EC260 FINAL EXAM QUESTIONS AND
ANSWERS 100% VERIFIED
Economists tend to judge a model based upon
A) The reality of its assumptions
B) The accuracy of its predictions
C) Its simplicity
D) Its complexity - ANSWER B) The accuracy of its predictions
If a theory's predictions are incorrect,
A) Then the data used was clearly faulty
B) Then economists will likely reduce their confidence in the theory
C) Then economists always reject it
D) Then the model must be too simple - ANSWER B) Then economists will likely reduce
their confidence in the theory
Behavioral economics is the study of why people
A) Optimize
B) Behave badly when buying and selling
C) Choose not to optimize
D) Sometimes don't optimize - ANSWER D) Sometimes don't optimize
Most private firms seek to
A) Maximize employee salaries
B) Maximize revenue
C) Maximize profit
D) Minimize headcount - ANSWER C) Maximize profit
A microeconomic model cannot be used to
,A) Evaluate the fairness of a proposal to nationalize health insurance
B) Evaluate the impact of a price change in the minimum wage on unemployment
C) Predict the impact of an increase in the minimum wage on unemployment
D) Evaluate the effect of an increase in stadium size on the price of a sport team's
tickets - ANSWER A) Evaluate the fairness of a proposal to nationalize health insurance
It is appropriate to use the supply-and-demand model if, in a market,
A) Everyone is a price taker with full information about the price and quality of the good
B) Firms sell identical products
C) Costs of trading are low
D) All of these - ANSWER D) All of these
If the price of automobiles were to increase substantially, the demand curve for
automobiles would most likely
A) Shift leftward
B) Become steeper
C) Remain unchanged
D) Shift rightward - ANSWER C) Remain unchanged
If the demand for eBook readers increases and the supply of eBook readers increases,
then
A) It is clear that prices will increase, the change in the quantity of eBook readers sold is
ambiguous
B) It is clear that quantity sold will increase, the change in the price of eBook is
ambiguous
C) It is clear that prices will decrease, the change in the quantity of eBook readers sold
is ambiguous
D) It is clear that quantity sold will decrease, the change in the price of eBook readers is
ambiguous - ANSWER A) It is clear that prices will increase, the change in the quantity
of eBook readers sold is ambiguous
,A downward sloping demand curve indicates that
A) Individuals all have the same valuation of the same product
B) Individuals have different valuations of the same product
C) Individuals have no valuations of a particular product
D) Certain individuals are uninformed about certain aspects of the product - ANSWER B)
Individuals have different valuations of the same product
A price ceiling that is set below the equilibrium price
A) Is non-binding
B) Creates a shortage
C) Causes suppliers to lose money
D) Creates a surplus - ANSWER B) Creates a shortage
Which of the following is NOT a characteristic of perfectly competitive markets?
A) All market participants are price-takers
B) Products are differentiated
C) It is easy to find a trading partner
D) Transactions costs are a very small part of the scale - ANSWER B) Products are
differentiated
Technological innovation in the production of computers has led to
A) A decrease in the quantity demanded for computers
B) A rightward shift of the supply curve for computers
C) A decrease in the quantity supplied of computers
D) None of these - ANSWER B) A rightward shift of the supply curve for computers
The below figure shows a graph of a market for pizzas in a large town. At a price of $7,
, what is the amount of excess demand?
A) 0; there is excess supply at $7
B) 20 units
C) 30 units
D) 10 units - ANSWER C) 30 units
If a city were to ban the use of automobiles within its city limits, we would expect
A) The demand curve for automobiles to remain the same
B) The demand curve for automobiles to shift to the left
C) The demand curve for bicycles to shift to the left
D) People to move to another city - ANSWER B) The demand curve for automobiles to
shift to the left
Which of the following is an example of a normative statement?
A) A lower price for a good causes people to want to buy more of that good.
B) A higher price for a good causes people to want to buy less of that good.
C) If you decrease the amount of sugar in soda drinks, sales to children will decrease.
D) To make the good available to more people, a lower price should be set. - ANSWER D)
To make the good available to more people, a lower price should be set.
The purpose of making assumptions in economic model building is to
A) Express the relationship mathematically.
B) Minimize the amount of work an economist must do.
C) Simplify the model while keeping important details.
D) Force the model to yield the correct answer. - ANSWER C) Simplify the model while
keeping important details.
In a market,
ANSWERS 100% VERIFIED
Economists tend to judge a model based upon
A) The reality of its assumptions
B) The accuracy of its predictions
C) Its simplicity
D) Its complexity - ANSWER B) The accuracy of its predictions
If a theory's predictions are incorrect,
A) Then the data used was clearly faulty
B) Then economists will likely reduce their confidence in the theory
C) Then economists always reject it
D) Then the model must be too simple - ANSWER B) Then economists will likely reduce
their confidence in the theory
Behavioral economics is the study of why people
A) Optimize
B) Behave badly when buying and selling
C) Choose not to optimize
D) Sometimes don't optimize - ANSWER D) Sometimes don't optimize
Most private firms seek to
A) Maximize employee salaries
B) Maximize revenue
C) Maximize profit
D) Minimize headcount - ANSWER C) Maximize profit
A microeconomic model cannot be used to
,A) Evaluate the fairness of a proposal to nationalize health insurance
B) Evaluate the impact of a price change in the minimum wage on unemployment
C) Predict the impact of an increase in the minimum wage on unemployment
D) Evaluate the effect of an increase in stadium size on the price of a sport team's
tickets - ANSWER A) Evaluate the fairness of a proposal to nationalize health insurance
It is appropriate to use the supply-and-demand model if, in a market,
A) Everyone is a price taker with full information about the price and quality of the good
B) Firms sell identical products
C) Costs of trading are low
D) All of these - ANSWER D) All of these
If the price of automobiles were to increase substantially, the demand curve for
automobiles would most likely
A) Shift leftward
B) Become steeper
C) Remain unchanged
D) Shift rightward - ANSWER C) Remain unchanged
If the demand for eBook readers increases and the supply of eBook readers increases,
then
A) It is clear that prices will increase, the change in the quantity of eBook readers sold is
ambiguous
B) It is clear that quantity sold will increase, the change in the price of eBook is
ambiguous
C) It is clear that prices will decrease, the change in the quantity of eBook readers sold
is ambiguous
D) It is clear that quantity sold will decrease, the change in the price of eBook readers is
ambiguous - ANSWER A) It is clear that prices will increase, the change in the quantity
of eBook readers sold is ambiguous
,A downward sloping demand curve indicates that
A) Individuals all have the same valuation of the same product
B) Individuals have different valuations of the same product
C) Individuals have no valuations of a particular product
D) Certain individuals are uninformed about certain aspects of the product - ANSWER B)
Individuals have different valuations of the same product
A price ceiling that is set below the equilibrium price
A) Is non-binding
B) Creates a shortage
C) Causes suppliers to lose money
D) Creates a surplus - ANSWER B) Creates a shortage
Which of the following is NOT a characteristic of perfectly competitive markets?
A) All market participants are price-takers
B) Products are differentiated
C) It is easy to find a trading partner
D) Transactions costs are a very small part of the scale - ANSWER B) Products are
differentiated
Technological innovation in the production of computers has led to
A) A decrease in the quantity demanded for computers
B) A rightward shift of the supply curve for computers
C) A decrease in the quantity supplied of computers
D) None of these - ANSWER B) A rightward shift of the supply curve for computers
The below figure shows a graph of a market for pizzas in a large town. At a price of $7,
, what is the amount of excess demand?
A) 0; there is excess supply at $7
B) 20 units
C) 30 units
D) 10 units - ANSWER C) 30 units
If a city were to ban the use of automobiles within its city limits, we would expect
A) The demand curve for automobiles to remain the same
B) The demand curve for automobiles to shift to the left
C) The demand curve for bicycles to shift to the left
D) People to move to another city - ANSWER B) The demand curve for automobiles to
shift to the left
Which of the following is an example of a normative statement?
A) A lower price for a good causes people to want to buy more of that good.
B) A higher price for a good causes people to want to buy less of that good.
C) If you decrease the amount of sugar in soda drinks, sales to children will decrease.
D) To make the good available to more people, a lower price should be set. - ANSWER D)
To make the good available to more people, a lower price should be set.
The purpose of making assumptions in economic model building is to
A) Express the relationship mathematically.
B) Minimize the amount of work an economist must do.
C) Simplify the model while keeping important details.
D) Force the model to yield the correct answer. - ANSWER C) Simplify the model while
keeping important details.
In a market,
