Econ Practice Exam 2

8/20/2019 Econ Practice Exam 2

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FINK ECONOMICS TEST 2

1. How would an improvement in technology affect the market for detergent?A. Supply would increase, causing equilibrium price to rise and quantity to fall. Supply would increase, causing equilibrium price to fall and quantity to rise!. Supply would decrease, causing equilibrium price to rise and quantity to fall". Supply would decrease, causing equilibrium price to fall and quantity to rise

#. "emand would increase, causing equilibrium price and quantity to both rise

$ules can cook %& pi''a bagels or 1& tiramisus in an hour.(iroki can cook )& pi''a bagels or * tiramisus in an hour.

). +hich of the following statements is -#?A. $ules/s opportunity cost of a pi''a bagel is % tiramisus. (iroki/s opportunity cost of a pi''a bagel is 0 tiramisus!. (iroki has the absolute advantage in pi''a bagels". $ules has a comparative advantage in producing tiramisus

%. Assume that one tiramisu trades for * pi''a bagels. f $ules and (iroki completely speciali'e,and the tiramisu producer trades % units, which of the following quantities will be consumed?A. (iroki will consume 2 pi''a bagels and 3 tiramisus. $ules will consume 12 pi''a bagels and % tiramisus!. (iroki will consume 2 pi''a bagels and % tiramisus". $ules will consume *) pi''a bagels and 3 tiramisus

*. +hich of the following statements is 4A5S#?A. #conomists believe that price rationing is the mist efficient rationing method. 6rice rationing is the allocation of goods among consumers using prices!. 6rice rationing allows every consumer that would like the good to have it

". 6rice rationing allows every consumer willing to pay at least the equilibrium price to have it

0. A fall in the price of a mystery good caused a change in the market for burritos that led to a fall inthe price of burritos as well. +hich of the following could possibly be the mystery good?

A. Spanish rice 7a complement8. !hinese food 7a substitute8!. ortillas 7an import8". A and ! only#. and ! only

!hamp can cook %& pancakes or 10 waffles in an hour.rick can cook )* pancakes or 9 waffles in an hour.

9. rick/s opportunity cost of a waffle isA. )* pancakes. : waffles!. 12 pancakes". &.)0 pancakes#. * pancakes

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3. +hich of the following statements is -#?A. rick has a comparative advantage in producing pancakes. rick has an absolute advantage in producing pancakes!. rick has an absolute advantage in producing waffles

". !hamp has a comparative advantage in producing pancakes

2. Assume that one waffle trades for % pancakes. f !hamp and rick completely speciali'e, andthe waffle producer trades * units, which of the following quantities will be consumed?

A. rick will consume 2 pancakes and % waffles. !hamp will consume 1) pancakes and 11 waffles!. rick will consume 1) pancakes and 1& waffles". !hamp will consume 12 pancakes and * waffles

:. f consumer income falls, how does that affect the market for an inferior good?A. "emand decreases

. nitially there is a surplus at the old price!. #quilibrium price eventually rises". #quilibrium quantity eventually falls

1&. -on urgandy faces the following production possibilitiesScotch drinks; 1&& :& 3& *& &$a'' flutes; & 1 ) % *

+hat is the opportunity cost of producing the )nd


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!. 0& units of eye makeup". 1& comforters

1:. ne comforter trades forA. 1.93 units of eye makeup

. unit of eye make up!. ) units of eye make up". % units of eye makeup#. 1 unit of eye make up

)&. A recent study found that an increase in the 4ederal taB on beer 7and thus an increase in theprice of beer8 would reduce the demand for mari


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#. A and ! only

(Refer to the hand drawn graph)

)0. he above economy will eBport

A. )& fro'en peas. *& tattoos!. 1& fro'en peas". )& tattoos

)9. ne unit of fro'en peas trades forA. % tattoos. * tattoos!. ) tattoos". &.0 tattoos#. &.)0 tattoos

)3. A producer faces a price elasticity of demand of 1.) when the price of the good is C19 and thequantity demanded is 30&& units. 4ind the change in quantity demanded if the producer decreasesprice by C1.0&. 7-ound to nearest unit8

A. 3&%. 2**!. *193". )9&#. 11)0

)2. A perfectly elastic demand curveA. is represented on a graph by a hori'ontal line. is represented on a graph by a vertical line!. has an elasticity coefficient equal to infinity". A and ! only#. and ! only


):. =iven the graph above, which of the following statements is -#?A. ") is more elastic than "1. 4or a given price change, the elasticity coefficient for "1 is bigger than that for ")!. 4or a given price change, the change in Fd along "1 is smaller than the change in Fd

along ")". A and only#. A and ! only

%&. nternational trade arises primarily fromA. ariffs and quotas. #conomic growth

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!. !omparative advantage". Absolute advantage

%1. Helen faces the following production possibilities;=iant cookies; )&& 19& 1)& 2& *& &!hocolate ftns; & 1 ) % * 0

+hat is the opportunity cost of producing the *th chocolate fountain?A. 19& giant cookies. 1& giant cookies!. *& giant cookies". %9 giant cookies

%). +hich of the following statements about the economy above is -#?A. Her opportunity cost of producing chocolate fountains increases as she produces morechocolate fountains

. Her opportunity cost of producing chocolate fountains stays constant as she producesmore chocolate fountains

!. he 664 is a straight line". A and ! only#. and ! only

%%. +hich of the following would cause a consumer/s demand to become relatively more elastic?A. he consumer finds she has less time to make the purchase. he consumer finds an additional substitute is available!. he good becomes a smaller proportion of the consumer/s budget". A and only#. and ! only

Cakes Carrots

Annie *2 1)

Rhodes *) 3

%*. -hodes/s opportunity cost of a carrot is

A. &.193 cakes. 1.1* cakes!. &.1)0 cakes". * cakes#. 9 cakes

%0. +hich of the following statements is -#?A. -hodes has a comparative advantage in producing cakes

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. -hodes has an absolute advantage in producing cakes!. -hodes has an absolute advantage in producing carrots". Annie has a comparative advantage in producing cakes

%9. Assume that one carrot trades for 0 cakes. f Annie and -hodes completely speciali'e, and the

carrot producer trades * units, which of the following quantities will -hodes consume?A. )& cakes and 2 carrots. )& cakes and % carrots!. )) cakes and * carrots". )) cakes and 11 carrots

%3. A federal regulation bans cheese imports completely, requiring that all cheese consumed in theS must be produced in the S. his quota is likely to

A. ncrease cheese consumption in the S. ncrease the demand for wine 7a complement8 in the S!. ncrease the price of cheese in the S

". ncrease cheese imports


%2. +hich of the following could cause a movement from point to point A?A. A decrease in the unemployment rate. An increase in the unemployment rate!. A technological improvement". An increase in the quantity of resources#. ! and " only

%:. +hich of the following would allow the economy to reach point !?A. An increase in the quantitiy of resources. A technological improvement!. rade with another economy". All of the above#. and ! only

*&. he cross elasticity coefficient between a +ilson 6hillips !" and a mystery good is @&.2). hemystery good is probably

A. 6lastic 7an input8. A !" player 7a complement8!. A +ilson 6hillips concert 7a substituteG ". A puppy 7a weird party favor8

*1. sing the midpoint formula, find the elasticity coefficient for a producer when a price increasefrom C1).&& to C1%.&&. causes a fall in quantity demanded from %*& units to %1& units.

A. &.23. &.2&!. 1.10

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". 1.&(Refer to the hand drawn graph)

*). +ith free trade, the above economy willA. import 10 units. eBport 10 units!. import %0 units". eBport %0 units

*%. he gained consumer surplus is represented by areaA. A!. 6nA!6w!. 6nA6w

**. At which point would the "d demand curve be relatively more elastic?A. A. !!. #lasticity is constant along a demand curve

*0. !ake aby faces a price elasticity of demand of &.:0. How should management alter price ifthey desire to increase total revenue?

A. ncrease price. "ecrease price!. !ake aby is already maBimi'ing -

(Refer to the hand drawn graph)*9. +ith free trade, the above economy will

A. mport 10 units. #Bport 10 units!. mport %0 units". #Bport %0 units

*3. he gained consumer surplus is represented by areA. A!. 6nA6w!. 6nA!6w

*2. +hich point on the above demand curve would be relatively more elastic?A. A. !!. #lasticity is constant along a demand curve

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*:. sing the midpoint formula, find the elasticity coefficient for a producer when a price increasesfrom C3.0& to C:.0& causes a fall in quantity demanded from 113 units to 1&% units.

A. &.9:. 1.**!. 1.&

". 1.20#. &.0*

0&. +hich of the following would cause a consumer/s demand to become relatively more inelastic?A. he consumer finds she has less time to make the purchase. he consumer finds an additional substitute is available!. he good becomes a larger proportion of the consumer/s budget". A and ! only#. and ! only

01. nternational trade arises primarily from

A. #conomic growth. Absolute advantage!. mport quotas". !omparative advantage


0). he above economy will eBportA. %& footballs. %& crab cakes!. :& footballs". 1)& footballs

0%. ne crab cake trades forA. !owboys from Ari'ona. footballs!. ) footballs". % footballs#. 1 football

0*. Holy Shirts and 6ants faces a price elasticity of demand of &.22. How should managementalter price if they desire to increase total revenue?

A. "ecrease price. ncrease price!. Holy shirts and pants is already maBimi'ing -

MapleSyrup

Pizza

John 9& 10

Jeremy %9 9

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00. $ohn/s opportunity cost of a maple syrup isA. )* pi''as. 1.93 pi''as!. *0 pi''as

". &.)0 pi''as#. * pi''as09. +hich of the following statements is -#?

A. $eremy has comparative advantage in producing pi''a. $ohn has comparative advantage in producing maple syrup!. $eremy has an absolute advantage in producing maple syrup". $ohn has a comparative advantage in producing pi''a

03. Assume that one pi''a trades for * maple syrups. f $ohn and $eremy completely speciali'e,and the pi''a producer trades 0 units, which of the following quantities will $ohn consume?

A. *& maple syrups and )& pi''as

. *& maple syrups and 0 pi''as!. 19 maple syrups and 0 pi''as". 2& maple syrups and 1& pi''as#. )& maple syrups and 1& pi''as

02. A producer faces a price elasticity of demand of 1.* when the price of the good is C19 and thequantity demanded is :&&& units. 4ind the change in quantity demanded if the producer changeprice by C).&&.

A. 2&*. )&1!. 1030". )39#. 322


0:. How many units did the economy import A4#- the tariff?A. 11&. )0!. 10". )&#. 9&

9&. he area labeled DAE representsA. gained producer surplus. taB revenue!. domestic partner revenue". foreign producer revenue#. deadweight loss

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91. f the government uses an import quota rather than a tariff to restrict trade, then the arealabeled DE would represent

A. gained producer surplus. taB revenue!. domestic producer revenue

". deadweight loss#. foreign producer revenue

9). he cross elasticity coefficient between crab cakes and mystery good is @&.2). he mysterygood is probably

A. bread crumbs 7an input8. a glass of wine 7a complement8!. bacon@wrapped scallops 7a substitute8". a boB of fresh +yoming air 7a bad wedding gift8

9%. A perfectly elastic demand curve

A. is represented on a graph by a hori'ontal line. is represented on a graph by a vertical line!. has an elasticity coefficient equal to infinity". A and ! only#. and ! only


9*. =iven the graph above, which of the following statements is 4A5S#?A. "1 is more inelastic than "). 4or a given price change, the elasticity coefficient for "1 is bigger than that for ")!. 4or a given price change, the change in Fd along "1 is smaller than the change in Fd

along ")". A and only#. A and ! only

90. A federal regulation that requires that all cheese consumed in the S must be produced in theS is likely to

A. ncrease cheese imports. "rive up the price of cheese in the S!. ncrease cheese consumption in the S". ncrease the demand for wine 7a complement8 in the S#. ! and " only

99. otal revenue is maBimi'ed whenA. (arginal revenue is equal to 1. 6rice elasticity of demand is equal to 1!. A firm produces at the midpoint of the demand curve". A and ! only#. and ! only

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93. Secretary !leary faces the following production possibilities!igars; 130 10& 1)& 20 *0 &Sailboats; & 1 ) % * 0

+hat is the opportunity cost of producing the )nd sailboat?

A. %& cigars. 9& cigars!. %0 cigars". 112 cigars

92. +hich of the following statements about the economy above is 4A5S#?A. His opportunity cost of producing sailboats stays constant as he produces more sailboats. His opportunity cost of producing sailboats increases as he produces more sailboats!. he 664 is a straight line". A and ! only#. and ! only


9:. +hich of the following could cause a shift from 6641 to 664)?A. A decrease in the unemployment rate. An increase in the quantity of resources!. A technological improvement". All of the above#. and ! only

3&. +hich of the following could cause a movement from point to point A?A. An increase in the unemployment rate. A decrease in the unemployment rate!. A technological improvement". An increase in the quantity of resources#. ! and " only

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ANS!R "!#1. ). "%. !

*. !0. #9. #3. A2. :. !1&. 11. 1). A1%. #1*. #

10. 19. #13. !12. 1:. #)&. )1. #)). A)%. ")*. #)0. "

)9. !)3. )2. "):. %&. !%1. !%). #%%. %*. #%0. A%9. !

%3. !%2. %:. "*&. *1. !*). !*%. **. A

*0. A*9. !*3. !

*2. A*:. #0&. A01. "0). A0%. #0*. 00. "09. "03. #02. !

0:. !9&. A91. #9). 9%. "9*. 90. 99. #93. A92. "9:. #

3&. A

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Econ Practice Exam 2

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