Exam1-A - No Answer Key

Exam 1- ECON 202
Friday, November 29th, 2019
Name:___________________
There are 50 questions. Answer all questions in the space provided next to each question.
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
1) Economics is the study of: 1)
A) whether we will have enough resources in the future.
B) the financial concerns of businesses and individuals.
C) the role of government in limiting the choices people make.
D) choice in the face of limited resources.
2) Cost-benefit analysis 2)
A) is useful only under certain conditions.
B) applies to firms but not individuals.
C) never requires the use of mathematics.
D) does not take opportunity costs into account.
E) is an approach that compares costs to benefits to determine whether an activity should be
pursued.
3) Opportunity cost is 3)
A) the value of the least desired alternative forgone to obtain a good or service, or to undertake
an activity.
B) the monetary value of obtaining a good or service, or to undertake an activity.
C) applicable to goods only and not to services.
D) another name for the regret of not taking the action of obtaining a good or service.
E) the value of the most desired alternative forgone to obtain a good or service, or to undertake
an activity.
4) Refer to the figure below. Moving from point A to point B, the opportunity cost of 10 more 4)
pizzas is:
A) 10 pizzas. B) 25 salads. C) 5 pizzas. D) 100 salads.
A‐1
5) Quantity of Quantity of 5)
Combination Guns Vaccines
A 120 0
B 100 100,000
C 60 200,000
D 20 280,000
E 0 300,00
Using the table above, what are the opportunity costs of increasing the production of guns from
100 to to to 120?
A) 20 guns B) 100,000 vaccines
C) 80,000 vaccines D) 280,000 vaccines
Use the Figure for the question(s) below.
6) Tarzan and David Livingstoneʹs production possibilities frontiers are shown in the figure above. 6)
A) Tarzan has the absolute advantage in growing grain.
B) Tarzan has a comparative advantage in growing grain.
C) Livingstone has the absolute advantage in growing grain.
D) Livingstone has a comparative advantage in growing grain.
E) A and B are correct.
A‐2
Table 02-01
Corey 10 5
Pat 5 1
7) Refer to Table 02-01. Based on their comparative advantages, Corey should specialize in 7)
________, and Pat should specialize in ________.
A) neither making pizza nor delivering pizza; both making pizza and delivering pizza
B) delivering pizza; making pizza
C) both making pizza and delivering pizza; neither making pizza nor delivering pizza
D) making pizza; delivering pizza
8) In general, individuals and nations should specialize in producing those goods for which they 8)
have a(n):
A) comparative advantage.
B) absolute advantage and a comparative advantage.
C) absolute advantage.
D) absolutely comparative advantage.
9) The difference between ʺdemandʺ and ʺquantity demandedʺ is that 9)
A) ʺquantity demandedʺ is never known.
B) ʺdemandʺ is a hypothetical relationship and ʺquantity demandedʺ is an actual point.
C) ʺdemandʺ refers to the entire curve while ʺquantity demandedʺ refers to a particular
price-quantity combination on the curve.
D) ʺquantity demandedʺ refers to the entire curve while ʺdemandʺ refers to a particular
price-quantity combination on the curve.
E) ʺdemandʺ is measured at a particular price at a particular time period.
10) ʺHolding all other relevant factors constant, consumers will purchase more of a good as the 10)

price falls.ʺ This statement reflects the behavior underlying:
A) the demand curve. B) the supply curve.
C) a decrease in the demand curve. D) an increase in demand.
11) When a slice of pizza sold for $2, Chris did not purchase any. When the price fell to $1.75, 11)

Chris purchased a slice each day for lunch. Moeʹs reservation price for a slice of pizza must be:
A) exactly $2.00. B) exactly $1.75.
C) at least $1.75 but less than $2. D) less than $1.75.
12) Complements are goods or services that 12)

A) consumers use together in some way.
B) are never used together.
C) are similar to one another from the consumerʹs perspective.
D) build up the userʹs self-esteem.
E) compete with each other in the marketplace.
A‐3
13) When the price of a substitute rises, 13)
A) the number of demanders falls.
B) the demand for the other good drops.
C) there is no effect on the demand for the other good.
D) the demand for the other good rises.
E) the prices of complements rise as well.
Use the table for the question(s) below.
Price Quantity Quantity Quantity

Demanded A Demanded B Demanded C
$100 75 60 10
$200 50 40 5
$300 0 30 0
14) There are three demanders, A, B, and C. According to the table above, if price were $100 then 14)

market quantity demanded would be
A) 145 units.
B) 50 units.
C) 30 units.
D) 95 units.
E) Cannot be calculated with the information available.
Use the figure for the question(s) below.
15) Which scenario is most consistent with panel B in the figure above? 15)

A) Prices are expected to drop in the future.
B) Incomes fall and the good is an inferior good.
C) Incomes fall and the good is a normal good.
D) The price of the good fell.
16) Market supply is the quantities that 16)

A) all sellers combined are willing and able to sell at various prices over a specific time period.
B) an individual seller is willing and able to sell at various prices over a specific time period.
C) buyers are willing and able to sell at various prices over a specific time period.
D) sellers are neither willing nor able to sell at various prices over a specific time period good.
E) sellers are willing and able to buy at various prices over a specific time period.
A‐4
17) The Exploding Firecracker Company has facilities to produce a maximum of 500 firecrackers per 17)
day. At the current market price the manager is willing to produce only 100 firecrackers. An
economist would conclude that the quantity supplied at the current price is
A) 200 because quantity supplied depends on excess capacity.
B) 300 because quantity supplied is the amount sellers are both able and willing to sell.
C) 500 because quantity supplied depends on plant capacity.
D) 100 because quantity supplied is the amount sellers are both able and willing to sell.
E) unknown because not enough information is given on what the actual current price is.
18) The point in the figure above represents 18)

A) a profit-maximization point.
B) quantity demanded.
C) quantity supplied.
D) supply.
E) a point on the PPF.
19) Given the two supply curves in the figures above, total market supply at $30 is 19)

A) 30 units. B) 9 units. C) 0 units. D) 16 units. E) 5 units.
A‐5
20) A change in the amount of a good or service that sellers are willing and able to sell as a result of a 20)
price change is called change in ________.
A) quantity supplied
B) potential supply
C) supply curve location
D) quantity sold
E) productive capacity
21) Petroleum is an input into making plastics. Therefore, if the price of petroleum rises, we would 21)

expect the supply of goods made of plastic to
A) remain unchanged because this represents a change in supply and not a change in quantity
supplied.
B) fall.
C) remain unchanged because the price of petroleum would not affect the price of plastic goods.
D) rise.
E) remain unchanged because this represents a change in quantity supplied and not a change in
supply.
22) The Law of Supply states that 22)

A) there is a positive relationship between price and quantity supplied.
B) there is a negative relationship between price and quantity supplied.
C) there is a positive relationship between price and quantity demanded.
D) as price goes up, quantity supplied goes down.
23) The buyer's reservation price of a particular good or service is the: 23)
A) price the buyer must pay to ensure he or she gets it.
B) minimum amount the buyer would be willing to pay for it.
C) same as the market price.
D) maximum amount the buyer would be willing to pay for it.
24) Gertie saw a pair of jeans that she was willing to buy for $35. The price tag, though, 24)
said they were $29.99. Therefore:
A) Gertie should not buy the jeans because the price is not equal to her reservation
price.
B) Gertie should not buy the jeans because they will be of lower quality than she
expected.
C) Gertie should buy the jeans because the price is more than her reservation price.
D) Gertie should buy the jeans because the price is less than her reservation price.
25) As the price of a good rises: 25)

A) government regulation becomes more justified.
B) firms find they can raise price by even more.
C) more firms can cover their opportunity costs of producing the good.
D) firms earn larger profits.
A‐6

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Exam 1- ECON 202

A) 10 pizzas. B) 25 salads. C) 5 pizzas. D) 100 salads.

10) ʺHolding all other relevant factors constant, consumers will purchase more of a good as the 10)

11) When a slice of pizza sold for $2, Chris did not purchase any. When the price fell to $1.75, 11)

12) Complements are goods or services that 12)

Price Quantity Quantity Quantity

14) There are three demanders, A, B, and C. According to the table above, if price were $100 then 14)

15) Which scenario is most consistent with panel B in the figure above? 15)

16) Market supply is the quantities that 16)

18) The point in the figure above represents 18)

19) Given the two supply curves in the figures above, total market supply at $30 is 19)

21) Petroleum is an input into making plastics. Therefore, if the price of petroleum rises, we would 21)

22) The Law of Supply states that 22)

25) As the price of a good rises: 25)

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