# Exam 1 Practice Test Flashcards Preview

## Macroeconomics > Exam 1 Practice Test > Flashcards

Flashcards in Exam 1 Practice Test Deck (14)
1
Q

Allocative efficiency best explains ________, and productive efficiency best explains ________.

A

what will be produced; how something will be produced

2
Q

A decrease in the unemployment rate may be represented as a movement from a point on the production possibilities frontier to a point outside the frontier. (T/F)

A

False

3
Q

A change in which variable will change the market demand for a product?

A

population

4
Q

Which of the following will not shift the demand curve for a good?

A

an increase in the price of the good

5
Q

A decrease in the price of pork will result in

A

a smaller quantity of pork supplied.

6
Q

A surplus occurs when the market price is lower than the equilibrium price. (T/F)

A

False

7
Q

A decrease in the equilibrium price for a product will result

A

when there is an increase in supply and a decrease in demand for the product.

8
Q

An increase in the demand for lobster due to changes in consumer tastes, accompanied by a decrease in the supply of lobster as a result bad weather reducing the number of fishermen trapping lobster, will result in

A

an increase in the equilibrium price of lobster; the equilibrium quantity may increase or decrease.

9
Q

Suppose there is no unemployment in the economy and society decides that it wants more of one good. Which of the following statements is true?

A

It will have to give up production and consumption of some other good.

10
Q

If all else is held constant, what would happen to the equilibrium price and quantity of iPhones if the price of an Android phone decreased?

A

They would both decrease.

11
Q

If the price of a product is above equilibrium, what forces it down?

A

When the price is above equilibrium, a surplus occurs. Some producers who are unable to sell the product will have an incentive to offer to sell the product at a lower price. A lower price will simultaneously decrease the quantity supplied and increase the quantity demanded. This downward pressure on price continues until the surplus is eliminated and equilibrium is achieved.

12
Q

A 10 percent rise in the price of housing reduces the quantity demanded of housing by 3 percent. We can conclude that the demand for housing is:

A

inelastic

13
Q

A horizontal demand curve is perfectly elastic. (T/F)

A

True

14
Q

A public transit company finds that when it reduces the price of a bus ticket, total revenues remain the same. One can conclude from this that:

A

the firm is operating in a range of the demand curve that is unit elastic.