Glendale Community College » Economics » Econ 101 - Microeconomics » Summer 2021

Econ 101 - Microeconomics » Summer 2021 » Test 1

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Question #1

The most likely impact of an effective price floor in a market is:

A. the supply curve will shift to the right.

B. a surplus will develop.

C. a shortage will develop.

D. the demand curve will shift to the left.

Question #2

If you are to properly engage in economic reasoning, an individual must compare:

A. marginal cost, sunk cost, and total benefit.

B. sunk cost and marginal cost.

C. marginal cost and marginal benefit.

D. total cost and total benefit.

Question #3

The difference or the distinction between demand for a good and the quantity demanded of good is best articulated by saying that:

A. the quantity demanded is represented graphically by a curve and demand as a point on that curve.

B. the quantity demanded is in a direct relation with prices, whereas demand is in an inverse relation.

C. demand is represented graphically by a curve and quantity demanded as a point on that curve.

D. the quantity demanded is in an inverse relation with prices, whereas demand is in a direct relation.

Question #4

The economic decision rule states that you should engage in an activity only when the marginal benefits of that action are greater than its total costs.

A. FALSE

B. TRUE

Question #5

The use of the statement "other things constant" in a supply and demand model indicates that:

A. we are considering changes in just one factor.

B. we are considering all the changes which might take place in actual markets.

C. an equilibrium price has been reached.

D. an equilibrium quantity has been reached.

Question #6

When the price of gasoline declines, the demand for electric cars likely:

A. falls, lowering their equilibrium price and raising equilibrium quantity.

B. falls, raising their equilibrium price and lowering equilibrium quantity.

C. rises, raising their equilibrium price and quantity.

D. falls, lowering their equilibrium price and quantity.

Question #7

The law of demand states that the price and the quantity demanded of a good have an inverse relationship. Therefore, as the price of a good goes:

A. up, the quantity demanded goes down.

B. down, the quantity demanded goes down.

C. down, the quantity demanded stays the same.

D. up, the quantity demanded also goes up.

Question #8

Opportunity cost:

A. is the same as sunk cost.

B. is nonexistent for some choices.

C. is the net benefit forgone by not undertaking the next best alternative.

D. includes only monetary outlays.

Question #9

Which of the following would cause quantity demanded to change without shifting the demand curve?

A. A change in the price of a substitute good

B. A change in the price of the good

C. A change in society's income

D. A change in advertising expenditures

Question #10

If Mexico decides to impose a 50 percent tax on natural gas exports to be paid by suppliers. All else being equal, this causes the:

A. quantity of natural gas exports produced to increase.

B. demand for natural gas exports to shift to the right.

C. supply of natural gas exports to shift to the left.

D. supply of natural gas exports to shift to the right.

Question #11

The minimum wage implemented in labor markets is an example of a price floor.

A. FALSE

B. TRUE

Question #12

Suppose that there is no third-party payer in the medical care market in Uganda in 1955. Suppose that in 1960, health insurance companies begin operations in Uganda. All else being equal, what does supply and demand analysis predict will happen in the medical care market in 1960?

A. Demand will decrease in the medical care market initially due to insurance premium costs, but will increase over the long term

B. The total quantity will decline

C. Total expenditures will decline

D. Total expenditures will increase

Question #13

Which of the following would not shift a supply or demand curve:

A. None of the available answers

B. A change in the price of the good in the model

C. A change in income

D. A change in taxes on consumers

Question #14

Suppose that in the rice market demand shifts slightly due to a new rice diet that is being marketed in the U.S. as a cure for cancer. Simultaneously the supply curve shifts greatly due to a healthy rainy season that positively affects the rice crop in California. What is the most likely outcome in this situation?

A. the equilibrium price will decrease

B. the equilibrium price will increase

C. the equilibrium quantity will fall

D. the supply curve will shift again after demand meets supply

Question #15

Suppose that the equilibrium price and quantity for 1 bedroom apartments in Orange County is $2,000 and 250,000 respectively. What is the most likely outcome from the Orange County Board of Supervisors' implementation of a price ceiling at $2,500 for a 1 bedroom apartment?

A. a surplus

B. no effect

C. excess demand

D. excess supply

Question #16

If, at a good's current price, the quantity demanded is 2,000 units and the quantity supplied is 1,000 units then:

A. the market price is above equilibrium

B. price is most likely going to decline

C. the market price is at the equilibrium price

D. the market price is below equilibrium

Question #17

A. excess supply

B. a surplus of apartments

C. no effect

D. a shortage of apartments

Question #18

Nike has so far had $30,000,000 in losses at its shoe factory in Vietnam in 2017. The additional revenue that it will earn from producing an additional shoe is $100 while the additional cots incurred for that additional shoe is $99.99. Should Nike continue operations in that factory and produce that additional shoe?

A. No, because the additional profits from the sale of the shoe are miniscule compared to the losses in that year

B. Not enough information provided to answer the question

C. No, because Nike already lost $30,000,000 and it should cut its losses and look for additional opportunities

D. Yes, because the marginal revenue from producing the additional shoe is greater than the marginal costs

Question #19

Which scarce service, good, or resource would most likely produce superior "technical outcomes" if it were to be distributed via non-market rationing, when the outcomes are compared to market rationing?

A. Chanel Shoes

B. Rare metal coins

C. Lamborghini

D. Student slot into Harvard Medical School

Question #20

Suppose, that the demand for watches increases and shifts the demand curve due to increased advertising by watch manufacturers. Immediately after the shift in demand and at the "old" equilibrium price, how would you describe the situation in the market? Assume that nothing happened to the supply curve.

A. excess production

B. Excess demand

C. not enough information provided to answer the question

D. excess supply

Question #21

Suppose we are analyzing the gasoline market. Initially we are at the following equilibrium point: P=$5 and Q=30,000 Now suppose incomes increase and simultaneously the price of petroleum (input for gasoline production) increases. Question: After the shifts what happened to equilibrium price and quantity in the gasoline market?

A. The equilibrium quantity increased, but we can't tell what happened to the equilibrium price because we aren't given any information about the relative size of the shifts in supply and demand in the market.

B. The equilibrium price increased, but we can't tell what happened to the equilibrium quantity because we aren't given any information about the relative size of the shifts in supply and demand in the market.

C. The equilibrium price decreased, but we can't tell what happened to the equilibrium quantity because we aren't given any information about the relative size of the shifts in supply and demand in the market.

D. The equilibrium quantity decreased, but we can't tell what happened to the equilibrium price because we aren't given any information about the relative size of the shifts in supply and demand in the market.

Question #22

If quantity declines and price also declines, this is consistent with a:

A. rightward shift in supply and demand.

B. leftward shift in demand keeping supply constant.

C. rightward shift in demand and a leftward shift in supply.

D. leftward shift in supply keeping demand constant.

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