ECON 2100 Test 1

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CH 6: 10. A surplus results when a a. nonbinding price floor is imposed on a market. b. nonbinding price floor is removed from a market. c. binding price floor is imposed on a market. d. binding price floor is removed from a market.

c. binding price floor is imposed on a market.

CH 6: 19. If a tax is levied on the sellers of flour, then a. buyers will bear the entire burden of the tax. b. sellers will bear the entire burden of the tax. c. buyers and sellers will share the burden of the tax. d. the government will bear the entire burden of the tax.

c. buyers and sellers will share the burden of the tax.

CH 6: 1. Price controls a. always produce a fair outcome. b. always produce an efficient outcome. c. can generate inequities of their own. d. All of the above are correct

c. can generate inequities of their own.

CH 2: 9. Positive statements are a. prescriptive. b. claims about how the world should be. c. claims about how the world is. d. made by economists speaking as policy advisers.

c. claims about how the world is.

CH 4: 8. Lead is an important input in the production of crystal. If the price of lead decreases, then we would expect the supply of a. crystal to be unaffected. b. crystal to decrease. c. crystal to increase. d. lead to increase.

c. crystal to increase.

CH 6: 8. If the government removes a binding price floor from a market, then the price paid by buyers will a. increase, and the quantity sold in the market will increase. b. increase, and the quantity sold in the market will decrease. c. decrease, and the quantity sold in the market will increase. d. decrease, and the quantity sold in the market will decrease.

c. decrease, and the quantity sold in the market will increase.

CH 4: 11. Equilibrium price must decrease when demand a. increases and supply does not change, when demand does not change and supply decreases, and when demand decreases and supply increases simultaneously. b. increases and supply does not change, when demand does not change and supply decreases, and when demand increases and supply decreases simultaneously. c. decreases and supply does not change, when demand does not change and supply increases, and when demand decreases and supply increases simultaneously. d. decreases and supply does not change, when demand does not change and supply increases, and when demand increases and supply decreases simultaneously.

c. decreases and supply does not change, when demand does not change and supply increases, and when demand decreases and supply increases simultaneously.

CH 1: 13.Brenda is an excellent baker and Floyd has a plentiful farm. If Floyd trades eggs and butter to Brenda for some of Brenda's bread and pastries, a. only Floyd is made better off by trade. b. only Brenda is made better off by trade. c. both Floyd and Brenda are made better off by trade. d. neither Floyd nor Brenda are made better off by trade.

c. both Floyd and Brenda are made better off by trade.

CH 4: 10. Which of the following events must cause equilibrium price to fall? a. demand increases and supply decreases b. demand and supply both decrease c. demand decreases and supply increases d. demand and supply both increase

c. demand decreases and supply increases

CH 2: 1. For an economist, the idea of making assumptions is regarded generally as a a. bad idea, since doing so leads to the omission of important ideas and variables from economic models. b. bad idea, since doing so invariably leads to data-collection problems. c. good idea, since doing so helps to simplify the complex world and make it easier to understand. d. good idea, since economic analysis without assumptions leads to complicated results that the general public finds hard to understand.

c. good idea, since doing so helps to simplify the complex world and make it easier to understand.

CH 3: 9. The producer that requires a smaller quantity of inputs to produce a certain amount of a good, relative to the quantities of inputs required by other producers to produce the same amount of that good, a. has a low opportunity cost of producing that good, relative to the opportunity costs of other producers. b. has a comparative advantage in the production of that good. c. has an absolute advantage in the production of that good. d. has an artificial advantage in the production of that good.

c. has an absolute advantage in the production of that good.

CH 1: 15. The decisions of firms and households are guided by prices and self-interest in a a. command economy. b. centrally-planned economy. c. market economy. d. All of the above are correct.

c. market economy.

CH 6: 14. If a tax is levied on the sellers of a product, then there will be a(n) a. downward shift of the demand curve. b. upward shift of the demand curve. c. movement up and to the left along the demand curve. d. movement down and to the right along the demand curve.

c. movement up and to the left along the demand curve.

CH 2: 7. The production possibilities frontier provides an illustration of the principle that a. trade can make everyone better off. b. governments can sometimes improve market outcomes. c. people face trade-offs. d. people respond to incentives.

c. people face trade-offs.

CH 1: 4. While pollution regulations yield the benefit of a cleaner environment and the improved health that comes with it, the regulations come at the cost of reducing the incomes of the regulated firms' owners, workers, and customers. This statement illustrates the principle that a. trade can make everyone better off. b. rational people think at the margin. c. people face tradeoffs. d. people respond to incentives.

c. people face tradeoffs.

CH 1: 14. The invisible hand works to promote general well-being in the economy primarily through a. government intervention. b. the political process. c. people's pursuit of self-interest. d. altruism.

c. people's pursuit of self-interest.

CH 6: 2. In a competitive market free of government regulation, a. price adjusts until quantity demanded is greater than quantity supplied. b. price adjusts until quantity demanded is less than quantity supplied. c. price adjusts until quantity demanded equals quantity supplied. d. supply adjusts to meet demand at every price.

c. price adjusts until quantity demanded equals quantity supplied.

CH 5: 15. Suppose that when the price of wheat is $2 per bushel, farmers can sell 10 million bushels. When the price of wheat is $3 per bushel, farmers can sell 8 million bushels. Which of the following statements is true? The demand for wheat is a. income inelastic, so an increase in the price of wheat will increase the total revenue of wheat farmers. b. income elastic, so an increase in the price of wheat will increase the total revenue of wheat farmers. c. price inelastic, so an increase in the price of wheat will increase the total revenue of wheat farmers. d. price elastic, so an increase in the price of wheat will increase the total revenue of wheat farmers

c. price inelastic, so an increase in the price of wheat will increase the total revenue of wheat farmers.

CH 1: 16. For markets to work well, there must be a. market power. b. a central planner. c. property rights. d. abundant, not scarce, resources.

c. property rights.

CH 1: 6. Ed spends an hour studying instead of watching tv with his friends. The opportunity cost to him of studying is a. the improvement in his grades from studying for the hour. b. the improvement in his grades from studying minus the enjoyment of watching tv. c. the enjoyment he would have received if he had watched tv with his friends. d. zero. Since Ed chose to study rather than to watch tv, the value of studying must have been greater than the value of watching tv.

c. the enjoyment he would have received if he had watched tv with his friends.

CH 6: 11. If a binding price floor is imposed on the video game market, then a. the demand for video games will decrease. b. the supply of video games will increase. c. a surplus of video games will develop. d. All of the above are correct.

c. a surplus of video games will develop.

CH 6: 5. A price ceiling will be binding only if it is set a. equal to the equilibrium price. b. above the equilibrium price. c. below the equilibrium price. d. either above or below the equilibrium price.

c. below the equilibrium price.

CH 1: 5. In economics, the cost of something is a. the dollar amount of obtaining it. b. always measured in units of time given up to get it. c. what you give up to get it. d. often impossible to quantify, even in principle.

c. what you give up to get it.

CH 6: 12. IMPORTANT - Flip Card.

Note - Question 12 under CH 6 Practice Questions use figures that I can not upload to Quizlet, please refer to the study guide.

CH 3: 11-13. IMPORTANT - Flip Card.

Note - Questions 11-13 under CH 3 Practice Questions use figures that I can not upload to Quizlet, please refer to the study guide.

CH 4: 17-38. IMPORTANT - Flip Card.

Note - Questions 17-38 under CH 4 Practice Questions use figures that I can not upload to Quizlet, please refer to the study guide.

CH 6: 20-24. IMPORTANT. Flip Card.

Note - Questions 20-24 under CH 6 Practice Questions use figures that I can not upload to Quizlet, please refer to the study guide.

CH 3: 3-7. IMPORTANT - Flip Card.

Note - Questions 3-7 under CH 3 Practice Questions use figures that I can not upload to Quizlet, please refer to the study guide.

CH 5: 1. The price elasticity of demand measures a. buyers' responsiveness to a change in the price of a good. b. the extent to which demand increases as additional buyers enter the market. c. how much more of a good consumers will demand when incomes rise. d. the movement along a supply curve when there is a change in demand.

a. buyers' responsiveness to a change in the price of a good.

CH 6: 24. Refer to Figure 6-14. The per-unit burden of the tax on sellers is a. $6. b. $8. c. $10. d. $14.

a. $6.

CH 3: 7. Refer to Table 3-6. If England and Spain specialize and trade based on the principle of comparative advantage, England will export a. bread and Spain will export cheese. b. bread and Spain will export bread. c. cheese and Spain will export cheese. d. cheese and Spain will export bread.

a. bread and Spain will export cheese.

CH 5: 13. Consider luxury weekend hotel packages in Las Vegas. When the price is $250, the quantity demanded is 2,000 packages per week. When the price is $280, the quantity demanded is 1,700 packages per week. Using the midpoint method, the price elasticity of demand is about a. 1.43, and an increase in the price will cause hotels' total revenue to decrease. b. 1.43, and an increase in the price will cause hotels' total revenue to increase. c. 0.70, and an increase in the price will cause hotels' total revenue to decrease. d. 0.70, and an increase in the price will cause hotels' total revenue to increase

a. 1.43, and an increase in the price will cause hotels' total revenue to decrease.

CH 3: 15. Belarus has a comparative advantage in the production of linen, but Russia has an absolute advantage in the production of linen. If these two countries decide to trade, a. Belarus should export linen to Russia. b. Russia should export linen to Belarus. c. Trading linen would provide no net advantage to either country. d. Without additional information about opportunity costs, this question cannot be answered.

a. Belarus should export linen to Russia.

CH 4: 13. Suppose the incomes of buyers in a market for a particular normal good decrease and there is also a reduction in input prices. What would we expect to occur in this market? a. Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous. b. Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous. c. Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous. d. Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.

a. Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous.

CH 6: 7. Suppose the government has imposed a price floor on the market for soybeans. Which of the following events could transform the price floor from one that is not binding into one that is binding? a. Farmers use improved, draught-resistant seeds, which lowers the cost of growing soybeans. b. The number of farmers selling soybeans decreases. c. Consumers' income increases, and soybeans are a normal good. d. The number of consumers buying soybeans increases.

a. Farmers use improved, draught-resistant seeds, which lowers the cost of growing soybeans.

CH 4: 24. Refer to Figure 4-22. Which of the four panels illustrates an increase in quantity supplied? a. Panel (a) b. Panel (b) c. Panel (c) d. Panel (d)

a. Panel (a)

CH 4: 25. Refer to Figure 4-22. Which of the four panels represents the market for pizza delivery in a college town as we go from summer to the beginning of the fall semester? a. Panel (a) b. Panel (b) c. Panel (c) d. Panel (d)

a. Panel (a)

CH 3: 8. If Shawn can produce donuts at a lower opportunity cost than Sue, then a. Shawn has a comparative advantage in the production of donuts. b. Sue has a comparative advantage in the production of donuts. c. Shawn should not produce donuts. d. Shawn is capable of producing more donuts than Sue in a given amount of time.

a. Shawn has a comparative advantage in the production of donuts.

CH 1: 12. Kevin is the CEO of a large firm and a homeowner who pays a landscaper to maintain his lawn rather than do it himself. Kevin has determined that he can earn more in the hour it would take him to work on his lawn than he must pay his landscaper. This scenario is an example of which principle of economics? a. Trade can make everyone better off. b. Markets are usually a good way to organize economic activity. c. Governments can sometimes improve market outcomes. d. Prices rise when the government prints too much money.

a. Trade can make everyone better off.

CH 4: 18. Refer to Figure 4-22. Panel (b) shows which of the following? a. a decrease in demand and a decrease in quantity supplied b. a decrease in demand and a decrease in supply c. a decrease in quantity demanded and a decrease in quantity supplied d. a decrease in quantity demanded and a decrease in supply

a. a decrease in demand and a decrease in quantity supplied

CH 3: 1. The opportunity cost of obtaining more of one good is shown on the production possibilities frontier as the a. amount of the other good that must be given up. b. market price of the additional amount produced. c. amount of resources that must be devoted to its production. d. number of dollars that must be spent to produce it.

a. amount of the other good that must be given up.

CH 4: 17. Refer to Figure 4-22. Panel (a) shows which of the following? a. an increase in demand and an increase in quantity supplied b. an increase in demand and an increase in supply c. an increase in quantity demanded and an increase in quantity supplied d. an increase in quantity demanded and an increase in supply

a. an increase in demand and an increase in quantity supplied

CH 6: 18. When a tax is placed on the buyers of cell phones, the size of the cell phone market a. and the effective price received by sellers both decrease. b. decreases, but the effective price received by sellers increases. c. increases, but the effective price received by sellers decreases. d. and the effective price received by sellers both increase.

a. and the effective price received by sellers both decrease.

CH 4: 12. A decrease in input costs to firms in a market will result in a(n) a. decrease in equilibrium price and an increase in equilibrium quantity. b. decrease in equilibrium price and a decrease in equilibrium quantity. c. increase in equilibrium price and a decrease in equilibrium quantity. d. increase in equilibrium price and an increase in equilibrium quantity

a. decrease in equilibrium price and an increase in equilibrium quantity.

CH 6: 17. A tax on the buyers of cereal will increase the price of cereal paid by buyers, a. decrease the effective price of cereal received by sellers, and decrease the equilibrium quantity of cereal. b. decrease the effective price of cereal received by sellers, and increase the equilibrium quantity of cereal. c. increase the effective price of cereal received by sellers, and decrease the equilibrium quantity of cereal. d. increase the effective price of cereal received by sellers, and increase the equilibrium quantity of cereal.

a. decrease the effective price of cereal received by sellers, and decrease the equilibrium quantity of cereal.

CH 2: 12. Normative statements are not a. descriptive. b. prescriptive. c. claims about how the world should be. d. made by economists speaking as policy advisers.

a. descriptive.

CH 5: 11. When the price of used cds is $4, Daphne buys five per month. When the price is $3, she buys nine per month. Daphne's demand for used cds is a. elastic, and her demand curve would be relatively flat. b. elastic, and her demand curve would be relatively steep. c. inelastic, and her demand curve would be relatively flat. d. inelastic, and her demand curve would be relatively steep.

a. elastic, and her demand curve would be relatively flat.

CH 5: 9. A good will have a more elastic demand, the a. greater the availability of close substitutes. b. more broad the definition of the market. c. shorter the period of time. d. more it is regarded as a necessity.

a. greater the availability of close substitutes.

CH 4: 16. Which of the following sets of events must cause an increase in the price of a new house? (Assume that they are normal goods.) a. higher wages for carpenters, higher wood prices, increases in consumer incomes, higher apartment rents, increases in population, and expectations of higher house prices in the future b. lower wages for carpenters, lower wood prices, increases in consumer incomes, higher apartment rents, increases in population and expectations of higher house prices in the future c. lower wages for carpenters, higher wood prices, decreases in consumer incomes, higher apartment rents, decreases in population and expectations of higher house prices in the future d. higher wages for carpenters, lower wood prices, decreases in consumer incomes, low

a. higher wages for carpenters, higher wood prices, increases in consumer incomes, higher apartment rents, increases in population, and expectations of higher house prices in the future

CH 2: 6. Production is efficient if the economy is producing at a point a. on the production possibilities frontier. b. outside the production possibilities frontier. c. on or inside the production possibilities frontier. d. inside the production possibilities frontier.

a. on the production possibilities frontier.

CH 3: 16. What you give up to obtain an item is called your a. opportunity cost. b. explicit cost. c. true cost. d. direct cost.

a. opportunity cost.

CH 6: 15. A $2.00 tax levied on the sellers of birdhouses will shift the supply curve a. upward by exactly $2.00. b. upward by less than $2.00. c. downward by exactly $2.00. d. downward by less than $2.00.

a. upward by exactly $2.00.

CH 6: 21. Refer to Figure 6-14. The effective price that sellers receive after the tax is imposed is a. $6. b. $10. c. $16. d. $24.

b. $10.

CH 6: 23. Refer to Figure 6-14. The per-unit burden of the tax on buyers is a. $6. b. $8. c. $14. d. $24.

b. $8.

CH 3: 4. Refer to Figure 3-2. Originally, Ben was producing at his point A and Jerry was producing at his point A. Then, each person decided to specialize in the product in which he has a comparative advantage. Furthermore, they agreed to trade 4 pounds of cones for 2 pounds of ice cream. As a result of these new arrangements, the gains from trade relative to the original situation are as follows: a. 1 additional pound of cones for Ben and 1 additional pound of ice cream for Jerry. b. 1 additional pound of ice cream for Ben and 1 additional pound of cones for Jerry. c. 2 additional pounds of ice cream for Ben and 2 additional pounds of cones for Jerry. d. 2 additional pounds of ice cream for Ben and 1 additional pound of cones for Jerry.

b. 1 additional pound of ice cream for Ben and 1 additional pound of cones for Jerry.

CH 5: 5. Suppose there is a 6 percent increase in the price of good X and a resulting 6 percent decrease in the quantity of X demanded. Price elasticity of demand for X is a. 0. b. 1. c. 6. d. 36.

b. 1.

CH 3: 5. Refer to Table 3-6. The opportunity cost of 1 unit of bread in England is a. 4 units of cheese. b. 2 units of cheese. c. 1 unit of cheese. d. 1/2 unit of cheese.

b. 2 units of cheese.

CH 3: 11. Refer to Figure 3-1. The opportunity cost of 1 bushel of wheat for Cliff is a. 1/3 bushel of corn. b. 2/3 bushel of corn. c. 1 bushel of corn. d. 3/2 bushels of corn.

b. 2/3 bushel of corn.

CH 4: 14. If macaroni and cheese is an inferior good, what would happen to the equilibrium price and quantity of macaroni and cheese if consumers' incomes rise? a. Both the equilibrium price and quantity would increase. b. Both the equilibrium price and quantity would decrease. c. The equilibrium price would increase, and the equilibrium quantity would decrease. d. The equilibrium price would decrease, and the equilibrium quantity would increase

b. Both the equilibrium price and quantity would decrease.

CH 4: 15. If consumers often purchase muffins to eat while they drink their lattés at local coffee shops, what would happen to the equilibrium price and quantity of lattés if the price of muffins rises? a. Both the equilibrium price and quantity would increase. b. Both the equilibrium price and quantity would decrease. c. The equilibrium price would increase, and the equilibrium quantity would decrease. d. The equilibrium price would decrease, and the equilibrium quantity would increase.

b. Both the equilibrium price and quantity would decrease.

CH 4: 23. Refer to Figure 4-22. Which of the four panels illustrates a decrease in quantity supplied? a. Panel (a) b. Panel (b) c. Panel (c) d. Panel (d)

b. Panel (b)

CH 4: 26. Refer to Figure 4-22 Which of the four panels represents the market for winter coats as we progress from winter to spring? a. Panel (a) b. Panel (b) c. Panel (c) d. Panel (d)

b. Panel (b)

CH 1: 8. Katie is planning to sell her house, and she is considering making two upgrades to the house before listing it for sale. Replacing the carpeting will cost her $2,500 and replacing the roof will cost her $9,000. Katie expects the new carpeting to increase the value of her house by $3,000 and the new roof to increase the value of her house by $7,000. a. She should make both improvements to her house. b. She should replace the carpeting but not replace the roof. c. She should replace the roof but not replace the carpeting. d. She should not make either improvement to her house.

b. She should replace the carpeting but not replace the roof.

CH 6: 6. Suppose the government has imposed a price ceiling on laptop computers. Which of the following events could transform the price ceiling from one that is not binding into one that is binding? a. Improvements in production technology reduce the costs of producing laptop computers. b. The number of firms selling laptop computers decreases. c. Consumers' income decreases, and laptop computers are a normal good. d. The number of consumers buying laptop computers decreases.

b. The number of firms selling laptop computers decreases.

CH 5: 7. If the price elasticity of demand for a good is 6, then a 3 percent decrease in price results in a. a 20 percent increase in the quantity demanded. b. an 18 percent increase in the quantity demanded. c. a 2 percent increase in the quantity demanded. d. a 1.8 percent increase in the quantity demanded.

b. an 18 percent increase in the quantity demanded.

CH 4: 3. Which of the following would shift the demand curve for gasoline to the right? a. a decrease in the price of gasoline b. an increase in consumer income, assuming gasoline is a normal good c. an increase in the price of cars, a complement for gasoline d. a decrease in the expected future price of gasoline

b. an increase in consumer income, assuming gasoline is a normal good

CH 3: 6. Refer to Table 3-6. England has a comparative advantage in a. bread and Spain has an absolute advantage in cheese. b. bread and Spain has an absolute advantage in neither good. c. cheese and Spain has an absolute advantage in both goods. d. both goods and Spain has an absolute advantage in cheese.

b. bread and Spain has an absolute advantage in neither good.

CH 2: 10. Normative statements are a. descriptive. b. claims about how the world should be. c. claims about how the world is. d. made by economists speaking as scientists.

b. claims about how the world should be.

CH 4: 2. A leftward shift of a demand curve is called a(n) a. increase in demand. b. decrease in demand. c. decrease in quantity demanded. d. increase in quantity demanded.

b. decrease in demand.

CH 5: 8. Elasticity of demand is closely related to the slope of the demand curve. The more responsive buyers are to a change in price, the a. steeper the demand curve will be. b. flatter the demand curve will be. c. further to the right the demand curve will sit. d. closer to the vertical axis the demand curve will sit.

b. flatter the demand curve will be.

CH 2: 5. In the circular-flow diagram, a. firms are buyers in the markets for goods and services. b. households are sellers in the markets for the factors of production. c. firms are sellers in the markets for factors of production and in the markets for goods and services. d. dollars that are spent on goods and services flow directly from firms to households.

b. households are sellers in the markets for the factors of production.

CH 1: 9. Economists are particularly adept at understanding that people respond to a. laws. b. incentives. c. punishments more than rewards. d. rewards more than punishments.

b. incentives.

CH 2: 2. Economists make assumptions to a. provide issues for political discussion. b. make a complex world easier to understand. c. make it easier to teach economic concepts and analysis. d. create policy alternatives that are incomplete or subject to criticism.

b. make a complex world easier to understand.

CH 6: 16. When a tax is placed on the buyers of a product, buyers pay a. more and sellers receive more than they did before the tax. b. more and sellers receive less than they did before the tax. c. less and sellers receive more than they did before the tax. d. less and sellers receive less than they did before the tax.

b. more and sellers receive less than they did before the tax.

CH 1: 3. Mitch has $100 to spend and wants to buy either a new amplifier for his guitar or a new mp3 player to listen to music while working out. Both the amplifier and the mp3 player cost $100, so he can only buy one. This illustrates the basic concept that a. trade can make everyone better off. b. people face trade-offs c. rational people think at the margin. d. people respond to incentives.

b. people face trade-offs

CH 2: 11. Positive statements are not a. descriptive. b. prescriptive. c. claims about how the world is. d. made by economists speaking as scientists.

b. prescriptive.

CH 4: 5. Suppose the American Medical Association announces that men who shave their heads are less likely to die of heart failure. We could expect the current demand for a. hair gel to increase. b. razors to increase. c. combs to increase. d. shampoo to increase.

b. razors to increase.

CH 6: 22. Refer to Figure 6-14. The amount of the tax per unit is a. $6. b. $8. c. $14. d. $18.

c. $14.

CH 5: 14. When the local used bookstore prices economics books at $15 each, it generally sells 70 books per month. If it lowers the price to $7, sales increase to 90 books per month. Given this information, we know that the price elasticity of demand for economics books is about a. 2.91, and an increase in price from $7 to $15 results in an increase in total revenue. b. 2.91, and an increase in price from $7 to $15 results in a decrease in total revenue. c. 0.34, and an increase in price from $7 to $15 results in an increase in total revenue. d. 0.34, and an increase in price from $7 to $15 results in a decrease in total revenue.

c. 0.34, and an increase in price from $7 to $15 results in an increase in total revenue.

CH 5: 12. If a 15% increase in price for a good results in a 20% decrease in quantity demanded, the price elasticity of demand is a. 0.75. b. 1.25. c. 1.33. d. 1.60.

c. 1.33.

CH 3: 3. Refer to Figure 3-2. For Jerry, the opportunity cost of 1 pound of ice cream is a. 1/3 pound of cones. b. 2/3 pound of cones. c. 3/2 pounds of cones. d. 2 pounds of cones.

c. 3/2 pounds of cones.

CH 3: 12. Refer to Figure 3-1. Which of the following statements is correct? a. Paul has a comparative advantage in both wheat and corn. b. Paul has a comparative advantage in wheat and Cliff has a comparative advantage in corn. c. Cliff has a comparative advantage in wheat and Paul has a comparative advantage in corn. d. Cliff has a comparative advantage in both wheat and corn.

c. Cliff has a comparative advantage in wheat and Paul has a comparative advantage in corn.

CH 3: 13. Refer to Figure 3-3. In order to maximize total output, a. Ginger should specialize in tap shoes and Fred should specialize in ballet slippers. b. Ginger should specialize in both goods and Fred should specialize in neither good. c. Ginger should specialize in ballet slippers and Fred should specialize in tap shoes. d. Ginger should specialize in neither good and Fred should specialize in both goods

c. Ginger should specialize in ballet slippers and Fred should specialize in tap shoes.

CH 4: 22. Refer to Figure 4-22. Which of the four panels illustrates an increase in quantity demanded? a. Panel (a) b. Panel (b) c. Panel (c) d. Panel (d)

c. Panel (c)

CH 4: 27. Refer to Figure 4-22. Which of the four panels represents the market for cars as a result of the adoption of new technology on assembly lines? a. Panel (a) b. Panel (b) c. Panel (c) d. Panel (d)

c. Panel (c)

CH 3: 14. If Shawn can produce more donuts in one day than Sue can produce in one day, then a. Shawn has a comparative advantage in the production of donuts. b. Sue has a comparative advantage in the production of donuts. c. Shawn has an absolute advantage in the production of donuts. d. Shawn should produce donuts and Sue should spend her time on a different activity.

c. Shawn has an absolute advantage in the production of donuts.

CH 4: 1. Which of these statements best represents the law of demand? a. When buyers' tastes for a good increase, they purchase more of the good. b. When income levels increase, buyers purchase more of most goods. c. When the price of a good decreases, buyers purchase more of the good. d. When buyers' demands for a good increase, the price of the good increases.

c. When the price of a good decreases, buyers purchase more of the good.

CH 6: 20. Refer to Figure 6-14. The price that buyers pay after the tax is imposed is a. $8. b. $10. c. $16. d. $24.

d. $24.

CH 1: 1. Approximately what percentage of the world's economies experience scarcity? a. 10% b. 40% c. 85% d. 100%

d. 100%

CH 5: 6. If the price elasticity of demand for a good is 4.0, then a 10 percent increase in price results in a a. 0.4 percent decrease in the quantity demanded. b. 2.5 percent decrease in the quantity demanded. c. 4 percent decrease in the quantity demanded. d. 40 percent decrease in the quantity demanded

d. 40 percent decrease in the quantity demanded

CH 3: 2. Which of the following statements is not correct? a. Trade allows for specialization. b. Trade has the potential to benefit all nations. c. Trade allows nations to consume outside of their production possibilities curves. d. Absolute advantage is the driving force of specialization.

d. Absolute advantage is the driving force of specialization.

CH 1: 11. The principle that trade can make everyone better off applies to a. individuals. b. families. c. countries. d. All of the above

d. All of the above

CH 1: 2. The principle that "people face tradeoffs" applies to a. individuals. b. families. c. societies. d. All of the above are correct.