Econ 120 Final Exam
Table (3-25) The opportunity cost of 1 toaster for Miguel is a. 1/2 mixer b. 2 hours of labor c. 2 mixers d. 20 hours of labor
1/2 mixer
Figure (3-17) Suppose Maxine decides to increase her production of tarts by 5. What is the opportunity cost of this decision? a. 2/5 pie b. 2 pies c. 5/2 pies d. 10 pies
10 pies
Figure (2-6) The opportunity cost of this economy moving from point I to point H is a. 120 pillows b. 120 blankets c. 120 blankets and 120 pillows d. 200 blankets
120 blankets
Table (3-40) Germany should specialize in the production of a. boats and import cars b. cars and import boats c. both goods and import neither good d. neither good and import both goods
cars and import boats
Table (3-32) The US has a comparative advantage in the production of a. wine b. cheese c. both wine and cheese d. neither wine or cheese
cheese
Figure (3-25) Colombia should specialize in the production of a. coffee and import soybeans b. soybeans and import coffee c. both goods and import neither good d. neither good and import both goods
coffee and import soybeans
Economists build economic models by a. generating data. b. conducting controlled experiments in a lab. c. making assumptions. d. reviewing statistical forecasts
making assumptions
A rational decision maker takes an action only if the a. marginal benefit is less than the marginal cost b. marginal benefit is greater than the marginal cost c. average benefit is greater than the average cost d. marginal benefit is greater than both the average cost and the marginal cost
marginal benefit is greater than the marginal cost
Figure (2-6) The opportunity cost of this economy moving from point K to point H is a. zero b. 50 blankets c. 60 pillows d. 50 blankets and 60 pillows
zero
Suppose that you have received $300 as a birthday gift. You can spend it today or you can put the money in a savings account for a year and earn 5% interest. The opportunity cost of spending the money today, in terms of what you could have after one year, is a. $0 b. $15 c. $305 d. $315
$315
Table (3-25) The opportunity cost of 1 mixer for Maya is a. 0.625 toasters b. 5 hours of labor c. 1.6 toasters d. 20 hours of labor
1.6 toasters
Figure (2-5) The opportunity cost of this economy moving from point A to point B is a. 20 dryers b. 20 washers c. 20 dryers and 20 washers d. 60 dryers
20 dryers
Figure (2-7) What is the opportunity cost of moving from point L to M a. zero b. 15 tvs c. 20 engines and 15 tvs d. 20 engines
20 engines
Table (3-21) Suppose Jamaica decides to increase its production of radios by 12. What is the opportunity cost of this decision a. 3 coolers b. 6 coolers c. 12 coolers d. 24 coolers
24 coolers
Figure (3-16) If Hosne and Merve switch from each person dividing her time equally between the production of purses and wallets to each person spending all of her time producing the good in which she has a comparative advantage, then total production of purses will increase by a. 2 b. 3 c. 5 d. 10
3
Table (3-33) Chris and tony both produce tomatoes and pasta sauce. The table shows their possible production per month if both work the same number of 8 hour days. Given this information, Chris's opportunity cost of 1 lb. of tomatoes is a. 2 jars of sauce and Tony's opportunity cost of 1 lb. of tomatoes is 3 jars of sauce b. 3 jars of sauce and Tony's opportunity cost of 1 lb. of tomatoes is 2 jars of sauce c. 20 jars of sauce and Tony's opportunity cost of 1 lb. of tomatoes is 30 jars of sauce d. 30 jars of sauce and Tony's opportunity cost of 1 lb. of tomatoes is 20 jars of sauce
30 jars of sauce and Tony's opportunity cost of 1 lb. of tomatoes is 20 jars of sauce
Figure (2-16) The opportunity cost of obtaining 30 additional gadgets by moving from point b to point a is a. 0 widgets b. 10 widgets c. 20 widgets d. 30 widgets
30 widgets
Figure (2-16) The opportunity cost of obtaining approximately 10 additional gadgets by moving from point C to A is a. 10 gadgets b. 30 widgets c. 10 gadgets and 30 widgets d. 0 gadgets
30 widgets
Table (2-3) What is the opportunity cost to Footville of increasing the production of shoes from 400 to 600 a. 400 socks b. 300 socks c. 200 socks d. 100 socks
300 socks
Figure (2-7) If this economy devotes all of its resources to the production of engines, then it will produce a. 0 engines and 40 tvs b. 10 engines and 35 tvs c. 40 engines and 0 tvs d. 40 engines and 40 tvs
40 engines and 0 tvs
Table (2-5) What is the opportunity cost of increasing the production of corn from 400 to 800 bushels a. 200 bushels of wheat b. 400 bushels of wheat c. 600 bushels of wheat d. 800 bushels of wheat
400 bushels of wheat
Consider Frank's decision to go to college. If he goes to college, he will spend $21,000 on tuition, $11,000 on room and board, and $1,800 on books. If he does not go to college, he will earn $16,000 working in a store and spend $7,200 on room and board. Frank's cost of going to college is a. 33,800 b. 42,600 c. 49,800 d. 57,000
42,600
Figure (3-16) Hosne's opportunity cost of one wallet is a. 4/5 purse and Merve's opportunity cost of one wallet is 2/3 purse b. 4/5 purse and Merve's opportunity cost of one wallet is 3/2 purses c. 5/4 purses and Merve's opportunity cost of one wallet is 2/3 purse d. 5/4 purses and Merve's opportunity cost of one wallet is 3/2 purses
5/4 purses and Merve's opportunity cost of one wallet is 2/3 purse
Table (3-21) Assume that Jamaica and Norway each has 4 days available for production. Originally, each country divided its time equally between the production of coolers and radios. Now, each country spends all its time producing the good in which it has a comparative advantage. As a result, the total output of radios increased by a. 3 b. 6 c. 9 d. 12
6
Figure (3-17) Suppose Daisy is willing to trade 3/4 tart to Maxine for each pie that Maxine makes and sends to Daisy. Which of the following combinations of pies and tarts could Maxine NOT then consume, assuming Maxine specializes in making pies and Daisy specializes in making tarts a. 4 pies and 6 tarts b. 6 pies and 5 tarts c. 8 pies and 3 tarts d. 10 pies and 1.5 tarts
6 pies and 5 tarts
Figure (3-17) If Maxine and Daisy switch from each person dividing her time equally between the production of pies and tarts to each person spending all of her time producing the good in which she has a comparative advantage, then total production of tarts will increase by a. 7 b. 10 c. 17 d. 20
7
The famous observation that households and firms interacting in markets act as if they are guided by an "invisible hand" that leads them to desirable market outcomes comes from whose 1776 book? a. David Ricardo b. Thorstein Veblen c. John Maynard Keynes d. Adam Smith
Adam Smith
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 a. Dave has a comparative advantage in the production of sweaters b. Caroline has a comparative advantage in the production of sweaters c. Dave has a comparative advantage in the production of socks d. Dave has a comparative advantage in the production of both sweaters and socks
Dave has a comparative advantage in the production of sweaters
DeShawn has spent $600 purchasing and repairing an old fishing boat, which he expects to sell for $900 once the repairs are complete. DeShawn discovers that, in addition to the $600 he has already spent, he needs to make an additional repair, which will cost another $400, in order to make the boat worth $900 to potential buyers. He can sell the boat as it is now for $400. What should he do? a. He should sell the boat as it is now for $400 b. He should keep the boat since it would not be rational to spend $1000 on repairs then sell the boat for $900 c. He should complete the repairs and sell the boat for $900 d. It does not matter which action he takes; the outcome is the same either way
He should complete the repairs and sell the boat for $900
Figure (2-4) Efficient production is represented by which points a. QRU b. RTU c. RU d. ST
RU
Table (3-32) The opportunity costs for the US and France are as follows: a. In the US 1 million gallons of wine costs 1/2 million pounds of cheese and in France 1 million gallons of wine costs 2 million pounds of cheese b. In the US 1 million gallons of wine costs 2 million pounds of cheese and in France 1 million gallons of wine costs 1/2 million pounds of cheese c. In the US 1 million pounds of cheese costs 1/2 million gallons of wine and in France 1 million pounds of cheese costs 2 million gallons of wine d. In the US 1 million pounds of cheese costs 16 million gallons of wine and in France 1 million pounds of cheese costs 8 million gallons of wine
In the US 1 million gallons of wine costs 2 million pounds of cheese and in France 1 million gallons of wine costs 1/2 million pounds of cheese
Figure (2-7) Unemployment could cause this economy to produce at which point(S) a. LM b. NOPQ c. NOP d. Q
NOP
Figure (2-5) The opportunity cost of obtaining 40 additional by moving from point D to point c is a. 0 washers b. 20 washers c. 40 washers d. None of the above; the economy cannot move from point D to point C
None of the above; the economy cannot move from point D to point C
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 the roof c. She should replace the roof but not the carpeting d. She should not make either improvement
She should replace the carpeting but not the roof
After much consideration, you have chosen Cancun over Ft. Lauderdale as your Spring Break destination this year. However, Spring Break is still months away, and you may reverse this decision. Which of the following events would prompt you to reverse this decision? a. The marginal benefit of going to Cancun increases b. The marginal cost of going to Cancun decreases c. The marginal benefit of going to Ft. Lauderdale decreases d. The marginal cost of going to Ft. Lauderdale decreases
The marginal cost of going to Ft. Lauderdale decreases
Figure (2-16) Suppose this economy is producing at point B. Which of the following statements would best explain this situation a. the economy does not have enough resources to produce more of either product b. the economy's available technology prevents it from producing more of either product c. There is widespread unemployment in the economy d. The economy is getting all it can from the scarce resources available
There is widespread unemployment in the economy
Table (3-33) Chris and Tony both produce tomatoes and pasta sauce. The table shows their possible production per month if both work the same number of 8 hour days. Which of the following statements is correct? a. Tony has a comparative advantage in the production of sauce b. Chris has a comparative advantage in the production of tomatoes c. Tony has an absolute advantage in the production of tomatoes d. Chris has an absolute advantage in the production of tomatoes
Tony has an absolute advantage in the production of tomatoes
Figure (2-4) At which point is this economy producing its maximum possible quantity of doors a. R b. S c. T d. U
U
If the United States decides to trade with Yemen, we know that a. Yemen will benefit, but trade with a less developed country could not benefit the U.S b. It will not benefit Yemen because workers in the U.S are more productive c. Yemen and the U.S can both benefit d. It will not benefit either country because their cultural differences are too vast
Yemen and the U.S can both benefit
A society allocates its scarce resources to various uses. These scarce resources include a. land b. water c. machines d. all of the above are correct
all of the above are correct
Economic models are built with a. recommendations concerning public policies b. facts about the legal system c. assumptions d. statistical forecasts
assumptions
Rick buys a 1966 Mustang for $3,000, planning to restore and sell the car. He goes on to spend $9,000 restoring the car. At this point he can sell the car for $10,000. As an alternative he can spend an additional $3,000 replacing the engine. With a new engine the car would sell for $13,000. Rick should a. complete the repairs and sell the car for $13000 b. sell the car now for $10000 c. never try such an expensive project again d. be indifferent between selling the car now and replacing the engine then selling it
be indifferent between selling the car now and replacing the engine then selling it
Figure (3-16) Hosne has an absolute advantage in the production of a. purses and Merve has an absolute advantage in the production of wallets b. wallets and Merve has an absolute advantage in the production of purses c. both goods and Merve has an absolute advantage in the production of neither good d. neither good and Merve has an absolute advantage in the production of both goods
both goods and Merve has an absolute advantage in the production of neither good
Table (2-5) Based on the values in the table, the production possibilities frontier is a. bowed outward indicating increasing opportunity costs b. bowed outward indicating decreasing opportunity costs c. a straight line indicating constant opportunity costs d. bowed inward indicating increasing opportunity costs
bowed outward indicating increasing opportunity costs
Economics models a. cannot be useful if they are based on false assumptions b. were once thought to be useful, but that is no longer true c. must incorporate all aspects of the economy if they are to be useful d. can be useful, even if they are not particularly realistic
can be useful, even if they are not particularly realistic
Economics is the study of how society allocates its unlimited resources
false
True/False: The invisible hand ensures that economics prosperity is distributed equally
false
Goods produced abroad and sold domestically are called a. exports b. imports c. exchange rates d. opportunity costs
imports
Table (3-25) Maya should specialize in the production of a. mixers and Miguel should specialize in the production of toasters b. toasters and Miguel should specialize in the production of mixers c. both goods and Miguel should special in the production of neither good d. neither good and Miguel should specialize in the production of both goods
mixers and Miguel should specialize in the production of toasters
Lawrence is a photographer. He has $230 to spend and wants to buy either a flash for his camera or a new tripod. Both the flash and tripod cost $230, so he can only buy one. This illustrates the principle 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
people face trade-offs
The phrase "no such thing as a free lunch" means a. people must face tradeoffs b. rational people think at the margin c. people respond to incentives d. trade can make everyone better off
people must face tradeoffs
A tax on gasoline encourages people to drive smaller, more fuel-efficient cars. Which principle of economics does this illustrate? a. people face tradeoffs b. the cost of something is what you give up to get it c. rational people think at the margin d. people respond to incentives
people respond to incentives
The "invisible hand" directs economic activity through a. advertising b. prices c. central planning d. government regulations
prices
Table (3-21) Jamaica should specialize in the production of a. coolers and Norway should specialize in the production of radios b. radios and Norway should specialize in the production of coolers c. both goods and Norway should specialize in the production of neither good d. neither good and Norway should specialize in both goods
radios and Norway should specialize in the production of coolers
The production possibilities frontier is a graph that shows the various combinations of output that an economy can possibly produce given the available factors of production and a. society's preferences b. the available protection technology c. a fair distribution of the output d. the available demand for the output
the available protection technology
Jane decides to spend four hours working overtime rather than going to a family gathering. She earns $12.50 per hour for overtime work. Her opportunity cost of working is a. the $50 she earns working b. the $50 minus the enjoyment she would have received from going to the family gathering c. the enjoyment she would have received had she gone to the family gathering d. nothing, since she wanted to work more than she wanted to attend the family gathering
the enjoyment she would have received had she gone to the family gathering
Suppose a nation is currently producing at a point inside its production possibilities frontier. We know that a. the nation is producing beyond its capacity, so inflation will occur b. the nation is not using all available resources or is using inferior technology or both c. the nation is producing and efficient combination of goods d. there will be a large opportunity cost if the nation tries to increase production of any good
the nation is not using all available resources or is using inferior technology or both
A rational decision maker takes an action if and only if the marginal benefit exceeds the marginal cost
true
True/False: Choosing not to attend a concert so that you can study for your exam is an example of a tradeoff.
true
True/False: The opportunity cost of working out for one hour is the value of the next best activity that you could have done in that hour
true
