econ 1

Suppose that a worker in Caninia can produce either 2 blankets or 8 meals per day, and a worker in Felinia can produce either 5 blankets or 1 meal per day. Each nation has 10 workers. For many years, the two countries traded, each completely specializing according to their respective comparative advantages. Now war has broken out between them and all trade has stopped. Without trade, Caninia produces and consumes 10 blankets and 40 meals per day and Felinia produces and consumes 25 blankets and 5 meals per day. The war has caused the combined daily output of the two countries to decline by

15 blankets and 35 meals.

Which of the following is not a determinant of the demand for a particular good?

the prices of the inputs used to produce the good

Suppose the government has imposed a price ceiling on cellular phones. Which of the following events could transform the price ceiling from one that is binding to one that is not binding?

A technological advance makes cellular phone production less expensive.

If Iowa's opportunity cost of corn is lower than Oklahoma's opportunity cost of corn, then

Iowa has a comparative advantage in the production of corn.

Your younger sister needs $50 to buy a new bike. She has opened a lemonade stand to make the money she needs. Your mother is paying for all of the ingredients. She currently is charging 25 cents per cup, but she wants to adjust her price to earn the $50 faster. If you know that the demand for lemonade is elastic, what is your advice to her?

Lower the price to increase total revenue.

New oak tables are normal goods. What would happen to the equilibrium price and quantity in the market for oak tables if the price of maple tables rises, the price of oak wood rises, more buyers enter the market for oak tables, and the price of wood saws increased?

Price will rise and the effect on quantity is ambiguous.

If Shawn can produce more donuts in one day than Sue can produce in one day, then

Shawn has an absolute advantage in the production of donuts.

For a particular good, a 2 percent increase in price causes a 12 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?

The good is a luxury.

Which of the following events would cause the price of oranges to fall?

The price of land throughout Florida decreases, and Florida produces a significant proportion of the nation's oranges.

What will happen in the rice market now if sellers expect higher rice prices in the near future?

The supply of rice will decrease.

Which of the following is the most likely explanation for the imposition of a price floor on the market for corn?

Which of the following is the most likely explanation for the imposition of a price floor on the market for corn?

If a binding price ceiling is imposed on the computer market, then

a shortage of computers will develop.

A price floor will be binding only if it is set

above the equilibrium price.

Trade can make everybody better off because it

allows people to specialize according to comparative advantage.

Which of the following would shift the demand curve for gasoline to the right?

an increase in consumer income, assuming gasoline is a normal good

Suppose you make jewelry. If the price of gold falls, then we would expect you to

be willing and able to produce more jewelry than before at each possible price.

As price elasticity of supply increases, the supply curve

becomes flatter.

A likely example of complementary goods for most people would be

chips and salsa.

For which of the following goods would demand be most inelastic?

chocolate

An increase in the price of a good would

give producers an incentive to produce more.

If he devotes all of his available resources to cantaloupe production, a farmer can produce 120 cantaloupes. If he sacrifices 1.5 watermelons for each cantaloupe that he produces, it follows that

his opportunity cost of one watermelon is 2/3 of a cantaloupe.

A higher price for bagels would result in a(n)

increase in the demand for muffins.

A person who takes a prescription drug to control high cholesterol most likely has a demand for that drug that is

inelastic.

The price elasticity of demand for eggs

is computed as the percentage change in quantity demanded of eggs divided by the percentage change in price of eggs.

The demand for Neapolitan ice cream is likely quite elastic because

other flavors of ice cream are good substitutes for this particular flavor.

Other things equal, when the price of a good falls, the

quantity supplied of the good decreases.

When consumers face rising gasoline prices, they typically

reduce their quantity demanded more in the long run than in the short run.

Suppose roses are currently selling for $20 per dozen, but the equilibrium price of roses is $30 per dozen. We would expect a

shortage to exist and the market price of roses to increase.

Given the market for illegal drugs, when the government is successful in reducing the flow of drugs into the United States,

supply decreases, demand is unaffected, and price increases.

If a binding price floor is imposed on the video game market, then

the quantity of video games demanded will decrease. a surplus of video games will develop.the quantity of video games supplied will increase. All of the above are correct.