Deck 1: Economic Models

Question 1

The X-intercept of is

A)-3.
B)3.
C)-1/3
D)12.

Answer 1

-3.

Question 2

Graphically,the solution to a system of two independent linear equations is usually

A)the average of the slopes.
B)the average of the intercepts.
C)a single point.
D)None of the above.

Answer 2

a single point.

Question 3

The slope of the production possibility frontier shows

A)how inputs must be changed to keep them fully employed.
B)the technically efficient combinations of the two goods.
C)how demanders are willing to trade one good for another.
D)the opportunity cost of one good in terms of the other.

Answer 3

the opportunity cost of one good in terms of the other.

Question 4

The Y-intercept of is

A)3/8.
B)3.
C)8.
D)-8/3.

Question 5

If society is producing a combination of goods on its production possibilities frontier

A)it must be employing all available resources.
B)it must be growing.
C)it is using all the available natural resources but may not be using all available labor resources.
D)Both a and b

Question 6

The slope of a nonlinear function at some particular point

A)is the slope of the straight line that is tangent to the function at that point.
B)is the slope of the straight line connecting the origin and the point.
C)cannot be determined.
D)is constant for the entire function.

Question 7

In the equation where Y is a function of X

A) Y is the independent variable.
B)38 is a variable.
C)the slope of the line is 38.
D)None of the above.

Question 8

Positive economic analysis

A)involves the study of firms with positive profits.
B)involves how resources are actually used in an economy.
C)involves judgments on how resources should be used in an economy.
D)is usually thought to be a waste of time.

Question 9

A major problem that may occur with models that predict the values of economic variables in the future is that

A)researchers are pessimistic about the future.
B)the model may fail to acknowledge that economic actors will change their behavior in response to changing situations.
C)the model may make predictions that conflict with widely held opinions.
D)no one cares about these predictions.

Question 10

For the equation the point , .

A) yields a value of .
B)lies below the contour line that includes the point , .
C)lies on the same contour line as the point , .
D)Both a and b

Question 11

For the equation ,which of the following points lie on the contour line?

A)
B)
C)
D) Both a and c.

Question 12

If the prevailing price of shirts is $10 and at this price demanders demand 100 shirts while suppliers are willing to supply 110 shirts,there is a(n)

A)shortage at the $10 price.
B)surplus at the $10 price.
C)equilibrium in this market.
D)shortage if price were to rise above $10.

Question 13

The solution to the simultaneous equations and is

A) , .
B) , .
C) , .
D)None of the above.

Question 14

Given which of the following are necessarily true?

A)Y is a linear function.
B)X,Z are dependent variables.
C)A contour line of this function would keep Y constant.
D)An increase in X would increase Y.

Question 15

If the slope of a linear function changes with no change in the Y-intercept

A)the graph shifts either up or down in a parallel way.
B)the graph remains unchanged.
C)the graph rotates about its X-intercept.
D)the graph rotates about its Y-intercept.

Question 16

The problem of scarcity

A)arises only in poor countries.
B)exists because the price of goods is too high.
C)exists because of limited resources.
D)will eventually be solved by better planning.

Question 17

If ,the contour lines.

A)are concentric circles.
B)are parabolas.
C)are hyperbolas.
D)intersect whenever either X or Z is zero.

Question 18

For the function ,the equation represents

A)the X-intercept.
B)the Y-intercept.
C)a contour line.
D)a tangent line.

Question 19

Normative economic analysis

A)involves the study of what comprises a normal firm.
B)involves how resources are actually used in an economy.
C)involves judgments on how resources should be used in an economy.
D)is usually thought to be a waste of time.

Question 20

If the Y-intercept of a linear function increases while the slope remains unchanged

A)the graph must shift down in a parallel way.
B)the graph must rotate to the left about the X intercept.
C)the graph must shift up in a parallel.
D)the graph remains unchanged.

Question 21

Suppose you can write generic supply and demand curves such that and .Equilibrium quantity is then given by.

A)
B)
C)
D)

Question 22

If the production possibilities frontier can be expressed as then the point ; is.

A)outside the production possibilities frontier
B)on the production possibilities frontier
C)inside the production possibilities frontier
D)in the wrong quadrant to be on the graph

Question 23

Suppose .If taxes are progressive which of the following is true?

A)
B)
C)
D)

Question 24

Suppose you can write generic supply and demand curves such that and .If price must reach a certain level before firms supply anything , ,A must be.

A)positive
B)negative
C)0

Question 25

The Ricardian notion that of diminishing returns implies that

A)as more input is used more output will be made.
B)as more input is used less output will be made.
C)as more input is used the increase in output will increase.
D)as more input is used the increase in output will decrease.

Question 26

Suppose a production possibilities frontier can be expressed as what is the opportunity cost of going from 2 units of X to 3 units of X (in terms of units of Y)? .

A)
B)
C)1
D)0

Question 27

Suppose and .The equilibrium price is.

A)7
B)8
C)9
D)10

Question 28

Suppose and .The equilibrium quantity is

A)2
B)3
C)4
D)5

Question 29

Suppose you can write generic supply and demand curves such that and .Equilibrium price is given bY.

A)
B)
C)
D)

Question 30

Economists typically use ____ analysis,whereas clergy members typically use ____ analysis.

A)positive; positive
B)normative; normative
C)positive; normative
D)normative; positive

Question 31

Suppose a production possibilities frontier can be expressed as what is the opportunity cost of going from 1 unit of X to 2 units of X (in terms of units of Y)?

A) 45
B)
C)
D) 1

Question 32

Suppose you can write generic supply and demand curves such that and .If consumers demand less as price rises,C must be.

A)positive
B)negative
C)0

Question 33

If the production possibilities frontier can be expressed as then the point ; is.

A)outside the production possibilities frontier
B)on the production possibilities frontier
C)inside the production possibilities frontier
D)in the wrong quadrant to be on the graph

Question 34

Let and .Here equilibrium price and quantity are

A) , .
B) , .
C) , .
D) , .

Question 35

Suppose .If taxes are proportional which of the following is true?

A)
B)
C)
D)

Question 36

An increase in the technology used in the production of only one of the two goods in a society will

A)eliminate scarcity
B)move the production possibilities frontier out in all directions
C)move the production possibilities frontier in all directions
D)leave one intercept of the production possibilities frontier fixed and swing out from the other

Question 37

Suppose you can write generic supply and demand curves such that and .If firms produce more when price rises,B must be.

A)positive
B)negative
C)0

Question 38

Suppose .If taxes are regressive which of the following is true?

A)
B)
C)
D)

Question 39

Suppose you can write generic supply and demand curves such that and .In the usual supply-demand configuration,D must be.

A)positive
B)negative
C)0