Exam A

  1. If products A and B are complements and the price of B decrease the:
    demand for A will increase and the quantity of B demanded will increase
  2. Refer to the table: In relation to column 3, a change from column 2 to column 1 would indicate a(n)
    increase in demand
  3. (Advanced analysis) Answer the question on the basis of the following information. The demand for commodity X is represented by the equation P=10-0.2Q and supply by the equation P=2+0.2Q. Refer to the above information. The equilibruim quantity is:
  4. Suppose that corn prices rise significantly. If farmers expect the price of corn to continue rising relative to other crops, then we would expect:
    the supply to increase as farmers plant more corn
  5. Refer to the above diagram. A shortage of 150 units would be encountered if price was:
  6. Which of the following would not shift the demand curve for beef?
    a reduction in the price of cattle feed
  7. In the following question you are asked to determine, other things equal, the effects of a given change in a determinant of demand or supply for product X upon (1) the demand (D) for, or supply (S) of,, X, (2) the equilibrium price (P) of X and (3) the equilibrium quantity (Q) of X.
    increase D, increase P and increase Q
  8. Refer to the above diagram A government-set price floor is best illustrated by:
    price of C
  9. When the price of a product increases, a consumer is able to buy less of it with a given money income. This describes the
    income effect
  10. A government subsidy to the producers of a product
    increases product supply
  11. Economics may best be defined as the
    social science concerned with how individuals, institutions, and society make choices under conditions of scarcity
  12. An economic hypothesis:
    is a possible explanation of cause and effect.
  13. Suppose that a university decides to spend $1 million to upgrade personal computers and scientific equipment for faculty rather than spend $1 million to expand parking for students. This example illustrates:
    opportunity costs
  14. (Consider This) In response to the terrorist attacks of September 11, 2001, the government decided to allocate more resources toward defense goods. The government's decision reflects their assessment that:
    the marginal benefits of additional defense goods outweighed the marginal cost
  15. Answer the question on the basis of the data given in the following production possibilities table: For these data the law of increasing opportunity costs is reflected in the fact that:
    larger and larger amounts of capital goods must be sacrificed to get additional units of consumer goods.
  16. The production possibilities curve has:
    a negative slope that increases as we move along it from left to right
  17. Answer the question on the basis of the following five data sets wherein it is assumed that the variable shown on the left is the independent variable and the one on the right is the dependent variable. Assume in graphing these data that the independent cariable is shown on the horizontal axis and the dependent variable on the vertical axis. Q: Refer to the data sets, the vertical intercept is positive for:
    data sets 1 and 3 only
  18. Which of the following most closely relates to the idea of opportunity costs?
  19. The term "other things equal" means that:
    a number of relevant variables are assumed to be constant
  20. A positive statement is one which is:
    objective and is based on facts
  21. What can be said by the following picture:
    no coincidence of wants exists between any two states
  22. Which of the following best illustrates the circular flow model in action?
    All of these answers illustrate the workings of the circular flow model.
  23. Which of the following is not one of the 5 fundamental questions?
    What prices will be charged for goods and services?
  24. The market system's answer to the fundamental question "How will the system promote progress?" is essentially:
    "Through the profut potential that encourages development of new technology."
  25. Barter:
    entails the exchange of goods for goods.
  26. Specialization-the division of labor-enhances productivity and efficiency by:
    all of the means identified in the other answers
  27. "Because the outputs of many industries are the inputs to other industries, the failure of any single industry to fulfill the output quantities specified in the central plan caused a chain-reaction of adverse repercussions on production." This quotation best identifies the:
    coordination problem under central planning
  28. Firms are motivated to minimize production costs because:
    competitive pressures in the market will drive out higher-cost producers.
  29. In competitive market economy firms select the least-cost production technique because:
    to do so will maximize the firms' profits
  30. Refer to the above diagram. Flow (4) represents:
    consumer expenditures
Card Set
Exam A
Exam A