Economics Quiz Paper
e650s07e01
Student: ___________________________________________________________________________
1. Economic profits are: A. total revenue minus total cost.
B. marginal revenue minus marginal cost.
C. total revenue minus total opportunity cost.
D. total profits of the economy as a whole. 2. Which of the following is an implicit cost to a firm that produces a good or service? A. labor costs.
B. costs of operating production machinery.
C. foregone profits of producing a different good or service.
D. costs of renting or buying land for a production site. 3. Which of the following signals to the owners of scarce resources are the best use of those resources? A. profits of businesses.
B. government regulations.
C. …show more content…
economic indicators.
D. the accounting cost of those resources. 4. The primary inducement for new firms to enter an industry is: A. increased technology.
B. availability of labor.
C. low capital costs.
D. presence of economic profits. 5. If the interest rate is five percent, the present value of $200 received at the end of five years is: A. $121.34.
B. $156.71.
C. $176.41.
D. $132.62.
6. What is the marginal revenue of producing the third unit? A. 250.
B. 70.
C. 0.
D. 90. 7. What is the marginal cost of producing the fifth unit? A. 270.
B. 110.
C. 50.
D. 0. 8. At what level of output does marginal cost equal marginal revenue? A. 1.
B. 2.
C. 3.
D. 4. 9. What is the level of net benefits when four units are produced? A. 0.
B. 70.
C. -70.
D. 20. 10. What is the marginal net benefit of producing the fourth unit? A. -50.
B. 0.
C. 60.
D. 40. 11. Under producer-producer rivalry, individual firms want to sell the product at the maximum price consumers will pay, but are unable to do this because of: A. cost considerations.
B. the scarcity of resources.
C. competition among sellers.
D. competition among buyers. 12. The value of the firm is: A. the current value of profits.
B. the present discounted value of all future profits.
C.
the average value of all future profits.
D. the total value of all future profits. 13. If marginal benefits exceed marginal costs, it is profitable: A. to increase Q.
B. to decrease Q.
C. to stay at that level of Q.
D. all of the above. 14. Trade will take place: A. if the maximum that a consumer is willing and able to pay is less than the minimum price the producer is willing and able to accept for a good.
B. if the maximum that a consumer is willing and able to pay is greater than the minimum price the producer is willing and able to accept for a good.
C. only if the maximum that a consumer is willing and able to pay is equal to the minimum price the producer is willing and able to accept for a good.
D. none of the above. 15. In a competitive market, the market demand is Qd = 60 - 6P and the market supply is Qs = 4P. A price ceiling of $3 will result in A. A shortage of 18 units.
B. A shortage of 30 units.
C. A surplus of 30 units.
D. A surplus of 12 units.
E. neither a shortage nor a surplus. 16. In a competitive market, the market demand is Qd = 60 - 6P and the market supply is Qs = 4P. The full economic price under a price ceiling of $3 is A. 6.
B. …show more content…
7.
C. 8.
D. 9. 17. Which of the following would not shift the demand for good A? A. drop in price of good A.
B. drop in price of good B.
C. consumer income.
D. change in the level of advertising of good A. 18. Good A is an inferior good, an increase in income leads to: A. a decrease in the demand for good B.
B. a decrease in the demand for good A.
C. an increase in the demand for good A.
D. no change in the quantity demanded of good A. 19. An increase in the price of steak will probably lead to: A. an increase in demand for chicken.
B. an increase in demand for steak.
C. no change in the demand for steak or chicken.
D. an increase in the supply for chicken. 20. If A and B are complements, an increase in the price of good A would: A. have no effect on the quantity demanded of B.
B. lead to an increase in demand for B.
C. lead to a decrease in demand for B.
D. none of the above. 21. Other things held constant, the greater the price of a good A. the lower the demand.
B. the higher the demand.
C. the greater the consumer surplus.
D. the lower the consumer surplus. 22. For a steel factory, a decrease in the cost of electricity to the plant will cause the supply curve to: A. become flatter.
B. shift to the left.
C. shift to the right.
D. become parallel to the price axis. 23. Suppose market demand and supply are given by Qd = 100 - 2P and QS = 5 + 3P. The equilibrium price is: A. $15.
B. $19.
C. $17.
D. $20. 24. Suppose market demand and supply are given by Qd = 100 - 2P and QS = 5 + 3P. The equilibrium quantity is: A. 92.
B. 81.
C. 45.
D. 62. 25. Suppose market demand and supply are given by Qd = 100 - 2P and QS = 5 + 3P. If a price floor of $30 is set, what will be size of the resulting surplus? A. 0.
B. 45.
C. 30.
D. 55. 26. Suppose market demand and supply are given by Qd = 100 - 2P and QS = 5 + 3P. If the government sets a price floor of $30 and agrees to purchase all surplus at $30 per unit, the total cost to the government will be: A. $1,650.
B. $1,375.
C. $900.
D. $1,125. 27. Suppose you produce wooden desks, and government legislation protecting the spotted owl has made it more expensive for you to purchase wood. What do you expect to happen to the equilibrium price and quantity of wooden desks? A. price and quantity will increase.
B. price will increase but quantity will decrease.
C. price and quantity will decrease.
D. price will decrease but quantity will increase. 28. Suppose both supply and demand decrease. What effect will this have on price? A. it will fall.
B.
it will rise.
C. it may rise or fall.
D. it will remain the same. 29. If the price of an input rises, producers are willing to produce A. more output at each given price.
B. less output at each given price.
C. the same output at each given price.
D. none of the above. 30. Jane pays the market price of $69 for a new pair of running shoes, even though she would be happy to pay a maximum of $100 for the same pair of shoes. This is an example of the concept of A. producer surplus.
B. price ceilings.
C. full economic prices.
D. consumer surplus. 31. Suppose the demand for good X is given by Qdx = 20 - 4Px + 2Py + M. The price of good X is $5, the price of good Y is $15, and income is $150. Given these prices and income, how much of good X will be purchased?
A)160
B)180
C) 220
D) None of the above.
Answer: B
32. An excise tax of $1.00 per gallon of gasoline placed on the suppliers of gasoline, would shift the supply curve A. down by $1.00.
B. down by more than $1.00.
C. up by $1.00.
D. up by less than $1.00. 33. Assume that the price elasticity of demand is -2 for a certain firm 's product. If the firm raises price, the firm 's managers can expect total revenue to: A.
Decrease
B. Increase
C. Remain constant
D. Either increase or remain constant depending upon the size of the price increase. 34. Suppose the demand for a product is Q xd = 10 - lnPx then product x is A. Elastic.
B. Inelastic.
C. Unitary elastic.
D. Cannot be determined without more information. 35. The own-price elasticity of demand for apples is -1.2. If the price of apples falls by 5%, what will happen to the quantity of apples demanded? A. It will increase 5%.
B. It will fall 4.3%.
C. It will increase 4.2%.
D. It will increase 6%. 36. If quantity demanded for sneakers falls by 10% when price increases 25% we know that the absolute value of the own-price elasticity of sneakers is: A. 2.5.
B. 0.4.
C. 2.
D. 0.27. 37. The quantity consumed of a good is relatively unresponsive to changes in price whenever demand is: A. elastic.
B. unitary.
C. falling.
D. inelastic. 38. Which of the following factors would not affect the own-price elasticity of a good? A. time.
B. price of an input.
C. available substitutes.
D. expenditure share. 39. Demand is more inelastic in the short-term because consumers: A. are impatient.
B. have no time to find available substitutes.
C. are present-oriented.
D. none of the above. 40. An income elasticity less than zero tells us that the good is: A. a normal good.
B. a Giffen good.
C. an inferior good.
D. an inelastic good. 41. You are the manager of a supermarket, and know that the income elasticity of peanut butter is exactly -0.7. Due to the recession, you expect incomes to drop by 15% next year. How should you adjust your purchase of peanut butter? A. buy 10.5% more peanut butter.
B. buy 2.14% more peanut butter.
C. buy 6.2% less peanut butter.
D. buy 9.8% less peanut butter. 42. You are the manager of a popular shoe company. You know that the advertising elasticity of demand for your product is .15. How much will you have to increase advertising in order to increase demand by 10%? A. .02%.
B. 38.6%.
C. 66.7%.
D. 4.3%. 43. Since most consumers spend very little on salt, a small increase in the price of salt A. will reduce quantity demanded by a large amount.
B. will not reduce quantity demanded by very much.
C. will not change quantity demanded.
D. will increase quantity demanded by a small amount. 44. The demand for good X has been estimated to be lnQxd = 100 - 2.5 lnPX + 4 lnPY + lnM. The own price elasticity of good X is A. -2.5.
B. 4.
C. -2.5%.
D. 4%. 45. The demand for which of the following commodities is likely to be more price inelastic? A. food.
B. hamburgers.
C. Big Mac 's.
D. sandwiches. 46. The demand for good X has been estimated by Qxd = 6 - 2Px + 5Py. Suppose that good X sells at $3 per unit and good Y sells for $2 per unit. Calculate the own price elasticity. A. -0.3.
B. -0.4.
C. -0.5.
D. -0.6. 47. When a demand curve is linear, A. demand is elastic at low prices.
B. demand is inelastic at low prices.
C. demand is unitary elastic at low prices.
D. the elasticity is constant at all prices. 48. The demand for Cinnamon Toast Crunch brand cereal is A. equally elastic to the demand for cereal in general.
B. less elastic than the demand for cereal in general.
C. more elastic than the demand for cereal in general.
D. none of the above. 49. Say the demand for illegal drugs is inelastic. Also say drug users commit other crimes to support their drug use. A policy to restrict the supply of illegal drugs will likely
a. lower the price of illegal drugs and lower the amount of other crimes.
b. lower the price of illegal drugs and raise the amount of other crimes.
c. raise the price of illegal drugs and lower the amount of other crimes.
d. raise the price of illegal drugs and raise the amount of other crimes.
50. Choose the best response for this question, like you did for all the others. This test
a. was a lot like a vacuum cleaner.
b. was representative of the material covered.
c. was easy.
d. was difficult.
Student: ___________________________________________________________________________
1. Economic profits are: A. total revenue minus total cost.
B. marginal revenue minus marginal cost.
C. total revenue minus total opportunity cost.
D. total profits of the economy as a whole. 2. Which of the following is an implicit cost to a firm that produces a good or service? A. labor costs.
B. costs of operating production machinery.
C. foregone profits of producing a different good or service.
D. costs of renting or buying land for a production site. 3. Which of the following signals to the owners of scarce resources are the best use of those resources? A. profits of businesses.
B. government regulations.
C. …show more content…
economic indicators.
D. the accounting cost of those resources. 4. The primary inducement for new firms to enter an industry is: A. increased technology.
B. availability of labor.
C. low capital costs.
D. presence of economic profits. 5. If the interest rate is five percent, the present value of $200 received at the end of five years is: A. $121.34.
B. $156.71.
C. $176.41.
D. $132.62.
6. What is the marginal revenue of producing the third unit? A. 250.
B. 70.
C. 0.
D. 90. 7. What is the marginal cost of producing the fifth unit? A. 270.
B. 110.
C. 50.
D. 0. 8. At what level of output does marginal cost equal marginal revenue? A. 1.
B. 2.
C. 3.
D. 4. 9. What is the level of net benefits when four units are produced? A. 0.
B. 70.
C. -70.
D. 20. 10. What is the marginal net benefit of producing the fourth unit? A. -50.
B. 0.
C. 60.
D. 40. 11. Under producer-producer rivalry, individual firms want to sell the product at the maximum price consumers will pay, but are unable to do this because of: A. cost considerations.
B. the scarcity of resources.
C. competition among sellers.
D. competition among buyers. 12. The value of the firm is: A. the current value of profits.
B. the present discounted value of all future profits.
C.
the average value of all future profits.
D. the total value of all future profits. 13. If marginal benefits exceed marginal costs, it is profitable: A. to increase Q.
B. to decrease Q.
C. to stay at that level of Q.
D. all of the above. 14. Trade will take place: A. if the maximum that a consumer is willing and able to pay is less than the minimum price the producer is willing and able to accept for a good.
B. if the maximum that a consumer is willing and able to pay is greater than the minimum price the producer is willing and able to accept for a good.
C. only if the maximum that a consumer is willing and able to pay is equal to the minimum price the producer is willing and able to accept for a good.
D. none of the above. 15. In a competitive market, the market demand is Qd = 60 - 6P and the market supply is Qs = 4P. A price ceiling of $3 will result in A. A shortage of 18 units.
B. A shortage of 30 units.
C. A surplus of 30 units.
D. A surplus of 12 units.
E. neither a shortage nor a surplus. 16. In a competitive market, the market demand is Qd = 60 - 6P and the market supply is Qs = 4P. The full economic price under a price ceiling of $3 is A. 6.
B. …show more content…
7.
C. 8.
D. 9. 17. Which of the following would not shift the demand for good A? A. drop in price of good A.
B. drop in price of good B.
C. consumer income.
D. change in the level of advertising of good A. 18. Good A is an inferior good, an increase in income leads to: A. a decrease in the demand for good B.
B. a decrease in the demand for good A.
C. an increase in the demand for good A.
D. no change in the quantity demanded of good A. 19. An increase in the price of steak will probably lead to: A. an increase in demand for chicken.
B. an increase in demand for steak.
C. no change in the demand for steak or chicken.
D. an increase in the supply for chicken. 20. If A and B are complements, an increase in the price of good A would: A. have no effect on the quantity demanded of B.
B. lead to an increase in demand for B.
C. lead to a decrease in demand for B.
D. none of the above. 21. Other things held constant, the greater the price of a good A. the lower the demand.
B. the higher the demand.
C. the greater the consumer surplus.
D. the lower the consumer surplus. 22. For a steel factory, a decrease in the cost of electricity to the plant will cause the supply curve to: A. become flatter.
B. shift to the left.
C. shift to the right.
D. become parallel to the price axis. 23. Suppose market demand and supply are given by Qd = 100 - 2P and QS = 5 + 3P. The equilibrium price is: A. $15.
B. $19.
C. $17.
D. $20. 24. Suppose market demand and supply are given by Qd = 100 - 2P and QS = 5 + 3P. The equilibrium quantity is: A. 92.
B. 81.
C. 45.
D. 62. 25. Suppose market demand and supply are given by Qd = 100 - 2P and QS = 5 + 3P. If a price floor of $30 is set, what will be size of the resulting surplus? A. 0.
B. 45.
C. 30.
D. 55. 26. Suppose market demand and supply are given by Qd = 100 - 2P and QS = 5 + 3P. If the government sets a price floor of $30 and agrees to purchase all surplus at $30 per unit, the total cost to the government will be: A. $1,650.
B. $1,375.
C. $900.
D. $1,125. 27. Suppose you produce wooden desks, and government legislation protecting the spotted owl has made it more expensive for you to purchase wood. What do you expect to happen to the equilibrium price and quantity of wooden desks? A. price and quantity will increase.
B. price will increase but quantity will decrease.
C. price and quantity will decrease.
D. price will decrease but quantity will increase. 28. Suppose both supply and demand decrease. What effect will this have on price? A. it will fall.
B.
it will rise.
C. it may rise or fall.
D. it will remain the same. 29. If the price of an input rises, producers are willing to produce A. more output at each given price.
B. less output at each given price.
C. the same output at each given price.
D. none of the above. 30. Jane pays the market price of $69 for a new pair of running shoes, even though she would be happy to pay a maximum of $100 for the same pair of shoes. This is an example of the concept of A. producer surplus.
B. price ceilings.
C. full economic prices.
D. consumer surplus. 31. Suppose the demand for good X is given by Qdx = 20 - 4Px + 2Py + M. The price of good X is $5, the price of good Y is $15, and income is $150. Given these prices and income, how much of good X will be purchased?
A)160
B)180
C) 220
D) None of the above.
Answer: B
32. An excise tax of $1.00 per gallon of gasoline placed on the suppliers of gasoline, would shift the supply curve A. down by $1.00.
B. down by more than $1.00.
C. up by $1.00.
D. up by less than $1.00. 33. Assume that the price elasticity of demand is -2 for a certain firm 's product. If the firm raises price, the firm 's managers can expect total revenue to: A.
Decrease
B. Increase
C. Remain constant
D. Either increase or remain constant depending upon the size of the price increase. 34. Suppose the demand for a product is Q xd = 10 - lnPx then product x is A. Elastic.
B. Inelastic.
C. Unitary elastic.
D. Cannot be determined without more information. 35. The own-price elasticity of demand for apples is -1.2. If the price of apples falls by 5%, what will happen to the quantity of apples demanded? A. It will increase 5%.
B. It will fall 4.3%.
C. It will increase 4.2%.
D. It will increase 6%. 36. If quantity demanded for sneakers falls by 10% when price increases 25% we know that the absolute value of the own-price elasticity of sneakers is: A. 2.5.
B. 0.4.
C. 2.
D. 0.27. 37. The quantity consumed of a good is relatively unresponsive to changes in price whenever demand is: A. elastic.
B. unitary.
C. falling.
D. inelastic. 38. Which of the following factors would not affect the own-price elasticity of a good? A. time.
B. price of an input.
C. available substitutes.
D. expenditure share. 39. Demand is more inelastic in the short-term because consumers: A. are impatient.
B. have no time to find available substitutes.
C. are present-oriented.
D. none of the above. 40. An income elasticity less than zero tells us that the good is: A. a normal good.
B. a Giffen good.
C. an inferior good.
D. an inelastic good. 41. You are the manager of a supermarket, and know that the income elasticity of peanut butter is exactly -0.7. Due to the recession, you expect incomes to drop by 15% next year. How should you adjust your purchase of peanut butter? A. buy 10.5% more peanut butter.
B. buy 2.14% more peanut butter.
C. buy 6.2% less peanut butter.
D. buy 9.8% less peanut butter. 42. You are the manager of a popular shoe company. You know that the advertising elasticity of demand for your product is .15. How much will you have to increase advertising in order to increase demand by 10%? A. .02%.
B. 38.6%.
C. 66.7%.
D. 4.3%. 43. Since most consumers spend very little on salt, a small increase in the price of salt A. will reduce quantity demanded by a large amount.
B. will not reduce quantity demanded by very much.
C. will not change quantity demanded.
D. will increase quantity demanded by a small amount. 44. The demand for good X has been estimated to be lnQxd = 100 - 2.5 lnPX + 4 lnPY + lnM. The own price elasticity of good X is A. -2.5.
B. 4.
C. -2.5%.
D. 4%. 45. The demand for which of the following commodities is likely to be more price inelastic? A. food.
B. hamburgers.
C. Big Mac 's.
D. sandwiches. 46. The demand for good X has been estimated by Qxd = 6 - 2Px + 5Py. Suppose that good X sells at $3 per unit and good Y sells for $2 per unit. Calculate the own price elasticity. A. -0.3.
B. -0.4.
C. -0.5.
D. -0.6. 47. When a demand curve is linear, A. demand is elastic at low prices.
B. demand is inelastic at low prices.
C. demand is unitary elastic at low prices.
D. the elasticity is constant at all prices. 48. The demand for Cinnamon Toast Crunch brand cereal is A. equally elastic to the demand for cereal in general.
B. less elastic than the demand for cereal in general.
C. more elastic than the demand for cereal in general.
D. none of the above. 49. Say the demand for illegal drugs is inelastic. Also say drug users commit other crimes to support their drug use. A policy to restrict the supply of illegal drugs will likely
a. lower the price of illegal drugs and lower the amount of other crimes.
b. lower the price of illegal drugs and raise the amount of other crimes.
c. raise the price of illegal drugs and lower the amount of other crimes.
d. raise the price of illegal drugs and raise the amount of other crimes.
50. Choose the best response for this question, like you did for all the others. This test
a. was a lot like a vacuum cleaner.
b. was representative of the material covered.
c. was easy.
d. was difficult.