Economics Exam 1

Question 1

Unemployment due to changes in the types of skills employers require is called

Answer 1

Structural Unemployment

Question 2

CPI=

Answer 2

Price of the basket/

Price of the basket base year

Question 3

If there is no CPI for a given year then the CPI is

Answer 3

100

Question 4

To find percentage change in real income you…

Answer 4

Calculate real income for both years
=nominal/CPI x 100

Subtract current RI by previous RI and divide by previous RI x 100

Question 5

Unemployment that arises as a result of the time it takes for unemployed people to locate a job utilizing their transferable skills is called

Answer 5

Frictional Unemployment

Question 6

How to find another’s years dollars worth….

Answer 6

1. Calculate percent change in CPI
2. Multiply percent by previous years worth of dollars
3. Add the product to previous years worth of dollars

Question 7

If tuition is set at 60$ there will be

Answer 7

A shortage at 10 a.m. And a surplus at 8 a.m.

Question 8

The demand for seats in 10 a.m. Classes at the university is higher than the demand for the seats in 8 a.m. Classes. The supply is fixed. If the university prices classes at the price required to achieve equilibrium at 10 a.m., there will be

Answer 8

A surplus at 8 a.m.

Question 9

To an economist, freeway congestion is a sign that the price to drive in the freeway is

Answer 9

Below its equilibrium level

Question 10

If demand to attend college rises, but the tuition stays constant, it follows that the

Answer 10

GPA required to attend the college will probably rise

Question 11

The lower the price of medical care in general, the higher the __________ medical care and the __________ specific items that makeup medical care

Answer 11

Quantity demanded of;higher the demand for

Question 12

If the government sets out to make home buying easier for more people by driving lenders to accept __________ down payments and __________ interest rates, the result will likely be a(n) __________ in housing prices

Answer 12

Lower;lower;increase

Question 13

If demand is fixed the line is

Answer 13

Perfectly Horizontal

Question 14

If supply is fixed the line is

Answer 14

Perfectly Vertical

Question 15

Law of demand states that price and quantity demanded are

Answer 15

Inversely related, ceteris paribus

Question 16

Inferior Good

Answer 16

Income goes up, demand goes down

Income goes down, demand goes up

Question 17

Normal good

Answer 17

As income increases, demand increases

As income decreases, demand decreases

Question 18

Resource X is necessary to the production of good Y. If the price of resource X rises

Answer 18

The supply curve of Y shifts leftward

Question 19

The fundamental reason why most supply curves are upward sloping is that

Answer 19

Higher production raises the opportunity costs of production and so price must rise to induce more output

Question 20

At a price below equilibrium, there is

Answer 20

A shortage

Question 21

If the supply of and demand for a product both decrease, then equilibrium

Answer 21

Quantity must decline, but equilibrium price may either, rise, fall, or remain unchanged

Question 22

A rightward shift in supply from S1 to S2 could have been caused by

Answer 22

The granting of a subsidy to the producer

Question 23

Neutral good

Answer 23

As income increases, you don’t but more of a good

As income decreases, you don’t buy less of a good

Question 24

In year 1 the average price of X is $10, and in year 2 the average price of X is $23. Still consumers buy more units of X In year 2 than in year 2. It follows that

Answer 24

Demand for good X could be higher in year 2 than in year 1

Income may have been higher in year 2 than in year 1

Question 25

A vertical supply curve represents

Answer 25

An independent relationship between price and quantity supplied

Question 26

If the demand for a good increases by more than the supply of the good increases, then equilibrium price will ______and equilibrium quantity will ______

Answer 26

Rise;rise

Question 27

Law of demand

Answer 27

Law of diminishing marginal utility

Question 28

To be efficient

Answer 28

Implies that it is impossible to get more of one good without getting less of the other

Question 29

Economy exhibits productive efficiency if it produces

Answer 29

Maximum output with given resources and technology

Question 30

Productive IN-efficiency

Answer 30

It is possible to obtain gains in one area without losses in another

Question 31

To fine combinations of the two good, X and Y, that it is possible for the economy to produce

Answer 31

Graph both combinations given, find the slope .04=.4

Multiply .4 time ____ combinations of X

Subtract the product from ____ Y combination given

Try for all answers

Question 32

PPF between goods X and Y will be a downward-sloping

Answer 32

Curve that is bowed outward if increasing opportunity costs exists

Question 33

PPF is a straight line as a result of

Answer 33

Constant opportunity costs

Question 34

At a price above equilibrium, there is a

Answer 34

Surplus