Worksheetsecon 104 exam 1 study (not answers to 2023 exam)
Total questions: 21
Worksheet time: 45mins
the law of supply states that there exists:
a direct positive relationship between the relative price of the good and the quantity of that good supplied
an inverse relationship between the relative price of the good and the quantity of that good supplied.
a direct positive relationship between the relative price of the good and the quantity of that good demanded.
n inverse relationship between the relative price of the gond the quantity of the good demanded.e. a direct positive
which of the following is an effect of minimum wage law?
increased employment of low skilled workers
a redistribution of wages from high skilled union workers to low skilled workers
a vast reduction of poverty in low skilled workers
an increase in demand for higher skilled workerse. a decrease in the quantity supplied of low skilled labor
the major problem with the equality of exchange idea was:
no problem with Equality of Exchange doctrine, as seen by modern price theory being founded on this principle
it could not explain why voluntary exchange occurs, because equal values in trade benefits no one.
exchange is zero sum, meaning one person gains at anothers expense.
the just price doctrine more closely resembles how transactions come into being.
none of the above
which of the following is an example of positive statement?
minimum wage should not be instituted because it causes unemployment
price controls cause shortages and surpluses
exchange is good for people, because it makes everyone better off.
market exchange is a better way for allocation of scarce resources than violence.
both b and d
which of the following is not a mistake of the Classical School of thought?
infinite regression in value
objective theory of value
labor theory value of value
exchange is a zero sum game
the relevant quantities were wrong
which of the following does not cause changes in the supply or demand for a good?
technology
prices of other goods
price
number of buyers
the most important function of the price system is that it has the ability to:
remove scarcity
to ensure fairness
allow for government regulation
transmit scarce information to billions of individuals
none of the above
which of the following determines the law of demand?
the opportunity cost of the next unit
increasing marginal utility with each successive unit.
law of diminishing marginal utility
the increasing value of each successive unit.
none
which of the following is true?
the current account is tabulated by the federal reserve, the US Treasury, and the IRS
the current account consists of the value of all goods and some services that move through customs
gains from trade are always the exports to foreign countries
comparative advantage is the reason we should try to maximize our exports in relation to our imports
tariffs are beneficial to all citizens, because they encourage people to purchase US- made goods
Suppose there are two people on an island: crusoe and friday. Below is each persons underlying productivity with respect to picking coconuts and pineapples. both people want one of each good. the terms of trade (relative price) is one coconut for one pineapple.
Crusoe - Friday
coconuts: 70 - 90
pineapple: 60 - 100
which of the following is true?
gains from trade are 20 mins for Crusoe AND Friday
Crusoe specializes in pineapples
gains from trade are 130 mins for Crusoe and 190 mins for Friday
gains from trade are 10 mins for Crusoe and zero gains for Friday
none
Which of the following is not true?
rent controls cause housing shortages
OPEC monopoly power is the direct result of price controls that were instituted on domestic oil prices
price controls are people control, since prices from peoples' values
a price support will cause a shortage
all are true
the neoclassical revolution:
Introduced the idea of subjectivism in value
introduced absolute quantity of analysis
was begun by adam smith
introduced the equality of exchange doctrine
introduced the law of comparative advantage
Suppose the exchange rate between dollars and yen is 1 dollars to 100 yen and then Japan runs a higher rate of inflation than america. before the exchange rate adjusts, which of the following is true?
there will be an excess supply of dollars in japan relative to yen
there will be an excess supply of yen in japan relative to dollars
there will be a surplus of yen in america relative to dollars.
the relative price of goods in japan will fall as compared to american goods
there will be a surplus of dollars in japan relative to yen.
which of the following is not true?
the purchasing power parity theory of exchange rates is the short run theory
the real interest rate parity theory of exchange states that abnormal returns on assets and investments govern the foreign exchange rates
the purchasing power parity theory of exchange rates states that relative rates of inflation will govern foreign exchange
like goods in different countries should cost the same absent transactions costs
all are true
suppose we have 6 buyers and 7 sellers in the market for horses. MAX buying prices / MIN selling prices
110/89
98/92
97/93
90/98
88/99
87/102
-/109
the limits of price formation are between?
$93 and $97
$97 and $98
$98 and $99
$99 and $102
no market clearing prices in this example
In capitalism, socialism, and democracy, joseph schumpeter describes the economic process of a capitalist system:"Capitalism...is by nature a form or method of economic change and not only never is but never can be stationary... the fundamental impulse that sets and keeps the capitalist engine in motion comes from the new consumers goods, the new methods of production or transportation, the new markets, the new forms of industrial organization that capitalist enterprise creates." Schumpeter refers to this process as:
perfect competition
monopolistic competition
creative destruction
economic stationary
government planning
In Funtion and formation of prices" Hans Sennholz writes that the value of a good or service comes from:
the labor used to produce it
its intrinsic worth
the most important needs served with available quantities
the value of its inputs
the subjective judgement of buyers and sellers
According to F. A. Hayek in "The use of knowledge in society" a market economy, prices:
are chosen by technocrats trained in economic theory
are determined by the cost of a good
convey tacit information, not known by any single person in entirety, that is relevant to the decisions of producers and consumers
convey scientific informaiton that is relevant to the decisions of producers and consumers
none of the above
Jane S. Shaw notes that "Anthony Downs, in one of the earliest public choice books, an Economic Theory of Democracy, pointed out that the voter is largely ignorant of political issues and that is ignorance is ___"
rational
due to laziness
harmful to democracy
beneficial to democracy
can be over come by selfless civil servants
According to Israel Kirzner in "Entrepreneurship," entrepreneurs earn pure economic profit by:
acting as walrasian auctioneers
discovering and facilitating previously unrealized gains from trade
discovering new opportunities fro monopolistic competition
producing goods until the marginal cost is equal to marginal revenue
forcing consumer to buy things they do not want to need
According to F. A. Hayek in "The use of knowledge in society" a market economy, prices:
are chosen by technocrats trained in economic theory
are determined by the cost of a good
convey tacit information, not known by any single person in entirety, that is relevant to the decisions of producers and consumers
convey scientific informaiton that is relevant to the decisions of producers and consumers
none of the above
