Exam Econ

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1. During a concert at Hammons Center, a large number of patrons decided to leave 20 minutes early to avoid traffic congestion getting away from campus to late evening "study" spots. Due to the large number involved in the exodus, there was considerable congestion in the parking area before the concert was over. This occurrence depicts which of the following? a. Murphy's Law

b. post hoc fallacy
c. law of diminishing returns
* d. fallacy of composition
e. law of increasing costs

2. An editor of a local newspaper called for the government to abolish the minimum wage because it takes advantage of consumers. This is an example of: a. a positive economic statement
b. a pure economic statement
c. an exogenous use of economics
* d. a normative economic statement
e. an abstract economic statement an exogenous use of economics

3. Which of the following is the primary incentive in determining WHAT to produce in a free market price system? Produce those products that a. enjoy maximum freedom from government controls
b. are needed by the masses of people
c. are easiest to produce
* d. will provide maximum profits for the producer

Use the table below to answer question number 4

Alternative | Pizza | Beer |
A | 0 | 100 |
B | 10 | 95 |
C | 20 | 80 |
D | 30 | 60 |
E | 40 | 35 |
F | 50 | 0 |

4. The opportunity cost of each of the 11th through l9th units of pizza is approximately: a. 10 units of beer
* b. 1.5 units of beer
c. 2 units of beer
d. 80 units of beer
e. none of the above

5. Assuming an economy to be operating at a point inside the production possibilities line, one may conclude that: a. the economy is at full employment
b. maximum output is now achieved
* c. unemployment or underemployment exists
d. the economy is of a command type

6. The law of increasing opportunity costs states that:
a. if the prices of all the resources devoted to the production of goods increase, the cost of producing any particular good will increase at the same rate b. if the sum of the costs of producing a particular good rises by a specified percent, the price of that good must rise by a greater relative amount c. the sum of the costs of producing a particular good cannot rise above the current market price of that good * d. if society wants to produce more of a particular good, it must sacrifice larger and larger amounts of other goods to do so

7. If the price of product L increases, the demand curve for a close substitute product M will: a. remain unchanged
* b. shift to the right
c. shift to the left
d. none of the above

8. Other things being unchanged, a decrease in the supply of X might be caused by: a. an improvement in the technology for producing X
b. an increase in the number of firms producing X
c. a decline in the price of the basic raw material used in producing X d. a government subsidy per unit of output, paid to firms producing X * e. an increase in the wages paid to laborers employed in the production of X

9. The demand for parking spaces on this campus is very high. If we were to raise the price of a parking sticker, we would decrease the demand. This statement: a. confuses a change in quantity demanded with a movement along the demand curve b. is correct as stated

c. confuses the determinants of demand with the determinants of supply * d. confuses a change in quantity demanded with a change in demand

10. With an increase in profits in a particular industry, we might expect a. firms to leave the industry
b. firms to produce less
* c. firms to enter the industry
d. people to buy less
e. profits don't have anything to do with what firms do

Use the graph below to answer question number 11

11. Using the graph above, a price of $1.00 per unit will result in: * a. a shortage of 50 units
b. a surplus of 80 units
c. a shortage of 80 units
d. a surplus of 50 units
e. impossible to...
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