Which of the following cultural events likely increased the demand for the associated product? A) the banning of cigarette advertising on television B) the inclusion of Reese’s Pieces in the movie E.T. C) increased environmental awareness about the impacts of sport utility vehicles (SUVs) D) concerns over “Mad Cow” disease in beef ANSWER B […]
Consider the demand functions: A) Qd = 250 – 2P B) Qd = 300 – 3P. Which of the demand functions reflects a higher level of consumer incomes? A) A B) B C) A and B reflect the same consumer incomes. D) More information is needed. ANSWER D
Normative statements are easily debated whereas positive statements are simply rhetorical. Indicate whether the statement is true or false ANSWER False. Positive statements are not merely rhetorical. Rather, positive statements are testable statements. On the other hand, normative statements are not testable and therefore are often the most debated topics in society.
The testing of economic models facilitates A) proving a model is false. B) proving a model is true. C) proving that one person’s opinion is morally incorrect. D) proving that one society’s legal structure is better than another country’s. ANSWER A
Assuming plasma TVs are a normal good, an increase in consumer incomes will lead to A) a rightward shift of the demand curve for plasma TVs. B) a movement upward along the demand curve for plasma TVs. C) a rightward shift of the supply curve for plasma TVs. D) no change of the demand curve […]
Economic models are only useful in analyzing government policy. A) True. Individuals are irrational and therefore economic models are useless. B) False. Economic models can be used to predict individual and firm behavior. C) True. Economists only model those questions for which they are hired. D) False. Economic models are not even useful in analyzing […]
Economic models are only applicable to free-market countries. A) False. Economic models are applicable wherever there is scarcity. B) True. Economic models are applicable only when private citizens are free to make their own decisions. C) False. Economic models are applicable in all countries with more than one million people, regardless of political structure. D) […]
Governments use microeconomic models to A) predict the impact of a policy before adopting it. B) consider the tradeoff between clean air and a high level of GDP. C) determine the tradeoff between equity and efficiency. D) All of the above. ANSWER D
Individuals use microeconomic models to determine A) their optimal consumption of beer given an increase in inflation. B) their optimal amount of leisure. C) whether or not to go to college given current student loan interest rates. D) All of the above. ANSWER D
According to the Law of Demand, the demand curve for a good will A) shift leftward when the price of the good increases. B) shift rightward when the price of the good increases. C) slope downward. D) slope upward. ANSWER C
