Liberty University ECON 213
quiz 2 solutions answers right
How many versions: 8
different versions
Question 1 Refer to the following table to answer the questions that
follow.
Given the same quantity of resources, what is JayZ’s opportunity
cost of producing a New York pizza?
Question 2 The _________ illustrates the various combinations of
output that a society can produce if all of its resources are being used
efficiently.
Question 3 Refer to the following figures to answer the questions
that follow.
Which allocation point in the shortrun production possibilities
frontier (PPF) will lead to the most significant growth in the longrun PPF?
Question 4 Suppose that, on a particular Saturday, Mark Zuckerberg
and Bill Gates can either plant trees or spread mulch in their gardens. Their
maximum output per day is listed in the following table, along with blanks
where you can calculate the opportunity cost. At what terms of trade (relative
price ratio) could they specialize and trade with one another so that both have
more trees planted and mulch spread than they could accomplish on their own?
Question 5 Michael and Angelo are both artists who can create
sculptures or paintings each day. The following table describes their maximum
outputs per day. Use this table to answer the questions that follow.
What is Angelo’s opportunity cost of a sculpture?
Question 6 Which statement best describes the absolute advantage as
shown in the graphs?
Question 7 Ceteris paribus, if a society is producing at a point on
the production possibilities frontier (PPF), it can only increase the
production of one good by:
Question 8 Suppose Jim is a brilliant attorney who can draft
especially persuasive legal briefs. He also happens to possess some excellent
administrative skills such as typing, filing, assembling binders and notes, and
making reservations. Which best describes whether Jim should hire an
administrative assistant to help him?
Question 9 Refer to the following figure to answer the questions
that follow.
You can see that the opportunity cost of moving from point B to
point D is different from the opportunity cost of moving from point D to point
C because:
Question 10 Michael and Angelo are both artists who can create
sculptures or paint paintings each day. The following table describes their
maximum outputs per day. Does either person have an absolute advantage?
Question 11 Refer to the following figure for the questions that
follow
According to the figure, a new technology that makes it easier to
peel, core, and prepare apples will cause:
Question 12 The _________ states that the opportunity cost of
producing a good always rises as you produce more of it.
Question 13 Why do economists use models?
Question 14 The figures below depict the production possibilities
frontiers (PPFs) for two people who can allocate the same amount of time
between building wooden boats and solving crimes. Refer to these figures to
answer the questions that follow.
What is Gibbs’s opportunity cost of solving a crime?
Question 15 A society that is producing its maximum combination of
goods and using all available resources for production:
Question 16 Which of the following is a positive statement?
Question 17 You have a comparative advantage in producing a good
whenever:
Question 18 One reason that economists make assumptions when
designing models is to:
Question 19 Economic growth can be depicted on a production
possibilities frontier (PPF) as an:
Question 20 Use these production possibilities frontier (PPF)
curves, which compare the ancient production of agricultural products to art
and literature, to answer the questions that follow. Suppose the printing press
is invented. Which graph best depicts how this would affect the PPF?
Question 1 The _________ states that the opportunity cost of
producing a good always rises as you produce more of it.
Question 2 Which of the following is a positive statement?
Question 3 Which of the following is a positive statement?
Question 4 An economist’s use of experiments and realworld data to
test a theory is an example of:
Question 5 A society that is producing its maximum combination of
goods and using all available resources for production:
Question 6 When testing a paper airplane on your campus quad, which
of the following would be an exogenous factor?
Question 7 Which of the following is a positive statement?
Question 8 On the television show “MythBusters,” the hosts design
experiments, collect data, and test theories based on popular myths. This is an
example of:
Question 9 Refer to the following figure for the questions that
follow.
As you move from points N to M to L, the opportunity cost of
additional apple pie:
Question 10 The movie Saving Private Ryan is about a military
mission to find and recover a particular soldier —Private Ryan. The movie is
predominantly about how much was given up in an effort to save this one
particular soldier. The main economic theme of the movie is:
Question 11 Refer to the following figure for the questions that
follow.
According to the figure, a new technology that makes it easier to
peel, core, and prepare apples will cause:
Question 12 Refer to the following figure to answer the questions
that follow
Which of the following represents an inefficient point?
Question 13 If Elaine can produce more output from a set amount of
resources than Jerry can, you know that:
Question 14 An increase in general resources that affects the
production of both goods on a production possibilities frontier (PPF) would
cause an:
Question 15 Refer to the following figure to answer the questions
that follow.
What is the most preferred consumption point for a pieappreciating
society?
Question 16 The important act of holding all other variables
constant while examining a particular variable is known as:
Question 17 You have an absolute advantage in producing something
whenever:
Question 18 Refer to the accompanying figure to answer the questions
that follow.
The inefficient point(s) is (are):
Question 19 Michael and Angelo are both artists who can create
sculptures or paint paintings each day. The following table describes their
maximum outputs per day. Does either person have an absolute advantage?
Question 20 Car companies build wind tunnels to test the
aerodynamics and the handling capabilities of their car designs. The many
variables that can be precisely controlled inside the wind tunnel are
considered:
Question 1 The _________ states that the opportunity cost of
producing a good always rises as you produce more of it.
Question 2 Which of the following is a positive statement?
Question 3 Which of the following is a positive statement?
Question 4 An economist’s use of experiments and realworld data to
test a theory is an example of:
Question 5 A society that is producing its maximum combination of
goods and using all available resources for production:
Question 6 When testing a paper airplane on your campus quad, which
of the following would be an exogenous factor?
Question 7 Which of the following is a positive statement?
Question 8 On the television show “MythBusters,” the hosts design
experiments, collect data, and test theories based on popular myths. This is an
example of:
Question 9 Refer to the following figure for the questions that
follow.
As you move from points N to M to L, the opportunity cost of
additional apple pie:
Question 10 The movie Saving Private Ryan is about a military
mission to find and recover a particular soldier —Private Ryan. The movie is
predominantly about how much was given up in an effort to save this one
particular soldier. The main economic theme of the movie is:
Question 11 Refer to the following figure for the questions that
follow.
According to the figure, a new technology that makes it easier to
peel, core, and prepare apples will cause:
Question 12 Refer to the following figure to answer the questions
that follow.
Which of the following represents an inefficient point?
Question 13 If Elaine can produce more output from a set amount of
resources than Jerry can, you know that:
Question 14 An increase in general resources that affects the
production of both goods on a production possibilities frontier (PPF) would
cause an:
Question 15 Refer to the following figure to answer the questions
that follow.
What is the most preferred consumption point for a pieappreciating
society?
Question 16 The important act of holding all other variables
constant while examining a particular variable is known as:
Question 17 You have an absolute advantage in producing something
whenever:
Question 18 Refer to the accompanying figure to answer the questions
that follow.
The inefficient point(s) is (are):
Question 19 Michael and Angelo are both artists who can create
sculptures or paint paintings each day. The following table describes their
maximum outputs per day. Does either person have an absolute advantage?
Question 20 Car companies build wind tunnels to test the
aerodynamics and the handling capabilities of their car designs. The many
variables that can be precisely controlled inside the wind tunnel are
considered:
Question 1 Refer to the following table to answer the questions that
follow. Given the same quantity of resources, what is JayZ’s opportunity cost
of producing a New York pizza?
Question 2 The _________ illustrates the various combinations of
output that a society can produce if all of its resources are being used
efficiently.
Question 3 Refer to the following figures to answer the questions
that follow Which allocation point in the shortrun production possibilities
frontier (PPF) will lead to the most significant growth in the longrun PPF?
Question 4 Suppose that, on a particular Saturday, Mark Zuckerberg
and Bill Gates can either plant trees or spread mulch in their gardens. Their
maximum output per day is listed in the following table, along with blanks
where you can calculate the opportunity cost. At what terms of trade (relative
price ratio) could they specialize and trade with one another so that both have
more trees planted and mulch spread than they could accomplish on their own?
Question 5 Michael and Angelo are both artists who can create
sculptures or paintings each day. The following table describes their maximum
outputs per day. Use this table to answer the questions that follow. What is
Angelo’s opportunity cost of a sculpture?
Question 6 Which statement best describes the absolute advantage as
shown in the graphs?
Question 7 Ceteris paribus, if a society is producing at a point on
the production possibilities frontier (PPF), it can only increase the
production of one good by:
Question 8 Suppose Jim is a brilliant attorney who can draft
especially persuasive legal briefs. He also happens to possess some excellent
administrative skills such as typing, filing, assembling binders and notes, and
making reservations. Which best describes whether Jim should hire an
administrative assistant to help him?
Question 9 Refer to the following figure to answer the questions
that follow. You can see that the opportunity cost of moving from point B to
point D is different from the opportunity cost of moving from point D to point
C because:
Question 10 Michael and Angelo are both artists who can create
sculptures or paint paintings each day. The following table describes their
maximum outputs per day. Does either person have an absolute advantage?
Question 11 Refer to the following figure for the questions that
follow. According to the figure, a new technology that makes it easier to peel,
core, and prepare apples will cause:
Question 12 The _________ states that the opportunity cost of
producing a good always rises as you produce more of it.
Question 13 Why do economists use models?
Question 14 The figures below depict the production possibilities
frontiers (PPFs) for two people who can allocate the same amount of time
between building wooden boats and solving crimes. Refer to these figures to
answer the questions that follow. What is Gibbs’s opportunity cost of solving a
crime?
Question 15 A society that is producing its maximum combination of
goods and using all available resources for production:
Question 16 Which of the following is a positive statement?
Question 17 You have a comparative advantage in producing a good
whenever:
Question 18 One reason that economists make assumptions when
designing models is to:
Question 19 Economic growth can be depicted on a production
possibilities frontier (PPF) as an:
Question 20 Use these production possibilities frontier (PPF)
curves, which compare the ancient production of agricultural products to art
and literature, to answer the questions that follow. Suppose the printing press
is invented. Which graph best depicts how this would affect the PPF?
Question 1
Refer to the following figure for
the questions that follow.
The opportunity cost of increasing production of apple
pies from 14 to 16 pies is:
Question 2
The figures below depict the
production possibilities frontiers (PPFs) for two people who can allocate the
same amount of time between building wooden boats and solving crimes. Refer to
these figures to answer the questions that follow.
What is Gibbs’s opportunity cost of solving a crime?
Question 3
Michael and Angelo are both artists who can create
sculptures or paintings each day. The following table describes their maximum
outputs per day. Does either one have a comparative advantage?
Question 4
The opportunity cost of every investment in capital goods
is:
Question 5
Refer to the following table to
answer the questions that follow.
Given the same quantity of resources, what is Alicia
Keys’s opportunity cost of producing a New York pizza?
Question 6
Economic growth is represented on a production
possibilities frontier (PPF) by the PPF:
Question 7
The _________ illustrates the various combinations of
output that a society can produce if all of its resources are being used
efficiently.
Question 8
The accompanying figures depict the production
possibilities frontiers (PPFs) for two people who can allocate the same amount
of time between making pizzas and making stromboli. If Jim and Pam were to
specialize and trade, at what exchange rate would they find some quantity of
trade to be mutually beneficial?
Question 9
Use these production possibilities
frontier (PPF) curves, which compare the ancient production of agricultural
products to art and literature, to answer the questions that follow.
Suppose a great plague wipes out half of the society’s
population. Which of the following graphs best depicts how this would affect
the PPF?
Question 10
Consider the following scenario to
answer the questions that follow: Two friends, Rachel and Joey, enjoy baking
bread and making apple pies. Rachel takes two hours to bake 1 loaf of bread and
one hour to make 1 pie. Joey takes four hours to bake 1 loaf of bread and four
hours to make 1 pie.
What is Rachel’s opportunity cost of baking 1 loaf of
bread?
Question 11
When the opportunity cost of producing a good rises as
you produce more of it, you experience:
Question 12
When one producer can create more of a good than another
producer using the same quantity of resources, the first producer has:
Question 13
If Elaine can produce more output from a set amount of
resources than Jerry can, you know that:
Question 14
A model without any simplifying assumptions:
Question 15
When one producer has a comparative advantage in
production, she:
Question 16
Refer to the following figure for
the questions that follow.
According to the figure, a new technology that makes it easier
to peel, core, and prepare apples will cause:
Question 17
Refer to the following table to
answer the questions that follow.
Given an eighthour workday, which statement best
describes the absolute advantage evident in the table?
Question 18
Consider the production
possibilities frontier (PPF) shown in the figure below to answer the questions
that follow.
The set of efficient points is best described as:
Question 19
Refer to the following figure to
answer the questions that follow.
What is the most preferred consumption point for a
pieappreciating society?
Question 20
Which of the following is a positive statement?
Question 1 The area inside (within) the
production possibilities frontier (PPF) contains:
Question 2 Michael and Angelo are both
artists who can create sculptures or paint paintings each day. The following
table describes their maximum outputs per day. Does either person have an
absolute advantage?
Question 3 The figures below depict the
production possibilities frontiers (PPFs) for two people who can allocate the
same amount of time between building wooden boats and solving crimes. Refer to
these figures to answer the questions that follow. What is Gibbs’s opportunity cost of making a wooden boat?
Question 4 The ability of one producer to
create more of a good than another producer using the same quantity of
resources is called:
Question 5 The figures below depict the
production possibilities frontiers (PPFs) for two people who can allocate the
same amount of time between building wooden boats and solving crimes. Refer to
these figures to answer the questions that follow. Which statement best
describes absolute advantage?
Question 6 You have a comparative advantage
in producing a good whenever:
Question 7 Mrs. Abel has a comparative
advantage in producing cabbage if, in comparison to Mrs. Bee, Mrs. Abel can
grow cabbage:
Question 8 The important act of holding all
other variables constant while examining a particular variable is known as:
Question 9 An increase in general resources
that affects the production of both goods on a production possibilities
frontier (PPF) would cause an:
Question 10 Use these production
possibilities frontier (PPF) curves, which compare the ancient production of
agricultural products to art and literature, to answer the questions that
follow. Suppose the plow is invented and agricultural productivity greatly
increases. Which of the following graphs best depicts how this would affect the
PPF?
Question 11 Suppose you find a production
possibilities frontier (PPF) that is shaped like a straight line. What can you
determine about the production of the two goods?
Question 12 A town on the Gulf Coast is
battered by a massive hurricane that destroys most of its productive resources.
The community’s production possibilities frontier (PPF)
would show an:
Question 13 Think of the production
possibilities frontier (PPF) model. When society is producing the largest
possible output from its resources, it is operating:
Question 14 Which of the following is a
positive statement?
Question 15 When the opportunity cost of
producing a good rises as you produce more of it, you experience:
Question 16 Which of the following is a
normative statement?
Question 17 Refer to the following figure
to answer the questions that follow. In the figure, point E is:
Question 18 An economist’s use of experiments and realworld data to test a theory is an
example of:
Question 19 Consider the production
possibilities frontier (PPF) shown in the figure below to answer the questions
that follow. Given current resources and technology, the unattainable range is
best described as:
Question 20 Refer to the following figure
to answer the questions that follow. Which point in the corresponding figure
represents a combination of smoothies and milk shakes that society cannot
currently produce?
Question 1 Economists use the scientific
method and the tools of economics to study:
Question 2 Ceteris paribus, if a society is
producing at a point on the production possibilities frontier (PPF), it can
only increase the production of one good by:
Question 3 Goods that are produced today in
order to make other valuable goods and services in the future are called:
Question 4 Use these production
possibilities frontier (PPF) curves, which compare the ancient production of
agricultural products to art and literature, to answer the questions that
follow. Suppose the printing press is invented. Which graph best depicts how
this would affect the PPF?
Question 5 Refer to the following table to
answer the questions that follow. Given the same quantity of resources, what is
JayZ’s opportunity cost of producing a New York pizza?
Question 6 Refer to the following figure to
answer the questions that follow. Which point in the corresponding figure
represents a combination of smoothies and milk shakes that society cannot
currently produce?
Question 7 Which of the following is a
normative statement?
Question 8 Refer to the following figure
for the questions that follow. The opportunity cost of increasing production of
apple pies from 14 to 16 pies is:
Question 9 Which of the following is a
positive statement? Selected Answer: e. Increases in the minimum wage cause
unemployment. Question 10 Refer to the following figure to answer the questions
that follow. In the figure, point E is:
Question 11 The figures below depict the
production possibilities frontiers (PPFs) for two people who can allocate the
same amount of time between building wooden boats and solving crimes. Refer to
these figures to answer the questions that follow. What is DiNozzo’s opportunity cost for solving a crime?
Question 12 Greater investment in capital
goods today leads to:
Question 13 Suppose that Sheldon and
Leonard can either run errands or wash dishes. Their maximum output per hour is
listed in the following table. Given the same quantity of resources, at what
terms of trade (relative price ratio) could they specialize and trade so that
both consume outside their own production possibilities frontier (PPF)?
Question 14 For both parties to benefit
from specialization and trade, the trading parties must agree on:
Question 15 Which of the following is NOT
an assumption that economists make when developing a production possibilities
frontier (PPF)?
Question 16 Which of the following is a
positive statement?
Question 17 The figures below depict the
production possibilities frontiers (PPFs) for two people who can allocate the
same amount of time between making pizzas and making stromboli. Refer to these
figures to answer the questions that follow. What is Jim’s opportunity cost of making 1 stromboli?
Question 18 Consider the following scenario
to answer the questions that follow: Two friends, Rachel and Joey, enjoy baking
bread and making apple pies. Rachel takes two hours to bake 1 loaf of bread and
one hour to make 1 pie. Joey takes four hours to bake 1 loaf of bread and four
hours to make 1 pie. What is Rachel’s opportunity cost
of baking 1 loaf of bread?
Question 19 The _________ illustrates the
various combinations of output that a society can produce if all of its
resources are being used efficiently.
Question 20 A graph that shows the maximum
attainable combinations of two goods when society efficiently uses its
productive resources is called:
Question 1 When one producer has a
comparative advantage in production, she:
Question 2 The process of using current
resources to create or buy new capital is called:
Question 3 A positive statement:
Question 4 An increase in general resources
that affects the production of both goods on a production possibilities
frontier (PPF) would cause an:
Question 5 Refer to the following table to
answer the questions that follow. Given the same quantity of resources, what is
JayZ’s opportunity cost of producing a New York pizza?
Question 6 Refer to the following figure
for the questions that follow. According to the figure, a new technology that
makes it easier to peel, core, and prepare apples will cause:
Question 7 To determine which of two
producers has a comparative advantage, you would need to know their:
Question 8 Consider the following scenario.
Two friends, Rachel and Joey, enjoy baking bread and making apple pies. Rachel
takes two hours to bake one loaf of bread and one hour to make one pie. Joey
takes four hours to bake one loaf of bread and four hours to make one pie. If
Rachel and Joey decide to specialize in order to maximize their combined
output, who should produce what?
Question 9 Refer to the accompanying figure
to answer the questions that follow. Unemployed resources are evident at:
Question 10 Refer to the following table to
answer the questions that follow. Suppose that Alicia Keys and JayZ could each
make either New York–style pizza or Philly
cheesesteaks. Given an eighthour workday, which of the following would permit
them to consume outside their respective production possibilities frontiers
(PPFs)?
Question 11 When the opportunity cost of
producing a good rises as you produce more of it, you experience:
Question 12 The figures below depict the
production possibilities frontiers (PPFs) for two people who can allocate the
same amount of time between making pizzas and making stromboli. Refer to these
figures to answer the questions that follow. What is Jim’s opportunity cost of making 1 stromboli?
Question 13 Ceteris paribus means:
Question 14 The ability of one producer to
create more of a good than another producer using the same quantity of
resources is called:
Question 15 Which of the following is a
positive statement?
Question 16 Refer to the following table to
answer the questions that follow. Given an eighthour workday, and to
experience gains from trade,
Question 17 Consider the production possibilities
frontier (PPF) shown in the figure below to answer the questions that follow.
Given current resources and technology, the attainable range is best described
as:
Question 18 Which of the following is a
normative statement?
Question 19 Consider the following scenario
to answer the questions that follow: Two friends, Rachel and Joey, enjoy baking
bread and making apple pies. Rachel takes two hours to bake 1 loaf of bread and
one hour to make 1 pie. Joey takes four hours to bake 1 loaf of bread and four
hours to make 1 pie. What is Joey’s opportunity cost of
baking 1 pie?
Question 20 Suppose you are studying a
production possibilities frontier (PPF) that has a bowedout shape relative to
the origin. What causes this shape?
The process of using current
resources to create or buy new capital is called
The movie Saving
Private Ryan is about a military mission to find and recover a
particular soldier—Private Ryan. The movie is predominantly about how much was
given up in an effort to save this one particular soldier. The main economic
theme of the movie is
An increase in the labor force
would be reflected in a society’s production possibilities frontier (PPF) by an
Refer to the following figure
for the questions that follow
According to the figure, a new technology that makes it easier to peel, core,
and prepare apples will cause.
The ability of one producer to
produce a good at a lower opportunity cost than another producer is called
The figures below depict the
production possibilities frontiers (PPFs) for two people who can allocate the
same amount of time between building wooden boats and solving crimes. Refer to
these figures to answer the questions that follow. Which statement best describes absolute advantage?
Refer to the following table to
answer the questions that follow. Given
the same quantity of resources, what is Alicia Keys’s opportunity cost of
producing a New York pizza?
If Jim can sell paper at a
lower opportunity cost than Dwight can, then
Greater investment in capital goods
today leads to
Consider the following scenario
to answer the questions that follow: Two friends, Rachel and Joey, enjoy baking
bread and making apple pies. Rachel takes two hours to bake 1 loaf of bread and
one hour to make 1 pie. Joey takes four hours to bake 1 loaf of bread and four
hours to make 1 pie. What
is Rachel’s opportunity cost of baking 1 loaf of bread?
One reason that economists make
assumptions when designing models is to
Suppose you are studying a
production possibilities frontier (PPF) that has a bowed-out shape relative to
the origin. What causes this shape?
Ceteris paribus means
The important act of holding
all other variables constant while examining a particular variable is known as:
Variables that are controlled
for in a model are called
Refer to the following figures to
answer the questions that follow. Which allocation
point in the short-run production possibilities frontier (PPF) will lead to the
most significant growth in the long-run PPF?
You have a comparative
advantage in producing a good whenever
The figures below depict the
production possibilities frontiers (PPFs) for two people who can allocate the
same amount of time between building wooden boats and solving crimes. Refer to
these figures to answer the questions that follow. What is Gibbs’s opportunity cost of solving a crime?
When testing a paper airplane
on your campus quad, which of the following would be an exogenous factor?
Consider the following scenario
to answer the questions that follow: Two friends, Rachel and Joey, enjoy baking
bread and making apple pies. Rachel takes two hours to bake 1 loaf of bread and
one hour to make 1 pie. Joey takes four hours to bake 1 loaf of bread and four
hours to make 1 pie. What
is Joey’s opportunity cost of baking 1 pie?
When the price is
the equilibrium price,
we would expect there to be a causing the market to put pressure on the price until it went back to the equilibrium price.
Suppose that Dwight and Jim can either make salads or grill steaks. Their maximum output per hour is listed in the following
table. Given the same quantity of resources, at what terms of trade (relative price ratio) could they specialize and trade so that both consume outside their own production possibilities frontier (PPF)?
What would you expect to happen to the price of bagels if the price
of flour decreased and the price of cream cheese decreased?
To determine which of two producers has a comparative advantage, you would need to know their
The area inside
(within) the production possibilities frontier (PPF) contains
Economics
professors are well aware of the importance of incentives. Which of the following
situations shows the use of a
positive incentive
Which one of the following
pairs of goods is likely to have a
negative cross-price elasticity of demand
The accompanying figures depict the production possibilities frontiers (PPFs)
for two people who can allocate the same amount of
time between making
pizzas and making
stromboli. If Jim and
Pam were to specialize and trade, at what exchange
rate would they find some quantity of trade to be mutually
beneficial?
Use the following
table to answer the questions
that follow. What is the surplus
when the price floor is $0.75 in the market for
public transportation?
Why are binding
price ceiling laws passed?
The figures below
depict the production possibilities frontiers (PPFs)
for two people who can allocate
the same amount
of time between building
wooden boats and solving crimes.
Refer to these figures to answer the questions that follow. Which statement best describes absolute
advantage?
Which of the following will cause a movement along a good’s supply curve?
What would happen
in the market for SUVs if the government
started to subsidize the production of SUVs that get very few miles per
gallon and the price of gasoline went up?
If the percentage change in the quantity consumed
of pizza is 8%
and the percentage change in income is 2%, what is the income
elasticity of demand for pizza?
If the price and quantity
for a normal good, Good X, is $8 and 6
units at the original equilibrium, what is one possibility for the new equilibrium of Good X if we see income increase and all other factors stay constant?
Chris runs a sporting goods store and knows that the price elasticity of demand for his sports clothing
line is –1.5. He is planning to lower
prices by 10%. The percentage change in quantity
demanded will be
If the cross-price elasticity of demand for two goods is zero, the two goods are
The price of peanut butter increases from $2.50 to $3.00 and the quantity of jelly demanded falls from 30 jars to 24 jars. Calculate
the cross-price elasticity of demand
During the winter
months, many elderly
persons leave their homes
in northern New York and travel south to Florida
or Arizona. What would you expect to happen to the equilibrium price and quantity of items most used by the elderly in northern New York?
When Heavenly
Cookies prices its sugar cookies at $1.00, they sell
75 cookies. They lowered
the price to $0.50 and sold 200 cookies. Their total revenue because the price elasticity of demand for sugar
cookies is
For a market
to be competitive
If a good is subject
to a binding price ceiling
and you purchase it on the black market,
what do you expect to happen to the price over time?
Use these production possibilities frontier (PPF) curves,
which compare the ancient
production of agricultural products to art and
literature, to answer the questions
that follow. Suppose a great plague wipes out half of the society’s
population. Which of the following graphs
best depicts how this would affect
the PPF?
In the first few months
of 2012, the price of gasoline increased
by approximately 15%. Because of this increase,
we would expect the curve in the market for hybrid
cars to
An increase in general
resources that affects
the production of both
goods on a production possibilities frontier (PPF) would
cause an
Use the following
scenario to answer the questions
that follow: Dairy Dream, a local
ice cream store,
finds that it sells out of ice cream sandwiches at the current
price of $1. It raises
the price to increase its revenues and finds that no one buys ice cream
sandwiches anymore.
While there are many pizza places in Curtisville, Pappy’s Pizza is
known for its distinctive deep-dish
pizza with an almost pie-like crust, whereas
Momma’s Pizza Pizzazz
is comparable to many
other restaurants. Pappy’s is likely to find that it can prices to increase total revenue,
and Mommas must prices
to increase total revenue.
The scientific method
and the tools of economics
are useful in examining
A positive statement
When the price of a basketball is $15, the quantity
supplied is 5,000. When the price increases to $20, the quantity supplied
is 10,000. The price elasticity of supply is
Which of the following will cause the demand curve for burgers
to shift the right?
You have an absolute advantage
in producing something
whenever
From the accompanying table, we would
expect that, for recreational skaters, the price elasticity of demand for ice skates between $10 and $20 to be than
that of hockey
players because
Refer to the accompanying figure.
What event would cause the supply curve to shift out?
The production possibilities frontier (PPF) shows
With no barriers to entry or exit and when firms in a market are operating at a loss,
you can expect other firms to exit, causing the curve to shift to the
and making the equilibrium price
and the equilibrium quantity
Google has started
a project to scan all books and make those that
are not copyrighted available to people free of charge.
Why is it important that only books without
a copyright are available?
According
to economists, one reason few professional athletes
have PhD’s is that the
What will happen
in a market where a binding price floor is removed?
What would you expect to happen to the price and quantity
of Pepsi if the price of Coke increases
and Pepsi develops
a new technology that makes its production process
more efficient?
Which statement best describes the absolute advantage
as shown in the graphs?
The figures below
depict the production possibilities frontiers (PPFs)
for two people who can allocate
the same amount
of time between building
wooden boats and solving crimes.
Refer to these figures to answer the questions that follow. What is DiNozzo’s opportunity cost for solving a crime?
Ceteris paribus, if a society
is producing at a point on the production possibilities frontier (PPF),
it can only increase the production of one good by
In the accompanying table, assume that the price of ice skates
increases from $10 to $20 per pair. Using the midpoint method,
calculate the price elasticity of demand for ice skates
for hockey players.
Refer to the following
figure for the questions that follow.
As you move from points
N to M to L, the opportunity cost of additional apple pie
Assume that the market for pencils is in equilibrium and that demand is very price elastic. The popularity of digital tablets and electronic pens increases
and demand for pencils
declines. The equilibrium change in quantity demanded
is
Refer to the accompanying figure.
When the price changes
from P1 to P2, we will see a(n)
Use the following
scenario to answer the questions
that follow. Dairy Dream, a local ice cream store,
finds that it sells out of
ice cream sandwiches at the current price of $1. It raises the price to increase its revenues and finds that no one buys ice cream sandwiches anymore.
The owners raised the price because they believed that the
demand for ice cream sandwiches is
Spam is considered an inferior good.
What would happen to the equilibrium price and quantity
of Spam if income decreased and more firms started producing
Spam?
Refer to the accompanying table to answer the questions that follow. The price of erasers increases
from $0.50 to $1.00 per eraser. Use the midpoint
method to calculate
the cross-price elasticity of demand between
pencils and erasers.
Question 1
Economics is the study of:
Select one:
a. markets
b. How to make workers more productive and
firms more profitable.
c. How to allocate resources to satisfy
wants and needs.
d. How to make money.
e. Capitalism
Question 2
An example of a direct positive incentive
is:
Select one:
a. Threatening to fire those who do not
perform well.
b. Unemployment insurance for those who are
laid off.
c. A prison sentence for committing a
crime.
d. Providing a workplace safety program.
e. Providing a commission for sales.
Question 3
A health insurance company may offer its
policyholders a discount on their premiums if they prove that
they have stopped smoking. What type of
incentive is the health insurance company offering?
Select one:
a. an unintended incentive.
b. A neutral incentive.
c. complementary incentive.
d. A direct incentive.
e. An indirect incentive.
Question 4
The cost of a trade-off is known as the
________ of that decision.
Select one:
a. opportunity cost
b. marginal cost
c. net cost
d. comparative cost
e. explicit cost
Question 5
Instead of taking an economics course, you
could have taken a history course that meets at the exact
same time. The total cost of taking the
economics course would be:
Select one:
a. the fact that you could not take the
history course at the same time.
b. the tuition cost, the cost of the
textbook and notebook, and the fact that you could not take the history
course at the same time.
c. the tuition cost for the economics
course plus the price of the textbook and a notebook for the
economics course.
d. the price of the textbook and a notebook
for the economics course.
e. the tuition cost for the economics
course.
Feedback
Question 6
The opportunity cost of working rather than
going to school is:
Select one:
a. zero because the person is earning an
income by working.
b. the cost of clothing and transportation.
c. the higher wages that come with
additional education.
d. the cost of food and housing.
e. the annual wages earned by working.
Question 7
On the television show “MythBusters,” the
hosts design experiments, collect data, and test theories based
on popular myths. This is an example of:
Select one:
a. the scientific method as used in
economics.
b. economic growth.
c. absolute advantage.
d. gains from trade.
e. production possibilities.
Question 8
The area inside (within) the production
possibilities frontier (PPF) contains:
Select one:
a. normative points.
b. inefficient points.
c. efficient points.
d. positive points.
e. high opportunity cost points.
Question 9
How will a reduction in the national
unemployment rate affect a nation’s production possibilities frontier
(PPF)?
Select one:
a. It will move society to a point farther
inside the PPF.
b. It will cause the PPF to shift inward.
c. It will move society outward to a point
closer to or on the PPF.
d. It will push society to a point outside
its PPF.
e. It will cause the PPF to shift outward.
Question 12
The movie Saving Private Ryan is
about a military mission to find and recover a particular soldier—
Private Ryan. The movie is predominantly
about how much was given up in an effort to save this one
particular soldier. The main economic theme
of the movie is:
Select one:
a. opportunity cost.
b. comparative advantage.
c. positive advantage.
d. normative analysis.
e. absolute advantage.
Question 15
Consider the following scenario to answer
the questions that follow: Two friends, Rachel and Joey, enjoy
baking bread and making apple pies. Rachel
takes two hours to bake 1 loaf of bread and one hour to
make 1 pie. Joey takes four hours to bake 1
loaf of bread and four hours to make 1 pie.
What is Joey’s opportunity cost of baking 1
loaf of bread?
Select one:
a. 1 loaf of bread
b. 1/2 loaf of bread.
c. 1 pie
d. 2 pies
e. 4 pies
Question 16
Consider the following scenario to answer
the questions that follow: Two friends, Rachel and Joey, enjoy
baking bread and making apple pies. Rachel
takes two hours to bake 1 loaf of bread and one hour to
make 1 pie. Joey takes four hours to bake 1 loaf of bread and four hours
to make 1 pie.
What is Rachel’s opportunity cost of baking
1 pie?
Select one:
a. 1 pie
b. 2 pies
c. 2 loaves of bread.
d. 1 loaf of bread
e. 1/2 loaf of bread
Question 17
The ability of one producer to create more
of a good than another producer using the same quantity of
resources is called:
Select one:
a. a positive-sum game.
b. absolute advantage.
c. gains from trade
d. the law of increasing relative cost.
e. comparative advantage.
Question 18
The ability of one producer to produce a
good at a lower opportunity cost than another producer is called:
Select one:
a. absolute advantage.
b. a zero-sum game.
c. comparative advantage.
d. a normative statement.
e. the law of increasing relative cost.
Question 19
For both parties to benefit from
specialization and trade, the trading parties must agree on:
Select one:
a. the appropriate level of investment for
the future.
b. the source of comparative advantage.
c. who has the absolute advantage in
production.
d. a plan not to trade with other parties.
e. a price somewhere between their
opportunity costs of production.
Question 20
Why do economists use models?
Select one:
a. Models allow us to control exogenous
factors.
b. Models allow us to study a simplified version
of a complex world.
c. Models make the world harder to
understand.
d. Models allow us to examine more factors
than what actually exists in our world.
e. Models are used to add complexity to a
simple world.
The basic goal of economics is:
The patent system acts as:
Economics is concerned with the trade-offs
that emerge because of scarcity. The term "trade-offs" refers to:
An opportunity cost is the:
How are changes in opportunity cost
related to decision-making behavior?
Why would economists find it surprising if
the CEP of a large company does his or her own housework?
Economists believe that optimal decisions
are made up to the point where:
One way to promote a new business is to
offer free items. If you were to open a new restaurant and offer free food, you
likely would have a line out the door. How would economists understand the
behavior of those standing in line?
Many stores are open 24 hours a day. When
store managers make the decision to stay open 24 hours, it must be the case
that:
More oranges are grown in Florida than
North Dakota because Florida's warm climate gives it a ___________ in growing
organges
Which of the following is a normative
statement?
a) you should wear a helmet when cycling
b) the sky is blue
c) a bicycle has two wheels
d) a unicycle has five wheels
e) electricity follows the path of least resistance
a) you should wear a helmet when cycling
b) the sky is blue
c) a bicycle has two wheels
d) a unicycle has five wheels
e) electricity follows the path of least resistance
The area inside (within) the production
possibilities frontier (PPF) contains:
Think of the production possibilities
frontier (PPF) model. When society is producing the largest possible output
from its resources, it is operating:
a) inefficiently
b) efficiently
c) with no opportunity cost
d) inside (within) the PPF
e) beyond its opportunity cost
a) inefficiently
b) efficiently
c) with no opportunity cost
d) inside (within) the PPF
e) beyond its opportunity cost
Suppose you find a production
possibilities frontier (PPF) that is shaped like a straight-line. What can you
determine about the production of the two goods?
A monopoly:
Imperfect markets:
a) do not exist in democracies
b) always result in supply exceeding demand
c) always result in demand exceeding supply
d) occur when the buyer or seller has an influence on the price
e) can't occur if there are many buyers and many sellers
a) do not exist in democracies
b) always result in supply exceeding demand
c) always result in demand exceeding supply
d) occur when the buyer or seller has an influence on the price
e) can't occur if there are many buyers and many sellers
Two goods that are used together are
called:
When the price of ground beef increases
and all else is held constant, we would expect the supply of hamburgers to
________, causing the price to ________
If the number of buyers in a market
increases from 50 to 100, you would expect the equilibrium price to ________
and the equilibrium quantity to _________, holding all else constant
Why does surplus exist under a binding price
floor?
Suppose you live in a community with no
price controls. What do you expect will happen if your town borders a community
where there is a binding price ceiling on most products?
Suppose you live in a community with no
price controls. What do you expect to happen if your town borders a community
where there is a binding price floor on most products?
What will happen in a market where a
nonbinding price floor is removed?
A tax on consumers of a good would shift
the _______ curve down and cause the price paid by consumers to ________
The net cost to society from the
imposition of a tax is also known as:
If a tax is imposed on a good with a
perfectly inelastic demand, the burden of the tax will be borne:
a) by both consumers and producers equally
b) by consumers alone
c) by producers alone
d) mostly by consumers but partially by producers
e) mostly y producers but partially by consumers
a) by both consumers and producers equally
b) by consumers alone
c) by producers alone
d) mostly by consumers but partially by producers
e) mostly y producers but partially by consumers
To evaluate the change in average living
standards over time, it is best to use:
When John buys new tires for his car it
________, and when Ford buys tires to put on new cars it _________
Net exports can be defined as:
Real GDP is equal to:
Real GDP is GDP measured in:
a) current prices
b) base year prices
c) average prices
d) marginal prices
e) nominal prices
a) current prices
b) base year prices
c) average prices
d) marginal prices
e) nominal prices
Real GDP can be calculated as:
GDP increases if prices decrease by
_______ and quantities produced increase by ________
Between two given years, if real GDP and
nominal GDP grow at the same rate, then:
If real GDP grew by 2% and the inflation
rate was 2%, then nominal GDP grew by:
Real GDP would be better measure of
economic well-being if it included the value of:
Official unemployment is identified as
when:
Jamal works in a factory in Lake Zurich,
Illinois, assembling toy trains. The factory owner updates the current equipment
and installs new robots that can do Jamal's job. As a result, Jamal is laid off
and is now unemployed. Jamal would be considered:
Unemployment caused by delays in matching
available jobs and workers is called:
Government policies such as unemployment
compensation and government regulations related to hiring and firing employees
results in:
An unemployment rate that is above the
natural rate indicates _________, and we say that economy is producing at
___________
A member of the labor force is defined as:
The unemployment rate is:
Discouraged workers are defined as:
One shortcoming of the official
unemployment rate is that:
Inflation occurs when:
Typically the largest percentage category
in the consumer price index (CPI) is:
If 51% of all goods in the consumer price
index (CPI) became more expensive and 49% became chapter:
How do you convert a price of a good from
an earlier time into today's price?
Typically if real wages fall, the quantity
demand of labor rises. If workers agree to 3% wage increases for a four-year
period and inflation is more than 3% then, based on this information alone:
A price confusion problem is best
described as:
The notion of the loanable funds market
is:
Borrowers in the loanable funds market
consist of:
The demand for loanable funds is:
Gross domestic product requires:
A bond is an instrument that allows the
bearer to earn interest. The bearer would be best described as:
If interest rates rise:
If real wages were higher than nominal
rates in 2009, the implication is that:
Typically a college degree is "worth
it", but it requires:
a) high time preferences
b) low time preferences
c) smoothed consumption
d) variable correlated consumption
e) the supply of loanable funds to be large
a) high time preferences
b) low time preferences
c) smoothed consumption
d) variable correlated consumption
e) the supply of loanable funds to be large
One would correctly argue that higher capital
productivity:
The demand for loanable funds decreases
while the supply simultaneously increases. This would cause:
Firms that help to channel funds from
savers to borrowers are known as:
The sellers (or lenders) in financial
markets are:
The two different paths through the
loanable funds market are:
A security is:
A bond is:
The maturity date of a bond is:
The par value of a bond is:
Bonds contain three important pieces of
information. These three pieces are:
The interest rate of a bond is equal to:
The risk that the borrower will not pay
the face value of a bond at the maturity date is called the:
All else equal, the greater the default
risk:
Typical individuals have difficulty
judging the default risk of any one company, let alone the thousands of firms
that sell bonds in a developed economy. To address this problem:
Stocks are:
A shareholder who owns more than 50% of
the shares of the firm is called the:
A majority shareholder:
Which of the following is a secondary
stock market?
a) North American Stock Exchange
b) The S&P 500
c) New York Stock Exchange
d) The Dow Jones Industrial Average
e) The United States Stock Exchange
a) North American Stock Exchange
b) The S&P 500
c) New York Stock Exchange
d) The Dow Jones Industrial Average
e) The United States Stock Exchange
The two largest foreign holders of U.S.
Treasury securities are:
A home mortgage loan is:
Economic growth is defined as:
Real per capita gross domestic product
(GDP) is defined as:
Average world income began to increase
rapidly during:
Which of the following are the three major
categories of resources?
All countries have some resources and
technology available to them. The ones that grow faster are the ones that:
Which of the following is an example of an
institution that promotes economic growth?
a) private property
b) bartering as a means of trade
c) high barriers to international trade
d) constant war and conflict
e) collective property ownership
a) private property
b) bartering as a means of trade
c) high barriers to international trade
d) constant war and conflict
e) collective property ownership
According to modern growth theory, the key
to economic growth is:
Economic growth is determined by:
A restaurant's production function would
show the relationship between:
If capital is increasing, then:
a) the production function will shift upward
b) the production function will shift downward
c) there is an upward movement along the production function
d) there is a downward movement along the production function
e) there is an upward shift of the production function and an upward movement along the production function
a) the production function will shift upward
b) the production function will shift downward
c) there is an upward movement along the production function
d) there is a downward movement along the production function
e) there is an upward shift of the production function and an upward movement along the production function
If net investment is positive then:
If a country experiences an epidemic that
reduces human capital, then:
Consider a country that improves its
educational system such that a greater percentage of workers become college
educated. It is reasonable to expect:
If more natural resources are discovered,
then:
There are diminishing returns to:
According to the Solow growth model,
growth will eventually:
Modern growth theory views technological
innovation as __________, whereas Solow growth theory views technological
change as ________
Consider a country that suffered through
five years of civil war, but now has a stable government that has the support
of the majority of the people. In this country, we are likely to observe:
A type of policy that would be advocated
by modern growth theory would be to:
The term ________ is a popular way to
describe the recession-expansion pattern followed by the economy
Aggregate demand is determined by adding
up the spending of:
Consider the wealth effect, interest rate
effect, and international trade effect. Of these, the ________ effect is the
most significant and the _______ effects is the least significant
The aggregate demand curve slopes downward
because:
An increase in the price level that
reduces the real value of wealth is likely to _______ consumption and _______
saving
Suppose that an increase in the price
level reduces the value of real wealth, which then causes a reduction in
consumption but no change in saving. In this case:
A rise in the price level that leads to a
change in the interest rate, and therefore to a change in the quantity of
aggregate demand, will cause:
If people expect higher income in the
future, then spending today ___________ and aggregate demand _________
When foreign income rises, U.S. aggregate:
The long run is best defined as a period
of time such that:
When prices in the economy have not fully
adjusted, we say that:
When inflation pushes up prices in the
economy, input prices are _________ and revenues _________ in the short run
Suppose new drilling techniques increase
the world oil supply. In the long run, output will ______ and the price level
will _______
An increase in the general price level
will lead to:
An upward movement along the short-run
aggregate supply
If inflation turns out to be higher than
expected, this will:
The economy is in short-run equilibrium
when:
An economist's use of experiments and
real-world data to test a theory is an example of:
a. the scientific method in economics.
b. macroeconomics.
c. economic growth.
d. normative analysis.
e. comparative advantage.
a. the scientific method in economics.
b. macroeconomics.
c. economic growth.
d. normative analysis.
e. comparative advantage.
Economists use the scientific method and
the tools of economics to study:
a. only the decisions of individuals.
b. only the decisions of business firms.
c. only economic growth and gross domestic product (GDP).
d. only the production possibilities curve.
e. anything around them; the world is the economist's laboratory.
a. only the decisions of individuals.
b. only the decisions of business firms.
c. only economic growth and gross domestic product (GDP).
d. only the production possibilities curve.
e. anything around them; the world is the economist's laboratory.
A positive statement:
a. is a claim that can be tested.
b. is a statement about what ought to be.
c. is a declaration of opinion.
d. is a claim that cannot be tested.
e. cannot be evaluated using the scientific method.
a. is a claim that can be tested.
b. is a statement about what ought to be.
c. is a declaration of opinion.
d. is a claim that cannot be tested.
e. cannot be evaluated using the scientific method.
Which of the following is a normative
statement?
a. The sky is blue.
b. The sky is green with pink polka dots.
c. Points on the production possibilities frontier (PPF) are efficient.
d. Points outside the PPF are unattainable with current resources.
e. We should strive to push the PPF outward.
a. The sky is blue.
b. The sky is green with pink polka dots.
c. Points on the production possibilities frontier (PPF) are efficient.
d. Points outside the PPF are unattainable with current resources.
e. We should strive to push the PPF outward.
Which of the following is a normative
statement?
a. You should wear a helmet when cycling.
b. The sky is blue.
c. A bicycle has two wheels.
d. A unicycle has five wheels.
e. Electricity follows the path of least resistance.
a. You should wear a helmet when cycling.
b. The sky is blue.
c. A bicycle has two wheels.
d. A unicycle has five wheels.
e. Electricity follows the path of least resistance.
Which of the following is a positive
statement?
a. Winters in Arkansas are too cold.
b. Everyone should work in a bank to understand the true value of money.
c. Harvard University is the top education institution in the country.
d. On average, people save 15% when they switch to GEICO.
e. Everyone ought to have a life insurance policy.
a. Winters in Arkansas are too cold.
b. Everyone should work in a bank to understand the true value of money.
c. Harvard University is the top education institution in the country.
d. On average, people save 15% when they switch to GEICO.
e. Everyone ought to have a life insurance policy.
The important act of holding all other
variables constant while examining a particular variable is known as:
a. endogeneity.
b. a normative statement.
c. a positive statement.
d. macroeconomics.
e. ceteris paribus.
a. endogeneity.
b. a normative statement.
c. a positive statement.
d. macroeconomics.
e. ceteris paribus.
Which of the following is necessary to
build a good economic model?
a. normative statements
b. assumptions
c. opinions
d. complex math
e. realism
a. normative statements
b. assumptions
c. opinions
d. complex math
e. realism
Why do economists use models?
a. Models are used to add complexity to a simple world.
b. Models allow us to study a simplified version of a complex world.
c. Models allow us to control exogenous factors.
d. Models make the world harder to understand.
e. Models allow us to examine more factors than what actually exists in our world.
a. Models are used to add complexity to a simple world.
b. Models allow us to study a simplified version of a complex world.
c. Models allow us to control exogenous factors.
d. Models make the world harder to understand.
e. Models allow us to examine more factors than what actually exists in our world.
Variables that are controlled for in a
model are called:
a. normative statements.
b. positive statements.
c. endogenous factors.
d. exogenous factors.
e. the scientific method.
a. normative statements.
b. positive statements.
c. endogenous factors.
d. exogenous factors.
e. the scientific method.
When testing a paper airplane on your
campus quad, which of the following would be an exogenous factor?
a. the weight of the paper used in making the plane
b. the ratio of wingspan to plane length
c. the height of the body of the plane
d. the level of wind encountered
e. the number of folds in the wings
a. the weight of the paper used in making the plane
b. the ratio of wingspan to plane length
c. the height of the body of the plane
d. the level of wind encountered
e. the number of folds in the wings
Car companies build wind tunnels to test
the aerodynamics and the handling capabilities of their car designs. The many
variables that can be precisely controlled inside the wind tunnel are
considered:
a. normative factors.
b. positive factors.
c. comparative factors.
d. endogenous factors.
e. exogenous factors.
a. normative factors.
b. positive factors.
c. comparative factors.
d. endogenous factors.
e. exogenous factors.
A model without any simplifying
assumptions:
a. is highly complex and likely unworkable.
b. excludes important predictive variables.
c. is very helpful for solving tough, real-world problems.
d. does not look like the real-world problem it is meant to address.
e. provides simplified solutions to complex problems.
a. is highly complex and likely unworkable.
b. excludes important predictive variables.
c. is very helpful for solving tough, real-world problems.
d. does not look like the real-world problem it is meant to address.
e. provides simplified solutions to complex problems.
A graph that shows the maximum attainable
combinations of two goods when society efficiently uses its productive
resources is called:
a. a production possibilities frontier (PPF).
b. a supply curve.
c. opportunity cost.
d. a consumer demand curve.
e. absolute advantage.
a. a production possibilities frontier (PPF).
b. a supply curve.
c. opportunity cost.
d. a consumer demand curve.
e. absolute advantage.
The _________ illustrates the various
combinations of output that a society can produce if all of its resources are
being used efficiently.
a. concept of absolute advantage
b. law of positive statements
c. law of demand
d. production possibilities frontier (PPF)
e. principle of comparative advantage
a. concept of absolute advantage
b. law of positive statements
c. law of demand
d. production possibilities frontier (PPF)
e. principle of comparative advantage
Ceteris paribus, if a society is producing
at a point on the production possibilities frontier (PPF), it can only increase
the production of one good by:
a. also increasing the production of the second good.
b. decreasing the production of the second good.
c. increasing the price of the second good.
d. decreasing the price of the second good.
e. reducing the resources available for production.
a. also increasing the production of the second good.
b. decreasing the production of the second good.
c. increasing the price of the second good.
d. decreasing the price of the second good.
e. reducing the resources available for production.
On a production possibilities frontier
(PPF) that shows the trade-off between consumer goods and capital goods given a
fixed amount of labor, unemployment is illustrated by:
a. movement from a point within the frontier to a point on the frontier.
b. a point outside the frontier.
c. a point within the frontier.
d. movement from a point on the frontier to another point on the frontier.
e. a point on the frontier.
a. movement from a point within the frontier to a point on the frontier.
b. a point outside the frontier.
c. a point within the frontier.
d. movement from a point on the frontier to another point on the frontier.
e. a point on the frontier.
Think of the production possibilities
frontier (PPF) model. When society is producing the largest possible output
from its resources, it is operating:
a. inefficiently.
b. efficiently.
c. with no opportunity cost.
d. inside (within) the PPF.
e. beyond its opportunity cost.
a. inefficiently.
b. efficiently.
c. with no opportunity cost.
d. inside (within) the PPF.
e. beyond its opportunity cost.
When the opportunity cost of producing a
good rises as you produce more of it, you experience:
a. normative economics.
b. increasing relative costs.
c. downward-sloping demand.
d. inferior goods.
e. increasing marginal utility.
a. normative economics.
b. increasing relative costs.
c. downward-sloping demand.
d. inferior goods.
e. increasing marginal utility.
Suppose you are studying a production
possibilities frontier (PPF) that has a bowed-out shape relative to the origin.
What causes this shape?
a. economic growth
b. the law of increasing relative cost
c. absolute advantage
d. normative economics
e. more resources
a. economic growth
b. the law of increasing relative cost
c. absolute advantage
d. normative economics
e. more resources
Suppose you find a production
possibilities frontier (PPF) that is shaped like a straight line. What can you
determine about the production of the two goods?
a. Production of the two goods is subject to decreasing relative cost.
b. Production of the two goods is subject to increasing relative cost.
c. Production of the two goods is subject to constant opportunity cost anywhere along the PPF.
d. One producer must have an absolute advantage in production.
e. More resources will not cause the PPF to shift.
a. Production of the two goods is subject to decreasing relative cost.
b. Production of the two goods is subject to increasing relative cost.
c. Production of the two goods is subject to constant opportunity cost anywhere along the PPF.
d. One producer must have an absolute advantage in production.
e. More resources will not cause the PPF to shift.
Specialization and trade allow individuals
to:
a. consume outside their own production possibilities frontier (PPF).
b. shift their PPF outward.
c. produce more goods with less technology.
d. eliminate scarcity.
e. produce fewer goods with less technology.
a. consume outside their own production possibilities frontier (PPF).
b. shift their PPF outward.
c. produce more goods with less technology.
d. eliminate scarcity.
e. produce fewer goods with less technology.
When one producer can create more of a
good than another producer using the same quantity of resources, the first
producer has:
a. a zero-sum game.
b. gains from trade.
c. an absolute advantage.
d. a comparative advantage.
e. increasing relative costs.
a. a zero-sum game.
b. gains from trade.
c. an absolute advantage.
d. a comparative advantage.
e. increasing relative costs.
If Elaine can produce more output from a
set amount of resources than Jerry can, you know that:
a. Elaine has a comparative advantage.
b. Jerry has a comparative advantage.
c. Elaine has an absolute advantage.
d. Jerry has an absolute advantage.
e. Elaine has a normative advantage.
a. Elaine has a comparative advantage.
b. Jerry has a comparative advantage.
c. Elaine has an absolute advantage.
d. Jerry has an absolute advantage.
e. Elaine has a normative advantage.
The ability of one producer to produce a
good at a lower opportunity cost than another producer is called:
a. a normative statement.
b. a zero-sum game.
c. absolute advantage.
d. comparative advantage.
e. the law of increasing relative cost.
a. a normative statement.
b. a zero-sum game.
c. absolute advantage.
d. comparative advantage.
e. the law of increasing relative cost.
You have a comparative advantage in
producing a good whenever:
a. you enjoy producing that good.
b. you can produce more of the good than someone else can using the same resources.
c. your opportunity cost is constant.
d. your opportunity cost of producing that good is lower than that of other producers.
e. you have specific training in the production of that good.
a. you enjoy producing that good.
b. you can produce more of the good than someone else can using the same resources.
c. your opportunity cost is constant.
d. your opportunity cost of producing that good is lower than that of other producers.
e. you have specific training in the production of that good.
If Jim can sell paper at a lower
opportunity cost than Dwight can, then:
a. Jim has an absolute advantage in paper sales.
b. Dwight has an absolute advantage in paper sales.
c. Jim has a positive advantage in paper sales.
d. Jim has a comparative advantage in paper sales.
e. Dwight has a comparative advantage in paper sales.
a. Jim has an absolute advantage in paper sales.
b. Dwight has an absolute advantage in paper sales.
c. Jim has a positive advantage in paper sales.
d. Jim has a comparative advantage in paper sales.
e. Dwight has a comparative advantage in paper sales.
Consider the following scenario. Two
friends, Rachel and Joey, enjoy baking bread and making apple pies. Rachel
takes two hours to bake one loaf of bread and one hour to make one pie. Joey
takes four hours to bake one loaf of bread and four hours to make one pie. If
Rachel and Joey decide to specialize in order to maximize their combined
output, who should produce what?
a. Joey should specialize in making pies because he has an absolute advantage.
b. Rachel should specialize in making pies and Joey should specialize in making bread.
c. Joey should specialize in making pies and Rachel should specialize in making bread.
d. Rachel should specialize in making bread and pies because she has a comparative advantage in both.
e. Rachel should not specialize because she is better at producing both.
a. Joey should specialize in making pies because he has an absolute advantage.
b. Rachel should specialize in making pies and Joey should specialize in making bread.
c. Joey should specialize in making pies and Rachel should specialize in making bread.
d. Rachel should specialize in making bread and pies because she has a comparative advantage in both.
e. Rachel should not specialize because she is better at producing both.
Consumer goods:
a. are produced today to be used to produce more goods in the future.
b. are produced today to be consumed at some point in the future.
c. are invested today in order to consume more today.
d. are produced today to be consumed today.
e. generate economic growth.
a. are produced today to be used to produce more goods in the future.
b. are produced today to be consumed at some point in the future.
c. are invested today in order to consume more today.
d. are produced today to be consumed today.
e. generate economic growth.
Goods that are produced for current
consumption are called:
a. capital goods.
b. consumer goods.
c. investment goods.
d. normal goods.
e. opportunity goods
a. capital goods.
b. consumer goods.
c. investment goods.
d. normal goods.
e. opportunity goods
Forgoing current consumption so that those
resources can be used to produce new capital is called:
a. absolute advantage.
b. comparative advantage.
c. investment.
d. scarcity.
e. saving.
a. absolute advantage.
b. comparative advantage.
c. investment.
d. scarcity.
e. saving.
The process of using current resources to
create new capital is:
a. absolute advantage.
b. comparative advantage.
c. specialization.
d. investment.
e. free.
a. absolute advantage.
b. comparative advantage.
c. specialization.
d. investment.
e. free.
Over the last 20 years, countries such as
India and China have:
a. consumed heavily with little regard for the future.
b. invested heavily and enjoyed significant economic growth.
c. eliminated the problem of scarcity.
d. produced outside their production possibilities frontier (PPF).
e. produced wholly for current consumption.
a. consumed heavily with little regard for the future.
b. invested heavily and enjoyed significant economic growth.
c. eliminated the problem of scarcity.
d. produced outside their production possibilities frontier (PPF).
e. produced wholly for current consumption.
Greater investment in capital goods today
leads to:
a. greater growth in the production possibilities frontier (PPF) in the future.
b. greater consumption today.
c. the end of scarcity.
d. less opportunity cost.
e. scarcity.
a. greater growth in the production possibilities frontier (PPF) in the future.
b. greater consumption today.
c. the end of scarcity.
d. less opportunity cost.
e. scarcity.
Georgia institutes a new gas tax to
discourage the purchase of "low-gas-mileage" cars. As a result, Kris
does not fill his gas tank when he knows he will be visiting friends in S.
Carolina (lower gas tax) the coming weekend. This is an example of...
The opportunity cost of a purchase is:
You are deciding whether to pay movers
$250 or to move yourself. It would be economically rational to hire movers if:
Although you are feeling full after a
large dinner at Bolton, you are considering getting a milkshake. As an economic
thinker, you will get a milkshake if:
Which of the following is a normative
statement?
A. You should wear a helmet when cycling.
B. The sky is blue.
C. A bicycle has two wheels.
D. A unicycle has five wheels.
E. Electricity follows the path of least resistance.
A. You should wear a helmet when cycling.
B. The sky is blue.
C. A bicycle has two wheels.
D. A unicycle has five wheels.
E. Electricity follows the path of least resistance.
Suppose that as a result of newly patented
machinery, Dell can make computers with less material and less time. Ceteris
paribus, this should make the price of Dell computers go down because of:
Jamal is willing to pay $85 for a new
jacket that sells for $70. Eddie is willing to pay $65 for that same jacket.
What is the total consumer surplus for Jamal and Eddie?
If supply shifts to the left and demand
shifts to the right, what can we predict absolute confidence?
In the market for pizza, a tax is imposed
on wheat, an input for making pizza.What happens in the pizza market?
Price "gouging laws implemented in
relevant markets after nature disaster are examples of...
Certain US cities have higher than average
minimum wages laws, but comparable unemployment levels. This suggests...
James specializes in college-level
economics tutoring. He knows that, during the two weeks before finals, he can
charge more for an hour of private tutoring. Expecting this price increases
later, James will:
In most cases, taxes reduce economic
efficiency because...
Total revenue is defined as TR = (P)(Q),
where P is the equilibrium price and Qis the equilibrium quantity. For a
business, which strategy is more likely to increase total revenue?
The local city council establishes a law
of maximum rent for apartments in your city. Which of the following is most
likely to happen:
Taxes will almost always cause consumer
prices to increase. How much they increase depends on...
In general, macroeconomics is the study of
_____.
If a macroeconomist were to research a
topic for a potential paper in the "Big-Wig Fancy-Shmancy Macroeconomist
Journal", it would likely be about ______.
Economist study the world around us, so
which of the following statements is true (or best option)?
"Lowering the home mortgage tax on
first time homeowners will increase building in the housing sector of the
economy." This is a ______ statement because it is ________.
You, a famous UGA economist, are asked to
give a talk at the Georgia statehouse to the governor. You are asked to report
on the current data of the economy. You are then asked to give a policy
suggestion to improve the economy. Your report on the current data will likely
be described as _______ statements and your policy advice can be described as
________ statements.
When creating models economist make use of
the following:
A model can be described by which of the
following?
Suppose the government increased
aid-payments to low income parents for each additional child to ensure the
parents had enough funds to support a larger family. In the following year,
suppose, on average, low income families had more children. This would be an
example of a(n) _____________.
We are not able to produce all the goods
and services that everyone would like to have. That means we live in a world of
Generally speaking, a market economy
rewards people according to their ________.
According to Adam Smith, people provide
you goods and services because _______
A certain production possibilities
frontier shows production possibilities for two goods: wheat and shirts.
concepts cannot be illustrated in this model?
Suppose a Mary produces both turnips and
corn in her garden. If she must give up 15 bushels of corn to get 4 bushels of
turnips, then her opportunity cost of 1 bushel of turnips is
The Production Possibilities Curve (PPC)
shows the different combinations, assuming a two good world, that an economy
_____.
Assumption in a PPC model
In our PPC model, an economy is considered
to be efficient if ____
The PPC model demonstrates what economic
concept?
A curve PPC model would indicate which of
the following
The benefit to those that specialize and
trade means they are able to
The ______ is responsible for measuring
and reporting the unemployment rate.
In the most commonly reported
"Unemployment Rate" which of these is not a category a worker would
be placed?
Paul works for his dad's company and is
unpaid. Paul is considered
Which of the following is included in the
labor force?
A. Phil just lost his job at Dunkin' Donuts but has a second job.
B. Barney has been filling out job applications for more than 6 months but still know luck.
C. Alice works at Jimmy John's but only 10 hours a week.
D. Only A and C are correct.
E. A, B, and C are correct.
A. Phil just lost his job at Dunkin' Donuts but has a second job.
B. Barney has been filling out job applications for more than 6 months but still know luck.
C. Alice works at Jimmy John's but only 10 hours a week.
D. Only A and C are correct.
E. A, B, and C are correct.
Joe is a professional mullet stylist and
is currently not working. There are several salons in Gainesville, Florida
looking for a mullet stylist but they do not know how to "work the
internet", and Joe is not aware of the openings yet. Joe would be
considered ______ unemployed.
The L.F.P.R. gives us the % of the
population that
Ce-Lo gets fired from a TV show and then
decides to go back to college for an acting degree. He will not work while in
college.
The B.L.S. reported in the small country
of UGA-tonia the population of 16 years and older of potential workers is 60
million. 36 million are working and 2 million are unemployed. What is the LFPR
and U-Rate?
Any variation away from the natural rate
of unemployment is referred to as
High school graduates as compared to high
school drop-outs generally have
Which of the following is a rationale
(explanation) for frictional unemployment?
A market economy is described using supply
and demand which
The following is a determinant of changes
in the demand function except
A. Consumer tastes
B. Future Expectations
C. Prices of Substitutes
D. Technology improvements
E. All of the above can change the demand function
A. Consumer tastes
B. Future Expectations
C. Prices of Substitutes
D. Technology improvements
E. All of the above can change the demand function
A likely example of complementary goods
for most people would be
Which of the following demonstrates the
law of demand?A. Tom buys more "Dunkin' Donuts" doughnuts at $0.75
per doughnut than at $1.25 per doughnut, all else the same.
B. Relative to last month, Russell buys more doughnuts at $1.50 per doughnuts since he got a raise at work last year.
C. Shorty buys fewer "Dunkin' Donuts" muffins at $1 per muffin than at $2 per muffin, all else the same.
D. Kim buys fewer D.D. Doughnuts at $1 per doughnut after the price of Krispy Kreme doughnuts fall to $0.75.
E. Both B and C are correct.
B. Relative to last month, Russell buys more doughnuts at $1.50 per doughnuts since he got a raise at work last year.
C. Shorty buys fewer "Dunkin' Donuts" muffins at $1 per muffin than at $2 per muffin, all else the same.
D. Kim buys fewer D.D. Doughnuts at $1 per doughnut after the price of Krispy Kreme doughnuts fall to $0.75.
E. Both B and C are correct.
If a decrease in your salary result in you
buying more, then the good is
When the number of buyers in a market
increases,
A. the market demand curve shifts to the right.
B. the demand curves of the individual demanders in the market are unaffected.
C. the market demand for the good in question increases.
D. All of the above are correct.
A. the market demand curve shifts to the right.
B. the demand curves of the individual demanders in the market are unaffected.
C. the market demand for the good in question increases.
D. All of the above are correct.
Steak is a normal good if
A. the demand for steak shifts to the right when income rises.
B. the demand for steak rises when the price of steak falls.
C. the demand curve for steak slopes upward.
D. the demand curve for steak shifts to the right when the price of burritos falls, assuming steak and burritos are substitutes.
E. None are correct.
A. the demand for steak shifts to the right when income rises.
B. the demand for steak rises when the price of steak falls.
C. the demand curve for steak slopes upward.
D. the demand curve for steak shifts to the right when the price of burritos falls, assuming steak and burritos are substitutes.
E. None are correct.
Suppose that the demand for a good
increases, while at the same time, supply of the good decreases. What would
happen in the market for the good?
What will happen to the equilibrium price
and quantity of new cars if the price of gasoline rises, the price of steel
rises, public transportation becomes cheaper and more comfortable, and
auto-workers negotiate higher wages?
You love peanutbutter. You hear on the
news that 50% of the peanut crop in the South has been wiped out by drought,
and that this will cause the price of peanuts to double by the end of the year.
As a result,
Whichofthefollowingoptionswouldnotshiftthedemandcurveforagood?
A. a change in income
B. a change in the price of the good
C. a change in expectations about the future price of the good
D. a change in the price of a related good or service
E. Both A and D are correct
A. a change in income
B. a change in the price of the good
C. a change in expectations about the future price of the good
D. a change in the price of a related good or service
E. Both A and D are correct
If the number of firms in a market
doubles, then you can expect
Assume there is an increase in steel
prices in the world market. You can expect the supply curve for steel train
cars to...
If a surplus exists in a market for live
lobster, we know that the actual price is...
Rent-control laws dictate
The presence of a price control in a
market for a good or service usually is an indication that
Which of the following is the most likely
explanation for the imposition of a price ceiling on the market for milk?
A price ceiling is binding when it is
set...
Consumer surplus
On a graph of a market in competitive
equilibrium, the are below a demand curve and above the price measures
On a graph of a market with a tax,
deadweight loss is represented by the area...
In a market, the marginal buyer is the
buyer
To say that a price ceiling is binding is
to say the the price ceiling
If a binding price ceiling is imposed on
the computer market, then
A. The quantity of computers demanded will increase
B. The quantity of computers supplied will decrease
C. A shortage of computers will develop
D. The Market will be below equilibrium price
E. all of the above are correct
A. The quantity of computers demanded will increase
B. The quantity of computers supplied will decrease
C. A shortage of computers will develop
D. The Market will be below equilibrium price
E. all of the above are correct
A demand curve reflects:
If the government wants to reduce smoking,
it should impose a tax on
When a tax is place on the sellers of a
product...
When a tax is place on the sellers of cell
phones...
When a country cannot produce every good
people wish to have we say this country facing
A good is _______ if it takes even a small
amount of time, energy, or money to acquire.
Kramer makes great non-fat frozen yogurt
and George makes awesome calzones. Kramer and George both enjoy frozen yogurt
and calzones. Of the following options, in which is it impossible for both
Kramer and George to benefit from trade?A. George can't make soup and Kramer
can't make calzones.
B. George is better than Kramer at making calzones. Kramer is better at making frozen yogurt than George.
C. Kramer can make better frozen yogurt and calzones than George.
D. None of the above is correct.
B. George is better than Kramer at making calzones. Kramer is better at making frozen yogurt than George.
C. Kramer can make better frozen yogurt and calzones than George.
D. None of the above is correct.
If labor in the Dominican Republic is less
productive than labor in the United States in all areas of production,
If the government wanted to give people a
negative direct incentive not to save money, what would be the appropriate
policy?
A car insurance company is willing to
offer accident-free drivers a discount. This is an example of:
The U.S. federal government offers
homeowners a tax deduction for their home loan interest payments. This
reduction in taxes may have encouraged too many people to own a home. If the
tax deduction caused people who otherwise would have rented
to own, the tax deduction serves as a(n):
to own, the tax deduction serves as a(n):
The opportunity cost of a purchase is:
Economists believe that optimal decisions
are made up to the point where:
A graph that shows the maximum attainable
combinations of two goods when society efficiently uses its productive
resources is called:
When the opportunity cost of producing a
good rises as you produce more of it, you experience:
Specialization and trade allow individuals
to:
Goods that produced for current
consumption are called:
When the price of an hour of tutoring
increases,
Changes in population can:
When a hurricane rips through Florida, the
price of oranges rise because the:
when both supply and demand decrease, the
equilibrium price:
Many states have laws that limit the
maximum amount of interest that a lender can charge a borrower. Such a law is
an example of:
What will happen in a market where a
binding price ceiling is removed?
If the local government tells gas stations
that they are not allowed to change the price of gas for three weeks during
hurricane season, what will be the consequence?
The consequence of a price floor set below
the equilibrium is:
Holding all else constant, when the price
of a good increases
All else held constant, a decrease in the
price of a good would necessarily:
Social welfare (i.e., the sum of producer
and consumer surplus) is maximized when:
When the price is
_________ the equilibrium price, we would expect there to be a _________,
causing the market to put _________ pressure on the price until it went back to
the equilibrium price
Suppose
that Dwight and Jim can either make salads or grill steaks. Their maximum
output per hour is listed in the following table. Given the same quantity of resources,
at what terms of trade (relative price ratio) could they specialize and trade
so that both consume outside their own production possibilities frontier (PPF)?
What would you expect
to happen to the price of bagels if the price of flour decreased and the price
of cream cheese decreased?
To determine which of
two producers has a comparative advantage, you would need to know their
The area inside
(within) the production possibilities frontier (PPF) contains
Economics professors
are well aware of the importance of incentives. Which of the following
situations shows the use of a positive incentive
Which one of the
following pairs of goods is likely to have a negative cross-price elasticity of
demand?
The
accompanying figures depict the production possibilities frontiers (PPFs) for
two people who can allocate the same amount of time between making pizzas and
making stromboli. If Jim and Pam were to specialize and trade, at what exchange
rate would they find some quantity of trade to be mutually beneficial?
Use the following table
to answer the questions that follow.
What is the surplus
when the price floor is $0.75 in the market for public transportation?
Why are binding price
ceiling laws passed?
The figures below
depict the production possibilities frontiers (PPFs) for two people who can
allocate the same amount of time between building wooden boats and solving
crimes. Refer to these figures to answer the questions that follow. Which statement best
describes absolute advantage?
Which of the following
will cause a movement along a good’s supply curve?
What would happen in
the market for SUVs if the government started to subsidize the production of
SUVs that get very few miles per gallon and the price of gasoline went up?
If the percentage
change in the quantity consumed of pizza is 8% and the percentage change in
income is 2%, what is the income elasticity of demand for pizza?
If the price and
quantity for a normal good, Good X, is $8 and 6 units at the original
equilibrium, what is one possibility for the new equilibrium of Good X if we
see income increase and all other factors stay constant?
Chris runs a sporting
goods store and knows that the price elasticity of demand for his sports
clothing line is –1.5. He is planning to lower prices by 10%. The percentage
change in quantity demanded will be:
If the cross-price elasticity of demand for two goods is
zero, the two goods are
The price of peanut butter increases from $2.50 to $3.00
and the quantity of jelly demanded falls from 30 jars to 24 jars. Calculate the
cross-price elasticity of
During the winter
months, many elderly persons leave their homes in northern New York and travel
south to Florida or Arizona. What would you expect to happen to the equilibrium
price and quantity of items most used by the elderly in northern New York?
When Heavenly Cookies
prices its sugar cookies at $1.00, they sell 75 cookies. They lowered the price
to $0.50 and sold 200 cookies. Their total revenue ________ because the price
elasticity of demand for sugar cookies is ________.
For a market to be
competitive:
If a good is subject to
a binding price ceiling and you purchase it on the black market, what do you
expect to happen to the price over time?
Use these
production possibilities frontier (PPF) curves, which compare the ancient
production of agricultural products to art and literature, to answer the
questions that follow. Suppose a great plague wipes out half of
the society’s population. Which of the following graphs best depicts how this
would affect the PPF?
In the first few months
of 2012, the price of gasoline increased by approximately 15%. Because of this
increase, we would expect the _________ curve in the market for hybrid cars to
_________.
An
increase in general resources that affects the production of both goods on a
production possibilities frontier (PPF) would cause an
Use the following
scenario to answer the questions that follow: Dairy Dream, a local ice cream
store, finds that it sells out of ice cream sandwiches at the current price of
$1. It raises the price to increase its revenues and finds that no one buys ice
cream sandwiches anymore. The demand for ice cream sandwiches is:
While there are many
pizza places in Curtisville, Pappy’s Pizza is known for its distinctive
deep-dish pizza with an almost pie-like crust, whereas Momma’s Pizza Pizzazz is
comparable to many other restaurants. Pappy’s is likely to find that it can
________ prices to increase total revenue, and Mommas must ________ prices to
increase total revenue.
The scientific method
and the tools of economics are useful in examining:
A positive statement:
When the price of a
basketball is $15, the quantity supplied is 5,000. When the price increases to
$20, the quantity supplied is 10,000. The price elasticity of supply is:
Which of the following
will cause the demand curve for burgers to shift the right?
You have an absolute
advantage in producing something whenever:
From the accompanying
table, we would expect that, for recreational skaters, the price elasticity of
demand for ice skates between $10 and $20 to be ________ than that of hockey
players because ________.
Refer to the
accompanying figure. What event would cause the supply curve to shift out?
The production
possibilities frontier (PPF) shows:
With no barriers to
entry or exit and when firms in a market are operating at a loss, you can
expect other firms to exit, causing the _________ curve to shift to the
_________ and making the equilibrium price _________ and the equilibrium
quantity _________.
Google has started a
project to scan all books and make those that are not copyrighted available to
people free of charge. Why is it important that only books without a copyright
are available
According to
economists, one reason few professional athletes have PhD’s is that the
What will happen in a market
where a binding price floor is removed?
What would you expect
to happen to the price and quantity of Pepsi if the price of Coke increases and
Pepsi develops a new technology that makes its production process more
efficient?
Which statement best
describes the absolute advantage as shown in the graphs?
The figures below
depict the production possibilities frontiers (PPFs) for two people who can
allocate the same amount of time between building wooden boats and solving
crimes. Refer to these figures to answer the questions that follow. What is DiNozzo’s
opportunity cost for solving a crime?
Ceteris paribus, if a society is
producing at a point on the production possibilities frontier (PPF), it can
only increase the production of one good by:
In the accompanying
table, assume that the price of ice skates increases from $10 to $20 per pair.
Using the midpoint method, calculate the price elasticity of demand for ice
skates for hockey players.
Refer to
the following figure for the questions that follow. As you move from points N to M
to L, the opportunity cost of additional apple pie:
Assume that the market
for pencils is in equilibrium and that demand is very price elastic. The
popularity of digital tablets and electronic pens increases and demand for
pencils declines. The equilibrium change in quantity demanded is:
Refer to the
accompanying figure. When the price changes from P1 to P2, we will see a(n):
Use the following
scenario to answer the questions that follow: Dairy Dream, a local ice cream
store, finds that it sells out of ice cream sandwiches at the current price of
$1. It raises the price to increase its revenues and finds that no one buys ice
cream sandwiches anymore. The owners raised the price because they believed that
the demand for ice cream sandwiches is:
Spam is considered an
inferior good. What would happen to the equilibrium price and quantity of Spam
if income decreased and more firms started producing Spam?
Refer to the
accompanying table to answer the questions that follow. The price of erasers
increases from $0.50 to $1.00 per eraser. Use the midpoint method to calculate
the cross-price elasticity of demand between pencils and erasers.
Question 1
Which of the following concepts do
economists focus their study on when explaining how humans behave?
Question 2
If you don’t like
changing the oil in your car and pay your father to do it for you, you have
provided him with a(n):
Question 3
What is the opportunity cost of taking this
exam?
Question 4
The opportunity cost of working rather than
going to school is:
Question 5
The term ________ means “additional.”
Question 6
Saudi Arabia has a comparative advantage in
producing oil because it:
Question 7
Ceteris paribus means:
Question 8
A graph that shows the maximum attainable
combinations of two goods when society efficiently uses its productive
resources is called:
Question 9
On a production possibilities frontier
(PPF) that shows the trade-off between consumer goods and capital goods given a
fixed amount of labor, unemployment is illustrated by:
Question 10
Consider the production possibilities
frontier (PPF) shown in the figure below to answer the questions that follow.
The set of efficient points is best
described as:
Question 11
The figures below depict the production
possibilities frontiers (PPFs) for two people who can allocate the same amount
of time between building wooden boats and solving crimes. Refer to these
figures to answer the questions that follow.
What is Gibbs’s
opportunity cost of solving a crime?
Question 12
The figures below depict the production
possibilities frontiers (PPFs) for two people who can allocate the same amount
of time between making pizzas and making stromboli. Refer to these figures to
answer the questions that follow.
What is Jim’s
opportunity cost of making 1 pizza?
Question 13
Specialization and trade allow individuals
to:
Question 14
Refer to the following table to answer the
questions that follow.
Suppose that Alicia Keys and Jay-Z could
each make either New York–style pizza or Philly
cheesesteaks. Given an eight-hour workday, which of the following would permit
them to consume outside their respective production possibilities frontiers
(PPFs)?
Question 15
Suppose that, on a particular Saturday,
Mark Zuckerberg and Bill Gates can either plant trees or spread mulch in their
gardens. Their maximum output per day is listed in the following table, along
with blanks where you can calculate the opportunity cost. At what terms of
trade (relative price ratio) could they specialize and trade with one another
so that both have more trees planted and mulch spread than they could
accomplish on their own?
Question 16
Something is a normal good if the demand
for the good:
Question 17
The demand curve for a good will shift to
the right if, holding all else constant,
Question 18
Refer to the accompanying figure. When the
price changes from P1 to P2, we will see a(n):
Question 19
If the price of Gatorade increases, the
Question 20
Which of the quantity (Q) and price (P)
combinations in the accompanying figure represents the market at competitive
equilibrium?
Question 21
According to the supply and demand model,
when the cotton gin was invented and if all else was held constant, we would
expect the equilibrium price of cotton to _________ and the equilibrium
quantity of cotton to _________.
Question 22
When the price of scooters drops by 5%, the
quantity demanded changes by 20%. You know that the price elasticity of demand
for scooters is:
Question 23
Refer to the accompanying table. When the
price drops from $5 to $3, price elasticity of demand for sushi (using the
midpoint method) at an income of $30,000 is:
Question 24
While there are many pizza places in
Curtisville, Pappy’s Pizza is known for its distinctive
deep-dish pizza with an almost pie-like crust, whereas Momma’s Pizza Pizzazz is comparable to many other restaurants. Pappy’s is likely to find that it can ________ prices to increase total
revenue, and Mommas must ________ prices to increase total revenue.
Question 25
A binding price ceiling will have the
following consequences:
Question 26
Refer to the accompanying figure to answer
the questions that follow.
The market is currently at market
equilibrium. If a binding price ceiling of P1 is imposed, by how much would the
quantity demanded change?
Question 27
Refer to the accompanying figure to answer
the questions that follow.
If there is a $180 price ceiling imposed on
a textbook, what will be the disequilibrium amount?
Question 28
Refer to the accompanying table to answer
the questions that follow.
At what price level does the apartment
market reach equilibrium?
Question 29
Use the following information to answer the
questions that follow.
Market for flat-screen TVs:
Demand: Qd = 2,600 – 5 P
Supply: Qs = –1,000 + 10 P
What would be the quantity demanded if a
price floor is set at $300?
Question 30
Use the following table to answer the
questions that follow.
At what price level does the labor market
experience its largest shortage?
Which of the following is a positive
statement?
Select one:
a. Increases in the minimum wage cause
unemployment.
b. We ought to deregulate the mortgage
market.
c. An economist should test every
theory at least twice.
d. We should forgo some current
consumption in order to invest in the future.
e. The government must provide
unlimited health care to citizens.
Which of the following is a positive
statement?
Select one:
a. All dogs should be required to wear
leashes at all times.
b. You should take your dog to the
veterinarian once a year for a checkup.
c. Legally requiring dogs to have
rabies shots will reduce the number of rabid dogs.
d. Chihuahuas are cuter than bulldogs.
e. My dog should lose some weight.
Consider a production possibilities
frontier (PPF) that compares the production of agricultural products to art and
literature. Now suppose the printing press is invented. Which graph best
depicts how this would affect the PPF?
Select one:
a. graph d
b. graph b
c. graph e
d. graph c
e. graph a
Economic growth is represented on a
production possibilities frontier (PPF) by:
Select one:
a. the PPF getting flatter.
b. the PPF rotating downward.
c. the PPF shifting outward.
d. the PPF shifting inward.
e. the PPF getting steeper.
Refer to the figure below. Unemployed
resources are evident at ____.
Select one:
a. point C.
b. point D.
c. point B.
d. point A.
e. points B, C, and E.
Refer to the figure below. What is the
most preferred consumption point for a pieappreciating society?
Select one:
a. Point E.
b. Point A.
c. Point C.
d. Point D.
e. Point B.
Referring to the graph below, this
society could reach point F when there is:
Select one:
a. an increase in the monetary price
of apple pie.
b. an increase in technology that
makes pie bakers more efficient.
c. a credible new study that shows
blueberries reduce the risk of heart attack.
d. a new regulation that makes pie
baking more costly.
e. an increase in the monetary price
of blueberry pie.
Please refer to the accompanying
table. Given an eighthour workday, to experience gains from trade,
Select one:
a. Alicia should produce both pizzas
and cheesesteaks.
b. Each should make their own
cheesesteaks and pizzas.
c. Alicia should make cheesesteaks and
JayZ should make pizzas.
d. Alicia should make pizzas and JayZ should
make cheesesteaks.
e. JayZ should produce both pizzas and
cheesesteaks.
Feedback
Suppose that on a particular Saturday
Mark Zuckerberg and Bill Gates can either plant trees or spread mulch in their
gardens. Their maximum output per day is listed in the following table, along
with spaces where you can calculate the opportunity cost. Who has an absolute
advantage in spreading mulch?
Select one:
a. Gates has the advantage because he
gives up fewer trees each time he spreads 1 cubic yard of mulch.
b. Zuckerberg has the advantage
because he gives up fewer trees each time he spreads 1 cubic yard of mulch.
c. Zuckerberg has the advantage
because he gives up more trees each time he spreads 1 cubic yard of mulch.
d. Neither has an absolute advantage
in spreading mulch.
e. Both parties have an absolute
advantage in planting trees.
Forgoing current consumption so that
those resources can be used to produce new capital is called:
Select one:
a. scarcity.
b. investment.
c. comparative advantage.
d. absolute advantage.
e. saving.
Which of the following is a normative
statement?
Select one:
a. You should wear a helmet when
cycling.
b. The sky is blue.
c. A bicycle has two wheels.
d. A unicycle has five wheels.
e. Electricity follows the path of
least resistance.
An economist’s use of experiments and realworld data to test a theory
is an example of: the scientific method in economics.
Select one:
a. comparative advantage.
b. normative analysis.
c. macroeconomics.
d. economic growth.
The opportunity cost of increasing the
production of apple pies from 12 to 14 pies is:
Select one:
a. 2 apple pies.
b. 4 blueberry pies.
c. 7 blueberry pies.
d. 2 blueberry pies.
e. 14 apple pies.
Which point in the corresponding
figure shows that productive resources are not fully employed?
Select one:
a. point B
b. point E
c. point C
d. point A
e. point D
The opportunity cost of increasing
production of blueberry pies from 7 to 11 pies is:
Select one:
a. 2 apple pies.
b. 7 blueberry pies.
c. 2 blueberry pies.
d. 14 apple pies.
e. 4 apple pies.
The ___________ states that the
opportunity cost of producing a good always rises as you produce more of it.
Select one:
a. law of demand
b. law of positive economics
c. production possibilities frontier
(PPF) model
d. law of increasing relative cost
e. zerosum game
You have a comparative advantage in
producing a good whenever:
Select one:
a. you have specific training in the
production of that good.
b. your opportunity cost of producing
that good is lower than that of other producers.
c. you can produce more of the good
than someone else can using the same resources.
d. your opportunity cost is constant.
e. you enjoy producing that good.
The figure below depicts the
production possibilities frontiers (PPTs) for two people who can allocate the
same amount of time between making pizzas and making stromboli. Which statement
best describes the absolute advantage evidenced in the graph?
Select one:
a. Pam has an absolute advantage in
the production of both.
b. Jim has an absolute advantage in
the production of both.
c. Pam has an absolute advantage in
the production of pizzas and Jim has an absolute advantage in the production of
stromboli.
d. They both have an absolute
advantage in the production of stromboli.
e. Jim has an absolute advantage in
the production of pizzas and Pam has an absolute advantage in the production of
stromboli.
Goods that are produced now so that
they can be used to produce other goods in the future are called:
Select one:
a. investment goods.
b. normal goods.
c. consumer goods.
d. capital goods.
e. opportunity goods.
1.Economics is the study of:
a. how to make money.
b. how to allocate resources to
satisfy wants and needs.
c. capitalism.
d. how to make workers more productive
and firms more profitable.
e. markets.
2.Suppose that, on a particular
Saturday, Mark Zuckerberg and Bill Gates can either plant trees or spread mulch
in their gardens. Their maximum output per day is listed in the following
table, along with spaces where you can calculate the opportunity cost. Who has
an absolute advantage in spreading mulch?
Trees Planted
Opportunity
Cost of 1 Tree
Amount of
Mulch Spread
(in cubic yards)
Opportunity
Cost of
Spreading 1
Cubic Yard of
Mulch
Zuckerberg 20 30
Gates 15 30
a. Zuckerberg has the advantage
because he gives up fewer trees each time he spreads 1 cubic yard of mulch.
b. Gates has the advantage because he
gives up fewer trees each time he spreads 1 cubic yard of mulch.
c. Zuckerberg has the advantage
because he gives up more trees each time he spreads cubic yard of mulch.
d. Neither has an absolute advantage
in spreading mulch.
e. Both parties have an absolute advantage
in planting trees.
3. A car insurance company is willing
to offer accidentfree drivers a discount. This is an example of:
a. a positive incentive.
b. a negative incentive.
c. an opportunity cost.
d. a comparative advantage.
e. scarcity.
4. Google has started a project to
scan all books and make those that are not copyrighted available to people free
of charge. Why is it important that only books without a copyright are
available?
a. If all books were scanned and
available free of charge, copyright holders would face positive incentive to
continue writing and publishing books.
b. If all books were scanned and
available free of charge, copyright holders would face a negative incentive to
continue writing and publishing books.
c. If only copyrighted texts were
scanned and available free of charge, copyright holders would face an indirect
incentive to continue writing and publishing books.
d. If only noncopyrighted books were
scanned and available free of charge, copyright holders would face a negative
incentive to continue writing and publishing books.
e. If only noncopyrighted books were
scanned and available free of charge, copyright holders would face an indirect
incentive to continue writing and publishing books.
5. Indirect incentives create:
a. positive consequences.
b. negative consequences.
c. indirect consequences.
d. direct consequences.
e. unintended consequences.
6. The cost of a tradeoff
is known as the ________ of that
decision.
a. marginal cost
b. net cost
c. opportunity cost
d. comparative cost
e. explicit cost
7. An opportunity cost:
a. can be measured only when the
decision involves expenditures of money.
b. can be measured only when the
decision involves spending time on one thing and not on another.
c. is impossible to measure.
d. is equal to the value of what is
given up to make a purchase or take an action.
e. exists for every decision made by
individuals and businesses, but not by the government.
8.Instead of taking an economics
course, you could have taken a history course that meets at the exact same
time. The total cost of taking the economics course would be:
a. the tuition cost for the economics
course.
b. the fact that you could not take
the history course at the same time.
c. the tuition cost for the economics
course plus the price of the textbook and a notebook for the economics course.
d. the tuition cost, the cost of the
textbook and notebook, and the fact that you could not take the history course
at the same time.
e. the price of the textbook and a
notebook for the economics course.
9. The opportunity cost of working
rather than going to school is:
a. the cost of food and housing.
b. the cost of clothing and
transportation.
c. zero because the person is earning
an income by working.
d. the higher wages that come with
additional education.
e. the annual wages earned by working.
10. The opportunity cost to free trade
is:
a. economic growth.
b. government involvement.
c. a gain of domestic jobs.
d. lower prices.
e. greater efficiency.
11. On the television show “MythBusters,” the hosts design experiments, collect
data, and test theories based on popular myths. This is an example of:
a. the scientific method as used in
economics.
b. economic growth.
c. gains from trade.
d. production possibilities.
e. absolute advantage.
12. Which of the following is a
positive statement?
a. An economist should test every
theory at least twice.
b. Increases in the minimum wage cause
unemployment.
c. We ought to deregulate the mortgage
market.
d. The government must provide
unlimited health care to citizens.
e. We should forgo some current
consumption in order to invest in the future.
13. Which of the following is a
normative statement?
a. The current exchange rate is 0.7
British pounds per U.S. dollar.
b. In January, the average temperature
in Fargo, North Dakota, is 56 degrees.
c. Winters in Arkansas are too cold.
d. On average, people save 15% when
they switch to GEICO.
e. University of Virginia graduates
earn more than Duke University graduates.
14. The process of examining a change
in one variable in a model while assuming that all the other variables remain
constant is called:
a. exogenous factors.
b. ceteris paribus.
c. normative analysis.
d. positive analysis.
e. faulty assumptions.
15. Variables that are not accounted
for in a model are called:
a. endogenous factors.
b. exogenous factors.
c. normative statements.
d. positive statements.
e. the scientific method.
16. You are considering the “dress well, test well” theory, which argues that you perform
better on exams when you dress nicely than you do when you wear sweatpants. If
you want to test this theory over the course of the semester, which of the
following would be an endogenous factor in your experiment?
a. your innate ability in the subject
b. the difficulty of the exam
c. the relative mix of multiplechoice
and shortanswer questions
d. your clothing choice for the exam
e. the amount of time you spend
studying for the exam
17. The area inside (within) the
production possibilities frontier (PPF) contains:
a. normative points.
b. positive points.
c. efficient points.
d. inefficient points.
e. high opportunity cost points.
18. How will a reduction in the
national unemployment rate affect a nation’s production possibilities frontier
(PPF)?
a. It will cause the PPF to shift
inward.
b. It will cause the PPF to shift
outward.
c. It will move society to a point
farther inside the PPF.
d. It will move society outward to a
point closer to or on the PPF.
e. It will push society to a point
outside its PPF.
19. Which of the following is NOT an assumption
that economists make when developing a production possibilities frontier (PPF)?
a. We live in a world with only two
goods.
b. There are no increases in
technology.
c. There is no change in available
resources.
d. Society will always be producing
somewhere on the PPF.
e. There are no decreases in
technology.
Consider the
production possibilities frontier (PPF) shown in the figure below to answer the
next three questions.
20. Given current resources and
technology, the attainable range is best described as:
a. only area O: points outside the
PPF.
b. points on the PPF only.
c. only area I: points inside the PPF.
d. area I: points inside the PPF and
points on the PPF.
e. Area O: points outside the PPF and
points on the PPF.
21. The set of efficient points is
best described as:
a. only area O: points outside the
PPF.
b. points on the PPF only.
c. only area I: points inside the PPF.
d. area I: inside the PPF and points
on the PPF.
e. area O: outside the PPF and points
on the PPF.
22 At current resources and
technology, the unattainable range is best described as:
a. only area O: points outside the
PPF.
b. points on the PPF only.
c. only area I: points inside the PPF.
d. area I: inside the PPF and points
on the PPF.
e. Area O: outside the PPF and points
on the PPF.
23.The _________ states that the
opportunity cost of producing a good always rises as you produce more of it.
a. law of increasing relative cost
b. law of positive economics
c. law of demand
d. production possibilities frontier
(PPF) model
e. zerosum game
24.As you move from one efficient
point on the production possibilities frontier (PPF) to another efficient point
on the PPF, you experience:
a. decreasing relative cost.
b. opportunity cost.
c. macroeconomics.
d. unlimited resources.
e. unattainable combinations.
25.Suppose you find a production
possibilities frontier (PPF) that is shaped like a straight line. What can you
determine about the production of the two goods?
a. Production of the two goods is
subject to decreasing relative cost.
b. Production of the two goods is
subject to increasing relative cost.
c. Production of the two goods is
subject to constant opportunity cost anywhere along the PPF.
d. One producer must have an absolute
advantage in production.
e. More resources will not cause the
PPF to shift.
Michael and
Angelo are both artists who can create sculptures or paintings each day. The
following table describes their maximum outputs per day. Use this table to
answer the next two questions.
Sculptures Paintings
Michael 10 5
Angelo 6 2
26. What is Michael’s opportunity cost of a sculpture?
a. 2 paintings
b. 1/2 painting
c. 3 paintings
d. 1/3 sculpture
e. 1/2 sculpture
27. What is Angelo’s opportunity cost of a sculpture?
a. 1/2 painting
b. 1/3 painting
c. 3 paintings
d. 1/3 sculpture
e. 6/10 sculpture
28. When one producer can create more
of a good than another producer using the same quantity of resources, the first
producer has:
a. a zerosum game.
b. gains from trade.
c. an absolute advantage.
d. a comparative advantage.
e. increasing relative costs.
29. Michael and Angelo are both
artists who can create sculptures or paintings each day. The following table
describes their maximum outputs per day. Does either one have a comparative
advantage?
Sculptures Paintings
Michael 10 5
Angelo 6 2
a. Yes, Michael has a comparative
advantage in both sculptures and paintings.
b. Yes, Angelo has a comparative
advantage in both sculptures and paintings.
c. Yes, Michael has a comparative
advantage in paintings, and Angelo has a comparative advantage in sculptures.
d. Yes, Michael has a comparative
advantage in sculptures, and Angelo has a comparative advantage in paintings.
e. No, neither has a comparative advantage.
30. An increase in the labor force
would be reflected in a society’s production possibilities frontier
(PPF) by an:
a. increase in opportunity cost.
b. inward shift of the PPF.
c. outward shift of the PPF.
d. outward rotation along the x axis.
e. outward rotation along the y axis.
31. Suppose that Dwight and Jim can
either make salads or grill steaks. Their maximum output per hour is listed in
the following table. Given the same quantity of resources, at what terms of
trade (relative price ratio) could they specialize and trade so that both
consume outside their own production possibilities frontier (PPF)?
Maximum
Number of
Salads
Opportunity
Cost of 1 Salad
Maximum
Number of
Steaks
Opportunity
Cost of 1 Steak
Dwight 9 1/3 steak 3 3 salads
Jim 12 1/2 steak 6 2 salads
a. 1 salad per 1 steak
b. 2 salads per 1 steak
c. 2.5 salads per 1 steak
d. 3 salads per 1 steak
e. 3.5 salads per 1 steak
32. According to the figure below, at
the price of $5:
a. the equilibrium quantity is 500.
b. the quantity demanded is 500.
c. the demand is 500.
d. there is a surplus.
e. there is a shortage.
33.If the price of a good increases,
holding all else constant,
a. the demand for all of that good’s substitutes will decrease.
b. the quantity demanded for that good
will increase.
c. the demand for all of that good’s complements will increase.
d. the demand for all of that good’s substitutes will increase.
e. the demand curve will shift to the
left.
34.Companies use advertising to shift
consumer demand. Which of the following demand shifters do you think
advertisers most often rely on?
a. changes in income
b. the price of related goods
c. changes in tastes and preferences
d. the number of buyers
e. expectations regarding the future
price
35.
The demand curve shift shown in the
figure was caused by a(n):
a. increase in the input cost of the
good.
b. increase in the price of a
substitute of the good.
c. decrease in the number of firms
selling the good.
d. decrease in the number of buyers in
the market for the good.
e. expectation that the future price
of this good will be higher than it is currently.
36. Which of the following is both a
shift in supply and a shift in demand?
a. the number of firms in an industry
b. tastes and preferences
c. income changes
d. expectations of future prices
e. the number of buyers
37. Which of the following could cause
the supply curve for the market for oranges to shift to the left?
a. an increase in the income of
consumers of oranges
b. a decrease in the cost of workers
c. an increase in the price of orange
juice
d. a new study saying that eating
oranges will give you heart disease
e. a severe hurricane in Florida
38. On January 30, 2012, Starbucks
India announced plans to open 50 cafes. What would you expect to happen to the
market for coffee in India, assuming all other factors are held constant?
a. The demand for coffee will increase
in India.
b. The demand for coffee will decrease
in India.
c. Both the supply and demand for
coffee will increase in India.
d. The supply for coffee will increase
in India.
e. The supply for coffee will decrease
in India.
39.According to the accompanying
figure, if the price is $10, there is a:
a. shortage of 15 units.
b. surplus of 15 units.
c. shortage of 30 units.
d. surplus of 30 units.
e. surplus of 22 units.
40.If the number of buyers in a market
increases from 50 to 100, you would expect the equilibrium price to _________
and the equilibrium quantity to _________, holding all else constant.
a. increase; increase.
b. increase; decrease.
c. decrease; decrease.
d. decrease; increase.
e. remain the same; remain the same.
41. Refer to the accompanying diagram.
Which of the following scenarios would explain this change in equilibrium?
a. A number of firms left the market.
b. A number of buyers entered the
market, and a number of firms entered the market.
c. The price of a complement of this
good increased.
d. The price of a substitute of this
good increased.
e. The price of this good decreased.
42.If all else is held constant, what
would happen to the equilibrium price and quantity of iPhones if the price of
an Android phone decreased?
a. They would both increase.
b. They would both decrease.
c. One would increase and one would
decrease, but we don’t know which would do what.
d. The price would increase and the
quantity would decrease.
e. The price would decrease and the
quantity would increase.
43. The market for footballs is
perfectly competitive. If all else is held constant and the price of leather
decreases, we would expect that the equilibrium quantity of footballs would:
a. fall and the equilibrium price
would rise.
b. rise and the equilibrium price
would fall.
c. fall and the equilibrium price
would fall.
d. rise and the equilibrium price
would rise.
e. fall and the equilibrium price
would remain constant.
44. Refer to the accompanying figure.
What event would cause the supply curve to shift out?
a. Consumers earn higher incomes.
b. Consumers earn lower incomes.
c. The price of an input increased.
d. Firms entered the market.
e. Firms expected the price to rise in
the future.
45. If the price and quantity for a
normal good, Good X, is $8 and 6 units at the original equilibrium, what is one
possibility for the new equilibrium of Good X if we see income increase and all
other factors stay constant?
a. $10 and 4 units
b. $10 and 8 units
c. $6 and 4 units
d. $6 and 8 units
e. $10 and 2 units
46. When both supply and demand shift
to the left, the:
a. equilibrium price always rises.
b. equilibrium price always falls.
c. equilibrium quantity always falls.
d. equilibrium quantity always rises.
e. equilibrium quantity is
indeterminate.
47. Spam is considered an inferior
good. What would happen to the equilibrium price and quantity of Spam if income
decreased and more firms started producing Spam?
a. Equilibrium price will go up and
equilibrium quantity will go down.
b. Equilibrium price will go up and equilibrium
quantity will go up.
c. Equilibrium price will go down and
equilibrium quantity will be indeterminate.
d. Equilibrium price will be
indeterminate and equilibrium quantity will go up.
e. Equilibrium price will go up and
equilibrium quantity will be indeterminate.
48. What would you expect to happen to
the price of bagels if the price of flour decreased and the price of cream
cheese decreased?
a. The equilibrium price of bagels
will be indeterminate and the equilibrium quantity will go up.
b. The equilibrium price will go up
and the equilibrium quantity will go up.
c. The equilibrium price will go down
and the equilibrium quantity will be indeterminate.
d. The equilibrium price will be
indeterminate and the equilibrium quantity will go down.
e. The equilibrium price will go up
and the equilibrium quantity will be indeterminate.
49. For a market to be competitive:
a. each buyer and seller is small,
relative to the whole market; no single decisionmaker has any influence over
the market price.
b. sellers must produce goods and
services that are different from their competitors.
c. sellers should have substantial
pricing power.
d. all you need are many buyers and
many sellers.
e. the price must be a fair price.
50. Many stores are open 24 hours a
day. When store managers make the decision to stay open 24 hours, it must be
the case that:
a. the marginal benefit of staying
open all day and the marginal cost to remaining open all day are at least
equal.
b. the marginal benefit of staying
open all day must always be greater than the marginal cost to remaining open
all day.
c. the marginal cost of staying open
all day must always be greater than the marginal benefit to remaining open all
day.
d. the calculation of marginal
benefits or marginal costs of remaining open all day play no role.
e. the marginal benefit of remaining
open all day is zero.
True or False: If you decide to buy a Butterfinger candy bar,
instead of an equally priced Almond Joy, the opportunity cost of your purchase
is the value you would have received from that Almond Joy.
True or False: The axes of the production possibilities frontier
are labeled price and quantity.
True or False: Economic growth is represented on a production
possibilities frontier as a shift outward of that frontier.
True or False: The circular flow model of economic activity
assumes that resources are owned by businesses.
True or False: With international trade, a country is able to
produce outside its production possibilities frontier
The opportunity cost of a new city police contract is:
a. The amount of money it takes in order to provide the city with the most highly qualified personnel.
b. The value of the other goods and services that the city and taxpayers will be forced to give up in order to pay for the contract.
c. The cost of victims of crimes that the new contract would prevent.
d. The value of the opportunities that city policemen acquire by accepting it.
a. The amount of money it takes in order to provide the city with the most highly qualified personnel.
b. The value of the other goods and services that the city and taxpayers will be forced to give up in order to pay for the contract.
c. The cost of victims of crimes that the new contract would prevent.
d. The value of the opportunities that city policemen acquire by accepting it.
Which of the following is the best example of an economic
resource?
a. A stock certificate.
b. A one-hundred dollar bill.
c. A tractor.
d. A plate of spaghetti and meatballs.
a. A stock certificate.
b. A one-hundred dollar bill.
c. A tractor.
d. A plate of spaghetti and meatballs.
Which of the following is the best example of earning income
from human capital?
a. Melody takes a job as an interpreter from the hearing impaired.
b. Josie invests her life savings into her own business, "Jeans by Josephine."
c. Seth toils all day in the hot summer sun as a common laborer, just to earn enough money to keep food on the table.
d. J.R. kicks up his heels and watches the royalty checks flow in from his oil fields.
a. Melody takes a job as an interpreter from the hearing impaired.
b. Josie invests her life savings into her own business, "Jeans by Josephine."
c. Seth toils all day in the hot summer sun as a common laborer, just to earn enough money to keep food on the table.
d. J.R. kicks up his heels and watches the royalty checks flow in from his oil fields.
A production possibilities frontier shows combinations of
a. Inputs that can produce a specific quantity of output.
b. Outputs that people consume.
c. Outputs that can be achieved as technology improves.
d. Outputs that can be achieved in a given time period with all available resources employed using current technology.
a. Inputs that can produce a specific quantity of output.
b. Outputs that people consume.
c. Outputs that can be achieved as technology improves.
d. Outputs that can be achieved in a given time period with all available resources employed using current technology.
If a nation's production possibilities indicate that 1,000,000
battle tanks and 6,000,000 houses could be produced, or alternatively, 750,000
tanks and 8,000,000 houses could also be produced, the opportunity cost of each
additional house would be
a. 250,000 tanks.
b. 8 tanks.
c. 0.125 tanks.
d. 2,000,000 houses.
a. 250,000 tanks.
b. 8 tanks.
c. 0.125 tanks.
d. 2,000,000 houses.
As a nation develops economically, its production possibilities
frontier
a. Remains stables.
b. Shifts towards the origin.
c. Shifts away from the origin.
d. Becomes steeper, but does not shift.
a. Remains stables.
b. Shifts towards the origin.
c. Shifts away from the origin.
d. Becomes steeper, but does not shift.
Suppose an economy produces only gizmos and widgets. If there is
a technological advance in the production of widgets, the economy's production
possibilities frontier will shift
a. Outward along the widget axis, but not along the gizmo axis.
b. Outward along the gizmo axis, but not along the widget axis.
c. Outward along both axes.
d. Inward along both axes.
a. Outward along the widget axis, but not along the gizmo axis.
b. Outward along the gizmo axis, but not along the widget axis.
c. Outward along both axes.
d. Inward along both axes.
Of the points listed in Self-Test Figure 2-1, the fastest rate
of economic growth would occur at
a. A
b. B
c. C
d. D
a. A
b. B
c. C
d. D
All points along the production possibilities frontier are
a. Technologically efficient.
b. Allocatively efficient.
c. Economically efficient.
d. Equitable.
a. Technologically efficient.
b. Allocatively efficient.
c. Economically efficient.
d. Equitable.
In a circular flow diagram, the output market is where
a. Goods and services are exchanged for money.
b. Resources are exchanged for money.
c. Consumer outlays of dollars are exchanged for wages, rents, interest, and profits.
d. Resources are exchanged for goods and services.
a. Goods and services are exchanged for money.
b. Resources are exchanged for money.
c. Consumer outlays of dollars are exchanged for wages, rents, interest, and profits.
d. Resources are exchanged for goods and services.
Money in the economy today
a. Is needed in order for barter to occur.
b. Is primarily commodity money.
c. Facilitates the circular flow of economic activity.
d. Is an economic resource along with land, labor, capital and entrepreneurship.
a. Is needed in order for barter to occur.
b. Is primarily commodity money.
c. Facilitates the circular flow of economic activity.
d. Is an economic resource along with land, labor, capital and entrepreneurship.
In order to gain from trade, it is necessary to
a. Specialize according to comparative advantages.
b. Specialize according to absolute advantage.
c. Find a trading partner with an absolute advantage in something.
d. Find a trading partner without an absolute advantage in something.
a. Specialize according to comparative advantages.
b. Specialize according to absolute advantage.
c. Find a trading partner with an absolute advantage in something.
d. Find a trading partner without an absolute advantage in something.
When a country can produce a good with fewer resources than any
other country, the country has
a. A comparative advantage.
b. A resource advantage.
c. An absolute advantage.
d. An unfair advantage.
a. A comparative advantage.
b. A resource advantage.
c. An absolute advantage.
d. An unfair advantage.
A country has a comparative advantage in the production of a
good if it can produce that good _______ than can other countries.
a. With fewer raw materials
b. At a lower opportunity cost
c. At a higher quality
d. With fewer labor-hours
a. With fewer raw materials
b. At a lower opportunity cost
c. At a higher quality
d. With fewer labor-hours
By having an efficient economy today, a country's future
production possibilities frontier will allow the production of
a. Both more guns and more butter.
b. More guns, but not more butter.
c. More butter, but not more guns.
d. Neither more guns nor more butter.
a. Both more guns and more butter.
b. More guns, but not more butter.
c. More butter, but not more guns.
d. Neither more guns nor more butter.
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