Review 01. Name: Class: Date: Multiple Choice Identify the choice that best completes the statement or answers the question.

Transcription

1 Name: Class: Date: Review 01 Multiple Choice Identify the choice that best completes the statement or answers the question. Table 3-1 Assume that Sardi and Tinaka can switch between producing corn and producing pork at a constant rate. Minutes Needed to Make 1 Bushel of Corn Pound of Pork Sardi Tinaka Refer to Table 3-1. Assume that Sardi and Tinaka each has 360 minutes available. If each person divides his time equally between the production of corn and pork, then total production is a bushels of corn and 16.5 pounds of pork. b. 21 bushels of corn and 33 pounds of pork. c. 35 bushels of corn and 22 pounds of pork. d. 42 bushels of corn and 66 pounds of pork. 2. Refer to Table 3-1. What is Sardi s opportunity cost of producing one bushel of corn? a. 3/5 pound of pork b. 6/5 pounds of pork c. 4/3 pounds of pork d. 5/3 pounds of pork 3. Refer to Table 3-1. What is Tinaka s opportunity cost of producing one bushel of corn? a. 2/3 pound of pork b. 3/4 pound of pork c. 5/6 pound of pork d. 3/2 pounds of pork 4. Refer to Table 3-1. Sardi has an absolute advantage in the production of a. corn and Tinaka has an absolute advantage in the production of pork. b. pork and Tinaka has an absolute advantage in the production of corn. c. both goods and Tinaka has an absolute advantage in the production of neither good. d. neither good and Tinaka has an absolute advantage in the production of both goods. 5. A competitive market is a market in which a. an auctioneer helps set prices and arrange sales. b. there are only a few sellers. c. the forces of supply and demand do not apply. d. no individual buyer or seller has any significant impact on the market price. 6. The market demand curve a. is found by vertically adding the individual demand curves. b. slopes upward. c. represents the sum of the prices that all the buyers are willing to pay for a given quantity of the good. d. represents the sum of the quantities demanded by all the buyers at each price of the good. 4

2 Name: Table 4-1 Price Aaron s Angela s Austin s Alyssa s $ $ $ $ $ $ Refer to Table 4-1. If these are the only four buyers in the market, then the market quantity demanded at a price of $2 is a. 0 units. b. 3.5 units. c. 6 units. d. 14 units. 8. An increase in supply is represented by a. a movement downward and to the left along a supply curve. b. a movement upward and to the right along a supply curve. c. a rightward shift of a supply curve. d. a leftward shift of a supply curve. 9. Suppose roses are currently selling for $40 per dozen, but the equilibrium price of roses is $30 per dozen. We would expect a a. shortage to exist and the market price of roses to increase. b. shortage to exist and the market price of roses to decrease. c. surplus to exist and the market price of roses to increase. d. surplus to exist and the market price of roses to decrease. 2

3 Name: Figure Refer to Figure 4-8. At a price of $35, a. there would be a shortage of 400 units. b. there would be a surplus of 200 units. c. there would be a surplus of 400 units. d. there would be a surplus of 600 units. 11. The smaller the price elasticity of demand, the a. steeper the demand curve will be through a given point. b. flatter the demand curve will be through a given point. c. more strongly buyers respond to a change in price between any two prices P 1 and P 2. d. smaller the decrease in equilibrium price when the supply curve shifts rightward from S 1 to S 2. Table 5-2 The following table shows a portion of the demand schedule for a particular good at various levels of income. Price (Income = $5,000) (Income = $7,500) (Income = $10,000) $ $ $ $ $ $ Refer to Table 5-2. Using the midpoint method, at a price of $8, what is the income elasticity of demand when income rises from $7,500 to $10,000? a b c d

4 Name: Figure Refer to Figure 5-6. Sellers total revenue would increase if the price a. increased from $6 to $8. b. decreased from $18 to $16. c. decreased from $16 to $15. d. All of the above are correct. 14. Muriel's income elasticity of demand for football tickets is All else equal, this means that if her income increases by 20 percent, she will buy a. 150 percent more football tickets. b. 50 percent more football tickets. c. 30 percent more football tickets. d. 20 percent more football tickets. 15. If two goods are substitutes, their cross-price elasticity will be a. positive. b. negative. c. zero. d. equal to the difference between the income elasticities of demand for the two goods. 4

5 Review 01 Answer Section MULTIPLE CHOICE 1. ANS: B PTS: 1 DIF: 2 REF: 3-1 NAT: Analytic LOC: Understanding and applying economic models TOP: Production 2. ANS: D PTS: 1 DIF: 2 REF: 3-2 NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity cost TOP: Opportunity cost 3. ANS: D PTS: 1 DIF: 2 REF: 3-2 NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity cost TOP: Opportunity cost 4. ANS: D PTS: 1 DIF: 2 REF: 3-2 NAT: Analytic LOC: Gains from trade, specialization and trade TOP: Absolute advantage 5. ANS: D PTS: 1 DIF: 1 REF: 4-1 NAT: Analytic LOC: Markets, market failure, and externalities TOP: Competitive markets MSC: Definitional 6. ANS: D PTS: 1 DIF: 2 REF: 4-2 NAT: Analytic LOC: Supply and demand TOP: Market demand MSC: Interpretive 7. ANS: D PTS: 1 DIF: 2 REF: 4-2 NAT: Analytic LOC: Supply and demand TOP: Market demand 8. ANS: C PTS: 1 DIF: 2 REF: 4-3 NAT: Analytic LOC: Supply and demand TOP: Supply curve MSC: Interpretive 9. ANS: D PTS: 1 DIF: 2 REF: 4-4 NAT: Analytic LOC: Equilibrium TOP: Surpluses 10. ANS: C PTS: 1 DIF: 2 REF: 4-4 NAT: Analytic LOC: Equilibrium TOP: Surpluses 11. ANS: A PTS: 1 DIF: 3 REF: 5-1 NAT: Analytic LOC: Elasticity TOP: Price elasticity of demand MSC: Analytical 12. ANS: C PTS: 1 DIF: 2 REF: 5-1 NAT: Analytic LOC: Elasticity TOP: Income elasticity of demand MSC: Analytical 13. ANS: D PTS: 1 DIF: 2 REF: 5-1 NAT: Analytic LOC: Elasticity TOP: Total revenue Price elasticity of demand 14. ANS: C PTS: 1 DIF: 2 REF: 5-1 NAT: Analytic LOC: Elasticity TOP: Income elasticity of demand 15. ANS: A PTS: 1 DIF: 2 REF: 5-1 NAT: Analytic LOC: Elasticity TOP: Cross-price elasticity of demand MSC: Interpretive 1

6 Review 01 [Answer Strip] _ D 7. _ B 1. _ C 8. _ C 10. _ D 13. _ D 2. _ D 9. _ A 11. _ C 14. _ D 3. _ A 15. _ D 4. _ D 5. _ D 6. _ C 12.