Exam 1 of ECON251 Purdue University In Tutorial Library

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TITLE: Exam 1 of ECON251 Purdue University

UNIVERSITY / INSTITUTE: Purdue University

CLASS / COURSE: Economics

QUESTION DESCRIPTION:

Exam 1:
 
1.
Question 034 5
(Points: 1.34)
Refer to 4.1 for the questions below.
Figure 4.1
In figure 4.1, with an effective price floor, consumer surplus would be:
a. a. X.
b. b. X+Y+Z.
c. c. A+B+C.
d. d. C.
2.
Question 063 7
(Points: 1.34)
Price elastic supply occurs whenever the elasticity of supply value is:
a. a. negative.
b. b. positive and greater than five.
c. c. positive and greater than one.
d. d. positive and less than one.
3.
Question 050 3
(Points: 1.34)
Smith's invisible hand is the:
a. a. government's oversight to control the economy.
b. b. property ownership laws and the rule of the court system.
c. c. individuals acting in their own self-interest.
d. d. real world laws of economics that are unseen.
4.
Question 057 4
(Points: 1.34)
Refer to Figure 3.1 for the questions below.
Figure 3.1
In figure 3.1, if supply decreases, then equilibrium:
a. a. price and quantity rise.
b. b. price and quantity fall.
c. c. price rises and quantity falls.
d. d. price falls and quantity rises.
5.
Question 022 2
(Points: 1.34)
The decision about what goods and services will be produced made in a market
economy is made by:
a. a. lawmakers in the government voting on what will be produced.
b. b. producing firms deciding to produce only what the boss says must be
produced.
c. c. celebrities deciding what society needs the most.
d. d. consumers and firms choosing which goods and services to buy
or produce.
6.
Question 059 2
(Points: 1.34)
How can the influence of a third variable be shown on a two-dimensional graph?
a. a. By allowing the the relationship to be nonlinear.
b. b. By allowing the position of the relationship line or curve to shift
on the graph.
c. c. By drawing a third axis coming out of the two axes.
d. d. None of these.
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7.
Question 016 5
(Points: 1.34)
Economic efficiency is achieved when:
a. a. total benefits received are equal to total costs.
b. b. marginal benefits received are equal to marginal costs
c. c. average benefits received are equal to average costs.
d. d. partial benefits received equal to partial costs.
8.
Question 047 2
(Points: 1.34)
Which of the following is a positive economic statement?
a. a. Everyone should live at the same standard of living.
b. b. If the price of gasoline rises, a smaller quantity of it will be
bought.
c. c. The government should close income tax loopholes.
d. d. U.S. firms should not be allowed to practice outsourcing.
9.
Question 014 6
(Points: 1.34)
What does a market supply curve reflect?
a. a. External costs of producing a good or service
b. b. External benefits of producing a good or service
c. c. Social costs of producing a good or service
d. d. Private costs of producing a good or service
10.
Question 012 3
(Points: 1.34)
On a production possibilities frontier, a combination of output that is inside the
frontier is:
a. a. allocatively efficient.
b. b. productively efficient
c. c. allocatively inefficient.
d. d. productively inefficient.
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11.
Question 012 2
(Points: 1.34)
Which of the following best describes an assumption economists make about human
behavior?
a. a. Individuals act rationally all the time in all circumstances.
b. b. Assuming rational behavior is useful in explaining choices
people make even though people may not behave rationally all the
time.
c. c. People weigh religious aspects in all decisions they make.
d. d. Individuals act randomly.
12.
Question 020 2
(Points: 1.34)
Society faces a tradeoff when:
a. a. deciding who will receive the goods and services produced.
b. b. deciding what goods and services will be produced.
c. c. deciding how goods and services will be produced.
d. d. answering all these fundamental economic questions.
13.
Question 044 2
(Points: 1.34)
When voluntary exchange takes place:
a. a. both parties gain.
b. b. one party must lose.
c. c. the government must have intervened in the market.
d. d. each party values what they have to start more than the other party.
14.
Question 042 5
(Points: 1.34)
What causes producers to earn more income under a price floor even though less is
produced?
a. a. Producers capture some former consumer surplus because of
the higher price.
b. b. Consumers capture some former producer surplus because of the
lower price.
c. c. Producers capture some former consumer surplus because of the lower
price.
d. d. Consumers capture some former producer surplus because of the
higher price.
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15.
Question 020 6
(Points: 1.34)
Refer to Figure 5.1 for the questions below.
Figure 5.1
In figure 5.1 the efficient output is:
a. a. Q1.
b. b. Q2.
c. c. Q3.
d. d. Q4.
16.
Question 058 5
(Points: 1.34)
A buyer experiences the imposition of a sales tax by:
a. a. the increase in the supply of the good being taxed.
b. b. having to pay more because they are buying the good being taxed.
c. c. the demand for the good being taxed decreasing.
d. d. finding the good harder to find because the tax has reduced
supply.
17.
Question 004 5
(Points: 1.34)
Marginal benefit is:
a. a. the satisfaction from consuming a given amount of a good.
b. b. the additional satisfaction from consuming one more of a good.
c. c. the satisfaction from consuming a given amount of a good divided by
the number of goods consumed.
d. d. the satisfaction from producing one more unit of a good.
18.
Question 068 4
(Points: 1.34)
If a market has a shortage, then it will be brought back into equilibrium by:
a. a. price falling.
b. b. quantity demanded rising.
c. c. quantity supplied rising.
d. d. all of these.
19.
Question 001 3
(Points: 1.34)
An example of something that is NOT a factor of production is:
a. a. an acre of farmland.
b. b. a drill press in a machine shop.
c. c. the manager of the local tire shop.
d. d. $1,000.
20.
Question 018 3
(Points: 1.34)
The opportunity cost of going to your economics class:
a. a. is the cost of tuition and fees.
b. b. depends on the salary of the instructor.
c. c. is zero because there is no admission charged if you are enrolled in the
class.
d. d. is equal to the highest value of an alternative use of the time
and money spent on the class.
21.
Question 043 4
(Points: 1.34)
If the price of SUVs falls, then:
a. a. the supply of automobiles will fall.
b. b. the supply of automobiles will rise.
c. c. the quantity supplied of automobiles will fall.
d. d. the quantity supplied of automobiles will rise.
22.
Question 060 2
(Points: 1.34)
The relationship between rainfall and height of grass grown is:
a. a. an inverse relationship.
b. b. a direct relationship.
c. c. a negative relationship.
d. d. independent.
23.
Question 080 4
(Points: 1.34)
With a normal good:
a. a. as price increases, the quantity demanded decreases.
b. b. as consumer income increases, demand increases.
c. c. as price decreases, the quantity demanded decreases.
d. d. if buyers expect a higher future price, demand will increase today.
24.
Question 015 5
(Points: 1.34)
Producer surplus measures:
a. a. total benefit received by producers from participating in a market.
b. b. average benefit received by producers from participating in a market.
c. c. marginal benefit received by producers from participating in a market.
d. d. net benefit received by producers from participating in a
market.
25.
Question 061 2
(Points: 1.34)
The relationship between caloric intake and pounds lost is:
a. a. inverse.
b. b. direct.
c. c. independent.
d. d. positive.
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26.
Question 033 4
(Points: 1.34)
If the demand for good X decreases, when the price of good Y decreases, then:
a. a. goods X and Y are inferior goods.
b. b. goods X and Y are complements.
c. c. goods X and Y are substitutes.
d. d. goods X and Y are normal goods.
27.
Question 044 5
(Points: 1.34)
The minimum wage is an example of
a. a. a competitive equilibrium price.
b. b. a price ceiling.
c. c. a price floor.
d. d. a tax on a market.
28.
Question 006 6
(Points: 1.34)
Externalities:
a. a. should be banned.
b. b. should be subsidized.
c. c. can either be positive or negative.
d. d. are what the private consumer and producer in an exchange realize.
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29.
Question 019 4
(Points: 1.34)
The demand for big screen TVs would fall, if big screen TVs are normal goods and:
a. a. the market price of big screen television sets increases.
b. b. there is a larger output of big screen TVs.
c. c. buyer's of big screen TVs incomes fall because of a recession.
d. d. the market price of DVDs falls.
30.
Question 049 5
(Points: 1.34)
Under a rent control law the quantity supplied of apartments decreases because:
a. a. landlords convert some former apartments into offices.
b. b. landlords sell off some former apartments as condominiums.
c. c. landlords abandon some former apartments buildings.
d. d. All of these occur under a rent control law.
31.
Question 051 7
(Points: 1.34)
If a firm is in an anti-trust court case accused of monopolizing a product, the firm
would hire an economist to show:
a. a. the cross-price elasticity of demand between the firm's good and
another is negative.
b. b. the cross-price elasticity of demand between the firm's good
and another is positive.
c. c. the price elasticity of demand for the firm's good is highly inelastic.
d. d. the income elasticity of the firm's good is inferior.
32.
Question 063 2
(Points: 1.34)
Which of the following is correct?
a. a. An inverse relationship has a negative slope value.
b. b. A direct relationship has a positive slope value.
c. c. A curved line has slope values that change at every point.
d. d. All of these are correct.
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33.
Question 058 4
(Points: 1.34)
Refer to Figure 3.1 for the questions below.
Figure 3.1
In figure 3.1, if demand and supply decrease, then equilibrium:
a. a. price rises.
b. b. price falls.
c. c. quantity falls.
d. d. quantity rises.
34.
Question 041 3
(Points: 1.34)
Comparative advantage means:
a. a. a producing unit can produce more of a good or service with the same
amount of resources than any other producing unit.
b. b. a producing unit can produce a good or service at a lower
opportunity cost than any other producing unit.
c. c. compared to anyone else, you are better at what you do.
d. d. none of these.
35.
Question 009 6
(Points: 1.34)
An external cost is created when you:
a. a. graduate from college.
b. b. buy flowers for your mother on Mother's Day.
c. c. litter on the side of the road.
d. d. buy a sandwich for lunch.
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36.
Question 051 3
(Points: 1.34)
The economic impact of Smith's invisible hand is:
a. a. chaos in a market not controlled by the government.
b. b. some people are able to take advantage of others and earn large
incomes.
c. c. the market provides consumers with what they want.
d. d. producers can secretly band together and decide what to produce.
37.
Question 056 2
(Points: 1.34)
If a graph has a line that shows the amount of outsourcing in the last ten years, it is
known as a:
a. a. pie chart.
b. b. time series graph.
c. c. demand curve for outsourcing.
d. d. supply curve of outsourcing.
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38.
Question 002 2
(Points: 1.34)
Scarcity:
a. a. is due to unlimited wants and limited resources.
b. b. is not a problem for the wealthy.
c. c. is only a problem when a country has too large a population.
d. d. all of these.
39.
Question 064 7
(Points: 1.34)
What determines the price elasticity of supply value?
a. a. How quickly firms can change the quantity supplied when price
changes
b. b. How quickly firms can change the supply when price changes
c. c. How quickly firms can change quantity demanded when price changes
d. d. All of these
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40.
Question 046 4
(Points: 1.34)
At the market equilibrium,
a. a. quantity demanded is greater than quantity supplied.
b. b. quantity supplied is greater than quantity demanded.
c. c. quantity demanded is equal to quantity supplied.
d. d. quantity supplied determines what quantity supplied will be.
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41.
Question 028 6
(Points: 1.34)
Refer to Figure 5.2 for the questions below.
Figure 5.2
If figure 5.2, the efficient output is:
a. a. Q1.
b. b. Q2.
c. c. Q3.
d. d. Q4.
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42.
Question 037 4
(Points: 1.34)
If the cost of producing a product increases, then:
a. a. the quantity demanded will increase.
b. b. the quantity supplied will increase.
c. c. the supply of the product will decrease.
d. d. the demand for the product will decrease.
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43.
Question 050 7
(Points: 1.34)
If the cross-price elasticity of demand for goods A and B is a positive value, this
means the two goods are:
a. a. substitutes.
b. b. complements.
c. c. inferior.
d. d. normal.
44.
Question 062 7
(Points: 1.34)
Price inelastic supply occurs whenever the elasticity of supply value is:
a. a. negative.
b. b. positive and greater than five.
c. c. positive and greater than one.
d. d. positive and less than one.
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45.
Question 039 7
(Points: 1.34)
When a firm changes its price, the change in total revenue:
a. a. depends on the elasticity of demand value and the direction of
the price change.
b. b. is zero.
c. c. is positive.
d. d. is negative.
46.
Question 054 5
(Points: 1.34)
In a city with rent controls on apartments:
a. a. there will be a surplus of apartments on the market.
b. b. if a black market rent is charged, it will be higher than an
equilibrium rent.
c. c. there will be a shortage of condominiums on the market.
d. d. everyone who wants to rent an apartment will be able to.
47.
Question 051 6
(Points: 1.34)
A public good differs from a private good in that:
a. a. only the government can produce public goods.
b. b. if a person does not pay for the good, they can be kept from enjoying
the benefits of a public good.
c. c. if you consume a unit of a public good, there is one less for everyone.
d. d. no one can be kept from enjoying the benefits of a public good
and one person using it does not reduce the amount available for
everyone else.
48.
Question 029 7
(Points: 1.34)
A type of demand curve that does not have the same price elasticity of demand
value at every point is:
a. a. a vertical demand.
b. b. a down sloping straight line demand.
c. c. a horizontal demand.
d. d. all of these.
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49.
Question 065 3
(Points: 1.34)
If the best lawyer in town is also the best at operating a word processor, then this
person should:
a. a. split their time evenly between being a lawyer and a word processor.
b. b. specialize in being a lawyer because its opportunity cost is
lower.
c. c. flip a coin, there is no clear choice between the two careers.
d. d. specialize in being a work processor because it is a job that uses
modern technology.
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50.
Question 064 4
(Points: 1.34)
When a strike at a major local employer occurs, the demand for television sets in
that local market will:
a. a. likely remain unchanged.
b. b. increase because the striking workers need something to do to pass
the time.
c. c. decreases because buyers incomes have decreased.
d. d. double because of unemployment benefits and strike pay.
51.
Question 029 2
(Points: 1.34)
The government makes all economic decisions in a:
a. a. market economy.
b. b. mixed economy.
c. c. centrally planned economy.
d. d. free economy.
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52.
Question 002 3
(Points: 1.34)
Scarcity:
a. a. requires tradeoffs.
b. b. is due to limited wants.
c. c. is due to unlimited resources.
d. d. all of these.
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53.
Question 047 7
(Points: 1.34)
If at a price of $50, 20 units are sold while at a price of $40, 25 units are sold, then
the elasticity of demand for this good is:
a. a. elastic.
b. b. inelastic.
c. c. perfectly inelastic.
d. d. unit elastic.
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54.
Question 052 5
(Points: 1.34)
A price floor invariably creates a surplus of the commodity affected, which means:
a. a. the commodity is no longer scarce.
b. b. at the price floor, quantity demanded is greater than quantity
supplied.
c. c. at the price floor, quantity supplied is greater than quantity
demanded.
d. d. the good under the price floor has become more plentiful.
55.
Question 060 4
(Points: 1.34)
Refer to Figure 3.1 for the questions below.
Figure 3.1
In figure 3.1, if demand increases and supply decreases, then equilibrium:
a. a. price rises.
b. b. price falls.
c. c. quantity falls.
d. d. quantity rises.
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56.
Question 034 6
(Points: 1.34)
If the paint on your house was eaten away by the fumes from a factory nearby and
you hired a lawyer to sue the polluting firm, what you have to pay your lawyer would
be:
a. a. external costs.
b. b. transaction costs.
c. c. marginal benefits.
d. d. social costs of the pollution.
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57.
Question 025 6
(Points: 1.34)
When there is a positive externality in a free market, there is:
a. a. too much of the good produced and consumed.
b. b. too little of the good produced and consumed.
c. c. the right amount of the good produced and consumed.
d. d. an economically efficient level of production and consumption.
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58.
Question 016 2
(Points: 1.34)
Which of the following does economics promote as the way to make the best
decision?
a. a. Continue an enjoyable activity until you get tired of it.
b. b. Continue an enjoyable activity until it is no longer enjoyable.
c. c. Continue an enjoyable activity until you cannot afford anymore of it.
d. d. Continue an enjoyable activity to where it marginal benefit
equals its marginal cost.
59.
Question 024 3
(Points: 1.34)
The production possibilities frontier model can be applied to:
a. a. a firm.
b. b. an individual.
c. c. the whole economy
d. d. all of these.
60.
Question 017 3
(Points: 1.34)
If your tuition for this term is $5,000, room and board this term is $3,000, books this
term are $500, and you can only work part-time while in school and earn $4,000
rather than $10,000 during the term, then your opportunity costs of college this
term is:
a. a. $5,500.
b. b. $8,500.
c. c. $11,500.
d. d. $14,500.
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61.
Question 032 2
(Points: 1.34)
Which of the following contributed to the downfall of the Soviet Union in 1991?
a. a. Public dissatisfaction with low living standards and political repression.
b. b. An inability to produce low-cost consumer goods that households
wanted.
c. c. A lack of high-quality goods and services.
d. d. All of these reasons contributed to the downfall of the Soviet
Union.
62.
Question 048 7
(Points: 1.34)
Cross-price elasticity of demand is calculated as the:
a. a. percentage change in quantity demanded divided by percentage
change in price of a good.
b. b. percentage change in quantity demanded of one good divided
by percentage change in price of a different good.
c. c. percentage change in quantity sold divided by percentage change in
buyers' incomes.
d. d. percentage change in quantity supplied divided by percentage change
in price of a good.
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63.
Question 024 2
(Points: 1.34)
Which of the following is correct?
a. a. Anytime you have to decide which action to take you are facing an
economic tradeoff.
b. b. Economics is a social science that studies the tradeoffs we are forced
to make because of scarcity.
c. c. Every individual, no matter how rich or poor, is faced with making
tradeoffs.
d. d. All of these are correct.
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64.
Question 033 2
(Points: 1.34)
Who ultimately decides what goods and services will be produced in a market
economy?
a. a. Producing firms
b. b. The ruling political party
c. c. Consumers
d. d. Workers
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65.
Question 031 6
(Points: 1.34)
The level of pollution in reality should be:
a. a. reduced completely to zero because by definition, it is a negative
external effect.
b. b. ignored because it has always been present since the beginning of
history.
c. c. reduced to the point where the marginal benefit is equal to the
marginal cost to society.
d. d. left alone because the optimal level is controversial.
66.
Question 012 4
(Points: 1.34)
Which of the following phrases means everything else held constant?
a. a. Post hoc, proctor hoc
b. b. Carpe diem
c. c. Ceterius paribus
d. d. Caveat emptor
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67.
Question 055 4
(Points: 1.34)
Refer to Figure 3.1 for the questions below.
Figure 3.1
In figure 3.1, if demand decreases, then equilibrium:
a. a. price and quantity rise.
b. b. price and quantity fall.
c. c. price rises and quantity falls.
d. d. price falls and quantity rises.
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68.
Question 021 5
(Points: 1.34)
If the marginal benefit to consumers is greater than the marginal cost to producers,
more should be produced because:
a. a. consumers would be willing to purchase the extra output and
producers would be willing to supply the units and both consumers
and producers would be better off.
b. b. consumers can take advantage of sellers.
c. c. sellers can take advantage of buyers.
d. d. consumers and sellers would gain the same amount from further
exchange.
69.
Question 006 4
(Points: 1.34)
The substitution effect results in:
a. a. sellers substituting less expensive inputs in production.
b. b. buyers buying more of a good because their purchasing power has
increased.
c. c. sellers producing products when input prices fall.
d. d. buyers buying more of a relatively cheaper good.
70.
Question 053 2
(Points: 1.34)
Human capital is:
a. a. the money people have.
b. b. the machines workers have to work with.
c. c. the accumulated skills and training workers have.
d. d. the wealth people have.
71.
Question 019 2
(Points: 1.34)
What forces humans to make tradeoffs?
a. a. Scarcity
b. b. Confusion
c. c. Risk
d. d. Productive inefficiency
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72.
Question 059 4
(Points: 1.34)
Refer to Figure 3.1 for the questions below.
Figure 3.1
In figure 3.1, if demand and supply increase, then equilibrium:
a. a. price rises.
b. b. price falls.
c. c. quantity falls.
d. d. quantity rises.
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73.
Question 011 2
(Points: 1.34)
Which of the following do economists assume rational people do?
a. a. Use all available information as they act to achieve their goals.
b. b. Respond to economic incentives.
c. c. Weigh the benefits and costs of all possible alternative actions.
d. d. All of these.
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74.
Question 002 6
(Points: 1.34)
In its first attempts to control pollution, Congress:
a. a. gave utility companies allowances to produce a target rate of
pollution.
b. b. specified the total levels of pollution to reach.
c. c. specified the methods used to reduce pollution.
d. d. allowed firms to prove they were small enough to not have to reduce
pollution.
75.
Question 017 4
(Points: 1.34)
What would explain the price of gasoline being much higher in 2005 than it was in
2004, yet roughly the same amount of gasoline was bought in both years?
a. a. The demand for gasoline does not follow the law of demand.
b. b. The supply of gasoline stayed constant in 2004 and 2005.
c. c. The demand for gasoline increased from 2004 to 2005.
d. d. The demand for gasoline decreased from 2004 to 2005.
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