ECON EXAM 1 ANSWERS Correct
Questions And Answers
You are looking at the market (supply and demand) for hot dog buns. You see in the
paper that the price of hot dogs has increased significantly. As a result, in the market for
hot dog buns we would expect to see...Correct Answers Demand shift left, producing a
lower equilibrium price, and higher equilibrium quantity
Consider these three headlines...
I. Microsoft Lowers the Price of Windows 10
II. U.S. Economy Enters Recession
III. Mergers in the Banking Industry Limit Choices for Customers
Macroeconomics v. MicroeconomicsCorrect Answers
Consider these two statements...
I. The current unemployment rate is 4.3 %
II. The current unemployment rate would be lower if we did not pay unemployment
benefits
Normative v. PositiveCorrect Answers Both are positive statements
You are looking at a country's production possibilities frontier (PPF). The PPF is a
straight-line (as opposed to a curve. If the PPF shifts outward what does the outward
shift represent? (assume the slope of the PPF does not change as it shifts).Correct
Answers Economic Growth
Which of the following is correct?
a) change in tech could either shift the demand or the supply curve
b) change in income could shift either the demand curve or the supply curve
c) a change in the price of inputs could shift either the demand curve or the supply
curve
d) a change in expectations could shift either the demand cure or the supply
curveCorrect Answers d) a change in expectations could shift either the demand cure or
the supply curve
SEE GRAPH UNDER EXAM 1
Which of the following would cause a movement from point J to point K?Correct
Answers This is a normal good and buyer's incomes increased (demand shift right)
SEE GRAPH UNDER EXAM 1
, Which of the following could cause a movement from point K to point J?Correct
Answers This is the demand for gasoline and buyers expect the price of gasoline to
decrease in the near future (demand shift left)
Which of the following could cause a movement from point point H to point J?Correct
Answers The price of the good decreased (price change)
Imagine a normal, upward sloping supply curve passing through point J. Which of the
following would cause the supply curve to shift in such a way that we'd end up at pint H?
Correct Answers The number of sellers of this product decreased
This graph essential depicts the Law of Demand. Write down the Law of
Demand.Correct Answers IF the price of a good or service increases, the demand will
decrease. If the price of a good or service decreases, the demand will increase.
Assume that the government places a price ceiling of 0.90 per pound on butter. As a
result of this price ceiling we see a _________ of ________ pounds in this
market.Correct Answers Storage, 3.0 Million
Following directly from the question above, which of the following was NOT listed as an
example of how price ceilings (like the one above) cause inefficiency?
a) increased opportunity cost
b) wasted resources
c) inefficient low quantity
d) black marketsCorrect Answers Increased Opportunity Cost
Now, instead of a price ceiling, assume the government imposes a price floor of $1.20
per pound on butter. As a result of this price floor we will see a ________ of _______
pounds in the market.Correct Answers Surplus; 1.5 Million
Country A can, using all its resources and using them efficiently, produce 100 tons of
wheat or 200 tons of corn. (Imagine these as the two -end points of Country A's
production possibilities frontier). Country B can, using all its resources and using them
efficiently, produce 100 tons of wheat or 100 tons of corn. (Again, imagine these as the
two end-pints of Country B's production possibilities frontier.) Which of the following is
correct?
a) Country A has a comparative advantage in producing wheat
B) Country B has a comparative advantage in producing wheat
C) Country A has a comparative advantage in producing BOTH wheat and corn
Questions And Answers
You are looking at the market (supply and demand) for hot dog buns. You see in the
paper that the price of hot dogs has increased significantly. As a result, in the market for
hot dog buns we would expect to see...Correct Answers Demand shift left, producing a
lower equilibrium price, and higher equilibrium quantity
Consider these three headlines...
I. Microsoft Lowers the Price of Windows 10
II. U.S. Economy Enters Recession
III. Mergers in the Banking Industry Limit Choices for Customers
Macroeconomics v. MicroeconomicsCorrect Answers
Consider these two statements...
I. The current unemployment rate is 4.3 %
II. The current unemployment rate would be lower if we did not pay unemployment
benefits
Normative v. PositiveCorrect Answers Both are positive statements
You are looking at a country's production possibilities frontier (PPF). The PPF is a
straight-line (as opposed to a curve. If the PPF shifts outward what does the outward
shift represent? (assume the slope of the PPF does not change as it shifts).Correct
Answers Economic Growth
Which of the following is correct?
a) change in tech could either shift the demand or the supply curve
b) change in income could shift either the demand curve or the supply curve
c) a change in the price of inputs could shift either the demand curve or the supply
curve
d) a change in expectations could shift either the demand cure or the supply
curveCorrect Answers d) a change in expectations could shift either the demand cure or
the supply curve
SEE GRAPH UNDER EXAM 1
Which of the following would cause a movement from point J to point K?Correct
Answers This is a normal good and buyer's incomes increased (demand shift right)
SEE GRAPH UNDER EXAM 1
, Which of the following could cause a movement from point K to point J?Correct
Answers This is the demand for gasoline and buyers expect the price of gasoline to
decrease in the near future (demand shift left)
Which of the following could cause a movement from point point H to point J?Correct
Answers The price of the good decreased (price change)
Imagine a normal, upward sloping supply curve passing through point J. Which of the
following would cause the supply curve to shift in such a way that we'd end up at pint H?
Correct Answers The number of sellers of this product decreased
This graph essential depicts the Law of Demand. Write down the Law of
Demand.Correct Answers IF the price of a good or service increases, the demand will
decrease. If the price of a good or service decreases, the demand will increase.
Assume that the government places a price ceiling of 0.90 per pound on butter. As a
result of this price ceiling we see a _________ of ________ pounds in this
market.Correct Answers Storage, 3.0 Million
Following directly from the question above, which of the following was NOT listed as an
example of how price ceilings (like the one above) cause inefficiency?
a) increased opportunity cost
b) wasted resources
c) inefficient low quantity
d) black marketsCorrect Answers Increased Opportunity Cost
Now, instead of a price ceiling, assume the government imposes a price floor of $1.20
per pound on butter. As a result of this price floor we will see a ________ of _______
pounds in the market.Correct Answers Surplus; 1.5 Million
Country A can, using all its resources and using them efficiently, produce 100 tons of
wheat or 200 tons of corn. (Imagine these as the two -end points of Country A's
production possibilities frontier). Country B can, using all its resources and using them
efficiently, produce 100 tons of wheat or 100 tons of corn. (Again, imagine these as the
two end-pints of Country B's production possibilities frontier.) Which of the following is
correct?
a) Country A has a comparative advantage in producing wheat
B) Country B has a comparative advantage in producing wheat
C) Country A has a comparative advantage in producing BOTH wheat and corn
