Econ full year

If the price of cocoa rises by 20%, the quantity supplied of cocoa rises by 4%. What is the elasticity of supply?520.2 0.008

0.2

If a 4% increase in the price of pepper results in a 1% decrease in pepper sales, what is the absolute value of the price elasticity of demand for pepper? Is it elastic or inelastic? 0.25; inelastic 0.25; elastic 4; inelastic 4; elastic

0.25; inelastic

The price of cigars is $10, with a quantity demanded of 1,000 per day. If the price increases to $12, the quantity demanded declines to 800 per day. What is the absolute value of elasticity of demand?0.821.221.00 12.2

1.22

Figure: PPF Mexico and United States The production possibility frontiers above show what Mexico and the U.S. can produce using 24 units of labor. The opportunity costs of producing 1 shirt are: 1/6 of a computer for Mexico and 1 computer for United States. 1 computer for both Mexico and the United States. 1 computer for Mexico and 1/6 of a computer for the United States. 1/6 of a computer for both Mexico and the United States.

1/6 of a computer for Mexico and 1 computer for United States.

Figure: Demand Curve What is the maximum number of books that buyers are willing and able to buy at a price of $45 per book? 0 450 100 300

100

Table: Equilibrium Quantity PriceQuantity DemandedQuantity Supplied$101004008150350620030042502502300200 Based on the table, the equilibrium quantity is: 100 and 400. 275.5. 10. 250.

250.

Table: Costs of Antibiotics Quantity of AntibioticsMarginal Benefit to BuyersMarginal Cost to SellersExternal CostMarginal Social Cost1$25$5$10220101031515104102010552510 The market equilibrium quantity is _____, and the efficient equilibrium quantity is _____. 3; 2 3; 4 2; 5 5; 1

3; 2

Figure: Rice and Shirts Use the PPFs shown for the United States and India. With specialization and trade, the United States would produce _____, and India would produce _____. 50 pounds of rice and 40 shirts; 20 pounds of rice and 35 shirts 50 pounds of rice and 0 shirts; 0 pounds of rice and 35 shirts 0 pounds of rice and 40 shirts; 20 pounds of rice and 0 shirts 30 pounds of rice and 16 shirts; 11.4 pounds of rice and 15 shirts

50 pounds of rice and 0 shirts; 0 pounds of rice and 35 shirts

Figure: Price Elasticity of Demand Which of the four demand curves has the greatest responsiveness to price changes? D A C B

A

What is the difference between a shift in the demand curve and a movement along the demand curve? A shift is a reaction to a movement along the demand curve. A shift creates a new equilibrium price; a movement creates a new equilibrium quantity. A shift implies a change in the whole demand curve; a movement does not. A shift conveys a change in the opportunity cost; a movement does not.

A shift implies a change in the whole demand curve; a movement does not.

Mark values his drum set at $800, and Ella values her guitar at $1,000. Suppose that Mark trades his drum set for Ella's guitar. This trade makes Ella worse off by $200. This trade makes Mark better off by $200. Mark must value Ella's guitar for at least $800, and Ella must value Mark's drum set for at least $1,000. This trade decreases total value by moving the guitar and drum away from people who placed a high value on them.

Mark must value Ella's guitar for at least $800, and Ella must value Mark's drum set for at least $1,000.

A new per unit subsidy for almond production in the United States increases the world supply of almonds. If almonds are inelastically demanded, what will happen to total revenues from almond production? They will rise. They will fall. They will change in an indeterminate direction. They will remain the same.

They will fall.

A new per unit subsidy for hybrid car production increases the supply of hybrid cars. If hybrid cars are elastically demanded, what will happen to total revenues from hybrid car production?They will rise.They will remain the same.They will fall. They will change in an indeterminate direction.

They will rise.

Extensive flooding in the Midwest decreases the world supply of corn. If corn is inelastically demanded, what will happen to total revenues from corn production? They will rise. They will fall. They will change in an indeterminate direction. They will remain the same.

They will rise.

Matilda sells her iPhone, which she considers worthless, to Gabriel for $200. Which of the following statements is TRUE? Matilda is made better off by the trade, but Gabriel is made worse off by the trade. Matilda is the only one made better off by the trade. This trade created value because Gabriel is buying the iPhone for more than Matilda thinks it is worth. Matilda and Gabriel must have the same preferences for the iPhone.

This trade created value because Gabriel is buying the iPhone for more than Matilda thinks it is worth.

Figure: Countries A and B Assume that each country begins by allocating half its labor force to the production of each good. Through trade with each other, each country could increase its consumption of both goods if country A moved part of its labor force to the production of good _____ and country B moved part of its labor force to the production of good _____. X; X X; Y Y; X Y; Y

Y; X

What are the institutions that help foster the appropriate incentives for economic growth?communal property rights and absence of a profit-loss systemregulated labor and credit markets; and unions production and export quotas; and supply and demand a dependable legal system, property rights, and competitive and open markets

a dependable legal system, property rights, and competitive and open markets

A decrease in demand refers to:an upward movement along the demand curve. a downward movement along the demand curve. a rightward shift of the demand curve. a leftward shift of the demand curve.

a leftward shift of the demand curve.

Wealthy countries tend to have _____ physical capital per worker and _____ human capital per worker.a lot of; a lot ofa lot of; littlelittle; a lot of no; a lot of

a lot of; a lot of

Which of the following choices contains only factors that cause the supply curve to shift to the right?a decrease in taxes on production, a fall in subsidies on production, a rise in costs of production a rise in technology, a fall in the costs of production, a fall in taxes on output a fall in tastes and preferences for the product, economic growth, a rise in technology a fall in production costs, a rise in technology, an increase in taxes on output

a rise in technology, a fall in the costs of production, a fall in taxes on output

Figure: Shifting Demand In the diagram, which of the following factors would cause the demand curve to shift from D1 to D2? an increase in income if this is an inferior good an increase in the price of a substitute good a decrease in the price of a complement good an increase in the population

an increase in income if this is an inferior good

Inflation is: an increase in the prices of goods in a particular classification, like food or energy. an increase in a price of a good. an increase in the general level of prices. a decrease in the general level of prices.

an increase in the general level of prices.

Consumers are likely to be more sensitive to price changes for automobiles than for canned soft drinks because:soft drinks are considered a necessity.canned soft drinks are less expensive. consumers take more time to decide on automobiles than soft drinks. automobiles have more substitutes.

automobiles have more substitutes.

When two people voluntarily trade with each other: whether they will be better off or worse off depends on how they negotiate with each other. both of them will be worse off. both of them will be better off. one person will be better off, and the other person will be worse off.

both of them will be better off.

Vernon Smith tested the supply and demand model in the laboratory and found that: the results were not consistent with competitive price theory, as he expected. buyers and sellers quickly converged on the predicted equilibrium. the buyers with the lowest willingness to pay bought the goods. the model may work in real life, but it does not work in the laboratory.

buyers and sellers quickly converged on the predicted equilibrium.

Economists believe people make decisions by:comparing marginal costs with marginal benefits.thinking about costs but not benefits. comparing total costs with total benefits. thinking about benefits but not costs.

comparing marginal costs with marginal benefits.

The quantity demanded of a good or service is the amount that:consumers are willing and able to buy at a given price.firms are willing to sell during a given time period at a given price. consumers need to consume during a given time period. consumers would like to buy but might not be able to afford.

consumers are willing and able to buy at a given price.

Economic growth in the modern era is primarily due to the: creation of new knowledge. defining of national borders. increases in money. increases in the number of people.

creation of new knowledge.

Increases in farm productivity lowered the prices of many agricultural products. Farm revenues decreased, which implies that the: costs of production stayed the same. demand for many agricultural products is elastic. demand for many agricultural products is inelastic. costs of production increased.

demand for many agricultural products is inelastic.

In an "open access" city, where building new housing is less restricted, the supply of housing is:perfectly inelastic. inelastic. elastic. perfectly elastic.

elastic.

Two major policies used by the government to affect economic conditions are:recalculation and normalization policy.fiscal and monetary policy. passive and active policy. acceleration and recalibration policy.

fiscal and monetary policy.

Booms and busts refer to the:fluctuations in economic activity over time.theory of the second best. monetary inflation and deflation caused by the central bank. decreases in a nation's output growth over time.

fluctuations in economic activity over time.

When markets don't align self-interest with social interest: markets will still manage to reach an efficient outcome. individual benefits will exceed societal benefits. governments may improve the situation by changing incentives. societal costs will always exceed individual benefits.

governments may improve the situation by changing incentives.

Suppose that a group of humans build an enormous space ship of fixed size and travel into outer space, never to return. They live on board the ship and allocate all goods on the ship using markets. As the population grows, the price of housing on board the ship will:grow more slowly than the quantity of housing supplied.remain constant. grow faster than the quantity of housing supplied. fall rapidly.

grow faster than the quantity of housing supplied.

Which of the following would increase the demand for beef? higher prices of feed grains used to feed beef cattle lower pork prices higher consumer income an increase in the price of beef

higher consumer income

The most important tools in economics, according to the textbook, are supply, demand, and the: opportunity to barter. idea of equilibrium. level of prices. quantity of sales.

idea of equilibrium.

Several states offer rebates on the purchase of electric vehicles. This practice highlights the idea of:self-interest.trade-offs. thinking on the margin. incentives.

incentives.

The supply curve for manufactured goods is usually more elastic than for raw materials because production of manufactured goods can often be:increased at higher cost per unit by building more factories.decreased at the same cost per unit by building more factories. increased at the same cost per unit by building more factories. increased at lower cost per unit by building more factories.

increased at the same cost per unit by building more factories.

The quantity supplied: is the amount that sellers are willing and able to sell at a particular price. shows how much buyers are willing and able to buy at different prices. shows how much sellers are willing and able to sell at different prices. is the amount that buyers are willing and able to buy at a particular price.

is the amount that sellers are willing and able to sell at a particular price.

South Korea became much richer than North Korea as a result of:foreign aid from the United States. its economic systems and incentives. a different language. a different cultural background.

its economic systems and incentives.

The main reason specialization can raise productivity is that: it is impossible to learn anything well. some persons have more knowledge than others. knowledge in human brains is limited. it is always good to know less than more.

knowledge in human brains is limited.

Deciding whether to study an additional hour for an exam by comparing the additional benefits to the additional costs of an extra hour of study is an example of:the social interest. the power of trade. marginal thinking. the invisible hand.

marginal thinking.

If the supply of a product is inelastic, a large price increase will: cause the supply curve to increase by a nontrivial amount. not have an effect on the quantity supplied. cause a modest decrease in supply. only bring about a small increase in quantity supplied.

only bring about a small increase in quantity supplied.

A person has a comparative advantage in activity X when that person's: opportunity cost is lower for him than for other trading partners. ability to perform that activity exceeds that of all other people. opportunity cost of performing that activity is very high. government negotiates a favorable trade agreement.

opportunity cost is lower for him than for other trading partners.

Table: Production Possibilities for Italy and Belgium Labor Hours Needed to Make 1 Pound of: Pounds Produced in 40 Hours Linen Pasta Linen Pasta Italy 10 4 4 10 Belgium 2 8 20 5 According to the table on production possibilities for Italy and Belgium, Italy and Belgium both could benefit if Italy were to specialize in: pasta and Belgium were to specialize in linen. linen and Belgium were to specialize in pasta. neither good and Belgium were to specialize in both goods. both goods and Belgium were to specialize in neither good.

pasta and Belgium were to specialize in linen.

Recall Chapter 1's opening story about the British sea captains and the convicted felons. Instead of paying the sea captains for each prisoner placed on board the ships in Great Britain, an economist suggested: doing nothing, since the suggested change would not matter. that new regulations be passed to require prisoner safety and health. paying for food and water to reduce the costs of caring for prisoners during the transit. paying for each prisoner who walked off the ship in Australia.

paying for each prisoner who walked off the ship in Australia.

Trade makes people better off when:everyone wants the same things as other people.some people are less productive than others. people have different preferences. people cannot specialize in certain activities.

people have different preferences.

Division of knowledge refers to: dividing tasks into different subtasks and having one person perform all these subtasks. people learning different tasks in which they specialize. limiting what each person knows about another person. assigning one person to learn all the different ways to perform the same task.

people learning different tasks in which they specialize.

Adam Smith's "invisible hand" refers to: government control. people's pursuit of the social interest. social justice. people's pursuit of their own self-interest.

people's pursuit of their own self-interest.

The supply curve for a Picasso painting is:perfectly elastic.somewhat inelastic.somewhat elastic. perfectly inelastic.

perfectly inelastic.

Technological advances have increased the supply of digital cameras. As a result, the:quantity demanded for digital cameras will increase.quantity supplied of digital cameras will increase, putting downward pressure on the price of digital cameras. demand and supply of digital cameras will both increase. demand for digital cameras will increase, putting downward pressure on the price of digital cameras.

quantity demanded for digital cameras will increase.

In a free market setting where quantity supplied is 40 units and quantity demanded is 50 units, price will: remain the same. move in an indeterminate direction. fall. rise.

rise.

Table: Supply and Demand PriceQuantity DemandedQuantity Supplied$102,0001,200$121,9001,300$141,8001,400$161,7001,500$181,6001,600$201,5001,700 If the price in the free market were $12, then a: shortage of 600 units would exist, and the price would rise. surplus of 200 units would exist, and the price would fall. surplus of 400 units would exist, and the price would fall. shortage of 200 units would exist, and the price would rise.

shortage of 600 units would exist, and the price would rise.

The equilibrium price is: stable because at this price all buyers are willing and able to pay. unstable because at this price the quantity demanded exceeds the quantity supplied. stable because at this price the quantity demanded equals the quantity supplied. unstable because at this price the quantity demanded is less than the quantity supplied.

stable because at this price the quantity demanded equals the quantity supplied.

Figure: Supply Elasticity Which one of the four supply curves has the greatest responsiveness to price changes? supply curve A supply curve B supply curve D supply curve C

supply curve B

Gun buyback programs will be less effective if the:supply of guns is more elastic.demand for guns is more elastic. demand for guns is more inelastic. supply of guns is more inelastic.

supply of guns is more elastic.

Comparative advantage refers to:the ability to make a good with fewer inputs than another producer. the amount of output produced by an input. the ability to produce a good with a lower opportunity cost than another producer. specializing in the production of one good.

the ability to produce a good with a lower opportunity cost than another producer.

Total producer surplus equals: the area beneath the supply curve and above the demand curve. the area above the supply curve and beneath the market price. the market price. the supply curve.

the area above the supply curve and beneath the market price.

The social cost is:a cost paid by people other than the consumer or the producer trading in the market.a cost paid by the consumer or the producer. the cost of reaching an agreement. the cost to everyone.

the cost to everyone.

Only a very small portion of people who use microwaves know how they work. This is an example of:the division of knowledge. opportunity cost. absolute advantage. a production possibility frontier.

the division of knowledge.

Absolute advantage derives from which of the following? the least expensive labor force the most suitable climate the best educated labor force the lowest cost of production

the lowest cost of production

Gains from trade are maximized when: the market price is higher than the equilibrium price. the market price is less than the equilibrium price. the market price is equal to the equilibrium price. there are additional potential trades available that have not been completed.

the market price is equal to the equilibrium price.

When the price of a good decreases:demand increases.the quantity supplied increases.the quantity demanded increases. supply increases.

the quantity demanded increases.

The supply curve illustrates: the willingness to produce a good if the technology to produce it becomes available. the relationship between the cost of production and price. the relationship between the quantity supplied and the price of a good. the total cost of producing a good.

the relationship between the quantity supplied and the price of a good.

The price elasticity of demand is: the responsiveness of price to changes in the quantity demanded of the product. the change in the firm's total revenue when prices change. exactly the same as the slope of the demand curve. the responsiveness of quantity demanded to changes in the price of the product.

the responsiveness of quantity demanded to changes in the price of the product.

Laboratory experiments by Vernon Smith support:the supply and demand model's usefulness in predicting changes in a free market.a market equilibrium where the quantity demanded always exceeds the quantity supplied. suspicions that a market equilibrium does not exist in the real world. a market equilibrium where the quantity supplied always exceeds the quantity demanded.

the supply and demand model's usefulness in predicting changes in a free market.

The opportunity cost of a choice is:the opportunity of using the money to buy something else cheaper.the money that a buyer has to pay for an item.the money cost that a person does not have to pay when doing something. the value of the next best opportunity foregone.

the value of the next best opportunity foregone.

The great economic problem is how to arrange our scarce resources:to meet the basic needs of all people.to satisfy as many of our wants as possible. to prevent them from being completely depleted. to provide the most profit possible.

to satisfy as many of our wants as possible.

If the supply of a good is very elastic, then any increase in demand for the good will have a: limiting effect on the quantity sold. big impact on the price of the good. very small impact on the price of the good. very small impact on the equilibrium quantity exchanged.

very small impact on the price of the good.

Figure: Gains from Trade What are the unexploited gains from trade at the free market equilibrium? $500 $0 $1,500 $1,000

$0

Figure: Gains from Trade What are the total gains from trade at the free market equilibrium? $500 $1,000 $0 $1,500

$1,000

Figure: A Supply Curve Producer surplus at a price of $40 is: $100. $200. $600. $400.

$100.

Figure: Good X As the price falls from $200 to $100, consumer surplus changes by: $5,000. $10,000. -$25,000. $12,500.

$12,500.

Table: Excel Company Survey ConsumerMaximum Willingness to pay for Excel Personal ComputersShira$1,459Simon1,320Sian1,201Sonnie1,165 The table shows the results of Excel Company's market survey. If the market price of Excel computers is $1,200 each, how much total consumer surplus (in $) are the four consumers earning? $345 $380 $415 $5,145

$380

Figure: Consumer Surplus Calculate the dollar amount of consumer surplus being earned in this market when the price is $30 and there are 300 units consumed. $450 $4,500 $9,000 $18,000

$4,500

Figure: Producer Surplus What is the producer surplus at a price of $2 per unit? $6 $5 $10 $20

$5

Figure: Oil To produce 30 million barrels of oil per day, the minimum price per unit that producers in the diagram require is: $80. $20. $60. $40.

$60.

Each of 100 people receives a random item from a grocery store and assigns it a value between 1 (low) and 10 (high). They trade those items among themselves for items they prefer rather than those they randomly received and then assign a second value (again, 1 to 10) to the item that they end up with after the trading concludes. How would the sum of those values before trading compare with the sum after trading? After trading, value would be higher because preferences are diverse. The value would stay the same because no new goods were introduced. The value would stay the same because no one has a comparative advantage. After trading, value would be lower because no one can specialize.

After trading, value would be higher because preferences are diverse.

Jose sells his economics textbook from last semester, which he could sell back to the bookstore for $40, to Adolfo for $150. Adolfo had planned to pay $240 for the textbook at the bookstore. Which of the following statements is TRUE? Adolfo is made better off by the trade, but Jose is made worse off by the trade. Both Jose and Adolfo are made better off by the trade. Jose and Adolfo must have the same preferences for the textbook. This trade did not create value because Adolfo is buying the textbook for more than Jose could get from the bookstore.

Both Jose and Adolfo are made better off by the trade.

Brazil can produce 1 unit of sugarcane with 1 unit of labor and 1 iPod with 8 units of labor, and China can produce 1 unit of sugarcane with 2 units of labor and 1 iPod with 4 units of labor. Which of the following is TRUE?Both countries have a comparative advantage in sugarcane production.Brazil has a comparative advantage in sugarcane production and an absolute advantage in iPod production.China has an absolute advantage in production of both goods. Brazil has both a comparative advantage and an absolute advantage in sugarcane production.

Brazil has both a comparative advantage and an absolute advantage in sugarcane production.

Figure: Demand Shift Which of the following could explain the figure? Consumer income rises in the market for an inferior good. Consumer income increases in the market for a normal good. Consumer income remains the same and the price of the good falls. Consumer income falls in the market for a normal good.

Consumer income increases in the market for a normal good.

If scientists discover a new form of energy that cuts the cost of producing electricity to the equivalent of $10 a barrel, what will happen to the market for oil?The price of oil will rise because of the competition from the new energy source. Demand for oil will decrease over time since no one will pay more than $10 for a barrel of oil to produce energy. There will be no effect on the market for oil. The supply of oil will decrease because few suppliers can profitably produce oil at $10 a barrel.

Demand for oil will decrease over time since no one will pay more than $10 for a barrel of oil to produce energy.

Since improved technology continually lowers the cost of discovering and producing oil, how can rising oil prices in recent years be explained?Prices always rise when supply shifts down and to the right. Oil is one of the few commodities that do not follow the supply and demand model. This is evidence against the supply and demand model. Demand has increased more than supply has increased, raising prices.

Demand has increased more than supply has increased, raising prices.

The _____ has the power to regulate the money supply in the United States. Senate House of Representatives Federal Reserve president

Federal Reserve

Figure: Market Changes If these figures represent the market for blue jeans, which figure shows the effect of an increase in the price of denim, a raw material used to make jeans? Figure C Figure D Figure A Figure B

Figure A

Figure: Market Changes If these figures represent the market for new cars, which figure shows the effect of an economic recession? Figure B Figure C Figure D Figure A

Figure D

Which of the following best explains why economists want to understand the determinants of economic wealth? The determinants of economic wealth are easier to study than the determinants of economic growth. As overall wealth increases, distribution of wealth tends to equalize as well. Higher levels of wealth tend to generate better health and human rights outcomes across countries. Economists, like everyone else, are self-interested.

Higher levels of wealth tend to generate better health and human rights outcomes across countries.

How does the price elasticity of supply for Henri Matisse paintings compare with the price elasticity of supply for Damien Hirst paintings? Note that Matisse is deceased, whereas Hirst still lives. Matisse paintings and Hirst paintings likely differ in price elasticity of supply in an indeterminate direction. Matisse paintings and Hirst paintings likely have the same price elasticity of supply. Matisse paintings likely have a lower price elasticity of supply. Matisse paintings likely have a higher price elasticity of supply.

Matisse paintings likely have a lower price elasticity of supply.

Which statement is correct regarding the Federal Reserve?The Federal Reserve has developed the ability to manage the economy with great precision.Most economists believe that the Federal Reserve does more good than harm.Its control of the money supply is not connected to the performance of the economy.The Federal Reserve's decisions usually have an immediate effect on the economy's unemployment rate.

Most economists believe that the Federal Reserve does more good than harm.

Figure: Four Panel 1 Which of the four panels shows an increase in the quantity supplied? Panel A Panel D Panel B Panel C

Panel B

Figure: Four Panel 3 Which of the panels shows the effect of a negative supply shock? Panel B Panel C Panel D Panel A

Panel D

Which statement illustrates the concept of external cost? Raymond cannot open his windows at times because he lives downwind from a mushroom farm. Felicia, an economics major, asks the most insightful questions in class. Margaret purchases all her food and clothing in the big city outside her residence. A small business owner frequently buys raw materials by using her bank's line of credit.

Raymond cannot open his windows at times because he lives downwind from a mushroom farm.

Table: Automobile and Light SUV Production 1 Automobile1 Light SUVSouth Korean labor units1518U.S. labor units2420 According to the table on automobile and light SUV production, which of the following is TRUE about U.S. and South Korean comparative advantages? South Korea has a comparative advantage in producing both automobiles and light SUVs. South Korea has a comparative advantage in producing automobiles, and the United States has a comparative advantage in producing light SUVs. The United States has a comparative advantage in producing automobiles, and South Korea has a comparative advantage in producing light SUVs. The United States has a comparative advantage in producing both automobiles and light SUVs.

South Korea has a comparative advantage in producing automobiles, and the United States has a comparative advantage in producing light SUVs.

Which of the following best explains the term "specialization" with respect to trade? Specialization refers to the ability of a person to produce more of a good than his or her trading partners can. Specialization occurs when one person can produce more of a particular good than another person can. Specialization refers to the absolute advantage that a person enjoys in the production of goods and services. Specialization occurs when people concentrate their productive resources on the goods and services they can produce most efficiently.

Specialization occurs when people concentrate their productive resources on the goods and services they can produce most efficiently.

What does the law of supply state? When prices rise, suppliers sell more. There is a negative relationship between price and quantity supplied. There is a positive relationship between price and quantity supplied. When prices rise, buyers buy less of the product.

There is a positive relationship between price and quantity supplied.

The COVID-19 pandemic caused many consumers to be quarantined in their homes. The supply and demand model would predict which of the following events in the market for craft supplies sold by online craft stores? The demand for craft supplies sold by online retailers would decrease, resulting in a lower equilibrium price and a lower equilibrium quantity. The supply of craft supplies sold by online retailers would decrease, resulting in a higher equilibrium price and a lower equilibrium quantity. The supply of craft supplies sold by online retailers would increase, resulting in a lower equilibrium price and a higher equilibrium quantity. The demand for craft supplies sold by online retailers would increase, resulting in a higher equilibrium price and a higher equilibrium quantity.

The demand for craft supplies sold by online retailers would increase, resulting in a higher equilibrium price and a higher equilibrium quantity.

Suppose a famous baseball player, Jacob deGrom, hires a high-school student to paint his house. Which of the following is most likely TRUE?The opportunity cost of painting a house is higher for Jacob deGrom than for the high-school student. The opportunity cost of painting a house is zero for Jacob deGrom and is negative for the high-school student. The opportunity cost of painting a house is lower for Jacob deGrom than for the high-school student. The opportunity cost of painting a house is the same for Jacob deGrom as for the high-school student.

The opportunity cost of painting a house is higher for Jacob deGrom than for the high-school student.

Figure: Comparative Advantage The figure illustrates both the U.S. and Japanese production possibilities frontiers for TVs and wheat. Based on this information, which of the following is TRUE? The opportunity cost of producing a TV in Japan is 2 bushels of wheat. The opportunity cost of producing a bushel of wheat in Japan is 2 TVs. The opportunity cost of producing a TV in the United States is 1/3 of a bushel of wheat. The opportunity cost of producing a TV in the United States is 900 bushels of wheat.

The opportunity cost of producing a TV in Japan is 2 bushels of wheat.

Why is the demand curve for oil rather inelastic? The demand curve for oil is always perfectly inelastic. The world supply of oil is low relative to demand. To increase the production of oil requires a significant outlay of exploration and drilling costs. There are few widely available good substitutes for oil.

There are few widely available good substitutes for oil.

Which statement explains why the Federal Reserve has a tough job?Legally it is not allowed to change the supply of money; it can only make recommendations to the president.There are lags in the effects of monetary policy, and economic conditions continuously change. It can change the supply of money, but that doesn't affect spending or the rate of unemployment. It takes a long time for Congress to agree on a policy.

There are lags in the effects of monetary policy, and economic conditions continuously change.