Economy Quiz Chapters 1-5

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Questions and Answers

Allocating dorm rooms is:

an economic problem

If supply and demand both shift to the right, equilibrium quantity:

rises, but the equilibrium price may rise, fall, or stay the same

What idea from Chapter 1 does the illegal cockfighting in New Jersey illustrate?

Social and political forces sometimes rein in market forces

When applied to labor markets, the law of supply suggests that:

an increase in the wages earned by nurses will cause the quantity of nurses supplied to increase Signup and view all the answers

The use of the phrase 'other things constant' in supply and demand analysis indicates that:

an equilibrium quantity has been reached Signup and view all the answers

What could cause the price of tomatoes to dramatically increase?

Hurricanes during the late summer damage the Florida crop, shifting supply left Signup and view all the answers

Laissez-faire is an economic:

precept because it is based on a model and normative judgments about the relevance of the model to the real world Signup and view all the answers

The distinction between supply and the quantity supplied is best made by saying that:

supply is represented graphically by a curve and quantity supplied as a point on that curve Signup and view all the answers

Charging for use of a road is shifting from:

a third-party-payer-market to one in which individual consumers have to pay for their consumption of road usage, thus seeking to reduce excess demand Signup and view all the answers

What is Mary’s marginal cost per minute of making two more calls lasting 10 minutes each?

zero Signup and view all the answers

The minimum wage is an example of a price floor.

False Signup and view all the answers

Entrepreneurship is defined as the ability to:

organize and get something done Signup and view all the answers

The explanation for the law of demand involves:

consumers' ability to substitute different goods Signup and view all the answers

What does any economic system provide?

all the goods people want and desire Signup and view all the answers

The effect of higher gasoline prices is most likely to:

increase the demand for hybrid cars and decrease the demand for the gas guzzler Hummer Signup and view all the answers

Which of the following is not an economic institution?

None of these options Signup and view all the answers

What are the equilibrium price and quantity of wheat given (Qd = 1750-130 P) and (Qs = 1000+170 P)?

$2.50 a ton and 1,425 thousands of tons respectively Signup and view all the answers

A defining difference in what makes a firm a sole proprietorship, partnerships, or a corporation is the:

nature of ownership and accountability for each type of business Signup and view all the answers

The distinction between demand and the quantity demanded is made by saying that:

demand is represented by a curve and quantity demanded as a point on that curve Signup and view all the answers

Why was the Industrial Revolution important to the history of economic systems?

increased the power of capitalists and eventually led to a revolution instituting capitalism as the dominant economic system Signup and view all the answers

Trade sanctions imposed on Iraq that limited Iraq's production of oil after the 1990 Gulf War are best shown graphically with a price ceiling below equilibrium price.

False Signup and view all the answers

Describe the events of world petroleum demand in the 1990s.

The rise in demand shifted the demand for oil to the right. OPEC actions shifted the demand for oil back to the left. Signup and view all the answers

If Chuck is following the economic decision rule, the marginal benefit of the house to:

Chuck must be less than $72,000 Signup and view all the answers

A basic difference between microeconomics and macroeconomics is that microeconomics examines the choices made by individual participants in an economy and macro considers the economy's overall performance.

Signup and view all the answers

Which of the following would cause quantity demanded to change without changing the demand curve?

A change in the price of the good Signup and view all the answers

From a purely economic perspective, the death penalty for computer hackers is:

reasonable based on cost/benefit analysis but society must also take into account social, political, and religious factors Signup and view all the answers

What does it suggest when price cuts cause consumers to wait for deeper discounts?

Price cuts have changed buyers' expectations, and the change in expectations has moved the demand curve left. Signup and view all the answers

Given the production capabilities in Colombia and Brazil, which of the following statements is true?

These countries cannot gain from trading. Signup and view all the answers

The supply of leather jackets would be expected to increase as a result of:

a decrease in the cost of producing leather jackets Signup and view all the answers

A socialist economy in theory expects people to be:

altruistic Signup and view all the answers

Alexandra should study for the quiz as long as her hourly wage rate is:

less than $20. Signup and view all the answers

The difference between an L3C and other types of businesses is that:

L3C explicitly takes on a social mission as well as profit-seeking Signup and view all the answers

Say a pill existed that made people selfless. Under the coordination definition of economics:

there still would be an economic problem Signup and view all the answers

An increase in price and decrease in quantity are consistent with a:

leftward shift in supply and no shift in demand Signup and view all the answers

Study Notes

Economic Problems and Concepts

Allocating dorm rooms presents an economic problem due to non-market-based allocation.
Equilibrium quantity rises when both supply and demand shift right, while equilibrium price can fluctuate.
Social and political forces can restrict market forces, exemplified by illegal cockfighting in New Jersey.

Supply and Demand Dynamics

In labor markets, higher wages for nurses result in an increase in the quantity of nurses supplied.
"Other things constant" in supply and demand indicates equilibrium quantity has been achieved.
Natural disasters, like hurricanes, can shift supply left, leading to price increases, such as seen with tomatoes.

Economic Theories and Models

Laissez-faire represents an economic precept based on normative judgments relevant to the real world.
The relationship between supply and quantity supplied is distinguished; supply is a curve, while quantity supplied is a point on that curve.

Pricing and Consumer Behavior

Electronic Road Pricing in Singapore exemplifies moving from third-party payment to direct consumer costs to manage demand.
Marginal cost for Mary, regarding phone calls exceeding her plan, is zero for calls within her free limit.

Economic Systems and Institutions

The minimum wage is not classified as a price floor; it is instead a direct wage intervention.
Any economic system aims to meet the goods and services desired by society.

Market Reactions and Shifts

Higher gasoline prices typically drive demand for hybrid cars while decreasing demand for high-consumption vehicles.
The total demand equation for wheat indicates the equilibrium price and quantity can be calculated as $2.50/ton and 1,425 thousand tons, respectively.

Business Structures and Economics

The distinguishing factor between business types (sole proprietorship, partnership, corporation) is ownership and accountability.
Demand versus quantity demanded: Demand is a curve while quantity demanded is a point on that curve.

Historical Economic Developments

The Industrial Revolution led to a significant power shift towards capitalists and established capitalism as a dominant force in economic systems.

Trade and Economic Relationships

Price ceilings below equilibrium price do not accurately represent trade sanctions, as indicated in Iraq post-1990 Gulf War.
Rapid global demand for petroleum increased in the 1990s, influenced by OPEC’s inability to control output.

Economic Decision-Making

Chuck’s behavior towards a house offer reflects that his marginal benefit from the house is less than the seller's asking price.
Microeconomics studies individual economic choices, whereas macroeconomics evaluates overall economic performance.

Demand Curve Insights

Changes to quantity demanded occur based solely on price changes, not shifts in the demand curve itself.
Price cuts may lead to consumer expectations that can shift the demand curve left, as consumers wait for better discounts.

Trade and Comparative Advantage

Colombia demonstrates an opportunity for trade; however, the response indicates D: no gains from trade under the provided circumstances.

Market Supply Changes

A decrease in production costs typically increases supply, such as with leather jackets.

Economic Ideals and Practicality

A socialist economy theoretically relies on altruism from its citizens to operate effectively.
Alexandra's decision to study over working hinges on a comparison of benefits measured against her opportunity costs.

Special Business Models

An L3C distinguishes itself by prioritizing social missions alongside profit objectives.

Economic Behavior and Self-interest

The coordination definition of economics suggests that even with selfless behavior, economic problems persist.
An increase in price along with a decrease in quantity typically indicates a leftward shift in supply, showcasing supply-demand interactions.

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Description

Test your understanding of economic principles covered in chapters 1 to 5 of this course. This quiz will challenge your knowledge on topics such as market allocation, equilibrium, and law impacts on supply and demand. Perfect for students at Santa Ana College.