Test 1 November 8 2020, questions and answers PDF

Preview

Summary

Download Test 1 November 8 2020, questions and answers PDF

Description

Micro Economics Test 1 Questions 1-34 (2 points each) 1. As a consequence of the condition of scarcity: A. There is never enough of anything B. Production has to be planned by government C. Things which are plentiful have relatively high prices D. Individuals have to make choices from among alternatives 2. Which is not a determinant of demand? A. Income B. The cost of inputs in production C. The prices of related goods D. Future price expectations 3. Which would be a likely cause of an increase in the price of pizza? A. A decreased interest in take-out and fast-food dining B. A decrease in the price of hamburgers, a substitute food C. An increase in the price of soda D. A health report showing eating pizza reduces stress 4. If the price of beef rose and the demand for chicken increased, then beef and chicken are: A. Complementary goods B. Consumer goods C. Inferior goods D. Substitute goods 5. If the price of hamburger buns increases, the demand for ground beef is predicted to: A. Increase B. Decrease C. Remain constant D. Shift to the right 6. Which of the following goods are not close substitutes? A. Peanut butter and jelly B. Margarine and butter C. Beef and chicken D. Tea and coffee

7. A fall in the price of milk, used in the production of ice cream, will: A. Decrease the supply of ice cream B. Increase the supply of ice cream C. Decrease the supply of chocolate ice cream only D. Have no effect on the supply of ice cream 8. DVD players and DVDs are: A. complementary goods. B. substitute goods. C. independent goods. D. inferior goods. 9. Digital cameras and memory cards are: A. substitute goods. B. complementary goods. C. independent goods. D. inferior goods. 10. Because of unseasonably cold weather, the supply of oranges has substantially decreased. This statement indicates that: A. the demand for oranges will necessarily rise. B. the equilibrium quantity of oranges will rise. C. the amount of oranges that will be available at various prices has declined. D. the price of oranges will fall. 11. Why does quantity demanded decrease when price increases? a. People choose to reduce consumption of the item. b. People “drop out” of the market for the item. c. People find substitutes for the item. d. All of the above are correct.

12. In economics, all the items that people would consume if they had unlimited income are known as A) wants. B) aggregates. C) outputs. D) needs. 13. The primary objective of economics is A) to learn how to create more resources. B) to study how people make choices with limited resources. C) to learn how to make the most profits with a given amount of resources. D) to study why some people are never happy with the resources they have.

14. When the text refers to rational self-interest, it means A) your looking out for what is best for you as an individual. B) your focus on your own contributions to society. C) behavior that makes society better off. D) behavior that hurts other people. 15. The law of demand tells us that people will buy less of a good if A) the price of that good increases. B) the prices of other goods increase. C) people's income decreases. D) every factor that can affect people's buying decisions changes. 16. Market demand is A) the total quantities demanded of all consumers of a particular item at given prices. B) a movement along the demand curve in response to the market. C) total equilibrium demand for the market. D) the demand for and supply of a good or service. 17. When the price of TVs goes up and fewer TVs are purchased, this is representative of the A) law of demand. B) law of supply. C) law of market operations. D) law of increasing costs.

18. Refer to the above table. What is the market quantity demanded of DVDs at a price of $12? A) 6 B) 9 C) 12 D) 24 19. An inferior good is one for which A) demand increases as income increases. B) demand decreases as income increases. C) the demand curve is vertical. D) the demand curve slopes up.

20. Fashion trends are a nonprice determinant for demand because A) they cause a movement along the demand curve. B) they influence people's tastes and preferences in clothing. C) they change the supply of accessories. D) they do not affect demand. 21. Suppose that goods X and Y are substitutes and the price of good Y falls. We would then expect A) the quantity of good Y demanded to increase and the demand for good X to increase also. B) an increase in the demand for good X and a decrease in the quantity of good Y demanded. C) an increase in the quantity demanded of good Y and a decrease in the demand for good X. D) an increase in the demand for both good X and good Y. 22. Of the following, which is the least likely to be an example of substitute goods? A) beer and pretzels B) margarine and butter C) beef and chicken D) tea and coffee 23. Which of the following pairs of goods is LEAST likely to be a pair of complements? A) gasoline and vehicles B) coffee and sugar C) beer and wine D) razors and razor blades 24. Suppose we observe that the demand for eggs increases when people buy more potatoes. We can conclude that eggs and potatoes are A) inferior goods. B) normal goods. C) complements. D) substitutes. 25. If the price of apples goes down, then the demand for pears will A) increase, assuming apples and pears are substitutes. B) decrease, assuming apples and pears are substitutes. C) decrease, assuming apples and pears are complements. D) remain constant, assuming apples and pears are related goods. 26. Suppose that a new study finds that eating more fish will improve a person's health. As a result A) the demand for fish will fall. B) the demand for fish will rise. C) the price of fish will fall. D) a smaller amount of fish will be purchased.

27. If the price of oil rises, producers of oil will A) increase the quantity of oil supplied. B) supply less oil. C) leave the amount of oil supplied unchanged. D) cut the price. 28. If the price of a product increases, we would expect A) the level of demand to decrease. B) quantity supplied to increase. C) the level of supply to increase. D) an increase in quantity demanded. 29. A technological improvement in the production of tablets would A) increase the demand for tablets. B) increase the supply of tablets. C) decrease the demand for tablets. D) decrease the supply of tablets. 30. Suppose that milk producers expect that the price of milk is going to drop next week. This would cause A) a decrease in the supply of milk today. B) an increase in the supply of milk today. C) an increase in the demand for milk today. D) the selling price of milk to rise today. 31. Scalping at major sporting events is an example of A) a surplus caused by the existence of price ceilings. B) the operation of rationing by the market. C) an example of the black market. D) a price floor. 32. Who ultimately benefits from price floors in agriculture? A) consumers B) grocery store owners C) farmers D) exporters 33. A maximum wage is an example of a A) price ceiling. B) price floor. C) black market. D) market clearing price.

34. The demand schedules of three individuals (Joe, Jack, and John) are shown. If they are the only three buyers of DVDs, complete the market demand for DVDs at each price level and state what is the Total Market Demand for all buyers.

Quantity demanded, DVDs Price

Joe

Jack

John

Total

$15.00

1

4

0

__5___

13.00

3

5

1

__9___

11.00

6

6

5

__17___

9.00

10

7

10

__27___

7.00

15

8

16

_39____

Question 35 and 36 (6 points each) 35. Explain what does it mean if we say “the Government is acting as a referee” for the economy. This means that the Government is enforcing the law and establishing order. Examples of this could be price controls, price ceiling, and price floor.

36. Explain why you feel it’s a good thing for the U.S. to be a Mixed Economy. I think that having a mixed economy is good because it creates economic freedom in the free market. As well as economic freedom there is room for the U.S government to intervene in economic activities for the greater good.

Question 37 (20 points) ANSWER IS ON OTHER DOCUMENT 37. Graph the supply and demand curve, by plotting the points for quantity demanded and quantity supplied at the different price levels. Be sure to show the equilibrium point on the graph. Also, fill in blank showing whether or not there is a surplus or shortage at the different price levels....