Economic Analysis Evaluation Questions

 Essay about Economic Research Test Concerns

BFIN 515 Economic Evaluation

Test you

Fall 2006

NAME: Answer Key


Prof. Inbong Kang


5 factors each

1 . If a 5 percent decrease in value leads to a ten percent embrace the quantity required, the price flexibility of demand is installment payments on your

2 . The opportunity cost of a selection refers to the very best valued activity sacrificed when the choice is produced.

3. The curve that shows the ideal combination of any two goods that can be created with a fixed quantity of methods is called the

production opportunities curve.

some. The Laffer curve identifies the phenomenon that if the tax charge rises above a certain level, the tax revenue may fall, certainly not rise, while people may get discouraged coming from working. your five. Demand curve slopes downward to the perfect for reasons linked to the profits effect plus the substitution result.

6. The area above the real price paid (the marketplace price) and below the require curve is called the consumer excessive.

7. Inelastic demand can easily best become represented with a relatively FLAT, STEEP demand competition.

8. When a price CEILING, FLOOR is made, problems for instance a shortage and quality degeneration develop.

on the lookout for. If the cost of gas goes up and Amy today buys fewer candy pubs because this lady has to spend even more on gas, this would best be the result of the INCOME, SUBSTITUTION effect.

10. Consider a pizzas shop within a college town. As pupils go home throughout the summer, ceteris paribus the necessity curve intended for pizzas alterations OUT, IN. Therefore, the market sense of balance price of pizzas will go UP, DOWN, the equilibrium amount demanded goes UP, DOWN, as well as the equilibrium amount supplied will go UP, DOWN. 11. Consider industry for gourmet sandwiches. Ceteris paribus, a rise in the customer's income can shift the need curve OUT, IN, resulting in a/an INCREASE, DECREASE on the market equilibrium value and a/an INCREASE, DECREASE inside the


balance quantity bought and sold.

12. A 10% embrace price leading to a 2% decrease in total expenditures shows a price firmness of LESS, GREATER than 1 .

13. Consider the market intended for tomatoes. Ceteris paribus, an undesirable weather that hampers the growth and harvesting of tomato plants in California will change the supply curve OUT, IN, causing a/an INCREASE, DECREASE in the market sense of balance price and a/an INCREASE, DECREASE in the sense of balance quantity bought and sold.

14. If perhaps suppliers do not recognize exterior costs, the market equilibrium price is too LOW, HIGH and the sense of balance quantity exchanged is too LOW, HIGH, compared to the economically efficient sense of balance.

15. Consider the choices of women aged 40 to 5 decades with (a) a college education and (b) less than a high school education. In the event one observes the share of women in the work force can be higher over the world with a school education, which of the pursuing economic ideas can finest explain the observation?

A. Opportunity price

B. Little cost

C. Marginal profit

D. Customer surplus

18. Suppose analysis subsidy system is in place to assist high school graduates by low-income people with their educational costs; thanks to this system, more high school graduates go to college. Ceteris paribus, the supply of fresh, unskilled staff on the fast-food market is going to INCREASE, DECREASE, pushing the income rates of workers appointed by pret a manger restaurants UPWARD, DOWNWARD. This will INCREASE, DECREASE the restaurant's opportunity price, causing a/an INCREASE, DECREASE in supply inside the fast-food merchandise market. Consequently, the price of pret a manger products is going UP, DOWN.

17. U. H. GDP has by $11 trillion using the following characters: Personal ingestion expenditures sama dengan $8 trillion

Gross personal investment spending = $2 trillion

Federal government spending = $2 trillion

Exports sama dengan $1 trillion

Imports sama dengan $2 trillion

18. In the event the quantity demanded decreases by a larger percentage than the price increases, the demand is said to be ELASTIC, INELASTIC.

19. Assume the price flexibility...