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100 Questions  I  By Kelliegio
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  • 1. 
    A tariff is imposed in an import industry. The losers from the tariff are _________________. 
    • A. 

      Net gains

    • B. 

      Buyers

    • C. 

      Consumers


  • 2. 
    A tariff is imposed on a good this will ________quantity produced domestically, _________quantity demanded, and ________ price in the home country.
    • A. 

      Increase; increase; decrease

    • B. 

      Increase; decrease; increase

    • C. 

      Decrease; increase; increase


  • 3. 
    To maximize their utility, consumers should allocate their scarce income so that the marginal utility for all goods consumed equals zero. 
    • A. 

      True

    • B. 

      False


  • 4. 
    In deciding to take a particular action, a person should take the action if: 
    • A. 

      Net gain is negative

    • B. 

      Net gain is positive

    • C. 

      Net gain is zero


  • 5. 
    Consider a market that is initially in equilibrium with quantity demanded equal to quantity supplied at a price of $20.  If the world price of the good is $10 and the country opens up to trade then in this market we would expect _____________
    • A. 

      Imports will increase, price will fall, and quantity supplied will fall

    • B. 

      Imports will increase, price will rise, and quantity supplied will fall

    • C. 

      Imports will decrease, price will fall, and the quantity supplied will rise


  • 6. 
    Suppose the United States has been producing and selling computers domestically, and now decides to begin exporting a large percentage of these computers.  We can expect the overall wages of U.S. computer workers to ______, while the price of computers in the United States will _______. 
    • A. 

      Increase; decrease

    • B. 

      Decrease; increase

    • C. 

      Increase; increase


  • 7. 
    According to an economist, total cost should be calculated by adding explicit plus implicit cost
    • A. 

      True

    • B. 

      False


  • 8. 
    A country opens up to trade and becomes an importer of some good.  Consumer surplus will _____, producer surplus will ______, and total surplus will_______.   
    • A. 

      Increase; decrease; increase

    • B. 

      Increase; increase; decrease

    • C. 

      Decrease; increase; increase


  • 9. 
    You decide to quit your $75,000 per year job as an information-technology specialist and become a house painter. At the end of the first year of painting, you have earned $120,000. You spent $15,000 for paint and other supplies.  In addition, your father gave you $20,000 to purchase some equipment that has a resale value of zero.  Which of the following is a sunk cost? 
    • A. 

      The $15,000 you spent for paint and other supplies

    • B. 

      The $75,000 you used to make

    • C. 

      The $20,000 your father gave you


  • 10. 
    In a country’s export industries we can expect that after trade consumer surplus will ___ and producer surplus will ___.  
    • A. 

      Increase; decrease

    • B. 

      Increase; increase

    • C. 

      Decrease; increase


  • 11. 
    Free trade is beneficial to a country because: total surplus increases in each industry  
    • A. 

      True

    • B. 

      False


  • 12. 
    The United States has a comparative advantage in producing airplanes if it can produce them at a higher opportunity cost.  
    • A. 

      True

    • B. 

      False


  • 13. 
    There are only two countries in the world and they decide to trade with each other.  Before trade, country A sells a good for $9 and country B sells the same good for $14.  In this case, which of the following would be reasonable:
    • A. 

      Country A imports the good for a price of $12

    • B. 

      Country A exports the good for a price of $12.

    • C. 

      Country B exports the good for a price of $14


  • 14. 
    When the price of a good falls, the ratio of the marginal utility of that good divided by its price _______ and as a result, consumers purchase _______ of that good. 
    • A. 

      Falls; more

    • B. 

      Rises; less

    • C. 

      Rises; more


  • 15. 
    The United States decides to specialize in the production of those goods for which it has a comparative advantage.  If this results in the United States importing clothing, which of the following will occur?  
    • A. 

      More clothing will be produced in the United States

    • B. 

      Less clothing will be produced in the United States

    • C. 

      None of the above


  • 16. 
    A proportional tax system is one in which each person pays the same percentage of their income in tax.  
    • A. 

      True

    • B. 

      False


  • 17. 
    Suppose the tax system is such that you pay 10% on earnings up to $50,000 and 20% on earnings over $50,000.  If you earn $200,000 then you must pay ___ in total taxes and your average tax rate is ______.
    • A. 

      $35,000; 17.5%

    • B. 

      $30,000; 20%

    • C. 

      $40,000; 10%


  • 18. 
    Income elasticity is defined as the percentage change in _____ for a given percentage change in _____. 
    • A. 

      Quantity demanded; income

    • B. 

      Quantity supplied; income

    • C. 

      None of the above


  • 19. 
    Consider a market that is in equilibrium. If the government implements a binding price ceiling we would expect the market price to _______ and the quantity sold to ________
    • A. 

      Decrease; decrease

    • B. 

      Increase; increase

    • C. 

      Increase; decrease


  • 20. 
    The demand for cereal sold by Company X is elastic.  If the company increases the price of cereal in order to cover an increase in the cost of the grain used to make the cereal, they can expect total revenue from cereal sales to: 
    • A. 

      Increase

    • B. 

      Decrease

    • C. 

      Stay the same


  • 21. 
    The market is in equilibrium at a price of $20. If the government mandates that the price of this good cannot be higher than $15 then this is called a price ceiling  
    • A. 

      True

    • B. 

      False


  • 22. 
    Suppose that in the market for tablet computers there is an increase in supply.  This would cause a (n) ___________ in consumer surplus and a(n) _____ in total surplus. 
    • A. 

      Increase; decrease

    • B. 

      Increase; increase

    • C. 

      Decrease; increase


  • 23. 
    If the price elasticity of demand for pineapple is 2.5, a 4% increase in the price of pineapple will lead to a
    • A. 

      10% increase in the quantity demanded of pineapple

    • B. 

      10% decrease in the quantity demanded of pineapple

    • C. 

      10% decrease in the quantity supplied of pineapple


  • 24. 
    Consider a market that is in equilibrium. If the government implements a binding price floor we would expect the market price to _____ and the total surplus to ______ 
    • A. 

      Decrease; increase

    • B. 

      Decrease; decrease

    • C. 

      Increase; decrease


  • 25. 
    Deadweight loss is best defined as the decrease in total surplus resulting from the market producing too much output.  
    • A. 

      True

    • B. 

      False


  • 26. 
    A binding price ceiling on the rent that landlords can charge will benefit
    • A. 

      Some consumers

    • B. 

      All consumers

    • C. 

      Some buyers


  • 27. 
    Consider a market that is in equilibrium. If the government implements a binding quantity restriction we would expect the market price to ______ and the quantity sold to _______
    • A. 

      Decrease; increase

    • B. 

      Increase; increase

    • C. 

      Increase; decrease


  • 28. 
    If a 6% change in the price of a good causes a 9% change in the quantity demanded of the good then the demand for the good is Perfectly Elastic  
    • A. 

      True

    • B. 

      False


  • 29. 
    The cross price elasticity of demand measures: the percentage change in the quantity demanded of good 1 for a given percentage change in the price of good 2  
    • A. 

      True

    • B. 

      False


  • 30. 
    Consider a market that is in equilibrium. If the government implements a per unit tax on the sale of the good we would expect the market price to _______ and the quantity sold to _______
    • A. 

      Increase; decrease

    • B. 

      Increase; increase

    • C. 

      Decrease; increase


  • 31. 
    Suppose Congress wants to prevent the price of gasoline from rising above $3 per gallon.  Which policy should they use to achieve this goal? 
    • A. 

      Higher taxes

    • B. 

      Price ceiling

    • C. 

      None of the above


  • 32. 
    A market is operating efficiently if
    • A. 

      Total surplus equals 0

    • B. 

      Total surplus is maximized

    • C. 

      Total surplus is minimized


  • 33. 
    A 2% increase in the price of good X causes a 4% increase in the quantity demanded of good Y.  Goods X and Y must be: Normal  
    • A. 

      True

    • B. 

      False


  • 34. 
    Who benefits from a quantity restriction? 
    • A. 

      The sellers of the good

    • B. 

      The buyers of the good

    • C. 

      Both

    • D. 

      Neither


  • 35. 
    Firms that produce goods with no close substitutes are most likely to find that: 
    • A. 

      Raising price increases total revenues

    • B. 

      Raising price decreases total revenues

    • C. 

      None of the above


  • 36. 
    A store sells two goods: good A and good B. It determines that good A has elastic demand and good B has inelastic demand. If the store wants to increase the total revenue earned from selling the two goods then it should ______ the price of good B and ______ the price of good A. 
    • A. 

      Decrease; increase

    • B. 

      Increase; increase

    • C. 

      Increase; decrease


  • 37. 
    What do a binding price ceiling and a quantity restriction have in common? 

  • 38. 
    Consider the market for frozen yogurt in a large city.  If the number of frozen yogurt shops increases and the price elasticity of demand for frozen yogurt is 1.2, then the equilibrium price of frozen yogurt will ___, the equilibrium quantity of frozen yogurt will __ and total revenue from frozen yogurt sales will __.   
    • A. 

      Decrease; increase; increase

    • B. 

      Decrease; decrease; increase

    • C. 

      Increase; decrease; decrease


  • 39. 
    What is consumer surplus?
    • A. 

      It is the net gain to a buyer from the purchase of a good.

    • B. 

      It is the difference between the buyer’s willingness to pay and the price paid.

    • C. 

      It is a net loss to a buyer from the purchase of a good


  • 40. 
    What is producer surplus?
    • A. 

      It is the net loss to a seller from selling a good

    • B. 

      It is the net gain to the seller from selling a good.

    • C. 

      It is the difference between the price received and the seller’s cost.


  • 41. 
    What is total surplus? 
    • A. 

      The total net gain to consumers and producers from trading in the market.

    • B. 

      It is the sum of the consumer and producer surplus.

    • C. 

      It is the sum of the buyer and producer surplus


  • 42. 
    Markets are efficient in that the market equilibrium _____________ total surplus. 

  • 43. 
    Total surplus is defined as the sum of consumer and producer surplus.
    • A. 

      True

    • B. 

      False


  • 44. 
    Demand identifies the price you are willing to pay.
    • A. 

      True

    • B. 

      False


  • 45. 
    The more you are willing to pay, the lesser the perceived marginal benefit you receive from the item.
    • A. 

      True

    • B. 

      False


  • 46. 
    Supply identifies the _______ firms are willing to sell for.

  • 47. 
    Firms are willing to sell for a price that covers marginal cost. For all quantities up to the market equilibrium, marginal benefit (the price consumers are willing to pay) is greater than marginal cost (the price firms are willing to sell for). 
    • A. 

      This generates quantity demanded

    • B. 

      This generates quantity supplied

    • C. 

      This generates surplus


  • 48. 
    What is a price ceiling?
    • A. 

      The maximum price a seller is allowed to sell a good

    • B. 

      The minimum price a seller is allowed to sell a good

    • C. 

      None of the above


  • 49. 
    A price floor is a minimum price that buyers are required to pay for a good.  
    • A. 

      True

    • B. 

      False


  • 50. 
    QUANTITY RESTRICTION is the quota by which the government regulates the quantity that can be bought or sold rather than the prices at which it is transacted.
    • A. 

      True

    • B. 

      False


  • 51. 
    ELASTICITY OF DEMAND compares the percent change in the quantity demanded to the percent change in price as me move along the demand curve.
    • A. 

      True

    • B. 

      False


  • 52. 
    What is the midpoint formula?
    • A. 

      The method for calculation is the percent of change.

    • B. 

      The percent change in X divided by the Average Value of X

    • C. 

      The Average Value of X divided by the percent change in X


  • 53. 
    What is elastic demand?
    • A. 

      A change in quantity due to a change in price

    • B. 

      The quantity demanded does not change with a change in price

    • C. 

      None of the above


  • 54. 
    What is inelastic demand? 
    • A. 

      A change in quantity due to a change in price

    • B. 

      The quantity demanded does not change with a change in price

    • C. 

      None of the above


  • 55. 
    If price increases and demand is elastic what happens to revenue?
    • A. 

      The total revenue will fall

    • B. 

      The total revenue will rise

    • C. 

      None of the above


  • 56. 
    The elasticity of supply is the measure of the responsiveness of the quantity of the goods supplied to the price of the good.
    • A. 

      True

    • B. 

      False


  • 57. 
    What is an example of two goods that are substitutes? Pancakes and Waffles and Hotdogs and Hamburgers.
    • A. 

      Pancakes and waffles

    • B. 

      Test and clen

    • C. 

      Hi babe I love you


  • 58. 
    What is an example of two goods that are complements?
    • A. 

      Penis 8=====D

    • B. 

      Cheese and rice

    • C. 

      Penut butter and Jelly


  • 59. 
    An excise tax:
    • A. 

      Is imposed on a good

    • B. 

      Is a tax charged onto the sale of a good or a service

    • C. 

      Is not existent


  • 60. 
    Variable input is:
    • A. 

      Fixed for a period of time and cannot be varied

    • B. 

      Input quantity the firm can vary at any time

    • C. 

      Time period when all inputs can be varied


  • 61. 
    Fixed inputs: 
    • A. 

      Fixed for a period of time and cannot be varied

    • B. 

      Input quantity the firm can vary at any time

    • C. 

      Time period when all inputs can be varied


  • 62. 
    Short run: 
    • A. 

      input quantity the firm can vary at any time

    • B. 

      Fixed for a period of time and cannot be varied

    • C. 

      Time period when at least one input is fixed


  • 63. 
    Long run is the time period when all inputs can be varied.
    • A. 

      True

    • B. 

      False


  • 64. 
    Marginal product of an input
    • A. 

      The additional quantity of output produced by using one more unit of input

    • B. 

      The additional quantity of input produced by using one more unit of output

    • C. 

      None of the above


  • 65. 
    Law of diminishing returns is the increase in the quantity of an input, holding all other inputs fixed, reduces the inputs marginal product.
    • A. 

      True

    • B. 

      False


  • 66. 
    Fixed cost: 
    • A. 

      Depends on the quantity of output produced

    • B. 

      Does not depend on the quantity of output produced

    • C. 

      Fixed cost/ quantity of output


  • 67. 
    Variable cost: 
    • A. 

      Depends on the quantity of output produced

    • B. 

      Does not depend on the quantity of output produced

    • C. 

      The total of fixed cost and variable cost at a given output produced


  • 68. 
    Total cost:
    • A. 

      The total of fixed cost and variable cost at a given output produced

    • B. 

      Variable cost/quantity of output

    • C. 

      Total Cost/Quantity of Output produced


  • 69. 
    Average fixed cost is the fixed cost/ quantity of output
    • A. 

      True

    • B. 

      False


  • 70. 
    Average variable cost is variable quantity/ cost of output
    • A. 

      True

    • B. 

      False


  • 71. 
    Average total cost is the total Cost/Quantity of Output produced
    • A. 

      True

    • B. 

      False


  • 72. 
    Marginal cost
    • A. 

      Change in total cost generated by producing one more unit of output

    • B. 

      Your girlfriend is sexy

    • C. 

      MC=Change in total cost/change in total quantity


  • 73. 
    Long run average total cost curve: Shows the relationship between the output and average total cost when fixed cost has been chosen to minimize average total cost for each level of output. **This was just a definition review for you!  
    • A. 

      I

    • B. 

      Love

    • C. 

      You


  • 74. 
    Firms decide how many fixed inputs to purchase in the long run by minimizing the total average cost
    • A. 

      True

    • B. 

      False


  • 75. 
    Assumptions of perfect competition: no individual buyer or seller of a good believes it is possible to individually affect the price at which he or she can buy or sell the good. It must contain producers, none of whom have a large market share. Consumers also have to regard the products of all producers as equivalent.
    • A. 

      True

    • B. 

      False


  • 76. 
    How do firms decide how much output to produce?
    • A. 

      Produce to the point where marginal revenue equals zero

    • B. 

      Produce to the point where marginal revenue equals marginal cost

    • C. 

      None of the above


  • 77. 
    How does the firm decide when to shutdown?
    • A. 

      Shutdown if price is less than average variable cost

    • B. 

      Shutdown if the price is more than the variable cost

    • C. 

      None of the available


  • 78. 
    Law of supply (again): all other factors being equal, as the price of a good or service increases, the quantity of goods or services offered by suppliers increases and vice versa.
    • A. 

      True

    • B. 

      False


  • 79. 
    Marginal revenue is
    • A. 

      Constant

    • B. 

      Always changing

    • C. 

      Stagnant


  • 80. 
    The marginal revenue curve has a slope __________ that of the demand curve

  • 81. 
    In an economy, who are the winners?
    • A. 

      Domestic producers because they are protected from the importing countries

    • B. 

      Domestic Consumers because increases the price

    • C. 

      None of the above


  • 82. 
    Explicit Cost requires the outlay of money
    • A. 

      True

    • B. 

      False


  • 83. 
    Implicit Cost does not involve money, measured by the value in dollar terms of the benefits foregone.
    • A. 

      True

    • B. 

      False


  • 84. 
    Accounting Profit is the businesses revenue minus the explicit costs and depreciation
    • A. 

      True

    • B. 

      False


  • 85. 
    Economic Profit is the business revenue minus the opportunity cost of its resources
    • A. 

      True

    • B. 

      False


  • 86. 
    Total cost Depends on the size or volume produced
    • A. 

      True

    • B. 

      False


  • 87. 
    Marginal cost is the additional cost incurred by producing one more unit of that good or service
    • A. 

      True

    • B. 

      False


  • 88. 
    Total benefit is the total earnings from producing
    • A. 

      True

    • B. 

      False


  • 89. 
    Marginal benefit is the additional benefit from producing one or more unit of that good or service
    • A. 

      True

    • B. 

      False


  • 90. 
    Optimal Quantity: is the amount that generates the greatest net gain
    • A. 

      True

    • B. 

      False


  • 91. 
    Marginal analysis: an introduction to making decisions at the margin: Principal of Marginal analysis says the optimal quantity is the quantity where the marginal benefits equal marginal costs.
    • A. 

      True

    • B. 

      False


  • 92. 
    Sunk cost: Money that has already been spent and cannot be recovered…should be ignored when making future decisions because they have no influence on actual costs.
    • A. 

      True

    • B. 

      False


  • 93. 
    Utility: The measure of satisfaction the consumer derives from consumption of goods and services.
    • A. 

      True

    • B. 

      False


  • 94. 
    Marginal utility: The change in total utility generated by consuming one additional unit of that good or service
    • A. 

      True

    • B. 

      False


  • 95. 
    The budget constraint: requires that the cost of a consumers consumption bundle be no more than their income
    • A. 

      True

    • B. 

      False


  • 96. 
    Marginal utility per dollar: The additional utility from spending one more dollar on that good or service. The optimal consumption rule: the consumption bundle that maximizes the consumers total utility given his or her budget constraint.
    • A. 

      True

    • B. 

      False


  • 97. 
    **All consumers seek to maximize utility (or satisfaction) obtained from consuming a given bundle of goods. The consumer must allocate their scarce dollars to the highest valued use. This is done by choosing to consume goods that offer the highest level of additional/marginal utility per dollar spent
    • A. 

      True

    • B. 

      False


  • 98. 
    I love you more than anything in dze world!
    • A. 

      True

    • B. 

      False


  • 99. 
    I want to jump your bones everytime I see you.
    • A. 

      True

    • B. 

      False


  • 100. 
    I want to fuck you ___________ times everyday. 
    • A. 

      None

    • B. 

      One

    • C. 

      43753473849348


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