Microeconomics (Dr. Bob) Test 2

question

Microeconomics deals with:

answer

households and firms

question

Macroeconomics deals with:

answer

-analysis regarding inflation
-topics related to recession
-government policies about the economy

question

Price Elasticity of Demand

answer

...

question

When the price of elasticity of demand is calculated, it is a negative number which means:

answer

as price increases quantity decreases

question

Income elasticity of demand measures

answer

the reaction of quantity demanded to changes in income

question

The more vertical the demand curve:

answer

the lower the elasticity

question

The more horizontal the demand curve:

answer

The higher the elasticity

question

In general, elasticity is:

answer

the reaction of one variable to the changes in other variables.

question

The price elasticity of demand measures how responsive

answer

buyers are to a change in price

question

Demand is said to be elastic if:

answer

the quantity demanded responds substantially to changes in the price of the good.

question

If a good is a necessity, demand for the good would tend to be:

answer

inelastic

question

Suppose the price of Twinkies is reduced from $1.45 to $1.25 and, as a result the quantity of Twinkies demanded increases from 2,000 to 2,200. Using the midpoint method, the price elasticity of demand for twinkies in the given price range is:

answer

.64

question

Demand is inelastic if elastic is:

answer

less than 1

question

Graph

answer

...

question

Graph

answer

...

question

16. Last year, Joan bought 50 pounds of hamburger when the household income was $40,000. This year, the household income was only $30,000 and Joan bought 60 pounds of hamburger. All else constant Joan's income elasticity of demand for hamburger is

answer

negative, so Joan considers hamburger to be an inferior good.

question

Suppose that an increase in the price of carrots from $1.20 to $1.40 per pound raises the amount of carrots that carrot farmers produce from 1.2 million pounds to 1.6 million pounds. Using the midpoint method, what would be the elasticity of supply?

answer

1.86

question

Assume that a 4 percent increase in income results in a 2 percent increase in the quantity demanded of a good. The income elasticity of demand for the good is

answer

positive and therefore the good is a normal good.

question

Table Chart

answer

...

question

If the cross-price elasticity of demand is 1.25, then the two goods would be:

answer

supplements

question

Price controls are:

answer

usually enacted when policy makers believe that the market price of a good or service is unfair to buyers or sellers

question

A government-imposed maximum price at which a good can be sold is called a price:

answer

ceiling

question

A legal minimum price at which a good can be sold is a price:

answer

floor

question

Binding price ceilings in a market cause quantity demanded to be:

answer

greater than quantity supplied

question

Economists generally hold that rent control is:

answer

a highly inefficient way to help the poor raise their standard of living.

question

graph

answer

...

question

graph

answer

...

question

graph

answer

...

question

Suppose that Larry, Moe, and Curly are bidding in an auction for a mint-condition video of Charlie Chaplin's first movie. Each has in mind a maximum amount that he will bid. This maximum is called:

answer

willingness to pay

question

Consumer surplus is:

answer

a buyer's willingness to pay minus the price

question

If a consumer is willing and able to pay $20.00 for a particular good but only has to pay $14.00, the consumer surplus is:

answer

$6.00

question

Ray buys a new tractor for $118,000. He receives consumer surplus of $13,000 on his purchase. Ray's willingness to pay is

answer

$131,000

question

Consumer surplus equals the:

answer

Value to buyers-Amount paid by buyers

question

graph

answer

...

question

graph

answer

...

question

According to the discussion in class price floor is implemented mostly for:

answer

agricultural products

question

A non-binding price ceiling may change to a binding case because of (gas example)

answer

a supply shock in the form of supply decrease

question

In economics, binding means:

answer

effective

question

Both price ceiling and floor:

answer

are not good for the market economy

question

Which price floor is in alignment with the biblical values:

answer

wage control

question

The Market economy is the best economic system in the world:

answer

True

question

As detailed in "College Tuition High, but Cost of Not Going Is Higher," college
graduates have all of the following advantages over high-school graduates except:

answer

lack of debt

question

As given in "America's Greatest Health Threat: Obesity," the status of obesity is that it is:

answer

an absolute crisis condition

question

As defined in "The Real Price of Gas," the most comprehensive term for describing the expenses that are not reflected in the retail price of gasoline would be:

answer

external costs

question

As noted in "The Real Price of Gas," program subsidies that support U.S. petroleum producers include all of the following except:

answer

safeguarding the world's oil-rich regions by the Department of Defense

question

As cited in "The Real Price of Gas," the federal government has resisted providing the oil industry with tax breaks.

answer

False

question

According to "The Real Price of Gas", tax breaks for oil companies are found at the:

answer

federal, state and local levels

question

As claimed in "The Real Price of Gas," consumers have no idea of how much fueling their cars actually costs them.

answer

True

question

According to the lecture in class, market does not have:

answer

ethics, morality, feelings

question

What is a good example of government ethical intervention in the Market Economy?

answer

minimum wage enforcement

1 of 50

question

Microeconomics deals with:

answer

households and firms

question

Macroeconomics deals with:

answer

-analysis regarding inflation
-topics related to recession
-government policies about the economy

question

Price Elasticity of Demand

answer

...

question

When the price of elasticity of demand is calculated, it is a negative number which means:

answer

as price increases quantity decreases

question

Income elasticity of demand measures

answer

the reaction of quantity demanded to changes in income

question

The more vertical the demand curve:

answer

the lower the elasticity

question

The more horizontal the demand curve:

answer

The higher the elasticity

question

In general, elasticity is:

answer

the reaction of one variable to the changes in other variables.

question

The price elasticity of demand measures how responsive

answer

buyers are to a change in price

question

Demand is said to be elastic if:

answer

the quantity demanded responds substantially to changes in the price of the good.

question

If a good is a necessity, demand for the good would tend to be:

answer

inelastic

question

answer

.64

question

Demand is inelastic if elastic is:

answer

less than 1

question

Graph

answer

...

question

Graph

answer

...

question

answer

negative, so Joan considers hamburger to be an inferior good.

question

answer

1.86

question

Assume that a 4 percent increase in income results in a 2 percent increase in the quantity demanded of a good. The income elasticity of demand for the good is

answer

positive and therefore the good is a normal good.

question

Table Chart

answer

...

question

If the cross-price elasticity of demand is 1.25, then the two goods would be:

answer

supplements

question

Price controls are:

answer

usually enacted when policy makers believe that the market price of a good or service is unfair to buyers or sellers

question

A government-imposed maximum price at which a good can be sold is called a price:

answer

ceiling

question

A legal minimum price at which a good can be sold is a price:

answer

floor

question

Binding price ceilings in a market cause quantity demanded to be:

answer

greater than quantity supplied

question

Economists generally hold that rent control is:

answer

a highly inefficient way to help the poor raise their standard of living.

question

graph

answer

...

question

graph

answer

...

question

graph

answer

...

question

Suppose that Larry, Moe, and Curly are bidding in an auction for a mint-condition video of Charlie Chaplin's first movie. Each has in mind a maximum amount that he will bid. This maximum is called:

answer

willingness to pay

question

Consumer surplus is:

answer

a buyer's willingness to pay minus the price

question

If a consumer is willing and able to pay $20.00 for a particular good but only has to pay $14.00, the consumer surplus is:

answer

$6.00

question

Ray buys a new tractor for $118,000. He receives consumer surplus of $13,000 on his purchase. Ray's willingness to pay is

answer

$131,000

question

Consumer surplus equals the:

answer

Value to buyers-Amount paid by buyers

question

graph

answer

...

question

graph

answer

...

question

According to the discussion in class price floor is implemented mostly for:

answer

agricultural products

question

A non-binding price ceiling may change to a binding case because of (gas example)

answer

a supply shock in the form of supply decrease

question

In economics, binding means:

answer

effective

question

Both price ceiling and floor:

answer

are not good for the market economy

question

Which price floor is in alignment with the biblical values:

answer

wage control

question

The Market economy is the best economic system in the world:

answer

True

question

As detailed in "College Tuition High, but Cost of Not Going Is Higher," college
graduates have all of the following advantages over high-school graduates except:

answer

lack of debt

question

As given in "America's Greatest Health Threat: Obesity," the status of obesity is that it is:

answer

an absolute crisis condition

question

As defined in "The Real Price of Gas," the most comprehensive term for describing the expenses that are not reflected in the retail price of gasoline would be:

answer

external costs

question

As noted in "The Real Price of Gas," program subsidies that support U.S. petroleum producers include all of the following except:

answer

safeguarding the world's oil-rich regions by the Department of Defense

question

As cited in "The Real Price of Gas," the federal government has resisted providing the oil industry with tax breaks.

answer

False

question

According to "The Real Price of Gas", tax breaks for oil companies are found at the:

answer

federal, state and local levels

question

As claimed in "The Real Price of Gas," consumers have no idea of how much fueling their cars actually costs them.

answer

True

question

According to the lecture in class, market does not have:

answer

ethics, morality, feelings

question

What is a good example of government ethical intervention in the Market Economy?

answer

minimum wage enforcement

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