VERSION 1 Name________________ ECON 2020 Exam #1 Directions: Read each question and EVERY possible answer VERY carefully

. Select the best answer from the alternatives. Good luck! 1. The condition whereby the resources we use to produce goods and services are limited relative to our wants for them is referred to by economists as A. a shortage B. opportunity cost C. unattainable D. inefficiency E. scarcity In a market where the demand is given by the equation Qd = 600 – 5P and supply is given by the equation Qs = 40 + 3P, find the equilibrium price and equilibrium quantity. A. $80; 200 units B. $80; 280 units C. $70; 250 units D. $280; 880 units E. “Yeah, there were horses, and a man on fire, and I killed a guy with a trident.” Use the following graph to answer question 3.
Ice cream

2.

80

30

C

P 30 3. One pair of slacks trades for A. 5 ice creams B. ½ ice cream C. 2 ice creams D. 3 ice creams E. 1 ice cream 40

Slacks

1

and the waffle producer trades 4 units. I miss being near you. 4 pancakes Which of the following statements is TRUE? A. Champ can cook 30 pancakes or 15 waffles in an hour. Brick has an absolute advantage in producing waffles. I miss your scent. 6. 0. tortillas (an input) D. Assume that one waffle trades for 3 pancakes. supply would increase and demand would decrease D. If Champ and Brick completely specialize. supply would decrease and demand would increase E. Brick will consume 8 pancakes and 3 waffles B. Champ has a comparative advantage in producing pancakes. B and C only How would a decrease in the price of cat fashions affect the market for cat fashions? A. When this all gets sorted out. Brick can cook 24 pancakes or 6 waffles in an hour. spanish rice (a complement) B. D.” 5. Brick has an absolute advantage in producing pancakes. 18 pancakes D. quantity supplied would decrease and quantity demanded would increase B. C. I miss your laugh. 2 .VERSION 1 4. Champ will consume 12 pancakes and 11 waffles C. “I miss being with you. Which of the following could possibly be the mystery good? A. I think you and me should get an apartment together. I miss your musk. Chinese food (a substitute) C. A and C only E. quantity supplied would increase and quantity demanded would decrease C. Brick has a comparative advantage in producing pancakes. 9 waffles C. A fall in the price of a mystery good caused a change in the market for burritos that led to a fall in the price of burritos as well. Brick will consume 12 pancakes and 10 waffles D. Brick’s opportunity cost of a waffle is A. 7. which of the following quantities will be consumed? A. Champ will consume 18 pancakes and 4 waffles E.25 pancakes E. B. 24 pancakes B. A and D only Use the following information to answer questions 6 – 8. 8.

S1 B A C P2 P1 S2 Quantity Qs1 11. resources. Qs2 Qs3 An increase in the price of beans (an input) would cause a movement from A. households D. Which of the following statements is TRUE? A. A. point A to point C C. point C to point A An increase in the price of coffee would cause a movement from A. B. C. Economists believe that price rationing is the least efficient rationing method. firms C.” Use the following graph of the supply of coffee to answer questions 11 – 12. firms. goods and services. “Milk was a bad choice. all of the above E. point B to point A D. goods and services. Price rationing allows every consumer that would like the good to have it. point C to point A 12. households . households E. Price 10.VERSION 1 9. point A to point C C. D. B and C only According to the Circular Flow diagram. point A to point B B. point B to point A D. resources. Price rationing is the allocation of goods among consumers using prices. point A to point B B. in resource markets ___ supply ___ to ___ in exchange for money. 3 . firms. households. firms B.

50 A price of $5 in this market would cause a ____ of ____ units. how does that affect the market for wood-burning fireplaces? A. Their opportunity cost is $1200 B. If the price of natural gas rises. $11. 11 5 D Q/T 40 50 62 Equilibrium occurs in this market at a price of ____ and quantity of _____ units. 22 D. demand decreases. causing the price to rise E.VERSION 1 13. and natural gas is a complement for gas fireplaces. 50 D. 10 15. causing the price to rise B. Their economic costs are $1430 C. causing the price to fall D. If they weren’t having poker night. 4 . $20 on chips and pretzels. causing the price to fall C. A. Their explicit costs are $230 D. 22 B. A. 62 E. $14.” Frank Vitchard and Wes Mantooth are getting ready for poker night at their apartment. P 14 S 14. $14. surplus. 10 C. demand increases. and $140 on drinks. $5. shortage. 50 B. supply decreases. Their implicit cost is $230 Use the following figure to answer questions 15 – 16. supply increases. 40 C. They spent $70 on cigars. $5. “I have many leather-bound books and my apartment smells of rich mahogany. 16. shortage. surplus. then they could have made $600 each working the late night news broadcasts. Which of the following statements about their costs (altogether) is FALSE? A. Gas fireplaces are substitutes for wood-burning fireplaces.

equilibrium quantity eventually falls E. how does that affect the market for an inferior good? A. causing a fall in equilibrium price and an indeterminate change in quantity C. A and C only E. C.” E. supply decreases and demand increases. 18 scotch drinks 19. If consumer income falls. 30 scotch drinks D. his opportunity cost of producing jazz flutes increases as he produces more flutes. initially there is a surplus at the old price C. 21. supply and demand decrease. the PPF is a straight line D. his opportunity cost of producing jazz flutes stays constant as he produces more flutes. labor 18. “Sixty percent of the time. B. but I'm kind of a big deal. it works every time. . supply decreases and demand increases. 35 scotch drinks B.” The signal that tells producers what and how much to produce is called the A. scarce goods D. “I don't know how to put this. equilibrium price eventually rises D. causing a rise in equilibrium price and an indeterminate change in quantity B. 20. 5 . demand decreases B. supply increases and demand decreases. cost C. 20 scotch drinks C. Which of the following statements about Ron’s economy above is TRUE? A.VERSION 1 17. 1 scotch drink E. B and C only How do expectations of higher future prices affect the market for Sex Panther cologne today? A. causing an indeterminate change in equilibrium price and a fall in quantity E. price B. “LOUD NOISES!” Ron Burgundy faces the following production possibilities: Scotch drinks: 100 90 70 40 0 Jazz flutes: 0 1 2 3 4 What is the opportunity cost of producing the 2nd jazz flute? A. causing a fall in equilibrium price and a rise in quantity D.

PPF2 Cheese Wheels Assume the above economy is on PPF 1 . coconuts and fish D. an increase in the unemployment rate B. a decrease in the unemployment rate C. a change in regulation C. how individuals. Refrigerators A B C PPF1 22. change in the price of a complement B. political agendas C. and society make optimal choices under conditions of scarcity 23. “I’m Ron Burgundy?” B. 25. B. profit E.VERSION 1 Use the following diagram to answer questions 22 – 23. an increase in the quantity of resources D. 24. change in the price of an input D. institutions. What would a movement from point C to point B represent? A. change in the price of a substitute C. and D only Which of the following could cause a shift from PPF1 to PPF2? A. all of the above Which of the following will NOT shift the demand curve? A. a technological improvement B. changes in all of the above WILL shift demand Economics is the social science concerned with A. a technological improvement D. an increase in the quantity of resources E. 6 . C. change in tastes and preferences E. trade with another economy E.

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