Part I: Multiple Choice Questions: Circle the letter corresponding to the correct answer to each question.
1.In practice, the term “centrally planned economy” refers to an economy in which
a.The government makes all production and consumption decisions
b.The mix of market and command principles is weighted towards he latter
c.All commodities are rationed
d.The military is in control of the government
e.Economic decision are made in the geographic center of the country
2.Suppose Andrea has a job that pays her $25,000 per year (after taxes). She is considering quitting her job and going to university full time for four years. Tuition fees and books will cost $3,000 per year. Living expense will cost $5,000 per year. What is the opportunity cost of Andreas’s university degree?
a.$100,000
b.$112,000
c.$120,000
d.$132,000
e.Zero
3.A positive statement is a statement about
a.what is, was, or will be
b.what is and what should be
c.what should be but is not
d.what is desirable
e.non-negative numbers
4.A normative statement
a.can be derived logically from facts
b.concerns what is provable
c.is a statement which is empirically testable
d.is one that involves a value judgment
e.has no place in the study and practice of economics
5.Variables
a.outline the conditions under which the theory applies
b.explain the relationship among hypotheses
c.are magnitudes that can take on different possible values
d.are deduced from the assumptions
e.provide an explanation of the variability of economic data
6.The slope of a horizontal line which intersects the Y axis is
a.positive
b.zero
c.increasing
d.decreasing
e.negative
7.Of the following, which is the best definition of economics?
a.a study of how to plan an economy
b.a study of how to best help the poor
c.an inquiry into why resource are scarce
d.a study of the allocation of scarce resources among alternative uses
e.a study of how to distribute income as equally as possible.
8.A basic underlying point in economics is that
a.people have unlimited wants in the face of limited resources
b.there are unlimited resources
c.our country is rich; we just don’t realize it
d.people have limited wants in the face to limited resources
e.government should never interfere in the workings of a market economy
9. Because of scarcity, individuals are compelled to
a.make choices among alternatives.
b.use resources inefficiently
c.sacrifice production but not consumption
d.improve distribution but not production
e.improve production but not distribution
10.The opportunity cost of going to university for four years is
a.equal to the wage rate a person will earn after graduation
b.the least valued alternative one forfeits to go to university
c.the cost of tuition and books and four years of lost wages from employment
d.the cost of tuition, residence fees and books
e.zero
11.An economic system that relies primarily upon custom and habit in economic decision making is a
a.market system
b.traditional system
c.command system
d.mixed system
12.In the Canadian economy, the majority of choices on how resources are allocated are made by
a.consumers and firms through the price system
b.the various levels of government
c.negotiation between unions and firms
d.business firms only
e.legal contract
17.If tastes change so that a particular commodity is now considered more appealing, then this leads to
a.a shift in the demand curve to the right
b.a shift in the demand curve to the left
c.a movement down the demand curve
d.a movement up the demand curve
e.no change in the demand curve
18.All of the following are likely to cause a change in demand for a given commodity EXCEPT
a.A change in average household income
b.A change in the distribution of income
c.A change in population
d.A change in tastes in favor of the commodity
e.A change in the price of the commodity
19.Ceteris paribus means
a)other things being equal
b)and so forth
c)knowledge gained before the study of evidence is made
d)variables that influence other variables within a theory but that themselves are determined by factors outside the theory
e)in a historical context
20.Quantity demanded is
a.the total amount of a commodity that is actually purchased during a given period of time
b.the entire relationship between desired purchases and possible prices
c.the total amount of a commodity that purchasers wish to purchase at a given price during a given period of time
d.the product advertising, and is independent of price
e.the total amount of a commodity that people wish to buy, regardless of price
21.For a given commodity, quantity demanded can be represented by
a.a demand curve
b.a demand schedule
c.a point on a demand curve
d.the money value of the stock of the commodity held by households
e.the price on the vertical axis
22.To say that the demand curve for movies is negatively sloped means that
a.less quantity will be demanded at lower prices
b.more quantity will be demanded as color TV sets become more expensive.
c.less quantity will be demanded at higher prices
d.less quantity will be demanded as movies become poorer in quantity
e.less quantity will be demanded at the same price
23.Supply does NOT depend on the
a.level of technology
b.number of suppliers in the industry
c.goals of the firm
d.cost of factors of production
e.motivation of consumers
24. Quantity supplied is the amount of a commodity that
a.producers wish to sell at a given price during a given period of time
b.producers actually sell during given period of time at a given price
c.households wish producers to sell during a given period of time at a given price
d.is exchanged between producers and consumers at all possible prices
25.To say the supply curve is positively sloped means that
a.as price goes up, quantity supplied will decrease
b.consumers will want to buy less at higher prices
c.quantity supplied is greater at higher than lower prices
d.if the costs of production increase, the quantity supplied will have to increase also.
26.An equilibrium price is
a.the market-clearing price
b.the price at which quantity demanded of the commodity is equal to the quantity supplied
c.is reached in the marketplace though the interaction of the forces of demand and supply
d.the one toward which the price will tend in a free market
e.all of the above
For problems 23 - 25
PriceQuantity SuppliedQuantity Demand
$10400700
$15500650
$20600600
$25700550
$30800500
23.In the table above, the equilibrium price for umbrellas is _______
a.$10
b.$15
c.$20
d.$25
e.$30
24. In the table above, what number of umbrellas would actually be purchased if the price were $10?
a.400
b.500
c.550
d.650
e.700
25. In the table above, at a price of _________ there would be an excess _________ of umbrellas.
a.$10; supply
b.$20; supply
c.$10; demand
d.$30; demand
e.$20; demand
For problems 26 - 27
P
S
P2 ---
P1 ---
P3 ---
D
Q
26.In the figure above, a price at which this good would be in surplus is
a.P1
b.P2
c.P3
d.Both P1 and P3
27.In the figure above, the price at which there would be a shortage of this good is
a.P1
b.P2
c.P3
d.Both P1 and P3
28.The formula for the own price elasticity of demand for a commodity can be written as which of the following?
a.change in quantity demanded
change in price
b. change in price
change in quantity demanded
c. percentage change in quantity demanded
percentage change in price
d. percentage change in price .
percentage change in quantity demanded
e.none of the above
29.When the percentage change in quantity demanded resulting from a price change is greater than the percentage change in price, demand is said to be
a.inelastic
b.zero elastic
c.elastic
d.unit elastic
e.perfectly elastic
30. If the price elasticity of demand is 0.5, then
a.a 10 percent increase in price results in a 50 percent reduction in quantity demanded
b.a 10 percent increase in price results in a 5 percent increase in quantity demanded
c.a 10 percent increase in price results in a 5 percent decrease in total revenues.
d.a 10 percent increase in price results in a 5 percent decrease in quantity demanded
e.a 10 percent increase in price results in a 0.5 percent increase in quantity demanded
31. Suppose that the quantity demanded of skipping ropes rises from 1250 to 1750 units when the price falls from $1.25 to $0.75 per unit. The price elasticity of demand for this product is
a.1/3
b.1
c.2/3
d.3/2
e.2
32.The formula for income elasticity of demand may be written as which of the following?
a.change in quantity demanded
change in income
b. change in income .
change in quantity demanded
c. percentage change in quantity demanded
percentage change in income
d. percentage change in income .
percentage change in quantity demanded
e.none of the above
33.If a product’s income elasticity is –1.7, then we can conclude that
a.an increase in income will lead to an increase in demand for the product
b.the product is certainly a necessity
c.the product is normal
d.a decrease in income will lead to an increase in demand for the product
34.For a normal good, the quantity demanded
a.falls when income falls
b.rises when income rises
c.rises when income falls
d.falls when income rises
e.both a and b
35.The formula for the Cross-price elasticity of demand for a community can be written as which of the following?
a.percentage change in quantity demanded of good x
percentage change in price of good x
b. percentage change in price of good x
percentage change in price of good y
c. percentage change in quantity demanded of good x
percentage change in price of good y
d. percentage change in price of good y .
percentage change in quantity demanded of good x
e.None of the above
36.If two goods, X and Y, have a negative cross-elasticity of demand, then we know that
a)they are substitutes
b)they are complements
c)they are both inferior goods
d)they each have a price elasticity greater than one
e)they are both normal goods
37.If two goods, X and Y, have a positive cross-elasticity of demand, then we know that
a)they are both normal goods
b)they are complements
c)they are both inferior goods
d)they each have a price elasticity greater than one
e)they are substitutes
38.The elasticity of supply for a given commodity is calculated as
a) percentage change in quantity supplied
percentage change product price
b. percentage change in quantity supplied
percentage change in input price
c. percentage change in product price
percentage change in quantity supplied
d. percentage change in quantity supplied .
percentage change in average household income
39.The consumers’ burden associated with a sales tax will be least when demand is
a)vertical
b)unitary elastic
c)perfectly inelastic
d)perfectly elastic
40.The imposition of a sales tax usually causes the price to consumers to _________, while the revenue of sellers ______________
a)rise, remains unchanged
b)rise, falls
c)rise, rises
d)fall, remains unchanged
e)fall, falls
2007-02-05 03:42:47 · 2 answers · asked by Neha 1 in Education & Reference ➔ Homework Help
1.In practice, the term “centrally planned economy” refers to an economy in which
a.The government makes all production and consumption decisions
b.The mix of market and command principles is weighted towards he latter
c.All commodities are rationed
d.The military is in control of the government
e.Economic decision are made in the geographic center of the country
2.Suppose Andrea has a job that pays her $25,000 per year (after taxes). She is considering quitting her job and going to university full time for four years. Tuition fees and books will cost $3,000 per year. Living expense will cost $5,000 per year. What is the opportunity cost of Andreas’s university degree?
a.$100,000
b.$112,000
c.$120,000
d.$132,000
e.Zero
3.A positive statement is a statement about
a.what is, was, or will be
b.what is and what should be
c.what should be but is not
d.what is desirable
e.non-negative numbers
2007-02-05 03:44:34 · update #1