FPC1 EXAM QUESTIONS WITH 100% CORRECT ANSWERS

FPC1 EXAM QUESTIONS WITH 100% CORRECT ANSWERS 1) A change in the demand for apples could result from any of the following EXCEPT - Answer-C) a change in the price of an apple. 2) If the demand for used cars decreases after the price of a new car falls, used cars and new cars are - Answer-substitute goods. 3) Other things remaining the same, the quantity of a good or service demanded will increase if the price of the good or service - Answer-B) falls. 4) Which of the following increases the supply of a product? - Answer-A) lower prices for the resources used to produce the product 5) Which of the following increases the supply of gasoline? - Answer-C) a decrease in the price of a resource used to produce gasoline, such as crude oil 6) Changes in which of the following factors do NOT shift the demand curve? - Answer-A) the price of the good 7) Assume a market is in equilibrium. There is an increase in supply, but no change in demand As a result the equilibrium price ________, and the equilibrium quantity ________. - Answer-E) falls; increases 8) The phrase "a change in demand" most directly implies a - Answer-D) shift of the demand curve. 9) Assume a competitive market is in equilibrium. There is an increase in demand, but no change in supply. As a result the equilibrium price ________, and the equilibrium quantity ________. - Answer-A) rises; increases 10) Which of the following would increase the equilibrium price of bananas? (Choose 2) - Answer-a hurricane wiped out the banana crop in South America., medical research that demonstrates the cancer fighting ability of bananas. Price- 10, 9 Quantity demanded- 100, 125 1) The data in the table above give two points on the demand curve for pizza. Using the midpoint method, when the price of a pizza falls from $10 to $9, what is the percentage change in price? - Answer-C) 10.5 percent Price- 10, 9 Quantity demanded- 100, 125 2) The data in the table above give two points on the demand curve for pizza. Using the midpoint method, when the price of a pizza falls from $10 to $9, what is the percentage change in the quantity demanded? - Answer-A) 22.2 percent Price- 10, 9 Quantity demanded- 100, 125 3) The data in the table above give two points on the demand curve for pizza. Using the midpoint method, when the price of a pizza falls from $10 to $9, what is the price elasticity of demand? - Answer-D) 2.1 Price- $8, $7 Quantity demand- 10, 14 4) In the figure above, using the midpoint method, the price elasticity of demand when the price falls from $8 to $7 is equal to - Answer-A) 2.50. 5) If a firm supplies 200 units at a price of $50 and 100 units at a price of $40, using the midpoint method, what is the price elasticity of supply? - Answer-C) 3.00 6) Consumer surplus is equal to - Answer-A) marginal benefit minus price summed over the quantity consumed. 7) In the summer of 2008, the price of gasoline increased greatly. If the demand curve for gasoline did not shift, which of the following occurred? - Answer-C) Consumer surplus decreased. 8) Mary is willing to pay $50 for a Christmas tree, John is willing to pay $45 and Jeff is willing to pay $40. The price of a tree is $40. The total consumer surplus for Mary, John and Jeff taken together is - Answer-A) $15. 10) Producer surplus is the ________ summed over the quantity produced. - Answer-A) price of the good minus the marginal cost of producing it 11) Producer surplus - Answer-A) increases if market price rises and the supply curve does not shift. 12) Which of the following influence the price elasticity of demand? (Choose two) - Answer-availability of substitutes, proportion of income spent on good 1) The production possibilities frontier illustrates the - Answer-A) maximum combinations of goods and services that can be produced. 2) The production possibilities frontier is the - Answer-C) boundary between the combinations of goods and services that can be produced and the combinations that cannot be produced, given the available factors of production and the state of technology. 3) If a society moves from a period of time with significant unemployment to a time with full employment, its production possibilities frontier will - Answer-D) not shift because the society moves from a point inside the frontier to a point on the frontier. 4) When production efficiency does NOT occur, i. an economy is producing at a point within its PPF. ii. there are unemployed resources. ative efficiency can not occur. - Answer-E) i, ii, and iii 5) If there is unemployment in an economy, then the - Answer-D) economy is producing at a point inside the production possibilities frontier. 6) A country produces only apples and bananas. Moving from point A to point B along its production possibilities frontier, 5 apples are forgone and 4 bananas are gained. What is the opportunity cost of a banana? - Answer-B) 5/4 of an apple 7) When drawing a production possibilities frontier, which of the following is held constant? - Answer-B) the available factors of production and the state of technology 9) The opportunity cost of producing one more unit of a good is calculated by dividing the - Answer-C) decrease in the quantity of the other good by the increase in the quantity of the good whose opportunity cost we're calculating. 8) When an economy is producing at a point on its PPF (choose 2) - Answer-C) producing a different output combination will require a trade-off., D) technology is being used efficiently.