Download Exam1 2014 Spring

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Exam1 2014 Spring
Multiple Choice
Identify the choice that best completes the statement or answers the question.
____
1. Ch.2 When a production possibilities frontier is bowed outward, the opportunity cost of producing an
additional unit of a good
a. increases as more of the good is produced.
b. decreases as more of the good is produced.
c. does not change as more of the good is produced.
d. may increase, decrease, or not change as more of the good is produced.
Figure 2-3
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2. Ch.2 Refer to Figure 2-3. Inefficient production is represented by which point(s)?
a. J, L
b. J, L, M
c. K, N
d. M
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Figure 2-4
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3. Ch.2 Refer to Figure 2-4. Suppose this economy is producing at point W. Which of the following
statements would best explain this situation?
a. The economy lacks the resources to produce at a more desirable point.
b. The economy’s available technology prevents it from producing at a more desirable
point.
c. There are unused resources in the economy.
d. Any of the above statements would be a legitimate explanation for this situation.
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Figure 2-8
Panel (a)
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Panel (b)
4. Ch.2 Refer to Figure 2-8, Panel (a). The opportunity cost of moving from point J to point L is
a. 2 donuts.
b. 2 donuts and 2 cups of coffee.
c. 2 cups of coffee.
d. 6 cups of coffee.
Table 3-6
Assume that Maya and Miguel can switch between producing mixers and producing toasters at a constant
rate.
Maya
Miguel
____
Hours Needed
To Make 1
mixer toaster
8
5
20
10
Amount Produced
in 40 Hours
mixers toasters
5
8
2
4
5. Ch.3 Refer to Table 3-6. The opportunity cost of 1 mixer for Miguel is
a. 1/2 toaster.
b. 1/2 hour of labor.
c. 2 toasters.
d. 8 hours of labor.
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Name: ________________________
ID: A
Figure 3-5
Hosne’s Production Possibilities Frontier
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Merve’s Production Possibilities Frontier
6. Ch.3 Refer to Figure 3-5. Hosne has an absolute advantage in the production of
a. purses and Merve has an absolute advantage in the production of wallets.
b. wallets and Merve has an absolute advantage in the production of purses.
c. both goods and Merve has an absolute advantage in the production of neither good.
d. neither good and Merve has an absolute advantage in the production of both goods.
Table 3-9
Barb and Jim run a business that sets up and tests computers. Assume that Barb and Jim can switch between
setting up and testing computers at a constant rate. The following table applies.
Minutes Needed to
Barb
Jim
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Set Up 1
Computer
48
30
Test 1
Computer
60
40
Number of Computers
Set Up or Tested in a
40-Hour Week
Computers Computers
Set Up
Tested
50
40
80
60
7. Ch.3 Refer to Table 3-9. Jim has an absolute advantage in
a. both setting up and testing computers and a comparative advantage in setting up
computers.
b. both setting up and testing computers and a comparative advantage in testing computers.
c. neither setting up nor testing computers and a comparative advantage in setting up
computers.
d. neither setting up nor testing computers and a comparative advantage in testing
computers.
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Name: ________________________
ID: A
Figure 3-7
Bintu’s Production Possibilities Frontier
Juba’s Production Possibilities Frontier
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8. Ch.3 Refer to Figure 3-7. Bintu has a comparative advantage in the production of
a. bowls and Juba has a comparative advantage in the production of cups.
b. cups and Juba has a comparative advantage in the production of bowls.
c. both goods and Juba has a comparative advantage in the production of neither good.
d. neither good and Juba has a comparative advantage in the production of both goods.
____
9. Ch.4 If a increase in income decreases the demand for a good, then the good is a(n)
a. substitute good.
b. complementary good.
c. normal good.
d. inferior good.
____ 10. Ch.4 Suppose that a decrease in the price of good X results in fewer units of good Y being demanded. This
implies that X and Y are
a. complementary goods.
b. normal goods.
c. inferior goods.
d. substitute goods.
____ 11. Ch.4 Suppose roses are currently selling for $20 per dozen, but the equilibrium price of roses is $30 per
dozen. We would expect a
a. shortage to exist and the market price of roses to increase.
b. shortage to exist and the market price of roses to decrease.
c. surplus to exist and the market price of roses to increase.
d. surplus to exist and the market price of roses to decrease.
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Figure 4-18
____ 12. Ch.4 Refer to Figure 4-18. At a price of $4, there is a
a. surplus of 3 units.
b. surplus of 6 units.
c. shortage of 3 units.
d. shortage of 6 units.
____ 13. Ch.5 When the price of bubble gum is $0.50, the quantity demanded is 400 packs per day. When the price
falls to $0.40, the quantity demanded increases to 600. Given this information and using the midpoint
method, we know that the demand for bubble gum is
a. inelastic.
b. elastic.
c. unit elastic.
d. perfectly inelastic.
____ 14. Ch.5 If a 10% decrease in price for a good results in a 20% increase in quantity demanded, the price
elasticity of demand is
a. 0.50.
b. 1.
c. 1.5.
d. 2.
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ID: A
Figure 5-13
____ 15. Ch.5 Refer to Figure 5-13. Over which range is the supply curve in this figure the least elastic?
a. $16 to $40
b. $40 to $100
c. $100 to $220
d. $220 to $430
Figure 5-16
____ 16. Ch.5 Refer to Figure 5-16. Using the midpoint method, what is the price elasticity of supply between point
B and point C?
a. 1.44
b. 1.29
c. 0.96
d. 0.78
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ID: A
Figure 6-1
Panel (a)
Panel (b)
____ 17. Ch.6 Refer to Figure 6-1. The price ceiling shown in panel (a)
a. is not binding.
b. creates a surplus.
c. creates a shortage.
d. Both a) and b) are correct.
Figure 6-3
Panel (a)
Panel (b)
____ 18. Ch.6 Refer to Figure 6-3. In panel (b), there will be
a. a shortage of wheat.
b. equilibrium in the market.
c. a surplus of wheat.
d. neither a surplus nor a shortage
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ID: A
____ 19. Ch.6 If a tax is levied on the sellers of a product, then the demand curve will
a. shift down.
b. shift up.
c. become flatter.
d. not shift.
____ 20. Ch.6 When a tax is imposed on the buyers of a good, the demand curve shifts
a. upward by the amount of the tax.
b. downward by the amount of the tax.
c. upward by less than the amount of the tax.
d. downward by less than the amount of the tax.
____ 21. Ch.7 All else equal, what happens to consumer surplus if the price of a good increases?
a. Consumer surplus increases.
b. Consumer surplus decreases.
c. Consumer surplus is unchanged.
d. Consumer surplus may increase, decrease, or remain unchanged.
Figure 7-5
____ 22. Ch.7 Refer to Figure 7-5. If the government imposes a price floor of $120 in this market, then consumer
surplus (compared to the surplus at equilibrium price) will decrease by
a. $75.
b. $125.
c. $225.
d. $300.
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ID: A
Figure 7-12
____ 23. Ch.7 Refer to Figure 7-12. When the price is P1, producer surplus is
a. A.
b. C.
c. A+B.
d. C+D.
Figure 7-20
____ 24. Ch.7 Refer to Figure 7-20. At equilibrium, total surplus is measured by the area
a. ACG.
b. AFG.
c. KBG.
d. CFG.
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Name: ________________________
ID: A
____ 25. Ch.8 When a tax is levied on a good,
a. neither buyers nor sellers are made worse off.
b. only sellers are made worse off.
c. only buyers are made worse off.
d. both buyers and sellers are made worse off.
Figure 8-2
The vertical distance between points A and B represents a tax in the market.
____ 26. Ch.8 Refer to Figure 8-2. The amount of deadweight loss as a result of the tax is
a. $2.50.
b. $5.
c. $7.50.
d. $10.
____ 27. Ch.8 Suppose the government increases the size of a tax by 40 percent. The deadweight loss from that tax
a. increases by 40 percent.
b. increases by more than 40 percent.
c. increases but by less than 40 percent.
d. decreases by 40 percent.
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Name: ________________________
ID: A
Figure 8-9
The vertical distance between points A and C represent a tax in the market.
____ 28. Ch.8 Refer to Figure 8-9. The amount of tax revenue received by the government is
a. $4,000.
b. $6,000.
c. $10,000.
d. $24,000.
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