EXAMINED ECONOMIC 1002 FINAL EXAM

EXAMINED ECONOMIC 1002 FINAL EXAM The law of demand states that: - CORRECT ANSWER -The lower the price, the greater the quantity demanded. Which of the following is TRUE about demand curves? A. Demand curves are negatively sloped. B. Demand curves reflect the law of demand. C.Demand curves are plots of quantities demanded at various prices. - CORRECT ANSWER -All of the answers are correct. (Figure: Willingness to Pay) Refer to the figure. What is the maximum amount that buyers are willing to buy at a price of $45 per book? - CORRECT ANSWER -100 books If Maria is willing to pay $50 for a sweatshirt, how much consumer surplus does she earn if the market price for sweatshirts is $27.50 each? - CORRECT ANSWER -$22.50 Mario buys eight units of good X when his income is $2,000 a month. When his income increases to $2,700 per month, he buys only six units of good X. For Mario, good X is: - CORRECT ANSWER -An inferior good. The quantity supplied of oil is the amount that: - CORRECT ANSWER -producers plan to sell during a given time period at a given price. Weather forecasters predict that a major winter storm will strike your town within the next few days. Which of the following would NOT occur based upon the expected storm? - CORRECT ANSWER -a decrease in the supply of winter clothing The movie trilogy The Lord of the Rings was hugely successful, and, as a result, the demand for fantasy novels, action figures, and online role-playing games surged. The increase in demand can be explained by a(n): - CORRECT ANSWER -change in tastes A change in quantity supplied is reflected by a movement along the same supply curve while a change in supply refers to a shift in the entire supply curve. - CORRECT ANSWER -True Producer surplus can be defined as the revenue producers make from selling goods in a market. - CORRECT ANSWER -False Suppose it is widely believed that the price of flat-screen, high-definition televisions will be lower next year. What will happen as a result of such beliefs? - CORRECT ANSWER -The demand for flat-screen TVs will decrease now. Which of the following statements is TRUE? I. Consumer surplus is the difference between the maximum price a consumer is willing to pay for a good or service and its market price. II. Mr. Bill is willing to pay $10 for two pounds of clay. If the market price per pound of clay is $2.50, his consumer surplus is $7.50. III. Total consumer surplus is represented graphically by the area beneath the demand curve and above the market price. - CORRECT ANSWER -I and III only The quantity of cell phones that firms plan to sell this month depends on all of the following EXCEPT the: - CORRECT ANSWER -All of these choices affect market conditions. Assume that spaghetti is an inferior good for most people. As their incomes increase, all other things held constant, the: - CORRECT ANSWER -demand for spaghetti will decrease shifting the demand curve to the left