Eco 216 Name___________________ Spring 2018 Test 1 St.#____________________ Answ
ID: 1132850 • Letter: E
Question
Eco 216 Name___________________ Spring 2018 Test 1 St.#____________________
Answer the following 15 true-false question by circling the appropriate letter. Remember a statement must be completely and always true to be true. Then answer the 15 multiple choice questions. Remember to select the best answer for them. Good Luck.
T F 1. Prices rise when the government or central bank prints and circulates too much money.
T F 2. When two parties trade, one must lose.
T F 3. Comparative advantage is required for trade to take place.
T F 4. You have a comparative advantage in any good you can produce a good at lower opportunity cost than your trading partner.
T F 5. Specialization and trade allows people to consume more than they can produce.
T F 6. If the price of cars increases, so does the demand for cars.
T F 7. If wage of workers on I-phones falls, then supply of I-phones increases.
T F 8. Normal goods are positively related to income.
T F 9. If the price of a complement to gasoline rises, then so does the demand for gasoline.
T F 10. The market equilibrium is a stable equilibrium and only changes when disturbed.
T F 11. Producer surplus is price less willingness to sell.
T F 12. If demand is Q = 100 – 10Px and supply is Q = 15Px, then equilibrium price is 5 and equilibrium quantity is 50.
T F 13. A deadweight loss is one captured by government.
T F 14. A price floor causes inefficient quality increases.
T F 15. Entrepreneurship is a factor of production that is paid profit which is what like all factor payments must be positive.
Investment Goods
R
W
16. In figure 1, point W: a. is optimal
Figure 1
T
V
b. can not be produced
c. implies unemployed resources
17. In figure 1, point T: a. is optimal
b. can not be produced
c. implies unemployed resources
d. is equilibrium
e. none of the above
d. is equilibrium
e. none of the above
In figure 1, the production possibility curve exhibits increasing relative costs due to:
a. specialized resources d. all of the above
b. increasing technology e. none of the above c. a fixed time period
In figure 1, the production possibility curve assumes:
a. fixed resources d. all of the above
b. fixed technology e. none of the above c. a fixed time period
In figure 1, point R, compared to point V implies:
a. more consumption goods now d. fewer cars and less wheat b. less investment goods today e. none of the above
c. more capital now and higher production in the future
Consumption Goods
Figure 2
Price/unit
P1
21. In figure 2. at P1:
a. price is too high
b. supply equals demand
c. quantity supplied is less than quantity demanded
22. In figure 2 if supply increases, then equilibrium:
a. price and quantity will rise d. price and quantity will fall b. price will rise and quantity will fall e. none of the above
c. price will fall and quantity will rise
23. In figure 2 if demand increases and supply decreases, then equilibrium: a. price increases d. quantity decreases
b. price decreases e. none of the above
c. quantity increases
24. In figure 2, demand for computers will increase, if:
a. the wage of computer engineers falls d. all of the above
b. the price of computers falls e. none of the above c. consumer income rises and a computer a normal good
25. If your tuition is $8,000, your books cost $1,000, your room and board are $2,500 and you earn $10,000 less this semester because you are enrolled, your opportunity cost of attending college is:
a. $8,000 d. $21,500
b. $11,500 e. none of the above c. $19,000
S
Q1
Quantity of computers/time
D
d. all of the above
e. none of the above
Price/unit
P2 P1
S
Figure 3
X
Y
C
Z
A
B
H
E
G
F
I
D
Q1 Q2 Q3
Quantity of computers/time
26. In figure 3, an effective price floor would be:
a. zero d. all of the above
b. P1 e. none of the above c. P2
27. In figure 3 in the effective price floor causes:
a. supply to equal demand d. all of the above
b. excess quantity supplied e. none of the above c. excess quantity demanded
28. In figure 3 in equilibrium producer surplus is:
a. X d. C
b. X+Y+Z e. none of the above c. C+E
29. In figure 3, with the price floor consumer surplus is:
a. X d. C
b. X+Y+Z e. none of the above c. C+E
30. In figure 3, with the price floor the dead weight loss is at least: a. A d. F
b. Z+E e. none of the above
c. A+B
Explanation / Answer
Ans
True. Too much money results in less value of currency
False Both can gain due to comparative advantage
False. Absolute advantage can also result in trade
True. This is what is definition of comparative advantage
True.
6 false. This is against law of demand
7 true because marginal cost falls
8 true by definition
9 false
10 falls. It is dynamic
Can answer only 4 parts according to Chegg policy but still answered 10 please please send other parts as separate question
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