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Midterm Review
Midterm Review
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Questions
31
Answers
1
Country A needs 2 hours to produce 1 painting while Country B needs 5 hours. Which country has the
absolute advantage
?
Country A
Both Country A and Country B
Country B
2
PPF might be
bow-shaped
for reasons below except for
Different level of inflation
Different opportunity costs
Workers have different skills
3
A
decrease in supply
of notebooks lowers the quantity of notebook supplied but not quantity demanded.
True
False
There is no way to tell.
4
When income increases, the demand for an
inferior good
increases
not change
decreases
5
Which below is NOT an “actor” in the
circular-flow diagram
?
Households
market
firms
6
Equilibrium price of a concert were $40. A
price ceiling
of $40 will cause fewer people to attend the concert.
There is no way to tell.
False
True
7
If Japan has a
comparative advantage
in producing cars, they should export cars.
True
There is no way to tell.
False
8
Which factor below is NOT a
factor of production
?
firm
land
labor
capital
9
“Higher education should be free for all.” This is an example of
Normative statement
False statement
Positive statement
10
The aluminum price has doubled. This will cause the
supply
of coca cola to
not change
increase
decrease
11
Which option below has a
comparative advantage
in producing cars?
Opportunity cost of 1 car = 5 bikes
Opportunity cost of 1 car = 1/10 bike
12
Which of the factor shift
PPF
inward?
Advancement in technology
Fewer human capital
Gaining additional resources
13
If a
price elasticity of supply
equals to 25, this supply is
elastic
unit elastic
inelastic
14
A
bowed-out PPF
means that a country faces ____ opportunity cost of producing one good in terms of another.
different
There is no way to tell.
same
15
I am ready for the midterm.
False
Unsure
True
16
A
linear PPF
means the opportunity cost of producing one good in terms of another is
increasing
constant
decreasing
17
“Getting a higher grade requires studying longer hours, which leaves less time for leisure.” This is an example of
tradeoff
efficiency
18
When demand decreases and supply increases, at the new
equilibrium
Price decreases, but quantity unclear
Price decreases, but quantity unchanged
Both price and quantity decrease
Price decreases, but quantity increases
19
Which statement below is
true
?
Minimum wage is good for low skilled workers.
Government imposes cigarettes taxes to force adults to quit smoking.
Rent control is good for the poor.
20
Economics is the study of how society allocates its ____ resources
abundant
scarce
21
Bread demand is more inelastic than supply. Which party bears higher share of
tax burden
in this market?
The sellers and buyers share the tax burden equally.
Sellers
Buyers
22
The
PPF
illustrates the concepts of below except for
efficiency and equality
tradeoff and opportunity cost
economic growth
unemployment
23
If a
price elasticity of demand
equals to 0.5, this demand is
Unit elastic
Inelastic
Elastic
24
When the price of cream cheese decreases, the demand for bagel
not change
decreases
increases
25
Few people can afford a limited edition of luxury car. Which party bears higher share of
tax burden
in this market?
The sellers and buyers share the tax burden equally.
Sellers
Buyers
26
In the short run, when an economic policy pushes
inflation
to increase, the unemployment will
increase
not change
decrease
27
At point B,
opportunity cost
of mountain bikes in terms of beer is
There is no way to tell
high
low
28
Governments
can improve market outcomes for reasons below except for
externality
invisible hand
Market power
Market failure
29
Equilibrium price is $5 for the cheese. A
price floor
of $3 on the cheese will
cause a surplus
cause a shortage
not cause a surplus or shortage
30
When demand is
elastic
, a price increase causes revenue to
decrease
increase
not change
31
Equilibrium price is $5 for the cheese. A
price floor
of $3 on the cheese will
There is no way to tell.
not be binding
be binding
