ECON Exam 1, Exam 3, ECON Exam 2

Refer to the graph below. How many roadsters are produced at the point where BMW produces 800 SUVs

0

Refer to the graph below. What is the opportunity cost of moving from point B to point C?

150 aircraft carriers

Consider the table below. What is country A's opportunity cost of producing 1 unit of clothing?

2 units of food

Refer to the graph below. What is the opportunity cost of moving from point B to point C?

200 roadsters

Refer to the graph below. Which of the following combinations of pies and cakes is unattainable given existing resources?

4 cakes and 7 pies

Refer to the graph below. What is the opportunity cost of producing 400 aircraft carriers?

600 automobiles

In the circular-flow diagram, which arrow shows the flow of spending by households?

A

What type of statement would "A minimum wage actually reduces employment" be considered?

A positive statement

Which of the following describes two goods that are substitutes?

As the price of one of the goods increases, the demand for the other good increases.

In the circular-flow diagram, which arrow shows the flow of factors of production?

C

Refer to the graphs below. If you have a comparative advantage in the production of apples, what point would best represent your production with trade?

C

Refer to the graph below. Which of the following combinations is unattainable with the current resources available in this economy?

Combination G

Refer to the graphs below. Each graph represents one country. Which country should specialize in the production of chips?

Country A

Consider the table below. Which country has a comparative advantage in the production of each good?

Country A has a comparative advantage in the production of food; Country B has a comparative advantage in the production of clothing

The table below shows the quantity of two goods that a worker in Country A and a worker in Country B can produce per day. Which country has an absolute advantage in the production of each good?

Country A has an absolute advantage in the production of each good.

Refer to the graphs below. Each graph represents one country. Which country has a comparative advantage in the production of shirts?

Country B

How will a decrease in the expected future price of Red Bull affect the demand and supply of Red Bull?F

Demand will fall and supply will rise.

According to Adam Smith, which of the following is necessary for the proper functioning of the market system?

For markets to work, people must be free to pursue their self-interest.

According to Adam Smith, which of the following is true?

Individuals usually act in a rational, self-interested way.

Refer to the graph below. As you move from point A to point B and then to point C on this graph, what happens to the marginal opportunity cost?

It increases.

Which of the following best describes the characteristics of models used in economics?

Models are simplifications of reality that include only essential elements and exclude less relevant details.

In the circular-flow diagram, which arrow shows the flow of income paid to the factors of production?

Not C

Refer to the graph below. The graph shows the data from Solved Problem 2-1. What is the opportunity cost of switching from Choice D to Choice E?

One cake

According to Adam Smith, which of the following is the instrument the invisible hand uses to direct economic activity?

Price

Refer to the graph below. What happens to quantity demanded along this demand curve?

Quantity demanded increases as the price decreases.

Which of the following statements is most consistent with positive economic analysis?

The United States would be better off if it specialized in the production of some goods, and then traded some of them to other countries.

If both demand and supply decrease in the market for Red Bull, how will equilibrium be affected?

The impact on equilibrium price will be ambiguous, but the equilibrium quantity will fall.

Refer to the graph below. Along the demand curve, what happens to the quantity demanded as the price falls from $250 to $200 per player?

The quantity demanded increases from 35 million to 40 million players per month.

When two goods are complements, which of the following is true?

The two goods are used together.

Refer to the graph below. What does the term "increasing marginal opportunity cost" mean in this graph?

There is a higher opportunity cost of producing either aircraft carriers or automobiles, so long as the quantity produced of that good is increasing.

Which of the following is not among the fundamental economic questions that every society must solve?

What goods and services will be exchanged?

When you think of an arrangement or institution that brings buyers and sellers of a good or service together, what are you thinking of?

a market

What type of assessment is one in which a person's values and political views form part of that assessment?

a normative assessment

Which of the following is achieved when a good or service is produced up to the point where the marginal benefit to consumers is equal to the marginal cost of producing it?

allocative efficiency

Refer to the graphs below. Which of the following could have caused the outward shift of the curve in the graph on the left side?

an increase in technology that affects the production of both aircraft carriers and automobiles

In the circular-flow diagram, which arrow shows the flow of goods and services?

b

In which markets are factors of production, such as labor, capital, natural resources, and entrepreneurial ability traded?

factor markets

Fill in the blanks. In a simple circular-flow model, there are flows of .

factors of production; goods and services funds received from the sale of factors of production; spending on final goods and services Both (a) and (b) are correct.\

If a country has a comparative advantage in the production of a good, then that country

has a lower opportunity cost in the production of that good.

Which of the following comprises the two key groups of participants in the circular flow of income?

households and firms

What is the outcome of enforcing contracts and property rights in a market system?

increased economic activity

Which of the following covers the study of topics such as inflation and unemployment?

macroeconomics

What types of economies require that answers be given to the following questions: what goods and services will be produced, how will the goods and services be produced, and who will receive the goods and services produced?

market economies centrally planned economies mixed economies !all of the above!

Fill in the blank:is the study of how households and businesses make choices, how they interact in markets, and how the government influences their choices.

microeconomics

Which of the following is the best classification for the economies of the United States, Canada, Japan, and Western Europe?

mixed economies

Refer to the graph below. Which of the following best represents the situation in which BMW must face a trade-off between producing SUVs and producing roadsters?

moving from B to C

What type of economic analysis is concerned with the way things ought to be?

normative analysis

Which of the following is not an essential component of an economic model?

normative statements

What is the name given to the highest-valued alternative that must be given up to engage in any activity?

oppurtnity cost

What is the stock of computers, factory buildings, and machine tools used to produce goods better known as?

physical capital

Which of the following involves an estimation of the benefits and costs of a particular action?

positive analysis

Absolute advantage is the ability of an individual, firm, or country to

produce more of a good or service than competitors using the same amount of resources.

Which of the following refers to markets where goods such as computers or services such as medical treatment are offered?

product markets

What does an economy achieve by producing a good or service at the least possible cost?

productive efficiency

What are patents and copyrights designed to do?

protect intellectual property rights

The principle of increasing marginal opportunity cost states that the more resources devoted to any activity, the ______ the payoff to devoting additional resources to that activity.

smaller

Generally speaking, for a market system to work, individuals must

take risks and act in rational, self-interested ways.

Refer to the graph below. In this problem, what is the opportunity cost of producing five cakes?

ten pies

Human capital is

the accumulated training and skills that workers possess.

In Solved Problem 1-1: "Orasure Makes a Decision" which of the concepts below is most applicable in solving the problem?

the concept of what a market is or marginal analysis

Refer to the graphs below. Each graph refers to the demand for digital music players. Which of the graphs illustrates the impact of an increase in consumers' tastes for digital music players?

the graph on the left

Refer to the graphs below. Each graph refers to the demand for digital music players. Which of the graphs illustrates the impact of an increase in population?

the graph on the left

Refer to the graphs below. Each graph refers to the demand for digital music players. Which of the graphs illustrates the impact of an increase in the expected price of digital music players in the future?

the graph on the left

Refer to the graphs below. Which graph best represents the concept of economic growth?

the graph on the left

Refer to the graph below. Which of the following moves illustrates what happens when there is a change in the price of digital music players

the move from A to B

Refer to the graph below. Which of the following moves illustrates what happens when there is a change in a determinant of the demand for digital music players other than the price of players?

the move from A to C

A production possibilities frontier will be linear instead of bowed out if

the opportunity cost of producing more of either of the two goods is constant.

Which of the following explains why there is an inverse relationship between the price of a product and the quantity of the product demanded?

the substitution effect

Which of the following terms summarizes the situation in which a buyer and a seller exchange a product in a market and, as a result, both are made better off by the transaction?

voluntary exchange+

How will a decrease in the expected future price of Red Bull affect the equilibrium price and quantity?

Equilibrium price will fall; the impact on equilibrium quantity is ambiguous.

Suppose that the income of buyers in a market increases and a technological advancement also occurs. What would we expect to happen in the market for a normal good?

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

Which of the following questions could be answered using economics?

How are the prices of goods and services determined?" "How does pollution affect the economy, and how should government policy deal with these effects?" "Why do firms engage in international trade, and how do government policies affect international trade?" !All of the above are economic questions.!

Which of the following is an example of a positive question?

If the college increased tuition, would class sizes decline?

Which of the following statements best defines scarcity?

Scarcity is a situation in which unlimited wants exceed the limited resources available to fulfill those wants.

Which of the following questions can be answered using normative economic reasoning?

Should a college cut tuition to stimulate enrollments?

What happens if a country produces a combination of goods that efficiently uses all of the resources available in the economy?

The country is operating on its production possibilities frontier.

In what type of economy does the government decide how economic resources will be allocated?

a centrally planned economy

Which of the following is the textbook's definition of a supply curve?

a curve that shows the relationship between the price of a product and the quantity of the product supplied

An early frost in the apple orchards of Washington State would cause

a decrease in the supply of apple juice, increasing equilibrium price.

Which of the following is the textbook's definition of a supply schedule?

a table that shows the relationship between the price of a product and the quantity of the product supplied

What is the name given to the practical application of an invention?

an innovation

What is the name given to the development of a new good or a new process for making a good?

an invention

Fill in the blanks. In economics, as well as in life, optimal decisions are made.

at the margin

Refer to the graph below. Which of the following combinations is inefficient?

combination F

When the price of a digital music player rises, the quantity of digital music players demanded by consumers falls. Therefore, the demand curve for digital music players is

downward sloping.

In a free market system, which of the following groups brings together the factors of production— labor, capital, and natural resources—in order to produce goods and services?

entrepreneurs

Which of the following terms best refers to a fair distribution of economic benefits?

equity

Refer to the graphs below. Each graph refers to the demand for digital music players. Which of the graphs illustrates the impact of an increase in the price of a substitute good?

the graph on the left

Refer to the graphs below. Which graph represents the concept of economic growth?

the graph on the left

Refer to the graphs below. Each graph refers to the supply for digital music players. Which of the graphs illustrates the impact of an increase in the price of a substitute in production?

the graph on the right

Refer to the graphs below. Each graph refers to the supply for digital music players. Which of the graphs illustrates the impact of an increase in the price of an input?

the graph on the right

Refer to the graphs below. Which graph better represents an improvement only in the technology used to make automobiles?

the graph on the right

Which of the following is critical to the success of a market system?

to allow individuals or firms to have exclusive use of their property

What is the purpose of an economic hypothesis?

to establish a causal relationship

What is the role of an entrepreneur?

to operate a business that produces a good or service. to bring together the factors of production—labor, capital, and natural resources. to take risks. all of the above.

Refer to the graphs below. What is point B' on your neighbor's PPF curve?

Point B' is your neighbor's consumption after trade.

Which of the following would create economic growth; that is, shift the production possibilities frontier outward?

an increase in the available labor an increase in technology that affects the production of both goods an increase in the available natural resources all of the above

Which of the following would shift the supply of Red Bull to the left?

an increase in the price of inputs used to produce Red Bull

Which of the following would result in a decrease in the demand for Red Bull?

an increase in the price of pizza, a complement of Red Bull

If a market system functions well, which of the following is necessary for the enforcement of contracts and property rights?

an independent court system.