Econ Final Exam Review

When a state government chooses to build more roads, the required resources are no longer available for spending on public education. This dilemma illustrates the concept of:

• Marginal Analysis
• Full employment
• Full protection
• Opportunity Cost

From an economic perspective, when a student decides to attend another year of college, the student has concluded that the marginal:

• Costs of attending college has decreased that year
• Benefits of attending college has increased that year
• Benefits of attending college are greater than the marginal costs
• Costs of attending college will be subsidized by someone else such as parents or the government

In the summer of 2008, the price of oil rose dramatically, which in turn caused the price of natural gas to increase. This can best be explained by saying that oil and natural gas are:

• complementary goods and the higher price for oil increased the demand for natural gas.
• substitute goods and the higher price for oil increased the demand for natural gas.
• complementary goods and the higher price for oil decreased the supply of natural gas.
• substitute goods and the higher price for oil decreased the supply of natural gas.

In deciding whether to study for an economics quiz or go to a movie, one is confronted by the idea(s) of:

• scarcity and opportunity costs
• money and real capital
• complementary economic goals
• full protection

The value of the best alternative to any action you undertake is referred to as its:

• Production cost
• Opportunity cost
• Resource cost
• Increasing cost

In a mixed economy, what to produce and how much to produce are determined by

• A central planning agency
• a private planning agency
• Markets and the government
• Large corporations and small entrepreneurs

If the government imposes a tax on the production of cars, which of the following will occur in the market for cars?

• There will be a movement to the right along the supply curve.
• There will be a movement to the right along the demand curve.
• The supply curve will shift to the right.
• The supply curve will shift to the left.
• The demand curve will shift to the right.

Which of the following is true of a price floor?

• To have an impact in the market for the good, the price floor should be set below the existing market price of the good.
• An effective price floor will increase the quantity demanded of the good.
• The price floor would tend to create a shortage of the good in the market.
• The creation of the price floor would not change the quantity supplied of the good if the supply curve were upward sloping
• The intention of the government in creating a price floor is to assist the producers of the good.

Which is consistent with the law of demand?

• An increase in the price of ice cream causes an increase in the quantity of ice cream demanded
• A decrease in the price of bagels causes an increase in the quantity of bagels demanded
• A decrease in the price of muffins causes a decrease in the quantity of muffins demanded
• An increase in the price of candy bars causes no change in the quantity of candy bars demanded

Refer to the figure. If box B represents the resource market and flow (3) represents money income, then:

• Box A is the product market and box C is households
• Box C is the product market and box A is households
• Box D is the product market and box C is households
• Box C is the product market and box D is households