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Economics Questionnaire

1. A legal maximum on the price at which a good can be sold is called a? Price ceiling. 2. Which of the following is likely to have the most price elastic demand? Breakfast cereal, corn flakes 3. A reduction in a country’s barriers to trade? Benefits some citizens of the importing country but does not benefit the domestic producers in the importing country. 4. The amount of a good that buyers are willing and able to purchase is quantity demanded. 5. Suppose a market in which demand is more elastic than supply. The incidence of a tax will? Fall more heavily on sellers than buyers. Suppose there is a frost that destroys much of the strawberry crop and the price of blueberries, a substitute for strawberries, increases. What would we expect to happen in the market for strawberries? The price of strawberries increases and the direction of the change in the equilibrium quantity of strawberries cannot be determined from the information given. 7. Which of the following changes will not shift the demand for ice cream to the right? A decrease in the price of ice cream 8. If price elasticity of demand is greater than one? Demand is

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elastic. 9.

If Tom Brady can ran $20,000 filming a commercial in the time it takes him to mow his lawn, he gains from trade? As long as he pays less than $20,000 for someone to mow his lawn 10. Suppose the income elasticity for good X is 0. 8. Good X? Has inelastic demand, is an inferior good 1 1 . Sue can produce 4 dozen cookies or 2 dozen cupcakes in one hour. David can produce 6 dozen cookies or 4 dozen cupcakes in one hour. See’s opportunity cost of 1 dozen cookies is? 2 dozen cupcakes and Davit’s opportunity cost of 1 dozen cookies is 1. 5 dozen cupcakes, 2 dozen cupcakes and Davit’s opportunity cost of 1 dozen cookies is 2/3 dozen cupcakes. . The market for agricultural products has experienced advances in technology but has relatively inelastic demand. The combination of these two effects is an increase in supply, a large reduction in equilibrium price, a small increase in the equilibrium quantity, and a decrease in total revenue paid to farmers as a group. 13. Without government intervention, prices of products are not capable of changing to avoid shortages or surpluses? FALSE 14. When supply is relatively elastic? The supply curve is relatively flat. 15. Sue can produce 4 dozen cookies or 2 dozen cupcakes in one hour.

David can reduce 6 dozen cookies or 4 dozen cupcakes in one hour. See’s opportunity cost of 1 dozen cookies is? Higher than Davit’s opportunity cost of 1 dozen cookies so Sue has a comparative advantage in the production of cookies. 16. Trade can make everyone better off because? Specialization based on comparative advantage increases total production. 17. Trade can make everyone better off? All of the choices are correct. 18. Free markets are preferred to markets with binding price ceilings or floors because free markets are impersonal and ration goods with prices? TRUE 19. The relative tax incidence of a tax is determined by the government?

FALSE 20. Binding rent controls create large shortages of apartments in the short run, but small shortages in the long run due to the elasticity of demand and supply.? FALSE 21 . When consumers have more time to adjust to a price change, price elasticity of demand tends to be? More elastic. 22. Suppose the price of gold, an input into the production of Jewelry, decreases. The effect on the market for Jewelry is? Decrease in quantity supplied, an Economics Questionnaire By bazillions the market for sport utility vehicles is are? All of the choices are correct. 24. In a perfectly competitive market?

All of the choices are correct. 25. Sue can produce 4 dozen cookies or 2 dozen cupcakes in one hour. David can produce 6 dozen cookies or 4 dozen cupcakes in one hour. Davit’s opportunity cost of 1 dozen cupcakes is? 2/3 dozen cookies while See’s opportunity cost of 1 dozen cupcakes is 1/2 dozen cookies so David should specialize in the production of cupcakes 2/3 dozen cookies while See’s opportunity cost of 1 dozen cupcakes is 1/2 dozen cookies so Sue should specialize in the production of cupcakes. 26. If price elasticity of demand is less than one? Increasing the price of the product will increase total revenue. 27.

Sue can produce 4 dozen cookies or 2 dozen cupcakes in one hour. David can produce 6 dozen cookies or 4 dozen cupcakes in one hour. A producer that requires fewer resources to produce a good is said to have? A comparative advantage, a straight line production possibilities frontier 28. A tax levied on buyers has the same effect on the price the buyer pays as an equal magnitude tax levied on sellers. TRUE 29. A price floor set below the market equilibrium price? Is a non-binding price floor. 30. One producer can have the comparative advantage in both products, but cannot have the absolute advantage in both products?

FALSE 31 . When the minimum wage is set above the equilibrium wage it is a binding price floor that results in a surplus of labor 32. A decrease in quantity supplied is shown as a movement from? Point B to point A 33. Imports are goods? Produced abroad and sold domestically 34. Goods with a positive cross price elasticity are? Substitutes. 35. An increase in supply is shown as a movement from? Point A to point B, point B to point A 36. A market with only one seller is called a monopoly market. TRUE 37. If the government were to impose a tax on cigarettes, the tax incidence will likely fall more heavily on the? Ensure because supply is more elastic than demand. 38. A price ceiling set below the market equilibrium price? All of the choices are correct. 39. The responsiveness of the quantity demanded of a product to a change in the price of a product is called? Elasticity 40. Suppose when the price of gasoline is $3. 50 per gallon, a local gas station sells 300 gallons per day. When the price of gasoline is $3. 85 per gallon, the same gas station sells 31 5 gallons per day. Using the midpoint formula, the absolute value of the price elasticity of demand for gasoline is approximately? 0. 32, 1. 95,

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