Econ Practice Test for Exam 1

Table 4-12 A country club usually only allows members to purchase tickets for its celebrity golf tournament, but the club is considering allowing non-members to purchase tickets this year. The demand and supply schedules are as follows: Refer to Table 4-12. If both members and non-members are allowed to purchase tickets to this year's celebrity golf tournament, then what will be the equilibrium price?

$25

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

$42,600

Assume that Brad and Theresa can switch between producing wheat and producing beef at a constant rate. Each individual can devote 1200 minutes to producing wheat and beef. Refer to Table 3-20. At which of the following prices would both Brad and Theresa gain from trade with each other?

12 brussels of wheat for 8 pounds of beef

Refer to Figure 3-14. Arturo's opportunity cost of one burrito is

4/3 tacos and Dina's opportunity cost of one burrito is 2 tacos

Suppose buyers of coffee and sugar regard the two goods as complements. Then an increase in the price of coffee will cause a(n)

A decrease in the supply of sugar and a decrease in the quantity demanded of sugar.

Economists generally believe that rent control is

A highly inefficient way to help the poor raise their standard of living.

The gains from trade are

A result of more efficient resource allocation than would be observed in the absence of trade.

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

And the equilibrium quantity both to increase.

Refer to Figure 6-7. For a price ceiling to be binding in this market, it would have to be set at

Any price below $7

Assume that Brad and Theresa can switch between producing wheat and producing beef at a constant rate. Each individual can devote 1200 minutes to producing wheat and beef. Refer to Table 3-20. Brad has a comparative advantage in the production of

Beef and Theresa has a comparative advantage in the production of wheat

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,

Belarus should export linen to Russia.

Tom produces baseball gloves and baseball bats. Steve also produces baseball gloves and baseball bats, but Tom is better at producing both goods. In this case, trade could

Benefit both Steve and Tom

In economics, capital refers to

Building and machines used in the production process.

Refer to Figure 3-14. Arturo should specialize in the production of

Burritos and Dina should specialize in the process of tacos

An increase in the price of a good will

Decrease quantity demanded

Opponents of the minimum wage point out that the minimum wage

Encourages teenagers to drop out of school, prevents some workers from getting needed on-the-job training, and contributes to the problem of unemployment.

The terms equality and efficiency are similar in that they both refer to benefits to society. However they are different in that

Equality refers to uniform distribution of those benefits and efficiency refers to maximizing benefits from scarce resources.

The principle that "trade can make everyone better off" applies to interactions and trade between

Families, States within the United States, and Nations

Economists make assumptions to

Focus their thinking on the essence of the problem at hand.

A statement describing how the world is

Is a positive statement.

Economists face an obstacle that many other scientists do not face. What is that obstacle?

Is often impractical to perform experiments in economics.

Refer to Figure 3-14. Dina has an absolute advantage in the production of

Neither good and a comparative advantage in the producing of tacos

If the demand for a good falls when income falls, then the good is called a(n)

Normal good.

Refer to Figure 4-27. 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?

Panel (a)

Refer to Figure 4-27. Which of the four panels illustrates an increase in quantity

Panel (c)

The phrase "no such thing as a free lunch" means

People must face tradeoffs

When government imposes a price ceiling or a price floor on a market,

Price no longer serves as a rationing device

What is the most important factor that explains differences in living standards across countries?

Productivity

The imposition of a binding price ceiling on a market causes

Quality demanded to be greater than quantity supplied

Refer to Figure 2-4. Efficient production is represented by which point(s)?

R, U

Refer to Figure 2-4. This economy has the ability to produce at which point(s)?

R,T,Q

The law of supply states that, other things equal, when the price of a good

Rises, the quantity supplied of the good rises

When a society cannot produce all the goods and services people wish to have, the economy is experiencing

Scarcity

When quantity demanded decreases at every possible price, the demand curve has

Shifted to the left

Workers at a bicycle assembly plant currently earn the mandatory minimum wage. If the federal government increases the minimum wage by $1.00 per hour, then it is likely that the

Supply of bicycles will shift to the left.

The "invisible hand" refers to

The free market

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.

Price controls are usually enacted

When policymakers believe that the market price of a good or service is unfair to buyers and sellers.

Assume that Brad and Theresa can switch between producing wheat and producing beef at a constant rate. Each individual can devote 1200 minutes to producing wheat and beef. Refer to Table 3-20. What is Theresa's opportunity cost of producing one bushel of wheat?

⅗ pound of beef

Assume that Brad and Theresa can switch between producing wheat and producing beef at a constant rate. Each individual can devote 1200 minutes to producing wheat and beef. Refer to Table 3-20. What is Brad's opportunity cost of producing one bushel of wheat?

⅚ pound of beef