Questions And Answers

Front 1

Trade-offs arise because wants are unlimited and resources are

Back 1

Scarce

Front 2

Economics is the study of

Back 2

How society manages its scarce resources

Front 3

A rational person does not act unless

Back 3

The action produces marginal benefits that exceed marginal costs

Front 4

In general, raising taxes and increasing welfare payments

Back 4

Improves equity at the expense of effciency

Front 5

Since people respond to incentives, we would expect that, if the average salary of accountants increases by 20 per cent, then

Back 5

Fewer students will take degree courses in education and more will take accounting courses

Front 6

Which of the following activities is most likely to produce an externality

Back 6

A student has a party in her room in the student hall of residence (because the students in the hall of residence are being affected)

Front 7

An increase in the price of beef provides information which

Back 7

Tells producers to produce more beef

Front 8

A perfectly competitive market has

Back 8

Many buyers and sellers

Front 9

If an increase in the price of blue jeans leads to an increase in the demand for tennis shoes, then blue jeans and tennis shoes are

Back 9

Substitutes (one of two goods that replace each other in consumption such that an increase in the price of one good leads to an increase in demand and rightward shift in the demand curve for the other good

Front 10

The law of demand states that an increase in the price of a good

Back 10

decrease the quantity demanded for that good

Front 11

The law of supply states that an increase in the price of a good

Back 11

Increases the quantity supplied of that good

Front 12

Which of the following shifts the demand for watches to the right?

Back 12

A decrease in the price of watch batteries if watch batteries and watches are complements

Front 13

If the price of a good is above the equilibrium price

Back 13

There is a surplus and the price will fall

Front 14

If the price of a good is below the equilibrium price

Back 14

There is a shortage and the price will rise

Front 15

An increase (rightward shift) in the demand for a good will tend to cause

Back 15

An increase in the equilibrium price and quantity

Front 16

A decrease (leftward shift) in the supply for a good will tend to cause

Back 16

An increase in the equilibrium price and a decrease in the equilibrium quantity

Front 17

Suppose there is an increase in both the supply and demand for personal computers. In the market for personal computers, we would expect

Back 17

The equilibrium quantity to rise and the change in the equilibrium price to be ambiguous

Front 18

Suppose a frost destroys much of the Florida orange crop. At the same time, suppose consumer tastes shift towards orange juice. What would we expect to happen to the equilibrium price and quantity in the market for orange juice?

Back 18

Price will increase; quantity is ambiguous

Front 19

Suppose both buyers and sellers of wheat expect the price of wheat to rise in the near future. What would we expect to happen to the equilibrium price and quantity in the market for wheat today?

Back 19

Price will increase, quantity is ambiguous

Front 20

If a small percentage increase in the price of a good greatly reduces the quantity demanded for that good, the demand for that good is

Back 20

Price elastic

Front 21

The price elasticity of demand is defined as

Back 21

The percentage change in the quantity demanded of a good divided by the percentage change in the price of that good

Front 22

In general a flatter demand curve is more likely to be

Back 22

Price elastic

Front 23

In general, a steeper supply curve is more likely to be

Back 23

Price inelastic

Front 24

Which of the following would cause a demand curve for a good to be price inelastic

Back 24

The good is a necessity

Front 25

A decrease in supply (shift to the left) will increase total revenue in that market if

Back 25

Demand is price inelastic

Front 26

If an increase in the price of good has no impact on the total revenue in that market, demand must be

Back 26

Unit price elastic

Front 27

Technological improvements in agriculture that shift the supply of agricultural commodities to the right tend to

Back 27

Reduce total revenue to farmers as a whole because the demand for food is inelastic

Front 28

If there is excess capacity in a production facility, it is likely that the firms supply curve is

Back 28

Price elastic

Front 29

If the income elasticity of a demand for a good is negative, it must be

Back 29

An inferior good

Front 30

For a price ceiling to be binding constraint on the market, the government must set it

Back 30

Below the equilibrium price

Front 31

A price floor

Back 31

Sets a legal minimum on the price at which a good can be sold

Front 32

Which of a following worker would be most likely to find it more difficult to get a job after a rise in the minimum wage rate?

Back 32

A teenage worker with few qualifications

Front 33

When a tax is collected from the buyers in a market,

Back 33

The tax burden on the buyers and sellers is the same as an equivalent tax collected from the sellers

Front 34

The burden of a tax falls more heavily on the sellers in a market when

Back 34

Demand is elastic and supply is inelastic

Front 35

A tax placed on a good that is a necessity for consumers will likely generate a tax burden that

Back 35

Falls more heavily on buyers

Front 36

The burden of a tax falls more heavily on the buyers in a market when

Back 36

Demand is inelastic and supply is elastic

Front 37

Consumer surplus is the area

Back 37

Below the demand curve and above the price

Front 38

A buyers willingness to pay is that buyers

Back 38

Maximum amount they are willing to pay for a good

Front 39

Producer surplus is the area

Back 39

Above the supply curve and below the price

Front 40

The sellers cost of production is

Back 40

The minimum amount the seller is willing to accept for a good

Front 41

Total surplus is the area

Back 41

Below the demand curve and above the supply curve

Front 42

Adam smith's "invisible hand" concept suggests that a competitve market outcome

Back 42

Maximizes total surplus

Front 43

If the MC curve crosses the MR curve twice

Back 43

The equilibrium is where the MC crosses MR and the slope of MC is positive

Front 44

The income elasticity of demand for luxury goods is (in absolute value)

Back 44

Greater than 1

Front 45

The law of demand says that, ceteris paribus

Back 45

When the price increases, quantity demanded decreases

Front 46

The individual demand faced by a firm in perfect competition

Back 46

Is horizontal

Front 47

The long run market supply curve in a perfectly competitive industry

Back 47

Can slope upward if more firms in the market shift up the firms cost curves

Front 48

The goods sold by firms operaring in an oligopoly

Back 48

Are homogeneous

Front 49

The price of a good in an oligopolistic market is

Back 49

Higher than the competitive price but lower than the monopoly pirce

Front 50

The price elasticity of demand is

Back 50

The percentage change in the quantity demanded in response to a percentage change in price

Front 51

Non-rivalry in consumption means that

Back 51

Different consumers can use the same good at the same time