Chapter 01 Economics: The Study of Opportunity Cost

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ADCP 310 Fall 2010/Week 1 Quiz
1
Name: ________________________________________ Section: _________ Date: __________
For each question, circle only one (1) response. If you change your answer, mark through your other
choices, circle your final answer. If more than one (1) answer is circled, the first answer will be graded.
1. Economics is the study of
A. how much people should buy and the prices they should be willing to pay.
B. how much people should sell and the prices they should be willing to accept.
C. the allocation of the world's freely available resources and who should get them.
D. the allocation and use of scarce resources to satisfy unlimited human wants.
2. Scarcity implies that the allocation scheme chosen by society can
A. not make more of any one good.
B. typically make more of a good but at the expense of making less of another.
C. always make more of all goods simultaneously.
3. Production possibilities frontier models
A. the choices we make in setting prices.
B. the choices we make in setting output alternatives.
C. the choices we make in setting wages.
D. the choices we make in setting incomes.
4. In Figure 1.1, which labeled points are attainable?
A. Only A
B. Only B and C
C. Only D
D. A, B and C
5. In Figure 1.1, which labeled points are unattainable?
A. Only A
B. Only B and C
C. Only D
D. A, B and C
ADCP 310 Fall 2010/Week 1 Quiz
2
6. Of course, all individual students are better off if they get better grades. If you were to
conclude that all students would be better off if everyone received an "A" you would
A. have fallen victim to the fallacy of scarcity.
B. be right.
C. have fallen victim to the fallacy of composition.
D. be mistaking correlation with causation.
7.
The fact that snow cones sales fall when snow accumulated from the sky suggests that snow
cones sales and snow on the ground are
A. directly correlated.
B. inversely correlated.
C. neither A) nor B)
D. both A) and B)
8. If you concluded from the fact that the last three recessions have occurred while Republicans
were President that their fiscal policies create recessions then you would be
A. right
B. wrong because causation and correlation are not the same
C. wrong and have fallen victim to the fallacy of composition
D. wrong because Democrats are much worse
9. Any mechanism by which buyers and sellers negotiate an exchange is a
A. corporation
B. market
C. negotiable instrument
D. brokerage
10. A mechanism by which buyers and sellers of labor and financial capital negotiate an
exchange is a
A. stock market
B. bond market
C. factor market
D. brokerage
11. If the (steadily decreasing) marginal benefit of another day spent in the hospital exceeds the
(steadily increasing) marginal cost of an additional day spent in the hospital, the rational
consumer of hospital services would be predicted to
A. check out of the hospital immediately
B. stay in the hospital for at least that additional day
C. demand a refund from the hospital for the previous day's stay
D. complain about the hospital food
ADCP 310 Fall 2010/Week 1 Quiz
12. Which of the following is the best example of the concept of "inferior"?
A. SUV's
B. Coke and Pepsi
C. Ramen noodles
D. Hot Dogs and Hot Dog Buns
13. From Table 2.1 above, which column is likely to be the one for quantity demanded?
A. Column A
B. Neither A nor B
C. Column B
D. Either A or B are equally likely
14. From Table 2.1 above, which column is likely to be the one for quantity supplied?
A. Column A
B. Neither A nor B
C. Column B
D. Either A or B are equally likely
15. From Table 2.1 above, and under the most likely scenario where columns A and B are
assigned to represent quantity demanded and quantity supplied, which is the equilibrium
price?
A. $1
B. $2
C. $3
D. $4
16. From Table 2.1 above, and under the most likely scenario where columns A and B are
assigned to represent quantity demanded and quantity supplied, which is the equilibrium
quantity?
A. 1 unit
B. 2 units
C. 3 units
D. 4 units
3
ADCP 310 Fall 2010/Week 1 Quiz
17. In Figure 2.1 above, Box 1 would be labeled
A. P* for equilibrium price.
B. P for price.
C. S for supply.
D. D for demand.
18. In Figure 2.1 above, Box 2 would be labeled
A. P* for equilibrium price.
B. P for price.
C. S for supply.
D. D for demand.
19. In Figure 2.1 above, Box 3 would be labeled
A. P* for equilibrium price.
B. P for price.
C. S for supply.
D. D for demand.
20. In Figure 2.1 above, Box 4 would be labeled
A. Q* for equilibrium quantity.
B. S for supply.
C. P for price.
D. D for demand.
21. In Figure 2.1 above, Box 5 would be labeled
A. P* for equilibrium price.
B. P for price.
C. S for supply.
D. D for demand.
22. In Figure 2.1 above, Box 6 would be labeled
A. P* for equilibrium price.
B. S for supply.
C. P for price.
D. Q/t for quantity per unit of time.
4
ADCP 310 Fall 2010/Week 1 Quiz
23. Of the collection of supply and demand diagrams in Figure 2.2 above, which one(s) could
show the result of an increase in income?
A. Figure 1
B. Figure 2
C. Figure 3
D. Figures 1 and 2
24. Of the collection of supply and demand diagrams in Figure 2.2 above which one shows the
result of an increase in the taste for a good?
A. Figure 1
B. Figure 2
C. Figure 3
D. Figure 4
25. Of the collection of supply and demand diagrams in Figure 2.2 above, which one shows the
result of a decrease in the price of a complement for a good?
A. Figure 1
B. Figure 2
C. Figure 3
D. Figure 4
5
ADCP 310 Fall 2010/Week 1 Quiz
26. Of the collection of supply and demand diagrams in Figure 2.2 above, which one shows the
result of an increase in the price of a substitute for a good?
A. Figure 1
B. Figure 2
C. Figure 3
D. Figure 4
27. Of the collection of supply and demand diagrams in Figure 2.2 above, which one shows the
result of a decrease in income if a good is considered normal?
A. Figure 1
B. Figure 2
C. Figure 3
D. Figure 4
28. Of the collection of supply and demand diagrams in Figure 2.2 above, which one shows the
result of an increase in the population of the group of people likely to buy a good?
A. Figure 1
B. Figure 2
C. Figure 3
D. Figure 4
29. Of the collection of supply and demand diagrams in Figure 2.2 above, which one shows the
result of a decrease in the population of the group of people likely to buy a good?
A. Figure 1
B. Figure 2
C. Figure 3
D. Figure 4
30. Of the collection of supply and demand diagrams in Figure 2.2 above which one shows the
result of an increase in technology in the market for anything?
A. Figure 1
B. Figure 2
C. Figure 3
D. Figure 4
31. Of the collection of supply and demand diagrams in Figure 2.2 above, which one shows the
result of a decrease in the number of sellers in the market for anything?
A. Figure 1
B. Figure 2
C. Figure 3
D. Figure 4
6
ADCP 310 Fall 2010/Week 1 Quiz
7
32. If two goods can be made with essentially the same inputs, which one of the collection of
supply and demand diagrams above shows the result of an increase in the price of one on the
market for the other?
A. Figure 1
B. Figure 2
C. Figure 3
D. Figure 4
33. If two goods can be made with essentially the same inputs, which one of the collection of
supply and demand diagrams above shows the result of a decrease in the price of one on the
market for the other.
A. Figure 1
B. Figure 2
C. Figure 3
D. Figure 4
34. If the price rises and the total amount consumers spend on the good rises, then demand must be
A. elastic.
B. inelastic.
C. perfectly inelastic.
D. perfectly elastic.
35. If the price rises and the total amount consumers spend on the good falls to zero, then
demand must be
A. elastic.
B. inelastic.
C. perfectly inelastic.
D. perfectly elastic.
36. If the price falls and the total amount consumers spend on the good rises, then demand must be
A. elastic.
B. inelastic.
C. perfectly inelastic.
D. perfectly elastic.
37. If the price rises and the total amount consumers spend on the good remains unchanged, then
demand must be
A. elastic.
B. inelastic.
C. perfectly inelastic.
D. unit elastic.
38. Suppose a new law makes illegal the sale of a good that had been legal. This will
A. decrease consumer surplus
B. increase consumer surplus
C. increase producer surplus
D. eliminate dead weight loss
ADCP 310 Fall 2010/Week 1 Quiz
39. In Figure 3.1, if demand is considered perfectly elastic, then the appropriate figure is?
A. Figure 1
B. Figure 2
C. Figure 3
D. Figure 4
40. In Figure 3.1, if demand is considered perfectly inelastic, then the appropriate figure is?
A. Figure 1
B. Figure 2
C. Figure 3
D. Figure 4
41. At point A of Figure 3 within Figure 3.1, demand is
A. elastic.
B. inelastic.
C. perfectly inelastic.
D. perfectly elastic.
42. At point B of Figure 4 within Figure 3.1, demand is
A. elastic.
B. inelastic.
C. perfectly inelastic.
D. perfectly elastic.
8
ADCP 310 Fall 2010/Week 1 Quiz
43. In Figure 3.2, what is the producer surplus?
A. 0PCQ*
B. 0ACQ*
C. P*AC
D. BP*C
44. When attempting to correct cases of "market failure", economists usually seek policies that
maximize
A. the sum of consumer and producer surplus
B. consumer surplus, not producer surplus
C. producer surplus, not consumer surplus
D. the difference between consumer and producer surplus
45. The demand for electricity is more elastic in the long run than in the short run because
A. more electricity can be produced in the long run
B. consumers can shift to more efficient electrical appliances in the long run
C. government regulation of electricity producers is most effective in the long run
D. solar energy will eventually replace electricity in the long run
46. The Marginal Cost curve usually
A. is J-shaped.
B. cuts through the minimum of the average variable cost curve.
C. cuts through the minimum of the average total cost curve.
D. all of the above
9
ADCP 310 Fall 2010/Week 1 Quiz
10
47. Referring to Figure 4.1 above, the increase in output from point A to B is less than the
increase in output from point B to C because
A. more workers always produce more.
B. better workers are usually hired after the earlier ones.
C. a small number of workers cannot take as good advantage of the division of labor as a
larger number.
D. eventually workers are up against the fact that there are fixed inputs and more workers do
not add as much.
48. Referring to Figure 4.1 above, the increase in output from point B to C is greater than the
increase in output from point C to D because
A. more workers always produce more.
B. better workers are usually hired after the earlier ones.
C. a small number of workers cannot take as good advantage of the division of labor as a
larger number.
D. eventually workers are up against the fact that there are fixed inputs and more workers do
not add as much.
49. Referring to Figure 4.1 above, the increase in output from point A to B and from point B to C
happens because
A. more workers will produce more.
B. better workers are usually hired after the earlier ones.
C. a small number of workers cannot take as good advantage of the division of labor as a
larger number.
D. eventually workers are up against the fact that there are fixed inputs and more workers do
not add as much.
ADCP 310 Fall 2010/Week 1 Quiz
50. In Figure 4.2 above, the reason that point A is not through the origin but starts up on the
vertical axis is that
A. there are fixed outputs.
B. there are fixed costs.
C. there is no cost associated with producing no output.
D. there is waste.
51. Referring to Table 4.1 above, Box D should be filled with
A. $0.
B. $1.
C. $100.
D. $200.
52. Referring to Table 4.1 above, Box E should be filled with
A. $0.
B. $10.
C. $100.
D. $200.
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ADCP 310 Fall 2010/Week 1 Quiz
53. Referring to Table 4.2 above, Box A should be filled with
A. $0.
B. $10.
C. $20.
D. nothing.
54. Referring to Table 4.2 above, Box B should be filled with
A. $0.
B. $10.
C. $20.
D. $30.
55. Referring to Table 4.2 above, Box C should be filled with
A. $0.
B. $5.
C. $1.
D. $2.
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