Quiz 1 Practice Problems

Document Sample
Quiz 1 Practice Problems Powered By Docstoc
					Quiz 1 Practice Problems
Answer Section

TRUE/FALSE

      1.   ANS:   T        DIF:   2
      2.   ANS:   F        DIF:   4
      3.   ANS:   F        DIF:   5
      4.   ANS:   F        DIF:   4


MULTIPLE CHOICE

      5.   ANS:   B        DIF:   3
      6.   ANS:   C        DIF:   3
      7.   ANS:   D        DIF:   4
      8.   ANS:   A        DIF:   4
      9.   ANS:   E        DIF:   4
     10.   ANS:   C        DIF:   2
     11.   ANS:   E        DIF:   3
     12.   ANS:   B        DIF:   3
     13.   ANS:   A        DIF:   1
     14.   ANS:   A        DIF:   5
     15.   ANS:   B        DIF:   2
     16.   ANS:   A        DIF:   2
     17.   ANS:   D        DIF:   2
     18.   ANS:   A        DIF:   5
     19.   ANS:   D        DIF:   3
     20.   ANS:   D        DIF:   3
     21.   ANS:   D        DIF:   5
     22.   ANS:   E        DIF:   5
     23.   ANS:   C        DIF:   4
     24.   ANS:   E        DIF:   3
     25.   ANS:   D        DIF:   4
     26.   ANS:   E        DIF:   4
     27.   ANS:   D        DIF:   3
     28.   ANS:   D        DIF:   3
     29.   ANS:   D        DIF:   3
     30.   ANS:   B        DIF:   5
     31.   ANS:   D        DIF:   2
     32.   ANS:   D        DIF:   2
     33.   ANS:   B        DIF:   2
     34.   ANS:   D        DIF:   1
     35.   ANS:   C        DIF:   3
     36.   ANS:   B        DIF:   1
     37.   ANS:   B        DIF:   3
     38.   ANS:   D        DIF:   1
    39.   ANS:   C              DIF:    4
    40.   ANS:   D              DIF:    2
    41.   ANS:   B              DIF:    1
    42.   ANS:   D              DIF:    3
    43.   ANS:   A              DIF:    4
    44.   ANS:   A              DIF:    2
    45.   ANS:   E              DIF:    3
    46.   ANS:   C              DIF:    4
    47.   ANS:   E              DIF:    2
    48.   ANS:   D              DIF:    3
    49.   ANS:   C              DIF:    4


ESSAY

    50. ANS:
        a. land, because the diamond is in its natural state
        b. capital, because it's part of DeBeers' inventory
        c. capital, because it's part of the jeweler's inventory
        d. none of the above, because it's a good that has been consumed by a household, not a
             resource
        e. capital, because it's being used in the production of your dentist's services
        f.   capital, because the highway department is using it to produce its output (roads, road
             repair)
    51. ANS:
        This assumption allows economists to develop one-to-one, cause-and-effect relationships in isolation from other
        potentially influential factors. It allows them to build useful models of the economy.
    52. ANS:
        a. As the supply of teen-aged workers falls, the wage rate for teen-aged workers must rise,
             ceteris paribus. This means higher resource prices for the fast food industry, so the supply
             curve for hamburgers will shift to the left, leading to higher hamburger prices and fewer
             hamburgers sold.
        b. The supply of "retirees" to the fast food industry may increase, offsetting the decreased
             supply of teenagers. Depending on the relative size of the two shifts, the price of
             hamburgers may rise, fall, or stay the same.
    53. ANS:
        With less capital (assuming no growth in other resources or technology), this economy will not be able to produce
        as much as it could before the capital wore out. The production possibilities curve will shift inward, towards the
        origin. With more capital (assuming no change in other resources or technology), this economy will be able to
        produce more than it initially could. Its production possibilities curve will shift outward, away from the origin.
    54. ANS:
        a. Ed = (26 - 30) / [(26 + 30) / 2] ÷ ($8 - $5) / [($8 + $5) / 2] = -0.31 = 0.31
        b. Demand is price inelastic. Brandon should charge $8.

    55. ANS:
        A policy that targets suppliers will shift the supply curve to the left, which will raise price. Because the demand
        for heroin is likely to be very inelastic, the price will rise; the market quantity will only fall slightly; and total
        revenues to suppliers who remain in the market will rise.