Econ2106 - Homework 1 (Ch 1-4)

Refer to Figure 4-2. If these are the only two consumers in the market, then the market quantity demanded at a price of $15 is a. 0 units. b. 15 units. c. 25 units. d. 10 units.

a. 0 units.

Refer to Figure 3-4. If point A represents Alice's production and point B represents Betty's production, a. Alice produces 200 pitchers of lemonade and 100 pizzas while Betty produces 180 pitchers of lemonade and 180 pizzas. b. Alice produces 180 pitchers of lemonade and 180 pizzas while Betty produces 200 pitchers of lemonade and 100 pizzas. c. a. Alice produces 100 pitchers of lemonade and 200 pizzas while Betty produces 180 pitchers of lemonade and 180 pizzas. d. Only Alice can benefit from specialization and trade.

a. Alice produces 200 pitchers of lemonade and 100 pizzas while Betty produces 180 pitchers of lemonade and 180 pizzas.

Trade between countries tends to a. increase both competition and specialization. b. reduce both competition and specialization. c. increase competition and reduce specialization. d. reduce competition and increase specialization.

a. increase both competition and specialization.

The bowed-outward shape of the production possibilities frontier can be explained by the fact that a. the opportunity cost of one good in terms of the other depends on how much of each good the economy is producing. b. all resources are scarce. c. economic growth is always occuring. d. the only way to get more of one good is to get less of the other.

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

Refer to Table 4-1. If the law of demand applies to this good, then Q1 could be a. 400. b. 0. c. 100. d. 200.

b. 0.

Refer to Table 2-2. What is the opportunity cost to Footville of increasing the production of shoes from 400 to 600? a. 200 socks b. 300 socks c. 100 socks d. 400 socks

b. 300 socks

Which of the following is an example of a positive, as opposed to normative, statement? a. Welfare payments should be increased because they lead to a better world for everyone. b. Prices rise when the government prints too much money. c. Decreasing inflation should be a top priority since inflation is more harmful to the economy than unemployment. d. When public policies are evaluated, the benefits to the economy of improved equality should be considered more important than the costs of reduced efficiency.

b. Prices rise when the government prints too much money.

The most obvious benefit of specialization and trade is that they allow us to a. work more hours per week than we otherwise would be able to work. b. consume more goods than we otherwise would be able to consume. c. spend more money on goods that are beneficial to society, and less money on goods that are harmful to society. d. consume more goods by forcing people in other countries to consume fewer goods.

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

Pizza is a normal good if the demand a. curve for pizza shifts to the right when the price of burritos rises, assuming pizza and burritos are substitutes. b. for pizza rises when income rises. c. curve for pizza slopes upward. d. for pizza rises when the price of pizza falls.

b. for pizza rises when income rises.

Suppose the United States has a comparative advantage over Mexico in producing pork. The principle of comparative advantage asserts that a. in order to consume beyond its PPF, the United States should produce a moderate quantity of pork and import the remainder of what it requires from Mexico. b. in order to consume beyond its PPF, the United States should produce more pork than what it requires and export some of it to Mexico. c. in order to consume beyond its PPF, the United States should refrain altogether from producing pork and import all of what it requires from Mexico. d. Mexico has nothing to gain from importing United States pork.

b. in order to consume beyond its PPF, the United States should produce more pork than what it requires and export some of it to Mexico.

Absolute advantage is found by comparing different producers' a. opportunity costs. b. input requirements per unit of output. c. locational and logistical circumstances. d. payments to land, labor, and capital.

b. input requirements per unit of output.

The overriding reason why households and societies face many decisions is that a. goods and services are not scarce. b. resources are scarce. c. income fluctuate with business cycles. d. people, by nature, tend to disagree.

b. resources are scarce.

Refer to Table 3-12. Indonesia's opportunity cost of producing bananas is a. 2.5 units of rice. This is lower than India's opportunity cost of producing bananas. b. 2/5 units of rice. This is higher than India's opportunity cost of producing bananas. c. 2.5 units of rice. This is higher than India's opportunity cost of producing bananas. d. 2/5 units of rice. This is lower than India's opportunity cost of producing bananas.

c. 2.5 units of rice. This is higher than India's opportunity cost of producing bananas.

Refer to Table 3-7. The number of minutes needed by Barb to test a computer is a. 48. b. 64. c. 60. d. 36.

c. 60.

Senator Jackson argues that replacing the federal income tax with a national sales tax would increase the level of output. Senator Feldman objects that this policy would benefit the rich at the expense of the poor. a. Both senators' arguments are primarily about efficiency. b. Senator Jackson's argument is primarily about equality, while Senator Feldman's argument is primarily about efficiency. c. Senator Jackson's argument is primarily about efficiency, while Senator Feldman's argument is primarily about equality. d. Both senators' arguments are primarily about equality.

c. Senator Jackson's argument is primarily about efficiency, while Senator Feldman's argument is primarily about equality.

What will happen in the market for shotgun-shell ammuntion now if buyers expect higher shotgun-shell prices in the near future? a. The demand for shotgun-shell ammunition will be unaffected. b. The supply of shotgun-shell ammunition will increase. c. The demand for shotgun-shell ammunition will increase. d. The demand for shotgun-shell ammunition will decrease.

c. The demand for shotgun-shell ammunition will increase.

In the circular-flow diagram, a. profit flows from household to firms. b. goods flow from household to firms. c. labor flows from households to firms. d. services flow from households to firms.

c. labor flows from households to firms.

Efficiency means that a. society's goods and services are distributed equally. b. society is conserving resources in order to save them for the future. c. society is getting the most it can from its scarce resources. d. society's goods and services are distributed fairly, though not necessarily equally, among society's members.

c. society is getting the most it can from its scarce resources.

Refer to Figure 4-5. If these are the only two sellers in the market, then the market quantity supplied at a price of $4 is a. 8 units. b. 6 units. c. 7 units. d. 14 units.

d. 14 units.

Suppose that a worker in Cornland can grow either 40 bushels of corn or 10 bushels of oats per year, and a worker in Oatland can grow either 5 bushels of corn or 50 bushels of oats per year. There are 20 workers in Cornland and 20 workers in Oatland. If the two countries do not trade, Cornland will produce and consume 400 bushels of corn and 100 bushels of oats, while Oatland will produce and consume 60 bushels of corn and 400 bushels of oats. If each country made the decision to specialize in producing the good in which it has a comparative advantage, then the combined yearly output of the two countries would increase by a. 360 bushels of corn and 520 bushes of oats. b. 280 bushes of corn and 450 bushels of oats. c. 360 bushels of corn and 640 bushels of oats. d. 340 bushels of corn and 500 bushels of oats.

d. 340 bushels of corn and 500 bushels of oats.

Refer to Table 3-1. Assume that John and Jane each work 24 hours. What happens to total production if instead of each person spending 12 hours producing each good, Jane spends 21 hours producing wine and 3 hours producing bread and John spends 3 hours producing wine and 21 hours producing bread? a. The total production of bread rises and the total production of wine falls. b. The total production of bread and wine each fall. c. The total production of bread falls and the total production of wine rises. d. The total production of bread and wine each rise.

d. The total production of bread and wine each rise.

Refer to Figure 2-8. The movement from point A to point B is a. an indication of an increase in income. b. a shift of the demand curve. c. an indication of a change in preferences for grapes. d. a movement along the demand curve.

d. a movement along the demand curve.

Refer to Figure 4-1. The movement from point A to point B on the graph shows a. an increase in demand. b. a decrease in quantity demanded. c. a decrease in demand. d. an increase in quantity demanded.

d. an increase in quantity demanded.

Economists make assumptions to a. mimic the methodologies employed by other scientists. b. minimize the number of experiments that yield no useful data. c. minimize the likelihood that some aspect of the problem at hand is being overlooked. d. focus their thinking on the essence of the problem at hand.

d. focus their thinking on the essence of the problem at hand.

The opportunity cost of an item is a. the dollar value of the item. b. the number of hours needed to earn money to buy the item. c. usually less than the dollar value of the item. d. what you give up to get that item.

d. what you give up to get that item.