Review Part I

Colorado experiences a record snowfall during the winter season. What impact will this have on the market for snowmobiles? 

• a. The supply curve for snowmobiles will to shift to the right and the price of snowmobiles will increase. 
• b. The supply curve for snowmobiles will to shift to the left and the price of snowmobiles will fall. 
• c. The demand curve for snowmobiles will shift to the left and the price of snowmobiles will fall. 
• d. The demand curve for snowmobiles will to shift to the right and the price of snowmobiles will rise. 

When the government funds a project that will create jobs, the funds for the project 

• a. are essentially free, because the project originated in the government sector. 
• b. will leave private sector output and employment unchanged. 
• c. will generate additional tax revenues that will pay for the project. 
• d. will have to be either taxed or borrowed from the private sector. 

If Sean sells Susan a DVD player for $30, 

• a. both Sean and Susan will gain from this transaction. 
• b. Sean will gain from the transaction, but Susan will lose. 
• c. Susan will gain from the transaction, but Sean will lose. 
• d. the well-being of both parties will be unchanged. 

Which of the following statements is correct?

• a. The human desire for goods and services is limited while the resources required for their production are unlimited. 
• b. The human desire for goods and services is virtually unlimited while the resources required for their production are limited. 
• c. Both the human desire for goods and services and the resources required for their production are virtually unlimited. 
• d. Both the human desire for goods and services and the resources required for their production are limited.

Which of the following most accurately illustrates the impact of price incentives?

• a.People usually buy products regardless of price.
• b.As the price of a product rises, suppliers will be less willing to produce that product.
• c.The price of a product is unable to bring quantity demanded and quantity supplied in balance.
• d.Consumers will adjust the amount they purchase in response to changes in prices.  

If the market price of a good is more than the opportunity cost of producing it, 

• a. the market price of the product will increase in the long run. 
• b. producers will increase supply in the long run. 
• c. resources will flow away from production of the good, causing supply to decline with the passage of time. 
• d. the situation will remain unchanged as long as supply and demand remain in balance.           

The demand curve for a good 

• a. indicates the relationship between the price of the good and the price of other goods. 
• b. indicates the quantities of the good that people are willing and able to purchase at various prices. 
• c. illustrates the quantity producers will provide at alternative prices. 
• d. is determined primarily by the cost of producing the good. 

Which of the following is a predictable, secondary effect of a sharp increase in gasoline prices? 

• a. Producers will increase the production of gas guzzling vehicles. 
• b. Producers will increase the production of fuel-efficient cars. 
• c. the termination of research on the cost-effectiveness of alternative fuels to power automobiles. 
• d. The federal government will place a quota on the number of fuel-efficient cars for sale, thus “forcing” consumers to purchase the gas guzzling vehicles. 

The secondary effects of an economic action refer to the 

•  a. best alternative that must be forgone as the result of a choice. 
• b. the unintended consequences of a change that are not immediately identifiable but are felt over time. 
• c. immediate and visible intended consequences of a change. 
• d. impact on the availability of a resource needed to produce a good or service. 

Individuals economize and respond predictably to

• a.positive incentives, but not negative incentives.
• a.negative incentives, but not positive incentives.
• a.both positive and negative incentives.
• a.neither positive or negative incentives.