Econ Midterm

Question 1

In the context of a production possibilities frontier, unemployment is a situation that occurs when resources are

Answer 1

Not being fully utilized

Question 2

The places where economic actors interact are the following:

Answer 2

Foreign exchange markets

Goods and services markets

Factor markets

Question 3

An example of a company engaged in an optimization would be its attempt to

Answer 3

maximize profit

Question 4

When using marginal analysis, the changes examined are

Answer 4

incremental

Question 5

What growth is where there is an increase in, or an increase in the ability of, resources to produce all goods.

Answer 5

Generalized

Question 6

If the marginal benefit of an action exceeds the marginal cost

Answer 6

do more of the action

Question 7

True or false:
If everyone in the world was trying to produce a single good, we could produce an infinite amount of that good.

Answer 7

False

Question 8

Growth can be the result of

Answer 8

having more resources available.

increased capability associated with using the same resources.

Question 9

Increased education among workers would be associated with which source of economic growth?

Answer 9

An increase in the ability of resources to produce goods and services

Question 10

An _____ assumption is the one that suggests that the person in question is trying to maximize some objective.

Answer 10

optimization

Question 11

When using marginal analysis, the goal is to

Answer 11

maximize net impact

Question 12

If you have two goods for which critical thinking skills are important in their respective production process, then an increase in the education level of workers would create

Answer 12

generalized growth

Question 13

Hydraulic fracturing makes natural gas available when it would otherwise be locked away. Which source of growth is this?

Answer 13

an increase in the availability of resources

Question 14

Which of the following are examples of optimization?

Multiple select question.

A student cleaning a dorm room and choosing not to make it perfect

A student cleaning a dorm room to make it perfect to the exclusion of all other useful things

Firms maximizing profit

Consumers deciding which goods to buy with their money

Answer 14

A student cleaning a dorm room and choosing not to make it perfect

Firms maximizing profit

Consumers deciding which goods to buy with their money

Question 15

What growth is where there is an increase in the ability to produce a particular good because there is an increase in, or an increase in the ability of, resources to produce a particular good that does not generalize to other goods.

Answer 15

Specialized

Question 16

If there is a subsidy paid for the production of a good, that subsidy goes to producers, and it changes, this will impact

Answer 16

supply

Question 17

A decrease in supply would have the supply curve move (horizontally)

Answer 17

to the left

Question 18

A decrease in the expected future price of a good would cause which of the following
firms to sell off their current inventories.

consumers to delay their purchase.

consumers to stock up.

firms to hold onto their current inventories.

Answer 18

firms to sell off their current inventories.

consumers to delay their purchase.

Question 19

A decrease in the supply for a good will result in a ____ unless the price is allowed to adjust.

Answer 19

shortage

Question 20

A decrease in the population of potential buyers for a good will result in a(n) ___ in the equilibrium price and a(n) ___ in the equilibrium quantity.

Answer 20

decrease
decrease

Question 21

The term “shortage” and the term______ mean the same thing.

Answer 21

excess demand

Question 22

The term “excess supply” and the term ______ mean the same thing.

Answer 22

surplus

Question 23

Identify all of the determinants of demand.

Multiple select question.

Expected price

Technology

Price of inputs

Income

Population of potential buyers

Number of sellers

Price of other potential outputs

Taxes

Price of other goods

Taste

Subsidies

Answer 23

Expected price

Income

Population of potential buyers

Taxes

Price of other goods

Taste

Subsidies

Question 24

A quantity sold cannot be called the equilibrium quantity if

Answer 24

the amount consumers want to buy is less than that quantity.

the amount consumers want to buy is greater than that quantity.

Question 25

Which of the following are examples of the real-balances effect in action?

Consumers are responding to a price increase of one good by noting their fixed income will mathematically not allow them to buy the same things.

Consumers are noting that the first donut is more satisfying than the fifth donut.

The price of salmon is rising so health-conscious consumers choose chicken breast instead.

The price of one cola is rising so consumers choosing another brand instead.

Answer 25

Consumers are responding to a price increase of one good by noting their fixed income will mathematically not allow them to buy the same things.

Question 26

A change in the expected price of a good will impact

Answer 26

both supply and demand

Question 27

If there is a subsidy paid for the production of a good, that subsidy goes to producers, and it decreases, this will result in a(n)

Answer 27

decrease in supply

Question 28

Economists refer to the amount that consumers want to buy at any particular price as the quantity ___
and the amount that firms want to sell at any particular price as quantity ___

Answer 28

demanded
supplied

Question 29

An increase in the expected future price of a good would cause

firms to sell off their current inventories.

consumers to wait to purchase.

consumers to stock up.

firms to hold onto their current inventories.

Answer 29

consumers to stock up.

firms to hold onto their current inventories.

Question 30

Ceteris paribus means

at equilibrium.

other things equal.

under typical circumstances.

holding those other factors constant.

Answer 30

other things equal.

holding those other factors constant.

Question 31

The demand for a particular farmer’s corn is likely to be perfectly ___
because that farmer has no influence over the price regardless of how much that farmer can produce.

Answer 31

elastic

Question 32

Suppose you are looking at a price-quantity combination of P = 5, Q = 10. The reason a relatively flat demand curve is more elastic than a relatively steep one going through that same point is that (Select all that apply.)

the flatter one shows a greater degree of responsiveness of quantity to changes in price.

the steeper one shows a greater degree of responsiveness of quantity to changes in price.

the steeper one shows the same degree of responsiveness of quantity to changes in price.

the steeper one shows a lower degree of responsiveness of quantity to changes in price

Answer 32

the flatter one shows a greater degree of responsiveness of quantity to changes in price.

the steeper one shows a lower degree of responsiveness of quantity to changes in price.

Question 33

Which of the following goods/services are likely to have perfectly inelastic demand (at realistic prices)? (Select all that apply.)

Multiple select question.

The services to set a broken leg

Insulin to a diabetic

Gasoline

Eggs

Answer 33

The services to set a broken leg

Insulin to a diabetic

Question 34

Suppose you are looking at a vertical demand curve

Answer 34

there is no responsiveness to changes in price so it is perfectly inelastic

Question 35

A good (such as a medication that is necessary to live) is likely to have perfectly ___ demand

Answer 35

inelastic

Question 36

Suppose you are looking at a price-quantity combination of P = 5, Q = 10. The reason a relatively steep demand curve is less elastic than a relatively flat one going through that same point is that

Answer 36

the steeper one shows a lower degree of responsiveness of quantity to changes in price