ECON 2020 Quiz 1

Which of the following would NOT result from all countries specializing according to the principle of comparative advantage? a.The size of the economic pie would increase. b.World wide production of goods and services would increase. c.The well-being of citizens in each country would be enhanced. d.Each country's production possibilities frontier would shift inward.

each country's production possibilities frontier would shift inward

In this market, equilibrium price and quantity, respectively, are

$10 and 50 units; where supply and demand line meet

suppose you have received $300 as a birthday gift. You can spend it today or you can put the money in a bank account for a year and earn 5% interest. The opportunity cost of spending the money today, in terms of what you could have after one year, is

$315

Consider Frank's decision to go to college. If he goes to college, he will spend $21,000 on tuition, $11,000 on room and board, and $1,800 on books. If he does not go to college, he will earn $16,000 working in a store and spend $7,200 on room and board. Frank's cost of going to college is

$42,600 (everything added minus room and board of NOT going to college)

Ken and Traci are two woodworkers who both make tables and chairs. In one month, Ken can make 3 tables or 18 chairs, whereas Traci can make 8 tables or 24 chairs. Given this, we know that the opportunity cost of 1 chair is

1/6 table for Ken and 1/3 for Traci

what is the opportunity cost to Footville of increasing the production of shoes from 400 to 600?

300 socks

If the market consists of Michelle, Laura, and Hilary and the price falls by $1, the quantity demanded in the market increases by

5 units (add up all QNTY demanded and compare)

what is brads opportunity cost of producing one pound of beef?

6/5 bushels of wheat (minutes to make 1 pound of beef over minutes to make 1 bushel of wheat)

If the production possibilities frontier is bowed outward, then "?" could be

750

which supply schedule obeys the law of supply?

Firm B's and Firm D's only; law of supply says Quantity and Price increase

which of the following is NOT an example of scarcity? a. Only some people can afford to buy a BMW automobile. b. Every individual in society cannot attain the highest standard of living to which he or she might aspire. c. Miranda has more oranges in her orchard than she will ever use. d. Each member of a household cannot get everything he or she wants.

Miranda has more oranges in her orchard than she will ever use

suppose that the federal government is concerned about obesity in the United States. Congress is considering two plans. One would require "junk food" produces to include warning labels on all junk food. The other would impose a tax on all products considered to be junk food. If the warning labels are successful, we could illustrate the plan as producing a movement from

Point A to Point B in panel 1

If the United States decides to trade with Yemen, we know that

Yemen and the United States can both benefit

when society requires that firms reduce pollution, there is

a trade-off because of reduced incomes to the firms owners and workers

which of the following transactions does NOT take place in the markets for factors of production in the circular-flow diagram?

a women buys corn for dinner

Suppose Susan can wash three windows per hour or she can iron six shirts per hour. Paul can wash two windows per house or he can iron five shirts per hour.

a. Susan has absolute advantage over Paul in washing windows b. Susan has comparative advantage over Paul in washing windows c. Paul has a comparative advantage over Susan in ironing shirts

in the simple circular flow diagram,

a. households own the factors of production b. households buy all the goods and services that firms produce c. land, labor, and capital flow from households to firms

on a bowed production possibilities frontier, as you move down along the curve

a. more of one good must be given up to receive one unit of the other good b. the available production technology does not change c. the opportunity cost increases

which of the following statements is NOT correct? a. trade allows for specialization b. trade has the potential to benefit all nations c. trade allows nations to consume outside of their production possibilities curves d. absolute advantage is the driving force of specialization

absolute advantage is the driving force of specialization

a competitive market is one in which there

are so many buyers and so many sellers that each has a negligible impact on the price of the product

In the market economy, supply and demand determine

both the quantity of each good produced and the price at which it is sold

Aruba should export

radios and import coolers (export product that takes more hours to produce, and import products that take less hours to produce)

when the government redistributes income from the wealthy to the poor,

equality is improved, but efficiency is not

The movement from point A to point B on the graph shows a

increase in quantity (movement)

Suppose there are six bait and tackle shops that all sell works in a lakeside resort town in Minnesota. If we add the respective quantities that each shop would produce and sell at each of the six bait and tackle shops when the price of worms is $2 per bucket, $2.50 per bucket, and $3 per bucket, and so forth, we have found the

market supply curve

the adage, "There is no such thing as a free lunch", means

people face trade-offs

the term price takers refers to buyers and sellers in

perfectly competitive market

a production possibilities frontier shifts outward when

the economy experiences economic growth

Melody decides to spend three hours working overtime rather than going to the park with her friends. She ears $20 per hour for overtime work. Her opportunity cost of working is

the enjoyment she would have received had she gone to the park

if an economy is producing efficiently, then

there is no way to produce more of one good without producing less of another good

factors of production are

used to produce goods and service

the quantity demanded of a good is the amount that buyers are

willing and able to purchase