ECN 211 FINAL EXAM ASU LATEST ACTUAL EXAM 200 QUESTIONS AND CORRECT DETAILED ANSWERS WITH RATIONALES|AGRADE

ECN 211 FINAL EXAM ASU LATEST 2023-2024 ACTUAL EXAM 200 QUESTIONS AND CORRECT DETAILED ANSWERS WITH RATIONALES|AGRADE When we move along a given demand curve, - ANSWER- all nonprice determinants of demand are held constant. Which of the following would likely be studied by a microeconomist rather than a macroeconomist? - ANSWER- The effect of a sales tax on the cigaret industry The bowed shape of the production possibilities frontier can be explained by the fact that - ANSWER- the opportunity cost of one good in terms of the other depends on how much of each good the economy is producing. Coke and Pepsi are substitute soft drinks. Which of the following would cause the demand curve for Pepsi to shift to the left? - ANSWER- the price of Coke decreases The opportunity cost of a choice is: - ANSWER- the value of the opportunities lost. Mario buys eight units of good X when his income is $2,000 a month. When his income increases to $2,700 per month, he buys only six units of good X. For Mario, good X is: - ANSWER- an inferior good. Suppose that the demand is given by the equation: Qd = 200 - 2P. if the market price is 10, what is the consumer surplus? - ANSWER- 8,100 Suppose that the demand for good Y is given by the equation: Qdy = 200- 2Py + 3Px, where Px is the price of good X and Py is the price of good Y. Based on this equation we can conclude that: - ANSWERGood X and good Y are substitute goods Suppose roses are currently selling for $40 per dozen, but the equilibrium price of roses is $30 per dozen. We would expect a - ANSWER- surplus to exist and the market price of roses to decrease. Suppose the income of buyers in a market for an inferior good decreases and a technological advancement occurs also. What would we expect to happen in the market? - ANSWER- Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous. Saddle shoes are not popular right now, so very few are being produced. If saddle shoes become popular, then how will this affect the market for saddle shoes? - ANSWER- The demand curve for saddle shoes will shift right, which will create a shortage at the current price. Price will increase, which will decrease quantity demanded and increase quantity supplied. The new market equilibrium will be at a higher price and higher quantity. If a surplus exists in a market, then we know that the actual price is - ANSWER- above the equilibrium price, and quantity supplied is greater than quantity demanded. Pens are normal goods. What will happen to the equilibrium price of pens if the price of pencils rises, consumers experience an increase in income, writing in ink becomes fashionable, people expect the price of pens to rise in the near future, the population increases, fewer firms manufacture pens, and the wages of pen-makers increase? - ANSWERprice will rise Which of the following demonstrates the law of supply? - ANSWERWhen the price of ice cream decreased, baloon sellers decrease their quantity supplied of ice cream The price elasticity of demand measures the - ANSWER- magnitude of the response in quantity demanded to a change in price During the last few decades in the United States, health officials have argued that eating too much beef might be harmful to human health. As a result, there has been a significant decrease in the amount of beef produced. Which of the following best explains the decrease in production? - ANSWER- Individual consumers, concerned about their own health, decreased their demand for beef, which lowered the equilibrium price of beef, making it less attractive to produce. Suppose there is an decrease in the price of wood. We would expect the supply curve for pencils to - ANSWER- shift rightward. Assume that the market for Good X is defined as follows: QD = 64 - 16P and QS = 16P. What is the producer surplus in this market? - ANSWER- $32 Assume that Qd = 80-2P and Qs = 2P-20. Equilibrium price and quantity are respectively - ANSWER- $25, 30 You and your college roommate eat three packages of Ramen noodles each week. After graduation last month, both of you were hired at several times your college income. Your roommate still enjoys Ramen noodles very much and buys even more, but you plan to buy fewer Ramen noodles in favor of foods you prefer more. When looking at income elasticity of demand for Ramen noodles, yours would - ANSWER- be negative and your roommate's would be positive. If soybean farmers know that the demand for soybeans is inelastic, in order to increase their total revenues they should - ANSWER- reduce the number of acres they plant to decrease their output. Rob is planning her activities for a cold winter day. He would like to go play hockey and see the latest blockbuster movie, but because he can only get tickets to the movie for the same time that the hockey ring is open he can only choose one activity. This illustrates the basic principle that - ANSWER- people face tradeoffs. Rachel spends 2 hours studying instead of watching TV with his friends. The opportunity cost to her of studying iS - ANSWER- the enjoyment he would have received if he had watched TV with his friends.