EC 111 Practice Exam #1

An increase in the price of a good will

If a good is normal, then an increase in income will result in a(n)

Two goods are substitutes when a decrease in the price of one good

We could expect the current demand for razors to increase.

A likely example of complementary goods for most people would be

Which of the following does not affect an individual's demand curve?

Recent forest fires in the western states are expected to cause the price of lumber to rise in the next 6 months. As a result, we can expect the supply of lumber to

If the federal government increases the minimum wage by $1.00 per hour, then it is likely that the

If a good is inferior, then an increase in income will result in a(n)

Suppose that when income rises, the demand curve for doctor's visits shifts to the right. In this case, we know the doctor's visits are

If the price elasticity of supply is 1.2 and the price increased by 5%, quantity supplied would

If the price elasticity of supply is 0, then

If the price elasticity of supply for a window manufacturer is 1.5,

If sellers do not adjust their quantities supplied at all in response to a change in price,

A drug interdiction program that successfully reduced the supply of illegal drugs in the U.S. likely will

As the price elasticity of supply approaches infinity, very small changes in price lead to

Why was OPEC unable to maintain high oil prices in the long run?

A form of government spending that is not made in exchange for a currently produced good or service is called

GDP is not a perfect measure of well-being; for example,

If net exports is a negative number for a particular year, then

What word do economists use to refer to the purchase of goods that will be used in the future to produce more goods and services?

A professional gambler moves from a state where gambling is illegal to a state where gambling is legal. Most of his income was, and continues to be, from gambling. His move

A stove is produced by a firm in 2014, added to the firm's investors in 2014, and sold to a household in 2015. It follows that

When the consumer price index rises, the typical family

The term inflation is used to describe a situation in which

One problem with the consumer price index stems from the fact that, over time, consumers tend to buy larger quantities of goods that have become relatively less expensive and smaller quantities of goods that have become relatively more expensive. This problem is called

Because the CPI is based on a fixed basket of goods, the introduction of new goods and services in the economy causes the CPI to overestimate the cost of living. This is so because

Michelle bought word-processing software in 2009 for $75. Michelle's cousin, Barry, bought an upgrade of the same software in 2010 for $75. To which problem in the construction of the CPI is this situation most relevant?

If the CPI was 95 in 1955 and 475 today, then $100 today purchases the same amount of goods and services as

Janelle earned a salary of $40,000 in 1996 and $65,000 in 2006. The consumer price index was 160 in 1996 and 266 in 2006. Janelle's 2006 salary in 1996 dollars is

Nate collected Social Security payments of $220 a month in 1985. If the price index rose from 90 to 108 between 1985 and 1986, then his Social Security payments for 1986 should have been

If macaroni and cheese is an inferior good, what would happen to the equilibrium price and quantity of macaroni and cheese if consumers' income rises?

UA's home games are always sold out, and students who wait in line for hours may be turned away. This indicates

The demand for Godiva mint chocolate is likely quite elastic because

Which of the following statements helps to explain why government drug interdiction increases drug-related crime?

Fuji Motors is a Japanese owned company that produces automobiles; all of its automobiles are produced in American plants. In 2010, Fuji Motors produced $30 million worth of automobiles, with $17 million in sales to Americans, $9 million in sales to Canadians, and $4 million worth of automobiles added to Fuji Motor's inventory. The transaction just described contributes how much to U.S. GDP for 2010?

In 2016, prostitution was illegal in the state of Alabama. In 2017, prostitution is now legal. Then, all things equal, GDP

If the CPI was 127 in 1972 and 324 today, then $10 in 1972 purchased the same amount of goods and services as

Because the CPI is based on a fixed basket of goods, the introduction of new goods and services in the economy causes the CPI to overestimate the cost of living. This is so because

Economists use the term inflation to describe a situation in which

Law of Demand

Normal vs. Inferior Goods

Substitutes

Complementary Goods

Price Elasticity of Supply

Perfectly Inelastic Supply

Highly Elastic Supply

Gross Domestic Product (GDP)

Transfer Payments

Net Exports

Consumer Price Index (CPI)

Substitution Bias (CPI)

New Goods Bias (CPI)

CPI & Living Standards

Market Equilibrium

Income & Market Equilibrium

Excess Demand

Demand Elasticity for Luxury Goods

Drug Supply Reduction & Crime

Drug Interdiction & Market Effects

GDP & Inventory Changes

Legality & GDP

Historical CPI & Inflation