ECON201 Final Exam
Table 2.1 Kaitlyn and Larissa have formed a dog bathing and grooming business.
The number of dogs they can bathe or groom in any given day is depicted in Table
2.1. The opportunity cost of grooming the third dog in a day is bathing ________
dog(s).
a. 3
b. 4
c. 5
d. 18 - ANSWER b. 4
Suppose that you own a house. What is the opportunity cost of living in the house?
a. There is no opportunity cost unless you could set up a business in the house.
b. The opportunity cost is the rent you could have received from a tenant if you didn't
live there.
c. The opportunity cost is the cost of your monthly mortgage payment plus bills.
d. There is no opportunity cost because you own the house. - ANSWER b. The
opportunity cost is the rent you could have received from a tenant if you didn't live
there.
Kaitlyn and Larissa have formed a dog bathing and grooming business business.
The number of dogs they can bathe or groom in any given day is depicted in Table
2.1. The opportunity cost of grooming the first dog in a day is bathing ________
dog(s).
a. 1 b. 2 c. 24 d. 25 - ANSWER b. 2
Steven lives in a big city where there is a shortage of parking. He has a parking spot
in his driveway where he parks his car. Which of the following statements is most
correct?
a. The opportunity cost depends on how much Steven's mortgage payment is.
b. Steven has a lower opportunity cost of owning a car than his neighbor, who must
rent a parking spot.
c. The opportunity cost of using the spot is zero, because Steven owns the house
d. The opportunity cost of using the parking spot is the price he could charge
someone else for using the spot. - ANSWER d. The opportunity cost of using the
parking spot is the price he could charge someone else for using the spot.
Refer to Table 2.4. The principle of diminishing returns sets in with the addition of the
tank of fertilizer.
a. second
b. third
c. fourth
d. fifth - ANSWER a. second
Diminishing returns occurs because
a. consumers don't buy enough of the products produced.
b. not enough people have jobs
,c. two people have not satisfied their self-interests.
d. one of the inputs in the production process is fixed. - ANSWER d. one of the
inputs in the production process is fixed.
In table 2.3, the principle of diminishing returns first occurs when how many workers
are hired?
a. 2 b. 3 c. 4 d. 5 - ANSWER c. 4
According to the principle of diminishing returns, an additional worker decreases total
output.
a. True b. False - ANSWER b. False
Kaitlyn and Larissa have formed a dog bathing and grooming business. The number
of dogs they can bathe or groom in any given day is depicted in Table 2.1. The
opportunity cost of grooming the sixth dog in a day is bathing ________dog(s).
a. 0 b. 5 c. 6 d. 7 - ANSWER d. 7
If the demand for jelly decreases, and the price of grapes (used to make jelly) rises
a. the equilibrium price of jelly might rise or fall, and the equilibrium quantity of jelly
falls.
b. the equilibrium price of jelly rises and the equilibrium quantity of jelly might rise or
fall.
c. the equilibrium price of jelly might rise or fall, and the equilibrium quantity of jelly
rises.
d. the equilibrium price of jelly falls and the equilibrium quantity of jelly might rise or
fall.
Demand Down [P Q ] , Supply Down from P(inputs) Up [P , Q ] P ~, Q - ANSWER
a. the equilibrium price of jelly might rise or fall, and the equilibrium quantity of jelly
falls.
Fig. 4.2 illustrates the supply and demand for t-shirts. If the actual price of t-shirts is
$15, we would expect that
a. supply will increase until quantity demanded equals quantity supplied.
b. demand will decrease until quantity demanded equals quantity supplied.
c. price will decrease until quantity demanded equals quantity supplied.
d. there will be no change in the price since the market is in equilibrium. - ANSWER
c. price will decrease until quantity demanded equals quantity supplied.
Suppose that a new advertising campaign extolling the virtues of apple juice is
successful, & a major freeze destroys half of the country's apple crop. What happens
to the price & quantity of apple juice?
a. the equilibrium price of apple juice might rise or fall & the equilibrium quantity of
apple juice falls.
b. the equilibrium price of apple juice falls & the equilibrium quantity of apple juice
might rise or fall.
c. the equilibrium price of apple juice rises & the equilibrium quantity of apple juice
might rise or fall.
,d. the equilibrium price of apple juice might rise or fall & the equilibrium quantity of
apple juice rises.
Demand UP, Supply Down.
Ad campaign Demand UP Major Freeze Supply DOWN - ANSWER c. the
equilibrium price of apple juice rises & the equilibrium quantity of apple juice might
rise or fall.
Suppose that in 2011, 3 million plasma TVs were purchased at $950 each, while in
2012, 4 million plasma TVs were purchased at $800 each. What might have caused
this change?
a. There was an advance in plasma TV manufacturing technology.
b. The price of LCD TVs (a substitute for plasma TVs) fell.
c. There were fewer workers in plasma TV manufacturing.
d. The price of LCD TVs (a substitute for plasma TVs) rose.
Price , Quantity SUPPLY increase. - ANSWER a. There was an advance in plasma
TV manufacturing technology.
When demand decreases & the demand curve shifts to the left, equilibrium price
________ & equilibrium quantity ________.
a. increases; increases
b. decreases; increases
c. decreases; decreases
d. increases; decreases - ANSWER c. decreases; decreases
Suppose that in October the price of a cup of cafe latte was $2.50 & 400 lattes were
consumed. In November the price of a latte was $2.00 & 600 lattes were consumed.
What might have
caused this change?
a. The price of coffee beans (an input of production of cafe lattes) fell.
b. The price of coffee beans (an input of production of cafe lattes) rose.
c. The price of tea (a substitute for cafe lattes) fell.
d. The price of tea (a substitute for cafe lattes) rose. - ANSWER a. The price of
coffee beans (an input of production of cafe lattes) fell.
Figure 4.4 illustrates the supply of tacos. An increase in the price of ground beef,
which is used to make tacos, would most likely cause a movement from
a. Point a to point b.
b. Point c to point b.
c. S2 to S1.
d. S0 to S1. - ANSWER c. S2 to S1.
Figure 4.5 illustrates a set of supply and demand curves for hamburgers. An
increase in supply and an increase in quantity demanded are represented by a
movement from
, a. point d to point b.
b. point a to point b.
c. point c to point d.
d. point a to point c. - ANSWER b. point a to point b.
Suppose that a new study is released stating that consumption of orange juice (a
substitute for apple juice) reduces the risk of cancer, and a major freeze destroys
half of the country's apple crop. What happens to the price and quantity of apple
juice?
a. The price of apple juice might rise or fall and the quantity of apple juice rises.
b. The quantity of apple juice might rise or fall, and the price of apple juice rises
c. The price of apple juice falls and the quantity of apple juice falls.
d. The price of apple juice might rise or fall and the quantity of apple juice falls. -
ANSWER d. The price of apple juice might rise or fall and the quantity of apple juice
falls.
Figure 4.5 illustrates a set of supply & demand curves for hamburgers. A decrease in
demand and a decrease in quantity supplied are represented by a movement from
a. point c to point a.
b. point b to point c.
c. point a to point c.
d. point d to point b. - ANSWER b. point b to point c.
Figure 4.3 illustrates the demand for tacos. An increase in the demand for tacos is
represented by the movement from
a. pt. a to pt.
b. b. pt. c to pt. b.
c. D2 to D1.
d. D0 to D1. - ANSWER d. D0 to D1.
Figure 4.4 illustrates the supply of tacos. A technological advancement which makes
tacos cheaper to produce would most likely cause a movement from
a. point a to point c.
b. point c to point a.
c. S2 to S0.
d. S0 to S2. - ANSWER d. S0 to S2.
Figure 4.3 illustrates the demand for tacos. Assume tacos are a normal good. An
increase in income would bring about a movement from
a. point a to point b.
b. point c to point b.
c. D 2 to D 1.
d. D 0 to D 1. - ANSWER d. D 0 to D 1.
Which of the following is NOT an example of private investment expenditure?
Table 2.1 Kaitlyn and Larissa have formed a dog bathing and grooming business.
The number of dogs they can bathe or groom in any given day is depicted in Table
2.1. The opportunity cost of grooming the third dog in a day is bathing ________
dog(s).
a. 3
b. 4
c. 5
d. 18 - ANSWER b. 4
Suppose that you own a house. What is the opportunity cost of living in the house?
a. There is no opportunity cost unless you could set up a business in the house.
b. The opportunity cost is the rent you could have received from a tenant if you didn't
live there.
c. The opportunity cost is the cost of your monthly mortgage payment plus bills.
d. There is no opportunity cost because you own the house. - ANSWER b. The
opportunity cost is the rent you could have received from a tenant if you didn't live
there.
Kaitlyn and Larissa have formed a dog bathing and grooming business business.
The number of dogs they can bathe or groom in any given day is depicted in Table
2.1. The opportunity cost of grooming the first dog in a day is bathing ________
dog(s).
a. 1 b. 2 c. 24 d. 25 - ANSWER b. 2
Steven lives in a big city where there is a shortage of parking. He has a parking spot
in his driveway where he parks his car. Which of the following statements is most
correct?
a. The opportunity cost depends on how much Steven's mortgage payment is.
b. Steven has a lower opportunity cost of owning a car than his neighbor, who must
rent a parking spot.
c. The opportunity cost of using the spot is zero, because Steven owns the house
d. The opportunity cost of using the parking spot is the price he could charge
someone else for using the spot. - ANSWER d. The opportunity cost of using the
parking spot is the price he could charge someone else for using the spot.
Refer to Table 2.4. The principle of diminishing returns sets in with the addition of the
tank of fertilizer.
a. second
b. third
c. fourth
d. fifth - ANSWER a. second
Diminishing returns occurs because
a. consumers don't buy enough of the products produced.
b. not enough people have jobs
,c. two people have not satisfied their self-interests.
d. one of the inputs in the production process is fixed. - ANSWER d. one of the
inputs in the production process is fixed.
In table 2.3, the principle of diminishing returns first occurs when how many workers
are hired?
a. 2 b. 3 c. 4 d. 5 - ANSWER c. 4
According to the principle of diminishing returns, an additional worker decreases total
output.
a. True b. False - ANSWER b. False
Kaitlyn and Larissa have formed a dog bathing and grooming business. The number
of dogs they can bathe or groom in any given day is depicted in Table 2.1. The
opportunity cost of grooming the sixth dog in a day is bathing ________dog(s).
a. 0 b. 5 c. 6 d. 7 - ANSWER d. 7
If the demand for jelly decreases, and the price of grapes (used to make jelly) rises
a. the equilibrium price of jelly might rise or fall, and the equilibrium quantity of jelly
falls.
b. the equilibrium price of jelly rises and the equilibrium quantity of jelly might rise or
fall.
c. the equilibrium price of jelly might rise or fall, and the equilibrium quantity of jelly
rises.
d. the equilibrium price of jelly falls and the equilibrium quantity of jelly might rise or
fall.
Demand Down [P Q ] , Supply Down from P(inputs) Up [P , Q ] P ~, Q - ANSWER
a. the equilibrium price of jelly might rise or fall, and the equilibrium quantity of jelly
falls.
Fig. 4.2 illustrates the supply and demand for t-shirts. If the actual price of t-shirts is
$15, we would expect that
a. supply will increase until quantity demanded equals quantity supplied.
b. demand will decrease until quantity demanded equals quantity supplied.
c. price will decrease until quantity demanded equals quantity supplied.
d. there will be no change in the price since the market is in equilibrium. - ANSWER
c. price will decrease until quantity demanded equals quantity supplied.
Suppose that a new advertising campaign extolling the virtues of apple juice is
successful, & a major freeze destroys half of the country's apple crop. What happens
to the price & quantity of apple juice?
a. the equilibrium price of apple juice might rise or fall & the equilibrium quantity of
apple juice falls.
b. the equilibrium price of apple juice falls & the equilibrium quantity of apple juice
might rise or fall.
c. the equilibrium price of apple juice rises & the equilibrium quantity of apple juice
might rise or fall.
,d. the equilibrium price of apple juice might rise or fall & the equilibrium quantity of
apple juice rises.
Demand UP, Supply Down.
Ad campaign Demand UP Major Freeze Supply DOWN - ANSWER c. the
equilibrium price of apple juice rises & the equilibrium quantity of apple juice might
rise or fall.
Suppose that in 2011, 3 million plasma TVs were purchased at $950 each, while in
2012, 4 million plasma TVs were purchased at $800 each. What might have caused
this change?
a. There was an advance in plasma TV manufacturing technology.
b. The price of LCD TVs (a substitute for plasma TVs) fell.
c. There were fewer workers in plasma TV manufacturing.
d. The price of LCD TVs (a substitute for plasma TVs) rose.
Price , Quantity SUPPLY increase. - ANSWER a. There was an advance in plasma
TV manufacturing technology.
When demand decreases & the demand curve shifts to the left, equilibrium price
________ & equilibrium quantity ________.
a. increases; increases
b. decreases; increases
c. decreases; decreases
d. increases; decreases - ANSWER c. decreases; decreases
Suppose that in October the price of a cup of cafe latte was $2.50 & 400 lattes were
consumed. In November the price of a latte was $2.00 & 600 lattes were consumed.
What might have
caused this change?
a. The price of coffee beans (an input of production of cafe lattes) fell.
b. The price of coffee beans (an input of production of cafe lattes) rose.
c. The price of tea (a substitute for cafe lattes) fell.
d. The price of tea (a substitute for cafe lattes) rose. - ANSWER a. The price of
coffee beans (an input of production of cafe lattes) fell.
Figure 4.4 illustrates the supply of tacos. An increase in the price of ground beef,
which is used to make tacos, would most likely cause a movement from
a. Point a to point b.
b. Point c to point b.
c. S2 to S1.
d. S0 to S1. - ANSWER c. S2 to S1.
Figure 4.5 illustrates a set of supply and demand curves for hamburgers. An
increase in supply and an increase in quantity demanded are represented by a
movement from
, a. point d to point b.
b. point a to point b.
c. point c to point d.
d. point a to point c. - ANSWER b. point a to point b.
Suppose that a new study is released stating that consumption of orange juice (a
substitute for apple juice) reduces the risk of cancer, and a major freeze destroys
half of the country's apple crop. What happens to the price and quantity of apple
juice?
a. The price of apple juice might rise or fall and the quantity of apple juice rises.
b. The quantity of apple juice might rise or fall, and the price of apple juice rises
c. The price of apple juice falls and the quantity of apple juice falls.
d. The price of apple juice might rise or fall and the quantity of apple juice falls. -
ANSWER d. The price of apple juice might rise or fall and the quantity of apple juice
falls.
Figure 4.5 illustrates a set of supply & demand curves for hamburgers. A decrease in
demand and a decrease in quantity supplied are represented by a movement from
a. point c to point a.
b. point b to point c.
c. point a to point c.
d. point d to point b. - ANSWER b. point b to point c.
Figure 4.3 illustrates the demand for tacos. An increase in the demand for tacos is
represented by the movement from
a. pt. a to pt.
b. b. pt. c to pt. b.
c. D2 to D1.
d. D0 to D1. - ANSWER d. D0 to D1.
Figure 4.4 illustrates the supply of tacos. A technological advancement which makes
tacos cheaper to produce would most likely cause a movement from
a. point a to point c.
b. point c to point a.
c. S2 to S0.
d. S0 to S2. - ANSWER d. S0 to S2.
Figure 4.3 illustrates the demand for tacos. Assume tacos are a normal good. An
increase in income would bring about a movement from
a. point a to point b.
b. point c to point b.
c. D 2 to D 1.
d. D 0 to D 1. - ANSWER d. D 0 to D 1.
Which of the following is NOT an example of private investment expenditure?
