econ final exam
1) The production possibilities frontier is the boundary betweenA) those combinations of goods and services that can be produced and those that can be consumed.B) those resources that are limited and those that are unlimited.C) those combinations of goods and services that can be produced and those that cannot.D) those wants that are limited and those that are unlimited
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1. A relative price is theA) slope of the demand curve.B) difference between one money price and another.C) slope of the supply curve.D) ratio of one money price to another
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10) While producing on the production possibilities frontier, if additional units of a good could beproduced at a constant opportunity cost, the production possibilities frontier would beA) bowed outward.B) bowed inward.C) positively sloped.D) a straight line.
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11. When the price of a pizza decreases from $12 to $10, it is definitely the case that theA) income effect means people buy less pizza.B) substitution effect means people buy more pizza.C) quantity demanded of pizza will not change.D) None of the above answers is correct
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12) In one day, Sue can change the oil on 20 cars or change the tires on 20 cars. In one day, Fred canchange the oil on 20 cars or change the tires on 10 cars. Sue's opportunity cost of changing oil is ________than Fred's and her opportunity cost for changing tires is ________ than Fred's.A) greater; lessB) less; greaterC) less; lessD) greater; greater
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12. The "income effect" in the market for aspirin means thatA) aspirin are generally taken by people with higher than average incomes.B) a decrease in the price of a substitute good like acetaminophen will make aspirin takers feel a littlepoorer than they were before.C) an increase in the price of aspirin will reduce the total purchasing power of aspirin takers, makingthem able to afford fewer aspirin.D) an increase in the price of aspirin will cause headache sufferers to look for a lower priced remedy
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14. The quantity of iPods that people plan to buy this month depends on all of the following EXCEPT theA) price of CD players.B) price of an iPod.C) technology used to produce an iPod.D) price of a music download from iTunes
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15. Ham and eggs are complements. If the price of ham rises, the demand for eggs will A) increase or decrease but the demand curve for ham will not change.B) decrease and the demand curve for ham will shift rightward.C) not change but there will be a movement along the demand curve for eggs.D) decrease and the demand curve for eggs will shift leftward.
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16) As we move along a bowed-out production possibility frontier, producing more tacos and less pizza,the opportunity cost of a pizza ________.A) increasesB) remains the sameC) decreasesD) increases and then decreases
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17. Oatmeal is a normal good and cold cereal is a substitute for oatmeal. Raisins are a complement foroatmeal. Which of the following increases the demand for oatmeal?A) an increase in the price of raisinsB) a decrease in incomeC) a decrease in populationD) an increase in the price of cold cereal
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18) Marginal cost is the ________ one more unit of a good and ________ of the good increases.A) opportunity cost of producing; increases as productionB) opportunity cost of producing; decreases as productionC) price that must be paid to consume; increases as consumptionD) price that must be paid to consume; decreases as consumption
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2) Harry produces 2 balloon rides and 4 boat rides an hour. Harry could produce more balloon rides butto do so he must produce fewer boat rides. Harry is ________ his production possibilities frontier.A) producing insideB) producing onC) producing outsideD) producing either inside or on
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20) Marginal benefit is the benefitA) that your activity provides to someone else.B) of producing a good or service when the total benefit from the good or service exceeds its total cost.C) that is received from consuming one more unit of a good or service.D) of consuming another good or service divided by the total number of goods or services produced
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20. An increase in the expected future price of a goodA) increases its demand.B) decreases its demand.C) increases its supply.D) has no effect on either its demand or its supply
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22) A marginal benefit curve showsA) the efficient use of resources.B) the quantity of one good that must be forgone to get more of another good.C) the quantity of one good that people are willing to forgo to get another unit of another good.D) there are increasing opportunity costs
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24) Suppose that the government is trying to decide between allocating its resources to build more damsor to build more freeways. In terms of forgone dams, as more freeways are constructed, the marginalbenefit of additional freeways ________ and the marginal cost of additional freeways ________.A) increases; increasesB) increases; decreasesC) decreases; increasesD) decreases; decreases
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25. A change in which of the following alters buying plans for cars but does NOT shift the demand curvefor cars?A) A 5 percent increase in people's income.B) A 10 percent decrease in the price of car insurance.C) A 20 percent increase in the price of a car.D) An increased preference for walking rather than driving
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28) The most anyone is willing to pay for another purse is $30. Currently the price of a purse is $40, andthe cost of producing another purse is $50. The marginal benefit of a purse isA) $50.B) $40.C) $30.D) an amount not given in the answers above.
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28. A supply curve shows the relation between the quantity of a good supplied andA) income. Usually a supply curve has negative slope.B) income. Usually a supply curve has positive slope.C) the price of the good. Usually a supply curve has negative slope.D) the price of the good. Usually a supply curve has positive slope
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29. Changes in which of the following shifts the supply curve of hamburgers?A) a rise in the price of soda, a complement for hamburgersB) new research that establishes a link between hamburgers and heart problemsC) an increase in the price of meat used to produce hamburgersD) an economy-wide decrease in income because of a long recession
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3) Suppose the country of Popcorn produces only jets and corn. If Popcorn cannot produce any more jetswithout giving up corn, we say that Popcorn has achievedA) the highest marginal benefit.B) production efficiency.C) the lowest marginal cost.D) the highest opportunity cost
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3. Suppose the price of a football is $20.00 and the price of a basketball is $10.00. The ________ of afootball is ________.A) relative price; 2 basketballs per footballB) relative price; 1/2 basketball per footballC) opportunity cost; $20.00D) opportunity cost; $10.00
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30) When economic growth occurs, theA) economy moves along its production possibilities frontier.B) production possibilities frontier shifts outward.C) production possibilities frontier becomes steeper.D) production possibilities frontier shifts outward but no longer limits the amount that can be produced.
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33) President Obama has proposed a goal that everyone complete at least one year of formal education ortraining beyond high school. This policy wouldA) increase human capital and increase economic growth.B) increase physical capital and increase economic growth.C) increase financial capital and increase economic growth.D) eliminate opportunity costs and increase economic growth
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36) Suppose Joe can prepare 10 sandwiches or 5 pizzas in an hour and Beth can produce 12 sandwiches or9 pizzas. Which of the following is true?A) Beth should produce pizza because she has a higher opportunity cost of producing pizza than doesJoe.B) Beth should produce pizza because she has a lower opportunity cost of producing pizza than does Joe.C) Joe should produce pizza because he has a higher opportunity cost of producing pizza than does Beth.D) Joe should produce pizza because he has a lower opportunity cost of producing pizza than does Beth.
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37) Tom takes 20 minutes to cook an egg and 5 minutes to make a sandwich. Jerry takes 15 minutes tocook an egg and 3 minutes to make a sandwich. If Tom and Jerry tradeA) Tom will benefit and Jerry will not.B) Jerry will benefit and Tom will not.C) both will benefit.D) none of them will benefit
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39) Missouri can produce 10,000 tons of pecans per year or 5,000 tons of pears per year. Washington canproduce 12,000 tons of pecans per year or 48,000 tons of pears per year. Which of the followingstatements about opportunity cost is correct?A) The opportunity cost of a ton of pecans is 2 tons of pears per ton of pecans for Missouri and 1/4 ton ofpears per ton of pecans for Washington.B) The opportunity cost of a ton of pears is 2 tons of pecans per ton of pears for Missouri and 1/4 ton ofpecans per ton of pears for Washington.C) The opportunity cost of a ton of pecans is 1/2 ton of pears per ton of pecans for Missouri and 4 tons ofpears per ton of pecans for Washington.D) Both answers B and C are correct
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8) Opportunity cost is best defined asA) the amount of money that an individual is willing to pay to purchase a good that means a great deal tothat person.B) the amount of money lost by one individual in an exchange process so that another individual mightgain.C) the highest-valued alternative that is forgone when choosing among various alternatives.D) a situation in which one individual cannot have an absolute advantage over another individual in theproduction of all goods
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9. The "law of demand" states that changes inA) demand are related directly to changes in supply.B) the quantity demanded of a good are not related to changes in the quantity supplied.C) the quantity demanded of a good are inversely related to changes in its price.D) demand are inversely related to changes in supply
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7. The quantity demanded isA) always equal to the equilibrium quantity.B) independent of the price of the good.C) the amount of a good that consumers plan to purchase at a particular price.D) independent of consumers' buying plans.
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