Exam One Prep-Questions

You pay $10 for a movie ticket at your local cineplex. After watching the movie, you decide to sneak into another movie rather than buy another ticket. What is the marginal cost of the second movie?

$0

Smallville has a linear production possibility frontier in the production of good X and good Y. It can produce 6 of X per hour or 8 of Y per hour. Suppose it has 240 hours of labor and divides labor hours equally between good X production and good Y production. What is the maximum amount of good Y it can produce?

960 Y

A decrease in the price of coffee will _______ the market price and ________ the market quantity of tea, a substitute for coffee.

Decrease; decrease

If they bake only cakes, in a single day George can bake 10 cakes and Greta can bake 5 cakes. If they make only pies, in a single day George can bake 10 pies while Greta can bake 4 pies. We know that:

George has an absolute advantage and a comparative advantage in making pies.

If an economy is producing at a point on its production possibilities frontier:

It is efficient in production but not necessarily in allocation.

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

Scarcity

You notice that the price of DVD players falls and the quantity of DVD players sold increases. Which of the following may cause this change?

Supply of DVD players shifts to the right

The market for lemonade is in equilibrium and the price of lemons rises. How will this affect the lemonade market?

Supply will decrease, increasing the price and decreasing the quantity.

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.

For an economist, the cost of something is:

What you gave up to get it.

Which of the following will cause a movement down along a demand curve?

a decrease in the product price

A demand schedule is

a table showing how much of a good consumers will buy at different prices.

Given a supply curve that is positively sloped and a demand curve for a normal good that is negatively sloped, an increase in income will most likely result in:

an increase in equilibrium price and quantity.

A beneficial technological change enhances the production of cranberries. At the same time, scientists discover the health benefits of cranberries. This will result in:

an increase in the equilibrium quantity and an uncertain impact on the equilibrium price of cranberries

When we say that the demand curve slopes downward, we mean that

higher prices are associated with lower quantities demanded

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

The concept of comparative advantage is based upon:

relative opportunity costs.

When demand and supply increase simultaneously,

the equilibrium quantity rises but the change in equilibrium price is ambiguous.

A production possibility frontier that is a straight line sloping down from left to right would suggest that:

the opportunity costs of the products are constant

It is certain that the equilibrium price will rise when:

the supply curve shifts to the left and the demand curve shifts to the right.

A production possibility frontier illustrates the ________ facing an economy that ________ only two goods.

trade-offs; produces