Econ 2010

Front 1

In Cuba, a bureaucratic committeemakes the production decisions for the country's firms and factories.Therefore, Cuba is an example of a:

Back 1

centralized economy

Front 2

A good example of central planning at work inthe U.S. would be:

Back 2

New York City's rent control

Front 3

the entire group of buyers and sellers of aparticular good or service makes up:

Back 3

a market

Front 4

Suppose you bought three tickets to a concert inadvance at the University ticket window. At the last minute one friendcancelled, so you could use only two of those tickets. You scalped, or sold, the third ticket just outside the entrance to theconcert for slightly more than the price you had originally paid. Whichtransaction occurred in a market?

Back 4

Both transactions, the one at the University ticket window as well as the sale at the concert entrance, occurred in markets.

Front 5

Suppose you camped out in front of anelectronics store to be one of the 200 lucky people able to purchase the latestgaming system. You bought the system for $350. Two weeks later you see that thesame system can be sold on e-Bay for $600, so you sell your system. Your marketrole is as:

Back 5

a consumer at the electronics store and as a seller on e-Bay.

Front 6

In order to understand how the price of a goodis determined in the free market, one must account for the desires of:

Back 6

D. purchasers and sellers.

Front 7

Buyers and sellers of a particulargood comprise the:

Back 7

market for the good

Front 8

In a market, the demanders are the _______, andthe suppliers are the ______.

Back 8

buyers;sellers

Front 9

Holding all other relevant factors constant,consumers will purchase more of a good as the price falls." This statementreflects the behavior underlying:

Back 9

the demand curve

Front 10

The demand curve illustrates the fact thatconsumers:

Back 10

tend to purchase more of a good as its price falls

Front 11

Which of the following is NOT true of a demand curve?

Back 11

D. It shows how an increase in price leads to an increase in quantity demanded of a good.

Front 12

A demand curve is ________ sloping because__________________.

Back 12

downward; fewer people are willing to buy an item at higher prices

Front 13

As coffee becomes more expensive, Joe startsdrinking tea, and therefore quantity demanded for coffee decreases. This iscalled:

Back 13

the substitution effect

Front 14

You can spend $5 for lunch and you would like tohave two double cheeseburgers. When you get to the restaurant, you find out theprice for double cheeseburger has increased from $2.50 to $2.99. You decide tohave just one double cheeseburger for lunch. This is best described asa(n):

Back 14

income effect

Front 15

The quantity of Revlon nail polish demanded byJen decreased after the price of Revlon nail polish increased. Jen decides tofind a cheaper brand of nail polish. This is called a(n):

Back 15

substitution effect of a price change

Front 16

When the price of an item increases, buyers tendto purchase less of that item:

Back 16

because of both the subsitution and the income effects

Front 17

The buyer's reservation price of a particulargood or service is the:

Back 17

maximum amount the buyer would be willing to pay for it.

Front 18

Shelly purchases a leather purse for $400. Onecan infer that:

Back 18

her reservation price was at least $400

Front 19

Gertie saw a pair of jeans that she was willingto buy for $35. The price tag, though, said they were $29.99. Therefore:

Back 19

C. Gertie should buy the jeans because the price is less than her reservation price.

Front 20

One reason for the ________ slope of the demandcurve is that as prices fall ________.

Back 20

downward; more people find that the price isless than their reservation price.

Front 21

When a slice of pizza at the student union soldfor $2, Moe did not purchase any. When the price fell to $1.75, Moe purchased aslice each day for lunch. Moe's reservation price for a slice of pizza mustbe:

Back 21

at least $1.75 but less than $2.

Front 22

Sellers tend to offer _______ for sale as priceincreases, and so the supply curve is ______ sloping.

Back 22

more; upward

Front 23

the supply curve illustrates that firms:

Back 23

increase the quantity supplied of a good whenits price rises

Front 24

As the price of a good rises:

Back 24

more firms can cover their opportunity costs of producing the good.

Front 25

Supply curves are generally _______ slopingbecause _______________.

Back 25

upward; of the principle of increasingopportunity costs

Front 26

Last summer, real estate prices in your townsoared. You started noticing more "For Sale" signs in your neighbors'yards. You conclude that:

Back 26

when housing prices rose, they started to exceedsome of your neighbors' reservation prices.

Front 27

Jessica's marginal cost for producing a pitcherof lemonade is $0.25. Therefore, $0.25 can also be called her:

Back 27

reservation price

Front 28

Suppose that the market price for hot dogs soldby street vendors has just risen from $4.50 to $5, and that Curly has now begunoperating a hot dog cart. We can assume that:

Back 28

Curly's reservation price is greater than $4.50but no more than $5

Front 29

A seller's reservation price is generally equalto:

Back 29

the sellers's opportunity coasst

Front 30

A seller's reservation price is generally equalto:

Back 30

the sellers marginal cost

Front 31

A market comprised of a downward-sloping demandcurve that intersects an upward-sloping supply curve is said to be stablebecause:

Back 31

at any price other than equilibrium, forces inthe market move price towards the equilibrium

Front 32

Which of the following is NOT a characteristic of a market in equilibrium?

Back 32

B. All consumers are able to purchase an amount equal to their quantity demanded.

Front 33

A market in disequilibrium would feature:

Back 33

either excess supply or excess demand

Front 34

The equilibrium price and quantity of any goodor service is established by:

Back 34

both demanders and suppliers

Front 35

A shortage occurs when:

Back 35

quantity demanded exceeds quantity supplied

Front 36

Whenever the quantity demanded is not equal tothe quantity supplied, the quantity that is actually sold in the marketis:

Back 36

C. the smaller of the quantity demanded and the quantity supplied.

Front 37

Almost every holiday season at least one giftidea achieves fad status. When that happens, prices tend to increasedramatically. Why?

Back 37

Quantity demanded exceeds quantity supplied

Front 38

If the market for sport utility vehicles hasexcess supply, then one can say that:

Back 38

quantity supplied is greater than quantitydemanded

Front 39

You notice that your grocery store always hasday-old bakery products at a reduced price. Why might that be?

Back 39

At the original price, quantity supplied wasgreater than quantity demanded.

Front 40

Why does your grocery store sell day-old bakerygoods but not day-old canned goods?

Back 40

B. An excess supply of bakery goods will quickly spoil, but excess canned goods will not.

Front 41

When the price of a good is below itsequilibrium value

Back 41

consumers will bid the price up

Front 42

When the price of a good is below itsequilibrium value:

Back 42

consumers will bid the price up

Front 43

In a free market, if the price of a good isbelow the equilibrium price, then;

Back 43

C. demanders, to acquire the good, will bid the price higher.

Front 44

In a free market, if the price of agood is above the equilibrium price, then;

Back 44

suppliers, dissatisfied with growinginventories, will lower the price

Front 45

Which of following is NOT true of an equilibrium price?

Back 45

It is always a fair and just price

Front 46

When a market is not in equilibrium:

Back 46

the economic motives of sellers and buyers willmove the market to its equilibrium.

Front 47

Suppose you bought a concert ticket fromTicketmaster for $50, but when you got to the concert scalpers (individuals whore-sell tickets at the event) were selling tickets in the same seating area asyours for $25. What is probably true?

Back 47

There is an excess supply of tickets for thisconcert at the Ticketmaster price

Front 48

You have noticed that there is a persistentshortage of teachers in an inner-city school district in your state. Based onthis observation, you suspect that:

Back 48

he wage for teachers at those schools is lowerthan the equilibrium wage

Front 49

Suppose you notice that more and more people aredriving gas-guzzling cars. Since you drive an economy car, their increaseddemand for gas:

Back 49

causes the price you pay for gas to increase

Front 50

The tendency of markets to automaticallygravitate toward equilibrium is an application of which core principle?

Back 50

The Incentive Principle

Front 51

Which of the following is NOT a characteristic of governmental rent controls?

Back 51

A. Equitable distribution of apartments.

Front 52

Minimum wage laws are an example of:

Back 52

regulated price

Front 53

Suppose one knows two facts: first, the marketfor prescription drugs experiences chronic shortages and second, governmentsets the price for prescription drugs. One can conclude that the:

Back 53

government has set the price below the equilibrium price.

Front 54

A regulated maximum price that is above theequilibrium price:

Back 54

B. will have no effect on the market.

Front 55

A regulated maximum price that is above theequilibrium price:

Back 55

will have no effect on the market

Front 56

In a market where government has set the maximumprice below the equilibrium price, one might expect:

Back 56

a black market to develop as individuals try to take advantage of unexploited opportunities.

Front 57

According to the textbook, government pricecontrols fail because:

Back 57

legislation cannot repeal basic economicmotives.

Front 58

a movementalong a demand curve from one price-quantity combination to another iscalled:

Back 58

change inquantity demanded

Front 59

"As the price of personalcomputers continues to fall, demand increases." This headline isinaccurate because:

Back 59

a falling price for personal computers increases quantity demanded, not demand.

Front 60

An increase in the quantity demanded of teaoccurs whenever:

Back 60

the price of the tea falls

Front 61

If the demand for a good decreases as incomedecreases, it is a(n):

Back 61

normal good

Front 62

In the market for coffee, for manyconsumers:

Back 62

tea is a substitute

Front 63

in the market for office workers:

Back 63

computers are complements.

Front 64

What might cause a demand function to shift tothe right?

Back 64

An increase in the price of a substitute.

Front 65

If the demand for steak increases as incomeincreases, this means that steak is a(n):

Back 65

normal good

Front 66

If the price of computers increases and thedemand for monitors decreases as a result, then:

Back 66

A. computers and monitors are complements.

Front 67

Whether or not a good can be classified as acomplement depends on whether;

Back 67

C. an increase in demand for one good follows a decrease in the price of the other.`

Front 68

A decrease in the price of pizza will cause a(n):

Back 68

increase in quantity demanded

Front 69

if the demand for computers shifts to the rightas consumers' incomes rise, computers are

Back 69

normal goods

Front 70

As consumers' incomes increase, the demand forground beef decreases. Ground beef is called a(n):

Back 70

inferior good

Front 71

As consumers' incomes decrease, the demand curvefor bologna sandwiches shifts to the right. Therefore bologna sandwichesare:

Back 71

inferior goods

Front 72

Suppose the price of gasoline increases and thatsport utility vehicles get poor gas mileage compared to other available cars.One would expect:

Back 72

the demand for sport utility vehicles todecrease

Front 73

Suppose one could either rent a car or take atrain to travel to Chicago from Washington, D.C. If the price of train ticketsincreases:

Back 73

the demand for rental cars will increase

Front 74

Suppose that the price of doughnuts decreasesand that doughnut-holes are a by-product of producing doughnuts. One wouldexpect:

Back 74

the quantity supplied of doughnuts to decrease

Front 75

Suppose that the price of doughnuts decreasesand that doughnut-holes are a by-product of producing doughnuts. One wouldexpect:

Back 75

the supply of doughnut holes to decrease

Front 76

For two goods X and Y to be classifiedas substitutes, it must be the case that

Back 76

when the price of X rises, the demand for Yincreases

Front 77

At the beginning of the fall semester, collegetowns experience large increases in their populations, causing a(n):

Back 77

C. increase in the demand for apartments.

Front 78

Suppose one observes that when the price ofpeanut butter increases, the demand for jelly increases. One must concludethat:

Back 78

peanut butter and jelly are substitutes

Front 79

Suppose that a disease that affects people whoconsume beef has been discovered in the United States. One likely resultis:

Back 79

a decrease in demand for beef

Front 80

Assume consumers eat either rice or pasta fordinner every night. If the price of rice increases, in the pasta market onewould expect to see:

Back 80

an increase in the demand for pasta

Front 81

Suppose that two recent studies conclude thatincreased fiber in the diet does not reduce the risk of developing colon canceras was previously thought. The likely result will be that the:

Back 81

demand for high-fiber foods will decrease.

Front 82

A decrease in the demand for bananas with noconcurrent change in the supply of bananas will result in a ________equilibrium price and a(n) ________ equilibrium quantity.

Back 82

lower; lower

Front 83

As the price of cookies increases, firms thatproduce cookies will:

Back 83

increase the quantity supplied of cookies.

Front 84

Which of the following would cause an increasein quantity supplied of wheat?

Back 84

The price farmers receive for their wheat rises.

Front 85

As the price of flour (an input into the cookieproduction process) increases, firms that produce cookies will:

Back 85

decrease the supply of cookies.

Front 86

Suppose that the technology used to manufacturelaptops has improved. The likely result would be:

Back 86

an increase in the supply of laptops

Front 87

What might cause a supply function to shift tothe left today?

Back 87

C. An expectation that the product's price will rise in the future.

Front 88

An increase in the demand for GM automobilesresults in:

Back 88

an increase in the quantity supplied of GMautomobiles

Front 89

which of the following is NOT a determinant of demand for gasoline?

Back 89

The quantity of gasoline supplied

Front 90

Suppose one observes that when the price ofpeanut butter increases, the demand for jelly increases. One must concludethat:

Back 90

peanut butter and jelly are substitutes

Front 91

Assume consumers eat either rice or pasta fordinner every night. If the price of rice increases, in the pasta market onewould expect to see:

Back 91

an increase in the demand for pasta.

Front 92

suppose that two recent studies conclude thatincreased fiber in the diet does not reduce the risk of developing colon canceras was previously thought. The likely result will be that the:

Back 92

demand for high-fiber foods will decrease

Front 93

A decrease in the demand for bananas with noconcurrent change in the supply of bananas will result in a ________equilibrium price and a(n) ________ equilibrium quantity.

Back 93

lower; lower

Front 94

As the price of cookies increases, firms thatproduce cookies will:

Back 94

increase the quantity supplied of cookies.

Front 95

Which of the following would cause an increasein quantity supplied of wheat?

Back 95

The price farmers receive for their wheat rises

Front 96

As the price of flour (an input into the cookieproduction process) increases, firms that produce cookies will:

Back 96

decrease the supply of cookies

Front 97

Suppose that the technology used to manufacturelaptops has improved. The likely result would be:

Back 97

A. an increase in supply of laptops.

Front 98

What might cause a supply function to shift tothe left today?

Back 98

C. An expectation that the product's price will rise in the future.

Front 99

An increase in the demand for GM automobilesresults in:

Back 99

B. an increase in the quantity supplied of GM automobiles.

Front 100

Which of the following is NOT a determinant of demand for gasoline?

Back 100

The quantity of gasoline supplied.

Front 101

When the supply of a good decreases, consumerswill eventually:

Back 101

C. decrease their quantity demanded.

Front 102

In general, when the supply curve shifts to theleft and demand is constant then:

Back 102

the equilibrium price will rise

Front 103

In general, when the demand curve shifts to theright and supply remains constant then:

Back 103

C. the equilibrium quantity will rise.

Front 104

Suppose that the equilibrium price of rice fallsand the equilibrium quantity falls. Which of the following best fits theobserved data?

Back 104

A decrease in demand with supply constant.

Front 105

Suppose that the equilibrium price of DVDplayers increases and the equilibrium quantity increases. Which of thefollowing best fits the observed data?

Back 105

An increase in demand with supply constant

Front 106

Suppose that the equilibrium price of T-shirtsincreases and the equilibrium quantity falls. Which of the following best fitsthe observed data?

Back 106

A decrease in supply with demand constant

Front 107

Suppose that the equilibrium price of applesfalls and the equilibrium quantity increases. Which of the following best fitsthe observed data?

Back 107

An increase in supply with demand constant.

Front 108

If a market is in equilibrium and demandincreases while supply decreases, the change in the equilibrium price is________ and the change in the equilibrium quantity is _________.

Back 108

positive; indeterminate

Front 109

If both supply and demand increasesimultaneously, the new equilibrium price is ___________ and the newequilibrium quantity is _________________.

Back 109

indeterminate; higher

Front 110

if both supply and demand decreasesimultaneously, the new equilibrium price is ___________ and the newequilibrium quantity is _________________.

Back 110

indeterminate; lower

Front 111

if supply decreases while demand increasessimultaneously, the new equilibrium price is ___________ and the newequilibrium quantity is _________________.

Back 111

higher; indeterminate

Front 112

Suppose that both the equilibrium price andquantity of ketchup fall. The most consistent explanation for theseobservations is:

Back 112

A. a decrease in demand for ketchup with no change in supply.

Front 113

Suppose that the equilibrium price of picklesfalls while the equilibrium quantity rises. The most consistent explanation forthese observations is:

Back 113

an increase in the supply of pickles with no change in demand.

Front 114

Suppose that the equilibrium price of Frenchfries rises while the equilibrium quantity falls. The most consistentexplanation for these observations is:

Back 114

D. a decrease in the supply of French fries with no change in demand.

Front 115

Assume the demand for coffee increases while thesupply decreases. Which of the following outcomes is certain to occur?

Back 115

The equilibrium price of coffee will rise.

Front 116

Assume the demand for sugar decreases while thesupply of sugar increases. Which of the following outcomes is certain tooccur?

Back 116

he equilibrium price of sugar will fall

Front 117

Assume both the demand and the supply of beefdecrease. Which of the following outcomes is certain to occur?

Back 117

The equilibrium quantity of beef will fall

Front 118

Assume both the demand and the supply of bagelsincrease. Which of the following outcomes is certain to occur?

Back 118

B. The equilibrium quantity of bagels will rise.

Front 119

Suppose that both supply and demand for iPadsdecrease. One can predict that the:

Back 119

equilibrium quantity will fall but the equilibrium price can rise or fall.

Front 120

An outcome is socially optimal if it:

Back 120

maximizes total economic surplus

Front 121

Efficiency occurs when:

Back 121

B. the socially optimal quantity of goods and services is being produced.

Front 122

Efficiency is an important goal in economicsbecause it:

Back 122

assures a higher level of output.

Front 123

Assume that Joe is willing to produce anotherhamburger that costs $1 to make. Mary is hungry and is willing to buy ahamburger for $3. According to the NoCash on the Table Principle, Joeand Mary:

Back 123

A. will make a trade.

Front 124

When two people agree to a price in anegotiation, we can assume that:

Back 124

both parties will benefit.

Front 125

if, in a particular market, all unexploitedopportunities have been realized, one can conclude that:

Back 125

the market is in equilibrium

Front 126

The situation described in the book as"Smart for One, Dumb for All" occurs when:

Back 126

individuals, when acting rationally, fail to takeadvantage of all opportunities for social benefit.

Front 127

Suppose the local slaughterhouse gives off anunpleasant stench. The price of meat would then be _______ because not all ofthe _________ are accounted for in the marketplace.

Back 127

too low; costs

Front 128

Suppose that the production of oranges reducesglobal warming. The equilibrium price of oranges is _______ because not all ofthe _________ are accounted for in the marketplace.

Back 128

too low; benefits

Front 129

Which of the following is NOT a condition for maximizing total economic surplus in aparticular market?

Back 129

D. Government regulation of the market is needed.

Front 130

Everyone in the neighborhood has been complainingabout the deteriorating condition of the park, but nobody has cleaned it up.Why not?

Back 130

No single person's reservation price to clean the park makes it worth cleaning it.

Front 131

The NoCash on the Table Principleasserts that:

Back 131

D. in equilibrium, all opportunities have been exploited.

Front 132

Which of the following directly follows from theNo Cash on the Table Principle?

Back 132

For a transaction to occur, the buyer'sreservation price must be greater than the seller's reservation price.

Front 133

according to the equilibrium principle:

Back 133

market equilibrium exploits all opportunitiesfor individual gain, but may not exploit gains possible through collectiveaction.