Question 1

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%. D

Question 2

Which of the following statements is false? An economic analysis of carbon taxes can:

Accepted Answer

A) calculate the increase in costs faced by coal-using industries. 
B) predict the effect on unemployment in West Virginia coal mining communities. 
C) compare the likely reductions in medical expenditures on diseases caused by smog. 
D) present a trade-off of the costs and benefits of different levels of carbon taxes. 
E) conclude that such taxes should be imposed to benefit future generations. 
A) calculate the increase in costs faced by coal-using industries. 
B) predict the effect on unemployment in West Virginia coal mining communities. 
C) compare the likely reductions in medical expenditures on diseases caused by smog. 
D) present a trade-off of the costs and benefits of different levels of carbon taxes. 
E) conclude that such taxes should be imposed to benefit future generations. E

Question 3

Which of the following features are relevant for determining the extent of a market?

Accepted Answer

A) Its geographical boundaries. 
B) Technological innovations that would reduce the cost of production. 
C) The range of products to be included in it. 
D) both A and B 
E) both A and C 
A) Its geographical boundaries. 
B) Technological innovations that would reduce the cost of production. 
C) The range of products to be included in it. 
D) both A and B 
E) both A and C E

Question 4

Firms face trade-offs in production,including decisions related to:

Accepted Answer

A) which products to produce. 
B) how much of a particular product to produce. 
C) the best way to produce a given amount of output. 
D) all of the above 
A) which products to produce. 
B) how much of a particular product to produce. 
C) the best way to produce a given amount of output. 
D) all of the above

Question 5

The trade-offs facing consumers include:

Accepted Answer

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

Question 6

Which of the following is a positive statement?

Accepted Answer

A) When the price of a good goes up,consumers buy less of it. 
B) When the price of a good goes up,firms produce more of it. 
C) When the Federal government sells bonds,interest rates rise and private investment is reduced. 
D) all of the above 
E) none of the above 
A) When the price of a good goes up,consumers buy less of it. 
B) When the price of a good goes up,firms produce more of it. 
C) When the Federal government sells bonds,interest rates rise and private investment is reduced. 
D) all of the above 
E) none of the above

Question 7

Although the U.S.airline industry has only a relatively small number of sellers,the market is nevertheless highly competitive.The reason is that:

Accepted Answer

A) the number of buyers is very large. 
B) due to fierce competition,no firm has significant control over prices. 
C) due to fierce competition,no firm has significant control over the quantity supplied. 
D) most airline routes are served by relatively many sellers. 
A) the number of buyers is very large. 
B) due to fierce competition,no firm has significant control over prices. 
C) due to fierce competition,no firm has significant control over the quantity supplied. 
D) most airline routes are served by relatively many sellers.

Question 8

When 1983 is the CPI base year,the CPI value is 82.4 for 1980 and 172.2 for 2000.Suppose we want to convert this CPI series to have a base year of 2000 (that is,CPI2000 = 100).What is the value of the revised CPI for 1980?

Accepted Answer

A) 172.2 
B) 100 
C) 47.9 
D) 209.0 
A) 172.2 
B) 100 
C) 47.9 
D) 209.0

Question 9

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 10

Which of the following markets has the most restrictive geographic boundary?

Accepted Answer

A) The market for retail gasoline 
B) The market for housing 
C) The market for gold 
D) The market for beef 
A) The market for retail gasoline 
B) The market for housing 
C) The market for gold 
D) The market for beef

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

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 13

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 14

The nominal price of a 1990 laptop was $3,500 and the CPI that year was 130.7.The nominal price of a laptop in 1998 was $1,600 and the CPI that year was 163.0.What is the real price of a 1998 laptop in terms of 1990 dollars? By what percent has the real price of laptops changed?

Accepted Answer

130.7($1,600)/163 = $1,283.Per

Question 15

The CPI in 1970 was 38.8 and in 1998 the CPI was 163.0.If the real value of a 1970 gallon of milk in terms of 1998 dollars is $0.70,what was the nominal price of milk in 1970?

Accepted Answer

38.8($0.70

Question 16

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.

Question 17

What does it mean when the CPI is higher this year than last?

Accepted Answer

A) The rate of inflation has increased. 
B) There has been inflation since last year. 
C) Real prices have increased. 
D) Real prices have decreased. 
A) The rate of inflation has increased. 
B) There has been inflation since last year. 
C) Real prices have increased. 
D) Real prices have decreased.

Question 18

The "constant dollar" price is:

Accepted Answer

A) the real price of a good. 
B) the nominal price of a good adjusted for inflation. 
C) the "current dollar" price adjusted for inflation. 
D) all of the above 
E) none of the above 
A) the real price of a good. 
B) the nominal price of a good adjusted for inflation. 
C) the "current dollar" price adjusted for inflation. 
D) all of the above 
E) none of the above

Question 19

To evaluate the potential impact of changes to its SUV business,Ford Motor Company would use:

Accepted Answer

A) normative economic analysis. 
B) positive economic analysis. 
C) negative economic analysis. 
D) arbitrage analysis. 
A) normative economic analysis. 
B) positive economic analysis. 
C) negative economic analysis. 
D) arbitrage analysis.

Question 20

Use the following statements to answer this question: I.The inflation rate (the rate of change in the general price level)calculated from a price index like CPI is the same regardless of the base year we use to form the price index.
II.Although the CPI may indicate the general price level increased by 5% last year,there are some consumer products that may have experienced more or less inflation in the past year.

Accepted Answer

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

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:

Which of the following statements is false? An economic analysis of carbon taxes can:

Which of the following features are relevant for determining the extent of a market?

Firms face trade-offs in production,including decisions related to:

The trade-offs facing consumers include:

Which of the following is a positive statement?

Although the U.S.airline industry has only a relatively small number of sellers,the market is nevertheless highly competitive.The reason is that:

When 1983 is the CPI base year,the CPI value is 82.4 for 1980 and 172.2 for 2000.Suppose we want to convert this CPI series to have a base year of 2000 (that is,CPI₂₀₀₀ = 100).What is the value of the revised CPI for 1980?

Which of the following markets has the most restrictive geographic boundary?

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?

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

Which of the following is a normative statement?

The nominal price of a 1990 laptop was $3,500 and the CPI that year was 130.7.The nominal price of a laptop in 1998 was $1,600 and the CPI that year was 163.0.What is the real price of a 1998 laptop in terms of 1990 dollars? By what percent has the real price of laptops changed?

The CPI in 1970 was 38.8 and in 1998 the CPI was 163.0.If the real value of a 1970 gallon of milk in terms of 1998 dollars is $0.70,what was the nominal price of milk in 1970?

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:

What does it mean when the CPI is higher this year than last?

The "constant dollar" price is:

To evaluate the potential impact of changes to its SUV business,Ford Motor Company would use:

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 1-83

Markets With Asymmetric Information

Externalities and Public Goods

Filters

Exam 1: Preliminaries

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:

Which of the following statements is false? An economic analysis of carbon taxes can:

Which of the following features are relevant for determining the extent of a market?

Firms face trade-offs in production,including decisions related to:

The trade-offs facing consumers include:

Which of the following is a positive statement?

Although the U.S.airline industry has only a relatively small number of sellers,the market is nevertheless highly competitive.The reason is that:

When 1983 is the CPI base year,the CPI value is 82.4 for 1980 and 172.2 for 2000.Suppose we want to convert this CPI series to have a base year of 2000 (that is,CPI2000 = 100).What is the value of the revised CPI for 1980?

Which of the following markets has the most restrictive geographic boundary?

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?

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

Which of the following is a normative statement?

The nominal price of a 1990 laptop was $3,500 and the CPI that year was 130.7.The nominal price of a laptop in 1998 was $1,600 and the CPI that year was 163.0.What is the real price of a 1998 laptop in terms of 1990 dollars? By what percent has the real price of laptops changed?

The CPI in 1970 was 38.8 and in 1998 the CPI was 163.0.If the real value of a 1970 gallon of milk in terms of 1998 dollars is $0.70,what was the nominal price of milk in 1970?

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:

What does it mean when the CPI is higher this year than last?

The "constant dollar" price is:

To evaluate the potential impact of changes to its SUV business,Ford Motor Company would use:

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 1-83

Markets With Asymmetric Information

Externalities and Public Goods

Filters

When 1983 is the CPI base year,the CPI value is 82.4 for 1980 and 172.2 for 2000.Suppose we want to convert this CPI series to have a base year of 2000 (that is,CPI₂₀₀₀ = 100).What is the value of the revised CPI for 1980?