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Microeconomics - Exam #1 Introduction to Economics (ECO 1301) – Take-home Exam 1 (Spring 2019) 1 Introduction to Economics (ECO 1301) – Take-home Exam 1 (25 + 3 Bonus Questions) (SPRING 2019) Instructions: Please try your best to pick out the best answers by yourself with your own utmost academic effort. If necessary, you can do your own research by “google” out terms, information or concepts you have learned in this class. Due Date/Time: Sunday Feb 24 th at Midnight (UHD Time; strictly observed; NO EXCEPTION) Remember to send your answers to my UHD email:
[email protected] on or before the deadline stated above. On the subject line of your e-mail, you must write down the followings: (Your Name; Intro; Exam 1). Inside your e-mail (in the message box), please fill in the question marks with proper answers (A, B, C or D) for each question. Make sure there are a few blanks after the semicolon so that I can grade your work efficiently –and without possible errors. 1?; 2?; 3?; 4?; 5?; 6?; 7?; 8?; 9?; 10?; 11?; 12?; 13?; 14?; 15?; 16?; 17?; 18?; 19?; 20?; 21?; 22?; 23?; 24?; 25?; 26?; 27?; 28?; Make sure that there is a separator between answers so that I can format them and grade your work correctly. In your test, there will be officially 25 questions plus 3 bonus ones where each equally is worth 3 points. It is extremely important that you follow my instructions. Failure to do so would result in a wrong grade that could potentially affect your class grade. I will confirm your answers –as soon as possible. Correct answers will be announced through Blackboard after the deadline. 1) When a legal (and binding) maximum cost of receiving medical treatments in a hospital is imposed nationwide – without any form of subsidies by the government, marginal benefits are ____ than marginal costs. At the same time, quantity supplied is _____ than quantity demanded of services, respectively. respectively. A) higher; greater B) lower; greater C) lower; less D) higher; less 2) If car ownership increases, holding other variables constant, the demand for college education A) shifts rightward. B) shifts leftward. C) stays constant. D) Can’t tell. mailto:
[email protected] Introduction to Economics (ECO 1301) – Take-home Exam 1 (Spring 2019) 2 3) Refer to Diagram SD1. Graph _______ can be best illustrated the effect of a rising wage rate and employment in the labor market. A) A B) B C) C D) D 4) Refer to Diagram SD1. Since the 1990’s, new production technology helped to reduce the cost of producing personal computers (PC) and more ownerships of PC. The effect on the market for PC can be best shown by Graph _______. A) A B) B C) C D) D 5) Refer to Figure 1Z. The market is initially in equilibrium at Point B for an inferior good. Other things being equal, which of the following is the new equilibrium -when income increases? A) Point A B) Point C C) Point E D) Point F 6) If car ownership increases, holding other variables constant, the demand for college education A) shifts rightward. B) shifts leftward. C) stays constant. D) Can’t tell. 7) X and Y are substitute and normal goods. Other things being equal, the effect of a decrease in the price of X would cause which of the following? A) A rightward shift in the demand curve for Y. B) A downward movement along the demand curve for Y. C) An upward movement along the demand curve for Y. D) A leftward shift in the demand curve for Y. 8) If people expect the price of packaged banana to drop next week, banana demand will: A) increase now. B) stay the same now and decrease next week. C) decrease now. D) stay the same now and increase next week. 9) Suppose that a market is initially in equilibrium. Then the government imposes a price floor above the equilibrium price. Which of the following would occur in the absence of a black market? A) the quantity supplied would decrease B) the market would remain in equilibrium C) the quantity demanded would increase D) the quantity sold would drop 10) Which of the following statements is true? A) The law of increasing opportunity costs assumes that all people have the same ability to produce goods. B) In a world of efficiently used scarce resources, more of one good necessarily means less of some other goods. C) Efficiency implies that it is possible to get more of one good without getting less of another. D) Even if a country has unemployed resources, it can still be operating on its production possibilities frontier. Introduction to Economics (ECO 1301) – Take-home Exam 1 (Spring 2019) 3 11) After Ms. Wonderful’s income rose by 6 percent, the amount of chicken she consumed increased by 4 percent. This means that a) her demand curve stays the same b) her saving is 2 percent of income c) her demand curve for chicken shifted to the left d) her demand curve for chicken shifted to the right 12) Since producers must be compensated for the rising opportunity cost that accompanies increases in output, A) the law of demand applies to most markets B) the supply curve usually slopes downward C) the supply curve usually slopes upward D) the demand curve usually slopes downward 13) Which of the following is an illustration of the law of increasing opportunity costs? A) As more cars are produced, the opportunity cost of each additional car is greater than for the preceding unit. B) As more cars are produced, the opportunity cost of each additional car is less than for the preceding unit. C) As more cars are produced, the opportunity cost of each additional car is the same as for the preceding unit. D) People pay lower prices for cars the higher the costs of producing cars. 14) Consider an economy with only two goods: bread and wine. In 1982 (the base year), the typical family bought 4 loaves of bread at 70¢ per loaf and 2 bottles of wine for $8 per bottle. In Year X, bread cost 75¢ per loaf and wine cost $10 per bottle. The CPI for Year X (using a 1982 base year) is about A) 122. B) 124. C) 120. D) 118. 15) Which of the following statements are true? A) Scarcity refers to shortages at existing market prices. B) As a result of scarcity, individuals must make choices and face trade-offs. C) It is impossible to satisfy unlimited human wants with limited resources. D) The only true statements are "As a result of scarcity, individuals must make choices and face trade-offs" and" "It is impossible to satisfy unlimited human wants with limited resources." 16) Years ago, your Mother earned $25,000 a year when the CPI was 130. How much is her wage this year when the CPI is 170? A) $32,694.31 B) $32,647.22 C) $32,692.31 D) $32,696.16 17) The most significant real economic cost of high unemployment is: A) the money cost of unemployment insurance payments to the unemployed. B) the potential goods and services that might have been produced but weren't. C) the lost tax revenue that might have been paid by persons if they had worked. D) the money cost of retraining persons to obtain new jobs. 18) The unemployment rate may underestimate the true extent of unemployment if: A) many part-time employees would like to work full-time, but are unable to get the additional work. B) employees increase the number of hours they work overtime. C) there are a large number of people working in the underground economy. D) any of the above occur. 19) Which of the following statements is correct? A) Technological advances always lead to the permanent displacement of workers. B) In a growing and dynamic economy, jobs are constantly being destroyed and created. C) Without unemployment insurance, the average duration of unemployment would likely be longer. D) If there is a balance between demand and supply in the labor market, frictional employment must equal zero. 20) Which of the following observations concerning phases of a business cycle (or economic fluctuation) is incorrect? A) Maximum amount of unemployment occurs exactly at the trough. B) Expansion phase is measured from the trough to the peak. C) Trough is the point in time when output stops declining. Introduction to Economics (ECO 1301) – Take-home Exam 1 (Spring 2019) 4 D) The contraction phase is also called recession. 21) Refer to data in Table 1. Given a budget of 5 hours studying Math and Economics exams, how many hours will Ms. Studiousness spend on Math and Economics subjects, respectively? A) 2; 3 B) 4; 1 C) 1; 4 D) 3; 2 22) Refer to data in Table 1. Given a budget of 5 hours studying Math and Economics exams, what is the maximum possible combined test score could this student earn? A) 144 B) 142 C) 156 D) 148 23) Which of the following is true about inflation? A) Those who lend money at a rate above the rate of inflation suffer economic losses. B) Inflation affects all household equally even if it is anticipated. C) Accurate anticipation of inflation is possible for everyone who is well informed about economic