WorksheetsECON1900
Total questions: 58
Worksheet time: 15hrs 30mins
efficiency in a market is achieved when____
a social planner intervenes and sets the quantity of output after evaluating buyers' willingness to pay and seller's costs.
no buyer is willing to pay more than the equilibrium price for any unit of the good.
the sum of producer surplus and consumer surplus us maximized.
all firms are producing the good at the same low cost per unit.
cost is a measure of the____
sellers' willingness to buy.
sellers' producer surplus
producer shortage
sellers' willingness to sell
When the price rises from P1 to P2 which are represents the increase in producer surplus to existing producers?
ACH
BCG
DGH
ABGD
Mike and Sarah sell lemonade on the corner for $3.10 per cup. It costs them $0.10 to make each cup. On a certain day, their producer surplus is $45. How many cups did Mike and Sarah sell?
45
7
15
1
Taxes on labor encourage which of the following?
Mothers to stay at home rather than work in the labor force
labor demand to be more inelastic
workers to work overtime
fathers to take on second jobs
Graph(a) and (b) illustrate $4 tax placed on the market. In comparison to (a), (b) illustrates which of the following statements?
when supply is relatively elastic, the deadweight loss of a tax is larger than when supply is relatively inelastic.
when demand is relatively inelastic, the deadweight loss of a tax is smaller than when demand is relatively elastic
when demand is relatively elastic, the deadweight loss of a tax is smaller than when demand is relatively inelastic
when supply is relatively inelastic, the deadweight loss of a tax is smaller than when supply is relatively elastic
This market is characterized by____
a positive externality
a price control
government intervention
a negative externality
if the government were to limit the release of air pollution produced by a glue factory to 75 parts per million, the policy would be considered a___
subsidy
market-based policy
command-and-control policy
corrective tax
The market equilibrium quantity of output is___
5 units
6 units
4 units
3 units
The socially optimal quantity of output is___
4 units
3 units
6 units
5 units
which of the following statements about a well-maintained yard best conveys the general nature of the externality?
a well-maintained yard conveys a positive externality because it increases the home's market value
a well maintained yard conveys a positive externality because it increases the value of adjacent properties in the neighborhood
a well-maintained yard cannot provide any type of externality
a well-maintained yard conveys a negative externality because it increases the property tax liability of the owner
The Occupational Safety and Health Administration has determined that the probability of a worker dying from exposure to a hazardous chemical used in the production of fertilizer is 0.008. The cost of imposing a regulation that would ban the chemical is $23 million. If the value of a human life is equal to $7 million, how many people must the policy affect in order for the benefits to exceed the costs?
184
2,301
412
2,876
a traffic light at an intersection is___
not rival but excludable in consumption
rival but not excludable in consumption
rival and excludable in consumption
not rival and not excludable in consumption
a free rider is a person who____
will only purchase a product on sale
rides public transit regularly
receives the benefit of a good but avoids paying for it
can produce a good at no cost
which of the following is an example of the Tragedy of the Commons?
the number of professional soccer teams increases to the point where the quality of the games decreases, as does the television viewership
Universal Studios becomes so crowded that it institutes a lottery for admissions
a type of fish becomes extinct due to overfishing
a tiger breeding program becomes so successful that local zoos have to build additional exhibits so that visitors can view the cats
which of the following statistics is usually regarded as the best single measure of a society's economic well-being?
the ratio of the government deficit to the government revenue
the producer price index
the GDP deflator
Gross Domestic Product
Which of the following is correct?
Nominal and real interest rates always move together
nominal and real interest rates never move together
nominal and real interest rates do not always move together
nominal and real interest rates always move in opposite directions
for an economy as a whole,___
consumption must equal saving
consumption must equal income
wages must equal profit
income must equal expenditure
if the consumer price index was 100 in Year 1, 123 in Year 2, and 131 in Year 3, then the base year must be___
Year 1
Year 3
Year 2
the base year cannot be determined from information
when the consumer price index falls, the typical family____
can offset the effects of rising prices by saving more
has to spend more dollars to maintain the same standard of living
can spend fewer dollars to maintain the same standard of living
finds that its standard of living is not affected
by far the largest category of goods and services in the CPI basket is___
housing
transportation
food and beverages
education and communication
suppose Will's Year 2 food expenditures in Year 3 dollars amount to $6,670. Then x, the consumer price index for Year 3, has a value of___
5,582
203.7
199.2
5,250
Gilbert has $1537 in his bank account. This money is___
medium of exchange
unit of account
store of value
Gilbert writes a check for $1,299. This money is___
medium of exchange
unit of account
store of value
Gilbert can easily determine that the price of the computer is more than the price of the vacation. This money is___
medium of exchange
unit of account
store of value
What defines liquidity?
refers to how quickly an asset can be converted into a medium of exchange
refers to how quickly an asset can be converted into a unit of storage
refers to how quickly a liability can be converted into a medium of exchange
refers to how quickly a liability can be converted into a unit of storage
What order represents most liquid to least liquid?
$5.00 bill>house>funds in a money market>share of stock
$5.00 bill>funds in a money market>share of stock>house
$5.00bill>share of stock>funds in a money market>house
house>share of stock>$5.00 bill>funds in a money market
Personal possession of currency is prohibited in U.S. prisons, although, in practice, prisoners still exchange goods and services. Until 2003, the year in which the U.S. government banned smoking in federal penitentiaries, cigarettes were the preferred medium of exchange among prisoners. One important difference between using cigarettes and using dollars as money is that_______have intrinsic value.
cigarettes
U.S. dollars
cigarettes are an example of ____ money
commodity
fiat
Nick has $30,000 in a money market account. Is this M1 or M2?
M1
M2
Rosa has $7,000 in a two-year certificate of deposit (CD). M1 or M2?
M1
M2
Jake has $1200 in a checking account. M1 or M2?
M1
M2
While all members of the Federal Reserve Board of Governors vote at Federal Open Market Committee (FOMC) meetings, only____ of the regional bank presidents are members of the FOMC.
5
7
8
12
The Federal Reserve's role as a lender of last resort involves lending to which of the following financially troubled institutions?
Governments in developing countries during currency crises
U.S. banks that cannot borrow elsewhere
U.S. state governments when they run short on tax revenues
The Federal Reserve's primary tool for changing the money supply is____
the reserve requirement
the discount rate
open market operations
In order to decrease the number of dollars in the U.S. economy (the money supply), the Federal Reserve will____ government bonds
buy
sell
What is the equation to find (a bank's) reserves?
Reserves=Loans x Demand Deposits
Reserves=Demand Deposits + Loans
Reserves= Demand Deposits - Loans
Reserves= Demand Deposits / Loans
How do you find (a banks) required reserves?
required reserves=demand deposits x loans
required reserves= demand deposits / required reserve ratio
required reserves= demand deposits x required reserve ratio
required reserves= demand deposits - required reserve ratio
How do you find (a bank's) excess reserves?
excess reserves= reserves - required reserves
excess reserves= reserves / required reserves
excess reserves= required reserves x reserves
excess reserves= reserves + required reserves
Bo buys and sells real estate. Two weeks ago, he paid $400,000 for a house on Cypress Street, intending to spend $50,000 on repairs and then sell the house for $500,000. Last week, the city gov. announced a plane to build a new landfill on Cypress Street just down the street from the house Bo purchased. This results in Bo trying to decide whether to repair the house ($50,000) and then sell the house for $390,000 or he can forgo the repairs and sell the house as it is for $350,000. He should...
move the house from Cypress Street to a more desirable location, regardless of the cost of doing so.
keep the house and live in it
forgo the repairs and sell the house as it is for $390,000
go ahead with the $50,000 repairs and sell the house for $390,000
which of the following is an example of a normative, as opposed to a positive statement?
a decrease in the minimum wage would decrease unemployment
the elimination of trade restrictions would increase an economy's standard of living
the social security system is a good system and it deserves to be preserved as it is
following the most recent recession, the economy is recovering at a slower than usual pace
beef is a normal goof. You observe that both the equilibrium price and quantity of beef have fallen over time. Which of the following explanations would be most consistent with this observation?
new medical evidence has been released that indicates a negative correlation between a person's beef consumption and life expectancy
consumers have experienced an increase in income, and beef production tech has improved
price of chicken has risen and the price of steak has fallen
the demand curve for beef must be positively sloped
according to the circular flow diagram if Christopher is the owner of a landscaping business and he just received $50 for mowing Mrs. Pendleton's lawn, ____
the $50 represents wages, rent, and profit to Christopher's firm
Christopher acts as a firm who interacted in the markets for goods and services with Mrs. Pendleton
the $50 represents a cost of production for Christopher's firm
Christopher acts as a firm who interacted in the markets for factors of production with Mrs. Pendleton
Which of the following demonstrates the law of demand?
after Roberto got a raise at work, he bought more pretzels at $1.50 per pretzel than he did before his raise
Ashlyn buys more donut holes at $0.25 per donut hole than at $0.50 per donut hole, other things equal
Benjamin buys fewer muffins at $0.75 per muffin than at $1 per muffin, other things equal
Tiana buys fewer Snickers at $0.60 per candy bar after the price of MMs falls to $0.50 per bag
In a market economy, economic activity is guided by ____
self-interest and prices
central planners
the government
public-interest groups
goods with many close substitutes tend to have___
price elasticities of demand that are unit elastic
more elastic demands
less elastic demands
income elasticities of demand that are negative
when a tax is placed on the sellers of a product, buyers pay___
more and sellers receive more than they did before the tax
less and sellers receive more than they did before the tax
less and sellers receive less than they did before the tax
more and sellers receive less than they did before the tax
what is the opportunity cost of increasing the production of rye from 700 bushels to 1200 bushels?
250 bushels of corn
1000 bushels of corn
750 bushels of corn
500 bushels of corn
the market demand curve____
shows the relationship between price and the number of buyers in a market
is found by vertically adding the individual demand curves
represents the sum of the prices that all the buyers are willing to pay for a given quantity of the good
shows how the total quantity demanded of a good varies as price varies
a good will have a more inelastic demand, the____
broader the definition of the market
more it is regarded as a luxury
greater the availability of close substitutes
longer the period of time
a key determinant of the price elasticity of supply is the___
income of consumers
price elasticity of demand
importance of the good in a consumer's budget
time horizon
Both Alvina and Jane___
face a constant trade-off between producing pitchers of lemonade and pizzas
can produce more pizzas than pitchers of lemonade is they devote all their time to pizza production
would benefit from specializing in pizza production
would benefit from specializing in lemonade production
the rate of trade-off between producing chairs and producing couches is constant in____
neither (a) nor (b)
Graph (a) only
both (a) and (b)
graph (b) only
the most obvious benefit of specialization and trade is that they allow us to ____
work more hours per week than we otherwise would be able to work
spend more money on goods that are beneficial to society and less money on goods that are harmful
consume more goods than we otherwise would be able to consume
consume more goods by forcing people in other countries to consume fewer goods
making rational decisions at the margin means that people___
evaluate how easily a decision can be reversed if problems arise
compare the marginal costs and marginal benefits of each decision
make those decisions that do not impose a marginal cost
always calculate the dollar costs for each decision
If the production possibilities frontier shown is for two months of production, then which of the following combos of peanuts and cashews could Peru produce in two months?
2 pounds of peanuts and 240 pounds of cashews
3 pounds of peanuts and 150 pounds of cashews
5 pounds of peanuts and 160 pounds of cashews
7 pounds of peanuts and 135 pounds of cashews
Two goods are complements when a decrease in the price of one good___
increases the demand for the other good
decreases the quantity demanded of the other good
increases the quantity demanded of the other good
decreases the demand for the other good
which of the following causes the price paid by buyers to be different than the price received by sellers?
binding price ceiling
binding price floor
tax on the good
nonbinding price control
