Wk 3 - practice mid term questions and answers cc
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May 15, 2024
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Practice Mid-Term Exam
Score for this quiz:
240
out of 300
Question 1
10
/ 10 pts
Amy purchased 4 cantaloupes at $2 each and 3 watermelons at $4 each.
If Amy is following the optimal consumption rule, the marginal utilities of the fourth cantaloupe and third watermelon are:
12 and 24, respectively
4 and 3, respectively
40 and 10, respectively
6 and 8, respectively
Question 2
10
/ 10 pts
As trade becomes more widespread, specialization______, which in turn______productivitiy.
decreases; decreases
increases; increases
decreases; increases
increases; decreases
Question 3
10
/ 10 pts
Barry's wage increased and he responded by working more hours. Which statement must be TRUE?
Leisure is an inferior good.
The substitution effect of the wage increase dominated the income effect.
The income effect of the wage increase dominated the substitution effect.
The substitution and income effect both increased hours of work.
Question 4
10
/ 10 pts
Economists thing that people are self-interested:
only when monetary incentives are present.
because they respond to incentives in predictable ways.
only rarely in response to incentives.
unless they are being altruistic.
Question 5
10
/ 10 pts
If quantity supplied equals 40 units and quantity demanded equals 50 units under a price control, then it is a:
price ceiling.
price floor.
market equilibrium.
minimum wage.
Question 6
10
/ 10 pts
If the elasticity of demand for a good is estimated to be _____, then firms producing the good will experience an increase in total revenue if prices fall.
0.05
0.75
1
2.5
Question 7
10
/ 10 pts
If the goal of education were solely to support economic growth, the ideal graduate would be a:
jack-of-all-trades but master of none (where a "jack" is a serviceable tradesperson).
jack-of-all-trades and master of one.
jack-of-all-trades and master of none.
jack-of-some-trades but master of none.
Question 8
10
/ 10 pts
If there are only two goods in the economy, chocolate and peanut butter, and the price of chocolate falls, the new utility-maximizing bundle for a typical consumer would entail _____ peanut butter and _______ chocolate.
less; more
more; less
more; more
less; less
Incorrect
Question 9
0
/ 10
pts
If, for any given amount of a good or service, willingness to pay increases, then:
supply has increased.
supply has decreased.
demand has increased.
demand has decreased.
Question 10
10
/ 10 pts
In the market for pharmaceuticals, the issue of "drug loss" illustrates which of the following ideas?
The longer a drug is tested for safety, the lower is the opportunity cost in terms of lives lost.
If a drug is not tested for safety, it might kill more people.
Because of the higher cost of testing a drug, fewer drugs are made, and more lives are lost.
Lives are being lost because safe drugs that are still in the testing stage have not been approved.
Question 11
10
/ 10 pts
In the week before Hurricane Katrina, the price of flashlights rose in New Orleans because of:
an increase in supply.
an increase in demand.
a decrease in supply.
a decrease in demand.
Question 12
10
/ 10 pts
On a graph of a demand curve, total consumer surplus equals:
the demand curve.
the area above the demand curve and beneath the market price.
the area beneath the demand curve and above the market price.
the market price.
Question 13
10
/ 10 pts
Recall Chapter 1's opening story about the British sea captains and the convicted felons. In what way were incentives used to solve the problem of the high mortality rate on board the ships?
Payment (to captains) was to be offered for each prisoner that was taken aboard the ships.
Payment (to ship captains) was made independent of the regulations passed for prisoner welfare.
Regulations were passed so that prisoners could get better food, water, and medical
care.
Payment (to ship captains) was made dependent on the survival rate of prisoners.
Question 14
10
/ 10 pts
The Edict on Maximum Prices, established by the Roman emperor Diocletian, created price ceilings on various jobs and goods in a failed effort to curb inflation.
For example, legal pay for a farm laborer could be no more that $0.108 a day (payment set in modern currency). If the market rate of farm labor was $0.12 a day, which would be a plausible consequence of this law?
Farms would produce more food than they otherwise would.
Nothing unusual would happen.
A laborer would work less hard than he otherwise would.
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