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QEP Post Math Part I – Answers Questions 1-20 on a separate 101864 Par L par score form
1. Resources are
A) scarce for households but plentiful for economies.
B) plentiful for households but scarce for economies.
C) scarce for households and scarce for economies.
D) plentiful for households and plentiful for economies.
2. If variable X increases as variable Y deceases, then X and Y are
A) directly related.
B) Independent
C) positively related
D) inversely related.
3. If people want more cars than there are cars available, then
A) cars are scarce.
B) there is a surplus of cars.
C) there is a decreased supply of cars.
D)none of the above
4. In the equation below, the value of X must be?
12
________ =
$1.20
A) 20
B) 10
C) 5
D) 15
X
________
$ .50
5. Below is a table of the prices of quarts of milk from 2000 to 2001, and from 2002 to 2003.
Price
Price
2000
$ .80
2002
$1.00
2001
1.00
2003
.80
In this table, the price of a quart of milk changed from 2000 to 2001 by _________ %, and by
_________% from 2002 to 2003?
A) + 25%, -25%
B) +25%, -20%
C) +25%, -15%
D) +15%, -15%
8
Price (dollars)
S
6
4
2
D
5
10
15
20
25
Quantity
6. Refer to the supply and demand graph above. A price of $6 in the market will result in a
A) shortage of 10 units.
B) surplus of 10 units.
C) surplus of 5 units.
D) shortage of 5 units.
7. Again, refer to the supply and demand graph above. A price of $2 in the market will result in a
A) shortage of 10 units.
B) surplus of 10 units.
C) surplus of 5 units.
D) shortage of 5 units
8. In economics, the Herfindahl Index measures the degree of concentration in an industry. It is computed as the
sum of the squares of the market shares of all the firms in the industry. If an industry has a total of five firms each
with the following market shares, what is the Herfindahl Index for this industry?
Market Share
Firm 1
Firm 2
Firm 3
Firm 4
Firm 5
20%
30%
20%
20%
10%
A) 2200
B) 100
C) 2000
D) 1000
9. Which of the following is correct?
A) The word economy comes from the Greek word for “rational thinker.”
B) Economists study the management of scarce resources.
C) Because economists believe that people pursue their best interests, they are not
interested in how people interact.
D) All of the above are correct.
10. The adage, "There is no such thing as a free lunch," means
A) even people on welfare have to pay for food.
B) the cost of living is always increasing.
C) people face tradeoffs.
D) all costs are included in the price of a product.
11. Which of the following is true?
A) Efficiency refers to the size of the economic pie; equality refers to how the pie is
divided.
B) Government policies usually improve upon both equality and efficiency.
C) As long as the economic pie continually gets larger, no one will have to go hungry.
D) Efficiency and equality can both be achieved if the economic pie is cut into equal
pieces.
12. It costs a company $50,000 to produce 5000 beach towels. The company’s cost will be $50,009 if
it produces an additional beach towel. If the company produces 5,000 beach towels then:
A) its average cost is greater than its marginal cost.
B) its average cost and its marginal cost are equal.
C) its average cost is less than its marginal cost.
D) there is insufficient information to compute average and marginal costs.
13. Suppose your management professor has been offered a corporate job with a 30 percent pay
increase. He has decided to take the job. For him, the marginal
A) cost of leaving was greater than the marginal benefit.
B) benefit of leaving was greater than the marginal cost.
C) benefit of teaching was greater than the marginal cost.
D) All of the above are correct.
Table: Production Possibilities for Library Land
Books
Magazines
400
0
300
200
200
350
100
450
0
500
14. Refer to the Production Possibilities Table above. What is the opportunity cost to Library Land of
increasing the production of books from 200 to 300?
A) 100 magazines
B) 150 magazines
C) 200 magazines
D) 350 magazines
Figure 1.1
15. In Figure 1.1 above, there is a _________________ relationship between the daily temperature
and the number of gallons of ice cream purchased.
A) a negative
B) an inverse
C) a positive
D) either a negative or a positive
Figure 1.2
16. In the figure above, the slope of the line between Point A and B is:
A) 0.4
B) 1.2
C) 2.5
D) indeterminate from this information
Figure 1.3
17. In the figure above, at Point A, what is the value of Y?
A) 10
B) 12
C) 15
D) indeterminate from this information
Figure 1.4
18. In the figure above, which of the curves or lines has a slope that is first positive and then negative?
A) Panel A
B) Panel B
C) Panel C
D) Panel D
19. If the slope of a straight line is 4 and if X (the variable on the horizontal axis) increases by 12,
then Y (the variable on the vertical axis will:
A) decrease by 3.
B) increase by 48.
C) increase by 3.
D) decrease by 0.33.
20. Which of the following is the best definition of economics?
A) The study of how business firms decide what inputs to hire and what outputs to produce.
B) The study of how individuals and societies choose to use the scarce resources that nature and
previous generations have provided.
C) The study of how consumer spend their income.
D) The study of how the federal government allocates tax dollars.