RUTGERS MICRO EXAM 1

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RUTGERS MICRO EXAM 1 |

QUESTIONS AND CORRECT

ANSWERS | LATEST UPDATE

Question : the incidence of a tax:

CORRECT ANSWER : refers to how much of the tax is

actually paid by consumers and producers

Question : points beyond the production-possibility

frontier

CORRECT ANSWER : are unattainable with current

resources

Question : the circular-flow diagram shows the flow of

____ and the flow of _______

CORRECT ANSWER : money; goods and services

Question : when a nations economy grows:

CORRECT ANSWER : its production possibility frontier

shifts outward

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Question : a Pigouvian subsidy is:

CORRECT ANSWER : designed to encourage activities

generating external benefits

Question : a choice is made _____ is a choice whether to

do a little more or a little less of something

CORRECT ANSWER : at the margin

Question : consumer surplus is represented by the area

_____ the demand curve and _____ the market price

CORRECT ANSWER : below; above

Question : we know that either the demand for personal

trainers or the supply of personal trainers has changed, but we don't know which has changed. however, we also know that the hourly price for services of personal trainers has increased, and the sales of these services have also increased. we can conclude that

CORRECT ANSWER : demand for services of personal

trainers has increased

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Question : producers will supply an inefficiently low

quality of a good if the government imposes:

CORRECT ANSWER : a binding price ceiling

Question : trade offs exist when:

CORRECT ANSWER : individuals can have more of

one good but only by giving up something else

Question : T or F: cigarette taxes have eliminated the wedge between the demand price for cigarettes and the supply of cigarettes

CORRECT ANSWER : false

Question : scarcity in economics means that:

CORRECT ANSWER : we do not have sufficient

resources to produce all the goods and services we want

Question : the phrase "supply has decreased" means that

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CORRECT ANSWER : the supply curve has shifted to

the left

Question : the term "autarky" refers to a country that:

CORRECT ANSWER : does not trade with other

countries

Question : France and England both produce wine and

clothing with constant opportunity costs. France will have

comparative advantage in wine production if:

CORRECT ANSWER : the opportunity cost of wine

production is lower in France than in England.

Question : we can measure total producer surplus for

good X as:

CORRECT ANSWER : the sum of the individual

producer surpluses for all buyers of X

Question : when the market is in equilibrium, the

quantity: