ECO/365 Final Examination Study Guide

ECO/365 Final Examination Study Guide

This study guide prepares you for the Final Examination you complete in the last week of the course. It contains practice questions, which are related to each week’s objectives. Highlight the correct response, and then refer to the answer key at the end of this Study Guide to check your answers.

Use each week’s questions as a self-test at the start of a new week to reflect on the previous week’s concepts. When you come across concepts that you are unfamiliar with, refer to the Student Guide for that particular week.

Week One: Fundamentals of Microeconomics

Objective: Differentiate between macroeconomics and microeconomics.

1.         Macroeconomics is 

a.     the study of individual choice and how that choice is influenced by economic forces

b.     the study of the pricing policies of firms and the purchasing decisions of households

c.     the study of aggregate economic relationships

d.     an analysis of economic reality that proceeds from the parts to the whole

2.         The invisible hand theorem comes from

a.     microeconomics

b.     macroeconomics

c.     sociology

d.     political science

Objective: Analyze the effect of changes in supply and demand on the equilibrium price and quantity.

3.         The law of demand states that the quantity demanded of a good is inversely related to the price of that good. Therefore, as the price of a good goes 

a.     up, the quantity demanded goes up

b.     up, the quantity demanded goes down

c.     down, the quantity demanded goes down

d.     down, the quantity demanded stays the same

4.         Which of the following situations best demonstrates the law of demand? 

a.     Moviegoers react to an increase in the price of a ticket by seeing fewer movies per year.

b.     Moviegoers see fewer movies per year due to an overall decrease in the quality of newly released motion pictures.

c.     A drought causes a decrease in the availability of pumpkins, resulting in fewer jack-o-lanterns displayed on Halloween.

d.     An increase in the number of people writing economics textbooks results in a decrease in average textbook prices.

Objective: Determine how elasticities affect pricing and purchasing decisions.

5.         If quantity demanded does not change when the price changes, the demand 

a.     is elastic

b.     is inelastic

c.     has unit elasticity

d.     is perfectly inelastic

6.         High gasoline prices hit commuters who live far from their jobs in areas with little public transportation hard. With few alternatives, they have to bear the higher cost. Based on this information, how would you characterize demand for gasoline by these commuters?  

a.     Gasoline is a luxury good.

b.     Gasoline is an inferior good.

c.     Demand for gasoline is elastic.

d.     Demand for gasoline is inelastic.