Final Exam Econ 101 2023
What behavior does the phenomenon known as comparative advantage encourage?
specialization in production
The government has been trying to encourage the use of fuel-efficient cars. One way it does this is by
allowing fuel-efficient cars to use a separate highway lane. This separate lane encourages people to use
fuel-efficient cars because
those who place a high value on their scarce time may be encouraged to buy a fuel-efficient car to take
advantage of the separate highway lane.
An individual worker is laid off because his firm is in financial trouble. Why would this event be of more
interest to a microeconomist than to a macroeconomist?
An event involving just one worker and one firm is a microscale event.
Although government-sponsored flood insurance can help those who experience flood damage through
no fault of their own, it can also increase the likelihood that people will build new homes where the risk
of flooding is high. With these people, the insurance functions as a(n)
indirect incentive.
Economics professors are well aware of the importance of incentives. Which of the following situations
illustrates the use of a positive incentive?
Students can choose to get a higher grade by doing extra credit work.
If Bo and Kenzi were to specialize and trade, at what exchange rate would they find some quantity of
trade to be mutually beneficial?
,1 pizza for 1 stromboli
A town is battered by a hurricane that destroys most of its productive resources. The community's
production possibilities frontier (PPF) would
shift inward.
Anne and Charity are both engineers who can create roads or tunnels each year. The roads and tunnels
they create are of equal, standard quality. The following table describes their maximum outputs per year.
What is Charity's opportunity cost of building one tunnel?
4 roads
The opportunity cost of increasing production of blueberry pies from 0 to 18 pies is ________ pies.
16 apple
In the graph, Point B is
an efficient point.
Refer to the accompanying graph. Which event would cause the supply curve to shift to the right?
Firms entered the market.
A technological advancement for Good A will shift the ________ curve of Good A to the ________,
making the equilibrium price ________.
supply; right; decrease
, In one year, 20 golf courses opened on the East Coast. During that same year, CBS started broadcasting
professional golf on TV, which sparked more interest in the sport. What would we expect to happen to
the price and quantity of a game of golf on the East Coast during that year?
The equilibrium price will be indeterminate and the equilibrium quantity will go up.
If all else is held constant, what would happen to the equilibrium price and quantity of leather shoes if
the price of suede shoes decreased?
They would both decrease.
Refer to the accompanying graph. Which of the following scenarios would explain this change in
equilibrium?
The price of a substitute of this good increased.
In the above graph, which combination of areas represents the social welfare?
B+C
Based on the graph above, suppose the equilibrium price and quantity remain the same but the demand
curve becomes steeper (more inelastic demand). What will that do to the consumer or producer
surplus?
It will increase the consumer surplus.
If there is a $60 price ceiling imposed on a textbook, will there be a textbook surplus or shortage?
There will be a shortage of 800,000 textbooks.
What behavior does the phenomenon known as comparative advantage encourage?
specialization in production
The government has been trying to encourage the use of fuel-efficient cars. One way it does this is by
allowing fuel-efficient cars to use a separate highway lane. This separate lane encourages people to use
fuel-efficient cars because
those who place a high value on their scarce time may be encouraged to buy a fuel-efficient car to take
advantage of the separate highway lane.
An individual worker is laid off because his firm is in financial trouble. Why would this event be of more
interest to a microeconomist than to a macroeconomist?
An event involving just one worker and one firm is a microscale event.
Although government-sponsored flood insurance can help those who experience flood damage through
no fault of their own, it can also increase the likelihood that people will build new homes where the risk
of flooding is high. With these people, the insurance functions as a(n)
indirect incentive.
Economics professors are well aware of the importance of incentives. Which of the following situations
illustrates the use of a positive incentive?
Students can choose to get a higher grade by doing extra credit work.
If Bo and Kenzi were to specialize and trade, at what exchange rate would they find some quantity of
trade to be mutually beneficial?
,1 pizza for 1 stromboli
A town is battered by a hurricane that destroys most of its productive resources. The community's
production possibilities frontier (PPF) would
shift inward.
Anne and Charity are both engineers who can create roads or tunnels each year. The roads and tunnels
they create are of equal, standard quality. The following table describes their maximum outputs per year.
What is Charity's opportunity cost of building one tunnel?
4 roads
The opportunity cost of increasing production of blueberry pies from 0 to 18 pies is ________ pies.
16 apple
In the graph, Point B is
an efficient point.
Refer to the accompanying graph. Which event would cause the supply curve to shift to the right?
Firms entered the market.
A technological advancement for Good A will shift the ________ curve of Good A to the ________,
making the equilibrium price ________.
supply; right; decrease
, In one year, 20 golf courses opened on the East Coast. During that same year, CBS started broadcasting
professional golf on TV, which sparked more interest in the sport. What would we expect to happen to
the price and quantity of a game of golf on the East Coast during that year?
The equilibrium price will be indeterminate and the equilibrium quantity will go up.
If all else is held constant, what would happen to the equilibrium price and quantity of leather shoes if
the price of suede shoes decreased?
They would both decrease.
Refer to the accompanying graph. Which of the following scenarios would explain this change in
equilibrium?
The price of a substitute of this good increased.
In the above graph, which combination of areas represents the social welfare?
B+C
Based on the graph above, suppose the equilibrium price and quantity remain the same but the demand
curve becomes steeper (more inelastic demand). What will that do to the consumer or producer
surplus?
It will increase the consumer surplus.
If there is a $60 price ceiling imposed on a textbook, will there be a textbook surplus or shortage?
There will be a shortage of 800,000 textbooks.
