ECN201 Exam 2
Fall 2015 V1
1. Which of these statements do you believe would be made by conservatives?
a. Regulations on e-cigarettes should be strengthened.
b. The estate tax should be eliminated.
c. Government should subsidize student loans because they represent the future of the country.
d. Government should impose a tax on sugar to combat the rise in obesity.
2. The class was presented with this graph and you should recall that many of you – the
majority – believed it was evidence that the drug Ansylium did help reduce the levels of
Chemical X in a person's blood. This changed quickly, however, when I introduced another
graph that had many thinking this decline was just part of a longer trend. This is an
example of the importance of which basic data question?
a.
b.
c.
d.
What: Type of variable
When: Time period
Where: Source of the data
How: Form used to present the data
3. In the market for college grads, if demand falls and supply rises, then ____
a. employment will fall and wages will rise
b. employment will rise and wages will fall
c. employment will fall and wages cannot be known in advance
d. wages will fall and employment cannot be known in advance
4. Which of the following is true based on this graph of the labor market
with a minimum wage favored by conservatives?
a. at the equilibrium wage there is a surplus of workers
b. at the minimum wage there is an equilibrium at Qs1
c. the minimum lowers employment
d. the minimum wage raises employment to Qs1
5. If the minimum wage increased the income of families who went out
and bought "stuff" in places where they paid minimum wages, how would
we show this on the graph?
1. Supply increase
2. Supply decrease
3. Demand increase
4. Demand decrease
6. Which of the following statements is consistent with this scatter graph?
a.
b.
c.
d.
Interest rates fell as inflation rates fell
Smoking death rates fall as income levels increase
Life expectancy rises as education levels rise
ECN grades are positively correlated with SAT Math scores
7. Which would be the best explanation of the price change in 1979?
a.
b.
c.
an increase in supply
an increase in supply and decrease in demand
an increase in demand
8. In the war on drugs the US government has focused its efforts on reducing
supply rather than reducing demand. If demand for the drugs is inelastic as you
see in the graph, then you can expect the US strategy to ____.
a.
b.
c.
d.
reduce output substantially and increase the price marginally
reduce output marginally and increase the price substantially
reduce output substantially and decrease the price marginally
reduce output marginally and decrease the price marginally
9. This graph contains information on tuition at public (URI…) and private
(Brown…) 4-year universities. Which of these statements is true based on this
graph?
a.
b.
c.
d.
Tuition at public institutions is substantially higher than at private institutions
Tuition in 2014 was about $10,00 for public institutions
Tuition rose at both public and private institutions, but they rose faster in
public
The ratio of private/public tuition increased in this time period
10. Who most likely wrote the article, “It’s not just about bad choices?”
a. Liberal
b. Conservative
11. What will my daughter need to invest today at 4% a year if she is to have enough to pay a tuition bill of $25,000 in 15
years? (closest approximation)
a. $12,600
b. $13,900
c. $15,100
d. $16,050
12. What will be the cost of URI's tuition in 15 years if it is growing at 7% a year and it is now $25,000? (closest
approximation)
a. $54,400
b. $63,000
c. $69,000
d. $76,200
13. We looked at a situation facing Abby – to choose a plane or train for her transportation. What would make it more likely that Abby
would travel by plane rather than by train?
a. Jet fuel costs rise
b. She gets a big raise in her hourly wage at work
c. The average speed of trains rose 10%
d. Construction on the interstate highway slows auto travel
24. In the article “When diamonds are cheap, will they dazzle,” the author describes new technologies that have allowed for very good
and cheap reproductions of diamond. If you look at the market for engagement rings in the long run when people reassess the value of
rings as commitment devices or symbols of financial success, this is likely to show up in the S&D graph as ____.
a. an inward shift in the supply curve
b. an outward shift in the supply curve
c. an inward shift in the demand curve
d. an outward shift in the demand curve
15. The university must decide on how to allocate
its budget between print ads (P) and internet ads (I).
print ads cost $250,000, while the internet ads costs
$200,000. Which of the above is the spending
possibility curve if the ad budget is $20,000,000?
a.
b.
c.
d.
16. Which or the following would be true based on this table of
elasticity of demand figures?
a.
b.
c.
d.
A recession would hurt sales of Pepsi more than Coke
A recession would hurt marijuana sales more than cigarette
sales
A recession would hurt sales of wine more than beer
A drop in the price of public transportation will lower demand
17. If a 10% tax is imposed on beer, what impact will it have on
consumption of beer? Beer consumption will ___
a. Fall by 3.8%
b. Fall by 4.6%
c. Fall by 2%
d. Fall by 2.6%
18. Which graph best represents the impact of the recent bad publicity
surrounding VW's cheating on their diesel engine's performance?
a. a
b. b
c. c
d. d
e. e
19. Which graph would best show the impact on the housing market of an
increase in lumber costs?
a. a
b. b
c. c
d. d
e. e
20. Here is a table we used to look at the cost of a year at URI for the traditional 18
year-old recent high school graduate. What is the economic cost of a year at school?
a. -41,000
b. 40,000
c. 57,000
d. 81,000
21. Which of the following could NOT be used as an example of the superiority of capitalism as an economic system?
a. The rapid growth of GDP in the US in the later 19th century
b. A dramatic shift in the shares of world GDP from the year 1 to 1000
c. The rapid rate of GDP growth for China in after 1980
d. The aerial photo of the Korean Peninsula
22. Based on this table, what share of the world’s population was in Asia in
2010? (closest approximation)
a.
b.
c.
d.
4.1%
35%
60%
82%
23. How do we explain what is happening to tuition? What we know about the market for college seats is that the costs of running
universities are rising as they build new athletic, dining, and dorm facilities, while families are being told the college degree is essential
for financial success. In a S&D graph we would show this as:
a. Demand will rise and supply will fall
b. Demand will fall and supply will fall
c. Demand will fall and supply will rise
d. Demand will rise and supply will rise
24. You cannot have missed the discussion of recessions in recent months. If I were interested in knowing how a recession will affect
demand for my product, then I would want to know the value of the ____.
a. own-price elasticity of demand
b. income elasticity of demand
c. cross-price elasticity of demand
d. inelasticity of demand
25. Here we have a picture of demand for laptop computers. Which of the following is a
description of what could be behind a move from B to A?
a.
b.
c.
d.
The increase in the supply of smart phones
A rise in the price of laptop computers
Economic growth that has increased overall consumer spending
The drop in the price of computer chips
26. These are graphs of the labor markets in the US (A) and Mexico (B) where
the suppliers of labor are people and the demanders are firms. The decision by
Mexicans to migrate north to the US would be best demonstrated by:
a. an outward shift in the labor supply curve in Mexico and an outward shift
in labor supply curve in the US
b. an outward shift in the demand curve in the US and an inward shift in
demand in West Germany
c. an inward shift in the labor supply curve in Mexico and an outward shift in
the labor supply curve in the US
d. an inward shift in the demand curve in Mexico and an inward shift in
supply in the US