Chapter 1-4 Quiz

Ryan produces hair clips and earrings. Celia also produces hair clips and earrings, but Ryan is better at producing both goods. In this case, trade could

benefit both Celia and Ryan

In the circular-flow diagram, which of the following is not a factor of production?

money

what must be given up to attain an item is called

opportunity cost

while pollution regulations yield the benefit of a cleaner environment and the improved health that comes with it, the regulations come at the cost of reducing the incomes of the regulated firms' owners, workers, and customers. this statement illustrates the principle that

people face tradeoffs

fundamentally, economics deals with

scarcity

in a market economy, economic activity is guided by

self-interest and prices

suppose that when the price of a 16 oz. to-go cup of gourmet coffee is $4.25, students purchase 750 cups per day. if the price decreases to $3.75 per cup, which of the following is the most likely outcome?

students would purchase more than 750 cups per day

suppose the cost of flying a 200-seat plane for an airline is $100,000 and there are 10 empty seats on a flight. if the marginal cost of flying a passenger is $200 and a standby passenger is willing to pay $300, the airline should

Sell the ticket because the marginal benefit exceeds the marginal cost

Table 3-11. Assume that Jamaica and Norway can switch between producing coolers and producing radios at a constant rate. Refer to Table 3-11. At which of the following prices would both Jamaica and Norway gain from trade with each other?

1 radio and four coolers

Assume that Zimbabwe and Portugal can switch between producing toothbrushes and producing hairbrushes at a constant rate. refer to table 3-4. which of the following combinations of toothbrushes and hairbrushes could Zimbabwe not produce in 120 minutes?

5 toothbrushes and 11 hairbrushes

Refer to Table 3-8. If the production possibilities frontier is bowed outward, then which of the following could represent the number of coats produced when 12 blankets are produced?

500

Refer to Figure 3-4. If point A represents Alice's current production and point B represents Betty's current production, under what circumstances can both Alice and Betty benefit from specialization and trade?

Alice produces more pizzas and Betty produces more lemonade

The term market failure refers to

a situation in which the market on its own fails to allocate resources efficiently

Refer to Figure 4-3. The shift from Db to Da in the market for potato chips could be caused by

an announcement by the FDA that potato chips lower cholesterol

Eva wants to create a graph containing the prices of concert tickets and the corresponding quantities of concert tickets demanded by customers. She should use a

coordinate system

refer to table 4-2. if these are the only four buyers in the market, then when the price increases from $1 to $1.50, the market quantity demanded

decreased by 7 units

A typical society strives to get the most it can from its scarce resources. At the same time, the society attempts to distribute the benefits of those resources to the members of the society in a fair manner. However, redistributing income from rich to poor reduces the reward for working hard. Therefore, society faces a tradeoff between

efficiency and equality

Yvette buys and sells real estate. Two weeks ago, she paid $300,000 for a house on Pine Street, intending to spend $50,000 on repairs and then sell the house for $400,000. Last week, the city government announced a plan to build a new landfill on Pine Street just down the street from the house Yvette purchased. As a result of the city's announced plan, Yvette is weighing two alternatives: She can go ahead with the $50,000 in repairs and then sell the house for $290,000, or she can forgo the repairs and sell the house as it is for $250,000. She should

forgo the repairs and sell the house as it is for $250,000.

when the government redistributes income from the wealthy to the poor,

people work less and produce fewer goods and services

Refer to Figure 4-10. Which of the following movements would illustrate the effect in the market for chocolate chip cookies of an improved high-speed mixer that allows bakers to produce cookies in less time?

point A to point B

what would happen to the equilibrium price and quantity of coffee if the wages of coffee-bean pickets fell and the price of tea fell?

price would fall and the effect on quantity would be ambiguous

Some, but not all, government economists are employed within the administrative branches of government. Which of the following government agencies employ economists outside of the administrative branch?

the Congressional Budget Office

which of the following areas of study typifies macroeconomics as opposed to microeconomics?

the effect on the economy of changes in the nation's unemployment rate

Refer to Table 2-2. Which of the following statements is correct?

the opportunity cost of an additional 200 shoes is constant at 200 socks

if something happens to alter the quantity supplied at any given price, then

we move along the supply curve