Econ 110 Final Study HW 1-3
Hurricane Katrina damaged a large portion of oil refining and pipeline capacity in the Gulf coast states. In the market for gasoline
) the supply curve shifted to the left resulting in an increase in the equilibrium price. * B) the supply curve shifted to the right resulting in an increase in the equilibrium price. C) the demand curve shifted to the left resulting in a decrease in the equilibrium price. D) the demand curve shifted to the right resulting in an increase in the equilibrium price.
Published in 1776, ________ was written by Adam Smith.
A) "The General Theory of Employment, Interest, and Money" B) "The Communist Manifesto" C) "The Declaration of Economics" D) "An Inquiry into the Nature and Causes of the Wealth of Nations"
The Farm Factory, a booth at the local Farmer's Market, sells fresh eggs for $1.50 per dozen and fresh milk for $2.50 per gallon. What is the opportunity cost of buying a gallon of milk?
A) 1 2/3 dozen eggs* B) 3/5 of a dozen eggs C) $2.50 D) $1.50
________ shows that if all resources are fully and efficiently utilized, more of one good can be produced only by producing less of another good.
A) Comparative advantage B) Absolute advantage C) The mixed market system D) The production possibilities frontier model*
Which of the following is a normative economic statement?
A) Tobacco products should be banned in all public spaces.* B) The increase in tobacco taxes has caused an increase in the price of cigarettes. C) Better awareness of health risks has decreased tobacco use. D) A reduction in tobacco subsidies has caused the price of tobacco to increase.
An example of a factor of production is
A) a car produced by an auto manufacturer. B) a worker hired by an auto manufacturer. * C) a loan granted to an auto manufacturer. D) the automobiles exported by an auto manufacturer
If you can produce more of something than others with the same resources, you have
A) a comparative advantage. B) an absolute advantage. * C) an efficient production system. D) a free-market economy.
When every good or service is produced up to the point where the last unit provides a marginal benefit to society equal to the marginal cost of producing it, ________ occurs.
A) allocative efficiency* B) productive efficiency C) equity D) efficient central planning
An increase in the demand for peanuts due to changes in consumer tastes, accompanied by an increase in the supply of peanuts as a result of favorable growing conditions, will result in
A) an increase in the equilibrium quantity of peanuts and no change in the equilibrium price. B) an increase in the equilibrium price of peanuts and no change in the equilibrium quantity. C) an increase in the equilibrium price of peanuts; the equilibrium quantity may increase or decrease. D) an increase in the equilibrium quantity of peanuts; the equilibrium price may increase or decrease. *
If an increase in income leads to a decrease in the demand for salami, then salami is
A) an inferior good.* B) a neutral good. C) a necessity. D) a normal good.
A(n) ________ is represented by a rightward shift of the demand curve while a(n) ________ is represented by a movement along a given demand curve.
A) increase in demand; decrease in demand B) increase in demand; increase in quantity demanded * C) decrease in demand; decrease in quantity demanded D) increase in quantity demanded; increase in demand
The processes used to produce goods and services describes
A) innovation. B) entrepreneurship. C) technology* D) capital.
The study of economics arises due to
A) money. B) scarcity* C) greed. D) resources.
8) Specializing in the production of a good or service in which one has a comparative advantage enables a country to do which of the following?
A) never have to engage in trade with other nations B) increase the variety of products that it can produce with a decrease in resources C) consume a combination of goods that lies outside its own production possibilities frontier* D) produce a combination of goods that lies outside its own production possibilities frontier
The ability to exercise control over one's own resources within the confines of the law refers to
A) the free market. B) one's property rights. * C) entrepreneurship. D) having an absolute advantage.
If the quantity demanded for a product exceeds the quantity supplied, the market price will rise until
A) the quantity demanded equals the quantity supplied. The product will then no longer be scarce. B) quantity demanded equals quantity supplied. The equilibrium price will then be greater than the market price. C) only wealthy consumers will be able to afford the product. Correct! D) quantity demanded equals quantity supplied. The market price will then equal the equilibrium price. *
If in the market for apples the supply has decreased, then
A) the supply curve for apples has shifted to the right. B) there has been a movement upwards along the supply curve for apples. C) the supply curve for apples has shifted to the left. * D) there has been a movement downwards along the supply curve for apples.
An increase in quantity supplied is represented by a rightward shift of the supply curve.
True False *
In the circular flow model, households supply resources such as labor services in the product market.
True False
As population declines, scarcity eventually disappears.
True False*
In market economies, income distribution is always going to be completely equitable
True False*
Physical capital refers to stocks and bonds.
True False*
Policies based on normative economic ideas tend to increase economic efficiency and improve equity
True False*
Consider a country that produces only two goods: pineapples and tractors. Suppose it is possible for this country to increase its production of pineapples without producing fewer tractors. In this case, its current output combination is inefficient.
True * False
In a two-good, two country world, if one country has an absolute advantage in the production of both goods, it can still benefit by trading with the other country.
True * False
