Econ Exam 1

Good Z question

$15

Frances has a linear production possibility frontier when she produces tomatoes and green beans. If she uses all of her resources, she can produce 400 bushels of tomatoes or 800 bushels of green beans. Which of the following combinations is not efficient for Frances?

200; 200

Lemonade question

90 cups per day

Determine whether each of the following are true. A. Resource scarcity is a major economic concern for all countries. C. Very talented individuals, who can do most things better than most people, can benefit from specializing in doing one thing.

A and C

Determine which of the following statements are positive statements.

A. The federal government spends half of its budget on national defense D. The rate of unemployment is 4%

Determine which of the following statements are normative statements.

A. The minimum wage is an important tool in fighting poverty and should be increased D. Everyone in the country should be covered by national health insurance

Which statement is correct?

An economic situation is in equilibrium when no individual would be better off taking a different action

If resources are scarce it means that they:

are insufficient to provide enough goods and services to satisfy all human material wants and needs.

An economy is said to have a comparative advantage in the production of a good if it can produce that good:

at a lower opportunity cost than another economy

Vitamin B12 tablet question

Panel B (aka from left to right: D1, D2, S)

Gasoline and oil question

Panel D

Bongos and Frisbees question

Bill

For which decision would marginal analysis be MOST relevant?

How many hours should I study for my exam?

Mark and Julie are going to sell brownies and cookies for their third annual fundraiser bake sale. In one day, Mark can make 40 brownies or 20 cookies, and Julie can make 15 brownies or 15 cookies. Based on this information, _____ has the comparative advantage in making brownies and _____ has the comparative advantage in making cookies.

Mark; Julie

The demand for meals at a local Chipotle will shift to the left if:

Saladworks offers a 10% discount coupon in the local newspaper

Mr. Freezee operates a fleet of ice cream trucks that drive around neighborhoods selling ice cream. He is trying to decide whether he should buy another ice cream truck to add to his fleet. He determines that one more truck will add $750 to his revenue but that the truck will also increase his costs by $1,000. Based on marginal analysis, Mr. Freeze decides:

That he should not purchase the truck since the costs outweigh the benefits

Which choice represents a possible trade based on specialization and comparative advantage?

The United States would trade 1 ton of wheat to Germany for 1.5 tons of aluminum

Consider the market for iPads. What happens if a fantastic new alternative tablet is developed by Samsung and, at the same time, a boat carrying a large shipment of iPads is attacked by pirates and sunk?

The change in price is indeterminate and quantity decreases

If the demand for tires goes down when the price of gas goes up, then tires and gas are:

complements

For an economist, the cost of something is:

what you gave up to get it

If Farmer Sam MacDonald can produce 200 pounds of cabbages and no potatoes or no cabbages and 100 pounds of potatoes and if he faces a linear production possibility frontier for his farm, the opportunity cost of producing an additional pound of potatoes is ________ pound(s) of cabbage.

2

An economy is efficient if it is:

not possible to produce more of one good without producing less of another good.

Which factor is MOST likely to shift the supply of milk to the right?

a decrease in the price of feed given to dairy cows

according to economic models of trade, when the United States and Mexico trade: ____

both Mexico and the United States will be better off

Because of trade, a country may:

consume outside its production possibility frontier.

The law of demand implies that:

consumers will buy more at lower prices

In the circular-flow diagram, the product market is where:

households buy goods and services

If the value of homes in University City increases, and as a result, the people of University City spend more, incomes in University City will:

increase

An economic model:

is a simplified version of reality used to understand real-world economic conditions

In terms of the production possibility frontier, the inefficient use of available resources is shown by:

production at a point inside the production possibility frontier

If the price of a commodity increases, you can expect the:

quantity supplied to increase

Abe starts exercising regularly, and after a few months he can do twice as much of everything. In a single day Abe can now make 10 hamburgers or 8 milkshakes rather than the 5 hamburgers and 4 milkshakes he made in the past. We now know that Abe's production possibility frontier has _____, but his opportunity costs of making milkshakes _____.

shifted right; not changed

Based on the table:

the United States has a comparative advantage in wheat and an absolute advantage in wheat

A new fast-food restaurant offered a free meal (valued at $5) a week for a year to its first 100 customers. Ramona camped out for 48 hours before the opening to be one of the first 100 customers. The cost of the free meal a week for a year for Ramona was:

whatever else she would have done with the 48 hours