Exam 1: Practice Questions

d.) The equilibrium price is $10, and the equilibrium quantity is 20 units.

A market can be described by the equations Qd = 50 - 3P and Qs = 2P. What are the equilibrium price and quantity in this market? a.) The equilibrium price is $20, and the equilibrium quantity is 10 units. b.) The equilibrium price is $50, and the equilibrium quantity is 100 units. c.) The equilibrium price is $30, and the equilibrium quantity is 10 units. d.) The equilibrium price is $10, and the equilibrium quantity is 20 units.

1.) Normative 2.) Positive

"People should consume less meat" is a 1.)________ statement. "A tax on meat products would reduce meat consumption" is a 2.)________ statement.

1.) The equilibrium price is $100, and the equilibrium quantity is 100 2.) The equilibrium price is $75, and the equilibrium quantity is 125

1.) A market can be described by the equations Qd = 200-P and Qs = P. What is the equilibrium price and quantity in this market? 2.) If the supply curve for the product shifted to the right so that 50 more units of the good are supplied at every price, what is the new equilibrium price and quantity in this market?

d.) increases; up and to the left

A chef can make either steak or pasta. An increase in the price of steak_____ the opportunity cost of making pasta so that the supply curve of pasta shifts _____. a.) decreases; down and to the right b.) increases; down and to the right c.) decreases; up and to the left d.) increases; up and to the left

Brazil

According to the table below, which country has the comparative advantage in banana production?

c.) $7.00

According to the table, what is the marginal cost of the 3rd unit? a.) $8.00 b.) $5.00 c.) $7.00 d.) $17.00

d.) decrease in the supply of wine, increasing price.

An early frost in the vineyards of Napa Valley would cause a(n): a.) increase in the demand for wine, increasing price. b.) increase in the supply of wine, decreasing price. c.) decrease in the demand for wine, decreasing price. d.) decrease in the supply of wine, increasing price.

b.) Angela should specialize in household chores and Alyssa should specialize in work outside the home

Angela & Alyssa are married. Angela can do $40 worth of household chores per hour, and Alyssa can do $15 worth of household chores per hour. In the labor market, Alyssa can earn $30/hour and Angela can earn $40/hour. The theory of comparative advantage suggests that: a.) Alyssa should specialize in household chores and Angela should specialize in work outside the home. b.) Angela should specialize in household chores and Alyssa should specialize in work outside the home. c.) Angela should specialize in both household chores and in work outside the home. d.) Alyssa should specialize in both household chores and in work outside the home.

d.) The supply would decrease, raising the price

Assume that car companies source their parts from factories that can be outfitted to manufacture parts for either pickup trucks or compact cars. If the market price of pickup trucks increased, what would you expect to happen to the supply of compact cars? a.) The supply would increase, raising the price. b.) The supply would decrease, lowering the price. c.) The supply would increase, lowering the price. d.) The supply would decrease, raising the price.

a.) An increase in demand, leading to an increase in price and quantity supplied.

Assume that chai tea, a substitute good for coffee, has an increase in price. What would you expect to happen in the market for coffee? a.) An increase in demand, leading to an increase in price and quantity supplied. b.) A decrease in demand, leading to a decrease in price and quantity supplied. c.) An increase in supply, leading to a decrease in price and quantity demanded. d.) A decrease in supply, leading to an increase in price and quantity demanded.

a.) decrease, shifting the demand curve to the left.

Assume that frozen cheese pizzas are an inferior good for most people. As these peoples' incomes increase, all other things held constant, the demand for frozen cheese pizzas will: a.) decrease, shifting the demand curve to the left. b.) decrease, shifting the demand curve to the right. c.) increase, shifting the demand curve to the left. d.) increase, shifting the demand curve to the right

b. They buy fewer normal goods and more inferior goods.

Assume that there is an economic recession, and people's incomes have decreased. Which of the following would you expect to happen? a.) They buy more normal goods and fewer inferior goods. b.) They buy fewer normal goods and more inferior goods. c.) They buy fewer of both types of goods. d.) They buy more of both types of goods.

a.) 6; 2; surplus of 4 units

At a price of $3, quantity supplied is _____ and quantity demanded is _____, leading to a _____. a.) 6; 2; surplus of 4 units b.) 2; 6; shortage of 8 units c.) 2; 4; surplus of 2 units d.) 4; 2; shortage of 2 units

a.) $75

At a price of $7, what is the consumer surplus in the market? a.) $75 b.) $150 c.) $180 d.) $350

a.) 1/3

At an initial price of $2, the quantity supplied equals 240 units. When the price increases to $4, the quantity supplied becomes 300 units. Calculate the elasticity of supply. (Hint: Remember to use the midpoint formula.) a.) 1/3 b.) 2/3 c.) 1 d.) 4/3

-3/4

At an initial price of $4, the quantity demanded equals 300 units. When the price increases to $8, the quantity demanded becomes 180 units. Calculate the elasticity of demand. (Hint: Remember to use the midpoint formula.)

a.) Spongebob should cook Krabby Patties and Squidward should cook kelp fries.

Both Spongebob and Squidward work at the Krusty Krab and cook Krabby Patties and kelp fries. If only focusing on one menu item at a time, Spongebob can cook 60 Krabby Patties or 25 batches of kelp fries per hour. Squidward, on the other hand, can cook 20 Krabby Patties or 15 batches of kelp fries per hour. Mr. Krabs (the owner of the Krusty Krab) is looking to rearrange work allocation. What assignment should he give his two employees to maximize total output and efficiency? a.) Spongebob should cook Krabby Patties and Squidward should cook kelp fries. b.) Spongebob should cook kelp fries and Squidward should cook Krabby Patties. c.) Spongebob should cook both. d.) Squidward should cook both.

c.) Both

Both Spongebob and Squidward work at the Krusty Krab and cook Krabby Patties and kelp fries. If only focusing on one menu item at a time, Spongebob can cook 60 Krabby Patties or 25 batches of kelp fries per hour. Squidward, on the other hand, can cook 20 Krabby Patties or 15 batches of kelp fries per hour. What menu item does Spongebob have an absolute advantage in? a.) Krabby Patties b.) Kelp Fries c.) Both d.) Neither

c.) inelastic; elastic

Buildings take a substantial amount of time to construct. As such, buildings have an __________ supply curve in the short run. Over time, the supply curve becomes more __________ a.) elastic; elastic b.) Inelastic; inelastic c.) inelastic; elastic d.) elastic; inelastic

26 units

How many units of the good are demanded when price is $6?

b.) the ability to produce a good with a lower opportunity cost than another producer

Comparative advantage refers to: a.) the ability to produce a good using fewer inputs (resources) than another producer. b.) the ability to produce a good with a lower opportunity cost than another producer. c.) specializing in the production of one good. d.) the amount of output produced by an input.

1.) United States 2.) China

Consider the figure below, which gives the PPFs for China and the United States. 1.) Which country has the comparative advantage in producing computers? 2.) Which country has the comparative advantage in producing clothing?

c.) D1 shifts to D3; S1 shifts to S3; price remains the same

Consider the market for chicken nuggets, with the initial supply curve S1 and demand curve D1. If a study comes out that suggests that chicken nuggets could lead to poor long-term health outcomes, what shift would you expect to see? Simultaneously, if the price of poultry (a key input for chicken nugget production) rises, what shift would you expect? And what is the ultimate impact of these two shifts on the market price of chicken nuggets? a.) D1 shifts to D3; S1 shifts to S2; price decreases b.) D1 shifts to D2; S1 shifts to S3; price increases c.) D1 shifts to D3; S1 shifts to S3; price remains the same d.) D1 shifts to D2; S1 shifts to S2; price remains the same

d.) Supply curve shifts leftward (upward), demand curve shifts rightward (upward), price increases

Consider the market for corn, which is initially in a competitive long run equilibrium. Then the following two events occur simultaneously: a large swarm of beetles consumes and destroys large amounts of corn crop in the American Midwest and consumers become more health conscious and start eating more vegetable (including corn). How will the supply curve, demand curve, and price in the corn market change due to these events? a.) Supply curve shifts rightward (downward), demand curve shifts rightward (upward, price change is indeterminate b.) Supply curve shifts rightward (downward), demand curve shifts leftward (downward), price decreases c.) Supply curve shifts leftward (upward), demand curve shifts leftward (downward), price change is indeterminate d.) Supply curve shifts leftward (upward), demand curve shifts rightward (upward), price increases

c.) Houses

Consider the supply curves for three goods: hand tools, paper, and houses. These three goods all use wood as one of their inputs. In addition, the three goods differ in the proportion of wood used in their production: hand tools make up a small proportion of all wood consumed, paper makes up a medium proportion of all wood consumed, and houses make up a large proportion of all wood consumed. Which of these goods has the lowest elasticity of supply (the most inelastic supply curve)? a.) Hand tools b.) Paper c.) Houses d.) Cannot be determined

c.) Opportunity cost

Currently, you make $10,000 a year working at a grocery store. You would like to go to college full time, but you're concerned about missing your income. The missed income from your grocery store job is known as the: a.) Marginal cost b.) Incentive c.) Opportunity cost d.) Comparative advantage

$490

If 70 units are sold, what is the producer surplus in this market?

b.) elastic; decrease

If a good's elasticity of demand equals -1.3, then the good is __________. If the price of the good increases, then firm revenues will __________. a.) elastic; increase b.) elastic; decrease c.) inelastic; increase d.) inelastic; decrease

d.) Prices will eventually rise, decreasing the quantity demanded and increasing the quantity supplied.

If a market has a shortage, which of the following will occur? a.) Prices will eventually fall, increasing the quantity demanded and decreasing the quantity supplied. b.) Prices will eventually fall, decreasing the quantity demanded and increasing the quantity supplied. c.) Prices will eventually rise, increasing the quantity demanded and decreasing the quantity supplied. d.) Prices will eventually rise, decreasing the quantity demanded and increasing the quantity supplied.

I and III only

If a market is in equilibrium, which of the following are TRUE? I. Deadweight loss is equal to zero II. Total consumer surplus is equal to total producer surplus III. Gains from trade are maximized

c.) Supply must be elastic in the industry

If an industry can be expanded with little increase in the price of inputs, what can be said about the elasticity of supply? a.) Supply must be inelastic in the industry. b.) Elasticity of supply cannot be determined without further knowledge. c.) Supply must be elastic in the industry. d.) Regardless of elasticity of supply the industry must be producing inferior goods.

c.) It rises because each producer is getting more surplus per good sold.

If prices of fresh-baked apple pies rise, what happens to producer surplus (all other things being equal)? a.) It falls because fewer people buy goods. b.) It falls because it encourages competition, which reduces profits. c.) It rises because each producer is getting more surplus per good sold. d.) It stays the same because the forces increasing the surplus counteract the forces reducing it

c.) try to lower the price of heroin

If the demand curve for heroin is inelastic and heroin users get the money to pay for heroin by committing crimes, policymakers who want to reduce crime should: a.) tax heroin b.) make is harder to find heroin c.) try to lower the price of heroin d.) try to raise the price of heroin

c.) pasta and chicken are substitute goods

If the demand for pasta increases when the price of chicken increases, then a.) pasta and chicken are complementary goods b.) pasta and chicken are normal goods c.) pasta and chicken are substitute goods d.) pasta and chicken are inferior goods

d.) $22.50

If the market price of coffee is $4, how much producer surplus do suppliers earn? a.) $15 b.) $45 c.) $20 d.) $22.50

0.47

If the price of batteries rises from $4 to $5, and the quantity demanded falls from 200 units to 180 units, what is the absolute value of the price elasticity of demand? (Use the Midpoint Formula)

a.) increases by 5%

If the price of chocolate rises by 10% and the elasticity of supply is 0.5, then the quantity supplied of chocolate: a.) increases by 5% b.) increases by 20% c.) decreases by 5% d.) decreases by 20%

$105

If the quantity traded is 30, what is the value of unrealized gains from trade?

Raise prices

If there is a shortage of a good, we would expect sellers to ________.

Demand would decrease

If tortilla chips and salsa are complementary goods, what would you expect to happen to the demand for salsa if the price of tortilla chips increased?

a.) a shortage.

Imagine a free market in equilibrium. After a sudden decrease in supply (but before the price can adjust), the market experiences: a.) a shortage. b.) a surplus. c.) its initial equilibrium. d.) a new equilibrium

b.) shift to D3.

In the diagram, the current demand curve for chicken legs is represented by D1. If the price of chicken thighs, a substitute for chicken legs, decreases, the demand curve for chicken legs will: a.) shift to D2. b.) shift to D3. c.) remain at D1. d.) shift to D2 and then back to D1.

c.) D1 will shift fo D3

In the figure, the initial demand curve is D1 and the initial supply curve is S1. If the figure depicts the equilibrium in the market for bicycles, what will happen when the price of gasoline skyrockets? a.) S1 will shift to S2 b.) S1 will shift to S3 c.) D1 will shift to D3 d.) D1 will shift to D2

Surplus; 70

In the market below, at a price of $12 there is a (surplus/shortage) of __________ units.

d.) Quantity demanded will decrease from 60 units to 15 units.

In the market in the figure, what will happen if the price increases from $3 to $10? a.) Demand will increase from 15 units to 60 units. b.) Quantity demanded will increase from 15 units to 60 units. c.) Demand will decrease from 60 units to 15 units. d.) Quantity demanded will decrease from 60 units to 15 units.

d.) makes the size of the overall economic pie bigger

International trade: a.) only benefits wealthy countries b.) is driven by the property of absolute advantage c.) decreases the amount of collective human knowledge d.) makes the size of the overall economic pie bigger

Rob

It takes Rob 30 minutes to wash a load of dishes and one hour to cook a meal. Sharon can wash a load of dishes in 15 minutes and cook a meal in 45 minutes. Does Rob or Sharon have the comparative advantage in cooking meals?

2 loads of dishes

It takes Rob 30 minutes to wash a load of dishes and one hour to cook a meal. What is Rob's opportunity cost of cooking a meal in terms of washing dishes?

Trade Offs are Everywhere

Joanie is a sophomore in college and has just declared her major to be biology. On a whim, she decided to apply to an unpaid summer internship at the Audubon Center, where she can learn about different bird species and their habitats. Not thinking that she would be selected for the internship, Joanie decided to obtain a summer job at her university working in the library. To Joanie's surprise, she finds out that she was selected for the internship, and now has to weigh the amount of money she would have made at her summer job against the experience she would be getting at the Audubon Center in order to make her decision. Which big idea of economics does this scenario best illustrate?

a.) decrease in demand b.) increase in demand c.) decrease in supply d.) increase in supply

Match each event w/ its impact on the supply or demand of karate classes: a.) Price of kickboxing classes fall b.) The new Netflix show Cobra Kai repopularize karate among teens c.) Property damaging brawls between Cobra Kai, Miyagi-Do, and Eagle Fang lead to d.) An influx of American servicemen who were posted in Okinawa begin to open karate schools to teach the styles they learned overseas

a.) Absolute advantage

Mike and Eddie are creating a video game together. Mike is an objectively better programmer and artist than Eddie, but Eddie only knows how to program and knows nothing about art. Though Mike has the __________ in both programming and art, it is more efficient to have Mike create art and have Eddie program. a.) Absolute advantage b.) Comparative advantage c.) Opportunity cost d.) Trade-off

Only Area A

Refer to the figure. At a price of $80 per unit, consumer surplus is represented by the area of which letters?

1.) 6 2.) 2 3.) Surplus

Refer to the figure. At the price of $3, quantity supplied is 1.)________ and quantity demanded is 2.)________, leading to a 3.)________.

1.) 1 2.) 1/4

Refer to the figure. Germany's opportunity cost of producing one unit of plastic is 1.)________ unit(s) of copper. France's opportunity cost of producing one unit of plastic is 2.)________ unit(s) of copper.

1.) Germany 2.) France

Refer to the figure. The country with the comparative advantage in copper production is 1.)________. The country with the comparative advantage in plastic production is 2.)________.

$900

Refer to the figure. The value of wasted resources at a quantity of 80 units is:

a.) The price of computers in China would decrease

Refer to the figure. What effect would arbitrage have in this market? a.) The price of computers in China would decrease. b.) The price of computers in the United States would decrease. c.) The price of computers would remain the same in both countries. d.) The price of clothing would increase in both countries.

$30

Refer to the figure. What is the maximum price per book that buyers are willing to pay for 3,500 books?

A

Refer to the figure. Which demand curve is the most inelastic (least elastic)?

2 units of clothing for 1 computer

Refer to the figure. Which of the following trade prices would both the United States and China accept?

b.) Supply will decrease

Retail stores expect that they will be able to sell winter coats for a higher price once winter starts. How does this effect the supply of coats in late summer and early fall, before the winter season? a.) Supply will increase b.) Supply will decrease c.) Supply will stay the same d.) It is indeterminate from the information given

3 loads of dishes

Sharon can wash a load of dishes in 15 minutes and cook a meal in 45 minutes. What is Sharon's opportunity cost of cooking a meal in terms of loads of dishes?

c.) comparative; possible

Since each country has the _____ advantage in producing only one good, then under specialization and trade, it is ____ for countries to consume bundles of goods that lie beyond their PPF. a.) absolute; possible b.) absolute; impossible c.) comparative; possible d.) comparative; impossible

c.) the additional benefit from the dessert w/ the additional cost of the dessert

Suppose a customer at a restaurant is deciding whether or not to order dessert. Marginal thinking means that the customer should compare: a.) the total benefit from the entire meal and dessert with the additional cost of the dessert b.) the total benefit from the entire meal and dessert with the total cost of the meal and dessert c.) the additional benefit from the dessert with the additional cost of the dessert d.) the marginal benefit from the meal with the marginal cost of the dessert

c.) The demand for air fryers will decrease now

Suppose it is widely believed that the price of air fryers will be lower next year. What will happen as a result of such beliefs? a.) The demand for air fryers will increase now. b.) The demand for air fryers will decrease next year. c.) The demand for air fryers will decrease now. d.) The demand for air fryers will not change now.

b.) France should specialize in producing computers and import phones from Sweden.

Suppose that in France it takes 4 labor units to make a phone and 3 labor units to make a computer, while in Sweden it takes 1 labor unit to make a phone and 2 labor units to make a computer. If France can only trade with Sweden, then the theory of comparative advantage suggests that: a.) France should specialize in producing phones and import computers from Sweden. b.) France should specialize in producing computers and import phones from Sweden. c.) France should produce both phones and computers, and import nothing from Sweden. d.) France should import both phones and computers from Sweden.

b.) -12.5%

Suppose that the elasticity of demand is 1.6 (in absolute value) and that the elasticity of supply is 0.9 for some good. What percent shift in supply causes a 5% increase in price? a.) -7.5% b.) -12.5% c.) -9% d.) -13%

a.) -1/3

Suppose that the price of tofu rises from $10 to $20, and quantity demanded falls from 500 to 400. Using the midpoint method, what is the elasticity of demand? a.) -1/3 b.) -1/4 c.) 1/3 d.) -1/2

Whatever you would have otherwise done w/ your time

Suppose that you spend a lot of time studying for this class. What is the opportunity cost of spending time studying?

b.) Point C

Suppose the figure shows the supply and demand of playing golf in Columbia, and point A is the initial equilibrium. After an increase in the price of golf clubs and balls (complementary goods to golf) and a natural disaster decimating half of the golf courses in town, what is the potential new equilibrium point? a.) Point B b.) Point C c.) Point D d.) None of the above.

b.) the quantity demanded of pizza at different pizza prices

The demand curve for Shakespeare's Pizza shows: a.) the quantity demanded of pizza at different income levels. b.) the quantity demanded of pizza at different pizza prices. c.) the demand for pizza at different prices of other goods. d.) the demand for pizza when there is a surplus or shortage of pizza ingredients.

a.) a large increase in price causes quantity demanded to decrease by very little

The demand curve for emergency room visits is inelastic; therefore: a.) a large increase in price causes quantity demanded to decrease by very little b.) a large decrease in price causes quantity demanded to decrease by very little c.) a small increase in price causes quantity demanded to decrease by a lot d.) a small decrease in price causes quantity demanded to decrease by very little

c.) positive economics describes, explains, and predicts economic events, whereas normative economics recommends what economic policies should look like

The difference between positive and normative economics is that: a.) positive economics is what you are learning in school, whereas normative economics is what you will learn in the real world. b.) normative economics is based on proven fact, whereas positive economics is based on what should be. c.) positive economics describes, explains, and predicts economic events, whereas normative economics recommends what economic policies should look like. d.) economists always use positive economics whereas politicians always use normative economics.

c.) 3% decrease in quantity demanded.

The elasticity of demand is -0.75 for a particular good. What will happen if a 4% increase in price occurs? a.) 3% increase in quantity demanded. b.) 5.33% decrease in quantity demanded. c.) 3% decrease in quantity demanded. d.) 5.33% increase in quantity demanded.

specialization and trade

The enormous variety of goods and services that we consume each day can be attributed mainly to ________

$38

The table below shows the maximum willingness to pay for Microsoft Office of four consumers. If Microsoft charged a price of $100 for their Office program, what is the total amount of consumer surplus in the market?

1.) Z 2.) Y

The table lists the characteristics of three goods. Good 1.)________ is the most inelastic, and Good 2.)________ is the most elastic

c.) $7,500

The table shows four individuals' maximum willingness to pay for one pound of gold. If the market price of gold is $15,000/lb, what is the total consumer surplus in the market? a.) $52,500 b.) $15,000 c.) $7,500 d.) $5,000

$1.75

The table shows four individuals' maximum willingness to pay for soda. If the market price of a soda is $0.75, what is the total consumer surplus in the market?

Turkey

There are many substitutes for turkey: chicken, beef, fish, and legumes can all provide a person with the necessary mount of protein to sustain human life. In contrast, there are no substitutes for transistors: without transistors the modern information economy could not exist. Which good has a greater elasticity of demand (in absolute value): turkey or transistors?

a.) sewing machines; There are fewer substitutes for sewing machines than for wool.

There are several substitutes for wool: cotton, polyester, and linen are all perfectly good materials with which to construct clothing. In contrast, there are no good substitutes for the sewing machines: without sewing machines it would be incredibly difficult and labor-intensive to mass-produce clothing. Which good has a lower elasticity of demand (in absolute value): wool or sewing machines? Why? a.) sewing machines; There are fewer substitutes for sewing machines than for wool. b.) wool; There are more substitutes for wool than sewing machines. c.) sewing machines; There are more substitutes for sewing machines than for wool. d.) wool; Wool is a major input for clothing firms.

b.) Tina's demand is inelastic, and Barry's demand is elastic

Tina tutors students in trigonometry. If she raises her rates, her revenues increase. Barry tutors students in business. If he lowers his rates, his revenues increase. Which of the following is TRUE? a.) Tina's demand is elastic, and Barry's demand is inelastic. b.) Tina's demand is inelastic, and Barry's demand is elastic. c.) Tina's demand is elastic, and Barry's demand is elastic. d.) Tina's demand is inelastic, and Barry's demand is inelastic.

The idea that people pursuing their own self-interest actually benefits the public at large

What is the "invisible hand" as described by Adam Smith?

$50

What is the equilibrium price in this market?

a.) 1/2 computer <= 1 phone <= 1 & 1/3 computers

What trade price for phones would both France and Sweden accept? a.) 1/2 computer <= 1 phone <= 1 & 1/3 computers b.) 1/3 computer <= 1 phone <= 1 & 1/2 computers c.) 1 computer <= 1 phone <= 1 & 1/3 computers d.) 1 computer <= 1 phone <= 1 & 1/2 computers

a.) 250

When 50 units of the good are traded, the deadweight loss is $______ a.) 250 b.) 500 c.) 0 d.) 1000

d.) inelastic; raises

When demand is ____, an increase in price ____ total revenue. a.) unit elastic; raises b.) inelastic; lowers c.) elastic; raises d.) inelastic; raises

positive; negative

When markets align individuals' self-interest with the social interest, ________ societal outcomes occur. When markets fail to align individuals' self interest with the social interest, ________ societal outcomes occur

Both of then will be better off in expectation

When two people voluntarily trade w/ each other ________

a.) Jason Statham and Bruce Willis (both men with receding hairlines) star in blockbuster films as leading men

Which of the following WILL NOT lead to an increase in demand for hair transplant surgery? a.) Jason Statham and Bruce Willis (both men with receding hairlines) star in blockbuster films as leading men b.) There is a general increase in income, and men consider hair transplant surgery to be a normal good c.) An aging population d.) Toupees increase in price e.) Consumers expect new regulations in the industry that will increase the price of surgery in the following year

I. only

Which of the following are normative economic statements? I. The government should increase spending on education. II. Consumer spending is nearly two-thirds of total GDP. III. Increased education spending could lead to higher test scores.

I. and III. only

Which of the following are positive economic statements? I. The United States Department of Agriculture's (USDA) Environmental Quality Incentives Program (EQIP) offers subsidies to farmers who use conservation-based agricultural practices and has led to the reduction of contamination from agricultural sources, such as animal feeding operations, among other things. II. Governments should hold firms that emit high levels of greenhouse gases accountable by enacting a carbon tax. III. According to a study conducted by the Congressional Budget Office in 2018, a $25 tax per metric ton on CO2 would generate 1 trillion dollars in revenue by 2028.

a.) the onset of an economic depression

Which of the following events would cause the demand curve for rice, an inferior good, to shift to the right? a.) the onset of an economic depression b.) a decrease in the production costs of rice, making it cheaper to produce c.) a decrease in the retail price of rice d.) a research article is published that suggests diets high in rice may cause cancer

c.) Publishers should not raise the price of new textbooks

Which of the following is a normative economic statement? a.) Raising the price of new textbooks will lead students to seek more used textbooks. b.) Raising the price of new textbooks will lead students to buy fewer new textbooks. c.) Publishers should not raise the price of new textbooks. d.) The price of new textbooks will rise if transportation costs and costs of paper rise.

b.) Since education is a public good, the government should provide free college tuition for all students.

Which of the following is a normative statement? a.) Most nations provide some level of government-funded education for students. b.) Since education is a public good, the government should provide free college tuition for all students. c.) The availability of student loans increases college demand d.) State declines in higher education spending lead to a decrease in college supply

d.) International trade increases the size of the overall economic pie.

Which of the following is true about international trade? a.) Specialization and trade raise productivity but not wages. b.) A country can have a comparative advantage in producing everything. c.) A high-wage country cannot benefit by trading with a low-wage country. d.) International trade increases the size of the overall economic pie.

b.) as the price of wood rises, consumers increasingly only use wood for purposes w/o good substitutes

Which of the following statements correctly explains why the demand curve for wood is negatively sloped? a.) As the price of wood rises, consumers use wood more freely b.) As the price of wood rises, consumers increasingly only use wood for purposes without good substitutes c.) As the price of wood falls, consumers increasingly use substitute goods d.) As the price of wood rises, producers are more willing to produce wood

b.) International trade only benefits large, wealthy countries

Which one of the following statements is false? a.) Arbitrage is the principle of buying low and selling high. b.) International trade only benefits large, wealthy countries. c.) Labor becomes more divided as the market expands. d.) The principle of comparative advantage can be applied at any level of economic activity.