UNT ECON 1100 Exam 1

UNT ECON 1100 Exam 1 The primary difference between a change in supply and a change in the quantity supplied is: - ✔✔a change in quantity supplied is caused by a change in the price of the good itself, and a change in ...

UNT ECON 1100 Exam 1 The primary difference between a change in supply and a change in the quantity supplied is: - ✔✔a change in quantity supplied is caused by a change in the price of the good itself, and a change in supply is caused by a change in a non-price determinant of supply Which of the following will cause a decrease in the demand for batteries? - ✔✔An increase in the price of digital cameras, a complement for batteries Based on the information in the table below, the opportunity cost of producing one clock in Mexico is: Clock Radio Spain 4 hours 2 hours Mexico 3 hours 6 hours - ✔✔1/2 radio. Which of the following is a normative microeconomic statement? - ✔✔Government should lower the taxes paid by small businesses. An outward shift of a production possibilities frontier illustrates that: - ✔✔economic growth has occurred. If the demand for electricity is inelastic but not perfectly inelastic, a 10% increase in the price of electricity is likely to: - ✔✔lead to a decrease in the quantity demanded of electricity of less than 10%. If quantity demanded is 30 when price is $3 and quantity demanded is 20 when price is $5, then total revenue __________ if price increases from $3 to $5, implying that demand is _________. - ✔✔increases; inelastic In the market for used cars, a surplus of used cars would, ceteris paribus: - ✔✔put downward pressure on the price of used cars. In the graph below, a shift from PPF1 to PPF2 will occur as a result of: - ✔✔an increase in the resources and technology used to produce food and clothing. Initially, assume Country A is producing and consuming 10 cars and 20 boats, while Country B is producing and consuming 20 cars and 40 boats. The two countries then decide to specialize according to comparative advantage and engage in trade. The potential gains from trade for both countries combined work out to be: - ✔✔20 boats, to be divided between the two countries. Which of the following is an example of capital as a factor of production? - ✔✔Kitchen equipment for a new restaurant venture The demand for a life-saving drug is likely to be: - ✔✔inelastic because the drug is a necessity. When wants and needs exceed the resources available to satisfy them: - ✔✔scarcity exists and decisions must be made about how to allocate limited resources among competing uses The ceteris paribus assumption is used to: - ✔✔isolate the relationship between two variables by holding other influences on the relationship constant For a normal good, an increase in consumer income leads to: - ✔✔an increase in demand and an increase in both equilibrium price and quantity. Which of the following pairs of goods is most likely to have a cross elasticity of demand coefficient of 1.2? - ✔✔bagels and toast Demand that is perfectly elastic graphs as a: - ✔✔Horizontal line Based on the information in the table below, Spain has a comparative advantage in the production of _____ and should therefore specialize in the production of this item; Mexico has a comparative advantage in the production of _____ and should therefore specialize in the production of this item. - ✔✔radios, clocks Based on the information in the graph below, a price of $4 per pumpkin will lead to a: - ✔✔surplus of 200 pumpkins. The effect of a decrease in the price of cassettes is best shown by arrow: - ✔✔A Ceteris paribus, an increase in the supply of a product leads to a(n) _____ in the equilibrium price of the produce and a(n) _____ in the equilibrium quantity of the product - ✔✔decrease, increase Which of the following pairs of goods is most likely to have a cross elasticity of demand coefficient of -1.2? - ✔✔hot dogs and relish Which of the following would lead to an increase in the supply of coffee, ceteris paribus? - ✔✔Janet has an absolute advantage in the production of baskets. If a seller wants to increase revenue from the sale of a product with a price elasticity of demand coefficient of 1.6, then the seller should: - ✔✔decrease price because demand is elastic The equilibrium price of a pumpkin in the market depicted in the graph below is: - ✔✔$3 because the quantity supplied of pumpkins is equal to the quantity demanded of pumpkins. Any point inside a production possibilities frontier represents: - ✔✔unemployed resources. The production possibilities schedule shown below: - ✔✔results in a straight-line PPF and illustrates constant opportunity cost Based on the information in the graphs below, the opportunity cost of 1 car is: - ✔✔1 boat for Country A and 2 boats for Country B. The assumption that because specific individuals benefit when taxes are lowered, the economy as a whole must also be stronger when taxes are lowered best illustrates the: - ✔✔fallacy of composition. If the income elasticity coefficient for fish tacos is 0.25, then fish tacos are: - ✔✔normal goods because the demand for fish tacos increases when income increases According to the law of demand, an increase in the price of gasoline, ceteris paribus, leads to: - ✔✔a decrease in the quantity demanded of gasoline. The responsiveness of buyers to changes in the price of a product is measured by: - ✔✔price elasticity of demand. Market economies are characterized by all of the following except: - ✔✔government ownership of capital. Use the midpoint formula to calculate the price elasticity of demand coefficient for a product if quantity demanded is 125 when price is $4 and quantity demanded is 75 when price is $6. - ✔✔1.25 If both countries produce the good for which each has a comparative advantage, Country A will produce _____________ and Country B will produce _______________. - ✔✔Cars, boats If cotton clothing becomes more popular at the same time that the supply of cotton decreases, then basic supply and demand analysis predicts that: - ✔✔the equilibrium price of cotton clothing will increase but the change in the equilibrium quantity of cotton clothing cannot be determined from the information given. If a 5% increase in the price of a product results in a 10% decrease in the quantity demanded of the product, then the absolute value of the price elasticity of demand coefficient is _________ and demand is said to be _________. - ✔✔2, elastic The demand for potato chips will increase in response to all of the following except: - ✔✔a decrease in the price of potato chips. In the circular flow model, resources flow from the _____ sector to the _____ sector and are converted into output that is supplied to households through the _____ market. - ✔✔household; business; product