Version D Student: 1. Refer to the above diagram. If the price were $2 per gallon, there would be a: A. Shortage of 8 million gallons B. Shortage of 10 million gallons C. Surplus of 10 million gallons D. Surplus of 8 million gallons 2. Variables X and Y in the above table are: A. Positively related B. Negatively related C. Independent D. Nonlinear 3. Suppose there are two economies, Alpha and Beta, which have the same production possibilities curves. If Beta devotes more resources to produce investment goods than consumer goods as compared to Alpha, then in the future: A. Alpha will experience greater economic growth than Beta B. Beta will experience greater economic growth than Alpha C. Alpha will not be able to achieve full employment or productive efficiency D. Beta will not be able to achieve full employment or productive efficiency 4. Which of the following is a normative economic statement? A. The Federal budget surplus rose by 10 billion dollars B. A fall in the unemployment rate is expected next month C. A trade deficit of 20 billion dollars will harm the economy D. The Federal funds rate was reduced by half a percentage point 5. Which statement is true about supply? A. There is an inverse relationship between product price and quantity supplied B. There is some price at which quantity supplied of a product is negative C. As product price decreases, producers are willing to put more of the good on the market for sale D. To entice producers to offer more of a product on the market for sale, product price must rise
6. As a result of a fall in the price of gasoline, consumers can afford to take more driving trips. This is an illustration of: A. The income effect B. The substitution effect C. Diminishing marginal utility D. The rationing function of prices 7. Theposthoc,ergopropterhoc fallacy consists of: A. Using an example to "prove" a different point B. Inferring causality from chronological sequence C. Jumping to conclusions from an inadequate number of cases D. Arguing for or against the person rather than the position being supported 8. Refer to the above graph with three demand curves. A decrease in demand would be illustrated as a change from: A. Point 1 to point 4 B. Point 1 to point 3 C. LineCtoB D. LineAtoC 9. A market demand schedule for a product would indicate that: A. As the product's price falls, consumers buy less of the product B. As buyers' incomes rise, they will buy more of the product C. If buyers demand more of the product, then its price would rise D. There is an inverse relationship between price and quantity demanded 10. Refer to the above production possibilities curves. Curve (a) is the current curve for the economy. Other things being equal, society's current choice of pointpon curve (a) will: A. Allow it to achieve more rapid economic growth than would the choice of pointn B. Entail a slower rate of economic growth than would the choice of pointn C. Entail the same rate of growth as would the choice of pointn D. Be inefficient because it is below the productive capacity of the economy
11. A point inside the production possibilities curve is: A. Attainable and the economy is efficient B. Attainable, but the economy is inefficient C. Unattainable, but the economy is inefficient D. Unattainable and the economy is efficient 12. In a market with supply and demand curves as shown above, a legal price ceiling of $2.50 will result in: A. A surplus of 10 units B. A shortage of 10 units C. No shortage or surplus D. A black market price greater than $2.50 13. If the price of gasoline increases and car dealers suffer a decrease in demand for sport utility vehicles, then gasoline and sport utility vehicles are: A. Substitutes B. Complements C. Inferior goods D. Unrelated goods 14. If product Y is an inferior good, a decrease in consumer incomes will: A. Make buyers want to buy less of Product Y B. Not affect the sales of product Y C. Shift the demand curve for product Y to the left D. Shift the demand curve for product Y to the right 15. If peanut butter and cheese spread are substitute products, which diagram above illustrates the effect on the peanut butter market of a decrease in the price of cheese spread? A. A B. B C. C D. D
16. A plastics manufacturer can make either toys or containers. If the demand for toys increases, then the: A. Demand for containers will decrease B. Supply of containers will increase C. Demand for containers will increase D. Supply of containers will decrease 17. Cuba is a command economy that suffered a decline in economic growth because of a cut in support from the former Soviet Union when it collapsed. As a consequence, Cuba: A. Experienced an outward shift of its production possibilities curve B. Experienced an inward shift of its production possibilities curve C. Moved along its existing production possibilities curve D. Went to a point inside its production possibilities curve Assume that a consumer has $12 in income and she can buy only two goods, apples or bananas. The price of an apple is $1.50 and the price of a banana is $0.75. 18. For this consumer, the opportunity cost of buying one more apple is A. 0.5 of a banana B. 0.75 of a banana C. 1 banana D. 2 bananas 19. In a competitive market, if the existing price is below the equilibrium price, market forces will drive the price: A. Up and quantity supplied up B. Up and quantity supplied down C. Up and supply up D. Down and demand down 20. The production possibility curve: A. Is convex to the origin B. Is based on the law of diminishing returns C. Is the boundary between attainable and unattainable outputs D. Reflects the mixed economy found with most economic systems 21. An increase in the price of product G will result in a: A. Shift of the demand curve for G to the left B. Decrease in the demand for G C. Larger quantity of G demanded D. Movement up and to the left along the demand curve for G 22. Economics is a social science that studies how individuals, institutions, and society may: A. Expand the amount of productive resources available to them B. Attain a minimum level of unemployment C. Best use scarce resources to achieve the maximum satisfaction of economic wants D. Reduce the prices of goods and services to consumers 23. A decrease in the price of digital cameras would lead to a(n): A. Increase in the price and quantity sold of memory cards B. Decrease in the price and quantity sold of memory cards C. Increase in the price and a decrease in quantity sold of memory cards D. Decrease in the price and an increase in quantity sold of memory cards
24. Refer to the four graphs above. Select the graph that best shows the changes in demand and supply in the market specified in the following situation: In the market for camera film, if consumers show greater interest in digital cameras that do not use film, and producers of film have a reduction in labor costs. A. Graph A B. Graph B C. Graph C D. Graph D 25. Refer to the four graphs above. Select the graph above that best shows the changes in demand and supply in the market specified in the following situation: In the market for music CDs sold in stores, if more consumers switch to music-downloads from the Internet, and the cost of making music CDs decreases because of technological improvement in production. A. Graph A B. Graph B C. Graph C D. Graph D