Question: The American market for bananas is in equilibrium. Then, two events occur. The National Institutes of Health (NIH) publish a report emphasizing the importance of phosphorus in combating heart disease and COVID (bananas are an excellent source of phosphorus). At the same time, banana wilt is discovered in Latin America, the primary source for bananas that Americans eat. As a result, we would expect to see
Answer Options:
A. An increase in the equilibrium quantity, but an indeterminate change in the equilibrium price.
B. A decrease in the equilibrium price, but an indeterminate change in the equilibrium quantity.
C. A decrease in the equilibrium quantity, but an indeterminate change in the equilibrium price.
D. An increase in the equilibrium price, but an indeterminate change in the equilibrium quantity.
Answer: D. An increase in the equilibrium price, but an indeterminate change in the equilibrium quantity.
Question: The following equations represent the supply and demand curves for tiki statues at Jake’s Tourist Trap.
P = 80 – 0.25Q
P = 20 + 0.75Q
What would the equilibrium price and quantity be?
Answer Options:
A. PE = $95 and QE = 100
B. PE = $50 and QE = 120
C. PE = $110 and QE = 120
D. PE = $65 and QE = 60
Answer: D. PE = $65 and QE = 60
Question: An agricultural set-aside program reduces production of a crop.
Answer Options:
True
False
Answer: True
Question: A price floor placed below the equilibrium becomes a price ceiling.
Answer Options:
True
False
Answer: False
Question: Effective price floors and ceilings both reduce the number of market transactions that take place.
Answer Options:
True
False
Answer: True
Question: A relatively flat supply curve indicates that producers are not very responsive to a change in price.
Answer Options:
True
False
Answer: False
Question: A change in income will lead to a “change in demand.”
Answer Options:
True
False
Answer: True
Question: While doing some research on the labor market on Dune, Paul discovers that unemployment breaks down as follows: structural (6%), frictional (3%), and cyclical (7%). Based on this, Dune’s natural rate of unemployment is
Answer Options:
A. 7%
B. 13%
C. 6%
D. 9%
Answer: D. 9%
Question: If full employment is 3% and we are currently at 5% unemployment, Okun’s Law would suggest that we are losing
Answer Options:
A. 3 percent of the output we could have had.
B. 4 percent of the output we could have had.
C. 5 percent of the output we could have had.
D. 2 percent of the output we could have had.
Answer: B. 4 percent of the output we could have had.
Question: Causation implies correlation.
Answer Options:
True
False
Answer: True
Question: Occam’s Razor can be used to distinguish between positive and normative statements.
Answer Options:
True
False
Answer: False