Macro Exam 1

Ginger and Maryann are lost in the jungle, where the only things to eat are mangoes and fish. Ginger can gather mangoes faster than Maryann and can also catch more fish per hour than can Maryann. Therefore:

Maryann should specialize in the activity for which she has a comparative advantage.

If Leslie can produce two pairs of pants in an hour while Eva can make one pair an hour, then it must be the case that:

Leslie has an absolute advantage.

Maria can produce 100 pounds of tomatoes or 25 pounds of squash in her garden each summer, while Tonya can produce 50 pounds of tomatoes or 25 pounds of squash. ______________ opportunity cost of producing tomatoes is lowest, and ___________ opportunity cost of producing squash is lowest, so __________ should produce tomatoes and ____________ should produce squash.

Maria's, Tonya's, Maria, Tonya

Suppose there are two parallel highways between two cities with approximately equal traffic. What would you expect to happen if the state began charging tolls to drive on one of those highways?

More drivers would drive on the non-toll road, making the toll road less congested.

Which of the following would be most likely to cause a reduction in the supply of Nintendo video games?

an increase in the price of computer chips used to make Nintendo games

Which of the following would not shift the supply curve for swordfish?

an increase in the price of swordfish

A decrease in consumer incomes will:

decrease the demand for an inferior good. decrease the supply of an inferior good. increase the demand for a normal good. increase the supply of a normal good.

In general, individuals and nations should specialize in producing goods _________ other individuals or nations.

for which they have a lower opportunity cost compared to

According to the incentive principle:

people tend to do more of something when the benefits are greater.

Corey can make 12 Pizzas per hour or deliver 6 pizzas per hour. Pat can make 10 Pizzas per hour or deliver 15 pizzas per hour. Based on their comparative advantages, Pat should specialize in _______ while Corey should specialize in _______.

pizza delivery; pizza production

A change in which of the following variables does not cause a change in demand?

prices of unrelated goods

A graph that illustrates the maximum amount of one good that can be produced for every possible level of production of the other good is called a(n):

production possibilities curve.

Corey can make 12 Pizzas per hour or deliver 6 pizzas per hour. Pat can make 10 Pizzas per hour or deliver 15 pizzas per hour. According to the data, Corey has an absolute advantage in:

the production of pizza.

The impact of government policies on the building of new roads and highways would be studied in the field of:

macroeconomics.

Which of the following statements is always true?

Comparative advantage does not require absolute advantage.

Which of the following questions would not be answered in macroeconomics?

Did the sharp increase in gasoline prices alter SUV sales?

Every time you go to the grocery store, you try to choose the shortest line. But all of the lines always seem to be the same length. Why?

Everyone else is trying to choose the shortest line too.

The last time gas prices increased drastically, sales of large Sport Utility Vehicles (SUVs) fell. What economic reason would explain this decrease in sales?

Higher gas prices increased the cost of owning a SUV.

Curly used his frequent flyer miles to fly to visit Moe. Curly told Moe that it didn't cost him anything to visit. Is Curly correct?

No, because Curly could have used his frequent flyer miles to go somewhere else, but chose to visit Moe.

If Scout has an absolute advantage over Dill:

Scout can accomplish more in a given period of time than can Dill.

During times of high unemployment, colleges often observe an increase in enrollment even if tuition remains unchanged. Why?

The opportunity cost of attending college is lower because students are less likely to have good full-time jobs.

Which of the following is most likely to be an inferior good?

Used clothing.

Some states have started giving tax credits to homeowners who install solar panels. This is an example of

Using the incentive principle to encourage homeowners to switch to solar energy.

Which of the following would not be analyzed in microeconomics?

Whether the federal budget should always be balanced.

If Econlandia can only trade with one other country, it should trade with

a country with very different comparative advantages than Econlandia

If a nation can produce a good more quickly than any other nation, that nation has a(n):

absolute advantage.

If Jane can produce 3 pairs of shoes hourly, while Bob can produce 2, then one can infer that the __________ advantage belongs to __________.

absolute; Jane

If a country experiences increasing opportunity costs, its production possibilities curve will

bow outward.

To say that an individual possesses an absolute advantage in the production of software means that individual:

can produce more and/or higher quality software in a given amount of time.

The number of US households with access to the Internet and those with broadband connections is growing rapidly. As an economic naturalist, one could predict that when a major purchase is being considered, families will:

collect more information before making the purchase because the cost of finding and acquiring it is lower.

If a nation has the lowest opportunity cost of producing a good, that nation has a(n

comparative advantage.

In general, individuals and nations should specialize in producing those goods for which they have a(n):

comparative advantage.

When each individual concentrates on performing the tasks and producing the goods for which he or she has the lowest opportunity cost, they are producing in accordance with the principle of

comparative advantage.

At the individual level, comparative advantage results from

differences in education or training. cultural differences. language differences. the amount of resources available.

Application of the Principle of Comparative Advantage leads to:

greater specialization of labor and other factors of production.

Larry has a comparative advantage in writing a term paper if he:

has the lowest opportunity cost for writing a term paper.

A supply schedule shows:

how many units producers are willing and able to sell at various prices.

The supply curve shows:

how the quantity produced varies with price.

If the government wanted to use the incentive principle to discourage smoking, it could:

increase taxes on cigarettes, effectively raising the price.

A country may have a comparative advantage in the production of cars if:

it has the natural resources needed to produce steel.

A study that deals with the salaries of university professors would be considered:

microeconomics

By convention, there are two major divisions of economics, called:

microeconomics and macroeconomics.

Studying how Pat allocates her time between teaching classes and assisting undergraduate students is an example of:

microeconomics.

Each point on the supply curve shows the:

quantity supplied at that price.

The difference between a change in quantity supplied and a change in supply is that a change in:

quantity supplied is caused by a change in a good's own, current price, while a change in supply is caused by a change in some other variable, such as input prices, prices of related goods, expectations, or taxes.

The textbook notes that the last time a major league batter hit .400 was in 1941. This is because:

specialization by pitchers, infielders, and outfielders has made it harder for batters to hit.

The market supply schedule reflects the total quantity:

supplied at each price by all of the producers.

An upward-sloping supply curve shows that:

suppliers are willing to increase production of their goods if they receive higher prices for them.

The incentive principle states that a person is more likely to do something if:

the benefits from doing it increase.

The production possibilities curve is:

the boundary that divides all production combinations into attainable ones and unattainable ones.

With ATMs, it is possible to retrieve cash from the bank at any time. One hundred years ago, one could only get cash from the bank during business hours, say, 9 am to 3 pm. The difference has arisen because:

the cost of providing 24-hour service is much lower today.

The production possibilities curve shows:

the maximum production of one good for every possible production level of the other good.

In economics, the demand for a good refers to the amount of the good people:

will buy at various prices.

Having a comparative advantage in a particular task means that:

you give up less to accomplish that task than do others.