Econ 1

13) Which of the following statements is true?

---?

17) Refer to Table 7-6. All of the following are terms of trade that could possibly benefit both countries except

1 Belt: 2.25

11) For each watch that Switzerland produces, it gives up the opportunity to make 50 pounds of chocolate. Germany can produce 1 watch for every 100 pounds of chocolate it produces. Which of the following is true about the comparative advantage between the two countries?

A) Switzerland has the comparative advantage in watches.

6) Refer to Figure 2-4. A movement from ________ could occur because of an influx of immigrant

A) X toY

3) Electric car manufacturers want to sell more electric cars at a higher price. Which of the following events would have this effect?

A) an increase in the price of gasoline

15) Studies have shown that smoking cigarettes can cause heart disease. Assume this is true, and favorable weather has increased the tobacco harvest in North Carolina. In the market for cigarettes, these two developments would

A) decrease demand and increase supply, resulting in a decrease in the equilibrium price and an uncertain effect on the equilibrium quantity of cigarettes

16) Autarky is a situation in which a country

A) does not trade with other countries.

28) To affect the market outcome, a price floor

A) must be set above the equilibrium price.

5) Economic growth is represented on a production possibilities frontier model by the production possibility frontier

A) shifting outward.

4) Increasing opportunity cost along a bowed out production possibilities frontier occurs because

A) some factors of production are not equally suited to producing both goods or services.

13) If the best lawyer in town is also the best at operating a word processor, then according to economic reasoning, this person should

A) specialize in being a lawyer because its opportunity cost is lower.

10) Comparative advantage means

A) the ability to produce a good or service at a lower opportunity cost than any other producer

1) The unattainable points in a production possibilities diagram are

A) the points outside the production possibilities frontier.

20) The additional cost to a firm of producing one more unit of a good or service is the

B) marginal cost.

20) In the real world we don't observe countries completely specializing in the production of goods for which they have a comparative advantage. All of the following are reasons for this except

B) some countries have more resources than other countries.

24) Two economists from Northwestern University estimated the benefit households received from subscribing to broadband Internet service. They found that in the year they analyzed, 47 million consumers paid an average of $36 per month to subscribe to a broadband Internet service, and estimated the value of total consumer surplus for these subscribers was equal to $890.5 million. Based on these numbers, what was the average monthly consumer surplus per subscriber for broadband Internet service?

D) $18.95

21) Refer to Table 4-3. The table above lists the marginal cost of polo shirts by Marko's, a firm that specializes in producing men's clothing. If the market price of Marko's polo shirts is $30, producer surplus is

D) $68.

8) Refer to Figure 2-5. If the economy is currently producing at pointX, what is the opportunity cost of moving to pointW?

D) 3 million tons of steel

23) Refer to Figure 4-2. What area represents the decrease in producer surplus when the market price falls fromP2toP1?

D) A +B

16) Refer to the Article Summary. If European governments and hospitals continue to publicize their existing services to American medical tourists and more Americans consider joint-replacement surgery to improve their quality of life, what will happen in the market for joint-replacement surgery as a result of these two factors?

D) Demand will increase, but these two factors will not shift the supply curve

12) Refer to Figure 3-8 . The graph in this figure illustrates an initial competitive equilibrium in the market for motorcycles at the intersection ofD1 andS1 (pointA). If there is an increase in the wages of motorcycle workers and an increase in the price of motorcycle insurance, a complement to motorcycles, the equilibrium could move to which point?

D) E

9) Refer to Figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for blu-ray discs. Which panel best describes what happens in this market if there is a substantial increase in the price of blu-ray players?

D) Panel (d)

10) During the 1990s positive technological change in the production of chicken caused the price of chicken to fall. Holding everything else constant, how would this affect the market for pork (a substitute for chicken)?

D) The demand for pork would decrease and the equilibrium price of pork would decrease.

14) When Toyota introduced its 2010 Prius, it announced that the average retail price of the 2010 model would be lower than the average retail price was for the equivalent 2009 model. Which of the following would explain the price differential?

D) The demand for the Prius had increased, and the supply of the Prius remained unchanged.

3) A production possibilities frontier with a ________ shape indicates increasing opportunity costs as more and more of one good is produced.

D) bowed outward

17) The difference between the ________ for a good and the ________ is called consumer surplus.

D) highest price a consumer is willing to pay; price the consumer actually pays

11) Assume that the demand curve for DVD players shifts to the left and the supply curve for DVD players shifts to the right, but the supply curve shifts more than the demand curve. As a result

D) the equilibrium price of DVD players will decrease; the equilibrium quantity will increase.

14) Refer to Table 2-6. Which of the following statements is true?

A) Lucy has a comparative advantage in making wagons and James in making tricycles

26) ________ is defined as a market outcome in which the marginal benefit to consumers of the last unit produced is equal to the marginal cost of production, and in which the sum of consumer surplus and producer surplus is at a maximum.

A Economic efficiency

19) Refer to Table 4-1. The table above lists the highest prices three consumers, Curly, Moe, and Larry, are willing to pay for a bottle of champagne. If the price of one of the bottles is $95 dollars, total consumer surplus will be

A) $0.

18) Juanita goes to the Hardware Emporium to buy a new circular saw. She is willing to pay $120 for a new saw, but buys one on sale for $85. Juanita's consumer surplus from the purchase is

A) $35.

18) Refer to Table 7-6. If the actual terms of trade are 1 belt for 1.5 swords and 70 belts are traded, how many belts will Morocco gain compared to the "without trade" numbers?

A) 10

1) LetD = demand,S = supply,P = equilibrium price,Q = equilibrium quantity. What happens in the market for sushi if the Surgeon General announces that a majority of the raw fish that is

A) D decreases,S no change,P andQ decrease

15) Refer to Table 2-9. If the two countries specialize and trade, who should export rice?

A) Japan

9) Suppose your expenses for this term are as follows: tuition: $5,000, room and board: $3,000, books and other educational supplies: $500. Further, during the term, you can only work part-time and earn $4,000 instead of your full-time salary of $10,000. What is the opportunity cost of going to college this term, assuming that your room and board expenses would be the same even if you did not go to college?

C) $11,500

2) Carmelita can perform either a combination of 35 manicures and 70 pedicures or a combination

C) 25 pedicures

6) Assume that in recent years the cost of producing microbrew beer in the U.S. has decreased largely due to technological improvements. At the same time, more and more Americans prefer microbrew beer over wine. Which of the following best explains the effect of these events in the microbrew beer market?

C) Both the supply and demand curves have shifted to the right. As a result, there has been an increase in the equilibrium quantity and an uncertain effect on the equilibrium price.

25) Refer to Figure 4-3. What area represents the deadweight loss atP2?

C) C +E

12) Refer to Table 2-5. If the two countries specialize and trade, who should export lumber?

C) Estonia

5) Prices of smartphones (assume that this is a normal good) have fallen in recent years. Over this same period, the price of the components used to produce smartphones has also fallen and consumer incomes have risen. Which of the following best explains the falling prices of smartphones?

C) The demand curve and the supply curve for smartphones have both shifted to the left.

Refer to Figure 2-4. A movement from ________ is the result of advancements in plastic production technology

C) Y toZ

8) An increase in the demand for peanuts due to changes in consumer tastes, accompanied by an increase in the supply of peanuts as a result of favorable growing conditions, will result in

C) an increase in the equilibrium quantity of peanuts; the equilibrium price may increase or decrease.

4) Which of the following would cause the equilibrium price of ketchup to increase and the equilibrium quantity of ketchup to decrease?

C) an increase in the price of tomatoes

7) Studies have shown that drinking one glass of red wine per day may help prevent heart disease. Assume this is true, and a fungal disease destroys a large portion of the grape harvest of California vineyards. In the market for red wine, these two developments would

C) increase demand and decrease supply, resulting in an increase in the equilibrium price and an uncertain effect on the equilibrium quantity of red wine.

22) The area above the market supply curve and below the market price

C) is equal to the total amount of producer surplus in a market.

27) Refer to Table 4-4. If a minimum wage of $9.50 is mandated there will be a

C) surplus of 20,000 units of labor.

2) Hurricane Katrina damaged a large portion of oil refining and pipeline capacity in the Gulf coast states. In the market for gasoline,

C) the supply curve shifted to the left resulting in an increase in the equilibrium price.

19) Examples of comparative advantage show how trade between two countries can make each better off. Compared to their pre-trade positions, trade makes both countries better off because in each country

C) total consumption of goods is greater