ECN 211 FINAL EXAM ASU LATEST ACTUAL EXAM 200
QUESTIONS AND CORRECT DETAILED ANSWERS
Rob is planning her activities for a cold winter day. He would like to go play hockey
and see the latest blockbuster movie, but because he can only get tickets to the
movie for the same time that the hockey ring is open he can only choose one
activity. This illustrates the basic principle that - ANSWER: people face tradeoffs.
Rachel spends 2 hours studying instead of watching TV with his friends. The
opportunity cost to her of studying iS - ANSWER: the enjoyment he would have
received if he had watched TV with his friends.
Consider Diego's decision to go to college. If he goes to college, he will spend
$21,000 on tuition, $11,000 on room and board, and $1,800 on books. If he does not
go to college, he will earn $16,000 working in a store and spend $7,200 on room and
board. Diego's cost of going to college is - ANSWER: $42,600
Suppose the cost of flying a 400-seat plane for an airline is $200,000 and there are 8
empty seats on a flight. If the marginal cost of flying a passenger is $100 and a
standby passenger is willing to pay $150, the airline should - ANSWER: sell the ticket
because the marginal benefit exceeds the marginal cost.
When the government changes a policy, people are likely to respond to such policy
change - ANSWER: if the policy changes either their costs or benefits.
An increase in quantity demanded - ANSWER: results in a movement downward
and to the right along a demand curve.
Which of the following examples demonstrates the law of demand? - ANSWER:
Mark buys less donuts at $0.80 per donut than at $0.25 per donut, other things
equal.
If the price of milk rose to $6 per gallon, consumers would purchase fewer gallons of
milk than if the price were $2 per gallon. If the price of chocolate fell to $1.50 per
piece, consumers would purchase more chocolate than if the price were $5 per
piece. These relationships illustrate the - ANSWER: Law of demand
When we move along a given demand curve, - ANSWER: all nonprice determinants
of demand are held constant.
Which of the following would likely be studied by a microeconomist rather than a
macroeconomist? - ANSWER: The effect of a sales tax on the cigaret industry
, The bowed shape of the production possibilities frontier can be explained by the fact
that - ANSWER: the opportunity cost of one good in terms of the other depends on
how much of each good the economy is producing.
Coke and Pepsi are substitute soft drinks. Which of the following would cause the
demand curve for Pepsi to shift to the left? - ANSWER: the price of Coke decreases
The opportunity cost of a choice is: - ANSWER: the value of the opportunities lost.
Mario buys eight units of good X when his income is $2,000 a month. When his
income increases to $2,700 per month, he buys only six units of good X. For Mario,
good X is: - ANSWER: an inferior good.
Suppose that the demand is given by the equation: Qd = 200 - 2P. if the market price
is 10, what is the consumer surplus? - ANSWER: 8,100
Suppose that the demand for good Y is given by the equation: Qdy = 200- 2Py + 3Px,
where Px is the price of good X and Py is the price of good Y. Based on this equation
we can conclude that: - ANSWER: Good X and good Y are substitute goods
Suppose roses are currently selling for $40 per dozen, but the equilibrium price of
roses is $30 per dozen. We would expect a - ANSWER: surplus to exist and the
market price of roses to decrease.
Suppose the income of buyers in a market for an inferior good decreases and a
technological advancement occurs also. What would we expect to happen in the
market? - ANSWER: Equilibrium quantity would increase, but the impact on
equilibrium price would be ambiguous.
Saddle shoes are not popular right now, so very few are being produced. If saddle
shoes become popular, then how will this affect the market for saddle shoes? -
ANSWER: The demand curve for saddle shoes will shift right, which will create a
shortage at the current price. Price will increase, which will decrease quantity
demanded and increase quantity supplied. The new market equilibrium will be at a
higher price and higher quantity.
If a surplus exists in a market, then we know that the actual price is - ANSWER:
above the equilibrium price, and quantity supplied is greater than quantity
demanded.
Pens are normal goods. What will happen to the equilibrium price of pens if the price
of pencils rises, consumers experience an increase in income, writing in ink becomes
fashionable, people expect the price of pens to rise in the near future, the
population increases, fewer firms manufacture pens, and the wages of pen-makers
increase? - ANSWER: price will rise
QUESTIONS AND CORRECT DETAILED ANSWERS
Rob is planning her activities for a cold winter day. He would like to go play hockey
and see the latest blockbuster movie, but because he can only get tickets to the
movie for the same time that the hockey ring is open he can only choose one
activity. This illustrates the basic principle that - ANSWER: people face tradeoffs.
Rachel spends 2 hours studying instead of watching TV with his friends. The
opportunity cost to her of studying iS - ANSWER: the enjoyment he would have
received if he had watched TV with his friends.
Consider Diego's decision to go to college. If he goes to college, he will spend
$21,000 on tuition, $11,000 on room and board, and $1,800 on books. If he does not
go to college, he will earn $16,000 working in a store and spend $7,200 on room and
board. Diego's cost of going to college is - ANSWER: $42,600
Suppose the cost of flying a 400-seat plane for an airline is $200,000 and there are 8
empty seats on a flight. If the marginal cost of flying a passenger is $100 and a
standby passenger is willing to pay $150, the airline should - ANSWER: sell the ticket
because the marginal benefit exceeds the marginal cost.
When the government changes a policy, people are likely to respond to such policy
change - ANSWER: if the policy changes either their costs or benefits.
An increase in quantity demanded - ANSWER: results in a movement downward
and to the right along a demand curve.
Which of the following examples demonstrates the law of demand? - ANSWER:
Mark buys less donuts at $0.80 per donut than at $0.25 per donut, other things
equal.
If the price of milk rose to $6 per gallon, consumers would purchase fewer gallons of
milk than if the price were $2 per gallon. If the price of chocolate fell to $1.50 per
piece, consumers would purchase more chocolate than if the price were $5 per
piece. These relationships illustrate the - ANSWER: Law of demand
When we move along a given demand curve, - ANSWER: all nonprice determinants
of demand are held constant.
Which of the following would likely be studied by a microeconomist rather than a
macroeconomist? - ANSWER: The effect of a sales tax on the cigaret industry
, The bowed shape of the production possibilities frontier can be explained by the fact
that - ANSWER: the opportunity cost of one good in terms of the other depends on
how much of each good the economy is producing.
Coke and Pepsi are substitute soft drinks. Which of the following would cause the
demand curve for Pepsi to shift to the left? - ANSWER: the price of Coke decreases
The opportunity cost of a choice is: - ANSWER: the value of the opportunities lost.
Mario buys eight units of good X when his income is $2,000 a month. When his
income increases to $2,700 per month, he buys only six units of good X. For Mario,
good X is: - ANSWER: an inferior good.
Suppose that the demand is given by the equation: Qd = 200 - 2P. if the market price
is 10, what is the consumer surplus? - ANSWER: 8,100
Suppose that the demand for good Y is given by the equation: Qdy = 200- 2Py + 3Px,
where Px is the price of good X and Py is the price of good Y. Based on this equation
we can conclude that: - ANSWER: Good X and good Y are substitute goods
Suppose roses are currently selling for $40 per dozen, but the equilibrium price of
roses is $30 per dozen. We would expect a - ANSWER: surplus to exist and the
market price of roses to decrease.
Suppose the income of buyers in a market for an inferior good decreases and a
technological advancement occurs also. What would we expect to happen in the
market? - ANSWER: Equilibrium quantity would increase, but the impact on
equilibrium price would be ambiguous.
Saddle shoes are not popular right now, so very few are being produced. If saddle
shoes become popular, then how will this affect the market for saddle shoes? -
ANSWER: The demand curve for saddle shoes will shift right, which will create a
shortage at the current price. Price will increase, which will decrease quantity
demanded and increase quantity supplied. The new market equilibrium will be at a
higher price and higher quantity.
If a surplus exists in a market, then we know that the actual price is - ANSWER:
above the equilibrium price, and quantity supplied is greater than quantity
demanded.
Pens are normal goods. What will happen to the equilibrium price of pens if the price
of pencils rises, consumers experience an increase in income, writing in ink becomes
fashionable, people expect the price of pens to rise in the near future, the
population increases, fewer firms manufacture pens, and the wages of pen-makers
increase? - ANSWER: price will rise
