Econ 102 Exam 1 Review

Question 1

Suppose a decrease in the supply of bottled water results in decreased revenue. This indicates:

Accepted Answer

Demand for water is elastic in the considered price range

Question 2

Suppose a decrease in the supply of paper results in increased revenue. This indicates:

Accepted Answer

Demand for paper is inelastic

Question 3

Income elasticity of demand measures:

Accepted Answer

Responsiveness of quantity demanded to income changes

Question 4

When there are few close substitutes of a good, demand tends to be:

Accepted Answer

relatively inelastic

Question 5

If demand & supply are relatively elastic, a $4 tax per month on cable TV will cause price to:

Accepted Answer

Increase by less than $4

Question 6

Which of the following would result in a movement along the demand curve?

Accepted Answer

An increase in the number of suppliers

Question 7

Olive oil producers want to sell more olive oil at higher prices. What would have this effect?

Accepted Answer

A study finds consumption of olive oil helps your heart

Question 8

The government wants to limit the number of hotel rooms to 200. The resulting DWL is:

Accepted Answer

$375

Question 9

If the production possibility frontier is a straight line, which of the following is true?

Accepted Answer

Opportunity costs are constant

Question 10

Jessica buys exactly 15 Big Macs regardless of the price. Jessica’s PED is:

Accepted Answer

equal to 0

Question 11

In economics, choices must be made because we live in a world of:

Accepted Answer

scarcity

Question 12

If both demand and supply of a product increases at the same time, what happens to price?

Accepted Answer

Ambiguous

Question 13

A good with a negative income elasticity of demand would be considered:

Accepted Answer

Inferior good

Question 14

If the quantity of grapes demanded increases because of a decrease in the price of grapes:

Accepted Answer

This is an increase in quantity demanded only

Question 15

How can this country ever produce at point E?

Accepted Answer

Permit more immigration

Question 16

The government wants to limit the number of hotel rooms to 150. The resulting quota rent is:

Accepted Answer

$30 per room

Question 17

Which of the following items is likely to have the highest income elasticity of demand?

Accepted Answer

European cruise

Question 18

A decrease in the price of GPS systems will result in:

Accepted Answer

A smaller quantity of systems supplied

Question 19

Producing more of one good means producing less of another refers to the concept of:

Accepted Answer

Trade-offs

Question 20

If an increase in income leads to a decrease in the demand for popcorn, then popcorn is:

Accepted Answer

an inferior good

Question 21

Economic models do all of the following except what?

Accepted Answer

Portray reality in minute details

Question 22

Which situation would most likely cause a decrease in consumer surplus in the toy market?

Accepted Answer

The cost of shipping increases because of higher oil prices

Question 23

Which of the following correctly describes market equilibrium?

Accepted Answer

Quantity demanded equals quantity supplied

Question 24

Harry quits his $125,000 job to take care of his parents. What is the cost of his decision?

Accepted Answer

At least $125,000

Question 25

If a firm raised their price & discovered revenues fell, then demand is considered:

Accepted Answer

relatively elastic

Question 26

Which of the following is most likely to increase the equilibrium price of corn?

Accepted Answer

Increasing production of corn-based ethanol

Question 27

Which of the following is true if there is a decrease in demand for cupcakes?

Accepted Answer

Decrease in producer surplus

Question 28

What could cause the equilibrium price & quantity to have increased in the market for tacos?

Accepted Answer

Increase in the income of people who eat tacos

Question 29

If the demand for tires goes down when the price of gas goes up, then tires and gas are:

Accepted Answer

Complements

Econ 102 Exam 1 Review

Questions 29

Econ 102 Exam 1 Review

Questions 29