ECON 104 FINAL EXAM KU |69 QUESTIONS AND ANSWERS
as long as people have different ____ everyone has a comparative advantage in something -
-opportunity costs
-Florida schools offered cash bonuses to students who scored high on the states
standardized exams. The cash bonuses are an example of what? - -people usually take the
advantages to make themselves better off
-Which of the following is not one of the shifters discussed in lecture and in the text? - -
actually, none of the above are demand shifters discussed in class or in the text
-When considering trading, the two parties should consider what advantage? - -
comparative advantage
-In the following example, state how the principle of marginal analysis is used to make a
decision. - -people will eat more bags of chips if the benefit(hunger satisfied) is GREATER
THAN the cost (calories)
-If goods A and Z are complements, an increase in the price of good Z will what? - -
decrease the demand for A
-If equilibrium exists - -there will be NO remaining opportunities for individuals to make
themselves better off
-Which of the following statements is not true? - -most opportunity costs are zero
-Consumer surplus for an individual buyer is equal to what? - -the consumer's willingness
to pay for the good minus the price of the good
-The dictator of a small country restricts the price of cars to an amount less or equal to
1,200 (below equilibrium) such a policy would set a what? - -price ceiling
-Which of the following is NOT one of the four principles of individual choice? - -unpaid
volunteer work is irrational, since economic rationality dictates that individuals should
only engage in work they are paid for
-Chapter 2 opportunity cost equation - -opportunity cost= sacrifice/gain
-You are looking at the market for blue jeans. Which will NOT cause the demand curve for
blue jeans to shift right? - -actually, none of these would cause the demand curve for blue
jeans to shift right
-You are looking at the supply and demand of bread. Now, as discussed in lecture, consider
a bakery that can produce either bread or cake. It can produce all bread, all cake, or some of
, each. Currently it is producing all bread. If the price of cakes increase significantly which
will we see? - -the supply of BREAD shifts LEFT, producing a higher equilibrium price and
lower equilibrium quantity
-A friend comes up to you and offers you a free ticket to a professional baseball game that
night. You attend the game. The game takes 5 hours and costs you $15 for transportation. If
you had not attended the game you would have worked for $8 an hour. - -8x5=$40
-What was the definition of economics as discussed in lecture? - -people making decisions
to attain their goals using the scarce resources they own.
-The demand for hamburgers in your hometown shifts due to income falling in town.
Assume that hamburgers are an inferior good for most people. Choose the answer that best
describes the shift and the effect on equilibrium price and quantity that results - -demand
curve shifts to the right, and results in a rise in the equilibrium price and quantity
-A negative relationship between the quantity and price is called the law of what? - -Law
of DEMAND
-A change in quantity demanded is a movement along the demand curve and a change in
demand is a shift of the demand curve - -TRUE
-The Rams will win the super bowl. The demand will ______ and so the equilibrium price
will _______ and the equilibrium quantity will _______ - -increase ; rise ; rise
-A natural monopoly exists whenever a single firm: - -has economies of scale over the
entire range of production that is relevant to its market
-In the short run: - -some inputs are fixed and some inputs are variable
-Which of the following is necessary for perfect competition? - -firms produce a
standardized product
-If the marginal cost is greater than the average total cost, average total cost is _____. This
means that the spreading effect is ______ than the diminishing return effect - -RISING ;
WEAKER
-If the market price in a competitive market corresponds to point B then the firm is at the?
- -Break-even price
-Look @ the figure. Long-run average cost, the firm has ____ in the output region from 0 to
A - -increasing returns to scale
-The practice of charging different prices to different customers for the same good or
service, even though the cost of supplying these customers is the same is what? - -PRICE
DISCRIMINATION
as long as people have different ____ everyone has a comparative advantage in something -
-opportunity costs
-Florida schools offered cash bonuses to students who scored high on the states
standardized exams. The cash bonuses are an example of what? - -people usually take the
advantages to make themselves better off
-Which of the following is not one of the shifters discussed in lecture and in the text? - -
actually, none of the above are demand shifters discussed in class or in the text
-When considering trading, the two parties should consider what advantage? - -
comparative advantage
-In the following example, state how the principle of marginal analysis is used to make a
decision. - -people will eat more bags of chips if the benefit(hunger satisfied) is GREATER
THAN the cost (calories)
-If goods A and Z are complements, an increase in the price of good Z will what? - -
decrease the demand for A
-If equilibrium exists - -there will be NO remaining opportunities for individuals to make
themselves better off
-Which of the following statements is not true? - -most opportunity costs are zero
-Consumer surplus for an individual buyer is equal to what? - -the consumer's willingness
to pay for the good minus the price of the good
-The dictator of a small country restricts the price of cars to an amount less or equal to
1,200 (below equilibrium) such a policy would set a what? - -price ceiling
-Which of the following is NOT one of the four principles of individual choice? - -unpaid
volunteer work is irrational, since economic rationality dictates that individuals should
only engage in work they are paid for
-Chapter 2 opportunity cost equation - -opportunity cost= sacrifice/gain
-You are looking at the market for blue jeans. Which will NOT cause the demand curve for
blue jeans to shift right? - -actually, none of these would cause the demand curve for blue
jeans to shift right
-You are looking at the supply and demand of bread. Now, as discussed in lecture, consider
a bakery that can produce either bread or cake. It can produce all bread, all cake, or some of
, each. Currently it is producing all bread. If the price of cakes increase significantly which
will we see? - -the supply of BREAD shifts LEFT, producing a higher equilibrium price and
lower equilibrium quantity
-A friend comes up to you and offers you a free ticket to a professional baseball game that
night. You attend the game. The game takes 5 hours and costs you $15 for transportation. If
you had not attended the game you would have worked for $8 an hour. - -8x5=$40
-What was the definition of economics as discussed in lecture? - -people making decisions
to attain their goals using the scarce resources they own.
-The demand for hamburgers in your hometown shifts due to income falling in town.
Assume that hamburgers are an inferior good for most people. Choose the answer that best
describes the shift and the effect on equilibrium price and quantity that results - -demand
curve shifts to the right, and results in a rise in the equilibrium price and quantity
-A negative relationship between the quantity and price is called the law of what? - -Law
of DEMAND
-A change in quantity demanded is a movement along the demand curve and a change in
demand is a shift of the demand curve - -TRUE
-The Rams will win the super bowl. The demand will ______ and so the equilibrium price
will _______ and the equilibrium quantity will _______ - -increase ; rise ; rise
-A natural monopoly exists whenever a single firm: - -has economies of scale over the
entire range of production that is relevant to its market
-In the short run: - -some inputs are fixed and some inputs are variable
-Which of the following is necessary for perfect competition? - -firms produce a
standardized product
-If the marginal cost is greater than the average total cost, average total cost is _____. This
means that the spreading effect is ______ than the diminishing return effect - -RISING ;
WEAKER
-If the market price in a competitive market corresponds to point B then the firm is at the?
- -Break-even price
-Look @ the figure. Long-run average cost, the firm has ____ in the output region from 0 to
A - -increasing returns to scale
-The practice of charging different prices to different customers for the same good or
service, even though the cost of supplying these customers is the same is what? - -PRICE
DISCRIMINATION
