ECO 201 Midterm Exam | Questions with Verified Answers

ECO 201 Midterm Exam | Questions with Verified Answers What does it mean if a person makes a "decision at the margin"? a.The person compares additional benefits and additional costs when deciding what to do. b.The person makes a decision based on a condition. c.The person compares marginal benefits and total costs and then decides what to do. d.The person is more likely to say yes than to say no. e.The person weighs the good against the bad and then decides what to do. Which of the following is a microeconomics topic? study of how prices are determined in the computer industry study of unemployment in the economy study of how changes in the nation's money supply affect the nation's output d.a and c e.b and c If variable X goes up as result of variable Y going down, then X and Y are sely related. ively related. endent. tly related. The opportunity cost of attending college is least valued alternative one forfeits to attend college. to the salary one will earn when one graduates from college. money one spends on college tuition, books, and so forth. highest valued alternative one forfeits to attend college. Which of the following is not one of the four broad categories of resources? preneurship al Something that provides utility is called a . . . . e.a and d Scarcity means are greater than the limited resources available to satisfy these wants. are less than the limited resources available to satisfy these wants. rces are infinite. are limited. c and d Produced goods used as inputs for the production of other goods comprise the resource known as al. preneurship. al resources. ces. Economists believe that people's wants are ite. e. ortant because needs are more important than wants. ional. The physical and mental talents people bring to production processes comprise the resource called al. al resources. preneurship. . Which of the following is an example of a positive economic statement? a.The U.S. public should devote more resources to education. b.If you drop a ball from the top of a building, it will fall to the ground. c.The poor should pay lower taxes and the rich should pay higher taxes. d.Soap operas should be taken off television. Opportunity cost is the value of forfeited alternatives. best (or most highly valued) forfeited alternative. c.a free good. chosen alternative. To an economist, utility means: lness. nal. faction. ional. A theory is on the major factors or variables that the theorist believes explain some event. b.a simplified abstract representation of the real world. to understand the real world. d.a and b e.a, b, and c In all cases, positive economics deals with should be. gates or the entire economy. ively small units in the economy. is. According to economists, competition exists because of ity. . alism. ended effects. Amy's opportunity cost of going to the movies is price of the ticket. , if she has a free pass to the movie. price of the ticket plus the value to Amy of what she would have chosen to do with her time had she not chosen to go to the movies. b and c Which of the following is not one of the four broad categories of resources? preneurship al nment Many people buy one newspaper per day, but rarely do they buy two of the same newspapers on the same day. What is the economic justification for this behavior? a.The marginal benefit of purchasing the second newspaper exceeds the marginal cost of purchasing that paper. b.The marginal cost of purchasing the second newspaper exceeds the marginal benefit of purchasing that paper. c.The marginal benefit of purchasing the second newspaper equals the marginal cost of purchasing that paper. of the above is an appropriate economic justification for this behavior. Minerals, animals, water and forests are all considered to be part of the resource category known as al preneurship of the above Saying "the marginal costs are greater than the marginal benefits" is the same as saying total costs are greater than the average benefits. average costs are greater than the average benefits. costs minus the benefits equal the net costs. benefits are greater than the costs. additional costs are greater than the additional benefits. The author of the textbook defines economics as the ce of efficiency. of markets. ce of scarcity. of human activity. Which of the following is a normative macroeconomics statement? a.Ford Motor Company's new advertising campaign ended up hurting General Motors' sales. b.The increase in the nation's money supply helped push the nation's unemployment rate down in the short run. c.The central bank should increase the nation's money supply. d.The local government ought to spend more on recreational facilities. Ceteris paribus means ing economic motives. correct relationship specified. variable too many. other things held constant or nothing else changes. Holding everything else constant, an increase in the price of MP3 players will result in an increase in the supply of MP3 players. a decrease in the quantity of MP3 players supplied. a decrease in the demand for MP3 players. a decrease in the quantity of MP3 players demanded. A supply schedule is a curve that shows the relationship between the price of a product and the quantity of the product supplied. is a table that shows the relationship between the price of a product and the quantity of the product supplied. is a table that shows the relationship between the price of a product and the quantity of the product that producers and consumers are willing to exchange. is the relationship between the supply of a product and the cost of producing the product. Price serves as a ning device. mitter of information. of determining who gets what of the available limited resources and goods. d.a and b of the above How does the increasing use of digital cameras affect the market for traditional camera film? The quantity of traditional camera film demanded increases. The demand curve for traditional camera film shifts to the left. The demand curve for traditional camera film shifts to the right. The quantity of traditional camera film demanded decreases. The supply curve for watches is downward sloping. shows the relationship between the price of watches and the quantity of watches supplied. shows the supply of watches consumers are willing and able to buy at any given price. shows the relationship between the quantity of watches firms are willing and able to supply and the quantity of watches consumers are willing and able to purchase. If the price of smartphones was to increase, then the demand for smartphone apps would increase. the quantity of smartphone apps demanded would decrease. the quantity of smartphone apps demanded would increase. the demand for smartphone apps would decrease. The demand by all the consumers of a given good or service is the ________ for the good or service. law of demand scheduled demand quantity demanded market demand Which of the following is false? a.When the U.S. government imposed price ceilings on gasoline, the result was a surplus of gasoline. b.When the U.S. government imposed price ceilings on gasoline, the result was a shortage of gasoline. c.If a price ceiling is imposed below the equilibrium price in a given market, the result is a shortage in that market. d.First-come-first-served is a commonly used rationing device. If the absolute price of a new car is $40,000 and the relative price of a laptop computer in terms of cars is 1/40 of a car, it follows that the absolute price of the laptop is a.$10,000. b.$1,000. c.$4,000. d.$2,000. e.$1,500. If goods are not rationed according to price, if follows that won't get rationed at all. non-price rationing device will be used to ration the goods. -come-first-served will necessarily be the rationing device used in the market. will be surpluses in the market. of the above The minimum wage is an example of a ceiling. floor. door. wall. A decrease in the price of GPS systems will result in an increase in the supply of GPS systems. a smaller quantity of GPS systems supplied. a larger quantity of GPS systems supplied. a decrease in the demand for GPS systems. If in the market for peaches the supply curve has shifted to the left the supply of peaches has increased. the quantity of peaches supplied has decreased. the quantity of peaches supplied has increased. the supply of peaches has decreased. A change in all of the following variables will change the market demand for a product except tastes. the price of the product. income. population and demographics. What is the difference between an "increase in demand" and an "increase in quantity demanded"? An "increase in demand" is represented by a rightward shift of the demand curve while an "increase in quantity demanded" is represented by a movement along a given demand curve. There is no difference between the two terms; they both refer to a shift of the demand curve. An "increase in demand" is represented by a movement along a given demand curve, while an "increase in quantity demanded" is represented by a rightward shift of the demand curve. There is no difference between the two terms; they both refer to a movement downward along a given demand curve. If the Apple Watch and the Samsung Gear S2 are considered substitutes, then, other things equal, an increase in the price of the Apple Watch will increase the quantity demanded for the Apple Watch. decrease the demand for the Apple Watch. increase the quantity demanded for the Gear S2. increase the demand for the Gear S2. Which of the following will not shift the demand curve for a good? an increase in consumer incomes a decrease in the price of a substitute good an increase in population an increase in the price of the good Let D= demand, S = supply, P = equilibrium price, and Q= equilibrium quantity. What happens in the market for tropical hardwood trees if the governments restrict the amount of forest lands that can be logged? D no change, S decreases, P increases, Q increases. D decreases, S no change, P and Q decrease. S decreases, D no change, P increases, Q decreases. D and S decrease, P and Q increase. Residents of cities with a reputation for good weather, ceteris paribus, a higher price for housing because the demand for housing is higher. a higher price for housing because the supply of housing is higher. the same for housing as they would in cities with a reputation for bad weather. a higher price for housing because the supply and demand for housing is higher. If the purchase and sale of a currently illegal drug (for example, marijuana) were decriminalized, economists would expect a.a decrease in demand and supply of this drug. b.a decrease in demand and an increase in supply of this drug. increase in demand and supply of this drug. increase in demand and a decrease in supply of this drug. Which of the following is evidence of a shortage of walnuts? The equilibrium price of walnuts falls due to a decrease in demand. Firms lower the price of walnuts. The price of cashews is lowered in order to make up for the walnut shortage. The quantity of walnuts demanded is greater than the quantity supplied. Which of the following is the correct way to describe equilibrium in a market? At equilibrium, scarcity is eliminated. At equilibrium, market forces no longer apply.