The ceteris paribus assumption is important in economics because
A) all empirical data are equal.
B) it would be impossible to relate the effects of changes in one variable on another without holding some variables constant.
C) economic data move very slowly over time and so they can always be considered constant.
D) models are always complex and require as many variables as possible.
Ques. 2If both buyers and sellers expect the price of a commodity to fall in the future, it is likely that the market clearing price ________ and the equilibrium quantity ________.
A) will fall, cannot be predicted
B) will rise, cannot be predicted
C) cannot be predicted, will fall
D) cannot be predicted, will rise
Ques. 3If the price of butter increases, the demand for margarine
A) will be unchanged.
B) will shift outward.
C) will shift inward.
D) will kink into an S-curve.
Ques. 4Which of the following is a factor influencing the demand for money?
A) transactions demand
B) precautionary demand
C) asset demand
D) All of the above are correct.
Ques. 5The three possible sources of government funding include
A) explicit fees, taxes, and borrowing.
B) international income, personal income taxes, and export taxes.
C) foreign aid, revenues, and implicit fees.
D) None of the above are correct.
Ques. 6In the above figure, market equilibrium at point E yields the quantity X. The quantity is the socially optimal quantity. Point E indicates that currently there is
A) a negative externality.
B) a positive externality.
C) a public good.
D) a positive externality with subsidy.
Ques. 7Suppose the population of El Campo is 120,000. Of the population 16 years and older, 50,000 are employed, 10,000 have never worked and are not looking for work, 5,000 are not working and are looking for work, and 15,000 are retired and not looking
for work. The labor force equals A) 50,000.
B) 55,000.
C) 65,000.
D) 80,000.
Ques. 8A significant increase in the price of tennis balls will most likely lead to
A) an increase in the demand for tennis racquets.
B) an inward shift in the demand for tennis balls.
C) a movement along the demand curve for tennis racquets.
D) an inward shift in the demand for tennis racquets.
Ques. 9It is not uncommon for people to say something like, If we can put someone on the moon we should be able to . . . , followed by the person's favorite project. What response can an economist make to this person?
What will be an ideal response?
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