WorksheetsHonors Economics - Practice Midterm
Total questions: 92
Worksheet time: 2hrs 57mins
An effective price floor must be set above equilibrium, resulting in:
a shortage
a surplus
limited choices
None of the above
If the government set the price at $700, would that be a price ceiling or floor?
Price Ceiling
Price Floor
Neither
If an effective rent ceiling is eliminated, which of the following is most likely to occur in the rental housing market?
An increase in the demand for housing, resulting in a decrease in the quantity of housing supplied
An increase in the demand for housing, resulting in an increase in the quantity of housing demanded
An increase in rents, resulting in an increase in the quantity of housing supplied
A decrease in rents, resulting in an increase in the quantity of housing supplied
When a price ceiling is imposed in a market:
A surplus results
Sellers of the product are made better off
A shortage results
Quantity supplied is greater than the quantity demanded
At the price, neither a surplus or a shortage exists
equilibrium
consumer surplus
producer's surplus
dead weight
A _______________ is a maximum price sellers are allowed to charge for a good. It's an upper limit for the price.
equilibrium
shortage
surplus
price ceiling
This is the minimum price buyers are required to pay for a good. It's a lower limit for the price.
equilibrium
shortage
price floor
price ceiling
A price ceiling will result in a
shortage
surplus
equilibrium price
equilibrium quantity
A price floor will result in a
shortage
surplus
equilibrium price
equilibrium quantity
What does this curve represent?
demand
supply
equilibrium
shortage
At the free market price, the quantity demanded is _____ and quantity supplied is _____.
50, 120
120, 120
120, 50
50, 50
If the government creates a price ceiling of $30, which one of the following statements is correct?
The quantity demanded = 60
The quantity supplied = 160
There is a surplus of 100
There is a shortage of 100
If the government creates a price floor of $80, which one of the following statements is correct?
The quantity demanded = 60
The quantity supplied = 180
There is a shortage of 140
There price floor is ineffective
Suppose the mayor of this city imposes a price ceiling at $5.50. How large is the shortage of rides?
1 million
2 million
3 million
4 million
Suppose the mayor of this city sets a quota limit of rides at 10 million per year. What is the quota rent?
$0.50
$1.00
$1.50
$2.00
The diagram depicts demand and supply curves in a city’s rental housing market. If a price ceiling of $1,000 is imposed on the market, which of the following will occur?
There will be a surplus of rental housing in the city.
The demand curve for housing will shift to the right.
The quantity of rental housing demanded will increase.
The supply curve for housing will shift to the right.
When a price ceiling is imposed in a market:
A persistent surplus results
Sellers of the product are made better off
A persistent shortage results
Quantity supplied is greater than the quantity demanded
When a price floor is imposed, it has an impact on a market if it is set:
Below the equilibrium price
Above the equilibrium price because quantity supplied exceeds quantity demanded
Above the equilibrium price because quantity demanded exceeds quantity supplied
At the equilibrium price
A binding maximum legal price in a market
Price ceiling
Price floor
Who are price ceilings intended to benefit?
Consumers
Producers
Government
Employees
Shortages, lower quality goods, and increased search costs, are all associated with
Price ceilings
Price floors
Rent control, an attempt to make housing more attainable when prices rise too high is an example of a
Price ceiling
Price floor
Which of the following is an argument in support of rent control?
Lower rent prices discourage incentives to build additional housing.
Housing prices in certain areas are rising faster than wages.
Rent control can cause a shortage of housing.
Quality of existing apartments will decrease.
A binding legal minimum price in a market
Price ceiling
Price floor
Price floors are intended to protect
Sellers of a good or service
Consumers of a good or service
Binding price floors often result in a market
Surplus
Shortage
Where would a binding price ceiling need to be set in this market?
$1500
$1200
$900
$600
A price floor set at $15.00 in this market would be
Binding
Not binding
What would be created if a binding price floor was imposed at $15.00?
A shortage of 10 units
A surplus of 10 units
A shortage of 5 units
A market clearing quantity of 15 units
The price ceiling
causes a shortage of 45 units of the good.
makes it necessary for sellers to ration the good.
is not binding because it is set below the equilibrium price.
Both orange and red are correct.
A nonbinding price floor
(i) causes a surplus.
(ii) causes a shortage.
(iii) is set at a price above the equilibrium price.
(iv) is set at a price below the equilibrium price.
(iii) only
(i) and (iii) only
(ii) and (iv) only
(iv) only
A price floor set at
$4 will be binding and will result in a shortage of 3 units.
$4 will be binding and will result in a shortage of 6 units.
$7 will be binding and will result in a surplus of 6 units.
$7 will be binding and will result in a surplus of 12 units.
Suppose that the market for coats is described as follows: What is the equilibrium price of coats?
120
100
80
60
Suppose the government sets a price ceiling of $80. How large will the shortage be?
5 million coats
4 million coats
3 million coats
2 million coats
Suppose again that the government sets a price ceiling of $80 and that people line up to get this good. For how long will people wait in line to obtain a coat if they value their time at $10 an hour?
2 hours
3 hours
4 hours
neither
The opportunity cost of a good is
its price in dollars and cents.
the alternative goods forgone.
the price of alternative goods foregone.
none of the other options
The opportunity cost of Australian households moving away from coal-powered energy to solar-powered energy includes (i) the loss of jobs in the coal industry, (ii) a cleaner environment, (iii) reduced coal production.
(i), (ii) and (iii)
(ii) and (iii)
(iii) only
(i) and (iii)
Which type of economics is based around facts, cause/effect, and can be proven or disproven?
Positive economics
Normative economics
Which type of economics is based around opinion and value judgements?
Positive Economics
Normative Economics
When a free trial is offered, most people forget to cancel the subscription before the trial ends or they enjoy it so much that they choose to remain subscribed. This method results in high amounts of new subscriptions.
Is this Positive or Negative Economics?
(a)
All restaurants in the mall food court should offer a free sample in an effort to gain people's business.
Is this Positive or Normative Economics?
(a)
The opportunity cost of increasing production from 7 to 9 trucks is
Scarcity
2 boats
2 trucks
3 boats
If a natural disaster strikes, the production possibilities curve can shift
No shift
To the left
To the right
Outward on one axis only
What can cause a production possibilities curve to move to the right?
thousands of people move out of the country
an epidemic kills thousands of young men and women
a new invention lowers the cost of production
the population is growing increasingly old
What is the production possibilities curve?
a graph that shows how much an economy can produce between 2 goods
how much money something is
the opportunity one has to give up in order to gain something else
land, labor, capital, entrepreneurs
What does point Y represent on the PPC?
Efficiency
Unattainable / impossible
Inefficency
Nothing
What is opportunity cost?
a graph that shows how much an economy can produce between 2 goods
how much money something is
the opportunity one has to give up in order to gain something else
land, labor, capital, entrepreneurs
For the law of demand, as price rises, what happens to quantity demanded?
it goes up
it goes down
it stays the same
it is not effected
For the law of supply, as price rises, what happens to quantity supplied?
it goes up
it goes down
it stays the same
it is not effected
If the cost of computers falls, then…
the demand for computers goes up.
the supply of computers goes up.
none of the choices
the demand for computers goes down.
Higher interest rates cause people to save more.
Normative
Positive
High taxes on cigarettes discourage smoking.
Normative
Positive
People should save more.
Normative
Positive
Government should tax the rich to help the poor.
Normative
Positive
Unemployment is more harmful than inflation.
Normative
Positive
What is opportunity cost?
the value of the next best option that is not selected when a choice is made.
there is not enough of it.
things people make to earn money.
actions people do to earn money.
Michael has been invited by a friend to go fishing on Friday. His parents are going to a concert. Michael chooses to go fishing with his friend. What is his opportunity cost?
fishing with a friend
going to a concert
Ashton tried our for cheer leading and made the varsity team. She can choose to cheer for football or basketball. She chooses to cheer for football, what is her opportunity cost?
to cheer for football
to cheer for basketball
Label the axis and curves for this graph.
Equilibrium
Price
Quantity
Demand
Supply
Graph a supply curve showing a change in quantity supplied change from 0 units to 4 units, when the price increases from $2 to $4?
Match the following terms to their definitions.
Demand
Price and quantity of a good or service that consumers are willing and able to buy at a given price level
Supply
Price and quantity of a good or service that producers are willing and able to sell at a given price level
Market Equilibrium
Point at which the quantity demanded equals the quantity supplied
Shortage
When the quantity demanded exceeds the quantity supplied at a given price level
Surplus
When the quantity supplied exceeds the quantity demanded at a given price level
A binding maximum legal price in a market
Price ceiling
Price floor
Shortages, lower quality goods, and increased search costs, are all associated with
Price ceilings
Price floors
Which of the following is an argument in support of rent control?
Lower rent prices discourage incentives to build additional housing.
Housing prices in certain areas are rising faster than wages.
Rent control can cause a shortage of housing.
Quality of existing apartments will decrease.
A binding legal minimum price in a market
Price ceiling
Price floor
Price floors are intended to protect
Sellers of a good or service
Consumers of a good or service
Where would a binding price ceiling need to be set in this market?
$1500
$1200
$900
$600
A price floor set at $15.00 in this market would be
Binding
Not binding
In a free market, the price would be
$10
$8
$6.
$4
This is an example of an economic model called a ____________
Production Possibilities Curve
Intro. to Economics Curve
Latter Curve
Circular Flow Curve
Points B, D, and C represent ___________ use of resources.
Ineffecient
Efficient
Unfeasible
Point X represents an amount of production which is __________.
Unfeasible
Inefficient
Efficient
Well thought out
Point A represents an __________ use of resources.
Smart
Inefficient
Efficient
Unfeasible
Which factors could cause an increase the productive capacity of the PPC?
Adding land, labor, and capital
Losing land, labor, and capital
What is the opportunity cost of moving from production from point B to D?
100 units of food
25 units of food
35 units of clothes
50 Units of food
What is the opportunity cost of moving from production from point D to B?
35 units of food
1,000 units of clothes
150 units of clothes
100 units of clothes
Predict: What would have to happen to achieve production at point F?
Build more factories & hire more workers
Factories get destroyed by fire
There is a shortage of materials used to make shoes and food
Get more educated leadership.
Based on the production possibilities curve shown here, what is the opportunity cost of a bowl of colcannon when a producer increases colcannon production from 9 bowls to 11 bowls?
2/3 of a plate of boxty
3 plates of boxty
2 plates of boxty
1 plate of boxty
1.5 plates of boxty
Based on the production possibilities curve shown here, what is the opportunity cost of a T-Rex costume?
0.4
0.25 of a T-Rex costume
4 velociraptor costumes
0.25 T-Rex costumes
10 velociraptor costumes
Kitt's production possibilities curve is shown in this graph. Which of the following is true based on the PPC shown?
Kitt's opportunity cost of designing a new logo in terms of writing another article decreases as more logos are designed
Kitt’s opportunity cost of writing another article in terms of designing a new logo decreases as more articles are written
Kitt’s opportunity cost of writing another article in terms of designing a new logo increases as more articles are written
Kitt’s opportunity cost of designing a new logo in terms of writing another article increases as more logos are designed
The opportunity cost of writing an article or designing a logo remains constant as the production of the other good increases
What is the opportunity cost of one ton of apples in Country X?
250 bales of wool
100 bales of wool
40 bales of wool
4,000 bales of wool
0.025 bales of wool
The graph represents a change in the production possibilities of the nation of Xam. Which of the following statements about the economic growth in the PPC is true?
Xam now has more resources or technology to produce more fruit smoothies, but not fast cars
Xam now has more resources or technology available to produce more fast cars, but not fruit smoothies
Xam's resources or technology have not changed
Xam now has more resources or technology available that can produce either fast cars or fruit smoothies
Xam has fewer resources or technology to produce fruit smoothies and fast cars
A company can use its current resources to produce hats and boots as shown in this production possibilities curve. Which of the following represents a movement from inefficiency to efficiency in this PPC?
From T to S
From V to T
From S to V
From S to R
From S to U
