Quiz 1

A decrease in the price of eggs will result in: A) an increase in the quantity of eggs demanded. B) an increase in the demand for eggs. C) an increase in the supply of eggs. D) an increase in the quantity of eggs supplied.

A) an increase in the quantity of eggs demanded.

Roommates Sarah and Zoe are hosting a Halloween party and have to make food for their guests and costumes for themselves. To finish both tasks as quickly as possible, Sarah and Zoe know that each of them should focus on just one task, but they don't know who should do what. To decide which roommate should do the cooking, Sarah and Zoe should determine which roommate: A) has the comparative advantage in cooking. B) can complete the cooking in the least amount of time. C) has the absolute advantage in cooking. D) has the largest production possibility frontier in cooking

A) has the comparative advantage in cooking.

Suppose the government sets a price floor below the current price of the good. This price floor will: A) have no effect on the price of the good. B) result in an excess supply of the good. C) increase the quantity supplied of the good. D) result in an excess demand for the good.

A) have no effect on the price of the good.

For simplicity, suppose there are only two countries. If the opportunity cost of manufacturing automobiles is lower in the United States than in Britain and the opportunity cost of manufacturing airplanes is higher in the United States than in Britain, then the United States will: A) import airplanes from Britain and export automobiles to Britain. B) export both airplanes and automobiles to Britain. C) import both airplanes and automobiles from Britain. D) export airplanes to Britain and import automobiles from Britain.

A) import airplanes from Britain and export automobiles to Britain.

*The incentives built into the market economy ensure that resources are put to good use and that opportunities to make people better off are not wasted. This means that: A) markets usually lead to efficiency. B) resources should be used as efficiently as possible to achieve society's goals. C) people usually are not selfish enough to exploit opportunities to make themselves better off. D) markets move toward equilibrium.

A) markets usually lead to efficiency.

As long as people have different ________, everyone has a comparative advantage in something. A) opportunity costs B) direct costs C) benefits D) preferences

A) opportunity costs

Consider the market for corn. What happens if demand increases for corn-based sweeteners and at the same time a new corn seed becomes available that dramatically increases the per-acre yield? A) The change in price for corn is indeterminate; quantity decreases. B) The change in price for corn is indeterminate; quantity increases. C) Price increases; the change in quantity is indeterminate. D) Price and quantity for corn decrease.

B) The change in price for corn is indeterminate; quantity increases.

Piswichaway has a linear production possibility frontier and has 80 hours of labor each period with which to produce waterproof teabags and inflatable anchors. Suppose it takes 4 hours to produce one waterproof teabag and 2 hours to produce one inflatable anchor. What happens to the opportunity cost of producing waterproof teabags if Piswichaway's labor resources decrease to 40 hours? A) The opportunity cost of producing waterproof teabags falls. B) The opportunity cost of producing waterproof teabags does not change. C) The opportunity cost of producing waterproof teabags may or may not change depending on how many inflatable anchors Piswichaway wishes to produce. D) The opportunity cost of producing waterproof teabags rises.

B) The opportunity cost of producing waterproof teabags does not change.

Suppose the equilibrium price of good X is $25 and the equilibrium quantity is 124 units. If the price of good X is $2: A) the market will clear. B) there will be excess demand for good X. C) the quantity demanded of good X will be less than 124 units. D) there will be an excess supply of good X.

B) there will be excess demand for good X.

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. A) 100 B) 200 C) 2 D) 1/2

C) 2

Which of the following is true if there is a decrease in the demand for ice cream? A) There is no change in producer surplus. B) It's impossible to tell what will happen to producer surplus. C) There is a decrease in producer surplus. D) There is an increase in producer surplus.

C) There is a decrease in producer surplus.

If the price of hamburger decreased, it would probably result in ________ in the demand for hamburger buns. A) random fluctuations B) a decrease C) an increase D) no change

C) an increase

Market failure may occur because: A) of regulated self-interest. B) all goods are suited for efficient management by markets. C) individual actions have side effects that are not properly taken into account by the market. D) one party benefits more than another in trade.

C) individual actions have side effects that are not properly taken into account by the market.

The production possibility frontier is bowed out from the origin because: A) resources are inefficiently used. B) economic growth leads to inefficiency. C) resources are not equally suited for the production of both goods. D) resources are scarce.

C) resources are not equally suited for the production of both goods.

If the price of chocolate-covered peanuts decreases from $1.10 to $0.90 and the quantity demanded increases from 190 bags to 210 bags, then the price elasticity of demand (using the midpoint method) is: A) -2. B) -1. C) 0. D) -0.5.

D) -0.5.

If chicken and beef are substitutes, then a fall in the price of chicken will bring about: A) no change in the demand for beef. B) a decrease in the quantity demanded of beef. C) an increase in the demand for beef. D) a decrease in the demand for beef.

D) a decrease in the demand for beef.

Suppose the United States removes the current sugar quotas and the market price of sugar drops. In the candy bar market, we would expect: A) consumer surplus to decrease. B) consumer surplus to be unchanged. C) deadweight loss to increase. D) consumer surplus to increase

D) consumer surplus to increase

The U.S. production possibility frontier will ________ if there is a large influx of immigrants. A) cannot be determined from the information provided B) not change C) shift in D) shift out

D) shift out

You manage a popular nightclub and lately revenues have been disappointing. Your bouncer suggests that raising drink prices will increase revenues, but your bartender suggests that decreasing drink prices will increase revenues. You aren't sure who is right, but you do know that: A) both the bouncer and bartender think the demand for drinks is elastic. B) your bouncer thinks the demand for drinks is elastic, while your bartender thinks the demand for drinks is inelastic. C) both the bouncer and bartender think the demand for drinks is inelastic. D) your bouncer thinks the demand for drinks is inelastic, while your bartender thinks the demand for drinks is elastic.

D) your bouncer thinks the demand for drinks is inelastic, while your bartender thinks the demand for drinks is elastic.

Which of the following is an example of a positive statement? A) Everyone in the country needs to save money for retirement. B) Basketball players should not be paid higher salaries than teachers. C) A high rate of economic growth is good for the country. D) The poverty rate is 14%

D: The poverty rate is 14%