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AGEC 1103 Midterm Study Guide
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Questions in this quiz (50)
1Which of the following statements is true?
- AIf a scarce resource is given away for free, everyone will be able to consume them.
- BGold is not a scarce resource.
- CScarcity means that there is an imbalance between unlimited resources and limited wants.
- DBoth life-saving drugs and ice cream are examples of scarce goods.
2Positive economics is descriptive because:
- Aits predictions cannot be verified with data.
- Bit explains what has happened or predicts what will happen.
- Cit prescribes what an individual or society ought to do.
- Dit is based on ethical judgments.
3John has to choose between two jobs: one that offers him $50 per hour and one that offers him $35 per hour. The
opportunity cost of choosing the job that offers him $50 per hour is:- A$15 per hour.
- B$85 per hour.
- C$1.5 per hour.
- D$35 per hour.
4Which of the following is an example of free riding?
- AA club member who makes voluntary contributions to the club
- BA tax payer who exercises in the public park near his house
- CA consumer who buys his groceries from a nearby store
- DAn individual who sneaks inside a music concert
5Which of the following statements is true of data?
- AThe lesser the available data, the better the analysis.
- BData are not important to evaluate theories.
- CData help in verifying causal relationships.
- DAnecdotes work as good substitutes for data.
6Which of the following is a feature of a good theory?
- AA good theory closely predicts actual behavior.
- BA good theory cannot be tested with data.
- CA good theory is free from approximations.
- DA good theory does not rely on data.
7Which of the following is a key property of models?
- AAll models can be used for a limited time period only.
- BAll economic models begin with assumptions.
- CEmpiricism is not essential for testing models.
- DAll models are consistent and do not make incorrect predictions.
8The mean of a data set is the:
- Asum of all different values multiplied by the number of values.
- Bproduct of all values divided by the number of values.
- Cdifference between the highest value and the lowest value.
- Dsum of all different values divided by the number of values.
9Causation occurs when:
- Achange in one variable does not cause any change in another variable.
- Bchange in one variable is the reason for the change in another variable.
- Ctwo variables tend to move in the same direction.
- Dtwo variables tend to move in opposite directions.
10When two variables move in the same direction, they are said to be:
- Auncorrelated.
- Bpositively correlated.
- Ca negatively correlated.
- Dunitary correlated.
11Which of the following is NOT a problem associated with randomized experiments?
- AExperiments can sometimes get expensive for the researcher.
- BGetting immediate answers to some important questions may not be possible.
- CSometimes experiments are conducted poorly, which may lead to inaccurate results.
- DThe participants in the treatment group and control group are not identical in all respects.
12Which of the following is a property of a good economic question?
- AA good economic question always addresses topics that are important to the whole society and not to an individual
economic agent. - BA good economic question can be answered.
- CA good economic question should never incorporate elements from disciplines other than economics.
- DA good economic question should always have a single solution.
- AA good economic question always addresses topics that are important to the whole society and not to an individual
13Optimization in differences analyzes:
- Athe change in the net benefits when you shift from one alternative to another.
- Bonly the costs of an alternative and not the benefits.
- Cthe total net benefits of different alternatives.
- Dthe total net benefits of the alternative which looks the most attractive.
14Refer to the figure above. Which apartment is the best feasible choice for the individual?
- AApartment 1
- BApartment 2
- CApartment 3
- DApartment 4
15Refer to the figure above. Other things remaining the same, assume that the individual now has a higher opportunity
cost of time. Which of the following statements is true in this context?- AThe cost curve will move down.
- BOptimization in differences will not lead to an efficient outcome.
- COptimization in levels will not lead to an efficient outcome.
- DThe cost curve will move up.
16Scenario: Sarah has to choose between renting a hotel room for two days and renting a hotel room for three days.
Refer to the scenario above. Which of the following statements is true?- AOnly optimization in differences can be used to arrive at an optimum choice. Optimization in levels will not be
applicable in this case. - BBoth optimization techniques will provide an efficient outcome, but optimization in levels will be faster to
implement. - CBoth optimization techniques will provide an efficient outcome, but optimization in differences will be faster to
implement. - DOnly optimization in levels can be used to arrive at an optimum choice. Optimization in differences will not be
applicable in this case.
- AOnly optimization in differences can be used to arrive at an optimum choice. Optimization in levels will not be
17Which of the following statements is true of marginal analysis?
- AMarginal analysis is a tool used in optimization in levels.
- BMarginal analysis compares the consequences of doing one more step of something.
- CMarginal analysis involves the calculation of total net benefits of all the available alternatives.
- DMarginal analysis of alternatives will mostly give an outcome different from optimization in levels.
18Which of the following statements is true?
- AAs the rental prices of downtown apartments rise, only workers with the lowest opportunity cost of time will be
willing to rent them. - BOptimizers with the highest opportunity cost of time push up the rental price of apartments with the highest
commute time. - CAs the rental prices of downtown apartments rise, only workers with the highest opportunity cost of time will be
willing to rent them. - DOptimizers with the lowest opportunity cost of time push up the rental price of apartments with the lowest
commute time.
- AAs the rental prices of downtown apartments rise, only workers with the lowest opportunity cost of time will be
19Assume that a seller in a perfectly competitive market charges more than the equilibrium price. It is likely that this
seller will:- Alose only a few buyers.
- Blose almost all of his buyers.
- Cincrease his profit.
- Dincrease his sales.
20The ________ plots the relationship between prices and the quantity that buyers are willing to purchase.
- Aisoquant
- Bdemand curve
- Csupply curve
- Dindifference curve
21The law of demand states that:
- Athe quantity demanded of a commodity is the same for all consumers in a perfectly competitive market.
- Bthe demand for a commodity is mostly influenced by consumers' income.
- Cthe quantity demanded of a commodity varies inversely with the price of the commodity.
- Dthe demand for a commodity always equals the supply of the commodity.
22Which of the following factors is expected to cause the demand curve for coffee to shift to the right?
- AAn increase in the supply of coffee due to better weather
- BA fall in the manufacturing cost of coffee
- CA higher personal tax on the income of all consumers
- DA higher tax on the sale of tea, a substitute for coffee
23The ________ plots the relationship between prices and the quantity producers are willing to sell
- Aindifference curve
- Bdemand curve
- Cisoquant
- Dsupply curve
24Refer to the figure above. When the demand curve for erasers is D and the supply curve of erasers is S1, what is the
surplus in the market if the price is $7?
- A10 units
- B60 units
- C20 units
- D50 units
25Which of the following statements is true?
- ATastes and preferences of a consumer are not revealed through her buying decisions and consumption patterns.
- BTastes and preferences of a consumer determine the satisfaction she receives from consumption.
- CConsumers' tastes and preferences do not change over time.
- DTastes and preferences of a consumer do not play an important role in arriving at a buying decision.
26John is ready to pay $5 for an extra loaf of bread. Due to an ongoing discount in the store, he gets a loaf for $2. John's
consumer surplus from the purchase is ________.- A$2.5
- B$10
- C$3
- D$2
27Refer to the figure above. If John spends his entire income on chairs, how many chairs can he purchase?
- A4
- B40
- C3
- D20
28Refer to the table above. What is the marginal benefit that Jenny derives from the 5th unit?
- A$0
- B$30
- C$1
- D$6
29The law of demand is the reason behind:
- Athe income elasticity of demand having a negative value.
- Bthe price elasticity of demand having a negative value.
- Cthe price elasticity of demand having a positive value.
- Dthe income elasticity of demand having a positive value.
30Which of the following is the formula to calculate arc elasticity of demand?
- AArc elasticity of demand = [(Q2 - Q1) / (Q2+ Q1)/2] / [(P2 - P1) / (P2 + P1)/2]
- BArc elasticity of demand = [(Q1 - Q2) / (Q2 + Q1)] / [(P1 - P2) / (P2 + P1)]
- CArc elasticity of demand = [(Q2 + Q1) / (Q2/2)] / [(P2 + P1) / (P2/2)]
- DArc elasticity of demand = [(Q2 - Q1) / (Q2/2)] / [(P2 - P1) / (P2/2)]
31Sellers in a perfectly competitive market:
- Asell differentiated goods and services.
- Bare small in number.
- Care not allowed to exit the market.
- Dare price-takers.
32A production function establishes the relationship between:
- Athe quantity of inputs used and the quantity of output produced.
- Bthe market price of a good and the quantity of output supplied.
- Cthe quantity of output produced and the firm's profit.
- Dthe market price of a good and the sales revenue generated.
33Which of the following inputs can be changed in the short run?
- ALand owned
- BMachinery
- COffice Space
- DLabor employed
34The equilibrium price in a market occurs where the:
- Amarket demand and the market supply curves intersect.
- Bmarket supply and the firms' revenue curves intersect.
- Cmarket demand and the firms' average cost curves intersect.
- Dmarket supply and the firms' average cost curves intersect.
35If the marginal cost of a perfectly competitive firm producing a good is $50 and the market price of the good is $100,
the firm should:- Atry to decrease the market price.
- Btry to increase the market price.
- Cdecrease its output.
- Dincrease its output.
36Refer to the figure above. What is the producer surplus when the price is $50?
- A$200
- B$100
- C$400
- D$1,000
37Social surplus is:
- Athe consumer surplus minus producer surplus.
- Bthe product of consumer surplus and producer surplus.
- Cthe ratio of consumer surplus to producer surplus.
- Dthe sum of consumer surplus and producer surplus.
38Refer to the figure above. What price does the firm face in the market?
- A$4
- B$2
- C$6
- D$8
39The entry of new firms into a perfectly competitive market will cause:
- Aboth the equilibrium price and quantity to increase.
- Bthe equilibrium price to decrease but the equilibrium quantity to increase.
- Cboth the equilibrium price and quantity to decrease.
- Dthe equilibrium price to increase but the equilibrium quantity to decrease.
40When positive economic profits exist in an industry:
- Athe market price of the good produced by the industry is less than the marginal cost faced by the industry.
- Bthe market price of the good produced by the industry is lesser than the average total cost of the industry.
- Cresources flow from less productive uses to that particular industry.
- Dthere is an exit of firms from the industry.
41Which of the following statements is true of market prices in a perfectly competitive market?
- AMarket prices allow for efficient allocation of scarce resources.
- BMarket prices are not stable and fluctuate widely.
- CMarket prices do not act as incentives for buyers.
- DMarket prices are determined by the government.
42Which of the following best describes a command economy?
- AAn economy in which there are a few privately owned firms.
- BAn economy which is characterized by barter trade of goods and services.
- CAn economy in which resources are allocated through the price mechanism.
- DAn economy where strong controls are imposed by the ruling authority.
43Which of the following statements is true?
- AMarket economies minimize waste and provide incentives to all market participants to promote their own interests.
- BThe broader interests of societies are met more often under a command system in comparison to a market system.
- CThe command system is remarkable at providing price signals that guides resources in a way that maximizes social
surplus. - DCoordination of different economic agents and bringing them together to trade is a central problem of a free market
economy.
44In Lithasia, the opportunity cost of producing a chair is two tables and in Barylia, the opportunity cost of producing a
chair is 1/2 tables. Which of the following statements is true?- ABarylia has a comparative advantage in producing tables.
- BBarylia has a comparative advantage in producing chairs.
- CLithasia has a comparative advantage in producing chairs.
- DLithasia has a comparative disadvantage in producing tables.
45Refer to the figure above. Which of the following combinations is attainable as well as efficient?
- AB
- BC
- CE
- DD
46Refer to the figure above. If the engineer spends his entire time on producing websites, how many websites can he
produce?- A5
- B12
- C10
- D2
47A production possibilities curve is plotted for a nation producing cotton and jute. Which of the following will cause a
parallel outward shift of the production possibilities curve?- AAn invention of a new fertilizer that increases jute production by 5%, without any effect on cotton production.
- BAn invention of a new fertilizer that increases cotton production by 10%, without any effect on jute production.
- CA two-times increase in the price of all cotton products and a three-times increase in the price of all jute products.
- DAn invention of a new fertilizer that increases production of both cotton and jute by 10%.
48Refer to the figure above. What is the domestic price of pens in Lithasia?
- A$1
- B$6
- C$3
- D$2
49Refer to the figure above. If Lithasia opens up to free trade, then which of the following statements is true?
- AThe domestic production of pens in Lithasia will increase.
- BLithasia will start exporting pens.
- CLithasia will start importing pens.
- DThe domestic price of pens will increase.
50The shift toward more open, integrated economies that participate in foreign trade and investment is referred to as:
- Aglobalization.
- Bprotectionism.
- Ctraditionalism.
- Dfair trade promotion.
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- Quiz on AGEC 1103 Midterm Study Guide, created by Tyler Gay on 13/03/2018.
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