ECN201 Microeconomics Midterm Exam Latest 2022

1. The law of supply asserts that there is a direct relationship between demand and supply.

True

False

2.            A government price control in the form of a price ceiling will lead to expanded output and fewer shortages in the market

True

False

3.            A change in quantity supplied involves a new supply curve resulting from a shift in the supply curve either inward or outward, leading to a new equilibrium point between demand and supply.

True

False

4.            Government actions such as price floors and price ceilings can actually increase unemployment and reduce market efficiency.

True

False

5.            If the government increases the excise tax on a gallon of gasoline we can expect the supply curve to shift rightward, quantity demanded to fall, and price to rise.

True

False

6.            A shortage of demand in the market will cause the price of a product to increase.

True

False

7.            A point inside the production possibility frontier indicates an economy that is underutilizing resources.

True

False

8.            An increase in the population of a country will cause the demand curve to shift outward and supply to increase.

True

False

9.            If the government were to impose a price ceiling on gasoline, thereby setting the price per gallon at $1.50 when the market price currently is $2.50, we could expect shortages in supply, long lines at gas stations, and an illegal underground market to form as a result.

True

False

10.          The demand curve is positively sloped because there is a positive relationship between the dependent variable quantity and independent variable price.

True

False

11.          in the circular flow model of economic activity, the government own the factors of production which firms use to produce goods and services.

True

False

12.          If the government raises taxes on wealthy individuals, we can expect the economy to expand positively.

True

False

13.          Movement along the demand and supply curves is referred to as "a change in demand and supply," while a shift in the demand and supply curves is referred to as "a change in quantity demanded and supplied."

True

False

14.          Economic analysis assumes that

a. individuals act only out of selfish motives.

B although individuals are at times selfish and at times unselfish, only their selfish actions may be predicted.

c. people are basically humanitarian, and their actions are, therefore, impossible to predict.

d             changes in the personal benefits and costs associated with a choice will exert a predictable influence on human behavior.

15.          If the government provides free schooling for all students, an economist would say education is

16.          Which of the following is a normative economic statement?

A If we doubled the size of welfare payments, we would reduce the number of homeless persons.

b. Companies should be concerned with more than just their profits.

c. An increase in spending on airport security will reduce the number of hijackings.

d             If social security were to be privatized, workers would earn a higher rate of return on their retirement contributions.

17.          The production possibilities frontier curve illustrates that

18.          If a small percentage increase in the price of a good results in a rather large percentage reduction in the quantity demanded of the good, demand is said to be

19.          When a supply and demand model is used to analyze the market for labor,

a              demand is generally no longer downward sloping

b             the wage rate is used on the vertical axis as the market price.

c. employment is used on the horizontal axis as the market quantity.

d             both b and c.

20.          n which statement(s) is "supply" used correctly?

(I) "An increase in the price of flour will increase the supply of flour."

(II) "As the cost of producing flour rises, the supply of flour will tend to fall."

in statement II only

21.          Which of the following is an example of a rational decision?

22.          If price rises, what happens to the demand for a product?

23.          All things equal, the price elasticity of supply

24.          Assuming that bus travel is an inferior good, a decrease in consumer income, other things being equal, will cause

25.          Which of the following is an example of political action that reflects the shortsightedness effect?