It’s good review guide
ECON 103 (Principles of Microeconomics) Donald J. Boudreaux
Fall 2013 Final Exam
INSTRUCTIONS: Write clearly your name and G-number clearly on your scantron sheet. Then on your scantron sheet, mark the correct answer for each of the 50 questions. Each question has only one correct answer. Turn in only your scantron sheet. Good luck and have a great holiday and semester break!
1. If, ceteris paribus, non-Americans come to find America to be a less attractive place in which to invest, the U.S. capital-account surplus will a. rise b) fall c. be unaffected
2. If, ceteris paribus, non-Americans come to find America to be a less attractive place in which to invest, the U.S. current-account deficit will a. rise b. fall E. be unaffected
3. A rise in the wages of steel-factory workers will cause the price of steel to 2. rise b. fall c. be unaffected
4. A rise in the wages of steel-factory workers will cause the price of refrigerators made with steel to (a. rise b. fall c. be unaffected
5. A rise in the wages of steel-factory workers will cause the price of refrigerators made, not with steel, but with aluminum to
a. rise b. fall @be unaffected
6. If in 2014 France will have a current-account surplus of $30.7762 billion, then in 2014 France will have a capital-account a deficit of $30.7762 billion. b. surplus of $30.7762 billion. C. surplus of at least $30.7762 billion (but possibly higher) d. deficit of at least $30.7762 billion (but possibly higher) We also discuss several other topics like cwu password reset
7. For an ordinary American consumer, which of the following goods is likely to have the highest elasticity of demand? (a) a package of chewing gum
b. a brand-new Mercedes-Benz E-class automobile
8. Ceteris paribus, which of the following situations will not result in a rise in the price of dog food? (Assume that there is no government-imposed ceiling or floor on the price of dog food.) a. the price of dog food currently is below its equilibrium level b. the demand for dog food rises © the supply of dog food falls d. dog food is a normal good, and consumers' incomes fall
9. The "amount-consumers-actually-get" curve is shaped like a.
10. According to now-widely accepted (by economists) interpretation of the Equation of Exchange, inflation is the result of a. higher output prices b. higher input prices (that is, higher costs of production) c. higher taxes d. a decrease in the money supply le an increase in the money supply Don't forget about the age old question of epsy uiuc
11. Which of the following - holding all else unchanged - will cause the equilibrium price of peanuts to fall? a. a rise in the wages paid to workers who harvest peanuts b. a fall in the wages paid to workers who harvest peanuts c. a rise in the demand for peanuts da fall in the quantity demand of peanuts If you want to learn more check out math 2425
We also discuss several other topics like xxksx
12. Which of the following changes in the supply or in the demand for cloth upholstered furniture will cause the price of leather-upholstered furniture to fall? (Assume that these two types of furniture are substitutes for each other.)
Montecata ANULATOR MOORE
13. Many economists believe that owners of textile mills in the American northeast in the 1930s lobbied hard for a nationally legislated "minimum-wage" because these owners a. wanted to take away from textile mills in the American south the chief cost advantage that the southern mills had over northern mills. b. wanted to force themselves and their fellow owners of northern mills to treat their northern workers better. c. cared deeply for poor southern workers. d. It's a myth: owners of textile mills in the American northeast opposed a nationally legislated minimum-wage.
14. True or false: Goods M and N are economic complements to each other if, as the price of N rises, the demand for M falls. a. true 6. false
15. If R is a normal good, a. a rise in consumer income will reduce the demand for R b. a fall in consumer income will reduce the demand for R c. a rise in consumer income will reduce the supply of R d. a fall in consumer income will reduce the supply of R Don't forget about the age old question of blackboard ole miss
16. Economists' case for a policy of free trade depends upon which of the following statements being true? a. No worker ever loses his or her current job because of an increase in imports. b. Free trade generates high and rising current-account surpluses in the domestic economy. c. Free trade generates both current-account and capital-account balances of $0, year in and year out. d. None of the above.
17. Which of the following graphs depicts a decrease in supply?,
18. The body of economic thought about international trade that was challenged by Adam Smith in his 1776 book An Inquiry Into the Nature and Causes of the Wealth of Nations is known today as a. public-choice economics b. Marxism © mercantilism d. free-tradeism We also discuss several other topics like psychology exam 2
19. Among the beliefs of those persons who subscribed to the economic doctrine of
(insert here your answer to question #18) is that a. a country should try to export as many goods and services as possible and import as few goods and services as possible b. a country should try to import as many goods and services as possible and export as few goods and services as possible c. the best policy is one of free trade d. none of the above
20. According to Adam Smith, wealth is a. gold and silver in private hands b. gold and silver in your government's treasury c. a powerful government with an invincible army and an opulent court d. goods and services widely available to the masses of ordinary men and women
21. According to economists, among the potential downsides - harms - of rent control is (are) a. a shortage of rental units b. a decline in the quality of rental units c. greater discrimination (racial, sexual preferences, etc.) by landlords in choosing tenants d all of the above e. none of the above
22. If greedy speculators come to believe that supplies of corn over the next month will fall dramatically to unusually low levels, these speculators will - if they are not prohibited by government from doing so – take actions today that a. cause the price of corn today to fall lower, and the price of corn next month to rise higher, than these prices would if speculators did nothing b. cause the price of corn today and next month to fall lower than these prices would if speculators did nothing 50 C. cause the price of corn today to rise higher, and the price of corn next month to fall lower, than these prices would if speculators did nothing d. cause the price of corn today and next month to rise higher than these prices would if speculators did nothing
23. When the Equation of Exchange is used to explain the relationship between money-supply growth and inflation, the two variables that are normally held constant are a. V & Q b. M & V c. M &P d. V&P
24. The law of one price a. means that it's against the law for sellers to charge more than one price for each kind of good or service that is sold b. predicts that no good or service will ever sell at a different prices in different places (e. predicts that, if good His selling for $1 on M St. in Washington and for $100 on K St.
in Washington, that price difference will not last; the price of H sold on M St. will rise and the price of H sold on K St. will fall until the two prices are (at least close to being) the same as each other. d. works only because government pays the salary of people hired to put the law into effect.
25. According to economic analysis, a potential downside of a legislated minimum wage is that it a. causes higher unemployment among unskilled workers b. encourages racial (and other forms of socially inappropriate) discrimination in hiring C. causes employers to work their low-wage workers harder Cd. causes all of the above (a, b, & c).
e. causes none of the above
26. If the price of tomatoes falls, then ceteris paribus the price that consumers pay for tomato soup will a. rise (bfall
c. be unaffected
27. If the price of tomato soup falls, then the demand for lentil soup - if lentil soup is an economic substitute for tomato soup - will a. rise bei fall c. be unaffected
28. If the demand for lentil soup falls, the price of lentil soup will a. rise b. fall c. be unaffected
29. If the price of lentil soup rises, and saltine crackers are an economic complement to lentil soup, then this rise in the price of lentil soup will cause the price of saltine crackers to a. rise (b) fall
c. be unaffected
30. If the demand for saltine crackers falls, then the demand for whole-wheat crackers (a substitute good for saltine crackers) will drise b. fall c. be unaffected
31. If the price of whole-wheat crackers falls, then the demand for whole-wheat crackers will a rise b. fall c. be unaffected
32. In 2013, Angela's annual income is $10,000; Bettina's annual income is $100,000, and Carol's annual income is $1,000,000. With a proportional (or "flat") tax on all income, d. Angela, Bettina, and Carol will each pay the same number of dollars in taxes. b) Angela will pay, in taxes, fewer dollars than will Bettina, and Bettina will pay, in taxes, fewer dollars than will Carol c. Angela will pay, in taxes, more dollars than will Bettina, and Bettina will pay, in taxes, more dollars than will Carol
d. Although Carol will pay more dollars in taxes than will either Angela or Bettina, the percent of her income that Carol will pay in taxes will be less than the percent of their incomes paid in taxes by either Angela or Bettina
33. Referring to question #32 for information on annual income in 2012 of Angela, Bettina, and Carol, under which of the following income-tax regimes will Carol pay a higher percent of her total income in taxes than will either Angela or Bettina? a. proportional B. progressive C. regressive d. A Condorcet tax system
34. Which of the following results of a rise in the average rate of income taxation, from 45 percent to 55 percent, is consistent with Laffer-curve analysis? a. government's income-tax revenue falls b. government's income-tax revenue rises c. taxpayers have more incentive to avoid and to evade income taxation d) all of the above
35. Which of the following events is an instance of the same phenomenon that underlies the Laffer Curve? a. when the supply of corn falls, ceteris paribus, the price of corn rises b. when foreigners earn dollars selling goods to Americans, foreigners eventually spend or invest these dollars in America c. when trade is made freer, producers in each country specializes more intensely in producing those goods and services for which each of them has a comparative advantage d. the introduction of an inexpensive and widely available birth-control pill was followed by an increase in the absolute number of unplanned pregnancies.
36. Among the implications of the fact that tastes are subjective is (a! Rachel's inability to know if Seth is making a bad choice for himself when he chooses to smoke
cigarettes b. Seth's inability to know if he himself is making a bad choice for himself when he chooses to smoke cigarettes c. Seth's inability to learn that smoking is bad for his health d. the inability of Seth's tastes and preferences to change
37. Which group below will most likely benefit over the long-run from rent control imposed in the city of Washington, DC? a. landlords in Washington, DC b. future would-be renters in Washington, DC
landlords in the DC suburbs without rent control d. renters in the DC suburbs without rent control
38. Which of the following four economic propositions most directly and plausibly - at least according to economists - best explains the fact that the U.S. government has in place several policies that protects American corn farmers from suffering if the world price of corn falls? a. the principle of comparative advantage b. the real-cash-balance effect
the special-interest-group effect d. the concept of subjectivism
39. Which of the following changes will not cause America's current-account deficit to increase? a. Non-Americans buy more vacations to Los Angeles, Chicago, and Disney World. b. Foreigners build more factories in North Carolina and North Dakota. c. Foreigners put more trust in the U.S. dollar and, as a result, hold larger amounts of dollars in their portfolios d. Foreigners, impressed by the rise in the price of stocks traded on the New York Stock Exchange, buy greater amounts of U.S. corporate stocks.
40. You are an apple producer interested only in making as much profit as possible in the apple business. Pears and apples are substitute goods for each other. Which of the following events do you not want to occur? a. The government imposes a price floor on the market for pears. b. The government imposes a price ceiling on the market for pears. c. A terrorist destroys the world's entire crop of pears. d. The supply of pears increases.
41. Energizer lowered the price it charges for its batteries. The old price for a pair of AA size batteries was $3.00. At that price, Energizer sold 10,000 pairs each week. At the new price of $2.00 per pair, Energizer sells 20,000 pairs each week. Demand for Energizer's AA-size batteries (over the price range of $3.00 and $2.00) is a. elastic b. inelastic c. unitarily elastic d. impossible to tell
42. Refer to question #41 (above). This price cut by Energizer will cause the total revenue it earns on its battery sales to (a rise b. fall c. No way tell from the information given.
43. If the State of Virginia imposes a per-unit excise tax on Christmas trees sold to consumers (with Christmas-tree sellers being made legally responsible for paying the tax to the government), then the: a. demand for Christmas trees will fall such that the vertical distance between the pre-tax demand curve for Christmas trees and the demand curve for Christmas trees with the tax is equal to the dollar amount of the tax b. demand for Christmas trees will rise such that the vertical distance between the pre-tax demand curve for Christmas trees and the demand curve for Christmas trees with the tax is equal to the dollar amount of the tax c. supply of Christmas trees will fall such that the vertical distance between the pre-tax supply curve for Christmas trees and the supply curve for Christmas trees with the tax is equal to the dollar amount of the tax d. supply of Christmas trees will rise such that the vertical distance between the pre-tax supply curve for Christmas trees and the supply curve for Christmas trees with the tax is equal to the dollar amount of the tax
means that some of the positions endorsed by a victorious candidate in democratic political election are likely opposed by a majority of the voters who voted for that candidate. a. special-interest-group effect b. rent-seeking effect c. rational-ignorance effect (d. bundling effect
45. Which of the following graphs likely supplies the best description of what happened in the market for plywood in New Orleans immediately after that city was hit in 2005 by hurricane Katrina?
46. Yesterday Oliver expressed his belief that "Since Governor Willynilly was sworn into office last January the unemployment rate in our state has steadily risen. Therefore, we can blame Gov. Willynilly's for bringing about this unfortunate outcome." Oliver here commits the a. fallacy of composition b. ad hominem fallacy c. naturalistic fallacy a. post-hoc, ergo propter hoc ("post-hoc") fallacy
47. Ceteris paribus, a decrease in the supply of tin will cause the price of aluminum - which is a substitute for tin - to @rise b. fall c. impossible to tell
48. If the Federal Reserve (the U.S. central bank that controls the supply of U.S. dollars) allows the supply of dollars in circulation throughout the economy to increase dramatically, the result will be inflation – that is, the purchasing power of each dollar will fall. Which of the following economic tenets best explains why a greater supply of money will reduce the purchasing power of each unit of that money? a. Arrow's Impossibility Theorem b. the law of comparative advantage © the law of diminishing marginal utility d. the bundling effect
49. What is the optimal tax rate in this "Laffer curve" graph?
- tax rate
a. t1 b.t2 ©t*
d. Not enough information is given to determine the optimal tax rate.
50. If Adam specializes completely at producing kilts, he can produce 400 kilts each month. If instead Adam specializes completely at producing whiskey, he can produce 1,200 bottles of whiskey each month.
If Elinor specializes completely at producing kilts, she can produce 500 kilts each month. If instead Elinor specializes completely at producing whiskey, she can produce 2,000 bottles of whiskey each month.
Which of these two people has a comparative advantage at producing kilts? a. Adam
. Elinor c. neither Adam nor Elinor d. both Adam and Elinor