Econ Test 1

Brock is willing to pay $400 for a new suit, but he is able to buy the suit for $350. His consumer surplus is Select one: a. $50. b. $150. c. $350. d. $400.

a. $50.

Refer to Figure 7-2. Which area represents consumer surplus at a price of P1? Select one: a. ABD b. ACG c. BCDF d. DFG

a. ABD

Mike and Sandy are two woodworkers who both make tables and chairs. In one month, Mike can make 4 tables or 20 chairs, while Sandy can make 6 tables or 18 chairs. Given this, we know that Select one: a. Mike has an absolute advantage in chairs. b. Mike has a comparative advantage in tables. c. Sandy has an absolute advantage in chairs. d. Sandy has a comparative advantage in chairs.

a. Mike has an absolute advantage in chairs.

Suppose the state of Iowa passes a law that increases the price of cigarettes by $1 per pack. As a result, residents in Iowa start purchasing their cigarettes in surrounding states. Which of the following principles does this best illustrate? Select one: a. People respond to incentives b. Rational people think at the margin c. Trade can make everyone better off d. Markets are usually a good way to organize economic activity

a. People respond to incentives

Economists use the word equality to describe a situation in which Select one: a. each member of society has the same income. b. each member of society has access to abundant quantities of goods and services, regardless of his or her income. c. society is getting the maximum benefits from its scarce resources. d. society's resources are used efficiently.

a. each member of society has the same income.

When a production possibilities frontier is bowed outward, the opportunity cost of producing an additional unit of a good Select one: a. increases as more of the good is produced. b. decreases as more of the good is produced. c. does not change as more of the good is produced. d. may increase, decrease, or not change as more of the good is produced.

a. increases as more of the good is produced.

Production is efficient if the economy is producing at a point Select one: a. on the production possibilities frontier. b. outside the production possibilities frontier. c. on or inside the production possibilities frontier. d. inside the production possibilities frontier.

a. on the production possibilities frontier.

What you give up to obtain an item is called your Select one: a. opportunity cost. b. explicit cost. c. true cost. d. direct cost.

a. opportunity cost.

Refer to Figure 3-5. Puneet has a comparative advantage in the production of Select one: a. purses and Chirag has a comparative advantage in the production of wallets b. wallets and Chirag has a comparative advantage in the production of purses. c. both goods and Chirag has a comparative advantage in the production of neither good. d. neither good and Chirag has a comparative advantage in the production of both goods.

a. purses and Chirag has a comparative advantage in the production of wallets

Refer to Figure 3-5. Puneet should specialize in the production of Select one: a. purses. b. wallets. c. both goods. d. neither good.

a. purses.

A rational decisionmaker takes an action if and only if Select one: a. the marginal benefit of the action exceeds the marginal cost of the action. b. the marginal cost of the action exceeds the marginal benefit of the action. c. the marginal cost of the action is zero. d. the opportunity cost of the action is zero.

a. the marginal benefit of the action exceeds the marginal cost of the action.

When computing the opportunity cost of attending a concert you should include Select one: a. the price you pay for the ticket and the value of your time. b. the price you pay for the ticket, but not the value of your time. c. the value of your time, but not the price you pay for the ticket. d. neither the price of the ticket nor the value of your time.

a. the price you pay for the ticket and the value of your time.

For most students, the largest single cost of a college education is Select one: a. the wages given up to attend school. b. tuition, fees, and books. c. room and board. d. transportation, parking, and entertainment.

a. the wages given up to attend school.

Refer to Figure 7-3. If the price of the good is $5, then consumer surplus is Select one: a. $9. b. $11. c. $13. d. $16.

b. $11.

Refer to Figure 2-4. The opportunity cost of this economy moving from point A to point B is Select one: a. 0 toasters. b. 10 toasters. c. 10 toothbrushes. d. 20 toasters.

b. 10 toasters.

Dolls Fire Trucks 400 0 300 200 200 350 100 450 0 500 What is the opportunity cost to Toyland of increasing the production of dolls from 200 to 300? Select one: a. 100 fire trucks b. 150 fire trucks c. 200 fire trucks d. 350 fire trucks

b. 150 fire trucks

Refer to Figure 3-5. Puneet's opportunity cost of one purse is Select one: a. 4/5 wallet and Chirag's opportunity cost of one purse is 2/3 wallet. b. 4/5 wallet and Chirag's opportunity cost of one purse is 3/2 wallets. c. 5/4 wallets and Chirag's opportunity cost of one purse is 2/3 wallet. d. 5/4 wallets and Chirag's opportunity cost of one purse is 3/2 wallets.

b. 4/5 wallet and Chirag's opportunity cost of one purse is 3/2 wallets.

Refer to Figure 3-5. If Puneet and Chirag each divides his time equally between making purses and making wallets, then total production is Select one: a. 4 purses and 8 wallets. b. 7 purses and 7 wallets. c. 10 purses and 6 wallets. d. 14 purses and 14 wallets.

b. 7 purses and 7 wallets.

Refer to Figure 2-10. Which of the following events would explain the shift of the production possibilities frontier from A to B? Select one: a. The economy's citizens developed an enhanced taste for batteries. b. The economy experienced a technological advance in the production of batteries. c. More capital became available in the economy. d. More labor became available in the economy.

b. The economy experienced a technological advance in the production of batteries.

The law of demand states that, other things equal, Select one: a. an increase in price causes quantity demanded to increase. b. an increase in price causes quantity demanded to decrease. c. an increase in quantity demanded causes price to increase. d. an increase in quantity demanded causes price to decrease.

b. an increase in price causes quantity demanded to decrease.

Any point on a countrys production possibilities frontier represents a combination of two goods that an economy Select one: a. will never be able to produce. b. can produce using all available resources and technology. 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.

b. can produce using all available resources and technology.

If a consumer places a value of $15 on a particular good and if the price of the good is $17, then the Select one: a. consumer has consumer surplus of $2 if he or she buys the good. b. consumer does not purchase the good. c. market is not a competitive market. d. price of the good will fall due to market forces.

b. consumer does not purchase the good.

Mitch has $100 to spend and wants to buy either a new amplifier for his guitar or a new mp3 player to listen to music while working out. Both the amplifier and the mp3 player cost $100, so he can only buy one. This illustrates the basic concept that Select one: a. trade can make everyone better off. b. people face trade-offs c. rational people think at the margin. d. people respond to incentives.

b. people face trade-offs

Refer to Figure 3-5. Chirag should specialize in the production of Select one: a. purses. b. wallets. c. both goods. d. neither good.

b. wallets.

You love peanut butter. You hear on the news that 50 percent of the peanut crop in the South has been wiped out by drought, and that this will cause the price of peanuts to double by the end of the year. As a result, Select one: a. your demand for peanut butter will increase, but not until the end of the year. b. your demand for peanut butter increases today. c. your demand for peanut butter decreases as you look for a substitute good. d. your demand for peanut butter shifts left today.

b. your demand for peanut butter increases today.

Refer to Table 7-5. If the market price of an orange is $1.20, consumer surplus amounts to Select one: a. $0.70. b. $1.10. c. $1.40. d. $5.00.

c. $1.40.

Refer to Figure 3-5. Puneet's opportunity cost of one wallet is Select one: a. 4/5 purse and Chirag's opportunity cost of one wallet is 2/3 purse. b. 4/5 purse and Chirag's opportunity cost of one wallet is 3/2 purses. c. 5/4 purses and Chirag's opportunity cost of one wallet is 2/3 purse. d. 5/4 purses and Chirag's opportunity cost of one wallet is 3/2 purses.

c. 5/4 purses and Chirag's opportunity cost of one wallet is 2/3 purse.

Refer to Table 7-5. If the market price of an orange is $0.70, the market quantity of oranges demanded per day is Select one: a. 5. b. 6. c. 7. d. 9.

c. 7.

Refer to Table 4-1. Whose demand does not obey the law of demand? Select one: a. Aaron's b. Angela's c. Austin's d. Alyssa's

c. Austin's

Refer to Figure 2-6. Inefficient production is represented by which point(s)? Select one: a. A, B b. C, D, F, G c. C, F, G d. D

c. C, F, G

Mike has spent $500 purchasing and repairing an old fishing boat, which he expects to sell for $800 once the repairs are complete. Mike discovers that, in addition to the $500 he has already spent, he needs to make an additional repair, which will cost another $400, in order to make the boat worth $800 to potential buyers. He can sell the boat as it is now for $300. What should he do? Select one: a. He should sell the boat as it is now for $300. b. He should keep the boat since it would not be rational to spend $900 on repairs and then sell the boat for $800. c. He should complete the repairs and sell the boat for $800. d. It does not matter which action he takes; the outcome is the same either way.

c. He should complete the repairs and sell the boat for $800.

Refer to Table 7-1. If the price of the product is $15, then who would be willing to purchase the product? Select one: a. Mike b. Mike and Sandy c. Mike, Sandy, and Jonathan d. Mike, Sandy, Jonathan, and Haley

c. Mike, Sandy, and Jonathan

For which of the following individuals would the opportunity cost of going to college be highest? Select one: a. a promising young mathematician who will command a high salary once she earns her college degree b. a student with average grades who has never held a job c. a famous, highly-paid actor who wants to take time away from show business to finish college and earn a degree d. a student who is the best player on his college basketball team, but who lacks the skills necessary to play professional basketball

c. a famous, highly-paid actor who wants to take time away from show business to finish college and earn a degree

An increase in demand is represented by Select one: a. a movement downward and to the right along a demand curve. b. a movement upward and to the left along a demand curve. c. a rightward shift of a demand curve. d. a leftward shift of a demand curve.

c. a rightward shift of a demand curve.

One effect of the government-imposed seat belt law in the U.S. has been Select one: a. a dramatic decrease in the number of pedestrian deaths. b. safer driving. c. an increase in the number of accidents. d. a dramatic decrease in the number of driver deaths.

c. an increase in the number of accidents.

Refer to Figure 3-5. Puneet has an absolute advantage in the production of Select one: a. purses and Chirag has an absolute advantage in the production of wallets. b. wallets and Chirag has an absolute advantage in the production of purses. c. both goods and Chirag has an absolute advantage in the production of neither good. d. neither good and Chirag has an absolute advantage in the production of both goods.

c. both goods and Chirag has an absolute advantage in the production of neither good.

You are considering staying in college another semester so that you can complete a major in economics. In deciding whether or not to stay you should Select one: a. compare the total cost of your education to the total benefits of your education. b. compare the total cost of your education to the benefits of staying one more semester. c. compare the cost of staying one more semester to the benefits of staying one more semester. d. compare the total benefits of your education to the cost of staying one more semester.

c. compare the cost of staying one more semester to the benefits of staying one more semester.

Refer to Table 4-1. If these are the only four buyers in the market, then when the price increases from $1.00 to $1.50, the market quantity demanded Select one: a. decreases by 1.75 units. b. increases by 2 units. c. decreases by 7 units. d. decreases by 24 units.

c. decreases by 7 units.

An economic outcome is said to be efficient if the economy is Select one: a. using all 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. d. able to produce more than what is currently being produced without additional resources.

c. getting all it can get from the scarce resources it has available.

A consumers willingness to pay directly measures Select one: a. the extent to which advertising and other external forces have influenced the consumer's preferences. b. the cost of a good to the buyer. c. how much a buyer values a good. d. consumer surplus.

c. how much a buyer values a good.

Assuming that bagels and muffins are substitute goods, then a higher price for bagels would result in a(n) Select one: a. increase in the demand for bagels. b. decrease in the demand for bagels. c. increase in the demand for muffins. d. decrease in the demand for muffins.

c. increase in the demand for muffins.

Where can an economy not produce? Select one: a. inside its production possibilities frontier b. on its production possibilities frontier c. outside its production possibilities frontier d. at the endpoints of its production possibilities frontier

c. outside its production possibilities frontier

A very hot summer in Atlanta will cause Select one: a. the demand curve for lemonade to shift to the left. b. the demand for air conditioners to decrease. c. the demand for jackets to decrease. d. a movement downward and to the right along the demand curve for tank tops.

c. the demand for jackets to decrease.

Sweaters Gloves 4 300 6 ? 8 100 If the production possibilities frontier is bowed outward, then "?" could be Select one: a. 100. b. 150. c. 200. d. 250.

d. 250.

Refer to Table 4-1. If these are the only four buyers in the market, then the market quantity demanded at a price of $1 is Select one: a. 4 units. b. 7.75 units. c. 14 units. d. 31 units.

d. 31 units.

Refer to Figure 7-2. Which area represents the increase in consumer surplus when the price falls from P1 to P2? Select one: a. ABD b. ACG c. DFG d. BCGD

d. BCGD

Ben bakes bread and Shawna knits sweaters. Ben and Shawna both like to eat bread and wear sweaters. In which of the following cases is it impossible for both Ben and Shawna to benefit from trade? Select one: a. Ben cannot knit sweaters and Shawna cannot bake bread. b. Ben is better than Shawna at baking bread and Shawna is better than Ben at knitting sweaters. c. Ben is better than Shawna at baking bread and at knitting sweaters d. Both Ben and Shawna can benefit from trade in all of the above cases.

d. Both Ben and Shawna can benefit from trade in all of the above cases.

Which of the following statements best represents the principle represented by the adage, "There is no such thing as a free lunch"? Select one: a. Melissa can attend the concert only if she takes her sister with her. b. Greg is hungry and homeless. c. Brian must repair the tire on his bike before he can ride it to class. d. Kendra must decide between going to Colorado or Cancun for spring break.

d. Kendra must decide between going to Colorado or Cancun for spring break.

Economists generally support Select one: a. trade restrictions. b. government management of trade. c. export subsidies. d. free international trade.

d. free international trade.

A marginal change is a a. change that involves little, if anything, that is important. b. large, significant adjustment. c. change for the worse, and so it is usually a short-term change. d. small, incremental adjustment.

d. small, incremental adjustment.

Efficiency means that Select one: a. society is conserving resources in order to save them for the future. b. society's goods and services are distributed equally among society's members. c. society's goods and services are distributed fairly, though not necessarily equally, among society's members. d. society is getting the maximum benefits from its scarce resources.

d. society is getting the maximum benefits from its scarce resources.

Soup is an inferior good if Select one: a. the demand for soup falls when the price of a substitute for soup rises. b. the demand for soup rises when the price of soup falls. c. the demand curve for soup slopes upward. d. the demand for soup falls when income rises.

d. the demand for soup falls when income rises.

A movement along the demand curve might be caused by a change in Select one: a. income. b. the prices of substitutes or complements. c. expectations about future prices. d. the price of the good or service that is being demanded.

d. the price of the good or service that is being demanded.