ECO 202 EXAM 1 STUDY GUIDE Questions and Correct Answers.
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Course
ECO 202
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ECO 202
ECO 202 EXAM 1 STUDY GUIDE Questions and Correct Answers.ECO 202 EXAM 1 STUDY GUIDE Questions and Correct Answers.ECO 202 EXAM 1 STUDY GUIDE Questions and Correct Answers.
ECO 202 EXAM 1 STUDY GUIDE Questions and
Correct Answers.
What is the largest portion of US personal income spent on?
-Services
-Tax payments
-Durable goods
-Dividends - Correct Answer Services
The most common form of business organization in the US is?
-The sole proprietorship
-The corporation
-The partnership
-None of the above - Correct Answer The sole propeietorship
If steel workers accept a decrease in their hourly wage, then one would expect...
-A decrease in the quantity supplied of steel
-The supply of steel to decline
-A rightward shift of the steel supply curve
-No change in the supply of steel - Correct Answer A rightward shift of the steel supply
curve
If an increase in consumer income leads to a decline in the demand for hamburger
-Then hamburger is considered a normal good
-Then the supply of hamburger must fall
-Then hamburger is an interior good
-Then hamburger is a neutral good - Correct Answer Then hamburger is an interior
good
A decline in the supply of coffee will result in
-A decline in demand for tea, a substitute
-A rise in price and a fall in quantity demanded for coffee
-A rise in price and a rise in quantity demanded of coffee
-A fall in price and a fall in quantity demanded of coffee - Correct Answer A rise in price
and a fall in quantity demanded of coffee
An analysis of the market for Good X shows that the price of a complement, Good Y, is
declining. At the same time, there is a technological advance that increases the supply
of Good X. Which of the following much be true for Good X?
-Equilibrium price will rise, and equilibrium quantity will decline
-Equilibrium price will fall, and equilibrium quantity will decline
-Equilibrium PRICE will rise, and the change in equilibrium quantity cannot be
determined. Equilibrium quantity may rise, fall, or stay the same
-Equilibrium QUANTITY will rise, and the change in equilibrium price cannot be
determined. Equilibrium price may rise, fall, or stay the same. - Correct Answer
,Equilibrium QUANTITY will rise, and the change in equilibrium price cannot be
determined. Equilibrium price may rise, fall, or stay the sane
All but which one of the following could shift the demand curve?
-An increase in the size of the group buying that good
-A shift of the supply curve
-A change in the price of substitutes
-An increase in the size of the group buying that good
-A successful advertising campaign which convinces people that they want more of this
good - Correct Answer A shift of the supply curve
At the equilibrium price of $3.50 a bushel, with no price controls, 10,000 bushels of oat
are sold. If the government imposed a price flow of $4.50, we would expect
-Nothing to happen, since the price floor would be above the equilibrium price.
-Farmers to continue to supply 10,000 bushels
-The quantity demanded of oats to fall below 10,000 bushels
-A shortage of oats to exist - Correct Answer The quantity demanded of oats to fall
below 10,000 bushels
A market supply curve
- is always vertical
- cannot be estimated
- is the sum of the supply curves of all the individual suppliers in the market
- is based on the supply curve of the four largest firms in the market - Correct Answer Is
the sum of the supply curves of all the individual suppliers in the market
Suppose the French government reduces the amount of French wine allowed to be
exported to the US we would predict
- a shortage of California wine
- a shortage of French wine if the price is not permitted to rise
- a surplus of French wine
- no change in the price of California wine, a substitute - Correct Answer A shortage of
French wine if the price is not permitted to rise
Scarcity
- is when the amount desired exceeds the amount available at a zero price
- Only happens in a subsistence economy
- Only happens when there is an efficient allocation of resources
- Is the same as a shortage - Correct Answer Is when the amount desired exceeds the
amount available at a zero price
Economics can best be defined as the
- study of money and commerce
- science of behavior and modification
- study of how people use their scarce resources to satisfy their unlimited wants
, - study of how labor and product markets are related - Correct Answer Study of how
people use their scarce resources to satisfy their unlimited wants
Resource markets include the
- market of auto workers
- market for new autos
- corporate bond market
- market used for trucks - Correct Answer Market of auto workers
Which of the following would be described as physical capital by an economist?
- corporate bonds
- the laptop computer used by a teacher
- common stocks traded on a national exchange
- petroleum reserves owned by a corporation - Correct Answer The laptop computer
used by a teacher
Which of the following is not part of the scientific method in economics?
- behavioral assumptions
- normative statements
- testing a hypothesis
- formulating a hypothesis - Correct Answer Normative statements
In a pure market economy, the questing of how goods should be produced is answered
by?
- consumers
- government regulation
- producers
- retailers - Correct Answer Producers
The US economy most closely resembles a
- mixed economy
- pure market economy
- pure command economy
- central economy - Correct Answer Mixed economy
An economy's production possibilities frontier will shift outward as a result of
- an increase in the production of one good
- an increase in the amount of resources
- a reduction in the quantity of capital goods
- none of the above - Correct Answer An increase in the amount of resources
Assume that a person may travel by plane or bus from Detroit to New York. The price of
an airline ticket is $500 while a bus ticket is $100. Traveling by plane will take 2 hours
compared with 10 hours by bus. Ceteris paribus
- this individual will always choose bus travel
- air travel will always be chosen
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