Mid term1 Section 52. Introduction to economics

Transcription

1 University of Sharjah College of Business Administration Department of Finance and Economic Instructor: Dr. Habib Ouni Springer Semester April, 15 Mid term1 Section 52 Introduction to economics Name : Id: First part: Question Multiple choice Question Answer Question Answer 1 A 16 A 2 A 17 A 3 B 18 A 4 C 19 D 5 B 20 C 6 A 21 A 7 D 22 B 8 B 23 A 9 A 24 A 10 C 25 B 11 B 26 D 12 B 27 C 13 D 28 C 14 D 29 A 15 B 30 D Second part: Question true OR false Question Answer Question Answer 1 T 11 T 2 T 12 T 3 T 13 T 4 T 14 T 5 T 15 F 6 T 16 T 7 F 17 F 8 T 18 T 9 F 19 T 10 F 20 T 1

2 1. Adam Smith's concept of the invisible hand refers to: A) The market mechanism. B) Central planning. C) Oppression of the working class by rich entrepreneurs. D) Government regulation 2. The branch of economics that focuses on the whole economy variables like inflation and unemployment is called: A) Macroeconomics. B) Microeconomics C) Free-market economics. D) Aggregate economics. 3. The total opportunity cost of eating dinner at a restaurant is: A) The amount of money that the meal cost you. B) The best alternative use of your time and money C) The amount of money that an alternative activity would cost you. D) Zero, since you gain satisfaction from the meal. 4. In economics, capital refers to: A) Money. B) Savings put aside for future investment. C) Goods that can be used to produce other goods. D) The value of a corporation's assets. 5. Answer the following questions based on the graph that represents J.R.'s demand for ribs per week of ribs at Judy's rib shack 20 Price Supply Demand Quantity 2

3 At the equilibrium price, how many ribs would J.R. be willing to purchase? A) 10 B) 8 C) 40 D) 6 6. How much is J.R. willing to pay for 20 ribs? A) 10 B) 20 C) 12 D) 8 7. What is the magnitude of J.R.'s consumer surplus at the equilibrium price? A) 50 B) 60 C) 70 D) At the equilibrium price, how many ribs would Judy be willing to sell? A) 30 B) 40 C) 50 D) How high must the price of ribs be for Judy to supply 20 ribs to the market? A) 5 B) 15 C) 10 D) At the equilibrium price, what is the magnitude of total surplus (consumer surplus plus producer surplus)in the market? A) 100 B) 150 C) 200 D) Refer to the figure to the right. A shortage of units will result at a price of. A) 14 ; 27 B) 7; 9 C) 17; 9 D) 7; 18 3

4 12. Using this graph At a price of 30 A) the market is in equilibrium B) there is a surplus of 35 units C) there is a surplus of 65 units D) there is a shortage of 35 units 13. At a price of 20 A) there is a surplus of 65 units B) there is a surplus of 35 units C) there is a shortage of 35 units D) the market is in equilibrium 14. At a price of 10 A) the market is in equilibrium B) there is a surplus of 65 units C) there is a surplus of 35 units D) there is a shortage of 35 units 15. If the price of DVRs fell and, as a result, the demand for VHS recorders fell, we could conclude that VHS recorders and DVRs are A) Normal goods B) Substitutes C) Complements D) Unrelated 16. To find the quantity people will buy, we move along the demand line if what changes? A) price of the product B) income C) price of a substitute D) price of a complement 4

5 17. If people s tastes change so that they like the product better, the demand for the product will A) shift to the right B) shift to the left C) move along D) all of above 18. If buyers expect the price of a product to rise greatly very soon, the demand for that product will A) shift to the right B) shift to the left C) move along D) all of above 19. Corn Total utlity Mrginal Utility ? 3? ? 5? 2 Refer to the table above. Total Utility derived from consuming three ice cream cones equals: A) 34 B) 6 C) 22 D) The law of diminishing marginal utility indicates that: A) the demand for the good gets more elastic as the price falls B) The total amount of utility falls as we consume additional amounts of a good C) We generally will not enjoy the third piece of pizza as much as the first slice D) The additional level of utility stays the same as more of a good are consumed 21. The price elasticity of demand measures how much A) quantity demanded responds to a change in price. B) quantity demanded responds to a change in income. C) price responds to a change in demand. D) demand responds to a change in supply. 22. Price elasticity of demand is defined as A) the percentage change in price divided by the percentage change in quantity demanded B) the percentage change in quantity demanded divided by the percentage change in price C) the change in quantity demanded divided by the change in price 5

6 D) the change in price divided by the change in quantity demanded 23. If an increase in the price of a product from $1 to $2 per unit leads to a decrease in the quantity demanded from 100 to 80 units, then the value of price elasticity of demand is : A) -1/5 B) -2/3 C) -1/4 D) Suppose there are three buyers and four sellers in a market as shown in the following individual demand and supply schedules. Table 3.1 Quantity Demanded By Price Alejandro Ben Carl Market $ Quantity Supplied By Price Avery Brandon Cassandra Market $

7 In Table 3.1, if the price is set at $4, the market will: A) Be in equilibrium. B) Experience a shortage of 22 units C) Experiences a surplus of 30 units. D) Experiences a surplus of 56 units. 25. In Table 3.1, if the price is $2, the market will: A) Be in equilibrium. B) Experience a shortage of 22 units C) Experiences a surplus of 30 units. D) Experiences a surplus of 56 units 26. In Table 3.1, if the price is set at $8, the market will: A) Be in equilibrium. B) Experience a shortage of 22 units. C) Experiences a surplus of 30 units. D) Experiences a surplus of 56 units. 27. In Table 3.1, if the price is set at $3: A) This is a price floor. B) The surplus is equal to the quantity demanded. C) There is a shortage D) The market is in equilibrium 28. In Table 3.1, the equilibrium market quantity is: A) 14 units. B) 20 units. C) 30 units. D) 50 units 29. In Table 3.1, the equilibrium market price is: A) $4. B) $3. C) $2 D) $ Which of the following is a determinant of demand? A) Income. B) Expectations of income C) Price of other goods. D) All of the above. 7

8 Part II: True False 1. Generally an increase in the size of market increases demand. 2. an increase in price of a substitute good increases quantity demanded 3. Tastes and income are determinants of demand 4. At a point, marginal utility begins to decline as consumption increases 5. The inverse relationship between quantity demanded and price for a good can be explained by the law of diminishing marginal utility 6. The price elasticity of demand measures the response of consumers to a change in price 7. A price cut will increase total revenue if demand is inelastic 8. The demand curve shows the quantities of a good buyers are willing and able to purchase at alternative prices 9. The supply curve of an individual producer is based on the expected demand in the market. 10. According to the law of supply, there is an inverse relationship between price and quantity supplied. 11. At the equilibrium price for plasma TVs, everyone who is willing and able to purchase a plasma TV is able to get on 12. A policy of laissez faire relies on the invisible hand to determine prices for goods and services. 13. Economics is the study of how to allocate scarce resources among competing uses. 14. If resources were unlimited, opportunity costs would not exist. 15. The factors of production include land, labor, and money used to produce goods and services. 16. Capital includes the machinery and buildings used to produce goods and services 17. The best answer to the HOW to produce question for an economy is always the method of production that uses the most labor. 18. A market economy uses price signals to indicate to producers which goods to produce. 19. Pollution is an example of an externality. 20. The Latin phrase ceteris paribus means that other variables are being held constant. Good luck 8