Econ Exam 1 Review

The production possibility frontier will shift outward for all of the following reasons except:

an increase in the unemployment rate.

The NFL wants to give the "common fan" the opportunity to attend the Super Bowl, so it sets Super Bowl prices "low"—tickets for a regular seat at Super Bowl XXXVII cost just $400. Scalpers, however, were selling tickets for $1,500 or more. The true cost to the "common fan" of a regular ticket to Super Bowl XXXVII was:

$1,500.

[Q#k2004] Alexander has a straight-line, or linear, production possibility frontier when he produces soybeans and corn. If he uses all of his resources to grow soybeans, he can produce 200 bushels of soybeans; if he uses all of his resources for corn production, he can produce 400 bushels of corn. Which of the following combinations of corn and soybeans are not possible for him to produce?

600 bushels of corn and 200 bushels of soybeans

If bagels and donuts are substitute goods, then which of the following is likely to occur if the price of bagels is reduced?

The demand curve for donuts will shift to the left.

The demand for gasoline is rising. Which of the following statements describes a possible cause?

Consumers expect prices to rise in the near future.

A decrease in buyers' income will _________ the demand for public transportation, an inferior good.

Increase

An improvement in technology used to produce computers will _________ the supply of computers.

Increase

An increase in buyers' income will _________ the demand for cars, a normal good.

Increase

Say you took an average of 20 minutes to answer an ECON problem, and 40 minutes to answer a MATH problem. If you had a limited time left to study, your best strategy would be to solve:

It depends

Which of the following is a reason for governments imposing or maintaining price controls?

It may be politically expedient to impose price controls that benefit influential voting groups.

In Kessy's old kitchen, he could bake 10 cookies or mix 15 glasses of lemonade in one day. Now Kessy has a larger oven and refrigerator. How does this affect his production possibility frontier?

It shifts out his production possibility frontier

If they spend all night writing computer programs, Laurence can write 10 programs while Carrie Anne can write 5. If they spend all night making sunglasses, Laurence can make 6 while Carrie Anne can make 4. We know that:

Laurence has a comparative advantage in programs.

Which of the following illustrates the law of demand?

Lindsay offers to buy more sticks of chewing gum at $1 than $2.

Which of the following demonstrates how people respond to incentives to make themselves better off?

More students major in economics when they hear that salaries for economists are rising.

An increase in the price of butter will cause the demand for margarine, a substitute for butter, to:

Shift to the right

If buyers' value for bicycles increase, the demand curve for bicycles will ______.

Shift to the right

Suppose that, as incomes in your community increase, the demand for taxi service increases and the demand for bus service decreases. From this, we can conclude that

Taxi service is a normal good; bus service is an inferior good. Correct

In the market for grass-fed beef, what would cause a price increase?

The prices of grass and corn increase.

Scarcity in economics means:

We do not have sufficient resources to produce all the goods and services we want.

If the opportunity cost of manufacturing automobiles is higher in the United States than in Britain and the opportunity cost of manufacturing airplanes is lower in the United States than in Britain, then the United States will:

export airplanes to Britain and import automobiles from Britain.

If the opportunity cost of manufacturing machinery is higher in the United States than in Britain and the opportunity cost of manufacturing sweaters is lower in the United States than in Britain, then the United States will:

export sweaters to Britain and import machinery from Britain.

A decrease in the price of eggs will result in:

an increase in the quantity of eggs demanded.

A new wonder diet that results in a dramatic weight loss sweeps through America. The key to the diet is to eat unlimited amounts of red meat (beef) but no poultry or carbohydrate-rich foods. As millions of Americans switch to the new diet, we can expect:

a decrease in the demand for poultry, leading to a shift to the left in the demand curve for poultry and lower poultry prices.

A price ceiling is:

a maximum price established by government intervention.

A student organization is formed on your local college campus to protest against the high rent prices for apartments near campus. This organization is planning a meeting with the dean and president of the college. Which of the following best describes the policy the student organization will fight for?

a price ceiling

If the government sets out to help low-income people by establishing a maximum amount that can be paid for rent:

a price ceiling has been set and a shortage of rental units may occur.

An effective price floor will lead to:

a resulting excess supply or a surplus.

An ambiguous change in price and a decrease in quantity are most likely caused by:

a shift to the left in supply and a shift to the left in demand.

Many public utilities burn oil to generate electricity. If the price of oil increases, we would expect there to be:

a shift to the left in the supply curve of electricity and a higher price for electricity.

If resources are scarce it means that they:

cannot provide enough goods or services to satisfy all human material wants and needs.

Suppose the government sets a price floor of $2.85 per bushel on corn when the current price is $2.55. This price floor will:

cause a surplus of corn.

If a consumer buys a set of headphones at the same time as she buys an .mp3 player, these two products are most likely:

complementary goods

Hugo Chávez is the current president of Venezuela. Venezuela is a major producer of oil products, which remain the keystone of Venezuela's economy. Suppose President Chávez enacts a government policy that reduces the customer price of gasoline sold at state-owned gas stations to 50% of the pre-policy price. In theory, this policy will result in the quantity of gasoline demanded to be ________ the quantity of gasoline supplied

greater than

An increase in which of the following determinants of demand will have an ambiguous (uncertain) effect on price?

income

Say the following two events occur at the same time: 1) an increase in the price of steel, an input in the production of cars; 2) an increase in the price of gasoline, a complement of cars. The following two events would lead to a(n) _________ in the market price and a(n) __________ in the market quantity of cars.

indefinite change; decrease

Suppose you and your roommate have the following agreement when it comes to cleaning your apartment: each person washes her or his own dishes after each meal. The principle of trade you just learned tells you that it would be more efficient if:

one of you wash all the dishes while the other did a different chore.

As long as people have different ________, everyone has a comparative advantage in something.

opportunity costs

One of the controversies surrounding America's energy markets is the trade-off between energy production and clean air. Assuming clean air has value, the United States will be on its production possibility frontier if and only if:

resources used to produce clean air and energy are being fully utilized.

Government intervention in the form of price floors or price ceilings will:

result in either surpluses or shortages.

When we are forced to make choices, we are facing the concept of:

scarcity.

The market price of airline flights increased recently. Some economists suggest that the price increased because jet fuel is much more expensive than before. They believe that in the market for flights:

supply decreased.

Suppose you have a choice between studying one more hour for your history exam or studying one more hour for your psychology exam. Your decision on what to study should be based on:

the additional benefits of studying for each class.

To achieve the gains from trade, each nation should specialize in the production of a good or service if:

the country can make the product while forgoing fewer alternative products than any other country

Specialization and trade usually lead to:

the exchange of goods and services in markets.

If the price of corn is rises, we would expect:

the quantity of corn supplied to rise.

The market demand for singing dolls is initially made up of 50 buyers. Suppose there is a decrease in the number of buyers by 10. Holding everything else constant, one would expect:

the quantity supplied to decrease.

[Q#k2001] A production possibility frontier illustrates the ________ facing an economy that ________ only two goods.

trade-offs; produces

A new fast-food restaurant offered a free meal (valued at $5) a week for a year to its first 100 customers. Ramona camped out for 48 hours before the opening to be one of the first 100 customers. The cost of the free meal a week for a year for Ramona was:

whatever she would have done with those 48 hours.

Peanut butter and jelly are complements. If there is a decrease in the price of jelly, producer surplus in the peanut butter market:

will increase

You can spend $200 on either a new tablet computer or a new smartphone. If you choose to buy the tablet computer, the opportunity cost is:

your enjoyment of the new smartphone.