Economy Growth, Highway Programs, Invisible Hand - Exam Review Questions
Explore key concepts of economy growth, highway program decisions, and the invisible hand theory through a series of exam review questions. Analyze scenarios to understand economic principles effectively.
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Final Exam Review Short (36 Questions) This web quiz may appear as two pages on tablets and laptops. I recommend that you view it as one page by clicking on the open book icon at the bottom of the page.
4. Other things equal, this economy will achieve the most rapid rate of growth if: 1. it chooses point A. 2. it chooses point B. 3. it chooses point C. 4. it chooses point D.
4. Other things equal, this economy will achieve the most rapid rate of growth if: 1. it chooses point A. 2. it chooses point B. 3. it chooses point C. 4. it chooses point D.
Answer the next question on the basis of the above information for four highway programs of increasing scope. All figures are in millions of dollars. 5. Which alternative should the government build? 1. A 2. B 3. C 4. D
Answer the next question on the basis of the above information for four highway programs of increasing scope. All figures are in millions of dollars. 5. Which alternative should the government build? 1. A 2. B 3. C 4. D
8. The invisible hand promotes society s interest because: 1. Individuals pursuing their self-interest will produce goods that people want 2. Individuals will produce goods for others out of concern for their fellow human beings 3. It makes sure that everybody wins from competition 4. Government regulation pushes businesses into producing the right mix of goods
8. The invisible hand promotes society s interest because: 0% 0% 0% 0% Government reg... Individuals wi... Individuals pu... It makes sure ... 1. Individuals pursuing their self-interest will produce goods that people want 2. Individuals will produce goods for others out of concern for their fellow human beings 3. It makes sure that everybody wins from competition 4. Government regulation pushes businesses into producing the right mix of goods
9. Assume before specialization both countries were producing at B , If they specialize 100% according to their comparative advantage, then the gains will be: 1. 30 wheat 2. 15 steel 3. 60 steel and 60 wheat 4. 60 steel and 20 wheat YP 36
9. Assume before specialization both countries were producing at B , If they specialize 100% according to their comparative advantage, then the gains will be: 1. 30 wheat 2. 15 steel 3. 60 steel and 60 wheat 4. 60 steel and 20 wheat YP 36
11. Which graph represents the effect of an increase in the price of oil on the market for gasoline? 1. A 2. B 3. C 4. D 1.Which Determinant? 2.Demand or Supply? 3.Increase or Decrease? 4.Graph it!
11. Which graph represents the effect of an increase in the price of oil on the market for gasoline? 1. A 2. B 3. C 4. D 1.Which Determinant? 2.Demand or Supply? 3.Increase or Decrease? 4.Graph it!
12. Which graph represents the effect of an increase in the smoking age on the market for cigarettes? 1. A 2. B 3. C 4. D 1.Which Determinant? 2.Demand or Supply? 3.Increase or Decrease? 4.Graph it!
12. Which graph represents the effect of an increase in the smoking age on the market for cigarettes? 1. A 2. B 3. C 4. D 1.Which Determinant? 2.Demand or Supply? 3.Increase or Decrease? 4.Graph it!
13. One can say for certainty that the equilibrium price will increase if: 1. S and D both increase 2. S increases and D decreases 3. S decreases and D increases 4. S and D both decrease
13. One can say for certainty that the equilibrium price will increase if: 1. S and D both increase 2. S increases and D decreases 3. S decreases and D increases 4. S and D both decrease
14. If a legal ceiling price is set above the equilibrium price: 1. A shortage of the product will occur 2. A surplus of the product will occur 3. A black market will evolve 4. Neither the price or quantity of the product will be affected
14. If a legal ceiling price is set above the equilibrium price: 1. A shortage of the product will occur 2. A surplus of the product will occur 3. A black market will evolve 4. Neither the price or quantity of the product will be affected
A price ceiling set below the equilibrium price will cause a shortage, but a price ceiling set above the equilibrium price will have no effect. Price ceilings are legally imposed maximum prices. They are used to decrease prices. Businesses can charge less than the price ceiling , but not more. Where is the profit maximizing price and quantity? ($12 and 150)
16. S is the supply with the negative externalities, How much will be produced? 1. Less than 3 2. 3 3. 4 4. More than 4 What is the allocatively efficient quantity? WHAT WE WANT
16. S is the supply with the negative externalities, How much will be produced? 1. Less than 3 2. 3 3. 4 4. More than 4 What is the allocatively efficient quantity? WHAT WE WANT
25. Which of the following is NOT a way to solve the efficiency problem of a positive externality? 1. Tax the product 2. Government produces the product itself 3. Increase demand for the product 4. Subsidize the product
25. Which of the following is NOT a way to solve the efficiency problem of a positive externality? 1. Tax the product 2. Government produces the product itself 3. Increase demand for the product 4. Subsidize the product
How to Correct for Positive Externalities Increase Supply: Increase Demand: Increase Supply: Increase Demand: - subsidize producers - subsidize consumers - example: solar panels - example: financial aid - gov t produces - example: public schools, parks
26. A public good: 1. Is a rival, exclusive good 2. Is a non-rival, exclusive good 3. Is a non-rival, non-exclusive good 4. Does not have the free rider problem
26. A public good: 1. Is a rival, exclusive good 2. Is a non-rival, exclusive good 3. Is a non-rival, non-exclusive good 4. Does not have the free rider problem
28. Compared to the price elasticity of demand for gasoline, the elasticity of demand for Mobil gasoline is: 1.more inelastic 2.unit elastic 3.the same 4.more elastic
28. Compared to the price elasticity of demand for gasoline, the elasticity of demand for Mobil gasoline is: 1.more inelastic 2.unit elastic 3.the same 4.more elastic
29. What is the coefficient of price elasticity of supply between prices $2 and $10 (midpoints formula)? 1. 5 2. 2.5 3. 1 4. 0.25
29. What is the coefficient of price elasticity of supply between prices $2 and $10 (midpoints formula)? 1. 5 2. 2.5 3. 1 4. 0.25
30. If Es = 0.25, then a 10% increase in price will: 1. Increase quantity supplied by 2.5% 2. Decrease quantity supplied by 2.5% 3. Increase the quantity supplied by 25% 4. Not change the quantity supplied
30. If Es = 0.25, then a 10% increase in price will: 1. Increase quantity supplied by 2.5% 2. Decrease quantity supplied by 2.5% 3. Increase the quantity supplied by 25% 4. Not change the quantity supplied
37. 1. A 2. B 3. C
37. 1. A 2. B 3. C
B is drawn correctly. MU is the slope of TU. Initially the slope of TU is positive, but declining. So, MU is positive and declining. Then, at its peak the slope of TU is zero. And MU is zero at that quantity After that the slope is negative. So, MU is negative
40. If: PX=$2, PY=$4, income=$18 How many of each will a rational consumer buy? 1. 1X and 4Y 2. 3X and 3Y 3. 5X and 2Y 4. 7X and 1Y YP 26, #4
40. If: PX=$2, PY=$4, income=$18 How many of each will a rational consumer buy? 1. 1X and 4Y 2. 3X and 3Y 3. 5X and 2Y 4. 7X and 1Y YP 26, #4
42. Pam runs her own plumbing business. Last year she earned $100 in total revenue and paid $65 to her suppliers and employees. Last year she was offered $40 to work for another plumber. What is Pam s accounting profit? 1. $ 0 2. $ 35 3. -$ 5 4. $ 40
42. Pam runs her own plumbing business. Last year she earned $100 in total revenue and paid $65 to her suppliers and employees. Last year she was offered $40 to work for another plumber. What is Pam s accounting profit? 1. $ 0 2. $ 35 3. -$ 5 4. $ 40
47. Diminishing marginal returns begin with the _____ worker. 1. 1st 2. 2nd 3. 3rd 4. 4th 5. 5th 6. 6th
47. Diminishing marginal returns begin with the _____ worker. 1. 1st 2. 2nd 3. 3rd 4. 4th 5. 5th 6. 6th
7a Economic Profit and the Production Function
48. When the TP curve is increasing at a decreasing rate, then MP is: 1. Increasing and positive 2. Increasing and negative 3. Decreasing and positive 4. Decreasing and negative
48. When the TP curve is increasing at a decreasing rate, then MP is: 1. Increasing and positive 2. Increasing and negative 3. Decreasing and positive 4. Decreasing and negative
54. Which is NOT a characteristic of pure competition? 1. Very many firms 2. Price takers (no control over price) 3. Standardized product 4. High Herfindahl index 5. No barriers to entry 6. No non-price competition
54. Which is NOT a characteristic of pure competition? 1. Very many firms 2. Price takers (no control over price) 3. Standardized product 4. High Herfindahl index 5. No barriers to entry 6. No non-price competition
55. Which is NOT a characteristic of monopolies? 1. Single firm 2. A lot of control over price 3. Mutual interdependence 4. Unique product 5. Blocked entry 6. Public relations non-price competition
55. Which is NOT a characteristic of monopolies? 1. Single firm 2. A lot of control over price 3. Mutual interdependence 4. Unique product 5. Blocked entry 6. Public relations non-price competition
