Econ 001 - Principles of Economics » Winter 2020 » Quiz 2

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Question #1
What is the definition of microeconomics?
A.   The science of being boring on an individual scale (like a classroom)
B.   The study of monetary, financial and historical instruments at the national level
C.   The study of decision making of how to distribute scarce resources by individual persons and firms
D.   The study of small amounts of resources
E.   None of the above
Question #2
What is the definition of the demand curve?
A.   The curve that tells us how much the quality of goods changes as income increases
B.   The curve that tells us the quantity demanded at a given price
C.   The curve that tells us how to study for exams when time is scarce
D.   The curve that tells us what a country is capable of producing if it uses all its resources
E.   None of the above
Question #3
Which of the following is something included in the circular flow model?
A.   Banks
B.   Government
C.   An explanation of where firms come from
D.   International Trade
E.   None of the above is included in this model
Question #4
Which of the following is an example of positive microeconomics?
A.   The minimum wage should be raised
B.   The US unemployment rate for September 2019 was 3.5%
C.   A tax on texts would reduce the quantity of them
D.   A price ceiling should be applied on gasoline
E.   We ought to legalize transgender bathrooms
Question #5
The opportunity cost of taking this quiz could be going out to a basketball game with your friends. 
A.   TRUE
B.   FALSE
Question #6
In addition to selling gas, gas stations also sell snacks in their convenience store. In fact, both gas and the snacks are bought together. What happens to the market for these snacks if the price of gas increases?
A.   Price falls and quantity rises
B.   Price rises and quantity falls
C.   Price rises and quantity rises
D.   Price falls and quantity falls
E.   None of the above
Question #7
Consider the market for marijuana. Suppose buyers suddenly expect the price of marijuana to rise. What is the effect on P and Q?
A.   Price falls and quantity falls
B.   Price rises and quantity rises
C.   Price rises and quantity falls
D.   Price falls and quantity rises
E.   None of the above
Question #8
Consider the product of gas-powered cars. Suppose tastes and preferences for this good are falling while the cost of making them is rising. What is the effect of these two trends on the gas-powered car market?
A.   Price is unclear while quantity falls
B.   Price falls and quantity falls
C.   Price rises while quantity is unclear
D.   Price falls and quantity is unclear
E.   None of the above
Question #9
Consider the market for marijuana. Suppose the price of a vaporizer (which is used to consume marijuana) becomes cheaper. What is the effect on P and Q?
A.   Not enough information
B.   P decreases, Q decreases
C.   P increases, Q increases
D.   P decreases, Q increases
E.   P increases, Q decreases
Question #10
Consider the good known as Shirwanis. Initially, a tax is placed on the buyers of this good. Suppose that due to intense pressure from consumer groups, the government decides to switch the tax to being on sellers. Which of the following is a result of this switch?
A.   Quantity decreases
B.   Sellers pay the entire tax
C.   Government obtains more revenue
D.   Price buyers pay decreases
E.   None of the above
Question #11
Suppose the tax per unit increases. What is the effect on the tax revenue?
A.   Increases
B.   Decreases
C.   Stays the same
D.   Unclear
E.   None of the above
Question #12
Suppose the PED of milk is -0.4. How can we interpret this number?
A.   Milk's demand curve is flat and upward sloping
B.   Milk's demand is not that responsive to changes in the price
C.   A small increase in income will cause a huge increase in demand
D.   Milk has no complements
E.   None of the above
Question #13
Suppose you have the following information for the demand for toddler walkers: P1=15 Q1=100 P2=10 Q2=500 Which of the following is true?
A.   Toddler walkers are not responsive to changes in price
B.   A decrease in costs will cause a greater change in the price than in the quantity
C.   An increase in tastes and preferences will cause a greater change in the quantity than the price
D.   A slight increase in price will cause a huge decrease in the good's quantity demanded
E.   None of the above are true
Question #14
Suppose we have a good known as Nazarovs. It has a PES of 1.2. Suddenly, there is a huge increase in tastes and preferences for it. What happens as a result?
A.   The supply shifts to the right
B.   The price increases a lot but the quantity falls by a lot
C.   The price decreases and the quantity increases
D.   The price increases a lot but the quantity increases only a little
E.   The price increases a little but the quantity increases a lot

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