module 2 quiz 3, 4a, 4b, & 5

Apple devices such as the iPhone and iPad are excellent examples of the Global Supply Chain.

-Answers "b" and "d" are correct.

Which of the following are examples of domestic (within the US) trade in goods and/or services?

-Exports of almonds from California to Flordia. -Online purchase of an e-book from Amazon

Trade is considered to be overall helpful to the economy. But this isn't true for everyone because:

-Though consumers have benefited from low cost Chinese imports, many workers in the US have lost their jobs due to the much lower wages in China. -Job loss has been an important issue in the upcoming elections.

Demand and Supply together:

All of the above answers are correct.

Supply and Demand share many characteristics but there are key differences:

Answers "b" and "c" are correct

Which of the following would cause the demand curve to shift to the right?

Buyers expect the price of the good to fall in the future.

The nature of composite goods and services:

Composite goods have many components whose cost and availability determine its supply curve.

Highways are a prominent example of national infrastructure. The state of highways can affect the demand for:

The decision about whether to lease or borrow from a bank to finance the vehicle purchase.

Demand curves have the following characteristics:

The demand curve is likely to remain unchanged for weeks, if not months for publicly traded stocks and bonds.

Which of the following statements is not correct?

When the income elasticity of demand is positive, the good is a normal good.

Suppose that the cost of potatoes increases by 25%. Then:

Yes, the demand for beef might decrease since beef and potatoes are often served together (think of McDonalds).

If an iPhone sells for $500, the value added due to assembly is $20 and component value added is $225, then the percentage value added due to assembly is 20%.

false

In market economies, the government allocates scarce resources.

false

Substitutes are two goods for which a decrease in the price of one leads to a decrease in the demand for the other.

false

The demand curve shifts to the left for an increase in demand.

false

If demand is inelastic, to raise revenue the price needs to

increase

Suppose that chicken and pork are substitutes. We would expect the cross-price elasticity of demand to be

positive

Which of the following is likely to have the most inelastic demand?

potato chips

If demand is elastic, a decrease in price will

raise total revenue.

A garage sale is an example of a market.

true

A surplus occurs when price is above equilibrium.

true

Economists use the term 'absolute advantage' when comparing the productivity of one person, firm, or nation to that of another.

true

Goods with close substitutes tend to have more elastic demand.

true

If Joe can produce more food per hour and more clothing per hour than Susie can, then Joe and Susie can both gain from trading food and clothing.

true

If demand increases such that inventories are depleted, production is unable to keep up, and prices are prevented from rising, them shortages are likely to develop.

true

If demand is inelastic, total revenue will fall if price falls.

true

If the cross-price elasticity of demand between two goods is negative, then the goods are substitutes.

true

Necessities tend to have more inelastic demand than luxuries.

true

Specialization and comparative advantage are the primary "drivers" of international trade.

true

Specialization and economies of scale are two factors which drive he Global Supply Chain.

true

Supply and Demand Curves are more likely to be more elastic in the long run.

true

Supply curves are typically less elastic in the short run than in the long run.

true

The wages per hour are lower in China than comparable wages (per hour) in the US. But the Chinese advantage in lower wages can be offset by superior productivity of US workers in certain industries

true

Transactions involve the exchange of money for a product or service but non-monetary transactions are common.

true

When a country specializes and trades, one of the gains from trade is that the country can consume more than it could without specialization and trade.

true