Some time ago the government of China required many highly skilled technicians

The opportunity cost of attending college includes

Select one:

a. the cost of food.b. the higher expected future income from a college degree.c. the wages forgone from studying and attending class instead of working.

d. all of the above.

Question 1 If an individual’s demand for frozen dinners increases when the price of steak rises, we would infer that

Select one:

a. steak is a normal good and frozen dinners an inferior good for this person.b. this individual’s limit prices for steak have fallen.c. steak and frozen dinners are complements for this person.d. steak and frozen dinners are substitutes for this person.

Question2 The opportunity cost of attending college includes

Select one:

a. the cost of food.b. the higher expected future income from a college degree.c. the wages forgone from studying and attending class instead of working.

d. all of the above.
Question3 Recent health studies claim that consuming a glass of wine with afternoon or evening meals significantly reduces the risk of heart disease.

If people believe this new information, what is likely to occur to the short-run equilibrium in the wine market?

Select one:

a. Equilibrium price will rise while quantity will fall due to a decrease in the supply of wine.b. Equilibrium price will fall while quantity will rise due to an increase in the supply of wine.c. Equilibrium price and quantity will both rise due to an increase in the demand for wine.

d. Equilibrium price and quantity will both fall due to a decrease in the demand for wine.

Question4 On the New York Stock Exchange, the current price per share for stock of the Boston Celtics, an NBA basketball team, is $8.25. At that price the total quantity of shares demanded is 2,500, while the total quantity supplied for trade is 2,000. It follows that
Select one:

a. there is a surplus of shares of the Boston Celtics on the stock exchange.b. $8.25 is the equilibrium price per share.c. there is a shortage of shares of the Boston Celtics on the stock exchange.

d. there will be downward pressure on the price of shares of the Boston Celtics.

Question 5 If the owner of an ice cream store on Kirkwood Avenue charges $1.20 for an ice cream cone, her total revenue is $540 per day. If she lowers the price to $1.00, total revenue falls to $500 per day.
The demand for ice cream on Kirkwood Avenue is

Select one:

a. elastic.b. inelastic.

c. unitary elastic.d. neither elastic nor inelastic because this situation violates the law of demand.

Question 6 Consider bagels and cream cheese. These two goods have a cross elasticity of ?5. This means that
Select one:

a. Bagels and cream cheese are weak substitutes.b. Bagels and cream cheese are strong substitutes.c. Bagels and cream cheese are strong complements.

d. Bagels and cream cheese are weak complements.

Question 7 Some time ago the government of China required many highly skilled technicians and scientists to engage in unskilled agricultural labour in order to develop ‘proper social attitudes’.
This policy caused China to produce

Select one:

a. inside its PPF.b. outside its PPF with respect to food, but inside the PPF with respect to high-technology goods.

c. inside its PPF with respect to food, but outside the PPF with respect to high-technology goods.d. at an appropriate point along its production possibilities frontier (PPF).

Question 8 Consider the market for SUVs. If the price of gasoline increases by 150 percent we would expect the equilibrium price of SUVs to _____ and the equilibrium quantity to _____.
Select one:

a. increase; increaseb. decrease; decrease

c. increase; decreased. decrease; increase

Question 9 Which of the following events would cause the supply of gum to FALL?
Select one:

a. A rise in income (assuming gum is a normal good).b. A rising population.c. An increase in the price of cinnamon.d. A discovery that chewing gum reduces tooth decay.

Question 10 Which of the following accurately describes the fundamental problem at the core of all economic analysis? The fundamental problem is
Select one:

a. understanding how resources can be used without creating scarcity.b. finding the way in which society can eliminate scarcity.c. the creation of non-scarce goods and the elimination of scarce goods.d. understanding how scarce resources are allocated among competing uses to best satisfy society’s unlimited wants.

Question 11 Any point outside the PPF (or PPC)

Select one:

a. is not possible given current resources and technology.

b. represents efficient use of the economy’s resources.c. represents the inefficient use of the economy’s resources.d. none of the above.

Question 12 Which of the following is a positive statement?
Select one:

a. New York State should replace its income tax with a higher sales tax.b. New York State income taxes are the highest in the nation.

c. New York State income taxes are unfair.d. Taxes in New York are too high.

Question 13 A time-series graph of mortgage rates would show
Select one:

a. the mortgage rates in different cities.b. the relationship between mortgage rates and housing sales.c. that mortgage rates are positively related to ice cream sales.d. the behavior of mortgage rates over time.

Question 14 Suppose parking fees at Flinders University increase. If demand is relatively elastic then

Select one:

a. total revenue from parking fees will rise.

b. total revenue from parking fees will fall.c. the direction of change in total revenue from parking fees cannot be determined.d. total revenue from parking fees is constant.

Question 15 Which graphs below show a relationship with a negative slope?
Select one:

a. B and C.b. C and D.

c. A and B.d. A and D.

Question 16 In the graphs below, the production possibility curve (or frontier) is concave due to
Select one:

a. its negative slope.b. its shifting out over time.c. increasing opportunity costs.

d. all of the above.

Question 17 An increase in the price of Snapple drinks
Select one:

a. causes the supply of bottled water to shift right.b. causes the demand for Snapple drinks to shift left.c. causes the demand for bottled water to shift right.d. causes none of the above.

Question 18 This year the demand for new homes increases while at the same time the supply also increases. As a result of these changes in the market for new homes you can conclude that
Select one:

a. the equilibrium number of homes sold will decrease.b. the equilibrium number of new homes will increase.c. the equilibrium price of new homes will rise.d. the equilibrium price of new homes will fall.

Question 19 Suppose the elasticity of demand for an iPod is ?3.5. This means that
Select one:

a. the demand curve for iPods is very steep.b. a 10 percent increase in the price of iPods will cause the quantity demanded to RISE by 35 percent.c. a 10 percent increase in the price of iPods will cause the quantity demanded to FALL by 35 percent.d. the demand for iPods is inelastic.

Question 20 Aglets are the plastic tips on shoelaces that make it easier to lace your shoes. The demand for aglets is probably
Select one:

a. unit elastic.b. elastic but not perfectly elastic.c. inelastic.d. perfectly elastic.

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