HW1

Refer to Figure 4-1. What is the equilibrium price in this market?

a. $0 b. $5 c. $7.50 d. $10 (Correct)

Suppose Spencer and Kate are the only two demanders of lemonade. Each month, Spencer buys six glasses of lemonade when the price is $1.00 per glass, and he buys four glasses when the price is $1.50 per glass. Each month, Kate buys four glasses of lemonade when the price is $1.00 per glass, and she buys two glasses when the price is $1.50 per glass. Which of the following points is on the market demand curve?

a. (quantity demanded = 2, price = $1.50) b. (quantity demanded = 4, price = $2.50) c. (quantity demanded = 10, price = $1.00) (Correct) d. (quantity demanded = 16, price = $2.50)

Refer to Table 2-1. Which of the following statements is correct?

a. The opportunity cost of an additional 100 dolls is constant at 50 fire trucks. b. The opportunity cost of an additional 100 dolls is constant at 100 fire trucks. c. Toyland's production possibilities frontier is a straight, downward-sloping line. d. The opportunity cost of an additional 100 dolls increases as more dolls are produced. (Correct)

In a certain economy, peanuts and books are produced, and the economy currently operates on its production possibilities frontier. Which of the following events would allow the economy to produce more peanuts and more books, relative to the quantities of those goods that are being produced now?

a. Unemployed labor is put to work producing peanuts and books. b. The economy puts its idle capital to work producing peanuts and books. c. The economy experiences economic growth. (Correct) d. All of the above are correct.

A decrease in input costs to firms in a market will result in

a. a decrease in equilibrium price and an increase in equilibrium quantity. (Correct) b. a decrease in equilibrium price and a decrease in equilibrium quantity. c. an increase in equilibrium price and a decrease in equilibrium quantity. d. an increase in equilibrium price and an increase in equilibrium quantity.

Suppose buyers of computers and printers regard those two goods as complements. Then an increase in the price of computers will cause

a. a decrease in the demand for printers and a decrease in the quantity supplied of printers. (Correct) b. a decrease in the supply of printers and a decrease in the quantity demanded of printers. c. a decrease in the equilibrium price of printers and an increase in the equilibrium quantity of printers. d. an increase in the equilibrium price of printers and a decrease in the equilibrium quantity of printers.

Which of the following would not shift the demand curve for mp3 players?

a. a decrease in the price of mp3 players (Correct) b. a fad that makes mp3 players more popular among 12-25 year olds c. an increase in the price of CDs, a complement for mp3 players d. a decrease in the price of satellite radio, a substitute for mp3 players

Refer to Figure 2-1. In order to reach point C, the economy would have to

a. acquire more resources or experience a technological advance. (Correct) b. begin using its available resources more efficiently than it is currently using them. c. shift resources away from the production of ribeye steaks and toward production of books. d. None of the above are correct; the economy will never be able to reach point C.

The bowed shape of the production possibilities frontier can be explained by the fact that

a. all resources are scarce. b. economic growth is always occurring. c. the opportunity cost of one good in terms of the other depends on how much of each good the economy is producing. (Correct) d. the only way to get more of one good is to get less of the other.

Workers at a bicycle assembly plant currently earn the mandatory minimum wage. If the federal government increases the minimum wage by $1.00 per hour, then it is likely that the

a. demand for bicycle assembly workers will increase. b. supply of bicycles will shift to the right. c. supply of bicycles will shift to the left. (Correct) d. firm must increase output to maintain profit levels.

When drawing a demand curve,

a. demand is on the vertical axis and price is on the horizontal axis. b. quantity demanded is on the vertical axis and price is on the horizontal axis. c. price is on the vertical axis and demand is on the horizontal axis. d. price is on the vertical axis and quantity demanded is on the horizontal axis. (Correct)

The market demand curve

a. is found by vertically adding the individual demand curves. b. slopes upward. c. represents the sum of the prices that all the buyers are willing to pay for a given quantity of the good. d. represents the sum of the quantities demanded by all the buyers at each price of the good. (Correct)

An economic outcome is said to be efficient if the economy is

a. misusing some of the scarce resources it has available. b. conserving on resources, rather than using all available resources. c. getting all it can get from the scarce resources it has available. (Correct) d. able to produce more than what is currently being produced without additional resources.

Refer to Figure 1. Point B represents an outcome in which

a. production is inefficient. b. some of the economy's resources are unemployed. c. the economy is using all of its resources to produce books. (Correct) d. the economy is using all of its ribeye steaks to produce books.

Refer to Figure 2-1. For this economy, as more and more books are produced, the opportunity cost of an additional book produced, in terms of ribeye steaks,

a. remains constant. b. increases. (Correct) c. decreases. d. This cannot be determined from the graph.

The supply curve for coffee

a. shifts when the price of coffee changes because the price of coffee is measured on the vertical axis of the graph. b. shifts when the price of coffee changes because the quantity supplied of coffee is measured on the horizontal axis of the graph. c. does not shift when the price of coffee changes because the price of coffee is measured on the vertical axis of the graph. (Correct) d. does not shift when the price of coffee changes because the quantity supplied of coffee is measured on the horizontal axis of the graph.

The production possibilities frontier is a graph that shows the various combinations of output that an economy can possibly produce given the available factors of production and

a. society's preferences. b. the available production technology (Correct). c. a fair distribution of the output. d. the available demand for the output.

Refer to Figure 4-1. At a price of $12, which of the following is correct?

a. there is a surplus of 1 unit b. there is a surplus of 2 units (Correct) c. there is a shortage of 1 unit d. there is a shortage of 2 units

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

a. we must add up all of the amounts that firms are willing and able to supply at that price. (Correct) b. we must take the average of the amounts that firms are willing and able to supply at that price. c. we must add all of the costs that firms incur to supply the product at that price. d. all determinants of demand must be taken into account.

Any point on a country's production possibilities frontier represents a combination of two goods that an economy

a. will never be able to produce. b. can produce using all available resources and technology. (Correct) c. can produce using some portion, but not all, of its resources and technology. d. may be able to produce in the future with more resources and/or superior technology.