ECON 110Final

In a two-good, two country world, if one country has an absolute advantage in the production of both goods, it can still benefit by trading with the other country.

True

Which of the following is a macroeconomic question?

What determines the minimum wage?

An example of a factor of production is

a worker hired by an auto manufacturer.

Refer to Figure above. In the circular flow diagram, economic agents M represent

households

The ability to exercise control over one's own resources within the confines of the law refers to

one's property rights.

Every society faces economic trade-offs. This means

producing more of one good means less of another good can be produced.

An outward shift of a nation's production possibilities frontier can occur due to

an increase in the labor force.

Which of the following would cause a decrease in the supply of peanut butter?

an increase the price of peanuts

Specializing in the production of a good or service in which one has a comparative advantage enables a country to do which of the following?

consume a combination of goods that lies outside its own production possibilities frontier

If in the market for apples the supply has decreased, then

the supply curve for apples has shifted to the left.

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

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

Published in 1776, ________ was written by Adam Smith.

"An Inquiry into the Nature and Causes of the Wealth of Nations"

All of the following are examples of spending on goods and services in the circular flow model except

Chaitanya buys a new spa pedicure chair for her expanding nail salon business.

If the demand for a product decreases and the supply of the same product increases, the equilibrium quantity will increase.

False

In economics, the term "free market" refers to a market where no sales tax is imposed on products sold.

False

Refer to Figure below. Which country has a comparative advantage in the production of coconuts?

Guatemala

If the United States lifts the embargo on Cuban products, what will happen in the U.S. market for Cuban cigars?

The supply curve will shift to the right.

Which of the following describes a characteristic of a perfectly competitive market?

There are many buyers and sellers.

Which of the following is a normative economic statement?

Tobacco products should be banned in all public spaces.

Marginal cost is the ________ associated with a particular increase in an activity.

Additional cost

Refer to Table above. Which of the following statements is true?

Mickey has a comparative advantage in making hats and Minnie in making umbrellas.

Refer to Figure below. ________ is (are) unattainable with current resources.

Point C

Lionel's Lawn Care is a company that maintains residential yards. Lionel's cost for his standard package of mowing, edging, and trimming is $15, and he charges $25 for this service. For a total price of $40, Lionel will also trim shrubs, a service that adds an additional $10 to the total cost of the standard package. What is Lionel's marginal cost of adding the shrub-trimming service to the standard package?

$10

The study of economics arises due to

Scarcity

Refer to Figure below. If the economy is currently producing at point X, what is the opportunity cost of moving to point W?

3 million tons of steel

An increase in quantity supplied is represented by a rightward shift of the supply curve.

False

As population declines, scarcity eventually disappears.

False

In market economies, income distribution is always going to be completely equitable.

False

Which of the following is part of an economic model?

data

The circular flow model demonstrates

the roles played by households and firms in the market system.

Refer to Figure below. What is the opportunity cost of one dozen roses?

0.4 dozen orchids

The Farm Factory, a booth at the local Farmer's Market, sells fresh eggs for $1.50 per dozen and fresh milk for $2.50 per gallon. What is the opportunity cost of buying a gallon of milk?

1 2/3 dozen eggs

Julius runs a small tailor shop in the city of Bloomfield. He is debating whether he should extend his hours of operation. Julius figures that his sales revenue will depend on the number of additional hours the tailor shop is open as shown in the table above. He would have to hire a worker for those hours at a wage rate of $18 per hour. 6) Refer to Table 1. Using marginal analysis, how many hours should Julius extend his shop's hours of operations?

2 hours

Refer to Figure above. If Vidalia chooses to produce 80 dozen roses, how many orchids can it produce to maximize production?

48 dozen orchids

Refer to Figure above. At a price of $25, how many units will be sold?

500

Economics promotes which of the following as the way to make the best decision?

Continue an enjoyable activity up to the point where its marginal benefit equals its marginal cost.

In the circular flow model, households supply resources such as labor services in the product market.

False

Peanut butter and jelly are complements. If the price of peanut butter increases, the demand for jelly will increase.

False

Physical capital refers to stocks and bonds.

False

Policies based on normative economic ideas tend to increase economic efficiency and improve equity.

False

If you can produce more of something than others with the same resources, you have

If you can produce more of something than others with the same resources, you have

The ________ effect of a price change refers to the impact of a change in the price of a good on a consumer's purchasing power.

Income

One reason some manufacturing companies began moving production to China in the early 2000s was due to lower wages that could be paid to Chinese workers. Moving manufacturing to China to take advantage of lower wages so goods could be produced at a lower cost than if produced in the United States exemplifies which key economic idea?

People respond to economic incentives.

Refer to Figure above. A technological advancement would be represented by a movement from

S1 to S2.

Opportunity cost is defined as

The highest-valued alternative that must be given up to engage in an activity.

________ shows that if all resources are fully and efficiently utilized, more of one good can be produced only by producing less of another good.

The production possibilities frontier model

A surplus is defined as the situation that exists when the quantity of a good supplied is 3eater than the quantity demanded.

True

Consider a country that produces only two goods: pineapples and tractors. Suppose it is possible for this country to increase its production of pineapples without producing fewer tractors. In this case, its current output combination is inefficient.

True

When every good or service is produced up to the point where the last unit provides a marginal benefit to society equal to the marginal cost of producing it, ________ occurs.

allocative efficiency

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

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

If an increase in income leads to a decrease in the demand for salami, then salami is

an inferior good

At a product's equilibrium price

any buyer who is willing and able to pay the price will find a seller for the product.

Voluntary exchange increases economic efficiency

because neither the buyer nor the seller would agree to a trade unless they both benefit.

) A(n) ________ is represented by a rightward shift of the demand curve while a(n) ________ is represented by a movement along a given demand curve.

increase in demand; increase in quantity demanded

If the quantity demanded for a product exceeds the quantity supplied, the market price will rise until

quantity demanded equals quantity supplied. The market price will then equal the equilibrium price.

In a market economy, those who are willing and able to buy what is produced

receive the most of what is produced.

The processes used to produce goods and services describes

technology

Assume that the hourly price for the services of personal trainers has risen and sales of these services have also risen. One can conclude that

the demand for personal trainers has increased.

If the price of smartphones was to increase, then

the demand for smartphone apps would decrease.

A demand curve shows the relationship between

the price of a product and the quantity of the product demanded.