Economics Questions 1-4

Which of the following is true? a)Efficiency refers to the size of the economic pie; equality refers to how the pie is divided. b) Government policies usually improve upon both equality and efficiency c)As long as the economic pie continually gets larger, no one will go hunger d)Efficiency and equality can both be achieved if the economic pie is cut into equal pieces

a)Efficiency refers to the size of the economic pie; equality refers to how the pie is divided.

Suppose the cost of flying a 200-seat plane for an airline is $100,000 and there are 10 empty seats on a flight. If the marginal cost of flying a passenger is $200 and a standby passenger is willing to pay $300, the airline should a)sell the ticket because the marginal benefits exceeds the marginal cost b)sell the ticket because the average exceeds the marginal cost c)not sell the ticket because the marginal benefits is less than the marginal cost d)not sell the ticket because the average is less than the average cost

a)sell the ticket because the marginal benefits exceeds the marginal cost.

As a student, Jordyn spends 40 hours per week writing term papers and completing homework assignments. On one axis of Jordyn's production possibilities frontier (PPF) is measured the number of term papers written per week. On the other axis is measured the number of homework assignments completed per week. The PPF is a straight line if a)Jordan faces no trade-offs b)Jordyn can switch between writing term papers and completing homework assignments at a constant rate. c)the rate at which Jordyn can switch between homework assignments and term papers depends on the number of homework assignments completed and on the number of term papers written d)professor require that Jordyn spends equal time on both assignments

b)Jordyn can switch between writing term papers and completing homework assignments at a constant rate.

Blankets:8,12,16 Coats:600,?,200 If the production possibilities frontier is a straight line, then which of the following could represent the number of coats produced when 12 blankets are produced? a)200 b)300 c)400 d)500

c)400

What will happen to the equilibrium price and quantity of new cars if the price of gasoline rises, the price of steel rises, public transportation becomes cheaper and more comfortable, and auto-workers negotiate higher wages? a)Price will fall, and the effect on quantity is ambiguous. b)Price will rise, and the effect on quantity is ambiguous. c)Quantity will fall, and the effect on price is ambiguous. d)Quantity will rise, and the effect on price is ambiguous.

c)Quantity will fall, and the effect on price is ambiguous.

Assume Lianna buys coffee beans in a competitive market. It follows that a)Lianna has a limited numbers of sellers from which to buy coffee beans b)Whenever buying coffee beans, Lianna will negotiate with sellers c)even buying a large quantity of coffee beans, Lianna cannot influence the price. d)Lianna might have trouble finding coffee beans at the local store.

c)even buying a large quantity of coffee beans, Lianna cannot influence the price.

Suppose that you plan your activities for a hot summer day. You would like to go to the local swimming pool and see the latest blockbuster movie. However, the only available ticket is for the same time that the pool is open. So you can only choose one activity. This illustrates the basic principle that a)people respond to incentives b)rational people think at the margin c)people face tradeoffs d)improvements in efficiency sometimes come at the expense of equality.

c)people face tradeoffs.

The marginal benefit Sabrina gets from purchasing a third pair of gloves is a)the same as total benefit from purchasing three pairs of gloves b)more than the marginal cost of purchasing the third pair of gloves c)the total benefit from purchasing three pairs of gloves minus the total benefit from purchasing two pairs of gloves d)the total benefit from purchasing four pairs of gloves minus the total benefit from purchasing three pair of gloves.

c)the total benefit from purchasing three pairs of gloves minus the total benefit from purchasing two pairs of gloves.

In the simple circular-flow diagram, which of the following is not true. a)Households own the factors of production b)Households buy all goods and services that firms produce c)Land,Labor,and capital flow from household to firms d)Firms own the factors of production.

d) Firms own the factors of production

Tennis Rackets: 100,200,300 Tennis Balls: 8000,6500,? If the production possibilities frontier is bowed outward, then which of the following could be the maximum number of tennis balls produced when 300 tennis rackets are produced? a)6,000 b)5,500 c)5,000 d)4,500

d)4,500

Blankets:8,12,16 Coats:600,?,200 If the production possibilities frontier is bowed outward, then which of the following could represent the number of coats produced when 12 blankets are produced? a)200 b)300 c)400 d)500

d)500

If Korea is capable of producing either shoes or soccer balls or some combination of the two, then a)Korea should specialize in the product in which it has an absolute advantage. b)it would be impossible for Korea to have an absolute advantage over another country in both products. c)it would be difficult for Korea to benefit from trade with another country if Korea is efficient in the production of both goods. d)Korea's opportunity cost of shoes is the inverse of its opportunity cost of soccer balls.

d)Korea's opportunity cost of shoes is the inverse of its opportunity cost of soccer balls.

When constructing a production possibilities frontier, which of the following assumptions is not made? a)The economy produces only two goods or two types of goods. b)Firms produce goods using factors of production c)The technology available to firms is given d)The quantities of the factors of production that are available are increasing over the relevant time period.

d)The quantities of the factors of production that are available are increasing over the relevant time period.

If a seller in a competitive market chooses to charge more than the going price, then a)the sellers' profits must increase. b)the owners of the raw materials used in production would raise the prices for the raw materials. c)other sellers would also raise their prices. d)buyers will make purchases from other sellers.

d)buyers will make purchases from other sellers