Exam 1: Analyzing Economic Problems

Since positive analysis is based on a model, and not the real world, it is mostly irrelevant.

Currently, 100,000 units of a good are traded on a market. The government imposes a limit of a maximum of 50,000 units that may be traded on the market. This will:

Currently, 75,000 units of a good are traded on a market. The government imposes a limit of a maximum of 50,000 units that may be traded on the market. This will create excess supply.

Another term for equilibrium would be:

Which of the following statements has both positive and normative aspects to it?

Suppose the equilibrium rent for apartments in New York City is $2,000 per month. If the city authorities declared effective tomorrow that rents would not be allowed to exceed $1,800 per month, what do you think would happen to the relationship between supply and demand for rental apartments in New York City?

Normative analysis ignores exogenous variables when making predictions.

Normative analysis, because it is based on opinion, rarely employs any positive analysis when prescribing a solution to a given problem.

Currently, 100,000 units of a good are traded on the market. The government imposes a tax on producers that raises the unit cost of production of the good. This will:

Movements along a demand curve caused by a change in price probably means that:

Normative analysis typically cannot be trusted because it is only someone's opinion.

Suppose the price of $X$ is $\$ 15$ per unit, the price of $Y$ is $\$ 12$ per unit, the consumer's income is $\$ 100$ , and the consumer's lesvel of satisfaction is measured by XY + Y. The consumer's constraint is

Suppose that we illustrate demand and supply with quantity on the horizontal axis and price on the vertical axis. Price and quantity are the exogenous variables in this representation.

An exogenous variable in a consumer's choice problem would typically be:

The analytical tools underlying nearly all microeconomic studies are:

In general, economics is the study of:

Which of the following statements regarding exogenous and endogenous variables is correct?

Suppose that we illustrate demand and supply with quantity on the horizontal axis and income on the vertical axis. Let demand be a function of price and income, Qd (P, I). A change in income will cause a shift in the demand curve.

Identifying the appropriate way to allocate an economy's resources is an example ofL

Identify the truthfulness of the following statements: I. Equilibrium analysis helps economists determine the market-clearing price. II. Comparative statics help economists analyze how a change in an exogenous variable affects the level of a related endogenous variable in an economic model.