Midterm Exam 1 Review

Suppose a country operates on its production possibility frontier when it produces 1000 books and 1000 tables. The combination of ________ reflects ________.

A) 500 books and 1000 tables; an inefficient but attainable point.

Using the data in the table above, the equilibrium quantity and equilibrium price for a cellular telephone are

A) 60,000 and $50.

Suppose that the price of bread rises. This rise could be the result of

A) a decrease in the supply of bread.

Which of the following increases the quantity supplied of compact discs but does NOT increase the supply of compact discs?

A) an increase in the price of a compact disc

If the price of tangerines increases, the price of oranges also rises because

A) consumers consider the two goods substitutes, and demand for oranges increases.

The above figure shows the market for pizza. The market is an equilibrium when the wages paid pizza workers increases. What point represents the most likely new price and quantity.

B) B

A change in the demand for apples could result from any of the following EXCEPT

B) a change in the price of an apple.

Gasoline prices increase by 50 percent and other things remain the same. As a result, there is

B) a decrease in the quantity of gasoline demanded.

A decrease in the price of a complement in production leads to

B) a decrease in the supply of the good in question.

An increase in the quantity demanded is shown as

B) a movement along the demand curve.

Which of the following increases the demand for a good or service?

B) a rise in the price of a substitute good or service

A country has a comparative advantage in the production of a good if it can

B) produce the good at the lowest opportunity cost.

The law of supply reflects the fact that

B) suppliers have an incentive to use their resources in the way that brings the biggest return.

The table above shows the production possibilities for an economy. The opportunity cost of a loaf of bread is ________ when moving from possibility B to possibility C.

C) 2 books

Consumers eat salsa with taco chips. The price of salsa rises. How does the increase in the price of salsa affect the demand for taco chips?

C) It decreases the demand for taco chips.

Production efficiency is represented by ________ a production possibilities frontier

C) all points on

If there is unemployment in an economy, then the

C) economy is producing at a point inside the production possibilities frontier.

A bowed out production possibility frontier shows that the

C) opportunity cost of a good increases as more of the good is produced.

The phrase "a change in demand" most directly implies a

C) shift of the demand curve.

Plywood is used in the construction of houses. If the price of plywood rises, what happens to the supply of houses?

D) The supply decreases so that the supply curve shifts leftward.

In the figure above, a price of $35 per dozen roses results in

D) a surplus.

If good weather conditions result in a larger than normal crop of peaches, then the

D) equilibrium price of peaches falls, and the equilibrium quantity of peaches increases.

When the demand curve shifts rightward and the market moves to a new equilibrium, then the

D) quantity supplied increases.

Assume that an association of young workers has lobbied Congress to require that all workers retire once they reach the age of fifty. What impact would this law have on the nation's production possibilities frontier?

E) The production possibilities frontier would shift inward.

The market demand curve

E) is the horizontal sum of individual demand curves.