Econ midterm 1

Question 1

Suppose the price of train tickets is lowered from $4 to $2, and the price of hot dogs remains the same at $1. What happens to the opportunity cost of train tickets?

Answer 1

Decrease

Question 2

Can a nation be producing in a way that is allocatively efficient, but productively inefficient?

Answer 2

No

Question 3

Suppose there is new technology that allows Brazil to be able to produce the same amount of wheat per acre as the US. (However, Brazil still can produce more sugarcane per acre than the US.) Which country now has the comparative advantage in wheat?

Answer 3

U.S

Question 4

Positive or Normative?

A decrease in wages will reduce the number of people who are willing to work.

Answer 4

Positive

Question 5

Positive or Normative?

The government should make state universities and colleges tuition-free for U.S. citizens.

Answer 5

Normative

Question 6

Positive or Normative?

High interest rates discourage many newlywed couples from buying their first home.

Answer 6

Positive

Question 7

Positive or Normative?

Increasing funding to the Border Patrol is the best policy for national security.

Answer 7

Normative

Question 8

Effect of sudden popularity of rollerskates on demand for rollerskates

Demand curve shifts leftward
Demand curve shifts rightward
Demand curve does not shift

Answer 8

Demand curve shifts rightward

Question 9

Effect of the rollerskate fad ending on demand for rollerskates

Demand curve shifts leftward
Demand curve shifts rightward
Demand curve does not shift

Answer 9

Demand curve shifts rightward

Question 10

Effect of consumer expectations that gasoline will be in short supply next week on demand for gasoline today

Demand curve shifts leftward
Demand curve shifts rightward
Demand curve does not shift

Answer 10

Demand curve shifts rightward

Question 11

Effect of consumer expectations that many new houses will be constructed by next year on demand for house purchases today

Demand curve shifts leftward
Demand curve shifts rightward
Demand curve does not shift

Answer 11

Demand curve shifts leftward

Question 12

Effect of new manufacturing methods reducing cost of producing cars on supply of cars

Supply curve shifts leftward
Supply curve shifts rightward
Supply curve does not shift

Answer 12

Supply curve shifts rightward

Question 13

Effect of war destroying innovation hubs on supply of artificial intelligence (AI) services

Supply curve shifts leftward
Supply curve shifts rightward
Supply curve does not shift

Answer 13

Supply curve shifts leftward

Question 14

Effect of climate change causing more droughts in California on supply of vegetables

Supply curve shifts leftward
Supply curve shifts rightward
Supply curve does not shift

Answer 14

Supply curve shifts leftward

Question 15

Effect of climate change causing a warmer climate in Canada on supply of maple syrup

Supply curve shifts leftward
Supply curve shifts rightward
Supply curve does not shift

Answer 15

Supply curve shifts rightward

Question 16

At a price of $5.50 per gallon, 460 million gallons of gasoline are supplied and 320 million gallons of gasoline are demanded.

Prices will increase Prices will decrease Prices will stay the same

Answer 16

Prices will decrease

Question 17

The price of Japanese chili peppers is $1.60 per pound, but the equilibrium price is $3.20 per pound.

Shortage
Surplus
Equilibrium

Answer 17

Shortage

Question 18

At a price of $100, 200 thousand TVs are demanded and 200 thousand TVs are supplied.

Prices will increase Prices will decrease Prices will stay the same

Answer 18

Prices will stay the same

Question 19

At a price of $1.00 per can, 3 million cans of cola are supplied and 5 million cans of cola are demanded.

Prices will increase Prices will decrease Prices will stay the same

Answer 19

Prices will increase

Question 20

The price of laptops is $250, but the equilibrium price is $120.

Shortage
Surplus
Equilibrium

Answer 20

Surplus

Question 21

At a price of $6 per can, 4 million cans of chickpeas are supplied and 4 million cans of chickpeas are demanded.

Shortage
Surplus
Equilibrium

Answer 21

Equilibrium

Question 22

Impact of dramatically decreased price of AI services on electricity market

Demand curve affected
Supply curve affected
BOTH demand curve AND supply curve affected
NEITHER demand curve NOR supply curve affected

Answer 22

Demand curve affected

Question 23

Impact of dramatically decreased price of AI services on electricity market: how will demand be affected?

Demand curve will shift to the left Demand curve will shift to the right

Answer 23

Demand curve will shift to the right

Question 24

Inferior good

Answer 24

a product or service that people buy more of when their income decreases

Income Rises, Demand falls (left)
Income falls. Demand rises (right)

Question 25

Normal good

Answer 25

a product that people buy more of when their income increases Income rises, Demand rises (right) Income falls, Demand falls (left)

Question 26

Substitute

Answer 26

a good that competes with another good for consumer purchases ex) pepsi v.s coca cola

Question 27

Complement

Answer 27

a good that is jointly consumed with another good ex) computers and internet service

Question 28

Law of Supply

Answer 28

rise in price- increase in quantity demand fall in price- decrease in quantity supplied

Question 29

Ceteris Paribus

Answer 29

The affect

Question 30

Production possibilities frontier (PPF)

Answer 30

Graph that shows

Question 31

Law of increasing opportunity cost

Answer 31

The more you produce of one good the opportunity cost of producing an additional unit of that good increases

Question 32

Sunk Costs

Answer 32

Costs that were incurred in the past and cannot be recovered

Question 33

Macroeconomics

Answer 33

the branch of economics that focuses on broad issues

Question 34

Microeconomics

Answer 34

the branch of economics that focuses on actions of particular agents

Question 35

Economic Systems

Answer 35

Traditional, Command, Market

Question 36

Marginal analysis

Answer 36

weighing benefits of choosing more or less of a good

Question 37

law of diminishing marginal utility

Answer 37

the more we get a of a good the total satisfaction decreases

Question 38

law of diminishing returns

Answer 38

as you increase one factor of production (like labor) while keeping other factors constant, the additional output gained from each additional unit of that factor will eventually become smaller

Question 39

monetary policy

Answer 39

a set of actions taken by a central bank to control the money supply and interest rates

Question 40

fiscal policy

Answer 40

a government's use of taxation and spending to influence a country's economy