Principles of micro eco Exam 1

Which of the following events would cause a movement upward and to the left along the demand curve for olives?

The price of olives rises.

Brad has an absolute advantage in the production of

neither good and Theresa has an absolute advantage in the production of both goods.

The production possibilities frontier provides an illustration of the principle that

people face trade-offs.

Candice is planning her activities for a hot summer day. She would like to go to the local swimming pool and see the latest blockbuster movie, but because she can only get tickets to the movie for the same time that the pool is open she can only choose one activity. This illustrates the basic principle that

people face tradeoffs.

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

people face tradeoffs.

Unemployment would cause an economy to

produce inside its production possibilities frontier.

A professor spends 10 hours per day giving lectures and writing papers. For the professor, a graph that shows his various possible mixes of output (lectures given per day and papers written per day) is called his

production possibilities frontier.

Jamaica has a comparative advantage in the production of

radios and Norway has a comparative advantage in the production of coolers.

Jamaica has an absolute advantage in the production of

radios and Norway has an absolute advantage in the production of coolers.

Jamaica should specialize in the production of

radios and Norway should specialize in the production of coolers.

The phenomenon of scarcity stems from the fact that

resources are limited.

The overriding reason why households and societies face many decisions is that

resources are scarce.

Production possibilities frontiers are usually bowed outward. This is because

resources are specialized; that is, some are better at producing particular goods rather than other goods.

A decrease in quantity supplied

results in a movement downward and to the left along a fixed supply curve.

Economics deals primarily with the concept of

scarcity.

Efficiency means that

society is getting the maximum benefits from its scarce resources.

The opportunity cost of an item is

what you give up to get that item.

An economy's production possibilities frontier is also its consumption possibilities frontier

when the economy is self-sufficient.

In the simple circular-flow diagram, who buys the factors of production?

firms only

A marginal change is a

small, incremental adjustment.

Which of the following would shift the supply of Green Bay Packers football jerseys to the left?

The cost of the fabric used to make the jerseys increases.

Which of the following represents Zimbabwe's and Portugal's production possibilities frontiers when each country has 60 minutes of machine time available?

Zimbabwe Portugal 6 hairbrushes 10 hairbrushes 20 toothbrushes 10+ toothbrushes

An increase in demand is represented by a

rightward shift of a demand curve.

An increase in supply is represented by a

rightward shift of a supply curve.

When the price of a good is higher than the equilibrium price,

sellers desire to produce and sell more than buyers wish to purchase.

A improvement in production technology will shift the

supply curve to the right.

Wheat is the main input in the production of flour. If the price of wheat decreases, then we would expect the

supply of flour to increase.

In most societies, resources are allocated by

the combined actions of millions of households and firms.

A surplus exists in a market if

the current price is above its equilibrium price.

A shortage exists in a market if

the current price is below its equilibrium price.

Buyers are able to buy all they want to buy and sellers are able to sell all they want to sell at

the equilibrium price but not above or below the equilibrium price.

Today's demand curve for gasoline could shift in response to a change in

the expected future price of gasoline.

The bowed shape of the production possibilities frontier can be explained by the fact that

the opportunity cost of one good in terms of the other depends on how much of each good the economy is producing.

Canada and the U.S. both produce wheat and computer software. Canada is said to have the comparative advantage in producing wheat if

the opportunity cost of producing a bushel of wheat is lower for Canada than it is for the U.S.

If, at the current price, there is a shortage of a good, then

the price is below the equilibrium price.

A movement along the supply curve might be caused by a change in

the price of the good or service that is being supplied.

Efficiency is illustrated by

the production possibilities frontier only.

A decrease in the number of sellers in the market causes

the supply curve to shift to the left.

Ramona decides to spend two hours taking a nap rather than attending her classes. Her opportunity cost of napping is

the value of the knowledge she would have received had she attended class.

When an economy is operating inside its production possibilities frontier, we know that

there are unused resources or inefficiencies in the economy.

The demand for a good or service is determined by

those who buy the good or service.

The supply of a good or service is determined by

those who sell the good or service.

If the supply of a product increases, then we would expect equilibrium price

to decrease and equilibrium quantity to increase.

High-school athletes who skip college to become professional athletes

understand that the opportunity cost of attending college is very high.

At the equilibrium price, the quantity of the good that buyers are willing and able to buy

exactly equals the quantity that sellers are willing and able to sell.

Jamaica's opportunity cost of one cooler is

0.5 radios, and Norway's opportunity cost of one cooler is 0.125 radios.

Production Possibilities for Picnicland Hotdogs Burgers 1800 0 1350 450 900 750 450 975 0 1125 Refer to Table 2-4. What is the opportunity cost to Picnicland of increasing the production of hotdogs from 450 to 900?

225 burgers

Suppose Jamaica decides to increase its production of radios by 12. What is the opportunity cost of this decision?

24 coolers

Assume that England and France each has 40 labor hours available. If each country divides its time equally between the production of cheese and wine, then total production is

24 units of cheese and 15 units of wine

What is Theresa's opportunity cost of producing one bushel of wheat?

3/5 pound of beef

Table 2-3Production Possibilities for Footville Shoes Socks 800 0 600 400 400 700 200 900 0 1000 Refer to Table 2-3. What is the opportunity cost to Footville of increasing the production of shoes from 400 to 600?

300 socks

What is Theresa's opportunity cost of producing one pound of beef?

5/3 bushels of wheat

What is Brad's opportunity cost of producing one bushel of wheat?

5/6 pound of beef

What is Brad's opportunity cost of producing one pound of beef?

6/5 bushels of wheat

Assume that Greece has a comparative advantage in fish and Germany has a comparative advantage in cars. Also assume that Germany has an absolute advantage in both fish and cars. If these two countries specialize and trade so as to maximize the benefits of specialization and trade, then

All of the above are correct.

On a bowed production possibilities frontier, as you move down along the curve

All of the above are correct.

Which of the following is a correct statement about production possibilities frontiers?

An economy can produce at any point on or inside the production possibilities frontier, but not outside the frontier.

Both Dave and Caroline produce sweaters and socks. If Dave's opportunity cost of 1 sweater is 3 socks and Caroline's opportunity cost of 1 sweater is 5 socks, then

Dave has a comparative advantage in the production of sweaters.

Which of the following is an example of a capital input?

a computer

An decrease in the price of oranges would lead to a(n)

a movement down and to the left along the supply curve for oranges.

Which of the following transactions does not take place in the markets for factors of production in the circular-flow diagram?

a woman buys corn for dinner

Rational people make decisions "at the margin" by comparing

additional costs and benefits.

The opportunity cost of obtaining more of one good is shown on the production possibilities frontier as the

amount of the other good that must be given up.

If the demand for a product increases, then we would expect equilibrium price

and equilibrium quantity both to increase.

Brad has a comparative advantage in the production of

beef and Theresa has a comparative advantage in the production of wheat.

Brad should specialize in the production of

beef and Theresa should specialize in the production of wheat.

If a shortage exists in a market, then we know that the actual price is

below the equilibrium price, and quantity demanded is greater than quantity supplied.

Any point on a country's production possibilities frontier represents a combination of two goods that an economy

can produce using all available resources and technology.

The most obvious benefit of specialization and trade is that they allow us to

consume more goods than we otherwise would be able to consume.

A movement upward and to the left along a demand curve is called a(n)

decrease in quantity demanded.

An increase in the price of a good will

decrease quantity demanded.

Kari downloads 7 songs per month when the price is $1.29 per song and 10 songs per month when the price is $0.99 per song. Kari's behavior demonstrates the law of

demand

Economists use the word equality to describe a situation in which

each member of society has the same income.

If Kindle e-readers and Nook e-readers are substitutes, a higher price for Nooks would result in a(n)

increase in the demand for Kindles.

If a good is normal, then an increase in income will result in a(n)

increase in the demand for the good.

You lose your job and, as a result, you buy more frozen pizzas. For you, frozen pizza are a(n)

inferior good.

Factors of production are

inputs into the production process.

In the circular-flow diagram, which of the following items represents a payment for a factor of production?

interest

The circular-flow diagram

is an economic model. 2) incorporates two types of decision makers: households and firms. 3) represents the flows of inputs, outputs, and dollars. All the above is correct

A decrease in demand is represented by a

leftward shift of a demand curve.

Which markets are represented in the simple circular-flow diagram?

markets for goods and services and markets for factors of production

In the circular-flow diagram, which of the following is not a factor of production?

money