Midterm Exam Multiple Choice

Which of the justices is necessary for the other justices?

Which of the justices covers private property and fulfilling contractual obligations?

The following is an example of what?

Spending time with a lonely grandparent.

What principle or justice has been ignored in the following scenario:

Your next door neighbors call the police at 12:01 AM, the moment the noise ordinance comes into effect, because your party is noisy. You have always been cooperative in the past.

The following is an example of which justice?

Alcoholics Anonymous meets with the goal of achieving sobriety in its members.

An example of a spontaneous order is

An example of a planned order is

The collective or governmental ownership and administration of the means of production and distribution of goods is called:

The technical economic term describing the telos of human action is

Where do economic means acquire their value?

Economics and praxeology study?

An opportunity cost is

“The law of returns states that with the quantity of complementary factors held constant, there always exists some optimum amount of the varying factor.” Choose the concept which is a necessary implication of the definition above.

Subjective theory of value implies

The law of Demand states that there exists:

Time is unlimited and therefore not a means.

Diminishing Marginal Utility is the notion that higher wants on the scale of wants (ends) are preferred greater than wants lower on the scale. Therefore, means which achieve higher wants are of greater utility than means achieving lower wants.

Risk with a probability distribution and can be insured. Uncertainty has no probability distribution and cannot be insured.

Entrepreneurs

Coke and Pepsi are

Peanut butter and jelly are

Comparative and Absolute advantage:

Assume Crusoe and Friday wish to maximize their production.

 

1 Coconut                  1 Fish

Crusoe            30 min                        25 min

Friday             20 min                        20 min

Who has the absolute advantage?

Comparative and Absolute advantage:

Assume Crusoe and Friday wish to maximize their production.

 

1 Coconut                  1 Fish

Crusoe            30 min                        25 min

Friday             20 min                        20 min

Considering comparative advantage, who would produce what?

Law of One Price is brought about through

Innovation, ceteris paribus,

Mimickry, ceteris paribus, affects other goods in what manner?

A sales tax on cigarettes is administered—a tax on buyers, i.e. buyers legally pay the tax. The demand curve for cigarettes is more inelastic than the supply curve.  Who actually pays the tax?

A price ceiling prevents prices from

A price floor prevents prices from

The USSR and other communist countries fixed prices for many goods.  Fixed prices prevent prices from

When does exchange occur?

Cell phones are discovered to cure cancer, what happens to the supply OR demand for cellphones?

The price of Pepsi decreases, what happens to the supply OR demand curve for Coke?

Milk becomes more expensive, an input for butter.  What happens to the supply OR demand curve for butter?

The price of peanut butter increases, what happens to the demand OR supply curve of jelly?  (Think of a peanut butter jelly sandwich)

When entrepreneurs engage in arbitrage they disequilibrate markets.

When entrepreneurs bring an innovation to market they equilibrate markets.

Joe Kowalski owns a company making an accounting profit of 6% per year. The return from a money-market account in a fully insured bank is 5%. What is Joe Kowalski’s economic profit?

The difference between a tariff and a quota is

The availability of substitutes determines the elasticity of the demand curve.

Demand and supply curves are more elastic over the long-run, than in the short-run.

The demand curve for Apples is more elastic than the demand curve for Gala Apples.

The demand curve for water is more elastic than the demand curve for diamonds.

The demand curve for packages of 1000 apples is more inelastic than the demand curve for packages of 5 apples.

At the initial price of 20$, the quantity is 100. When the price rises to 30$, the quantity demanded falls to 90.  Is the demand curve inelastic or elastic?

With a perfectly elastic demand curve, a small decrease in Q will result in a proportionally large increase in P and an increase in Revenue.

In order to increase car production, car companies will pay the same cost per unit of steel. Therefore the supply curve for cars is

The price of oil drops 90$, but oil refineries cannot shut down or quickly lessen production in the short-run lest they damage their equipment.  They will have to slowly lessen production. The supply curve for oil is

The supply curve of gold in the world is more _________ than the supply curve of gold for Belmont NC.

At an initial price of 70$, the quantity supplied is 100 units.  Then the price moves to 110$ and quantity supplied is 110 units. Is the supply curve inelastic or elastic?

An example of a price floor is

An example of a price ceiling is

An example of a fixed price is

A price ceiling set below the market price will result in

A price ceiling set above the market price will result in

A price floor set below the market price will result in

The USSR sets the price of milk at 5 rubles for the entire USSR—regions with differing demands and supplies of milk. The fixed price will result in:

A minimum wage of 50$ would result in

A minimum wage increase of 2$ will likely

The minimum wage is increased by 2$.  Town A and B are exactly the same in every way, except Town A is rife with crime and Town B has no crime.  Both populations are made up of unskilled and uneducated labor. Which town will be affected and how?

When rent controlled is imposed what is one of the effects?

A famine is when there is a shortage of food.  During famines we expect prices to increase, since the supply has shifted to the left.  Citizens are outraged at the high prices for food and demand the government lower prices.  What will happen to the current shortage of food if the government imposes a maximum price below the current famine market price, ceteris paribus?

Farmers have had a bumper crop and surplus (supply moves rightward) and prices are dropping.  The farming lobby gets government to impose a minimum price.  What will happen to the surplus of crop?

Consider the elasticity of demand for electricity. The politicians decide to create a tax on a coal-fire utility company providing electricity. The utility company buys a very small portion of the coal on the market. Ceteris paribus, who pays the tax?

Product: Electricity

A subsidy is given to the producers of electricity  What are the effects?

 

 

Why is economic calculation impossible in the socialist commonwealth?

Product: Education

Consider the elasticity of demand for education by parents for their children. Assume education firms (schools) can easily enter the market and there is not a big increase in the price of inputs.

A voucher (subsidy) is given to the consumers of education.  What are the effects?