Homework Help in Stats

Final Part I Economics Study Guide

1. Suppose buyers in the used car market are willing to pay $4,000 for a plum (high-quality) used car and $2,000 for a lemon (low-quality) used car. If buyers believe that 50% of the used cars on the market are lemons (low quality), what would they be willing to pay for a used car?

a. $3000

b. $4000

c. $3500

d. $2000

2. Recall the application “Regulation of the California Kiwifruit Market. “Prior to enactment of the federal government’s order.

a. California and New Zealand kiwifruit sold for the same price

b. Grocers were willing to pay less for any California kiwifruit than for any New Zealand kiwifruit

c. Grocers were willing to pay more for California kiwifruit that had been harvested at maturity than for any New Zealand kiwifruit

d. Grocers were willing to pay more for any California kiwifruit than for any New Zealand kiwifruit.

3. Insurance leads to taking less risk

a. True

b. False

4. An example of a good that is non-rival in consumption is

a. The Lincoln Memorial in Washington D.C.

b. A campsite at Yellowstone National Park

c. A ticket to an Omnimax movie at the Smithsonian

d. All of the above are non – rival in consumption

5. Pollution imposes costs on people and firms other than those involved in producing or consuming the product that produces pollution

a. True

b. False

6. Suppose Johnson’s Rubber Factory belches black smoke into the air over the city of Bellowsville. If the city of Bellowsville attempts to internalize the external costs associated with the production of rubber with a pollution tax, then we expect

a. At each price, a smaller quantity of rubber will be supplied by Johnson’s Rubber Factory.

b. At each price, a larger quantity of rubber will be supplied Johnson’s Rubber Factory

c. Johnson’s production costs not to change

d. Johnson’s Rubber Factory will not change the amount of rubber supplied at each price

7. __________________________________________________

Number of workers Units of output

2 100

3 160

4 210

5 250

6 280

7 300

8 310

Table 17.1

Refer to Table 17.1 The marginal product of the fourth unit of labor is

a. 210

b. 40

c. 50

d. 52.5

8. The market supply curve for labor is the relationship between the wage and the quantity of labor that

a. Any given worker is willing to provide

b. All firms are willing to employ

c. All workers are willing to provide

d. Any given firm is willing to employ

9. In Figure 17.3 a decrease in the supply of labor will cause the equilibrium

a. Wage to increase and hours of labor used to decrease

b. Wage and hours of labor used to increase

c. Wage to decrease and hours of labor used to increase

d. Wage and hours of labor used to decrease

10. Recall the application about how lottery contributions are distributed among income groups to answer the following question(s)

a. Progressive

b. Exponential

c. Regressive

d. Proportional

11. Bananas, chocolate bars, chewing gum, orange juice and yogurt are considered to be ____ goods.

a. Service

b. Durable

c. Essential

d. Nondurable

12. In the expanded circular flow diagram, net exports interact directly with

a. Factor markets

b. Firms

c. Product markets

d. Households

13. When the GDP is measured using “adjustments for price changes” it is known as the

a. Nominal GNP

b. Real GNP

c. Real GDP

d. Nominal GDP

14. GDP ignores all of the following EXCEPT

a. Products produced in other countries that are sold in the United States

b. Changes in the environment that occur in the production of output

c. The value of leisure time

d. Household production

15. Since 1997, the labor force participation rate for women in the United States has

a. Equaled the participation rate for men

b. Increased more than 10 percent

c. Decreased more than 20 percent

d. Remained virtually constant

16. The natural rate of unemployment

a. Can vary over time and will differ across countries

b. Can vary over time but tends to be the same across countries

c. Tends to remain constant over time but at different levels for different countries

d. Tends to remain constant over time and is the same across countries

17. When wages or benefits are automatically increased based on the reported inflation rate, it is called the ________________adjustment.

a. Change in imports

b. Cost-of-living

c. Natural flow of money

d. Change in exports

18. According to the text, ___________ is perhaps the most critical aspect of a country’s economic performance

a. The unemployment rate

b. Growth in GDP

c. The living standard

d. The inflation rate

19. Suppose that for a given firm, the increase in output resulting from the last worker hired is less than the increase in output of the previous worker hired. This is an example of

a. Capital deepening

b. Increasing return

c. Constant returns

d. Diminishing returns

20. Technological innovations are not necessarily major scientific breakthroughs

a. True

b. False