WhizKids and members of the Flashnotes Honor Society Exam 1 Question 1 Land used to grow corn could also be used to grow soybeans Which of the following is true when the farmer plants soybeans and the market price of corn rises Answers a The opportunity cost of producing soybeans increases b The opportunity cost of producing corn increases c The opportunity cost of producing soybeans decreases d There will be no change in the opportunity cost of producing soybeans Question 2 Which of the following most clearly distinguishes between positive and normative economics Answers a Positive economics is the study of supply and demand in narrowly defined markets such as the market for shoes normative economics focuses on highly aggregated markets such as the market for all consumer products b Positive economics is the study of the facts normative economics is concerned with what ought to be c Positive economics is the study of goods that are scarce normative economics is concerned with goods that are not scarce d Positive economics is the study of what ought to be normative economics is concerned with the facts 10 out of 10 points 10 out of 10 points Question 3 If there is a decrease in both the supply and demand for a good which of the following will definitely occur Answers 10 out of 10 points a The equilibrium quantity will increase b The price of the good will decrease c The price of the good will increase d The equilibrium quantity will decrease Question 4 High transaction costs will tend to 10 out of 10 points An increase in the expected future price of a good will cause the current demand for the good to Answers a 10 out of 10 points Answers a increase the number of mutually beneficial exchanges that occur b allow easier specialization according to the law of comparative advantage c increase the value created by exchanges in an economy d reduce the number of mutually beneficial exchanges that occur Question 5 increase which is a shift to the right of the demand curve b decrease which is a shift to the left of the demand curve c decrease which is a shift to the right of the demand curve d increase which is a shift to the left of the demand curve a not change the demand for college football tickets b decrease the demand for professional football games c increase the demand for college football tickets d decrease the demand for college football tickets Question 7 Ceteris paribus an increase in the price of a good will cause the Answers a quantity supplied of the good to decrease b supply of the good to decrease c consumer surplus derived from the good to decrease d Question 6 In San Francisco tickets for professional and college football games are substitutes An increase in the ticket price for professional football other things being equal will Answers 10 out of 10 points 10 out of 10 points quantity demanded of the good to increase Question 8 Assume that eggnog and cookies are complements If the price of eggnog goes up what happens to the demand for cookies Answers a 10 out of 10 points the shift in demand will depend on the original price of cookies b demand for cookies decreases c demand for cookies remains unchanged d demand for cookies increases Question 9 10 out of 10 points When price is the rationing criterion individuals have a strong incentive to Answers a provide services to others in exchange for income b substitute promises for the consistent delivery of a quality product c avoid exchanges because in every exchange there will be one person who gains and another who loses d ignore the wishes of others when making decisions about how to use their resources Question 10 Other things constant which of the following would most likely cause the supply of garden hoses to decrease Answers a 10 out of 10 points a decrease in the price of grass seed b an increase in the price of plastic used to make garden hoses c a technological advance that lowers the cost of producing garden hoses d the occurrence of a very dry year with little rain Question 11 Which of the following would decrease the supply of sugar Answers a The tariff tax on imported sugar increases 10 out of 10 points Question 12 10 out of 10 points b The price of artificial sweeteners rises dramatically c A technological advance lowers the cost of producing sugar d The demand for sugar increases Which of the following events would decrease producer surplus Answers a Sellers costs stay the same and the price of the good increases b Sellers costs increase and the price of the good stays the same c Sellers costs decrease and the price of the good increases d All of the above are correct a Price will increase and quantity decrease b Price will decrease and quantity increase c Both price and quantity will increase d Nothing e Both price and quantity will decrease Question 13 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 Answers 10 out of 10 points Question 14 Question 15 What do the forces of supply and demand assure Answers a When the supply curve for a good shifts the demand curve for that good shifts in response b Demand curves and supply curves tend to shift to the right as time goes by c The equilibrium price of a good will be rising more often than it will be falling d The price of a good will eventually rise in response to an excess demand for that good 10 out of 10 points Which of the following occurs when a shortage occurs in the market for a good Answers a Quantity supplied exceeds quantity demanded and the price falls which encourages more production and less consumption b Quantity supplied exceeds quantity demanded and the price rises which encourages more production and less consumption c Quantity demanded exceeds quantity supplied and the market mechanism pushes the price down which encourages more production and less consumption d Quantity demanded exceeds quantity supplied and the market mechanism pushes the price up which in turn encourages more production and less consumption 10 out of 10 points 10 out of 10 points Question 16 How do markets coordinate output decisions Answers a They decrease prices when quantity demanded exceeds quantity supplied b They increase prices when there is a shortage c They increase prices when quantity supplied exceeds quantity demanded d They increase prices when there is a surplus Question 17 10 out of 10 points Which of the following is the most
View Full Document
Unlocking...