Econ 13 Hwk1 - Not an expert, dyor. PDF

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Not an expert, dyor....

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UCI Econ / IS 13 Due: Check Syllabus for due date

Homework 1 (100 points)

You can handwrite or type you answer then upload to Canvas. Multiple Choice (1 point each) Identify the choice that best completes the statement or answers the question. ____

1. Economic models a. cannot be useful if they are based on false assumptions. b. were once thought to be useful, but that is no longer true. c. must incorporate all aspects of the economy if they are to be useful. d. can be useful, even if they are not particularly realistic. Figure 2-6

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2. Refer to Figure 2-6. What is the opportunity cost of moving from point A to point B? a. zero b. 6 clocks c. 6 clocks and 15 candles d. 15 candles

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3. Which of the following is not an example of a positive, as opposed to normative, statement? a. Higher gasoline prices will reduce gasoline consumption. b. Equality is more important than efficiency. c. Trade restrictions lower our standard of living. d. If a nation wants to avoid inflation, it will restrict the growth rate of the quantity of money. [*what is a normative statement] Figure 3-6 Maxine’s Production Possibilities Frontier

Daisy’s Production Possibilities Frontier

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4. Refer to Figure 3-6. If the production possibilities frontier shown for Maxine is for 3 hours of work, then how long does it take Maxine to make one pie? a. 1/4 hour b. 1/3 hour c. 3 hours d. 4 hours Figure 3-11 The graph below represents the various combinations of ham and cheese (in pounds) that the nation of Bolivia could produce in a given month.

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5. Refer to Figure 3-11. If the production possibilities frontier shown is for 240 hours of production, then which of the following combinations of ham and cheese could Bonovia produce in 240 hours? a. 225 pounds of ham and 140 pounds of cheese b. 280 pounds of ham and 100 pounds of cheese c. 355 pounds of ham and 80 pounds of cheese d. 330 pounds of ham and 60 pounds of cheese

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6. Refer to Figure 3-11. For Bonovia, what is the opportunity cost of a pound of cheese? a. 0.8 pounds of ham b. 1.25 pounds of ham c. 8 pounds of ham d. 16 pounds of ham Figure 3-5 Hosne’s Production Possibilities Frontier

Merve’s Production Possibilities Frontier

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7. Refer to Figure 3-5. Hosne should specialize in the production of a. purses. b. wallets. c. both goods. d. neither good.

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8. A group of buyers and sellers of a particular good or service is called a(n) a. coalition. b. economy. c. market. d. competition.

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9. In a competitive market, the quantity of a product produced and the price of the product are determined by a. buyers. b. sellers. c. both buyers and sellers. d. None of the above is correct.

____ 10. For a competitive market, a. a seller can always increase her profit by raising the price of her product. b. if a seller charges more than the going price, buyers will go elsewhere to make their purchases. c. a seller often charges less than the going price to increase sales and profit. d. a single buyer can influence the price of the product but only when purchasing from several sellers in a short period of time.

____ 11. An example of a perfectly competitive market would be the a. cable TV market. b. soybean market. c. breakfast cereal market. d. shampoo market. ____ 12. Nemo rents 5 movies per month when the price is $3.00 per rental and 7 movies per month when the price is $2.50 per rental. Nemo’s demand demonstrates the law of a. price. b. supply. c. demand. d. income. Table 4-1 Price $5 $4 $3 $2 $1 $0

Quantity Demanded by Michelle 5 6 7 8 9 10

Quantity Demanded by Laura 4 6 8 10 12 14

Quantity Demanded by Hillary 11 13 15 17 19 21

____ 13. Refer to Table 4-1. If the market consists of Michelle and Hillary only and the price falls by $1, the quantity demanded in the market increases by a. 2 units. b. 3 units. c. 4 units. d. 5 units. Table 4-2 Price William’s Quantity Demanded $12 2 $10 4 $8 6 $6 8 $4 10 $2 12

Fergie’s Quantity Demanded 1 4 7 8 9 10

Taboo’s Quantity Demanded 3 4 5 4 3 2

apl.de.ap’s Quantity Demanded 4 5 6 7 8 9

____ 14. Refer to Table 4-2. Whose demand does not obey the law of demand? a. William’s b. Fergie’s c. Taboo’s d. apl.de.ap’s Figure 4-4

____ 15. Refer to Figure 4-4. Which of the following would cause the demand curve to shift from Demand B to Demand C in the market for DVDs in the United States? a. a decrease in the price of DVDs b. a decrease in the price of DVD players c. a change in consumer preferences toward watching movies in movie theaters rather than at home d. a decrease in the number of people in the United States ____ 16. Refer to Figure 4-4. Which of the following would cause the demand curve to shift from Demand C to Demand A in the market for tennis balls in the United States? a. an increase in the price of tennis balls b. a decrease in the price of tennis racquets c. an expectation by buyers that their incomes will increase in the very near future d. a decrease in the number of people in the United States under age 70 ____ 17. Which of the following would not shift the demand curve for mp3 players? a. a decrease in the price of mp3 players b. a fad that makes mp3 players more popular among 12-25 year olds c. an increase in the price of digital music downloads, a complement for mp3 players d. a decrease in the price of satellite radio, a substitute for mp3 players ____ 18. Each of the following is a determinant of demand except a. tastes. b. production technology. c. expectations. d. the prices of related goods. ____ 19. If muffins and bagels are substitutes, a higher price for bagels would result in a(n) a. increase in the demand for bagels. b. decrease in the demand for bagels. c. increase in the demand for muffins. d. decrease in the demand for muffins. ____ 20. A higher price for batteries would result in a(n) a. increase in the demand for flashlights. b. decrease in the demand for flashlights.

c. increase in the demand for batteries. d. decrease in the demand for batteries. ____ 21. You love peanut butter. You hear on the news that 50 percent of the peanut crop in the South has been wiped out by drought and that this will cause the price of peanuts to double by the end of the year. As a result, your demand for peanut butter a. will increase but not until the end of the year. b. increases today. c. decreases as you look for a substitute good. d. shifts left today. ____ 22. Which of these statements best represents the law of supply? a. When input prices increase, sellers produce less of the good. b. When production technology improves, sellers produce less of the good. c. When the price of a good decreases, sellers produce less of the good. d. When sellers’ supplies of a good increase, the price of the good increases. ____ 23. A supply schedule is a table that shows the relationship between a. price and quantity supplied. b. input costs and quantity supplied. c. quantity demanded and quantity supplied. d. profit and quantity supplied. Figure 4-10

____ 24. Refer to Figure 4-10. Which of the following would cause the supply curve to shift from Supply B to Supply A in the market for tennis racquets? a. a decrease in the price of tennis balls b. an expectation by firms that the price of tennis racquets will increase in the very near future c. a decrease in the price of tennis racquet strings d. an improvement in technology that allows firms to use less labor in the production of tennis racquets ____ 25. If something happens to alter the quantity supplied at any given price, then a. we move along the supply curve. b. the supply curve shifts.

c. the supply curve becomes steeper. d. the supply curve becomes flatter. ____ 26. In a market, to find the total amount supplied at a particular price, we must a. sum the quantities that individual firms are willing and able to supply at that price. b. calculate the average of the quantities that individual firms are willing and able to supply at that price. c. sum the costs that individual firms incur to supply the product at that price. d. account for all determinants of demand. Figure 4-11 Firm A

Firm B

____ 27. Refer to Figure 4-11. If these are the only two sellers in the market, then the market quantity supplied at a price of $4 is a. 6 units. b. 7 units. c. 8 units. d. 14 units. Figure 4-13

____ 28. Refer to Figure 4-13. The shift from S to S’  is called a(n) a. decrease in supply. b. decrease in quantity supplied. c. increase in supply. d. increase in quantity supplied. ____ 29. Buyers are able to buy all they want to buy and sellers are able to sell all they want to sell at a. prices at and above the equilibrium price. b. prices at and below the equilibrium price. c. prices above and below the equilibrium price, but not at the equilibrium price. d. the equilibrium price but not above or below the equilibrium price. ____ 30. When supply and demand both increase, equilibrium a. price will increase. b. price will decrease. c. quantity may increase, decrease, or remain unchanged. d. price may increase, decrease, or remain unchanged. Table 4-6 An Increase in Demand A Decrease in Demand

An Increase in Supply A C

A Decrease in Supply B D

____ 31. Refer to Table 4-6. Which combination would produce an increase in equilibrium quantity and an indeterminate change in equilibrium price? a. A b. B c. C d. D ____ 32. 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. Table 4-7 Price $10 $8 $6 $4 $2

Quantity Demanded 10 20 30 40 50

Quantity Supplied 60 45 30 15 0

____ 33. Refer to Table 4-7. The equilibrium price and quantity, respectively, are a. $2 and 50 units. b. $6 and 30 units.

c. $6 and 60 units. d. $12 and 30 units. Figure 4-17

____ 34. Refer to Figure 4-17. If the price is $10, then there would be a a. shortage of 400 units, and price would rise. b. surplus of 400 units, and price would rise. c. shortage of 600 units, and price would rise. d. surplus of 600 units, and price would rise. Figure 4-18

____ 35. Refer to Figure 4-18. What is the equilibrium price in this market? a. $0 b. $5 c. $7.50 d. $10

____ 36. What would happen to the equilibrium price and quantity of peanut butter if the price of peanuts went up, the price of jelly fell, fewer firms decided to produce peanut butter, and health officials announced that eating peanut butter was good for you? a. Price will fall, and the effect on quantity is ambiguous. b. Price will rise, and the effect on quantity is ambiguous. c. Quantity will fall, and the effect on price is ambiguous. d. Quantity will rise, and the effect on price is ambiguous. Figure 4-22 Panel (a)

Panel (b)

Panel (c)

Panel (d)

____ 37. Refer to Figure 4-22. Which of the four panels represents the market for peanut butter after a major hurricane hits the peanut-growing south? a. Panel (a) b. Panel (b) c. Panel (c) d. Panel (d) ____ 38. Which of the following is a way to compute GDP?

a. b. c. d.

add up the wages paid to all workers add up the quantities of all final goods and services add up the market values of all final goods and services add up the difference between the market values of all final goods and services and then subtract the costs of producing those goods and services

____ 39. Which of the following is not included in GDP? a. carrots grown in your garden and eaten by your family b. carrots purchased at a farmer’s market and eaten by your family c. carrots purchased at a grocery store and eaten by your family d. None of the above are included in GDP. __????  _ _40. One bag of flour is sold for $1.00 to a bakery, which uses the flour to bake bread that is sold for $3.00 to consumers. A second bag of flour is sold for $1 to a grocery store who sells it to a consumer for $2.00. Taking these four transactions into account, what is the effect on GDP? a. GDP increases by $3.00. b. GDP increases by $5.00. c. GDP increases by $6.00. d. GDP increases by $7.00. ____ 41. Gross domestic product includes all a. legal and illegal final goods, but it excludes all legal and illegal final services. b. legal and illegal final goods and all legal and illegal final services. c. legal final goods and services, but it excludes illegal final goods and services. d. legal and illegal final goods and legal final services, but it excludes illegal final services. ____ 42. Which of the following items is included in U.S. GDP? a. the estimated value of production accomplished at home, such as backyard production of fruits and vegetables b. the value of illegally-produced goods and services c. the value of cars and trucks produced in foreign countries and sold in the U.S. d. None of the above is included in U.S. GDP. _????  _ __43. Which of the following represents a transfer payment? a. You transfer $1,000 from your bank account to a mutual fund. b. The government sends your grandfather his Social Security check. c. You make a payment to get legal documents showing you purchased a previously owned home. d. Your employer automatically transfers $100 each month from your wages to a non-taxable medical spending account. _????  _ __44. In the economy of Ukzten in 2010, consumption was $3000, GDP was $5500, government purchases were $1000, imports were $2000, and investment was $1000. What were Ukzten’s exports in 2010? a. -$1500 b. $500 c. $1500 d. $2500 ____ 45. Which of the following statements about nominal GDP and real GDP is correct? a. Nominal GDP is a better gauge of economic well-being than real GDP. b. Real GDP is a better gauge of economic well-being than nominal GDP. c. Real GDP and nominal GDP are equally good measures of economic well-being.

d. Neither nominal nor real GDP provide a measure of economic well-being. Table 23-5 A hypothetical country of Lahland produces only movies and popcorn. Quantities and prices of these goods for the last several years are shown below. The base year is 2009.

Year

Price of Movies $10.00 $11.00 $12.00 $12.00

2008 2009 2010 2011 __????  _ _46. a. b. c. d.

Prices and Quantities Quantity of Price of Movies Popcorn 400 $5 500 $4 600 $5 600 $6

Quantity of Popcorn 800 900 1000 900

Refer to table 23-5 What was this country’s GDP deflator in 2010? 86.9 115.1 120.5 None of the above is correct.

____ 47. A recession has traditionally been defined as a period during which a. nominal GDP declines for two consecutive quarters. b. nominal GDP declines for four consecutive quarters. c. real GDP declines for two consecutive quarters. d. real GDP declines for four consecutive quarters. __????  _ _48. Which of the following statements is correct? a. The CPI can be used to compare dollar figures from different points in time. b. The percentage change in the CPI is a measure of the inflation rate, but the percentage change in the GDP deflator is not a measure of the inflation rate. c. Compared to the consumer price index (CPI), the GDP deflator is the more common gauge of inflation. d. The GDP deflator better reflects the goods and services bought by consumers than does the CPI. ____ 49. If the price index was 90 in year 1, 100 in year 2, and 95 in year 3, then the economy experienced a. 10 percent inflation between years 1 and 2 ,and 5 percent inflation between years 2 and 3. b. 10 percent inflation between years 1 and 2, and 5 percent deflation between years 2 and 3. c. 11.1 percent inflation between years 1 and 2, and 5 percent inflation between years 2 and 3. d. 11.1 percent inflation between years 1 and 2, and 5 percent deflation between years 2 and 3. Table 24-1 The table below pertains to Pieway, an economy in which the typical consumer’s basket consists of 10 bushels of peaches and 15 bushels of pecans. Year

Price of

Price of

2005 2006 _????  _ __50. a. b. c. d.

Peaches $11 per bushel $9 per bushel

Pecans $6 per bushel $10 per bushel

Refer to Table 24-1. If 2006 is the base year, then the CPI for 2005 was 83.3. 100. 120. 200.

Table 24-2 The table below pertains to Iowan, an economy in which the typical consumer’s basket consists of 3 pounds of pork and 4 bushels of corn. Year 2008 2009 _????  _ __51. a. b. c. d.

Price of Pork $20 per pound $25 per pound

Price of Corn $12 per bushel $18 per bushel

Refer to Table 24-2. If 2008 is the base year, then the inflation rate in 2009 was 26.5 percent. 36.1 percent. 39 percent. 47 percent.

Table 24-3 The table below pertains to Studious, an economy in which the typical consumer’s basket consists of 5 books and 10 calculators. Year 2006 2007 2008

Price of a Book $24 $30 $32

Price of a Calculator $8 $12 $15

____ 52. Refer to Table 24-3. The cost of the basket in 2006 was a. $32. b. $200. c. $280. d. $480. ____ 53. In the basket of goods that is used to compute the consumer price index, the three largest categories of ????consumer spending are a. housing, transportation, and recreation. b. housing, transportation, and food & beverages. c. housing, food & beverages, and education & communication. d. housing, medical care, and education & communication.

_????  _ __54. Which of these events would cause the consumer price index to overstate the increase in the cost of living? a. Car makers benefit from a new technology that allows them to sell higher-quality cars to consumers with no increase in price. b. Energy prices decrease, and consumers respond by buying more gas and electricity. c. A new good is introduced that renders cellular telephones inferior and obsolete. d. All of the above are correct. __????  _ _55. a. b. c. d.

An increase in the price of bread produced domestically will be reflected in both the GDP deflator and the consumer price index. neither the GDP deflator nor the consumer price index. the GDP deflator but not in the consumer price index. the consumer price index but not in the GDP deflator.

_????  _ __56. Henri earned a salary of $50,000 in 2001 and $70,000 in 2006. The consumer price index was 177 in 2001 and 265.5 in 2006. Henri's 2001 salary in 2006 dollars is a. $25,000.00. b. $33,333.33. c. $44,250.00 d. $75,000.00. ____ 57. In 1970, Professor Plum earned $12,000; in 1980, he earned $24,000; and in 1990, he earned $36,000. If the CPI was 40 in 1970, 60 in 1980, and 100 in 1990, then in real terms, Professor Plum's salary was highest in a. 1980 and lowest in 1970. b. 1980 and lowest in 1990. c. 1990 and lowest in 1970. d. 1990 and lowest in 1980. Scenario 24-4 Quinn has job offers in Wrexington and across the country in Charlieville. The Wrexington job would pay a salary of $50,000 per year, and the Charlieville job would pay a salary of $40,000 per year. The CPI in Wrexington is 150, and the CPI in Charlieville is 90. ____ 58. Refer to Scenario 24-4. If Quinn only cares about maximizing her purchasing power, then she should a. take the Charlieville job. b. take the Wrexington job. c. take either job because they both have the same purchasing power. d. The answer cannot be determined from the information given because a salary is not the same as purchasing power. ____ 59. Who of the following is not included in the Bureau of Labor Statistics' “employed” category? a. those who worked in their own business b. those who worked as unpaid workers in a family member's business c. those waiting to be recal...