econ 2020 exam 1 actual test
econ 2020 exam 1 actual test Econ 2020
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This 7 page Study Guide was uploaded by Natalie Partain on Monday May 2, 2016. The Study Guide belongs to Econ 2020 at Auburn University taught by William M. Finck in Spring 2016. Since its upload, it has received 12 views. For similar materials see Principles of Economics: Microeconomics in Business at Auburn University.
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Date Created: 05/02/16
VERSION 1 Name________________ ECON 2020 Exam #1 Directions: Read each question and EVERY possible answer VERY carefully. Select the best answer from the alternatives. Good luck! 1. The condition whereby the economic resourceswe use to produce goods and services are limited relative to our wants for them is referred to by economists as A. a shortage B. scarcity C. inefficiency D. a surplus E. quantity demanded 2. What happens to the market for toilets when the price of an input falls? A. supply decreases B. there is a shortage at the old price C. equilibrium price decreases D. equilibrium quantity decreases E. “I’m Ron Burgundy?” 3. When the price of a good decreases, A. producer surplus decreases and consumer surplus decreases B. producer surplus decreases and consumer surplus increases C. producer surplus increases and consumer surplus increases D. producer surplus increases and consumer surplus decreases E. “I miss being with you. I miss being near you. I miss your laugh. I miss your scent. I miss your musk. When this all gets sorted out, I think you and me should get an apartment together!” Use the following demand and supply schedules to answer question 4. Price $100 $80 $60 $40 $20 $0 Quantity Demanded 0 50 100 150 200 250 Quantity Supplied 60 50 40 30 20 10 4. The equilibrium price in the above market is A. $100 B. $40 C. $80 D. $60 E. $20 1 VERSION 1 Use the following figure to answer questions 5 – 8. P S $30 A D $20 B C $10 D Q 500 800 1100 5. Equilibrium occurs in this market at a price of ____ and quantity of _____ units. A. $10; 1100 B. $30; 500 C. $10; 800 D. $20; 800 E. $20; 1100 6. If the price in this market falls from $30 to $20, the area labeled D represents A. the consumer surplus to new buyers B. the producer surplus to new sellers C. the additional producer surplus to the initial sellers D. the additional consumer surplus to the initial buyers 7. A price floor of $30 in this market would cause a A. surplus of 600 units B. surplus of 300 units C. shortage of 600 units D. shortage of 300 units E. it would have no effect 8. A price ceiling of $30 in this market would cause a A. surplus of 600 units B. surplus of 300 units C. shortage of 600 units D. shortage of 300 units E. it would have no effect 2 VERSION 1 9. In a market where the demand is given by the equation Qd = 462 – 5P and supply is given by the equation Qs = 42 + 2P, find the equilibrium price and equilibrium quantity. A. $72; 102 units B. $140; 322 units C. $168; 378 units D. $60; 162 units E. “I don’t know how to put this, but I’m kind of a big deal. People know me.” Use the following graph of the market for ribs to answer question 10. Price S P1 Pe D D1 Quantity Qe Q1 10. Which of the following could have caused the above change in the market for ribs? A. a fall in the price of a substitute B. a fall in the price of a complement C. a fall in the price of an input D. expectations of lower future prices 11. If last week, the Mexican restaurant Escupimos en su Alimento sold 600 dinners for a price of $16 each, and this week it sells 450 dinners for a price of $14 each, what change most likely occurred in the market for Mexican food? A. an increase in demand B. an increase in supply C. a decrease in demand D. a decrease in supply 12. Wes Mantooth is getting ready for news team poker night at his apartment. If he wasn’t having poker night, then he could have made $750 working the late night news broadcast. He spent $100 on cigars, $20 on snacks, and $150 on drinks. Which of the following statements about his costs is TRUE? A. His explicit costs are $1020 B. His economic costs are $1020 C. His opportunity cost is $1020 D. His implicit cost is $1020 E. B and D only 3 VERSION 1 13. How do expectations of lower future prices affect the market for Sex Panther cologne today? A. demand decreases and supply increases, causing a fall in equilibrium price and an indeterminate change in quantity B. demand increases and supplydecreases, causing a fall in equilibrium price and an indeterminate change in quantity C. demand decreases and supply increases, causing a rise in equilibrium price and an indeterminate change in quantity D. demand increases and supply decreases, causing a rise in equilibrium price and an indeterminate change in quantity E. “Sixty percent of the time, it works every time.” 14. Economics is the social science concerned with how individuals, institutions and society A. make scarce choices under optimal conditions B. make supplemental choices under conditions of scarcity C. make optimal conditions under choices of scarcity D. make optimal choices under conditions of scarcity E. “What? You pooped in the refrigerator? And ate the whole wheel of cheese? How’d you do that? Heck, I’m not even mad -- that’s amazing!” 15. Which of the following is NOT a type of resource? A. marginal B. capital C. labor D. natural 16. A rise in the price of a mystery good caused a change in the market for a bottle of scotch that led to a rise in the price of a bottle of scotch. Which of the following could possibly be the mystery good? A. a rocks glass (a complement) B. a bottle of bourbon (a substitute) C. malted barley (an input) D. A and B only E. B and C only 17. Which of the following statements is FALSE? A. Economists believe that price rationing is the least efficient rationing method. B. Price rationing allows every consumer that would like the good to have it. C. Price rationing allows every consumer willing to pay the equilibrium price to have the good. D. A and B only E. A and C only 4 VERSION 1 18. Milk is an input in ice cream. Ice cream and gelato are substitutes. How would a decrease in the price of milk affect the market for gelato? A. “Milk was a bad choice.” B. the equilibrium price would fall and equilibrium quantity would rise C. the equilibrium price would rise and equilibrium quantity would fall D. the equilibrium price and equilibrium quantity both would fall E. the equilibrium price and equilibrium quantity both would rise Use Brick's supply of hand grenades to answer questions 19 - 20. Willingness - $10 $16 $22 $28 $34 $40 $46 Quantity - 1 2 3 4 5 6 7 19. If the price of a hand grenade is $28, how many will Brick offer for sale? A. 4 B. 6 C. 3 D. 5 E. 7 20. If the price of a hand grenade is $28, what is Brick’s producer surplus? A. “Yeah, there were horses, and a man on fire, and I killed a guy with a trident.” B. $120 C. $34 D. $48 E. $36 21. Which of the following consequences results from an effective price ceiling? A. a surplus B. inefficient allocation among consumers C. a shortage D. A and B only E. B and C only 22. A demand curve represents A. the maximum that consumers are willing to pay for any quantity B. the maximum that producers are willing to accept as payment for any quantity C. the minimum that consumers are willing to pay for any quantity D. the minimum that producers are willing to accept as payment for any quantity 23. Which of the following would NOT increase the demand for blue suits? A. a fall in the price of blue ties (a complement) B. a rise in the price of brown suits (a substitute) C. an increase in consumer income (assume blue suits are normal goods) D. a fall in the price of blue suits E. all of the above WILL increase the demand for blue suits 5 VERSION 1 24. How would a decrease in consumer income affect the market for steakif steak is a normal good? A. demand would decrease, causing equilibrium price to rise and quantity to fall B. demand would increase, causing equilibrium price and quantity both to fall C. demand would increase, causing equilibrium price to fall and quantityto rise D. demand would decrease, causing equilibrium price and quantity both to fall E. demand would increase, causing equilibrium price and quantity both to rise 25. According to the Circular Flow diagram, in product markets ___ demand ___ which are supplied by ____ . A. “I love lamp.” B. households, resources, firms C. firms, resources, households D. firms, goods and services, households E. households, goods and services, firms 6 VERSION 1 7
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