ECON 2023 Exam 1 - UARK Teng Ma
Refer to Figure 3-4. If the production possibilities frontier shown for Lisa is for 4 months of work, then how long does it take Lisa to produce one jacket? a. 1/4 month b. 1/2 month c. 2 months d. 4 months
a. 1/4 month
Refer to Table 3-22. Zimbabwe and Portugal would not be able to gain from trade if Zimbabwe's opportunity cost of one toothbrush changed to a. 0 hairbrushes. b. 5/6 hairbrushes. c. 6/5 hairbrushes. d. Zimbabwe and Portugal can always gain from trade regardless of their opportunity costs.
b. 5/6 hairbrushes.
Refer to Table 3-9. Which of the following combinations of mixers and toasters could Miguel not produce in 80 hours? a. 5 mixers and 6 toasters. b. 6 mixers and 5 toasters. c. 7 mixers and 2 toasters. d. 4 mixers and 8 toasters.
b. 6 mixers and 5 toasters.
Refer to Table 3-21. Assume that Jamaica and Norway each has 4 days available for production. Originally, each country divided its time equally between the production of coolers and radios. Now, each country spends all its time producing the good in which it has a comparative advantage. As a result, the total output of radios increased by a. 3. b. 6. c. 9. d. 12.
b. 6.
Who said, "The whole of science is nothing more than the refinement of everyday thinking"? a. Isaac Newton b. Albert Einstein c. Adam Smith d. Benjamin Franklin
b. Albert Einstein
Refer to Figure 2-8. Efficient production is represented by which point(s)? a. J b. J, K c. J, K, L d. J, K, M
b. J, K
Tom's opportunity cost of mowing a lawn is 2 loads of laundry. Jen's opportunity cost of mowing a lawn is 1.5 loads of laundry. What is the range of prices for mowing a lawn at which Tom and Jen could both benefit from trade?
Less than 2 loads of laundry but greater than 1.5 loads of laundry.
What does a production possibilities frontier represent?
The combinations of output that an economy can produce.
Refer to Table 3-23. The opportunity cost of 1 pound of pork for the rancher is a. 1 pound of tomatoes. b. 1 hour of labor. c. 1.5 pounds of tomatoes. d. 1.5 hours of labor.
a. 1 pound of tomatoes.
Refer to Table 3-22. Assume that Zimbabwe and Portugal each has 60 machine minutes available. Originally, each country divided its time equally between the production of toothbrushes and hairbrushes. Now, each country spends all its time producing the good in which it has a comparative advantage. As a result, the total output increased by a. 4 toothbrushes and 2 hairbrushes. b. 10 toothbrushes and 5 hairbrushes. c. 16 toothbrushes and 8 hairbrushes. d. 20 toothbrushes and 10 hairbrushes.
a. 4 toothbrushes and 2 hairbrushes.
Refer to Table 3-28. Barb's opportunity cost of setting up one computer is testing a. 4/5 computer and Jim's opportunity cost of setting up one computer is testing 3/4 computer. b. 4/5 computer and Jim's opportunity cost of setting up one computer is testing 4/3 computers. c. 5/4 computers and Jim's opportunity cost of setting up one computer is testing 3/4 computer. d. 5/4 computers and Jim's opportunity cost of setting up one computer is testing 4/3 computers.
a. 4/5 computer and Jim's opportunity cost of setting up one computer is testing 3/4 computer.
Refer to Figure 2-5. It is possible for this economy to produce a. 60 dryers and 50 washers. b. 60 dryers and 60 washers. c. 80 dryers and 50 washers. d. All of the above.
a. 60 dryers and 50 washers.
Which of the following transactions takes place in the markets for the factors of production in the circular-flow diagram? a. Dylan receives a salary for his work as a financial analyst for an investment firm. b. Kristin buys two business suits to wear to her job as a Chief Information Officer. c. Jim receives clean water in his home in exchange for paying his water bill. d. Caroline owns a nail salon and receives payments from her clients for her services
a. Dylan receives a salary for his work as a financial analyst for an investment firm.
Stephen is restoring a car and has already spent $4,000 on the restoration. He expects to be able to sell the car for $5800. Stephen discovers that he needs to do an additional $2,400 of work to make the car worth $5,800 to potential buyers. He could also sell the car now, without completing the additional work, for $3,800. What should he do? a. He should sell the car now for $3,800. b. He should keep the car since it wouldn't be rational to spend $6,400 restoring a car and then sell it for only $5,800. c. He should complete the additional work and sell the car for $5,800. d. It does not matter which action he takes since the outcome will be the same either way.
a. He should sell the car now for $3,800.
Consider two individuals — Howard and Mai — each of whom would like to wear sweaters and eat tasty food. The gains from trade between Howard and Mai are least obvious in which of the following cases? a. Howard is very good at knitting sweaters and at cooking tasty food, but Mai's skills in both of these activities are very poor. b. Howard is very good at knitting sweaters and at cooking tasty food; Mai is very good at knitting sweaters, but she knows nothing about cooking tasty food. c. Howard's skills in knitting sweaters are fairly good, but his skills in cooking tasty food are fairly bad; Mai's skills in knitting sweaters are fairly bad, but her skills in cooking tasty food are fairly good. d. Howard's skills are such that he can produce only sweaters, and Mai's skills are such that she can produce only tasty food.
a. Howard is very good at knitting sweaters and at cooking tasty food, but Mai's skills in both of these activities are very poor.
Which of the following examples does not illustrate the principle represented by the adage, "There is no such thing as a free lunch"? a. Melissa needs to pay her rent and her electric bill. b. Kevin must choose between buying a new flat screen television and buying his textbooks for this semester. c. Robert must decide between studying for his psychology exam and working at his part-time job. d. Lisa can spend her money on a new smart phone or on a weekend trip.
a. Melissa needs to pay her rent and her electric bill.
Pens are normal goods. What will happen to the equilibrium price of pens if the price of pencils rises, consumers experience an increase in income, writing in ink becomes fashionable, people expect the price of pens to rise in the near future, the population increases, fewer firms manufacture pens, and the wages of pen-makers increase? a. Price will rise. b. Price will fall. c. Price will stay exactly the same. d. The price change will be ambiguous.
a. Price will rise.
After much consideration, you have chosen Ireland over Spain for your Study Abroad program next year. However, the deadline for your final decision is still months away and you may reverse this decision. Which of the following events would prompt you to reverse this decision? a. The marginal benefit of going to Spain increases. b. The marginal cost of going to Spain increases. c. The marginal benefit of going to Ireland increases. d. The marginal cost of going to Ireland decreases.
a. The marginal benefit of going to Spain increases.
International trade can make some individuals within a country worse off, even as it makes the country as a whole better off. a. True b. False
a. True
Suppose the U.S. and Japan both produce airplanes and televisions and the U.S. has a comparative advantage in the production of airplanes while Japan has a comparative advantage in the production of televisions. If the U.S. exports airplanes to Japan and imports televisions from Japan, a. both countries, as a whole, will be better off. b. all individuals in both countries will be better off. c. both countries, as a whole, will be worse off. d. all individuals in both countries will be worse off.
a. both countries, as a whole, will be better off.
Two goods are substitutes when a decrease in the price of one good a. decreases the demand for the other good. b. decreases the quantity demanded of the other good. c. increases the demand for the other good. d. increases the quantity demanded of the other good.
a. decreases the demand for the other good.
A likely effect of government policies that redistribute income and wealth from the wealthy to the poor is that those policies a. enhance equality. b. enhance efficiency. c. increase the reward for working hard. d. All of the above are correct.
a. enhance equality.
The terms equality and efficiency are similar in that they both refer to benefits to society. However they are different in that a. equality refers to uniform distribution of those benefits and efficiency refers to maximizing benefits from scarce resources. b. equality refers to maximizing benefits from scarce resources and efficiency refers to uniform distribution of those benefits. c. equality refers to everyone facing identical tradeoffs and efficiency refers to the opportunity cost of the benefits. d. equality refers to the opportunity cost of the benefits and efficiency refers to everyone facing identical tradeoffs.
a. equality refers to uniform distribution of those benefits and efficiency refers to maximizing benefits from scarce resources.
In the circular-flow diagram, which of the following items flows from firms to households through the markets for goods and services? a. goods and services b. dollars paid to land, labor, and capital c. dollars spent on goods and services d. wages, rent, and profit
a. goods and services
In the markets for factors of production in the circular-flow diagram, a. households provide firms with labor, land, and capital. b. households provide firms with savings for investment. c. firms provide households with goods and services. d. firms provide households with revenue.
a. households provide firms with labor, land, and capital.
When an economist is asked a question like "why is unemployment higher for teenagers than for older workers?" the economist a. is asked to explain the cause of an economic event. b. is asked to recommend a policy to improve economic outcomes. c. is asked as a policy adviser. d. does not have enough information to respond.
a. is asked to explain the cause of an economic event.
Almost all economists agree that tariffs and import quotas a. reduces general economic welfare. b. increases general economic welfare. c. have no effect on general economic welfare.
a. reduces general economic welfare.
Refer to Table 4-13. Suppose Harry, Darby, and Jake are the only demanders of sandwiches. Also suppose the following: • x = 2. • The current price of a sandwich is $3.00. • The market quantity supplied of sandwiches is 5. • The slope of the supply curve is 1. Then there is currently a a. shortage of 5 sandwiches, and the equilibrium price of a sandwich is between $3.00 and $5.00. b. shortage of 5 sandwiches, and the equilibrium price of a sandwich is $5.00. c. surplus of 5 sandwiches, and the equilibrium price of a sandwich is between $3.00 and $5.00. d. surplus of 5 sandwiches, and the equilibrium price of a sandwich is $5.00.
a. shortage of 5 sandwiches, and the equilibrium price of a sandwich is between $3.00 and $5.00.
When computing the opportunity cost of attending a basketball game you should include a. the price you pay for the ticket and the value of your time. b. the price you pay for the ticket, but not the value of your time. c. the value of your time, but not the price you pay for the ticket. d. neither the price of the ticket nor the value of your time.
a. the price you pay for the ticket and the value of your time.
Refer to Table 3-31. In 10 hours, a. the rancher could produce 2.5 pounds of meat and 1.0 pound of pot toes. b. the rancher could produce 1.0 pound of meat and 1.0 pound of potatoes. c. the farmer could produce 0.25 pounds of meat and 1.6 pounds of potatoes. d. the farmer could produce 0.75 pounds of meat and 1.25 pounds of potatoes.
a. the rancher could produce 2.5 pounds of meat and 1.0 pound of potatoes.
The first number in any ordered pair is a. the x-coordinate. b. the y-coordinate. c. the vertical location of the point. d. the slope.
a. the x-coordinate.
Refer to Table 3-36. If Antigua and Barbuda decide to trade with each other, Antigua should specialize in the production of a. towels and Barbuda should specialize in the production of umbrellas. b. umbrellas and Barbuda should specialize in the production of towels. c. both goods and Barbuda should specialize in the production of neither good. d. neither good and Barbuda should specialize in the production of both goods.
a. towels and Barbuda should specialize in the production of umbrellas.
Refer to Figure 4-25. All else equal, buyers expecting paper to be more expensive in the future would cause a current move from a. x to y. b. y to x. c. SA to SB. d. SB to SA.
a. x to y.
Refer to Figure 3-9. If Uzbekistan and Azerbaijan each divides its time equally between making bolts and making nails, then total production is a. 15 bolts and 40 nails. b. 25 bolts and 70 nails. c. 30 bolts and 80 nails. d. 50 bolts and 140 nails.
b. 25 bolts and 70 nails.
Refer to Table 3-27. The opportunity cost of 1 parasol for Min is a. 1/3 plate. b. 1/2 plate. c. 2 plates. d. 3 plates.
b. 1/2 plate.
Refer to Figure 2-6. The opportunity cost of this economy moving from point I to point H is a. 120 pillows. b. 120 blankets. c. 120 blankets and 120 pillows. d. 200 blankets.
b. 120 blankets.
Refer to Figure 3-18. Suppose Juba is willing to trade one bowl to Bintu for every two cups that Bintu makes and sends to Juba. Which of the following combinations of bowls and cups could Bintu then consume, assuming Bintu specializes in making cups and Juba specializes in making bowls? a. 1 bowl and 7 cups b. 2 bowls and 4 cups c. 3 bowls and 3 cups d. 4 bowls and 1 cup
b. 2 bowls and 4 cups
What would happen to the equilibrium price and quantity of peanut butter if the price of peanuts went up, the price of jelly fell, fewer firms decided to produce peanut butter, and health officials announced that eating peanut butter was good for you? 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.
b. Price will rise, and the effect on quantity is ambiguous.
Refer to Figure 2-10, Panel (a) and Panel (b). Which of the following is not a result of the shift of the economy's production possibilities frontier from Panel (a) to Panel (b)? a. The tradeoff between the production of tractors and sofas changes. b. Production of 2 tractors and 10 sofas becomes efficient. c. Production of 6 tractors and 14 sofas becomes possible. d. The opportunity cost of a sofa is higher at all levels of sofa production.
b. Production of 2 tractors and 10 sofas becomes efficient.
Any point on a country's production possibilities frontier represents a combination of two goods that an economy a. will never be able to produce. b. can produce using all available resources and technology. c. can produce using some portion, but not all, of its resources and technology. d. may be able to produce in the future with more resources and/or superior technology.
b. can produce using all available resources and technology.
Refer to Figure 2-17. The curves shown are a. supply curves. b. demand curves. c. preference curves. d. income-consumption curves.
b. demand curves.
Opponents of cigarette taxes often argue that tobacco and marijuana are substitutes so that high cigarette prices a. encourage marijuana use, and the evidence supports this argument. b. encourage marijuana use, but the evidence does not support this argument. c. discourage marijuana use, and the evidence supports this argument. d. discourage marijuana use, but the
b. encourage marijuana use, but the evidence does not support this argument.
The "invisible hand" refers to a. how central planners made economic decisions. b. how the decisions of households and firms lead to desirable market outcomes. c. the control that large firms have over the economy. d. government regulations without which the economy would be less efficient.
b. how the decisions of households and firms lead to desirable market outcomes.
In the circular-flow diagram, a. taxes flow from households to firms, and transfer payments flow from firms to households. b. income payments flow from firms to households, and sales revenue flows from households to firms. c. resources flow from firms to households, and goods and services flow from households to firms. d. inputs and outputs flow in the same direction as the flow of dollars, from firms to households.
b. income payments flow from firms to households, and sales revenue flows from households to firms.
Refer to Figure 2-8. For this economy, as more and more hammers are produced, the opportunity cost of an additional hammer produced, in terms of nails, a. remains constant. b. increases. c. decreases. d. This answer cannot be determined from the graph.
b. increases.
The business cycle is the a. relationship between unemployment and inflation. b. irregular fluctuations in economic activity. c. positive relationship between the quantity of money in an economy and inflation. d. predictable changes in economic activity due to changes in government spending and taxes.
b. irregular fluctuations in economic activity.
Which of the following is not held constant when looking at an individual's demand curve? a. income b. price c. preferences d. the availability of alternative goods
b. price
The law of supply states that, other things equal, when the price of a good a. falls, the supply of the good rises. b. rises, the quantity supplied of the good rises. c. rises, the supply of the good falls. d. falls, the quantity supplied of the good rises.
b. rises, the quantity supplied of the good rises.
Refer to Table 4-13. Suppose Harry, Darby, and Jake are the only demanders of sandwiches. Also suppose the following: • x = 2. • The current price of a sandwich is $3.00. • The market quantity supplied of sandwiches is 4. • The slope of the supply curve is 2. Then there is currently a a. shortage of 6 sandwiches, and the equilibrium price of a sandwich is less than $3.00. b. shortage of 6 sandwiches, and the equilibrium price of a sandwich is $5.00. c. surplus of 6 sandwiches, and the equilibrium price of a sandwich is less than $3.00. d. surplus of 6 sandwiches, and the equilibrium price of a sandwich is $5.00.
b. shortage of 6 sandwiches, and the equilibrium price of a sandwich is $5.00.
The market for diamond rings is closely linked to the market for high-quality diamonds. If a large quantity of high-quality diamonds enters the market, then the a. supply curve for diamond rings will shift right, which will create a shortage at the current price. Price will increase, which will decrease quantity demanded and increase quantity supplied. The new market equilibrium will be at a higher price and higher quantity. b. supply curve for diamond rings will shift right, which will create a surplus at the current price. Price will decrease, which will increase quantity demanded and decrease quantity supplied. The new market equilibrium will be at a lower price and higher quantity. c. demand curve for diamond rings will shift right, which will create a shortage at the current price. Price will increase, which will decrease quantity demanded and increase quantity supplied. The new market equilibrium will be at a higher price and higher quantity. d. demand curve for diamond rings will shift right, which will create a surplus at the current price. Price will decrease, which will increase quantity demanded and decrease quantity supplied. The new market equilibrium will be at a lower price and higher quantity.
b. supply curve for diamond rings will shift right, which will create a surplus at the current price. Price will decrease, which will increase quantity demanded and decrease quantity supplied. The new market equilibrium will be at a lower price and higher quantity.
"Other things equal, when the price of a good rises, the quantity demanded of the good falls, and when the price falls, the quantity demanded rises." This relationship between price and quantity demanded is referred to as a. equilibrium. b. the law of demand. c. the relationship between supply and demand. d. the definition of an inferior good.
b. the law of demand.
Refer to Table 3-2. We could use the information in the table to draw a production possibilities frontier for England and a second production possibilities frontier for Holland. If we were to do this, measuring milk along the horizontal axis, then a. the slope of England's production possibilities frontier would be -10/4 and the slope of Holland's production possibilities frontier would be -4/3. b. the slope of England's production possibilities frontier would be -4/10 and the slope of Holland's production possibilities frontier would be -3/4. c. the slope of England's production possibilities frontier would be 10/4 and the slope of Holland's production possibilities frontier would be 4/3. d. the slope of England's production possibilities frontier would be 4/10 and the slope of Holland's production possibilities frontier would be 3/4.
b. the slope of England's production possibilities frontier would be -4/10 and the slope of Holland's production possibilities frontier would be -3/4.
The opportunity cost of going to college is a. the total spent on food, clothing, books, transportation, tuition, lodging, and other expenses. b. the value of the best opportunity a student gives up to attend college. c. zero for students who are fortunate enough to have all of their college expenses paid by someone else. d. zero, since a college education will allow a student to earn a larger income after graduation.
b. the value of the best opportunity a student gives up to attend college.
Refer to Table 3-35. At which of the following prices, if any, could both Denmark and Finland gain from trade? a. 2/3 pounds of ham per dozen eggs. b. 1 pound of ham per dozen eggs. c. 1.4 pounds of ham per dozen eggs. d. None of the above are correct.
c. 1.4 pounds of ham per dozen eggs.
Refer to Figure 3-11. If the production possibilities frontier shown is for 240 hours of production, then which of the following combinations of ham and cheese could Bonovia not produce in 240 hours? a. 250 pounds of ham and 120 pounds of cheese b. 200 pounds of ham and 160 pounds of cheese c. 160 pounds of ham and 200 pounds of cheese d. 100 pounds of ham and 240 pounds of cheese
c. 160 pounds of ham and 200 pounds of cheese
Refer to Figure 2-9, Panel (a). To gain 2 donuts by moving from point L to point M, society must sacrifice a. efficiency. b. employment. c. 4 cups of coffee. d. More than one of the above is correct
c. 4 cups of coffee.
Cole is refinishing an antique china cabinet and has already spent $180 on the restoration. He expects to be able to sell the cabinet for $360. Cole discovers that he needs to do an additional $200 worth of work to make the cabinet worth $360 to potential buyers. He could also sell the cabinet now, without completing the additional work, for $100. What should Cole do? a. He should sell the cabinet now for $100. b. He should keep the cabinet since it wouldn't be rational to spend $380 restoring a cabinet and then sell it for only $360. c. He should complete the additional work and sell the cabinet for $360. d. It does not matter which action he takes since the outcome will be the same either way.
c. He should complete the additional work and sell the cabinet for $360.
A worker in Vietnam can earn $6 per day making cotton cloth on a hand loom. A worker in the United States can earn $85 per day making cotton cloth with a mechanical loom. What is the likely explanation for the difference in wages? a. U.S. textile workers belong to a union, whereas Vietnamese textile workers do not belong to a union. b. There is little demand for cotton cloth in Vietnam and great demand in the U.S. c. Labor is more productive making cotton cloth with a mechanical loom than with a hand loom. d. Vietnam has a low-wage policy to make its textile industry more competitive in world markets.
c. Labor is more productive making cotton cloth with a mechanical loom than with a hand loom.
Which of the following is not correct? a. Evaluating statements about how the world should be involves values as well as facts. b. Positive statements can, in principle, be confirmed or refuted by examining evidence. c. Normative statements can be judged using data alone. d. Deciding what is good or bad policy is not just a matter of science.
c. Normative statements can be judged using data alone.
Two individuals engage in the same two productive activities. In which of the following circumstances would neither individual have a comparative advantage in either activity? a. One individual's production possibilities frontier is steeper than the other individual's production possibilities frontier. b. One individual is faster at both activities than the other individual. c. One individual's opportunity costs are the same as the other individual's opportunity costs. d. None of the above is correct; one of the two individuals always will have a comparative advantage in at least one of the two activities.
c. One individual's opportunity costs are the same as the other individual's opportunity costs.
In competitive markets, which of the following is not correct? a. Firms produce identical products. b. No individual buyer can influence the market price. c. Some sellers can set prices. d. Buyers are price takers.
c. Some sellers can set prices.
Which of the following is not an example of a natural experiment an economist might use to evaluate a theory? a. Transit ridership increased in Atlanta following an increase in gas prices. b. Federal tax revenue increased following a decrease in the tax rate. c. Students in a principles of microeconomics course are asked to play a game with classmates to determine what decisions they make under certain circumstances. d. Following the imposition of austerity measures, the growth rate of the economy in Greece slowed.
c. Students in a principles of microeconomics course are asked to play a game with classmates to determine what decisions they make under certain circumstances.
Saddle shoes are not popular right now, so very few are being produced. If saddle shoes become popular, then how will this affect the market for saddle shoes? a. The supply curve for saddle shoes will shift right, which will create a shortage at the current price. Price will increase, which will decrease quantity demanded and increase quantity supplied. The new market equilibrium will be at a higher price and higher quantity. b. The supply curve for saddle shoes will shift right, which will create a surplus at the current price. Price will decrease, which will increase quantity demanded and decrease quantity supplied. The new market equilibrium will be at a lower price and higher quantity. c. The demand curve for saddle shoes will shift right, which will create a shortage at the current price. Price will increase, which will decrease quantity demanded and increase quantity supplied. The new market equilibrium will be at a higher price and higher quantity. d. The demand curve for saddle shoes will shift right, which will create a surplus at the current price. Price will decrease, which will increase quantity demanded and decrease quantity supplied. The new market equilibrium will be at a lower price and higher quantity.
c. The demand curve for saddle shoes will shift right, which will create a shortage at the current price. Price will increase, which will decrease quantity demanded and increase quantity supplied. The new market equilibrium will be at a higher price and higher quantity.
What would happen to the equilibrium price and quantity of lattés if coffee shops began using a machine that reduced the amount of labor necessary to produce steamed milk, which is used to make lattés, and scientists discovered that lattés cause heart attacks? a. Both the equilibrium price and quantity would increase. b. Both the equilibrium price and quantity would decrease. c. The equilibrium price would decrease, and the effect on equilibrium quantity would be ambiguous. d. The equilibrium quantity would decrease, and the effect on equilibrium price would be ambiguous.
c. The equilibrium price would decrease, and the effect on equilibrium quantity would be ambiguous.
Which of the following is not a reason perfect competition is a useful simplification, despite the diversity of market types we find in the world? a. Perfectly competitive markets are the easiest to analyze because everyone participating in the market takes the price as given by market conditions. b. Some degree of competition is present in most markets. c. There are many buyers and many sellers in all types of markets. d. Many of the lessons that we learn by studying supply and demand under perfect competition apply in more complicated markets as well.
c. There are many buyers and many sellers in all types of markets.
Equilibrium price must decrease when demand a. increases and supply does not change, when demand does not change and supply decreases, and when demand decreases and supply increases simultaneously. b. increases and supply does not change, when demand does not change and supply decreases, and when demand increases and supply decreases simultaneously. c. decreases and supply does not change, when demand does not change and supply increases, and when demand decreases and supply increases simultaneously. d. decreases and supply does not change, when demand does not change and supply increases, and when demand increases and supply decreases simultaneously.
c. decreases and supply does not change, when demand does not change and supply increases, and when demand decreases and supply increases simultaneously.
A professor spends 10 hours per day giving lectures and writing papers. For the professor, a graph that shows his various possible mixes of output (lectures given per day and papers written per day) is called his a. line of tastes. b. trade-off curve. c. production possibilities frontier. d. consumption possibilities frontier.
c. production possibilities frontier.
The Federal Reserve a. designs tax policy. b. enforces the nation's antitrust laws. c. sets the nation's monetary policy. d. analyzes data on workers.
c. sets the nation's monetary policy.
Refer to Figure 4-19. If there is currently a shortage of 20 units of the good, then the law of a. demand predicts that the price will rise by $2 to eliminate the shortage. b. supply predicts that the price will rise by $2 to eliminate the shortage. c. supply and demand predicts that the price will rise by $2 to eliminate the shortage. d. supply and demand predicts that the price will fall by $2 to eliminate the shortage.
c. supply and demand predicts that the price will rise by $2 to eliminate the shortage.
Suppose after graduating from college you get a job working at a bank earning $30,000 per year. After two years of working at the bank earning the same salary, you have an opportunity to enroll in a one year graduate program that would require you to quit your job at the bank. Which of the following should not be included in a calculation of your opportunity cost? a. the cost of tuition and books to attend the graduate program b. the $30,000 salary that you could have earned if you retained your job at the bank c. the $45,000 salary that you will be able to earn after having completed your graduate program d. the value of insurance coverage and other employee benefits you would have received if you retained your job at the bank
c. the $45,000 salary that you will be able to earn after having completed your graduate program
If buyers today become more willing and able than before to purchase larger quantities of stand up paddle boards (SUPs) at each price of SUPs, then a. we will observe a movement downward and to the right along the demand curve for SUPs. b. we will observe a movement upward and to the left along the demand curve for SUPs. c. the demand curve for SUPs will shift to the right. d. the demand curve for SUPs will shift to the left.
c. the demand curve for SUPs will shift to the right.
In the circular-flow diagram, in the markets for a. goods and services, households and firms are both sellers. b. goods and services, households are sellers and firms are buyers. c. the factors of production, households are sellers and firms are buyers. d. the factors of production, households and firms are both buyers.
c. the factors of production, households are sellers and firms are buyers.
Market economies are distinguished from other types of economies largely on the basis of a. the political affiliations of government officials. b. the process by which government officials are elected or appointed. c. the ways in which scarce resources are allocated. d. the number of retail outlets available to consumers.
c. the ways in which scarce resources are allocated.
The supply of a good or service is determined by a. those who buy the good or service. b. the government. c. those who sell the good or service. d. both those who buy and those who sell the good or service.
c. those who sell the good or service.
In the former Soviet Union, producers were paid for meeting output targets, not for selling products. Under those circumstances, what were the economic incentives for producers? a. to produce good quality products so that society would benefit from the resources used b. to conserve on costs, so as to maintain efficiency in the economy c. to produce enough to meet the output target, without regard for quality or cost d. to produce those products that society desires most
c. to produce enough to meet the output target, without regard for quality or cost
High-school athletes who skip college to become professional athletes a. obviously do not understand the value of a college education. b. usually do so because they cannot get into college. c. understand that the opportunity cost of attending college is very high. d. are not making a rational decision since the marginal benefits of college outweigh the marginal costs of college for high-school athletes.
c. understand that the opportunity cost of attending college is very high.
Suppose that a worker in Boatland can produce either 5 units of wheat or 25 units of fish per year, and a worker in Farmland can produce either 25 units of wheat or 5 units of fish per year. There are 10 workers in each country. Political pressure from the fish lobby in Farmland and from the wheat lobby in Boatland has prevented trade between the two countries on the grounds that cheap imports would kill the fish industry in Farmland and the wheat industry in Boatland. As a result, Boatland produces and consumes 25 units of wheat and 125 units of fish per year while Farmland produces and consumes 125 units of wheat and 25 units of fish per year. If the political pressure were overcome and trade were to occur, each country would completely specialize in the product in which it has a comparative advantage. If trade were to occur, the combined output of the two countries would increase by a. 25 units of wheat and 25 units of fish. b. 50 units of wheat and 50 units of fish. c. 75 units of wheat and 75 units of fish. d. 100 units of wheat and 100 units of fish.
d. 100 units of wheat and 100 units of fish.
For teenagers, a 10 percent increase in the price of cigarettes leads to a a. 1 percent reduction in the quantity demanded of cigarettes. b. 4 percent reduction in the quantity demanded of cigarettes. c. 10 percent reduction in the quantity demanded of cigarettes. d. 12 percent reduction in the quantity demanded of cigarettes.
d. 12 percent reduction in the quantity demanded of cigarettes.
Refer to Table 3-33 Chris and Tony both produce tomatoes and pasta sauce. The table shows their possible production per month if both work the same number of 8 hour days. Given this information, Chris's opportunity cost of 1 lb. of tomatoes is a. 2 jars of sauce and Tony's opportunity cost of 1 lb. of tomatoes is 3 jars of sauce. b. 3 jars of sauce and Tony's opportunity cost of 1 lb. of tomatoes is 2 jars of sauce. c. 20 jars of sauce and Tony's opportunity cost of 1 lb. of tomatoes is 30 jars of sauce. d. 30 jars of sauce and Tony's opportunity cost of 1 lb. of tomatoes is 20 jars of sauce.
d. 30 jars of sauce and Tony's opportunity cost of 1 lb. of tomatoes is 20 jars of sauce.
Refer to Table 3-36. What is Antigua's opportunity cost of one umbrella? a. 3/5 towels b. 2/3 towels c. 3/2 towels d. 5/3 towels
d. 5/3 towels
The principle that trade can make everyone better off applies to a. individuals. b. families. c. countries. d. All of the above
d. All of the above
In response to the deep economic downturn in the US in 2008 and 2009, the US a. reduced taxes. b. increased government spending. c. increased the supply of money. d. All of the above are correct.
d. All of the above are correct.
Most economists believe that an increase in the quantity of money results in a. an increase in the demand for goods and services. b. lower unemployment in the short run. c. higher inflation in the long run. d. All of the above are correct.
d. All of the above are correct.
US citizens have better nutrition, better healthcare, and a longer life expectancy than citizens of Ghana. Which of the following conclusions can be drawn from this statement? a. Average income in the US is higher than the average income in Ghana. b. The US has a higher standard of living than Ghana. c. Productivity in the US is higher than productivity in Ghana. d. All of the above are correct.
d. All of the above are correct.
Which of the following statements about market economies is correct? a. In a market economy, no one is looking out for the economic well-being of society as a whole. b. Market economies are characterized by decentralized decision making and self interested decision makers. c. Market economies have proven remarkably successful in promoting overall economic wellbeing. d. All of the above are correct.
d. All of the above are correct.
Bill is restoring a car and has already spent $4000 on the restoration. He expects to be able to sell the car for $6200. Bill discovers that he needs to do an additional $2400 of work to make the car worth $6200 to potential buyers. He could also sell the car now, without completing the additional work, for $3800. What should he do? a. He should sell the car now for $3800. b. He should keep the car since it wouldn't be rational to spend $6400 restoring a car and then sell it for only $6200. c. He should complete the additional work and sell the car for $6200. d. It does not matter if Bill sells the car now or completes the work and then sells it at the higher price because the outcome will be the same either way.
d. It does not matter if Bill sells the car now or completes the work and then sells it at the higher price because the outcome will be the same either way.
Yi and Avik are both economists. Yi thinks that taxing consumption, rather than income, would result in higher household saving because income that is saved would not be taxed. Avik does not think that household saving would respond much to a change in the tax laws. In this example, Yi and Avik a. hold different normative views about the tax system. b. disagree about the validity of a positive theory. c. have a fundamental misunderstanding of the tax system. d. More than one of the above is correct.
d. More than one of the above is correct.
When government policies are enacted, a. equality can usually be enhanced without an efficiency loss, but efficiency can never be enhanced without a reduction in equality. b. efficiency can usually be enhanced without a reduction in equality, but equality can never be enhanced without an efficiency loss. c. it is always the case that either efficiency and equality are both enhanced, or efficiency and equality are both diminished. d. None of the above are correct.
d. None of the above are correct.
Assume Diana buys computers in a competitive market. It follows that a. Diana has a limited number of sellers to turn to when she buys a computer. b. Diana will find herself negotiating with sellers whenever she buys a computer. c. if Diana buys a large number of computers, the price of computers will rise noticeably. d. None of the above is correct.
d. None of the above is correct.
Suppose an increase in the price of rubber coincides with an advance in the technology of tire production. As a result of these two events, the demand for tires a. decreases, and the supply of tires increases. b. is unaffected, and the supply of tires decreases. c. is unaffected, and the supply of tires increases. d. None of the above is necessarily correct.
d. None of the above is necessarily correct.
Suppose an economy produces two goods, food and machines. This economy always operates on its production possibilities frontier. Last year, it produced 1000 units of food and 47 machines. This year it experienced a technological advance in its machine-making industry. As a result, this year the society wants to produce 1050 units of food and 47 machines. Which of the following statements is correct? a. Because the technological advance occurred in the machine-making industry, it will not be possible to increase food production without reducing machine production below 47. b. Because the technological advance occurred in the machine-making industry, increases in output can only occur in the machine industry. c. In order to increase food production in these circumstances without reducing machine production, the economy must reduce inefficiencies. d. The technological advance reduced the amount of resources needed to produce 47 machines, so these resources could be used to produce more food.
d. The technological advance reduced the amount of resources needed to produce 47 machines, so these resources could be used to produce more food.
Suppose the cost of flying a 200-seat plane for an airline is $100,000 and there are 10 empty seats on a flight. The airline should sell a ticket to a standby passenger only if the passenger is willing to pay a. more than $200. b. more than $300. c. more than $500. d. This cannot be determined from the information given.
d. This cannot be determined from the information given.
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.
Equilibrium quantity must decrease when demand a. increases and supply does not change, when demand does not change and supply decreases, and when both demand and supply decrease. b. increases and supply does not change, when demand does not change and supply increases, and when both demand and supply decrease. c. decreases and supply does not change, when demand does not change and supply increases, and when both demand and supply decrease. d. decreases and supply does not change, when demand does not change and supply decreases, and when both demand and supply decrease.
d. decreases and supply does not change, when demand does not change and supply decreases, and when both demand and supply decrease.
Refer to Figure 2-2. Devin works as an attorney for a corporation and is paid a salary in exchange for the legal services he performs. Juan owns office buildings and rents his buildings to companies in exchange for rent payments. If Devin's income is represented by a flow of dollars from Box D to Box B of this circular-flow diagram, then Juan's income is represented by a flow of dollars a. from Box A to Box C. b. from Box C to Box A. c. from Box B to Box D. d. from Box D to Box B.
d. from Box D to Box B.
In a market economy, who or what determines who produces each good and how much is produced? a. the government b. lawyers c. lotteries d. prices
d. prices
The phenomenon of scarcity stems from the fact that a. most economies' production methods are not very good. b. in most economies, wealthy people consume disproportionate quantities of goods and services. c. governments restrict production of too many goods and services. d. resources are limited.
d. resources are limited.
You have eaten two bowls of ice cream at Sundae School Ice Cream store. You consider eating a third. As a rational consumer you should make your choice by comparing a. the benefits from eating all three bowls of ice cream to how much three bowls of ice cream costs. b. the benefits from eating all three bowls of ice cream to how much one more bowl of ice cream costs. c. the benefits from eating one more bowl of ice cream to how much three bowls of ice cream costs. d. the benefits from eating one more bowl of ice cream to how much one more bowl of ice cream costs.
d. the benefits from eating one more bowl of ice cream to how much one more bowl of ice cream costs.
In addition to advising the president, one duty of the Council of Economic Advisers is to a. prepare the federal budget. b. write government regulations. c. advise Congress on economic matters. d. write the annual Economic Report of the President.
d. write the annual Economic Report of the President.
Refer to Figure 4-24. All else equal, a decrease in the price of the grain fed to turkeys would cause a move from a. DA to DB. b. DB to DA. c. x to y. d. y to x.
d. y to x.
