economia revision primer trimestre de 2018 PDF

Preview

Summary

practica de economia es una revision del ano 2018, el cual tiene ejercicios que prodran practicar oara el desarrollo del...

Description

ECO 2314 251 Sample Exam 2 Chapter 6 1) Price elasticity of demand measures A) how responsive suppliers are to price changes. B) how responsive sales are to changes in the price of a related good. C) how responsive quantity demanded is to a change in price. D) how responsive sales are to a change in buyers' incomes. 2) The slope of a demand curve is not used to measure the price elasticity of demand because A) the slope of a linear demand curve is not constant. B) the slope of a line cannot have a negative value. C) the measurement of slope is sensitive to the units chosen for price and quantity. D) the slope of the demand curve does not tell us how much quantity changes as price changes.

C 3) If the slope of a demand curve is equal to -0.1 then A) demand is inelastic. B) we don't know whether the demand is elastic or inelastic. C) the demand is elastic at low prices and inelastic at high prices. D) as price increases by 10 percent quantity demanded decreases by 1 percent. B 4) Suppose the value of the price elasticity of demand is -3. What does this mean? A) A 1 percent increase in the price of the good causes quantity demanded to increase by 3 percent. B) A 1 percent increase in the price of the good causes quantity demanded to decrease by 3 percent. C) A 3 percent increase in the price of the good causes quantity demanded to decrease by 1 percent. D) A $1 increase in price causes quantity demanded to fall by 3 units. 5) If the percentage increase in price is 15 percent and the value of the price elasticity of demand is -3, then quantity demanded A) will increase by 45 percent. B) will increase by 5 percent. C) will decrease by 45 percent. D) will decrease by 5 percent.

C 6) The price elasticity of demand for Stork ice cream is -4. Suppose you're told that following a price increase, quantity demanded fell by 10 percent. What was the percentage change in price that brought about this change in quantity demanded? A) 40 percent B) 25 percent C) 2.5 percent D) 0.4 percent

1

7) If demand is inelastic, the absolute value of the price elasticity of demand is A) one. B) less than one. C) greater than one. D) greater than the absolute value of the slope of the demand curve. B 8) Perfectly inelastic demand is represented by a demand curve which is ________, and relatively inelastic demand is represented by a demand curve which is ________. A) downward sloping; vertical B) horizontal; downward sloping C) vertical; downward sloping D) upward sloping; horizontal

B 9) Suppose a hurricane decreased the supply of oranges so that the price of oranges rose from $120 a ton to $180 a ton and quantity sold decreased from 800 tons to 240 tons. What is the absolute value of the price elasticity of demand? A) 0.11 B) 0.37 C) 2.69 D) 9.33 C 10) If 50 units are sold at a price of $20 and 80 units are sold at a price of $15, what is the absolute value of the price elasticity of demand? Use the midpoint formula. A) 0.17 B) 0.62 C) 1.62 D) 5 C 11) If the absolute value of the price elasticity of demand for aspirin equals 0.8 then A) aspirin is a normal good. B) the demand for aspirin is inelastic. C) aspirin has few substitutes. D) the demand for aspirin is elastic. B

12) If a 35 percent increase in price of golf balls led to an 42 percent decrease in quantity demanded, then the demand for golf balls is A) unit elastic. B) perfectly elastic. C) relatively inelastic. D) relatively elastic. B 13) When there few close substitutes available for a good, demand tends to be

2

A) perfectly inelastic. B) perfectly elastic. C) relatively inelastic. D) relatively elastic. C 14) A demand curve that is horizontal indicates that the commodity A) has few substitutes. B) must be very cheap. C) is a necessity. D) has a large number of substitutes. D

15) Jonah lives in a small town where there is only one Mexican restaurant. Which of the following is likely to be true about the price elasticity of demand for meals at the Mexican restaurant? A) Demand is likely to be perfectly inelastic. B) Demand is likely to be perfectly elastic. C) Demand is likely to be relatively elastic. D) Demand is likely to be relatively inelastic. D 16) When demand is elastic, a fall in price causes total revenue to rise because A) when price falls, quantity sold increases so total revenue automatically rises. B) the increase in quantity sold is large enough to offset the lower price. C) the percentage increase in quantity demanded is less than the percentage fall in price. D) the demand curve shifts. B 17) If a firm wanted to know whether the demand for its product was elastic, unit elastic, or inelastic, then the firm could A) survey competitors and ask them what they think demand elasticity is for the product. B) talk to its customers. C) change price a little bit and observe what happens to total revenue. D) not do anything as there is no way to find an elasticity value. 18) Opera Estate Girls' School is considering increasing its tuition to raise revenue. If the school believes that raising tuition will increase revenue it is assuming that the demand for attending the school is A) inelastic. B) elastic. C) unit elastic. D) perfectly elastic. A 19) Calculate the income elasticity if an 8 percent increase in income leads to a 4 percent increase in quantity demanded for organic produce. A) -0.66 B) 0.5

3

C) 1.5 D) 2 B 20) Last year, Sefton purchased 60 pounds of potatoes to feed his family of five when his household income was $30,000. This year, his household income fell to $20,000 and Sefton purchased 80 pounds of potatoes. All else constant, Sefton's income elasticity of demand for potatoes is A) negative, so Sefton considers potatoes to be an inferior good. B) positive, so Sefton considers potatoes to be an inferior good. C) positive, so Sefton considers potatoes to be a normal good and a necessity. D) negative, so Sefton considers potatoes to be a normal good. A 21) Cross-price elasticity of demand is calculated as the A) percentage change in quantity demanded divided by percentage change in price of a good. B) percentage change in quantity demanded of one good divided by percentage change in price of a different good. C) percentage change in quantity sold divided by percentage change in buyers' incomes. D) percentage change in quantity supplied divided by percentage change in price of a good. B 22) If the cross-price elasticity of demand for computers and software is negative, this means the two goods are A) substitutes. B) complements. C) inferior. D) normal. B

23) Consider the following pairs of items: a. shampoo and conditioner b. iPhones and earbuds c. a laptop computer and a desktop computer d. beef and pork e. air-travel and weed killer Which of the pairs listed will have cross-price elasticity of zero? A) a and b only B) c only since most people cannot do without computers C) e only D) none of the pairs listed 24) Suppose the cross-price elasticity of demand between grapefruit juice and orange juice is approximately 6. What does this mean? A) A 1 percent increase in the price of grapefruit juice leads to a 6 percent increase in orange juice consumption. B) A 6 percent increase in the price of grapefruit juice leads to a 1 percent increase in

4

orange juice consumption. C) If the price of grapefruit juice rises by $1, 6 more cartons of orange juice will be purchased. D) The demand for orange juice is 6 times greater than the demand for grapefruit juice.

25) Suppose the value of the price elasticity of supply is 4. What does this mean? A) A 4 percent increase in the price of the good causes quantity supplied to increase by 1 percent. B) A 1 percent increase in the price of the good causes the supply curve to shift upward by 4 percent. C) A 1 percent increase in the price of the good causes quantity supplied to increase by 4 percent. D) For every $1 increase in price, quantity supplied increases by 4 units. C 26) Suppose a 4 percent increase in price results in a 2 percent increase in the quantity supplied of a good. Calculate the price elasticity of supply and characterize the product. A) 2; The product is elastic. B) 0.2; The product is inelastic. C) 0.5; The product is inelastic. D) 50%; The product is inelastic.

C

Chapter 7 and 8 27) A key difficulty facing insurance companies is that people know more about their health than do insurance companies, and that those people who are seriously ill are the most likely to want to obtain health insurance. What is this phenomenon called? A) moral hazard B) economic irrationality C) asymmetric information D) adverse selection

28) When people who buy insurance change their behavior after the purchase because they are protected from loss by the insurance, the insurance market is said to face the problem of A) moral hazard. B) adverse selection. C) asymmetric information. D) economic irrationality.

5

29) One reason why adverse selection problems arise in health insurance markets is that A) sick people are more likely to want health insurance than healthy people. B) because of advances in medical technology, people are living longer. These medical advances are costly and drive up the price of insurance for everyone. C) the average age of citizens of the United States has increased in recent years, and will continue to increase over the next 20 to 30 years. As older citizens retire, more and more of their medical bills will have to be paid by younger workers. D) fewer men and women are choosing medical careers because of the increase in the cost of malpractice insurance. Chapter 9 Figure 9-2

Suppose the U.S. government imposes a $0.40 per pound tariff on rice imports. Figure 9-2 shows the impact of this tariff. 30) Refer to Figure 9-2. The tariff revenue collected by the government equals the area A) D + E + F. B) E. C) B + D + E + F. D) C + D + E + F.

31) Refer to Figure 9-2. Without the tariff in place, the United States consumes A) 9 million pounds of rice. B) 15 million pounds of rice. C) 31 million pounds of rice. D) 42 million pounds of rice.

32) Refer to Figure 9-2. Without the tariff in place, the United States produces A) 9 million pounds of rice. B) 15 million pounds of rice. C) 31 million pounds of rice. D) 42 million pounds of rice.

6

A 33) Refer to Figure 9-2. With the tariff in place, the United States consumes A) 9 million pounds of rice. B) 15 million pounds of rice. C) 31 million pounds of rice. D) 42 million pounds of rice. C 34) Refer to Figure 9-2. With the tariff in place, the United States produces A) 9 million pounds of rice. B) 15 million pounds of rice. C) 31 million pounds of rice. D) 42 million pounds of rice. B

35) Refer to Figure 9-2. With the tariff in place, the United States A) imports 16 million pounds of rice. B) imports 9 million pounds of rice. C) imports 15 million pounds of rice. D) exports 31 million pounds of rice. A 36) Refer to Figure 9-2. As a result of the tariff, domestic producers increase their quantity supplied by A) 31 million pounds of rice. B) 22 million pounds of rice. C) 15 million pounds or rice. D) 6 million pounds of rice. D 37) Refer to Figure 9-2. The increase in domestic producer surplus as a result of the tariff is equal to the area A) C. B) C + G. C) A + C + G. D) C + D + G + H + I. C 38) Refer to Figure 9-2. The tariff causes domestic consumption of rice A) to fall by 27 million pounds. B) to fall by 11 million pounds. C) to rise by 6 million pounds. D) to rise by 16 million pounds. B

7

39) Refer to Figure 9-2. The loss in domestic consumer surplus as a result of the tariff is equal to the area A) B + D + E + F. B) D + E + F. C) C + D + E + F. D) B. 40) Refer to Figure 9-2. If the tariff was replaced by a quota which limited rice imports to 16 million pounds, the amount of revenue received by rice importers would equal A) $6.4 million. B) $9.6 million. C) $16 million. D) $19.8 million. Figure 9-3

Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota. 41) Refer to Figure 9-3. What is the area of consumer surplus after the imposition of the quota? A) A + G + H B) G + H + E + I+ J + M C) G + H D) A A 42) Refer to Figure 9-3. What is the area of domestic producer surplus after the imposition of a quota? A) B B) B + C C) B + E + I + J + M D) E + I + J + M B 43) Refer to Figure 9-3. What is the area that represents the deadweight loss as a result of the quota? A) G + H B) G + H + I + J

8

C) E + I + J + M D) E + M D

Chapter 10 44) Economists assume that the goal of consumers is to A) do as little work as possible to survive. B) make themselves as well off as possible. C) spend all their income. D) consume as much as possible. B 45) If a consumer receives 22 units of marginal utility for consuming the first can of soda, 20 units from consuming the second, and 15 from the third, the total utility of consuming the three units is A) 57 utility units. B) 35 utility units. C) 15 utility units. D) unknown as more information is needed to determine the answer. A 46) If a consumer receives 20 units of utility from consuming two candy bars, and 25 units of utility from consuming three candy bars, the marginal utility of the third candy bar is A) 25 utility units. B) 20 utility units. C) 5 utility units. D) unknown as more information is needed to determine the answer. 47) If, as a person consumes more and more of a good, each additional unit adds less satisfaction than the previous unit consumed, we are seeing the workings of A) the law of demand. B) the law of supply. C) the law of increasing marginal opportunity cost. D) the law of diminishing marginal utility. D 48) Marginal utility can be A) negative. B) zero. C) positive. D) positive, negative, or zero.

9

D

Table 10-2 Quantity of Quantity of Total Utility Total Utility Sandwiches Soup (cups) 1 40 1 45 2 60 2 75 3 72 3 102 4 82 4 120 5 88 5 135 6 90 6 145 Table 10-2 above shows Keira's utility from soup and sandwiches. The price of soup is $2 per cup and the price of a sandwich is $3. Keira has $18 to spend on these two goods. 49) Refer to Table 10-2. If Keira maximizes her utility, how many units of each good should she buy? A) 1 cup of soup and 5 sandwiches B) 3 cups of soup and 4 sandwiches C) 6 cups of soup and 2 sandwiches D) 4 cups of soup and 3.5 sandwiches B 50) Refer to Table 10-2. Suppose Keira's income increases from $18 to $23 but prices have not changed. What is her utility maximizing bundle now? A) 6 cups of soup and 5 sandwiches B) 4 cups of soup and 5 sandwiches C) 5 cups of soup and 4 sandwiches D) 5 cups of soup and 5 sandwiches B 51) Avner is maximizing total utility by buying sports magazines and protein supplements. For him to buy more sports magazines A) the price of protein supplements. has to fall. B) the price of sports magazines has to fall. C) the price of sports magazines has to rise. D) Since Avner is maximizing his utility, nothing can change the consumption of sports magazines. B 52) Most people would prefer to drive a luxury car that has all the options, but more people buy less expensive cars even though they could afford the luxury car because A) car buyers are irrational. B) the total utility of less expensive cars is greater than that of luxury cars. C) the marginal utility per dollar spent on the less expensive car is higher than that spent on luxury cars.

10

D) luxury cars cost a lot more than non-luxury cars. C 53) If Valerie purchases ankle socks at $5 and gets 25 units of marginal utility from the last unit, and bandanas at $3 and gets 12 units of marginal utility from the last bandana purchased, she A) is maximizing total utility and does not want to change her consumption of ankle socks or bandanas. B) wants to consume more ankle socks and fewer bandanas. C) wants to consume more bandanas and fewer ankle socks. D) wants to consume less of both ankle sock and bandanas. B Figure 10-2

Figure 10-2 represents the demand for ice cream cones. 54) Refer to Figure 10-2. Which of the following statements is true? A) Points a and b are the utility-maximizing quantities of ice cream cones at two different prices of ice cream. B) Points a and b may not necessarily be the utility-maximizing quantities of ice cream cones at two different prices because we have no information on the consumer's budget or the price of other goods. C) Point a could be a utility-maximizing choice if the price is $3 but point b may not be because we have no information on the marginal utility per dollar when price changes. D) Points a and b are derived independently of the utility-maximizing model. A 55) Refer to Figure 10-2. When the price of ice cream cones increases from $2 to $3, quantity demanded decreases from 4 ice cream cones to 3 ice cream cones. This change in quantity demanded is due to A) the price and output effects. B) the income and substitution effects. C) the law of diminishing marginal utility. D) the fact that marginal willingness to pay falls. B 56) A network externality occurs when A) there is production cost savings from being networked with suppliers. B) there is production cost savings from being networked with buyers. C) the usefulness of a good is affected by how many other people use the good.

11

D) the usefulness of a good is affected by celebrities who use the good. C

57) All of the following products are likely to have significant network externalities except A) cat food. B) cell phones. C) popular board games. D) Twitter. A

58) Which of the following is used to explain why a consumer's willingness to buy Microsoft Office increases as the number of other people who use Microsoft Office increases? A) network externalities B) market failure C) diminishing marginal utility D) the income effect of a price change A 59) A significant downside to network externalities is that A) there may be large switching costs to consumers of changing products so that consumers end up using products with inferior technologies. B) firms may network with unethical suppliers or distributors. C) the costs of using celebrity endorsements may be very high. D) there may be large switching costs to firms changing technologies. A

12...