Economics 103 (Principles of Microeconomics)

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  1. Most economists conclude that, under a policy of free international trade,

each country will export goods and services that it produces at a comparative disadvantage, and import goods and services that it produces at a comparative advantage

each country will export goods and services that it produces at a comparative advantage, and import goods and services that it produces at a comparative disadvantage

the productive activities that producers in each country specialize in are unaffected by the openness of trade

More jobs will be created by such trade than are destroyed by such trade.

2. The further below the equilibrium price of raisins is a government-imposed price ceiling on raisins, the ____________ will be the resulting market value (or marginal value) of raisins

lower

higher

The market value (or marginal value) of apples is unaffected by just how far below the equilibrium price is the government-mandated price ceiling on apples.

  1. Which of the following effects is among those that economists predict will arise from a government-imposed price ceiling on raisins?

a shortage of raisins

an increase in the amount of raisins that consumers actually get (compared to the amount of raisins that consumers get at the equilibrium price)

increased quality of raisins

a decrease in the market (or marginal) value of raisins

  1. The economic agent who is most responsible for causing the law” of one price to operate in reality is called

CEO

politician

arbitrageur

economist

banker

  1. Raising the minimum wage

causes the quantity supplied of labor to rise

causes the quantity demanded of labor to fall

both a. and b.

neither a. nor b.

  1. When prices rise in the aftermath of a natural disaster, such as a hurricane, the causes of these price increases typically are

lower demand along with lower supply

lower demand along with higher supply

higher demand along with higher supply

higher demand along with lower supply

greedy producers and greedy consumers

  1. Which of the above graphs of the wheat market depicts what happens when speculators operate in the wheat market in years 1 and 2?
  2. The amount of peaches that consumers will actually get if the government imposes a price floor in the market for peaches is

the same as the amount of peaches they would get if the price of peaches is at equilibrium.

greater than the amount of peaches they would get if the price of peaches is at equilibrium.

less than the amount of peaches they would get if the price of peaches is at equilibrium.

It’s impossible to tell without more information.

  1. True or false: the general public benefits from successful speculation regardless of speculators’ motives.

true

false

  1. A bushel of rice that is moved from point A to point B by a successful arbitrageur

yields the same amount of marginal utility when it is bought and consumed at point B as it would have yielded by being bought and consumed at point A.

yields less marginal utility when it is bought and consumed at point B than it would have yielded by being bought and consumed at point A.

yields more marginal utility when it is bought and consumed at point B than it would have yielded by being bought and consumed at point A.

Which of the following is not among the reasons why most economists support a policy of free trade?

free trade increases the total number of jobs in the economy

free trade moves workers from less-efficient to more-efficient industries

free trade causes each good or service to be produced by those producers that have comparative advantages at producing that good or service

Trick question: most economists oppose a policy of free trade.

  1. Which of the following transactions are recorded on Turkey’s capital account?

Some Turks buy American-made steel

Some Turks buy steel made exclusively in Turkey

Some Turks buy stock on the New York Stock Exchange

Some Turks import coffee from Guatemala

None of the above transactions are recorded on Turkey’s capital account

  1. Which of the following government actions are consistent with a policy of free trade?

government requires that all imported toys meet the same safety standards that are met by domestically produced toys

government imposes an 7.5% tax on both imported and domestically produced cheese

government refuses to tax purchases of solar panels regardless of where the solar panels are produced

none of the above

all of the above

  1. Government-imposed prohibitions on price increases after natural disasters – that is, legislation aimed at stopping ‘price gouging’ – are called by economists

interest rates

price ceilings

price floors

usury

none of the above

 

  1. ___________ causes the “law of one price” to operate across time – that it, it makes tomorrow’s

Price of good X closer than it would otherwise be to today’s price of good X.

a rising current-account deficit

a falling current-account deficit

mercantilism

speculation

  1. protectionism

 

  1. The graph below depicts the market for unskilled labor. According to this graph, setting the legislated minimum-wage at Wmin causes how many hours of such labor to go unhired compared to the amount that would be hired in the absence of a minimum wage?

3,000

4,000

7,000

15,000

  1. Refer again to the graph inn question #16 (above). The rise in the wage to workers employed at the minimum wages is shown by the difference between

Wmin and Ww

We and Wv

Wmin and We

Wmin and 0

  1. Refer again to the graph in question #16 (above). The minimum wage cause the quantity supplied of unskilled labor to rise by _____ compared to the quantity of unskilled labor that would be supplied at the equilibrium wage.

3,000

4,000

7,000

15,000

  1. The national minimum-wage in the united states was first imposed in 1938 (by he Fair Labor Standards Act) chiefly because.

Owners of textile mills in the northeastern part of the country, and the labor unions their, pressured (lobbied) Congress to impose a national minimum-wage.

Poorly paid workers throughout the country (but especially in the south) pleaded with Congress to impose a national minimum-wage.

Many people in Congress believed that inflation would result, and that inflation would finally rescue the U.S. economy from grips of the Great Depression

The U.S. government was forced to fo so by the League of Nations.

 

  1. if, in this real world of ours, Americans in 2018 will import $746.32 billion of goods and services from the Chinese, economists expect

that, if the Chinese trade fairly, Americans will in 2018 export about $746.32 billion of goods and services to the Chinese

That, regardless of how fairly or unfairly the Chinese trade, Americans will export in 2018 about $746.32 billion of goods and services to the Chinese

no particular relationship between the value of American imports from the Chinese and the value of American exports to the Chinese.

  1. Strictly enforced rent-control in San Francisco will likely cause rents paid by tenants – and, hence, rents earned by landlords – in those San Francisco suburbs without rent-control to

rise

fall

remain unchanged

  1. The ‘law’ of one price explains why

prices never change

the prices of all goods and services will one day converge into a single price at which everything is sold

the prices of any particular good or service at any particular time are about the same as each other

the mercantilists were correct

purchasing power dial leaves a country is destined to return to that country

  1. True or false: If in the real world of 2018 the U.S. has a current-account deficit with Spain of $36.1 billion, then the U.S. must have a capital-account surplus with Spain of $36.1 billion.

true

false

  1. Which of the following do economists predict will result from a government-imposed price floor in the market for lemons?

a decrease in the quality of lemons

an increase in the market (or marginal) value of lemons

an increase in the amount of lemons that consumers actually get

a shortage of lemons

a surplus of lemons

  1. Suppose that in 2017 the government imposed a price ceiling in the market for walnuts, and that in 2018 the demand for walnuts falls. One result would be

a bigger shortage of walnuts

a smaller shortage of walnuts

a bigger surplus of walnuts

a smaller surplus of walnuts

 

The Graph below depicts the market for beans. Government just imposed a price-ceiling on beans (at P per bushel). Use this graph to answer the following five questions.

(refer to the picture)

  1. the amount of beans that consumers will actually get with this price-ceiling in place is

Qs

Qx

Qo

Zero

  1. The quantity of beans that bean will supply with this price ceiling is

Qs

Qx

Qo

Zero

  1. The actual market value of each bushel of beans under this price ceiling is

P

Pk

Pz

Impossible to tell from the information given in the graph.

  1. Economics predict that this price ceiling will cause the quality of beans offered for sale to ________________.

Fall

Rise

Remain unchanged.

  1. The shortage of beans is shown by the line segment

0 to Qs

Qs to Qx

Qx to Qu

Qs to Qu

 

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