Expert Answer:ECO202 CMICH Economics Homework Spring ’19 Take Ho

  

Solved by verified expert:Solve the questions attached document This multiple-choice test contains a total of seventy-six (76) questions for all students. The first sixty (60) questions are compulsory for all students.
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This multiple-choice test contains a total of seventy-six (76) questions for all students. The first sixty (60)
questions are compulsory for all students. The other sixteen (16) questions are for extra credits and are
therefore optional.
Choose the best answer among the options for each of the questions below
Do all Questions
(1)Principle#6 states that:
(a)”People respond to incentives”
(b)”Rational people think and make decisions at the margin”
(c)”Markets are usually a good way to organize economic activity”
(d)”A country’s standard of living depends on its ability to produce goods and services”
(2)Which of the following pairs of principles is organized in category#2?
(a)”The cost of something is what you give up to get it” and “Trade makes everyone and every nation better off”
(b) “Rational people think and make decision at the margin” and “People face trade-offs”
(c)”Trade makes everyone and every nation better off” and “Government can sometimes improve market outcomes”
(d) “A country’s standard of living depends on its ability to produce goods and services” and “Government can sometimes improve market
outcome
(3)A leftward shift in the PPF curve of a country’s economy given ceteris paribus could be caused by:
(a)An improvement in technology
(b)A decrease in resources
(c)An increase in entrepreneurship
(d)All of the above
(4)Which of the following statements is false?
The fallacy of composition is:
(a)A common error of macroeconomists
(b)A confusion of cause and correlation between events
(c)A flawed understanding of the relationship between the whole and the parts of the whole and vice versa
(d)All of the above
(5)The existence of a surplus or a shortage in a market is indicative of the absence of scarcity as the main economic problem in a society
is:
(a)A true statement
(b)A false statement
(c)More information is needed to respond
(d)None of the above
(6)The use of satellite technology for monitoring the productivity of truck drivers by trucking companies is an example of a:
(a)Human capital
(b)Physical capital
(c)Domestic savings
(d)Financial investment
(7)The sub-discipline of economics that focuses on especially on individual markets is:
(a)Normative economics
(b)Macroeconomics
(c)Microeconomics
(d)Econometrics
(8)Which of the following statements is true?
A marketplace is:
(a)A market
(b)A physical place where trade occurs
(c)(a) or (b) above
(d)(a) and (b) above
(9)Which of the fundamental economic question is most closely related to the issues of income distribution and poverty in a society?
(a)The what to produce question
(b)The how to produce question
(c)The for whom to produce question
(d)None of the above
(10)All costs are ultimately opportunity costs in all spheres of life and society is a:
(a)True statement
(b)False statement
(c)Reasonable statement
(d)A silly statement
(11)A supply curve that is horizontally sloped is an accurate representation of the law of supply given ceteris paribus when only price
changes for a good is a:
(a)False statement
(b)True statement
(c)More information needed to respond
(d)All of the above
(12)Positive economic analysis deals with_________________________ and normative economic analysis deals
with_____________________
(a)What should be, what is
(b)What is, what ought to be
(c)Fiction, fact
(d)Positive things, negative things
(13)If given ceteris paribus there is a positive correlation between annual household expenditures and annual household incomes in an
economy, macroeconomists will conclude that:
(a)A decrease in household incomes will cause a decrease in household consumption expenditures and vice versa
(b)An increase in household incomes will cause a decrease in household consumption expenditures and vice versa
(c)A decrease in household incomes will have no effect on household consumption expenditures and vice versa
(d)None of the above
(14)Suppose in a market for organic carrots, you are asked to compute the market clearing price and market clearing quantity for airline
tickets in a market where the demand and supply equations are D=340-5P and S=250, which of the following pairs would be your
accurate calculations of what you are asked to do?
(a)P=$18 and Q=156 tickets
(b)P=$12 and Q=280 tickets
(c)P=$9 and Q=250 tickets
(d)None of the above
(15)Suppose now, there is a change in the market conditions in the market for airline tickets in Q#14 above such that the supply of tickets
is represented by the equation S=120 and the demand for tickets is unchanged as described in the previous question, which of the
following is the market equilibrium price and the market equilibrium quantity in the market?
(a)P=$15 and Q=120 tickets
(b)P=$20 and Q=280 tickets
(c)P=$44 and Q=120 tickets
(d)P=$35 and Q=320 tickets
(16)Which of the following pairs of statements is true about the slopes of the demand and supply “curves” in Qs#14 and 15 above?
(a)The demand curve is positively sloped and the supply curve is negatively sloped
(b)The demand curve is negatively sloped and the supply curve is vertically sloped
(c)The demand curve is negatively sloped and the supply curve is horizontally sloped
(d)(b) and (c) above
(17)The silly clothes worn by circus clowns are considered as an example of:
(a)Human resources
(b)Natural resources
(c)Capital resources
(d)Entrepreneurship
(18)Which of the following statements is true?
Market prices are those prices set by the market forces of supply and demand in any market:
(a)At equilibrium
(b)Above equilibrium
(c)Below equilibrium
(d)All of the above
(19)Which of the following statements is true?
If there is a direct relationship between the price level and the money supply in an economy, it would be correct to conclude that:
(a)There is an inverse relationship between the price level and the money supply in the economy
(b)There is a vertical relationship between the price level and the money supply in the economy
(c)A decrease in the price level leads to an increase in the money supply in the economy
(d)None of the above
(20)Which of the following statements is false?
(a)A rent control is an example of a binding price ceiling
(b)A binding price ceiling is set above a competitive equilibrium price
(c)A legally binding minimum wage is set above the equilibrium wage rate in a labor market
(d)None of the above
(21)Which of the following is not a common effect of imposing a rent control in a housing market?
(a)Extended time on waiting list and searching for housing
(b)An “underground market” for rental units develops
(c)An excess supply of rentals at the controlled price
(d)Discriminatory practices by the landlords
(22)If the equilibrium price for metro tickets is $2.50 for 450,000 tickets and a non-binding maximum price is imposed by the City’s
government at $3.50, the eventual result in the market will be a (an):
(a)Shortage
(b)Surplus
(c)Equilibrium
(d)Depletion of resources
(23)Which of the following statements would be true about the price set by the City government in the market referenced in Q#22 above?
(a)It is not a legally binding price on the metro riders and the metro company
(b)It does not prevent the clearance of the market by the interaction of market forces
(c)The surplus of metro tickets initially created in the market will disappear as ticket prices fall
(d)All of the above
(24)Which of the following statements is true?
Non-binding price ceilings:
(a)Are also minimum prices under the law
(b)Are set by governments below equilibrium price to encourage production
(c)Are prices that facilitate market equilibrium in markets
(d)None of the above
(25)A consequence of a legally binding price floor in a market is that:
(a)Producers will stop supplying the product
(b)Some rationing device must be employed
(c)A surplus of the product will result
(d)There will be an excess demand for the product
(26)Given that a rent control is a binding price ceiling in a housing market, which of the following is not a likely result of a rent control
policy?
(a)Discriminatory practices by landlords
(b)Longer waiting list and search time for housing
(c)An excessive supply of rental units at the controlled price
(d)An ‘illegal market” for rental units
(27)Which of the following statements is false?
If a government imposes a minimum price above the market equilibrium price, then:
(a)There will be excess supply
(b)The policy intent is to benefit producers
(c)The policy intent is to benefit consumers
(d)It is the lowest price that the consumers will pay under the law
(28)Another name for a non-binding price floor set by a government in a market is a:
(a)Binding maximum price
(b)Binding price floor
(c)Non-binding maximum price
(d)None of the above
(29)Suppose the demand and supply equations in the market for fresh milk are given as D=340-10P and S=260 in the City of Los Angeles,
what is the market equilibrium price and the market equilibrium quantity for fresh milk in this market?
(a)P=$6 ,Q= 412 liters
(b)P=$12,Q=520 liters
(c)P=$8,Q=260 liters
(d)P=$9,Q=285 liters
(30)Suppose now the City government in Los Angeles intervenes in the market for fresh milk referenced in Q#29 above and sets a price
of $5 for a gallon of fresh milk as a legally mandated price, the pricing policy of the City government is called:
(a)A binding price floor
(b)A binding price ceiling
(c)A do nothing price
(d)None of the above
(31)Which of the following is the rationale for your answer to Q#30 above?
(a)The price in Q#30 is the lowest price for fresh milk under the law
(b)The price is set below the competitive equilibrium price for fresh milk
(c)The price in Q#30 is set above the competitive equilibrium price for fresh milk
(d)None of the above
(32)Is the supply equation in Q#29 in conformity with the law of supply in the market for fresh milk?
(a)Yes
(b)No
(c)More information is needed to respond
(d)None of the above
(33)Which of the following statements is false?
A binding maximum price for a resource in a market is a:
(a)Legally mandated price
(b)Price set by a government below the market equilibrium price in a market
(c)Price that creates a surplus for a resource
(d)None of the above
(34)Which of the following statements is false?
If the interest rate in a market for agricultural loans is capped at 1.2 percent by law for small family owned farms, it can be concluded
that:
(a)The interest cap is a binding price ceiling for agricultural loans
(b)The demand for these loans will exceed their supply in the market
(c)The market forces of supply and demand for these loans will clear the market
(d)All of the above
(35)Which of the following statements is false?
(a)A rent control is an example of a binding price ceiling
(b)A binding price ceiling is set above a competitive equilibrium price
(c)A legally binding minimum wage is set above the equilibrium wage rate in a labor market
(d)None of the above
(36)Which of the following characteristics about command economies is false?
(a)There is voluntary exchange between buyers and sellers in markets
(b)Profit is the main motivation for economic activity
(c)Social ownership is the dominant form of property ownership
(d)Central planning is the dominant economic system
(37)Suppose the demand and supply equations in the market for fresh milk are given as D=340-3P and S=260+7P in the City of Los
Angeles, what is the market equilibrium price and the market equilibrium quantity for fresh milk in this market?
(a)P=$6 ,Q= 412 liters
(b)P=$12,Q=520 liters
(c)P=$8,Q=316 liters
(d)P=$9,Q=285 liters
(38)Suppose now the City government in Los Angeles intervenes in the market for fresh milk referenced in Q#37 above and sets a price
of $5 for a gallon of fresh milk, the pricing policy of the City government is called:
(a)A binding price floor
(b)A non-binding price ceiling
(c)A non-binding price floor
(d)A do nothing price
(39)Which of the following statements about the pricing policy adopted by the City government of Los Angeles in the market for fresh
milk cited in Q#38 above is false?
(a)The pricing policy is set below the competitive equilibrium price of fresh milk
(b)The pricing policy creates more demand and less supply of fresh milk
(c)The pricing policy is set above the competitive equilibrium price for fresh milk
(d)The pricing policy will not hinder the capacity of the market forces from clearing the market
(40)Which of the following statements is false?
If a government imposes a minimum price above the market equilibrium price, then:
(a)There will be excess supply
(b)The policy intent is to benefit producers
(c)The policy intent is to benefit consumers
(d)It is the lowest price that the consumers will pay under the law
(41)The former Soviet Union and other socialist countries were notorious for underground markets. An explanation for the existence of
these illegal markets is that:
(a)The goods markets were unregulated by governments
(b)The governments imposed price ceilings above the market equilibrium prices
(c)The governments imposed price ceilings equal to the market equilibrium prices
(d)None of the above
(42)If cooks are being paid $12 per hour by law in the state of California because the government in California concluded that the
market determined wage of $8 per hour was too low for their labor services, it can be inferred that:
(a)The cooks are being paid a non-binding wage ceiling
(b)The cooks are being paid a binding maximum wage
(c)The cooks are being paid a binding minimum wage
(d)The cooks are being paid a non-binding wage floor
(43)Which of the following statements is true?
With reference to Q#42 above, a microeconomist who concludes that:
(a)The demand for the labor services of cooks exceeds its supply is incorrect
(b)The legal wage for a cook’s labor services will be set below the equilibrium wage is incorrect
(c)The market for the labor services of cooks will not clear at the equilibrium wage is correct
(d)All of the above
(44)Which of the following statements is false?
If the interest rate in a market for mortgage loans is cap at 2.8 percent by law for first time home buyers, it can be concluded that:
(a)The interest cap is a binding price ceiling for mortgage loans
(b)The demand for these loans will exceed their supply in the market
(c)The market forces of supply and demand for these loans will clear the market
(d)All of the above
(45)Given ceteris paribus, if people expect the price of cooking oil to increase next month, the demand for cooking oil will:
(a)Decrease now
(b)Stay the same now and increase next month
(c)Increase now
(d)Stay the same now and decrease next month
Price of GoldPer Ounce
$1575
$1575
$1575
$1575
Table#1-Supply Schedule for Gold
Quantity Supplied of GoldPer Ounce
1285
1546
1785
2897
(46)Suppose you are a market analyst for a company that specializes in the trade for gold in the international market and you are given
the above market supply schedule for gold in Table#1 above, which of the following statements about the market supply curve for gold is
true?
(a)The supply curve conforms to the law of supply
(b)The supply curve is vertically sloped
(c)The supply curve is negatively sloped
(d)None of the above
(47)As a market analyst, if you are told that the international gold market represented by the price-quantity data in Table#1 above is at
equilibrium and you are also told that the demand curve for gold has an inverse relationship to price. Which of the following statements is
false?
(a)The market clearing price is $1575
(b)The demand curve violates the law of demand
(c)The market price for gold on the demand curve may be above or below $1575
(d)Global consumers will buy more gold at a price less than $1575
(48)In a graphical relationship, shifts in demand and supply curves are caused by a change in:
(a)The slope of the curve
(b)One of the factors measured on either axes of the graph
(c)A factor not measured on the axes of the graph
(d)Any factor, whether measured on the axes of the graph or not
(49)Given ceteris paribus if consumers expect that the price of grapes will increase in the next four months, their demand curve for
grapes will:
(a)Shift inwardly to the left
(b)Rotate outwardly to the right
(c)Shift outwardly to the right
(d)Remain unchanged
(50)Which of the following statements is true?
The demand schedule for maple syrup shows:
(a)The positive relationship between the price and the quantity of maple syrup
(b)The specific quantity of maple syrup that retailers are willing and able to sell at different prices
(c)The specific quantity of maple syrup that people are willing and able to buy at different prices
(d)None of the above
(51)Which of the following statements is true?
A decrease in the quantity supplied of a good given ceteris paribus is given by a (n):
(a)A shift to the right in the supply curve
(b)A downward movement to the left along the supply curve
(c)An upward movement to the right along the supply curve
(d)A shift to the left in the supply curve
Table#2-Supply for Macabee Coffee Beans
Quantity Supplied Per Week (Millions of Bushels)
Price Per Bushel
6
$3.00
5
2.50
4
2.00
3
1.50
2
1.00
1
0.80
(52)In reference to Table#2 above, assume the price of Macabee’s coffee beans to be $0.90 per bushel. If the price were to increase to
$2.40 per bushel, given ceteris paribus, the result would be a (an):
(a)Decrease in demand
(b)Increase in quantity supplied
(c)Increase in supply
(d)Any of the above
(53)A movement along the demand curve for toothbrush given ceteris paribus is caused by a change in:
(a)The price of toothpaste
(b)The price of dental care
(c)The price of toothbrush
(d)Consumers’ perspectives of future price changes
(54)When firms advertise their products, given ceteris paribus, their goal is to:
(a)Shift the demand curve for the product to the left
(b)Shift the demand curve of the product to the right
(c)Shift the supply curve of the product to the left
(d)None of the above
(55)Suppose Qs is the quantity supplied at a given price for brown rice and Qd is the quantity demanded at the same given price for
brown rice. Which of the following market conditions produces an upward movement of the price for brown rice?
(a)Qs =1,000, Qd =860
(b)Qs =850, Qd=850
(c)Qs=750, Qd=1,000
(d)Qs=1,000, Qd=1,000
(56)Assuming steak and potatoes are complementary goods, other things being equal, an increase in the price of steak, will:
(a)Increase the demand for potatoes
(b)Increase the demand for steak
(c)Decrease the demand for potatoes
(d)Decrease the demand for steak
(57)Which of the following will not shift the demand curve for flat screen televisions?
(a)An increase in consumers’ income
(b)A decrease in the price of flat screen TVs
(c)An increase in the price of radios, a substitute for flat screen TVs
(d)An increase in the price of cable service, a complementary service for flat screen TVs
(58)Suppose given ceteris paribus, organically grown green tea is a normal good, a rise in consumer income will shift the:
(a)Demand curve for green tea to the left
(b)Supply curve for green tea to the right
(c)Demand curve for green tea to the right
(d)More information needed to respond
(59)Sugar and honey are seen as substitutes for each other in many household usage. Should the price of sugar rises, we should expect
the:
(a)Demand for honey to decrease
(b)Quantity demanded of honey to decrease
(c)Demand for honey to increase
(d)Price of honey to decrease
(60)Which of the following pairs of demand equations best represent the change in the demand for honey in Q#59 above?
(a)D1=30-4P and D2=20-3P
(b)S1=60+3P and S2=100+2P
(c)D2=40-2P and D3=60-6P
(d)D3=70-P and D4=70-2P
Extra Credit Questions-Optional
(61)In accordance with the law of supply, both individual and market supply curves are drawn:
(a)Horizontal
(b)Vertical
(c)Upward-sloping
(d)Downward-sloping
(62)Which of the following statements is true?
Suppose a government simultaneously taxes the consumption and production of pineapples given ceteris paribus. The latter p …
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