Econ 2113 Rupp Test 1

A competitive market is a market in which

no individual buyer or seller has any significant impact on the market price

Which of the following statements best characterizes a basic difference between market economies and centrally-planned economies?

none of the above

High-school athletes who skip college to become professional athletes

Understand that the opportunity cost of attending college is very high

Refer to figure 1-8. Which of the following would cause the supply curve to shift from Supply B to Supply A in the market for disposable ballpoint pens?

an increase in the price of ink

One advantage market economies have over centrally-planned economies is that market economies

are more efficient

The most obvious benefits of specialization and trade is that they allow us to

consume more goods than we otherwise would be able to consume

Market failure can be caused by

externalities and market power

The law of demand states that, other things equal, an increase in

price causes quantity demanded to decrease

A direct or positive relationship exists between a country's

productivity and its standard of living

A decrease in the price of a good will

increase quantity demanded

When a production possibilities frontier is bowed outward, the opportunity cost of producing an additional unit of a good

increases as more of the good is produced

An increase in the overall level of prices in an economy is referred to as

inflation

Prices direct economic activity in a market economy by

influencing the actions of buyers and sellers

An economy's production of two goods is efficient if

it is impossible to produce more of one good without producing less of the other

The production possibilities frontier is a graph that shows the various combinations of output that an economy can possibly produce given the available factors of production and

the available production technology

Refer to figure 1-1. This economy has the ability to produce at which points?

K, M, N

Normative statements are

claims about how the world should be

Specialization and trade are closely linked to

comparative advantage

Macroeconomics is the study of

economy-wide phenomena

Refer to table 1-4. Faldas opportunity cost of one yard of cloth is

2/3 bushel of wheat and Varick's opportunity cost of one yard of cloth is 2/5 bushel of wheat

Refer to Table 1-6. The opportunity cost of 1 plate for Huang is

3 parasol

Refer to table 1-4. Faldas opportunity cost of one bushel of wheat is

3/2 yards of cloth and Varick's opportunity cost of one bushel of wheat is 5/2 yards of cloth

In a market economy, supply and demand are important because they

Can be used to predict the impact on the economy of various events and policies

Refer to figure 1-1. Unemployment could cause this economy to produce at which points?

M

Mike and Sandy are two woodworkers who both make tables and chairs. In one month, Mike can make 4 tables or 20 chairs, while Sandy can make 6 tables or 18 chairs. Given this we know that

Mike has an absolute advantage in chairs.

In a competitive market, the price of a product

None of the above are correct

Refer to figure 1-5. The fact that the line slopes downward reflects the fact that

Peru faces a trade-off between producing emeralds and producing rubies

If Shawn can produce more donuts in one day than Sue can produce in one day, then

Shawn has an absolute advantage in the production of donuts

If labor in mexico is less productive than labor in the U.S. in all areas of production

Then both Mexico and the U.S. can benefit

Refer to table 1-3. Which of the following represents Zimbabwe's and Portugal's production possibilities frontiers when each country has 60 minutes of machine time available.

Zimbabwe: 6 hairbrushes, 20 toothbrushes and Portugal: 10 hairbrushes and 12 toothbrushes

Refer to figure 1-7. The movement from D to D' could be caused by

a decrease in the price of a substitute

If toast and butter are complements, then which of the following would increase the demand for toast?

a decrease in the price of butter

Refer to figure 1-8. Which of the following would cause the supply curve to shift from Supply A to Supply C in the market for winter coats?

a decrease in the price of zippers and snaps

Refer to figure 1-2. Which of the following would most likely have caused the production possibilities frontiers to shift outward from A to B?

a general technological advance

Which of the following concepts cannot be illustrated by the production possibilities frontier?

equality

If Germany chooses to engage in trade, it

can benefit by trading with any other country

Any point on a country's production possibilities frontier represents a combination of two goods that an economy

can produce using all available resources and technology

An early frost in the vineyards of Napa valley would cause a(n)

decrease in the supply of wine, increasing the price

Efficiency

refers to how much a society can produce with its resources. Equality refers to how evenly the benefits from using resources are distributed between members of society

An increase in quantity demanded

results in a movement downward and to the right along a demand curve

For most students, the largest single cost of a college education is

the wages given up to attend school

The supply of a good or service is determined by

those who sell the good or service