Economics Multiple Choice
Multiple Choice: 2 points each for 50 pts.
1. To graphically demonstrate the principle of increasing marginal opportunity cost the production possibility curve must be:
C. bowed out.
D. bowed in.
2. Refer to the graph above. As you move from point A to point B:
A. production efficiency is increased because we have more of good X.
B. production efficiency is decreased because we have less of good Y.
C. production efficiency is decreased because we are no longer on the production possibility curve.
D. the change in efficiency is unclear.
3. Which of the following would likely result in an increase in the demand for beef?
A. A decrease in the supply of beef.
B. An increase in family incomes.
C. An increase in the price of feed grains.
D. A decrease in the price of pork.
4. The more the current price exceeds the equilibrium price, the:
A. greater the resulting shortage will be.
B. smaller the resulting shortage will be.
C. greater the resulting surplus will be.
D. smaller the resulting surplus will be.
5. Suppose a market has an excess demand and price starts to rise. What will the rise in price cause?
A. A fall in both quantity supplied and quantity demanded.
B. A rise in both quantity supplied and quantity demanded.
C. A rise in quantity supplied and a fall in quantity demanded.
D. A fall in quantity supplied and a rise in quantity demanded.
6. Suppose the above supply and demand tables reflect the supply and demand for milk per week. What is the equilibrium price and quantity of milk?
A. $1 per gallon and 2000 gallons per week.
B. $2 per gallon and 1500 gallons per week.
C. $3 per gallon and 2000 gallons per week.
D. $4 per gallon and 2000 gallons per week.
7. Refer to the graph above. The figure shows the demand and supply curves for eggs and shows two equilibrium points, E1 and E2. An increase in demand from D1 to
D2 would cause
A. price to decline from $1.25 to $1.00 a dozen and a shortage of 2000 dozen eggs per week.
B. price to remain at $1.00 a dozen and a shortage of 2000 dozen eggs per week.
C. price to rise from $1.00 to $1.25 a dozen and equilibrium quantity to be 3000 dozen eggs per week.
D. price to rise from $1.00 to $1.25 a dozen and a surplus of 2000 dozen eggs per week.
8. Refer to the graphs above. A recent report indicates that the device known as the right heart catheter used to diagnose heart conditions poses more risks than
previously thought. The effect of the report on the market for right heart catheters is best shown by which of the graphs above?
9. In general, the greater the elasticity the:
A. smaller the responsiveness of price to changes in quantity.
B. smaller the responsiveness of quantity to changes in price.
C. larger the responsiveness of price to changes in quantity.
D. larger the responsiveness of quantity to changes in price.
10. If the price of a good goes up by 5% and, in response, the quantity demanded falls by 15%, the price elasticity of demand would be:
11. An elasticity of supply of 2.7 means that:
A. supply is inelastic.
B. quantity supplied changes 2.7 units for each 1% change in price.
C. quantity supplied changes 2.7% for each 1% change in price.
D. price changes by 2.7% for each 1% change in quantity supplied.
12. Economic profit is:
A. total revenue minus explicit measurable costs.
B. explicit revenues minus explicit costs.
C. implicit and explicit revenues minus implicit and explicit costs.
D. implicit and explicit revenues minus implicit costs.
13. The short run is a period during which:
A. some inputs are variable and no inputs are fixed.
B. some inputs are variable and some inputs are fixed.
C. no inputs are variable and all inputs are fixed.
D. no inputs are variable and some inputs are fixed.
14. The increase in output obtained by hiring an additional worker is known as:
A. the average product.
B. the marginal product.
C. the total product.
D. value added.
15. Costs that are spent and cannot be changed in the period of time under consideration are called:
A. variable costs.
B. total costs.
C. marginal costs.
D. fixed costs.