Question 1

The price of a taco was $0.29 in 1970 and $1.09 in 2017. The CPI was 38.8 in 1970 and 172.2 in 2017. The 2017 price of a taco in 1970 dollars is:

Accepted Answer

A)  $0.25. 
B)  $0.29. 
C)  $1.09. 
D)  $4.84. 
A)  $0.25. 
B)  $0.29. 
C)  $1.09. 
D)  $4.84. B

Question 2

Although there are many reasons why a market can be non-competitive, the principal economic difference between a competitive and a non-competitive market is:

Accepted Answer

A)  the number of firms in the market. 
B)  the extent to which any firm can influence the price of the product. 
C)  the size of the firms in the market. 
D)  the annual sales made by the largest firms in the market. 
E)  the presence of government intervention. 
A)  the number of firms in the market. 
B)  the extent to which any firm can influence the price of the product. 
C)  the size of the firms in the market. 
D)  the annual sales made by the largest firms in the market. 
E)  the presence of government intervention. B

Question 3

The trade-offs facing consumers include:

Accepted Answer

A)  how to allocate income across goods and serves. 
B)  how to allocate income between current consumption and future consumption. 
C)  both A and B 
D)  none of the above 
A)  how to allocate income across goods and serves. 
B)  how to allocate income between current consumption and future consumption. 
C)  both A and B 
D)  none of the above C

Question 4

Use the following two statements to answer this question: I. In order to answer normative questions, it is necessary to make value judgments.
II) In order to conduct positive economic analysis, it is always necessary to use empirical evidence in addition to economic theories.

Accepted Answer

A)  I and II are incorrect. 
B)  I is correct, II is incorrect. 
C)  I is incorrect, II is correct. 
D)  Both I and II are correct. 
A)  I and II are incorrect. 
B)  I is correct, II is incorrect. 
C)  I is incorrect, II is correct. 
D)  Both I and II are correct.

Question 5

Suppose we expect consumer prices to increase by about 30 percent between 2010 and 2020, and the minimum wage was $7.25 per hour in 2010. What should be the minimum wage in 2020 if it is set to maintain the same purchasing power as in 2010?

Accepted Answer

A)  $7.25 
B)  $7.55 
C)  $9.42 
D)  none of the above 
A)  $7.25 
B)  $7.55 
C)  $9.42 
D)  none of the above

Question 6

Use the following statements to answer this question: I. If the extent of a market is broader, it is less likely that firms in the market can influence the market price.
II) In determining whether two different products belong to the same market, it is necessary to know whether the two products can be used as substitutes for each other.

Accepted Answer

A)  I and II are both false. 
B)  I is false, and II is true. 
C)  I is true, and II is false. 
D)  I and II are both true. 
A)  I and II are both false. 
B)  I is false, and II is true. 
C)  I is true, and II is false. 
D)  I and II are both true.

Question 7

In real terms, which of the following has been declining over the last decade or so?

Accepted Answer

A)  The minimum wage 
B)  The price of health care 
C)  The price of textbooks 
D)  None of the above. All of the above have been rising. 
A)  The minimum wage 
B)  The price of health care 
C)  The price of textbooks 
D)  None of the above. All of the above have been rising.

Question 8

To arbitrage a price difference between two markets, you should:

Accepted Answer

A)  sell in the low-price market and buy in the high-price market. 
B)  buy in the low-price market and sell in the high-price market. 
C)  sell in both markets to capture a lower average "market price." 
D)  none of the above 
A)  sell in the low-price market and buy in the high-price market. 
B)  buy in the low-price market and sell in the high-price market. 
C)  sell in both markets to capture a lower average "market price." 
D)  none of the above

Question 9

Which of the following could not possibly be included in the same market as Coke?

Accepted Answer

A)  Pepsi 
B)  Gatorade 
C)  Milk 
D)  Bread 
A)  Pepsi 
B)  Gatorade 
C)  Milk 
D)  Bread

Question 10

The price to attend a NBA basketball game in Chicago is $55 while the CPI in Chicago is 153. The CPI in Charlotte is 108 while the price to attend a NBA basketball game is $52. Which city offers a smaller real cost of attending a NBA basketball game?

Accepted Answer

Chicago real value @#IMG-DLM& The real v

Question 11

A Rolling Stones song goes: "You can't always get what you want." This echoes an important theme from microeconomics. Which of the following statements is the best example of this theme?

Accepted Answer

A)  Consumers must make the best purchasing decisions they can, given their limited incomes. 
B)  Workers do not have as much leisure as they would like, given their wages and working conditions. 
C)  Workers in planned economies, such as North Korea, do not have much choice over jobs. 
D)  Firms in market economies have limited financial resources. 
A)  Consumers must make the best purchasing decisions they can, given their limited incomes. 
B)  Workers do not have as much leisure as they would like, given their wages and working conditions. 
C)  Workers in planned economies, such as North Korea, do not have much choice over jobs. 
D)  Firms in market economies have limited financial resources.

Question 12

We can approximate the real return on an investment by subtracting the inflation rate from the nominal return on the investment. For example, an investment that returns 10% per year while inflation is 4% per year has a real (inflation adjusted) return of approximately 6%. Which of the following outcomes is NOT possible?

Accepted Answer

A)  Nominal and real returns are positive. 
B)  Nominal return is positive, real return is negative. 
C)  Nominal return is negative, real return is positive. 
D)  All of these outcomes are possible. 
A)  Nominal and real returns are positive. 
B)  Nominal return is positive, real return is negative. 
C)  Nominal return is negative, real return is positive. 
D)  All of these outcomes are possible.

Question 13

In the definition of a market, economists consider:

Accepted Answer

A)  only actual interactions between buyers and sellers, not potential interactions. 
B)  both actual and potential interactions between buyers and sellers. 
C)  neither actual nor potential interactions between buyers and sellers. 
D)  actions by third parties that do not include buyers or sellers in the market. 
A)  only actual interactions between buyers and sellers, not potential interactions. 
B)  both actual and potential interactions between buyers and sellers. 
C)  neither actual nor potential interactions between buyers and sellers. 
D)  actions by third parties that do not include buyers or sellers in the market.

Question 14

Suppose the price of crude oil is $95 per barrel in New York and $85 per barrel in Texas, and the transaction costs for trading between the two markets are $15 per barrel. What actions should you take to arbitrage this price difference?

Accepted Answer

A)  Buy oil in Texas and sell oil in New York 
B)  Sell oil in Texas and buy oil in New York 
C)  Buy oil in both markets and wait for higher prices 
D)  Do not buy or sell oil in either market 
A)  Buy oil in Texas and sell oil in New York 
B)  Sell oil in Texas and buy oil in New York 
C)  Buy oil in both markets and wait for higher prices 
D)  Do not buy or sell oil in either market

Question 15

For each city across the U.S., economists construct a price index for a similar basket of goods. In Los Angeles the index is 127.3 and the index for Dallas is 94.8. If you have been offered $137,000 for a job in Los Angeles and $117,000 for a similar job in Dallas, which job affords you the highest purchasing power of the bundle of goods in the price index? Use the Los Angeles value as the base.

Accepted Answer

Real value[Dallas] = 127.3($11

Question 16

The textbook argues that one of the trade-offs workers make is working for a small company or a large company. The small companies offer:

Accepted Answer

A)  job security but limited potential for advancement. 
B)  more potential for advancement but limited job security. 
C)  both job security and ample potential for advancement. 
D)  benefits that appeal to the workers that do not include job security or career advancement. 
A)  job security but limited potential for advancement. 
B)  more potential for advancement but limited job security. 
C)  both job security and ample potential for advancement. 
D)  benefits that appeal to the workers that do not include job security or career advancement.

Question 17

Which of the following is a normative statement?

Accepted Answer

A)  The taxes paid by the poor should be reduced in order to improve the income distribution in the U.S. 
B)  State governments should not subsidize corporations by training welfare recipients. 
C)  Presidential candidates should not be given funds from the federal government to run campaigns. 
D)  The sea otter should not be allowed to spread into Southern California coastal waters, because it will reduce the value of fisheries. 
E)  all of the above 
A)  The taxes paid by the poor should be reduced in order to improve the income distribution in the U.S. 
B)  State governments should not subsidize corporations by training welfare recipients. 
C)  Presidential candidates should not be given funds from the federal government to run campaigns. 
D)  The sea otter should not be allowed to spread into Southern California coastal waters, because it will reduce the value of fisheries. 
E)  all of the above

Question 18

This textbook is about microeconomics because it deals mainly with the behavior of variables such as:

Accepted Answer

A)  national output, interest rates, unemployment and inflation. 
B)  individual economic units, such as consumers, firms, workers and investors. 
C)  national and international markets, exchange rates and economic treaties. 
D)  economic sectors, the business cycle and monetary and fiscal policies. 
A)  national output, interest rates, unemployment and inflation. 
B)  individual economic units, such as consumers, firms, workers and investors. 
C)  national and international markets, exchange rates and economic treaties. 
D)  economic sectors, the business cycle and monetary and fiscal policies.

Question 19

The problem of scarcity means that people face trade-offs. Which of the following trade-offs are the concern of microeconomics?

Accepted Answer

A)  Trade-offs faced by consumers in the purchase of goods 
B)  Trade-offs faced by workers between work and leisure 
C)  Trade-offs faced by firms in what goods to produce 
D)  all of the above 
A)  Trade-offs faced by consumers in the purchase of goods 
B)  Trade-offs faced by workers between work and leisure 
C)  Trade-offs faced by firms in what goods to produce 
D)  all of the above

Question 20

Over the past year, price inflation has been 10%, but the price of a used Ford Escort has fallen from $6,000 to $5,000. The real price of a Ford Escort has fallen by:

Accepted Answer

A)  12%. 
B)  17%. 
C)  20%. 
D)  24%. 
E)  32%. 
A)  12%. 
B)  17%. 
C)  20%. 
D)  24%. 
E)  32%.

The price of a taco was $0.29 in 1970 and $1.09 in 2017. The CPI was 38.8 in 1970 and 172.2 in 2017. The 2017 price of a taco in 1970 dollars is:

Although there are many reasons why a market can be non-competitive, the principal economic difference between a competitive and a non-competitive market is:

The trade-offs facing consumers include:

Use the following two statements to answer this question: I. In order to answer normative questions, it is necessary to make value judgments. II) In order to conduct positive economic analysis, it is always necessary to use empirical evidence in addition to economic theories.

Suppose we expect consumer prices to increase by about 30 percent between 2010 and 2020, and the minimum wage was $7.25 per hour in 2010. What should be the minimum wage in 2020 if it is set to maintain the same purchasing power as in 2010?

In real terms, which of the following has been declining over the last decade or so?

To arbitrage a price difference between two markets, you should:

Which of the following could not possibly be included in the same market as Coke?

The price to attend a NBA basketball game in Chicago is $55 while the CPI in Chicago is 153. The CPI in Charlotte is 108 while the price to attend a NBA basketball game is $52. Which city offers a smaller real cost of attending a NBA basketball game?

A Rolling Stones song goes: "You can't always get what you want." This echoes an important theme from microeconomics. Which of the following statements is the best example of this theme?

In the definition of a market, economists consider:

Suppose the price of crude oil is $95 per barrel in New York and $85 per barrel in Texas, and the transaction costs for trading between the two markets are $15 per barrel. What actions should you take to arbitrage this price difference?

The textbook argues that one of the trade-offs workers make is working for a small company or a large company. The small companies offer:

Which of the following is a normative statement?

This textbook is about microeconomics because it deals mainly with the behavior of variables such as:

The problem of scarcity means that people face trade-offs. Which of the following trade-offs are the concern of microeconomics?

Over the past year, price inflation has been 10%, but the price of a used Ford Escort has fallen from $6,000 to $5,000. The real price of a Ford Escort has fallen by:

The Basics of Supply and Demand

Consumer Behavior

Individual and Market Demand

Uncertainty and Consumer Behavior

Production

The Cost of Production

Profit Maximization and Competitive Supply

The Analysis of Competitive Markets

Market Power: Monopoly and Monopsony

Pricing With Market Power

Monopolistic Competition and Oligopoly

Game Theory and Competitive Strategy

Markets for Factor Inputs

Investment, Time, and Capital Markets

General Equilibrium and Economic Efficiency

Markets With Asymmetric Information

Externalities and Public Goods

Behavioral Economics

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Exam 1: Preliminaries

The price of a taco was $0.29 in 1970 and $1.09 in 2017. The CPI was 38.8 in 1970 and 172.2 in 2017. The 2017 price of a taco in 1970 dollars is:

Although there are many reasons why a market can be non-competitive, the principal economic difference between a competitive and a non-competitive market is:

The trade-offs facing consumers include:

Use the following two statements to answer this question: I. In order to answer normative questions, it is necessary to make value judgments. II) In order to conduct positive economic analysis, it is always necessary to use empirical evidence in addition to economic theories.

Suppose we expect consumer prices to increase by about 30 percent between 2010 and 2020, and the minimum wage was $7.25 per hour in 2010. What should be the minimum wage in 2020 if it is set to maintain the same purchasing power as in 2010?

In real terms, which of the following has been declining over the last decade or so?

To arbitrage a price difference between two markets, you should:

Which of the following could not possibly be included in the same market as Coke?

The price to attend a NBA basketball game in Chicago is $55 while the CPI in Chicago is 153. The CPI in Charlotte is 108 while the price to attend a NBA basketball game is $52. Which city offers a smaller real cost of attending a NBA basketball game?

A Rolling Stones song goes: "You can't always get what you want." This echoes an important theme from microeconomics. Which of the following statements is the best example of this theme?

In the definition of a market, economists consider:

Suppose the price of crude oil is $95 per barrel in New York and $85 per barrel in Texas, and the transaction costs for trading between the two markets are $15 per barrel. What actions should you take to arbitrage this price difference?

The textbook argues that one of the trade-offs workers make is working for a small company or a large company. The small companies offer:

Which of the following is a normative statement?

This textbook is about microeconomics because it deals mainly with the behavior of variables such as:

The problem of scarcity means that people face trade-offs. Which of the following trade-offs are the concern of microeconomics?

Over the past year, price inflation has been 10%, but the price of a used Ford Escort has fallen from $6,000 to $5,000. The real price of a Ford Escort has fallen by:

The Basics of Supply and Demand

Consumer Behavior

Individual and Market Demand

Uncertainty and Consumer Behavior

Production

The Cost of Production

Profit Maximization and Competitive Supply

The Analysis of Competitive Markets

Market Power: Monopoly and Monopsony

Pricing With Market Power

Monopolistic Competition and Oligopoly

Game Theory and Competitive Strategy

Markets for Factor Inputs

Investment, Time, and Capital Markets

General Equilibrium and Economic Efficiency

Markets With Asymmetric Information

Externalities and Public Goods

Behavioral Economics

Filters