Economics final

Which of the following is not a reason people choose to depend on other for goods and services?

to allow people to produce outside their production possibilities frontier

One thing economists do to help them understand the real world is

Make assumptions

Which of the following statements about markets is most accurate?

Markets are usually a good way to organize economic activity

The short-run tradeoff between inflation and unemployment implies that, in the short run,

A decrease in the growth rate of the quantity of money will be accompanied by an increase in the unemployment rate

Which of the following can policy do?

Alter incentives Alter trade-offs Change opportunity costs **All of the above are correct

Positive statements are

Claims about how the world is

Normative statements are

Claims about how the world should be

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

Families States within the United States Nations **All of the above are correct

If an externality is present in a market, economic efficiency may be enhanced by

Government intervention

In the circular flow diagram,

Households are sellers in the markets for the factors of production

An increase in the overall level of prices in an economy is referred to as

Inflation

Suppose that a worker in Cornland can grow 40 bushels of corn or 10 bushels of oats per year, and a worker in Oatland can grow either 20 bushels of corn or 5 bushels of oats per year. There are 20 workers in Cornland and 20 workers in Oatland. Which of the following statements is true?

Neither country could gain from trade with each other because neither has a competitive advantage

The adage, "there is no such thing as a free lunch," mean

People face tradeoffs

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

Productivity

The phenomenon of scarcity stems from the fact that:

Resources are limited

Economics deals primarily with the concept of:

Scarcity

A rational decision maker

Takes an action only if the marginal benefit of that action exceeds the marginal cost of that action

When calculating the cost of college, which of the following should you probably not include?

The cost of rent you pay for your off-campus apartment

Market economies are distinguished from other types of economies largely on the basis of

The ways in which scarce resources are allocated

When an economy is operating inside its production possibilities frontier, we know that

There are unused resources or inefficiencies in the economy

The opportunity cost of an item is

What you give up to get that item

Which of the following does not cause a change in demand (a shifting of the entire demand curve) for Hershey candy bars?

a change in the price of Hershey bars;

Which of the following would cause a decrease in the equilibrium price and a decrease in the equilibrium quantity of a normal good?

a decrease in the price of a substitute good.

Trade between countries

a. allows each country to consume at a point outside its production possibilities frontier

Which of the following will cause a change in supply (a shifting of the entire supply curve) for beer?

a. an increase in the price of barley, which is an input in the production of beer; b. the development of new technology that allows brewers to brew beer at a lower cost; c. the entry of a new firm into the market that has not brewed beer in the past; d. all the above.

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 works 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

b. 340 bushels of corn and 500 bushels of oats

Absolute advantage is found by comparing different producers'

c. input requirements per unit of output

When each person specializes in producing the good in which he or she has a comparative advantage, total production in the economy

c. rises

A Perfectly competitive market is characterized by:

many buyers and many sellers of the good;