2015 Spring Exam 1. Name: Class: Date: Multiple Choice Identify the choice that best completes the statement or answers the question.

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1 Class: Date: 2015 Spring Exam 1 Multiple Choice Identify the choice that best completes the statement or answers the question. Table 2-3 Production Possibilities for Libraryland Books Magazines Ch.2 Refer to Table 2-3. What is the opportunity cost to Libraryland of increasing the production of books from 200 to 300? a. 100 magazines b. 150 magazines c. 200 magazines d. 350 magazines Figure Ch.2 Refer to Figure 2-4. If this economy devotes all of its resources to the production of notepads, then it will produce a. 0 notepads and 40 lamps. b. 35 notepads and 20 lamps. c. 70 notepads and 0 lamps. d. 70 notepads and 40 lamps. 1

2 Figure Ch.2 Refer to Figure 2-5. The opportunity cost of this economy moving from point A to point C is a. 75 soccer balls. b. 125 soccer balls. c. 125 soccer balls and 240 sweaters. d. 240 sweaters. Figure Ch.2 Refer to Figure 2-7. Point K represents an outcome in which a. production is inefficient. b. some of the economy s resources are unemployed. c. the economy is using all of its resources to produce hammers. d. the economy is using all of its nails to produce hammers. 2

3 Table 3-4 Assume that the farmer and the rancher can switch between producing meat and producing potatoes at a constant rate. Labor Hours Needed to Make 1 Pound of Pounds Produced in 24 Hours Meat Potatoes Meat Potatoes Farmer Rancher Ch.3 Refer to Table 3-4. The opportunity cost of 1 pound of potatoes for the rancher is a. 1/2 pound of meat. b. 1/2 hour of labor. c. 2 pounds of meat. d. 6 hours of labor. 6. Ch.3 Refer to Table 3-4. The rancher has a comparative advantage in the production of a. meat. b. potatoes. c. both goods. d. neither good. 7. Ch.3 Refer to Table 3-4. The rancher has an absolute advantage in the production of a. meat. b. potatoes. c. both goods. d. neither good. 3

4 Figure 3-2 Peru s Production Possibilities Frontier 8. Ch.3 Refer to Figure 3-2. Suppose Peru decides to increase its production of emeralds by 2. What is the opportunity cost of this decision? a. 30 rubies b. 40 rubies c. 60 rubies d. 120 rubies 9. Ch.4 Which of the following changes would not shift the demand curve for a good or service? a. a change in income b. a change in the price of the good or service c. a change in expectations about the future price of the good or service d. a change in the price of a related good or service 10. Ch.4 macaroni and cheese is an inferior good, then an increase in a. the price will cause the demand curve for macaroni and cheese to shift to the left. b. the price will cause the demand curve for macaroni and cheese to shift to the right. c. a consumer s income will cause the demand curve for macaroni and cheese to shift to the left. d. a consumer s income will cause the demand curve for macaroni and cheese to shift to the right. 11. Ch.4 Good X and good Y are substitutes. If the price of good Y increases, then the a. demand for good X will decrease. b. quantity demanded of good X will decrease. c. demand for good X will increase. d. quantity demanded of good X will not change. 4

5 12. Ch.4 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. 13. Ch.5 Tyler purchases 5 pounds of hot dogs per month when his monthly income is $2,000 and 4 pounds of hot dogs per month when his monthly income is $2,200. Tyler s income elasticity of demand for hot dogs is a. 2.33, and hot dogs are a normal good. b , and hot dogs are an inferior good. c. 0.43, and hot dogs are a normal good. d , and hot dogs are an inferior good. Figure Ch.5 Refer to Figure Along which of these segments of the supply curve is supply most elastic? a. AB b. CD c. DH d. GH 15. Ch.5 Refer to Figure Using the midpoint method, what is the price elasticity of supply between points C and D? a b c d

6 16. Ch.5 If a 30 percent change in price causes a 15 percent change in quantity supplied, then the price elasticity of supply is about a. 0.5, and supply is elastic. b. 0.5, and supply is inelastic. c. 2, and supply is inelastic. d. 2, and supply is elastic. Figure Ch.6 Refer to Figure 6-8. If the government imposes a price ceiling of $2 on this market, then there will be a. no shortage of the good. b. a shortage of 45 units of the good. c. a shortage of 60 units of the good. d. a shortage of 85 units of the good. 6

7 Figure 6-14 The vertical distance between points A and B represents the tax in the market. 18. Ch.6 Refer to Figure The per-unit burden of the tax on sellers is a. $6. b. $8. c. $10. d. $24. 7

8 Figure Ch.6 Refer to Figure Suppose a tax of $4 per unit is imposed on this market. How much will buyers pay per unit after the tax is imposed? a. $3 b. $5 c. $4 d. $7 Figure Ch.6 Refer to Figure How much tax revenue does this tax generate for the government? a. $120 b. $15 c. $250 d. $300 8

9 Figure Ch.7 Refer to Figure 7-3. Which area represents the increase in consumer surplus when the price falls from P1 to P2? a. ABD b. ACG c. DFG d. BCGD Figure Ch.7 Refer to Figure 7-8. Which area represents producer surplus when the price is P1? a. BCG b. ACH c. ABGD d. DGH 9

10 Figure Ch.7 Refer to Figure At the equilibrium price, consumer surplus is a. $480. b. $640. c. $1,120. d. $1,

11 Figure Ch.7 Refer to Figure At equilibrium, total surplus is a. $36. b. $72. c. $108. d. $

12 Figure Ch.8 Refer to Figure 8-1. Suppose the government imposes a tax of P' - P'''. The consumer surplus after the tax is measured by the area a. J+K+I. b. J. c. M. d. L+M+Y. 12

13 Figure 8-4 The vertical distance between points A and B represents a tax in the market. 26. Ch.8 Refer to Figure 8-4. The amount of deadweight loss as a result of the tax is a. $105. b. $210. c. $490. d. $ Ch.8 Refer to Figure 8-4. The tax results in a loss of producer surplus that amounts to a. $45. b. $90. c. $210. d. $ Assume, for Canada, that the domestic price of tomatoes without international trade is higher than the world price of tomatoes. This suggests that, in the production of tomatoes, a. Canada has a comparative advantage over other countries and Canada will export tomatoes. b. Canada has a comparative advantage over other countries and Canada will import tomatoes. c. other countries have a comparative advantage over Canada and Canada will export tomatoes. d. other countries have a comparative advantage over Canada and Canada will import tomatoes. 13

14 Figure 9-4. The domestic country is Nicaragua. 29. Refer to Figure 9-4. With trade, Nicaragua a. imports 150 calculators. b. imports 250 calculators. c. exports 100 calculators. d. exports 250 calculators. Figure Refer to Figure The price and domestic quantity demanded after trade are a. $8 and 300. b. $8 and 900. c. $14 and 900. d. $14 and