Econ 202: Exam 1 Correct Solutions

Econ 202: Exam 1 Solutions

Question 1

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The supply curve shows the relationship between:

Select one:

a. price and quantity supplied.

b. production costs and the amount demanded.

c. total business revenues and quantity supplied.

d. physical inputs of resources and the resulting units of output.

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The correct answer is: price and quantity supplied.

Question 2

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An improvement in production technology will:

Select one:

a. increase equilibrium price.

b. shift the supply curve to the left.

c. shift the supply curve to the right.

d. shift the demand curve to the left.

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The correct answer is: shift the supply curve to the right.

Question 3

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Camille’s Creations and Julia’s Jewels both sell beads in a competitive market. If at the market price of $5, both are running out of beads to sell (they can’t keep up with the quantity demanded at that price), then we would expect both Camille’s and Julia’s to:

Select one:

a. raise their price and reduce their quantity supplied.

b. raise their price and increase their quantity supplied.

c. lower their price and reduce their quantity supplied.

d. lower their price and increase their quantity supplied.

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The correct answer is: raise their price and increase their quantity supplied.

Question 4

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Because of unseasonably cold weather, the supply of oranges has substantially decreased. This statement indicates that:

Select one:

a. the demand for oranges will necessarily rise.

b. the equilibrium quantity of oranges will rise.

c. the amount of oranges that will be available at various prices has declined.

d. the price of oranges will fall.

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The correct answer is: the amount of oranges that will be available at various prices has declined.

Question 5

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The location of the product supply curve depends on:

Select one:

a. production technology.

b. the number of buyers in the market.

c. the tastes of buyers.

d. the location of the demand curve.

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The correct answer is: production technology.

Question 6

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Answer the next question(s) on the basis of the given supply and demand data for wheat:

Refer to the above data. Equilibrium price will be:

Select one:

a. $4.

b. $3.

c. $2.

d. $1.

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The correct answer is: $2.

Question 7

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A firm’s supply curve is upsloping because:

Select one:

a. the expansion of production necessitates the use of qualitatively inferior inputs.

b. mass production economies are associated with larger levels of output.

c. consumers envision a positive relationship between price and quality.

d. beyond some point the production costs of additional units of output will rise.

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The correct answer is: beyond some point the production costs of additional units of output will rise.

Question 8

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When the price of oil declines significantly, the price of gasoline also declines. The latter occurs because of a(n):

Select one:

a. increase in the demand for gasoline.

b. decrease in the demand for gasoline.

c. increase in the supply of gasoline.

d. decrease in the supply of gasoline.

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The correct answer is: increase in the supply of gasoline.

Question 9

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Refer to the above diagram, which shows demand and supply conditions in the competitive market for product X. Given D₀, if the supply curve moved from S₀ to S₁, then:

Select one:

a. supply has increased and equilibrium quantity has decreased.

b. supply has decreased and equilibrium quantity has decreased.

c. there has been an increase in the quantity supplied.

d. supply has increased and price has risen to 0G.

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The correct answer is: supply has decreased and equilibrium quantity has decreased.

Question 10

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Which of the following will not cause the demand for product K to change?

Select one:

a. a change in the price of close-substitute product J

b. an increase in consumer incomes

c. a change in the price of K

d. a change in consumer tastes

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The correct answer is: a change in the price of K

Question 11

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Assume in a competitive market that price is initially below the equilibrium level. We can predict that price will:

Select one:

a. decrease, quantity demanded will decrease, and quantity supplied will increase.

b. decrease and quantity demanded and quantity supplied will both decrease.

c. increase, quantity demanded will increase, and quantity supplied will decrease.

d. increase, quantity demanded will decrease, and quantity supplied will increase.

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The correct answer is: increase, quantity demanded will decrease, and quantity supplied will increase.

Question 12

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An increase in the price of a product will reduce the amount of it purchased because:

Select one:

a. supply curves are upsloping.

b. the higher price means that real incomes have risen.

c. consumers will substitute other products for the one whose price has risen.

d. consumers substitute relatively high-priced for relatively low-priced products.

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The correct answer is: consumers will substitute other products for the one whose price has risen.

Question 13

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The quantity demanded of a product increases as its price declines because the:

Select one:

a. lower price shifts the demand curve rightward.

b. lower price shifts the demand curve leftward.

c. lower price results in an increase in supply.

d. demand curve is downsloping.

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The correct answer is: demand curve is downsloping.

Question 14

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If X is a normal good, a rise in money income will shift the:

Select one:

a. supply curve for X to the left.

b. supply curve for X to the right.

c. demand curve for X to the left.

d. demand curve for X to the right.

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The correct answer is: demand curve for X to the right.

Question 15

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College students living off-campus frequently consume large amounts of ramen noodles and boxed macaroni and cheese. When they finish school and start their careers, their consumption of both goods frequently declines. This suggests that ramen noodles and boxed macaroni and cheese are:

Select one:

a. inferior goods.

b. normal goods.

c. complementary goods.

d. substitute goods.

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The correct answer is: inferior goods.

Question 16

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Refer to the above diagram. If price falls from P₁ to P₂, total revenue will become area(s):

Select one:

a. B + D.

b. C + D.

c. A + C.

d. C.

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The correct answer is: B + D.

Question 17

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Which of the following goods (with their respective income elasticity coefficients in parentheses) will most likely suffer a decline in demand during a recession?

Select one:

a. Dinner at a nice restaurant (+1.8)

b. Chicken purchased at the grocery store for preparation at home (+0.25)

c. Facial tissue (+0.6)

d. Plasma screen and LCD TVs (+4.2)

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The correct answer is: Plasma screen and LCD TVs (+4.2)

Question 18

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The above diagram shows two product supply curves. It indicates that:

Select one:

a. over range Q₁Q₂ price elasticity of supply is greater for S₁ than for S₂.

b. over range Q₁Q₂ price elasticity of supply is greater for S₂ than for S₁.

c. over range Q₁Q₂ price elasticity of supply is the same for the two curves.

d. not enough information is given to compare price elasticities.

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The correct answer is: over range Q₁Q₂ price elasticity of supply is greater for S₁ than for S₂.

Question 19

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A perfectly inelastic demand schedule:

Select one:

a. rises upward and to the right, but has a constant slope.

b. can be represented by a line parallel to the vertical axis.

c. cannot be shown on a two-dimensional graph.

d. can be represented by a line parallel to the horizontal axis.

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The correct answer is: can be represented by a line parallel to the vertical axis.

Question 20

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Assume that a 4 percent increase in income in the economy produces an 8 percent increase in the quantity demanded of good X. The coefficient of income elasticity of demand is:

Select one:

a. negative and therefore X is an inferior good.

b. negative and therefore X is a normal good.

c. positive and therefore X is an inferior good.

d. positive and therefore X is a normal good.

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The correct answer is: positive and therefore X is a normal good.

Question 21

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If the supply of a product is inelastic, the price elasticity coefficient of supply is:

Select one:

a. zero.

b. greater than one.

c. equal to one.

d. less than one.

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The correct answer is: less than one.

Question 22

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The demand for a product is inelastic with respect to price if:

Select one:

a. consumers are largely unresponsive to a per unit price change.

b. the elasticity coefficient is greater than 1.

c. a drop in price is accompanied by a decrease in the quantity demanded.

d. a drop in price is accompanied by an increase in the quantity demanded.

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The correct answer is: consumers are largely unresponsive to a per unit price change.

Question 23

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The price elasticity of demand for widgets is 0.80. Assuming no change in the demand curve for widgets, a 16 percent increase in sales implies a:

Select one:

a. 1 percent reduction in price.

b. 12 percent reduction in price.

c. 40 percent reduction in price.

d. 20 percent reduction in price.

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The correct answer is: 20 percent reduction in price.

Question 24

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The elasticity of demand for a product is likely to be greater:

Select one:

a. if the product is a necessity, rather than a luxury good.

b. the greater the amount of time over which buyers adjust to a price change.

c. the smaller the proportion of one’s income spent on the product.

d. the smaller the number of substitute products available.

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The correct answer is: the greater the amount of time over which buyers adjust to a price change.

Question 25

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Refer to the above diagrams. The case of a normal good is represented by figure(s):

Select one:

a. A.

b. B.

c. C.

d. D.

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The correct answer is: A.

Question 26

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If quantity demanded is completely unresponsive to price changes, demand is:

Select one:

a. perfectly inelastic.

b. perfectly elastic.

c. relatively inelastic.

d. relatively elastic.

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The correct answer is: perfectly inelastic.

Question 27

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Suppose that when your income increases from $28,000 to $30,000 per year, your purchases of X increase from 4 to 5 units because of that income increase. Thus:

Select one:

a. X is an inferior good.

b. X is a substitute good.

c. the income effect exceeds the substitution effect.

d. the demand for X is elastic with respect to income.

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The correct answer is: the demand for X is elastic with respect to income.

Question 28

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The elasticity of supply of product X is unitary if the price of X rises by:

Select one:

a. 5 percent and quantity supplied rises by 7 percent.

b. 8 percent and quantity supplied rises by 8 percent.

c. 10 percent and quantity supplied stays the same.

d. 7 percent and quantity supplied rises by 5 percent.

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The correct answer is: 8 percent and quantity supplied rises by 8 percent.

Question 29

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We would expect:

Select one:

a. the demand for Coca-Cola to be less elastic than the demand for soft drinks in general.

b. the demand for Coca-Cola to be more elastic than the demand for soft drinks in general.

c. no relationship between the elasticity of demand for Coca-Cola and the elasticity of demand for soft drinks in general.

d. none of these to hold true.

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The correct answer is: the demand for Coca-Cola to be more elastic than the demand for soft drinks in general.

Question 30

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Refer to the above information and assume the stadium capacity is 5,000. If the Mudhens’ management charges $7 per ticket:

Select one:

a. some fans who want to see the game will find that tickets are not available.

b. there will be 2,000 empty seats.

c. there will be 1,000 empty seats.

d. the game will be sold out.

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The correct answer is: there will be 1,000 empty seats.

Question 31

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A demand curve which is parallel to the vertical axis is:

Select one:

a. perfectly inelastic.

b. perfectly elastic.

c. relatively inelastic.

d. relatively elastic.

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The correct answer is: perfectly inelastic.

Question 32

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Suppose the supply of product X is perfectly inelastic. If there is an increase in the demand for this product, equilibrium price:

Select one:

a. will decrease but equilibrium quantity will increase.

b. and quantity will both decrease.

c. will increase but equilibrium quantity will decline.

d. will increase but equilibrium quantity will be unchanged.

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The correct answer is: will increase but equilibrium quantity will be unchanged.

Question 33

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The demand for autos is likely to be:

Select one:

a. less elastic than the demand for Honda Accords.

b. more elastic than the demand for Honda Accords.

c. of the same elasticity as the demand for Honda Accords.

d. perfectly inelastic.

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The correct answer is: less elastic than the demand for Honda Accords.

Question 34

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Refer to the above diagram. If price falls from P₁ to P₂, total revenue will become area(s):

Select one:

a. B + D.

b. C + D.

c. A + C.

d. C.

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The correct answer is: B + D.

Question 35

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The above diagram shows two product supply curves. It indicates that:

Select one:

a. over range Q₁Q₂ price elasticity of supply is greater for S₁ than for S₂.

b. over range Q₁Q₂ price elasticity of supply is greater for S₂ than for S₁.

c. over range Q₁Q₂ price elasticity of supply is the same for the two curves.

d. not enough information is given to compare price elasticities.

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The correct answer is: over range Q₁Q₂ price elasticity of supply is greater for S₁ than for S₂.

Question 36

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Answer the next question(s) on the basis of the following total utility data for products L and M. Assume that the prices of L and M are $3 and $4 respectively and that the consumer’s income is $18.

Refer to the above data. How many units of the two products will the consumer purchase?

Select one:

a. 3 of L and none of M

b. 4 of L and 2 of M

c. 3 of L and 5 of M

d. 2 of L and 3 of M

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The correct answer is: 2 of L and 3 of M

Question 37

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The marginal utility of the last unit of apples consumed is 12 and the marginal utility of the last unit of bananas consumed is 8. What set of prices for apples and bananas, respectively, would be consistent with consumer equilibrium?

Select one:

a. $4 and $6

b. $6 and $4

c. $8 and $12

d. $16 and $9

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The correct answer is: $6 and $4

Question 38

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Refer to the above data. What level of total utility does the consumer realize in equilibrium?

Select one:

a. 87 utils

b. 114 utils

c. 51 utils

d. 58 utils

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The correct answer is: 51 utils

Question 39

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The law of diminishing marginal utility states that:

Select one:

a. total utility is maximized when consumers obtain the same amount of utility per unit of each product consumed.

b. beyond some point additional units of a product will yield less and less extra satisfaction to a consumer.

c. price must be lowered to induce firms to supply more of a product.

d. it will take larger and larger amounts of resources beyond some point to produce successive units of a product.

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The correct answer is: beyond some point additional units of a product will yield less and less extra satisfaction to a consumer.

Question 40

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Answer the next question(s) on the basis of the following marginal utility data for products X and Y. Assume that the prices of X and Y are $4 and $2 respectively and that the consumer’s income is $18.

Refer to the above data. What quantities of X and Y should be purchased to maximize utility?

Select one:

a. 2 of X and 1 of Y

b. 4 of X and 5 of Y

c. 2 of X and 5 of Y

d. 2 of X and 6 of Y

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The correct answer is: 2 of X and 5 of Y

Question 41

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Utility:

Select one:

a. is synonymous with usefulness.

b. is want-satisfying power.

c. is easy to quantify.

d. rarely varies from person to person.

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The correct answer is: is want-satisfying power.

Question 42

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Refer to the above data. The value for X is:

Select one:

a. 15.

b. 5.

c. 55.

d. 10.

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The correct answer is: 15.

Question 43

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Answer the next question(s) on the basis of the following two schedules which show the amounts of additional satisfaction (marginal utility) which a consumer would get from successive quantities of products J and K.

Refer to the above data. If the consumer has a money income of $52 and the prices of J and K are $8 and $4 respectively, the consumer will maximize her utility by purchasing:

Select one:

a. 2 units of J and 7 units of K.

b. 5 units of J and 5 units of K.

c. 4 units of J and 5 units of K.

d. 6 units of J and 3 units of K.

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The correct answer is: 4 units of J and 5 units of K.

Question 44

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The theory of consumer behavior assumes that:

Select one:

a. consumers behave rationally, attempting to maximize their satisfaction.

b. consumers have unlimited money incomes.

c. consumers do not know how much marginal utility they obtain from successive units of various products.

d. marginal utility is constant.

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The correct answer is: consumers behave rationally, attempting to maximize their satisfaction.

Question 45

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Refer to the above data. What level of total utility does the consumer realize in equilibrium?

Select one:

a. 87 utils

b. 114 utils

c. 51 utils

d. 58 utils

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The correct answer is: 51 utils

Question 46

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Noncash gifts:

Select one:

a. increase the utility of recipients by introducing them to products they have not consumed before.

b. reduce recipient utility relative to a cash gift because noncash gifts often fail to match recipient preferences.

c. entail as much utility as do cash gifts.

d. increase the utility of recipients because many people are uncertain of their own preferences.

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The correct answer is: reduce recipient utility relative to a cash gift because noncash gifts often fail to match recipient preferences.

Question 47

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Which of the following has been a significant factor in iPods replacing portable CD players?

Select one:

a. iPods are now less than one-half the price of CD players.

b. A scarcity of production capacity has curtailed the manufacture of CD players.

c. Most consumers perceive iPod portability and storage to be superior to CD players.

d. The price of iPods has increased dramatically.

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The correct answer is: Most consumers perceive iPod portability and storage to be superior to CD players.

Question 48

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(Consider This) Newspapers dispensing devices seemingly “trust” people to take only a single paper but the devices actually rely on the law of:

Select one:

a. supply.

b. increasing opportunity costs.

c. demand.

d. diminishing marginal utility.

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The correct answer is: diminishing marginal utility.

Question 49

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An increase in the price of product A will:

Select one:

a. increase the marginal utility per dollar spent on A.

b. decrease the marginal utility per dollar spent on A.

c. not affect the marginal utility per dollar spent on A.

d. cause utility-maximizing consumers to buy more of A.

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The correct answer is: decrease the marginal utility per dollar spent on A.

Question 50

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If total utility is increasing, marginal utility:

Select one:

a. is positive, but may be either increasing or decreasing.

b. must also be increasing.

c. may be either positive or negative.

d. will be increasing at an increasing rate.

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The correct answer is: is positive, but may be either increasing or decreasing.

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How our Assignment Help Service Works

1. Place an order

You fill all the paper instructions in the order form. Make sure you include all the helpful materials so that our academic writers can deliver the perfect paper. It will also help to eliminate unnecessary revisions.

2. Pay for the order

Proceed to pay for the paper so that it can be assigned to one of our expert academic writers. The paper subject is matched with the writer’s area of specialization.

3. Track the progress

You communicate with the writer and know about the progress of the paper. The client can ask the writer for drafts of the paper. The client can upload extra material and include additional instructions from the lecturer. Receive a paper.

4. Download the paper

The paper is sent to your email and uploaded to your personal account. You also get a plagiarism report attached to your paper.

PLACE THIS ORDER OR A SIMILAR ORDER WITH US TODAY AND GET A PERFECT SCORE!!!