ECON 202 Learning Module 4

4.11) Suppose the value of the price elasticity of supply is 4. What does this mean? A. For every $1 increase in price, quantity supplied increases by 4 units. B. A 1 percent increase in the price of the good causes the supply curve to shift upward by 4 percent. C. A 4 percent increase in the price of the good causes quantity supplied to increase by 1 percent. D. A 1 percent increase in the price of the good causes quantity supplied to increase by 4 percent.

D. A 1 percent increase in the price of the good causes quantity supplied to increase by 4 percent.

4.9) Why has the number of people living on farms gone down so drastically from 1900? A. Process innovations such as herd immunization B. Process innovations such as mechanized planting and harvesting C. Investment in capital such as tractors D. All of these

D. All of these

4.2) Which of the following statements is true? A. Individuals who have never been the best at doing anything can still have a comparative advantage in producing some product. B. Individuals who have never been the best at doing anything perform all tasks at a higher opportunity cost than others. C. Individuals who have never been the best at doing anything must have an absolute advantage in at least ones task. D. Individuals who have never been the best at doing anything cannot have a comparative advantage in producing any product.

A. Individuals who have never been the best at doing anything can still have a comparative advantage in producing some product.

4.1) An increase in the quantity of a product supplied is caused by an increase in the price of the product. A. True B. False

A. True

4.1) Quantity supplied refers to the amount of a good or service that a firm is willing and able to supply at a given price. A. True B. False

A. True

4.3)Which of the following would cause a decrease in the supply of milk? A. an increase the price of a product that producers sell instead of milk B. an increase in the number of firms that produce milk C. an increase in the price of cookies (assuming that milk and cookies are complements) D. a decrease in the price of milk

A. an increase the price of a product that producers sell instead of milk

4.2) You have an absolute advantage whenever you: A. can produce more of something than others with the same resources. B. can produce something at a lower opportunity cost than others. C. are better educated than someone else. D. prefer to do one particular activity

A. can produce more of something than others with the same resources

4.11) If firms do not increase their quantity supplied when price changes, then supply is A. perfectly inelastic. B. relatively inelastic. C. elastic. D. perfectly elastic

A. perfectly inelastic.

4.11) The price elasticity of an upward-sloping supply curve is always A. positive. B. greater than one. C. negative. D. impossible to determine.

A. positive.

4.11) The price elasticity of supply is equal to: A. the percentage change in quantity supplied divided by the percentage change in price. B. the change in quantity supplied divided by the change in price. C. the value of the slope of the supply curve. D. the percentage change in price divided by the percentage change in quantity supplied.

A. the percentage change in quantity supplied divided by the percentage change in price.

4.11)Suppose a 4 percent increase in price results in a 2 percent increase in the quantity supplied of a good. Calculate the price elasticity of supply and characterize the product. A. 2; The product is elastic. B. 0.5; The product is inelastic. C. 0.2; The product is inelastic. D. 50%; The product is inelastic.

B. 0.5; The product is inelastic.

4.1) All else equal, as the price of a product falls, the quantity supplied increases. A. True B. False

B. False

4.2) *REFER TO LEARNING MODULES- GRAPHS & TABLES* Table 2-6 shows the output per week of two jewelers, Serena and Haley. They can either devote their time to making bracelets or making necklaces. Refer to Table 2-6. Which of the following statements is true? A. Haley has a comparative advantage in making necklaces and Serena in making bracelets. B. Haley has a comparative advantage in making bracelets and Serena in making necklaces. C. Serena has a comparative advantage in making both products. D. Haley has a comparative advantage in making both products.

B. Haley has a comparative advantage in making bracelets and Serena in making necklaces.

4.9) Assembly lines are an example of: A. Capital investment B. Process innovation C. Product innovation D. All of these

B. Process innovation

4.3)Danielle Ocean pays for monthly pool maintenance for her home swimming pool. Last week the owner of the pool service informed Danielle that he will have to raise his monthly service fee because of increases in the price of pool chemicals. How is the market for pool maintenance services affected by this? A. There is a decrease in the quantity of pool maintenance services supplied. B. There is a decrease in the supply of pool maintenance services. C. There is a decrease in the demand for pool maintenance services. D. There is an increase in the supply of pool maintenance services.

B. There is a decrease in the supply of pool maintenance services.

4.3) Ranchers can raise either cattle or sheep on their land. Which of the following would cause the supply of sheep to increase? A. an increase in the price of sheep feed B. a decrease in the price of cattle C. an increase in the price of sheep D. an increase in the demand for cattle

B. a decrease in the price of cattle

4.1) An increase in the price of off-road vehicles will result in A. a smaller quantity of off-road vehicles supplied. B. a larger quantity of off-road vehicles supplied. C. a decrease in the supply of off-road vehicles. D. an increase in the demand for off-road vehicles.

B. a larger quantity of off-road vehicles supplied.

4.1) An increase in the price of pineapples will result in A. an increase in the supply of pineapples. B. a larger quantity of pineapples supplied. C. a decrease in the demand for pineapples. D. a smaller quantity of pineapples supplied.

B. a larger quantity of pineapples supplied.

4.10) An outward shift of a nation's production possibilities frontier represents: A. rising prices of the two goods on the production possibilities frontier model. B. economic growth. C. an impossible situation. D. a situation in which a country produces more of one good and less of another.

B. economic growth.

4.10) A production possibilities frontier with a bowed-outward shape indicates: A. constant opportunity costs as more and more of one good is produced. B. increasing opportunity costs as more and more of one good is produced. C. decreasing opportunity costs as more and more of one good is produced. D. the possibility of inefficient production.

B. increasing opportunity costs as more and more of one good is produced.

4.10) The production possibilities frontier shows the ________ combinations of two products that can be produced in a particular time period with available resources. A. only B. maximum attainable C. equitable D. minimum attainable

B. maximum attainable

4.3)If in the market for peaches the supply curve has shifted to the left,: A. the quantity of peaches supplied has increased. B. the supply of peaches has decreased. C. the supply of peaches has increased. D. the quantity of peaches supplied has decreased.

B. the supply of peaches has decreased.

4.11) The price elasticity of supply for umbrellas is 2. Suppose you're told that following a price increase, quantity supplied increased by 30 percent. What was the percentage change in price that brought this about? A. 6.7 percent B. 60 percent C. 15 percent D. impossible to determine without additional information

C. 15 percent

4.3)If, in the market for oranges, the supply has increased then: A. there has been a movement upwards along the supply curve for oranges. B. the supply curve for oranges has shifted to the left. C. the supply curve for oranges has shifted to the right. D. there has been a movement downwards along the supply curve for oranges.

C. the supply curve for oranges has shifted to the right.

4.2) *REFER TO LEARNING MODULES- GRAPHS & TABLES* Table 2-6 shows the output per week of two jewelers, Serena and Haley. They can either devote their time to making bracelets or making necklaces. Refer to Table 2-6. Which of the following statements is true? A. Haley has an absolute advantage in making necklaces and Serena in making bracelets. B. Haley has an absolute advantage in making both products. C. Haley has an absolute advantage in making bracelets and Serena in making necklaces. D. Serena has an absolute advantage in making both products.

C. Haley has an absolute advantage in making bracelets and Serena in making necklaces.

4.11) Over longer periods of time, increases in oil prices provide firms with incentives to explore and recover oil. What does this indicate about the long-run price elasticity of supply for oil? A. The elasticity coefficient approaches 0 in the long run as supplies are depleted. B. The elasticity coefficient is unstable in the long run because oil supplies may be depleted. C. The elasticity coefficient is likely to be higher in the long run than in the short run. D. The elasticity coefficient is likely to be lower in the long run than in the short run.

C. The elasticity coefficient is likely to be higher in the long run than in the short run.

4.3) In October, market analysts predict that the price of platinum will fall in November. What happens in the platinum market in October, holding everything else constant? A. The demand curve shifts to the right. B. The supply curve shifts to the left. C. The supply curve shifts to the right. D. The quantity of platinum demanded and the quantity of platinum supplied both increase.

C. The supply curve shifts to the right.

4.1) Last year, the Pottery Palace supplied 8,000 ceramic pots at $40 each. This year, the company supplied the same quantity of ceramic pots at $55 each. Based on this evidence, The Pottery Palace has experienced: A. a decrease in the quantity supplied. B. an increase in supply. C. a decrease in supply. D. an increase in the quantity supplied.

C. a decrease in supply.

4.1) A decrease in the price of GPS systems will result in: A. a decrease in the demand for GPS systems. B. a larger quantity of GPS systems supplied. C. a smaller quantity of GPS systems supplied. D. an increase in the supply of GPS systems.

C. a smaller quantity of GPS systems supplied.

4.2) Comparative advantage means the ability to produce a good or service: A. at a higher profit level than any other producer. B. at a lower opportunity cost than any other producer. C. at a lower selling price than any other producer. D. of a higher quality than any other producer.

C. is a table that shows the relationship between the price of a product and the quantity of the product supplied

4.3) A supply schedule: A. is a curve that shows the relationship between the price of a product and the quantity of the product supplied. B. is the relationship between the supply of a product and the cost of producing the product. C. is a table that shows the relationship between the price of a product and the quantity of the product supplied. D. is a table that shows the relationship between the price of a product and the quantity of the product that producers and consumers are willing to exchange.

C. is a table that shows the relationship between the price of a product and the quantity of the product supplied.

4.10) The slope of a production possibilities frontier A. is always constant. B. is always varying. C. measures the opportunity cost of producing one more unit of a good. D. has no economic relevance or meaning.

C. measures the opportunity cost of producing one more unit of a good. C. measures the opportunity cost of producing one more unit of a good.

4.1)The supply curve for watches: A. shows the relationship between the quantity of watches firms are willing and able to supply and the quantity of watches consumers are willing and able to purchase. B. shows the supply of watches consumers are willing and able to buy at any given price. C. shows the relationship between the price of watches and the quantity of watches supplied. D. is downward sloping.

C. shows the relationship between the price of watches and the quantity of watches supplied.

4.10) The attainable production points on a production possibilities curve are: A. the points outside the area enclosed by the production possibilities frontier. B. the points along the production possibilities frontier. C. the points along and inside the production possibility frontier. C. the horizontal and vertical intercepts.

C. the points along and inside the production possibility frontier.

4.3)What is the difference between an "increase in supply" and an "increase in quantity supplied"? A. An "increase in supply" means the supply curve has shifted to the right while an "increase in quantity supplied" means at any given price supply has increased. B. There is no difference between the two terms; they both refer to a shift of the supply curve. C. There is no difference between the two terms; they both refer to a movement along a given supply curve. D. An "increase in supply" means the supply curve has shifted to the right while an "increase in quantity supplied" refers to a movement along a given supply curve in response to an increase in price.

D. An "increase in supply" means the supply curve has shifted to the right while an "increase in quantity supplied" refers to a movement along a given supply curve in response to an increase in price.

4.9) Which of the following was not mentioned in the video as a driver of economic growth? A. Process innovation B. Product innovation C. Capital investment D. Increased demand

D. Increased demand

4.1) In October 2005, the U.S. Fish and Wildlife Service banned the importation of beluga caviar, the most prized of caviars, from the Caspian Sea. What happened in the market for caviar in the United States? A. The demand curve shifted to the right. B. The supply curve shifted to the right. C. The demand curve shifted to the left. D. The supply curve shifted to the left.

D. The supply curve shifted to the left.

4.3)In February, market analysts predict that the price of titanium will rise in March. What happens in the titanium market in February, holding everything else constant? A. The demand curve shifts to the left. B. The quantity of titanium demanded and the quantity of titanium supplied both increase. C. The supply curve shifts to the right. D. The supply curve shifts to the left.

D. The supply curve shifts to the left.

4.1) If the United States placed an embargo on Swedish products, what would happen in the U.S. market for Swedish furniture? A. The demand curve would shift to the left. B. The demand curve would shift to the right. C. The supply curve would shift to the right. D. The supply curve would shift to the left.

D. The supply curve would shift to the left.

4.9) Which of the following is a product innovation? A. Kyle Field B. assembly lines C. self check-out lines D. antibiotics

D. antibiotics

4.9) Which of the following is a process innovation? A. smartphones B. airports C. Lasik eye surgery D. self checkout lines

D. self checkout lines

4.3)One would speak of a change in the quantity of a good supplied, rather than a change in supply, if: A. the cost of producing the good changes. B. prices of substitutes in production change. C. supplier expectations about future prices change. D. the price of the good changes.

D. the price of the good changes.