Reference no: EM133527657

Economics

PART A

Each question is worth one (1) mark.

Question 1. Scarcity exists because:

a) human wants exceed the resources available to satisfy them.
b) some people make bad economic decisions.
c) people take too much leisure time.
d) some individuals have low incomes.
e) the costs of production are high.

Question 2. Which of the following is a microeconomic issue?
a) The unemployment rate soars in Spain.
b) The Brazilian economy experiences rapid economic growth.
c) Inflation skyrockets in Russia.
d) The price of petrol increases in the United States this year.
e) The Australian government cuts taxes to combat a recession.

Question 3. Which of the following is a topic studied in macroeconomics?
a) How the wheat industry determines how much wheat to grow.
b) The effect on economic growth if the government raises taxes.
c) The impact of higher prices for petrol on the number of SUVs people buy.
d) The pricing decisions in the computer hardware industry.
e) The impact of labour unions on wages.

Question 4. You have chosen to take a trip during the mid-semester break. If you had not gone, you would either have worked at a temporary job or studied for exams. The opportunity cost of your trip is
a) We cannot determine what the opportunity cost is without knowing which alternative, working or studying, you would have preferred.
b) the wages you would have earned from working.
c) the wages you would have earned from working and the lower grade earned by not studying.
d) the value of the trip.
e) the lower grade earned by not studying.

Question 5. Rational choice:
a) is always efficient.
b) is a choice that uses the available resources to best achieve the objective of the person making the choice.
c) provides the answer to only the 'how?' question.
d) is made by comparing different incentives.
e) is what you must give up to get what you want

Question 6. Consider a Production Possibility Frontier with jeans on the vertical axis and shoes on the horizontal axis. As the country moves along the frontier towards the vertical axis,
a) more jeans are produced.
b) more trade-offs occur.
c) the country eventually chooses an unattainable point.
d) free lunches occur.
e) more shoes are produced.

Question 7. The law of demand refers to how
a) the price of the good changes when people's demand for the good changes.
b) demand changes when people's incomes change.
c) the quantity demanded changes when the demand for the good changes.
d) the quantity demanded changes when the price of the good changes.
e) demand changes when the prices of substitutes and complements change.

Question 8. A "change in demand" most directly implies a
a) movement along a demand curve.
b) shift of the demand curve.
c) change in the quantity demanded of a good.
d) movement along the price curve.
e) movement along the quantity curve.

Question 9. Changes in which of the following factors do NOT shift the demand curve?
a) Buyers' incomes
b) The price of the good
c) The price expected in the future
d) The number of buyers
e) The price of a substitute good

Question 10. Producers expect that the price of a tonne of wheat will increase in one month. This expectation will result in
a) an increase in the current supply of wheat.
b) no change in the current or future supply of wheat.
c) an increase in the current quantity supplied of wheat.
d) a decrease in the future supply of wheat.
e) a decrease in the current supply of wheat.

PART B

Question 1. Refer to the below diagram and table

 

Pizza	Beer
100	0
99	14
95	28
89	41
81	53
71	64
59	73
45	80
31	86
16	89
0	90

a) If the economy is currently producing 59 Pizza and 73 Beer, what is the opportunity cost of increasing Pizza production to 71?

b) Is point ‘A' an efficient combination of the production of Pizza and Beer? Why/why not?

c) Start at point A and increase the quantity produced of Pizza until the economy is operating at a level of productive efficiency. What is the change in the quantity produced of Beer?

Question 2. The current market for energy bars is shown in the below diagram.

 

a) At a price of $2.00 per bar, is there a deficit or surplus of energy bars in the market?

b) Based on your answer to a), explain how the market for energy bars returns to equilibrium.

c) what is the equilibrium price and quantity for energy bars?