Econ Exam 1

Refer to Figure 4-17. At a price of

$2, there is a shortage of 6 units.

Refer to Figure 4-18. At what price would there be an excess demand of 200 units of the good?*

$20

Refer to Table 4-12. If only members are allowed to purchase tickets to this year's celebrity golf tournament, then what will be the equilibrium price?

$20

Suppose a gardener produces both tomatoes and squash in his garden. If he must give up 8 bushels of squash to get 5 bushels of tomatoes, then his opportunity cost of 1 bushel of tomatoes is

1.6 bushels of squash.

Refer to table 3-34. India's opportunity cost of producing rice is

1/2 units of bananas. This is lower than Indonesia's opportunity cost of producing rice.

Refer to Table 2-5. Table 2-5 shows one set of production possibilities. Which of the following combinations of corn and wheat is not currently attainable but would be attainable if there was an improvement in overall production technology?*

1000 bushels of corn and 2000 bushels of wheat

Refer to Figure 2-6. The opportunity cost of this economy moving from point I to point H is

120 blankets.

Refer to Figure 2-6. The opportunity cost of this economy moving from point I to point F is

120 pillows.

Refer to table 3-34. At which of the following prices, if any, can India and Indonesia both gain from trade?*

3/5 units of bananas per unit of rice.

Refer to Figure 2-6. If this economy devotes all of its resources to the production of blankets, then it will produce

360 blankets and 0 pillows.

Refer to Table 2-5. Table 2-5 shows one set of production possibilities. What is the opportunity cost of an increase in the production of wheat from 700 bushels to 1300 bushels?

400 bushels of corn

Refer to Figure 4-18. At the equilibrium price,

400 units would be supplied and demanded.

Belarus has a comparative advantage in the production of linen, but Russia has an absolute advantage in the production of linen. If these two countries decide to trade,

Belarus should export linen to Russia.

Suppose Jim and Tom can both produce two goods: baseball bats and hockey sticks. Which of the following is not possible?*

Jim has a comparative advantage in the production of baseball bats and in the production of hockey sticks.

Refer to Figure 4-26. Which of the following movements would illustrate the effect in the market for doctor's visits of an increase in the number of medical students graduating from medical school and successfully completing their residency programs?*

Point A to point B.

Refer to Figure 4-26. Which of the following movements would illustrate the effect in the market for bullet-proof vests of an increase in the price of Kevlar?*

Point C to point D.

Refer to Figure 4-26. Which of the following movements would illustrate the effect in the market for convertible automobiles of an increase in the price of steel?*

Point C to point D.

Which of the following events could shift the demand curve for gasoline to the left?*

Public service announcements run on television...

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.

What would happen to the equilibrium price and quantity of lattes if the cost of producing steamed milk, which is used to make lattes, rises?

The equilibrium price would increase, and the equilibrium quantity would decrease.

Refer to Table 4-12. If both members and non-members are allowed to purchase tickets to this year's celebrity golf tournament and the country club sets the ticket price at $30, then there will be

a surplus of 300 tickets.

Which of the following would cause price to decrease?*

a surplus of the good

An example of a firm with market power is a

cable TV provider in Tulsa.

An improvement in production technology will

decrease a firm's costs and increase its supply.

If a good is inferior, then an increase in income will result in a(n)

decrease in the demand for the good.

Consider the market for new DVDs. If DVD players became cheaper, buyers expected DVD prices to fall next year, used DVDs became more expensive, and DVD production technology improved, then the equilibrium price of a new DVD would

fall.

An increase in the price of blueberries would lead to a(n)

increased supply of blueberries and a movement up and to the right along the supply curve for blueberries

Two goods are compliments when a decrease in the price of one good

increases the quantity demanded of the other good.

Most markets in the economy are

markets in which buyers, rather than sellers, control the price of the product.

Suppose the cost of operating a 75 room hotel for a night is $6,000 and there are 5 empty rooms for tonight. If the marginal cost of operating one room for one night is $40, the hotel manager should rent one of the empty rooms only if a customer is willing to pay

more than $40, as the marginal benefit will exceed the marginal cost.

A country that currently does not trade with other countries could benefit by

not restricting trade.

The highest form of competition is called

perfect competition.

Normative statements are

prescriptive, whereas positive statements are descriptive.

Refer to Table 4-11. If the price were $4, a

shortage of 25 units would exist, and prices would tend to rise.

In a market, to find the total amount supplied at a particular price, we must

sum the quantities that individual firms are willing and able to supply at that price.

Refer to Figure 4-18. At a price of $35, there would be a

surplus of 400 units.

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

surplus to exist and the market price of chocolate-dipped strawberries to decrease.

If something happens to alter the quantity demanded at any given price, then

the demand curve shifts.

Hamid spends an hour studying instead of watching TV with his friends. The opportunity cost to him of studying is

the enjoyment he would have received if he had watched TV with his friends.

"Other things equal, when the price of a good rises, the quantity demanded of the good falls, and when the price falls, the quantity demanded rises." This relationship between price and quantity demanded is referred to as

the law of demand.