ECON 201 Exam questions and
answers well graded A+
Imposing economic "autarky" through tariffs or other anti-trade measures results in: - ANS✅✅a.
protection of domestic industries from foreign competition
b. consumers facing higher prices for protected goods
c. lower productivity due to lack of specialization
D. ALL OF THESE ARE CORRECT
A very poor country with low levels of education and an unskilled workforce can still benefit from
international trade by having its workers specialize in jobs for which they have the lowest
opportunity cost. - ANS✅✅A. TRUE
b. false
According to a 2006 report issued by the United States Department of Commerce, "For each _____
growing and harvesting job saved by current sugar policies, nearly three _____ confectionary
manufacturing jobs are lost. - ANS✅✅A. SUGAR
B. CONFECTIONARY
A farmer can successfully grow 10 different crops on his land. The price system allows the farmer to
compare the opportunity costs of each crop and select the one which creates the greatest net value.
- ANS✅✅A. TRUE
b. false
Which financial statement is essential for an entrepreneur to compare revenues vs. expenses and
evaluate the success of his/her business? - ANS✅✅A. INCOME STATEMENT
b. balance sheet
c. statement of cash flows
d. statement of owner's equity
If resources are scare, they have _____ uses and we need a mechanism to help us critically assess
the opportunity costs. - ANS✅✅ALTERNATIVE
,Homer Simpson failed miserably in his attempt to build his own backyard barbecue pit. This
represents that: - ANS✅✅a. the labor theory of value is always correct
b. the labor theory of value only applies to physical goods
C. THE LABOR THEORY OF VALUE IS NOT ALWAYS APPLICABLE
d. the labor theory of value only applies to skilled labor
If Menger's farmer has a smaller crop of wheat than usual this year, he will roll a 6-sided die to
decide which of his 6 regular uses of the wheat crop he will do without. - ANS✅✅FALSE
Water is very important for life, but it has a very low market price. Diamonds are not as essential for
life as water, but they have a much higher market price. How does the marginal value theory explain
this seeming contradiction? - ANS✅✅a. value is based primarily on scarcity
b. value is based primarily on usefulness
C. VALUE IS BASED ON USEFULNESS IN CONJUNCTION WITH SCARCITY
d. no answer provided
For people who live near abundant sources of fresh water, such as the Great Lakes, the marginal
value of additional units of fresh water is: - ANS✅✅a. very high, because water is essential for life
B. VERY LOW, BECAUSE THERE AREN'T MANY GOOD USES FOR ADDITIONAL WATER
c. low or high depending on seasonal fluctuations
d. no answer provided
If the price of gas rises from $1.85 to $2.25, what happens to the demand (demand curve) for gas? -
ANS✅✅a. demand increases
b. demand goes down
C. NOTHING--WE SIMPLY MOVE ALONG THE DEMAND CURVE
d. up or down depending on circumstances
Which of the following is not a determinant of demand? - ANS✅✅A. TAXES
b. price of substitutes
c. consumer incomes
d. expectations
, Which of the following includes ONLY determinants of supply? - ANS✅✅a. price of inputs,
technology, tastes & preferences
B. TECHNOLOGY, # OF PRODUCERS, PRICE OF INPUTS
c. taxes, technology, tastes & preferences
d. incomes, taxes, technology
If the price of ground beef falls from $3.50 per lb. to $2.99 per lb., what happens to the supply
(supply curve) of ground beef? - ANS✅✅a. it increases
b. it goes down
c. it depends on consumer preferences
D. NOTHING; WE MOVE ALONG A GIVEN SUPPLY CURVE
Watts is trying to sell one of his classic old cars. He lists the car for $6,500, but it goes months with
no takers. Watts' price is likely _____ equilibrium for this particular car. - ANS✅✅A. ABOVE
b. below
c. at
d. no answer
What is the term for the area above the supply curve and below equilibrium price? - ANS✅✅a.
consumer surplus
b. surplus
C. PRODUCER SURPLUS
d. total surplus
What is "equal" at equilibrium? - ANS✅✅a. supply and demand
B. QUANTITY SUPPLIED AND QUANTITY DEMANDED
c. consumer and producer surplus
d. price and quantity
When a business sets prices above equilibrium, it often finds that products go unsold and inventories
pile up. To correct this situation, the company will sooner or later have to cut its prices. This
situation is known as a: - ANS✅✅a. shortage
B. SURPLUS
answers well graded A+
Imposing economic "autarky" through tariffs or other anti-trade measures results in: - ANS✅✅a.
protection of domestic industries from foreign competition
b. consumers facing higher prices for protected goods
c. lower productivity due to lack of specialization
D. ALL OF THESE ARE CORRECT
A very poor country with low levels of education and an unskilled workforce can still benefit from
international trade by having its workers specialize in jobs for which they have the lowest
opportunity cost. - ANS✅✅A. TRUE
b. false
According to a 2006 report issued by the United States Department of Commerce, "For each _____
growing and harvesting job saved by current sugar policies, nearly three _____ confectionary
manufacturing jobs are lost. - ANS✅✅A. SUGAR
B. CONFECTIONARY
A farmer can successfully grow 10 different crops on his land. The price system allows the farmer to
compare the opportunity costs of each crop and select the one which creates the greatest net value.
- ANS✅✅A. TRUE
b. false
Which financial statement is essential for an entrepreneur to compare revenues vs. expenses and
evaluate the success of his/her business? - ANS✅✅A. INCOME STATEMENT
b. balance sheet
c. statement of cash flows
d. statement of owner's equity
If resources are scare, they have _____ uses and we need a mechanism to help us critically assess
the opportunity costs. - ANS✅✅ALTERNATIVE
,Homer Simpson failed miserably in his attempt to build his own backyard barbecue pit. This
represents that: - ANS✅✅a. the labor theory of value is always correct
b. the labor theory of value only applies to physical goods
C. THE LABOR THEORY OF VALUE IS NOT ALWAYS APPLICABLE
d. the labor theory of value only applies to skilled labor
If Menger's farmer has a smaller crop of wheat than usual this year, he will roll a 6-sided die to
decide which of his 6 regular uses of the wheat crop he will do without. - ANS✅✅FALSE
Water is very important for life, but it has a very low market price. Diamonds are not as essential for
life as water, but they have a much higher market price. How does the marginal value theory explain
this seeming contradiction? - ANS✅✅a. value is based primarily on scarcity
b. value is based primarily on usefulness
C. VALUE IS BASED ON USEFULNESS IN CONJUNCTION WITH SCARCITY
d. no answer provided
For people who live near abundant sources of fresh water, such as the Great Lakes, the marginal
value of additional units of fresh water is: - ANS✅✅a. very high, because water is essential for life
B. VERY LOW, BECAUSE THERE AREN'T MANY GOOD USES FOR ADDITIONAL WATER
c. low or high depending on seasonal fluctuations
d. no answer provided
If the price of gas rises from $1.85 to $2.25, what happens to the demand (demand curve) for gas? -
ANS✅✅a. demand increases
b. demand goes down
C. NOTHING--WE SIMPLY MOVE ALONG THE DEMAND CURVE
d. up or down depending on circumstances
Which of the following is not a determinant of demand? - ANS✅✅A. TAXES
b. price of substitutes
c. consumer incomes
d. expectations
, Which of the following includes ONLY determinants of supply? - ANS✅✅a. price of inputs,
technology, tastes & preferences
B. TECHNOLOGY, # OF PRODUCERS, PRICE OF INPUTS
c. taxes, technology, tastes & preferences
d. incomes, taxes, technology
If the price of ground beef falls from $3.50 per lb. to $2.99 per lb., what happens to the supply
(supply curve) of ground beef? - ANS✅✅a. it increases
b. it goes down
c. it depends on consumer preferences
D. NOTHING; WE MOVE ALONG A GIVEN SUPPLY CURVE
Watts is trying to sell one of his classic old cars. He lists the car for $6,500, but it goes months with
no takers. Watts' price is likely _____ equilibrium for this particular car. - ANS✅✅A. ABOVE
b. below
c. at
d. no answer
What is the term for the area above the supply curve and below equilibrium price? - ANS✅✅a.
consumer surplus
b. surplus
C. PRODUCER SURPLUS
d. total surplus
What is "equal" at equilibrium? - ANS✅✅a. supply and demand
B. QUANTITY SUPPLIED AND QUANTITY DEMANDED
c. consumer and producer surplus
d. price and quantity
When a business sets prices above equilibrium, it often finds that products go unsold and inventories
pile up. To correct this situation, the company will sooner or later have to cut its prices. This
situation is known as a: - ANS✅✅a. shortage
B. SURPLUS
