question
Normative statements are based upon:
A) Value judgements
B) Experiments
C) Conjecture
D) Facts
A) Value judgements
B) Experiments
C) Conjecture
D) Facts
answer
A) Value judgements
question
Which of the following statements is "positive" in nature?
A) College tuition is higher for out of state students than in state students
B) College tuition is too inexpensive
C) College tuition should be free for all US citizens
D) College tuition is too expensive
A) College tuition is higher for out of state students than in state students
B) College tuition is too inexpensive
C) College tuition should be free for all US citizens
D) College tuition is too expensive
answer
A) College tuition is higher for out of state students than in state students
question
A farmer can produce 1 ton of apples for $10,000, 2 tons of apples for $25,000 and 3 tons of apples for $45,000. What is the marginal cost of the 2nd ton of apples?
A) $20,000
B) $10,000
C) $15,000
D) $25,000
A) $20,000
B) $10,000
C) $15,000
D) $25,000
answer
C) $15,000
question
Assume a nation has constant opportunity costs. If at most the nation can produce 300 cars or 500 dishwashers, what is the opportunity cost of producing a car?
A) 3/5
B) 500
C) 5/3
D) No values are given, so cost cannot be determined
A) 3/5
B) 500
C) 5/3
D) No values are given, so cost cannot be determined
answer
C) 5/3
question
If Country A produces 300 of Good C and 700 of Good D, and Country B produces 1000 of Good C and 1500 of Good D, assuming constant opportunity costs and equal resources in the 2 countries, who has the absolute advantage in Good D?
A) Country B
B) Country A
C) There is not enough information to determine this relationship
D) Neither country has absolute advantage
A) Country B
B) Country A
C) There is not enough information to determine this relationship
D) Neither country has absolute advantage
answer
A) Country B
question
If Country A produces 300 of Good C and 700 of Good D, and Country B produces 1000 of Good C and 1500 of Good D, assuming constant opportunity costs and equal resources in the 2 countries, which of the following statements is true?
A) Country A has a comparative advantage in Good C
B) Country A has a comparative advantage in Good D
C) Country A has an absolute advantage in Good C
D) Country A has no advantage in any good
A) Country A has a comparative advantage in Good C
B) Country A has a comparative advantage in Good D
C) Country A has an absolute advantage in Good C
D) Country A has no advantage in any good
answer
B) Country A has a comparative advantage in Good D
question
Assume a country has a starting GDP of 200 which grows at 4% per year. Using the formula for compounding growth, what will GDP be after 20 years?
A) 438
B) 360
C) 280
D) 219
A) 438
B) 360
C) 280
D) 219
answer
A) 438
question
Which of the following is most likely to encourage sustained long run economic growth (ceteris paribus)?
A) Increased amount of capital
B) Increased natural resources
C) Technological progress
D) Increased number of workers
A) Increased amount of capital
B) Increased natural resources
C) Technological progress
D) Increased number of workers
answer
C) Technological progress
question
Ceteris Paribus, if the price of a good increases:
A) Demand decreases
B) Demand increases
C) Supply decreases
D) Neither supply nor demand change
A) Demand decreases
B) Demand increases
C) Supply decreases
D) Neither supply nor demand change
answer
D) Neither supply nor demand change
question
Supply is:
A) Upward sloping because of diminishing marginal utility
B) Upward sloping because of diminishing marginal returns
C) Downward sloping because of diminishing marginal utility
B) Downward sloping because of diminishing marginal returns
A) Upward sloping because of diminishing marginal utility
B) Upward sloping because of diminishing marginal returns
C) Downward sloping because of diminishing marginal utility
B) Downward sloping because of diminishing marginal returns
answer
B) Upward sloping because of diminishing marginal returns
question
For an inferior good if my income increases:
A) Supply will decrease, equilibrium quantity will increase, and equilibrium price will increase
B) Demand will increase, equilibrium quantity will increase, and equilibrium price will increase
C) Supply will increase, equilibrium quantity will decrease, and equilibrium price will decrease
D) Demand will decrease, equilibrium quantity will decrease, and equilibrium price will decrease
A) Supply will decrease, equilibrium quantity will increase, and equilibrium price will increase
B) Demand will increase, equilibrium quantity will increase, and equilibrium price will increase
C) Supply will increase, equilibrium quantity will decrease, and equilibrium price will decrease
D) Demand will decrease, equilibrium quantity will decrease, and equilibrium price will decrease
answer
D) Demand will decrease, equilibrium quantity will decrease, and equilibrium price will decrease
question
Assume peanut butter and jelly are compliments, if the price of peanut butter decreases, for jelly:
A) Demand will decrease, equilibrium quantity will decrease, and equilibrium price will decrease
B) Supply will decrease, equilibrium quantity will increase, and equilibrium price will increase
C) Demand will increase, equilibrium quantity will increase, and equilibrium price will increase
D) Supply will increase, equilibrium quantity will decrease, and equilibrium price will decrease
A) Demand will decrease, equilibrium quantity will decrease, and equilibrium price will decrease
B) Supply will decrease, equilibrium quantity will increase, and equilibrium price will increase
C) Demand will increase, equilibrium quantity will increase, and equilibrium price will increase
D) Supply will increase, equilibrium quantity will decrease, and equilibrium price will decrease
answer
C) Demand will increase, equilibrium quantity will increase, and equilibrium price will increase
question
Which of the following would most likely increase the supply of vegetables:
A) A wildfire in a growing region
B) An increase in the price of fertilizer
C) A time period with especially good weather
D) An increase in the price of vegetables
A) A wildfire in a growing region
B) An increase in the price of fertilizer
C) A time period with especially good weather
D) An increase in the price of vegetables
answer
C) A time period with especially good weather
question
If supply increases and demand decreases, we can say for certain that:
A) Equilibrium price will increase
B) Equilibrium price will decrease
C) Equilibrium quantity will increase
D) Equilibrium quantity will decrease
A) Equilibrium price will increase
B) Equilibrium price will decrease
C) Equilibrium quantity will increase
D) Equilibrium quantity will decrease
answer
B) Equilibrium price will decrease
question
If the demand for a good decreases but sellers do not immediately change the price, this will most likely cause:
A) the market to clear
B) a surplus
C) a shortage
A) the market to clear
B) a surplus
C) a shortage
answer
C) a surplus
question
When the percentage change of quantity demanded for a good is less in magnitude than the percentage change in price, the demand for that good or service is ____ and the elasticity of demand is _______.
A) inelastic; less than 1
B) unitary elastic; less than 1
C) unitary elastic; equal to 1
D) elastic; greater than 1
A) inelastic; less than 1
B) unitary elastic; less than 1
C) unitary elastic; equal to 1
D) elastic; greater than 1
answer
A) inelastic; less than 1
question
According to the midpoint formula, what is the elasticity of demand for shoes if the price goes from $50 to $60 and the quantity demanded goes from 400 shoes to 300 shoes.
A) 1.57
B) 10
C) 0.64
D) 1.25
A) 1.57
B) 10
C) 0.64
D) 1.25
answer
A) 1.57
question
If a business increases its prices and this results in increased total revenue this means:
A) demand is elastic
B) demand is inelastic
C) supply is inelastic
D) this is not possible, a business cannot raise prices and increase revenue
A) demand is elastic
B) demand is inelastic
C) supply is inelastic
D) this is not possible, a business cannot raise prices and increase revenue
answer
B) demand is inelastic
question
Assume an individual has their income increase from $45,000 to $55,000. Due to this change they go from purchasing 150 units of a good to 250 units of a good. Using the midpoint method to calculate elasticity, we can say this good is:
A) An inferior good
B) A substitute good
C) A normal good and a luxury good
D) A normal good and a necessity good
A) An inferior good
B) A substitute good
C) A normal good and a luxury good
D) A normal good and a necessity good
answer
C) A normal good and a luxury good
question
As a demand curve becomes flatter, we can say that demand:
A) becomes more inelastic
B) becomes more elastic
C) does not change in elasticity
A) becomes more inelastic
B) becomes more elastic
C) does not change in elasticity
answer
B) becomes more elastic
question
Using the standard percent change formula (not the midpoint formula), the price goes from $200 to $220 and quantity supplied goes from 700 to 800, what is the elasticity of supply?
A) 1.25
B) .142
C) 1.59
D) 1.42
A) 1.25
B) .142
C) 1.59
D) 1.42
answer
D) 1.42
question
If a price increase for good A decreases quantity demanded for good B:
A) Cross-price elasticity is negative and the goods are compliments
B) Cross-price elasticity is positive and the goods are compliments
C) Cross-price elasticity is negative and the goods are substitutes
A) Cross-price elasticity is negative and the goods are compliments
B) Cross-price elasticity is positive and the goods are compliments
C) Cross-price elasticity is negative and the goods are substitutes
answer
A) Cross-price elasticity is negative and the goods are compliments
question
Assume the elasticity of supply is equal 2.5, this means that if the price of a good increases 25%, the quantity supplied would:
A) Decrease 62.5%
B) Decrease 10%
C) Increase 62.5%
D) Increase 10%
A) Decrease 62.5%
B) Decrease 10%
C) Increase 62.5%
D) Increase 10%
answer
C) Increase 62.5%
question
Which of the following is NOT an assumption along a given PPC:
A) all resources are fully employed
B) All technology is fully employed
C) Capital is used 24/7
D) The time period for the PPC is held constant
A) all resources are fully employed
B) All technology is fully employed
C) Capital is used 24/7
D) The time period for the PPC is held constant
answer
C) Capital is used 24/7
question
If the price of a good increases, which of the following will occur:
A) The demand for that good will increase (shift to right)
B) The demand for that good will decrease (shift to left)
C) The supply for that good will increase (shift to right)
D) The supply for that good will decrease (shift to left)
E) Quantity demanded for that good will decrease (shift along the demand curve)
F) Quantity supplied for that good will decrease (shift along the supply curve)
A) The demand for that good will increase (shift to right)
B) The demand for that good will decrease (shift to left)
C) The supply for that good will increase (shift to right)
D) The supply for that good will decrease (shift to left)
E) Quantity demanded for that good will decrease (shift along the demand curve)
F) Quantity supplied for that good will decrease (shift along the supply curve)
answer
E) quantity demanded for that good will decrease
question
If the price of bicycles increase, in the market for bicycle helmets, what would we expect to occur?
A) Demand to decrease
B) Demand to increase
C) Supply to decrease
D) Supply to increase
A) Demand to decrease
B) Demand to increase
C) Supply to decrease
D) Supply to increase
answer
A) Demand to decrease
question
If a country can make at most 400 Bicycles or 500 Cars, assuming constant opportunity costs, what is the cost of making 1 bicycle in terms of cars?
A) 4/5
B) 5/4
C) 1
D) 500
A) 4/5
B) 5/4
C) 1
D) 500
answer
B) 5/4
question
Which of the following would we expect to have the most elastic demand?
A) Chicken Wings at Buffa Louie's (a restaurant on campus)
B) Chicken Wings
C) Chicken
D) Food
A) Chicken Wings at Buffa Louie's (a restaurant on campus)
B) Chicken Wings
C) Chicken
D) Food
answer
A) Chicken Wings at Buffa Louie's
question
If the price of beef (made from cows) increases, what do we expect to happen to the equilibrium for leather (made from cow hides)?
A) Equilibrium price increases, equilibrium quantity increases
B) Equilibrium price decreases, equilibrium quantity increases
C) Equilibrium price increases, equilibrium quantity decreases
D) Equilibrium price decreases, equilibrium quantity decreases
A) Equilibrium price increases, equilibrium quantity increases
B) Equilibrium price decreases, equilibrium quantity increases
C) Equilibrium price increases, equilibrium quantity decreases
D) Equilibrium price decreases, equilibrium quantity decreases
answer
B) Equilibrium price decreases, equilibrium quantity increases
question
If the cross-price elasticity between good A and good B is 3/4, what can we say for certain about goods A and B?
A) They are compliments
B) They are substitutes
C) They are inferior
D) They are normal
A) They are compliments
B) They are substitutes
C) They are inferior
D) They are normal
answer
B) They are substitutes
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