SOPHIA ECON102 Unit 2 Milestone Latest 2022 May

ECON102 Macroeconomics

Unit 2 Milestone

1In economic terms, which of the following happened when cupcakes went from being homemade treats to being specialized gourmet goodies with multiple TV shows devoted to them and people waiting in line for them?

A change in the quantity of cupcakes demanded caused movement along the demand curve.

Changes in public tastes created a shift in the demand curve.

As the price of cupcakes rose, so did demand.

Changing tastes created a shift in the supply curve.

2Which graph below correctly illustrates a scenario in which the regular price for a set of four tires is $250, but Erin finds a store that has the tires she needs on sale for $175?

3Which of the following would NOT cause a shift in the supply curve for cheese?

The results of a medical study show that eating too much cheese can lead to premature aging.

A celebrity chef develops a new technique for making cheese that makes it easier to increase output.

The price of feed for the dairy cattle goes up significantly.

Thousands of dairy cattle come down with a mysterious illness and need to be quarantined.

4Jack is willing to pay as much as $1,300 for a new camera but is happy to find one he likes that costs $400.

Select the term below that corresponds to this situation.

Consumer surplus

Producer surplus

Equilibrium

Ceteris paribus

5If the market price of a product happens to be at equilibrium, which of the following will happen next?

Surplus will be created.

Nothing will happen since the market is already clearing.

The price will decrease and consumers will purchase more.

The price will increase and consumers will purchase less of that item.

6What economic rule is generally used in the decision of a regulator to impose a binding price constraint?

When it creates deadweight loss

When it transfers surplus from producers to consumers

When the benefit to a specific group of people is greater than deadweight loss

When consumer and producer surplus are maximized

7If an excise tax is imposed on a product, which of the following will happen?

A shortage will occur.

The supply curve will shift upward by the amount of the tax.

The price will fall until it reaches equilibrium.

The higher price will cause consumers to purchase more of the product.

8Which graph accurately represents Rachel’s consumer surplus if she is willing to pay up to $10,000 a year for college tuition, but she finds a school with a tuition of $5,000 a year?

9Which statement below about producer surplus is NOT true?

Producer surplus is basically the same as profit.

Producer surplus represents the revenue generated from sales over and above the minimum price at which sellers are willing to sell.

Producer surplus is a similar concept to consumer surplus.

When producer surplus drops to zero, firms stop producing.

10Which statement below regarding aggregate demand is true?

It represents a positive relationship between price level and RGDP.

It expresses an inverse relationship between price level and RGDP.

It represents the relationship between price level and the amount of RGDP that producers are willing to produce.

It represents the fixed amount of RGDP that can be produced.

11Select the graph that corresponds to a shift in the supply curve.

12If the graph shown here represents supply and demand for ethanol, at which of the points below would it be best to put a binding price ceiling instituted by the government?

BThere is not enough information to answer the question.

A

C

13Which graph below indicates an economic situation that is NOT sustainable?

14Select the statement below that is true of ONLY price ceilings.

The market is allowing for trade to occur between buyers and sellers

Can create a shortage of product

Are binding when they are above equilibrium

The market clears, there are no shortages or surpluses

15If demand becomes more elastic, which of the following will happen, as demonstrated by the graph shown here? 

The incidence of the subsidy on the consumer will decrease.

The incidence of the subsidy on the consumer will increase.

The incidence of the subsidy on the producer will decrease.

Both producer and consumer will receive the incidence of the subsidy in equal amounts.

16Based on the graph above, if market price is $19 per unit, what is happening at that market price?

The price is too low so suppliers want to produce less than consumers want.

Price is at equilibrium.

The price is too high, so suppliers want to produce less than consumers want.

The price is too high, so suppliers want to produce more than consumers want.

17Which of the following will cause movement along the demand curve?

The price of Brand A orange juice decreases, so the price of Brand B orange juice decreases.

The number of consumers who eat beef decreases.

The market price of a pound of beef increases from $5 to $7.

The price of salt goes down, so the price of black pepper goes up.

18Select the TRUE statement below regarding aggregate supply in the long and short run.

In the long run, changes in price will affect output.

The discovery of new resources can cause the LRAS curve to move.

If production is below the LRAS, it will eventually have to fall back.

In the short run, there is no relationship between price level and RGDP.