1. Microeconomics focuses on (Points : 2)
the religious decisions that a business manager makes
the monetary policy made by the Federal Reserve Bank
the purchasing decisions that an individual consumer makes
the fiscal decisions made by the government.
2. If resources are "scarce," it means that they: (Points : 2)
cannot provide enough goods or services to satisfy all human material wants
and needs.
have no opportunity cost.
are probably not valued by consumers.
have an unlimited supply
3. The importance of an economic model is that it allows us to (Points : 2)
build a complex and accurate model of the economy.
build an accurate mathematical model of the economy.
focus on the effects of only one change at a time.
avoid opportunity costs.
4. A college student is faced with a difficult decision of how to spend one hour
tonight. She could babysit her professor's child at an hourly wage of $7, she could
work at the college library at a wage of $6, or she could finish her economics
homework assignment. If she chooses to complete her homework assignment, she
has incurred an opportunity cost equal to (Points : 2)
$7
$6
$13
$0
5. Which of the following is a normative economic statement? (Points : 2)
Government has grown too large and should be reduced.
There has been an increase in the rate of inflation.
Government is subject to the same rules as all other institutions.
The money supply grew by 3% last year.
6. An example of a positive statement is: (Points : 2)
the rate of unemployment should be 4%.
a high rate of economic growth is good for the country.
the federal government spends half of its budget on national defense.
everyone in the country should be covered by national health insurance.
7. The typical supply curve illustrates that: (Points : 2)
other things equal, the quantity supplied for a good is inversely related to the
price of a good
other things equal, the supply of the good creates its own demand for the
good
other things equal, the quantity supplied for a good is positively related to
the price of a good
price and quantity supplied are unrelated.
8. Which of the following examples illustrates the law of demand? (Points : 2)
An increase in tuition encourages more students to enroll in college because
the quality of education has risen.
Consumers buy more personal computers because prices have fallen.
Oil companies drill for new sources of oil because oil prices are higher
Fewer people play golf because incomes are lower
9. An improvement in production technology that reduces costs will: (Points : 2)
increase the price of equilibrium.
shift the supply curve to the left.
shift the supply curve to the right.
shift the demand curve to the left.
10. In much of the country, homeowners choose to heat their houses with either
natural gas or home heating oil. Which of the following would cause a change in the
demand for natural gas? (Points : 2)
a change in the price of home heating oil.
a change in income.
an increase in consumer tastes for natural gas as an energy source.
all of the above
11. The table for Market for Chocolate-Covered Peanuts is given below:
Price (per bag)
$.90
.80
.70
.60
.50
.40
.30
Quantity Demanded
(bags per month)
70
105
140
175
210
245
280
Quantity Supplied
(bags per month)
280
245
210
175
140
105
70
Based on the table given above, the equilibrium quantity and the equilibrium
price are ________ bags and ________. (Points : 2)
140; $0.40
175; $0.60
175; $0.80
210; $0.50
12. The table for Market for Chocolate-Covered Peanuts is given below:
Price (per bag)
$.90
.80
.70
.60
.50
.40
.30
Quantity Demanded
(bags per month)
70
105
140
175
210
245
280
Quantity Supplied
(bags per month)
280
245
210
175
140
105
70
Based on the table given above, a surplus of 210 bags of chocolate-covered
peanuts exists if the price is ________ per bag.
(Points : 2)
$0.90
$0.80
$0.60
$0.40
13. If the supply and demand curves intersect at a price of $47, then any price
above that would result in: (Points : 2)
a shortage
a surplus
equilibrium
an increase in demand
14. If chicken and beef are substitutes, then a fall in the price of chicken will bring
about (Points : 2)
an increase in the demand for beef
a decrease in the demand for beef.
a decrease in the quantity demanded of beef.
no change in the demand for beef
15. Which of the following will most likely result from a destruction of half of the
Florida orange crop due to a hard freeze? (Points : 2)
a decrease in the demand for oranges (shift to the left)
an increase in the supply of oranges (shift to the left)
an increase in the quantity of oranges bought and sold
an increase in the price of oranges
17.
The Producer Surplus in this graph is (calculate the area of the respective triangle) (Points : 2)
$140
$60
$40
$20
18. Consider that the market for shoes is at equilibrium. If the supply of shoes increased, what
would be the effect on the equilibrium price and quantity?
(Points : 2)
price would increase and quantity would increase
price would decrease and quantity would decrease
price would increase and quantity would decrease
price would decrease and quantity would increase
19. Assume that Velcro is becoming more and more popular for a variety of uses, including as
fasteners for shoes. What should happen to the equilibrium price and quantity for shoelaces as a
result?
(Points : 2)
Both price and quantity will increase
Both price and quantity will decrease
Price will increase and quantity decrease
Price will decrease and quantity increase
20. Kelly is an attorney and also an excellent typist. She can type 60 pages per hour and charges
attorney fees at $100 per hour. There is a 60 page document that needs to be typed and Todd
wants to do it. He can type 30 pages per hour and would like to convince Kelly to accept his
services.
Explain why Kelly will accept Todd's offer if he says: Kelly, I will help you if you pay me $45 per
hour" but will reject it if Todd says: "Kelly, I will help you if you pay me $51 per hour."
(Points : 6)
21. While waiting in line to buy two tacos at 75 cents each, and a medium drink for 80 cents,
Jordan notices that the restaurant has a value meal containing three tacos and a medium drink all
for $2.50.
What would be the cost of getting the 3rd taco for Jordan? (in other words, what is the
incremental cost of getting the 3rd taco?
Include your logic and calculations in your answer
(Points : 6)