ECON 400 EXAM 1 – UA QUESTIONS AND ANSWERS
The demand schedule for a good - Answers - Indicates the quantities of the good that
people will buy various prices.
Assume the demand curve for a shampoo is downward sloping. If the price falls from
$1.50 t0 $1.25 per bottle, - Answers - A larger quantity of shampoo will be demanded.
Which of the following does the law of demand specifically imply? - Answers - If the
product increases, quantity demanded will decrease.
The height of the demand curve for a product indicates the - Answers - Maximum price
consumers are willing to pay for an additional unit of it.
The difference between the amount consumers would be willing to pay and the amount
they actually pay for a good is called - Answers - consumer surplus
Graphically, the area that represents the difference between the market price and the
minimum price required to induce suppliers to produce a good is called - Answers -
producer surplus
If Mateo is paid $25,000 to sell his crop of tomatoes even though he would have been
willing to have sold the crop for as little as $20,000, this indicates that - Answers -
Mateo received $5,000 of producer surplus from the transaction.
The following table is a schedule of the supply and demand for coffee (both given in
thousands of pounds per month.)
PPP = Pricer Per Pound
QD = Quantity Demanded
QS = Quantity Supplied
PPP / QD / QS
$6. / 9
$8. / 12
$10. /15
$12. / 18
Refer to the table. The equilibrium market price of coffee would be - Answers - $10 per
pound
When there is excess supply of a product in a market, - Answers - price must be above
the equilibrium price
, Velcro is becoming more and more popular for a variety of uses, including as fasteners
for shoes. What should happen to the equilibrium price and quantity for shoelaces as a
result? - Answers - Both price and quantity will decrease
A new law requiring plumbers to pass strict certification tests that reduce the number of
plumbers would - Answers - increase the wage rate of plumbers.
How would a decrease in lumber prices influence the home construction market? -
Answers - The supply of newly constructed homes will increase.
Rent controls tend to cause persistent imbalances in the market for housing because
quantity - Answers - demanded exceeds quantity supplied but price cannot rise to
remove the shortage.
Suppose the equilibrium price of a medical diagnostic test is $100, and the government
imposes a price ceiling of $25. As a result of the price ceiling, - Answers - there will be a
shortage of tests because quantity demanded will increase and the quantity supplied
will decrease.
When a government declares a state of emergency, widespread price ceilings generally
go into effect and shortages of goods in high demand develop. Economic analysis
indicates - Answers - these shortages would disappear if market prices were allowed to
work.
What is most likely to occur when a tax is imposed on the sellers of a good? - Answers -
price paid by buyers and lower the equilibrium quantity.
The more elastic the supply of a product, the more likely it is that the burden of a tax will
- Answers - fall on buyers.
A progressive tax is defined as a tax for which the - Answers - average tax rate rises as
income increases.
If Makena's income increases from $40,000 to $50,000 and her tax liability increases
from $6,000 to $9,000, which of the following is true? - Answers - Her marginal tax rate
is 30% in this range.
A $25 government subsidy paid directly to buyers of jeans will result in - Answers - an
upward shift in the demand curve for jeans by $25.
Public choice analysis indicates that elected political officials will find it attractive to -
Answers - use debt to finance government expenditures during both good and bad
times.
The demand schedule for a good - Answers - Indicates the quantities of the good that
people will buy various prices.
Assume the demand curve for a shampoo is downward sloping. If the price falls from
$1.50 t0 $1.25 per bottle, - Answers - A larger quantity of shampoo will be demanded.
Which of the following does the law of demand specifically imply? - Answers - If the
product increases, quantity demanded will decrease.
The height of the demand curve for a product indicates the - Answers - Maximum price
consumers are willing to pay for an additional unit of it.
The difference between the amount consumers would be willing to pay and the amount
they actually pay for a good is called - Answers - consumer surplus
Graphically, the area that represents the difference between the market price and the
minimum price required to induce suppliers to produce a good is called - Answers -
producer surplus
If Mateo is paid $25,000 to sell his crop of tomatoes even though he would have been
willing to have sold the crop for as little as $20,000, this indicates that - Answers -
Mateo received $5,000 of producer surplus from the transaction.
The following table is a schedule of the supply and demand for coffee (both given in
thousands of pounds per month.)
PPP = Pricer Per Pound
QD = Quantity Demanded
QS = Quantity Supplied
PPP / QD / QS
$6. / 9
$8. / 12
$10. /15
$12. / 18
Refer to the table. The equilibrium market price of coffee would be - Answers - $10 per
pound
When there is excess supply of a product in a market, - Answers - price must be above
the equilibrium price
, Velcro is becoming more and more popular for a variety of uses, including as fasteners
for shoes. What should happen to the equilibrium price and quantity for shoelaces as a
result? - Answers - Both price and quantity will decrease
A new law requiring plumbers to pass strict certification tests that reduce the number of
plumbers would - Answers - increase the wage rate of plumbers.
How would a decrease in lumber prices influence the home construction market? -
Answers - The supply of newly constructed homes will increase.
Rent controls tend to cause persistent imbalances in the market for housing because
quantity - Answers - demanded exceeds quantity supplied but price cannot rise to
remove the shortage.
Suppose the equilibrium price of a medical diagnostic test is $100, and the government
imposes a price ceiling of $25. As a result of the price ceiling, - Answers - there will be a
shortage of tests because quantity demanded will increase and the quantity supplied
will decrease.
When a government declares a state of emergency, widespread price ceilings generally
go into effect and shortages of goods in high demand develop. Economic analysis
indicates - Answers - these shortages would disappear if market prices were allowed to
work.
What is most likely to occur when a tax is imposed on the sellers of a good? - Answers -
price paid by buyers and lower the equilibrium quantity.
The more elastic the supply of a product, the more likely it is that the burden of a tax will
- Answers - fall on buyers.
A progressive tax is defined as a tax for which the - Answers - average tax rate rises as
income increases.
If Makena's income increases from $40,000 to $50,000 and her tax liability increases
from $6,000 to $9,000, which of the following is true? - Answers - Her marginal tax rate
is 30% in this range.
A $25 government subsidy paid directly to buyers of jeans will result in - Answers - an
upward shift in the demand curve for jeans by $25.
Public choice analysis indicates that elected political officials will find it attractive to -
Answers - use debt to finance government expenditures during both good and bad
times.
