Econ Test 1 Review All Homeworks (MINUS GRAPHING QUESTIONS)
The money price of a tube of toothpaste is $0.75, and the relative price of a tube of toothpaste in terms of burritos is 1.25 packs of frozen burritos per tube of toothpaste. What is the money price of a pack of frozen burritos? The money price of a pack of frozen burritos is _______.
$0.60
During a year, a firm's depreciation is $1,800 and gross investment is $9,000. What is the firm's net investment? The firm's net investment is _______.
$7,200
Tropical Republic produces only bananas and coconuts. The base year is 2021, and the tables give the quantities produced and the market prices. Calculate real GDP in 2022 expressed in base-year prices. Real GDP in 2022 expressed in base-year prices is ___________.
$7200
In 2021, a country's exports were $1,662 billion and imports were $2,375 billion. What was the value of net exports? The value of net exports in 2021 was __________ billion dollars.
-713
The figure shows the circular flow model. During 2017, flow A was $13 trillion, flow B was $9.1 trillion, flow D was $3.3 trillion, and flow E was -0.8 trillion. Calculate Government Expenditure.
1.4 trillion
The figure shows the circular flow model. During 2017, flow A was $13 trillion, flow B was $9.1 trillion, flow D was $3.3 trillion, and flow E was -0.8 trillion. Calculate GDP.
13 trillion
Explain why a relative price is an opportunity cost. The money price of a box of ramen noodles is $0.40 and the money price of a pack of microwave popcorn is $1.00. The opportunity cost of a pack of microwave popcorn is _______.
2.50 boxes of ramen noodles, which is the relative price of pack of microwave popcorn
If Freda decides to produce 1 bag of mints, her opportunity cost of producing the bag of mints is _______ of chips.
3 bags
Suppose that Leisure Island produces 4 shows and 12 meals a week. Calculate the opportunity cost of producing 2 additional shows a week. The opportunity cost of producing 2 additional shows per week is ________ per week.
3 meals
Both Mia and Mario produce only the item in which they have a comparative advantage. Then they trade one pasta for one pizza. Before specialization and trade started, Mia and Mario were each producing 4 dishes of pasta and 4 pizzas an hour. What are the gains from specialization and trade? The total gains from trade are _______ dishes of pasta and _______ pizzas an hour.
4, 4
Tropical Republic produces only bananas and coconuts. The base year is 2021, and the tables give the quantities produced and the market prices. Calculate nominal GDP in 2021 and 2022.
5800; 7600
The table gives the demand and supply schedules for batteries. Suppose that demand increases by 200 batteries a day and supply decreases by 100 batteries a day. What is the new equilibrium price of a battery and what is the new equilibrium quantity of batteries? The new equilibrium price is _________ per battery. The new equilibrium quantity is _________ batteries per day.
7.50; 750
Which of the following is an example of comparative advantage?
Dave makes 4 pizzas giving up 6 jars of milk shakes while Rob makes 2 pizzas giving up 4 jars of milk shakes.
Which of the following statements about entrepreneurship is correct?
Entrepreneurs make business decisions.
_____, is an example of a choice in the self-interest. _____, is an example of a choice in the social interest.
I buy pizza for lunch; I am collecting funds to help the flood victims
Time For Tea Americans are switching to loose-leaf tea for its health benefits. Tea could be grown in the United States, but picking tea leaves would be costly because it can only be done by workers and not by machine. Source: The Economist, July 8, 2005 The graph shows the production possibilities frontiers for India and the United States. Explain why the United States does not produce tea and instead imports it from India. The United States does not produce tea because _______.
India has a comparative advantage in producing tea and the United States has a comparative advantage in other goods and services
Which of the following statements about rational choice is correct?
It is a rational choice to quit university and train to become a plumber when the benefit you receive from working as a plumber exceeds the cost of becoming a plumber.
Which of the following illustrates scarcity?
Megan wants to buy a CD that costs 25 dollars but only has 10 dollars to spend
Which of the following news headlines does not deal with scarcity?
Netflix added 7.05 million subscribers in the last quarter
Can Leisure Island produce 4 shows and 14 meals a week?
No
Pam, Pru, and Pat are deciding how they will celebrate the New Year. Pam prefers to go on a cruise, is happy to go to Hawaii, but does not want to go skiing. Pru prefers to go skiing, is happy to go to Hawaii, but does not want to go on a cruise. Pat prefers to go to Hawaii or to take a cruise but does not want to go skiing. Who faces a tradeoff?
Pam, Pat, and Pru face a tradeoff
Which of the following is an example of entrepreneurship?
Sam Walton created the multinational retail corporation brand Walmart in 1962
Which of the following illustrates an efficient outcome?
Ted cuts the price of his sausages and his profit increases.
Pam, Pru, and Pat are deciding how they will celebrate the New Year. Pam prefers to go on a cruise, is happy to go to Hawaii, but does not want to go skiing. Pru prefers to go skiing, is happy to go to Hawaii, but does not want to go on a cruise. Pat prefers to go to Hawaii or to take a cruise, but does not want to go skiing. Their decision is to go to Hawaii. What is the opportunity cost of the trip to Hawaii for each of them?
The opportunity cost for Pam and Pat is a cruise and for Pru it is skiing.
Kanye West Offers Free Concert Tickets Kanye West has teamed with Los Angeles inner-city schools to offer free passes for students. When Kanye West gave away tickets, what was free and what was scarce?
The seats available for the concert are scarce because there are only a certain number available.
Which of the following is an example of absolute advantage?
Tom does his math homework in 2 hours while Harry takes only 30 minutes to do the same task.
Which of the following topics is NOT a macroeconomics question?
Would a higher alcohol tax decrease the quantity sold?
If Leisure Island produces 8 shows and 5 meals a week, do the people of Leisure Island face a tradeoff?
Yes
Why does specialization and the gains from trade make the economy's PPF outward bowed? Specialization and the gains from trade make the economy PPF outward bowed because _______.
a good is initially produced by producers with lower opportunity costs and eventually produced by producers with higher opportunity costs
What is economics?
a subject that studies incentives
In a low-income country, _______. As a country invests in capital and uses more advanced technologies _______.
agriculture accounts for a large percentage of total production; industry becomes a greater percentage of total production and agriculture shrinks
A choice on the margin is a choice that is made by comparing all the relevant _____ systematically and _____. Marginal cost is the _____ that arises from one unit _____ in an activity. Marginal benefit is the _____ that arises from one unit _____ in an activity.
alternatives; incrementally; opportunity cost; increase; benefit; increase
Why is the opportunity cost the best forgone alternative? Opportunity cost is the best forgone alternative because _______.
although you have many alternatives, it is the highest-valued alternative that you give up
The figure shows the production possibilities frontier for a firm that produces pet food. Is point A attainable? Is point B attainable? Point A is ______ and point B is ______.
attainable; unattainable
What conditions must be satisfied if resources are used efficiently? Suppose a country produces only pencils and erasers. Pencil production is efficient if the marginal _______ a pencil equals the marginal _______.
benefit of; cost of a pencil
Rational choice is a choice that uses the available resources to _____ of the person making the choice.
best achieve the objective
A market is an arrangement that brings _____ together and enables them to get information and do business with each other.
buyers and sellers
What are the goods and services that we sell to people in other countries? What are the goods and services that we buy from people in other countries? What is the value of exports of goods and services minus the value of imports of goods and services? The value of exports of goods and services minus the value of imports of goods and services is _______.
called net exports
The production possibilities frontier is the boundary between the combinations of goods and services that _____, given the available factors of production and the state of technology.
can be produced and the combinations that cannot be produced
Production efficiency is a situation in which the economy is getting all that it can from its resources and _____ produce more of one good or service without producing _____ of something else.
cannot; less
Depreciation is the _____ in the value of _____ that results from its use and from obsolescence.
decrease; capital
A decrease in the price of fish fillets, a substitute in production of fish cakes, will _______ the equilibrium price of fish cakes and _______ the equilibrium quantity of fish cakes.
decrease; increase
In January 2019, the price of gasoline was $2.70 a gallon. By spring 2019, the price had increased to $3.00 a gallon. Assume that there were no changes in average income, population, or any other influence on buying plans. Explain how the rise in the price of gasoline would affect a. The demand for gasoline. b. The quantity of gasoline demanded. Given the law of demand, you would expect the rise in the price of gasoline to _______ the quantity of gasoline demanded and _______ the demand for gasoline.
decrease; not change
Does this production possibilities frontier illustrate scarcity? This PPF _______ illustrate scarcity because _______.
does; the firm cannot produce points outside the frontier and as the firm moves along the PPF, it cannot produce more dog biscuits without producing less cat food
What are the goods and services that we sell to people in other countries? What are the goods and services that we buy from people in other countries? The goods and services that we sell to people in other countries are _______. The goods and services that we buy from people in other countries are _______.
exports; imports
Net exports of goods and services is the value of _____ of goods and services _____ the value of _____ of goods and services.
exports; minus; imports
The night before a history test, you decide to go to a club with friends instead of reviewing your notes. You get 85 percent on your test compared with the 90 percent that you normally score. Did you face a tradeoff? What was the opportunity cost of your evening at the club? You _______, and the opportunity cost of your evening at the club was _______.
faced a tradeoff between a higher test score and an evening at the club; the 5 percent fall in your grade
A decrease in the demand for computers brings a _______ in the price of a computer and _______ in the quantity of computers supplied.
fall; a decrease
Real GDP is the value of the _____ goods and services produced in a given year expressed in terms of the prices in _____ year. Nominal GDP is the value of the _____ goods and services produced in a given year expressed in terms of the prices of _____ year.
final; a base final; that same
Gross domestic product (GDP) is the market value of all the _____ goods and services produced _____ a country in a given time period.
final; within
For each news item below, indicate whether it involves a what, how, or for whom question. "Oscar swag-bags may be taxable" involves a_______ question.
for whom
Land is the _____ that we use to produce goods and services.
gifts of nature or natural resources
What is a tradeoff?
giving up one thing to get something else
The law of supply states that other things remaining the same, the _______ the price of a good, the _______.
higher; greater is the quantity supplied
The law of demand states that other things remaining the same, the _______ the price of a good, the _______.
higher; smaller is the quantity demanded
Question content area top Part 1 For each news item below, indicate whether it involves a what, how, or for whom question. "Consultants replacing high school counselors" involves a______ question
how
What makes the market for pancake mix a competitive market? The market for pancake mix is a competitive market _______.
if many people buy and many firms sell pancake mix, so no single buyer or seller can influence the price
Why does economic growth destroy some jobs and create new jobs? As a country experiences economic growth, investment in capital and advances in technology _______.
increase industrial production but decrease industrial jobs. Jobs are created in the service industry but many workers lack the necessary skills or are unwilling to relocate
Isobel currently produces at point A in the figure. How does the production possibilities frontier illustrate opportunity cost? If Isobel moves from point A to point C, her opportunity cost of producing a magazine _______.
increases
Why does the PPF bow outward and what does that imply about the relationship between opportunity cost and the quantity produced? The PPF bows outward because as we move from point A to point B to point C, the opportunity cost of producing a pair of blue jeans ______.
increases. Resources are not equally productive in all activities
If hotdogs and hamburgers are substitutes, then if the price of a hotdog increases, the demand for burgers will _______.
increase, and the demand curve for burgers will shift
Is not specializing and reaping the gains from trade inefficient or efficient? Failure to specialize and reap the games from trade is _______ because _______.
inefficient; production is at a point inside the economy's PPF
The firm that printed your textbook bought the paper from XYZ Paper Mills. Was this purchase of paper part of GDP? If not, how does the value of the paper get counted in GDP? This purchase of paper _______ part of GDP because the paper is _______ good.
is not; an intermediate
Human capital _____ that people obtain from education, on-the-job training, and work experience. _____ that have been produced in the past and that businesses now use to produce goods and services is capital.
is the knowledge and skill; tools instruments, machines, buildings, and other items
What type of factor of production is a movie star?
labor
The resources that are used to produce goods and services - _____ are factors of production.
land, labor, capital, and entrepreneurship
Rent is the income paid for the use of _____. Wages are income paid for the services of _____. Profit (or loss) is the _____ earned by an entrepreneur for running a business. Interest is the income paid for the use of _____.
land; labor; income; capital
Which of the following pairs does NOT match?
land; wages
The graph shows the PPF for an economy that produces butter and ice cream. The PPF shows two production points, A and B. At which point is the opportunity cost of producing a pound of butter greater? At which point is the opportunity cost of producing a tub of ice cream greater? The opportunity cost of producing a pound of butter is _______ at point A than at point B. The opportunity cost of producing a tub of ice cream is _______ at point B than at point A.
less; less
macro or micro: manufacturing production rises for the 6th straight month
macro
macro or micro: satisfaction with standard of living is greater now than in 2000
macro
Macro or Micro: WHO recommends tax of at least 20% on sugary drinks
micro
macro or micro: pay to rise for millions as minimum wage rises
micro
An increase in the demand for golf clubs together with an increase in the supply of golf clubs ______ create a surplus or a shortage of golf clubs at the original price. The equilibrium price of golf clubs ______.
might; might fall, rise, or not change
Are either or both of these newspaper headlines positive or normative? 1. We should use more nuclear power. Statement 1 is a _______ statement because it _______ be tested.
normative; cannot
Explain what economists mean by rational choice. A rational choice is _______.
one that compares costs and benefits and achieves the greatest benefit over cost for the person making the choice
The firm that printed your textbook bought the paper from XYZ Paper Mills. Was this purchase of paper part of GDP? If not, how does the value of the paper get counted in GDP? The value of the paper is counted in the GDP as ________.
part of the value of the textbook
Maria graduates from college and her income increases by $25,000 a year. Nothing else changes. Maria decreases the quantity of pasta and french fries that she buys and increases the quantity of gourmet ice cream that she buys. How can we categorize Maria's purchases?
pasta and french fries are inferior goods
Are either or both of these newspaper headlines positive or normative? 2. Smoking causes lung cancer. Statement 2 is a _______ statement because it _______ be tested.
positive; can
Complete the statement: a shortage is the amount by which the ___________ exceeds the __________.
quantity demanded; quantity suppied
_____ are examples of goods and _____ are examples of services
shoes; haircuts
A demand curve illustrates the law of demand _____.
shows that the quantity demanded decreases as the price rises
Economics is the _____ the choices that individuals, businesses, governments, and entire societies make as they _____, and the influences on those choices, and the arrangements that coordinate them.
social science that studies; cope with scarcity
A decrease in the demand for ramen noodles together with an increase in the supply of ramen noodles brings a _______ of ramen noodles at the original price and a _______ in their price.
surplus; fall
An increase in the supply of T-shirts brings a _______ of T-shirts at the original price and a _______ in their price.
surplus; fall
In a high-income country like the United States _______.
technological advances release labor from industrial production and move the labor into service production
Which of the following topics is studies in macroeconomics?
the national economy and the global economy
The supply of books will decrease if ______.
the number of book publishers decreases
Why does demand not change when the price of a good changes with no change in the other influences on buying plans? Consider the demand for hot dogs. The demand for hot dogs does not change when a change in _______ occurs.
the price of a hotdog
Firms are institutions that organize _____ of goods and services.
the production
Explain why a relative price is an opportunity cost. The money price of a box of ramen noodles is $0.40 and the money price of a pack of microwave popcorn is $1.00. The relative price of a pack of microwave popcorn is an opportunity cost because _______.
the relative price tells us how many boxes of ramen noodles we must give up in order to get a pack of popcorn
Zach is an engineering student who is considering taking an extra course in Spanish. What is an incentive that might encourage him to take the Spanish course?
tougher grading in engineering
The graph shows a production possibilities frontier. How does the production possibilities frontier illustrate production efficiency? Production efficiency is achieved at points A, B, and C because to increase the production of x as we move from A to B to C, _______ .
we are giving up the minimum amount of y possible to increase the production of x
What is allocative efficiency? Allocative efficiency occurs when _______.
we are producing at a point on the PPF that we prefer above all other points
Every day we make many choice because?
we face scarcity
For each news item below, indicate whether it involves a what, how, or for whom question. "Scientists blast NASA program cuts " involves a ______ question.
what
The what, how, and for whom questions in economics are questions about _______.
what goods and services do we produce, how do we use the factors of production to produce these goods, and who consumes the goods and services that are produced
What is the fundamental fact of life from which all economic problems rise?
what we want as a society is limited by our resources
Which of the following is a microeconomic question?
why invest in R&D?
The _____ that people devote to produce goods and services is labor.
work time, and work effort
