Econ Exam 1-3
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
Figure 2-2 shows the ppf for Vidalia, a nation that produces 2 goods, roses and orchids. Refer to figure 2-2. What is the opportunity cost of 1 dozen orchids
2.5 dozen roses
Refer to Figure 2-5. If the economy is currently producing at point X, what is the opportunity cost of moving to point W?
3 million tons of steel
Figure 2-2 above shows the production possibilities frontier for Vidalia, a nation that produces two goods, roses and orchids. Refer to Figure 2-2. If Vidalia chooses to produce 80 dozen roses, how many orchids can it produce to maximize production?
48 dozen orchids
Refer to Table 3-2. The table above shows the demand schedules for cashews of two individuals (Jordy and Amy) and the rest of the market. At a price of $10, the quantity demanded in the market would be
52 lbs
Refer to figure 3-4. At a price of $20, how many units will be supplied
600
Which of the following statements is true
A decrease in supply causes the equilibrium price to rise; the increase in price then results in a decrease in quantity demanded
Refer to Figure 2-6. If the economy is currently producing at point D, what is the opportunity cost of moving to point B?
ANSWER IS NOT 16 thousand spoons
Refer to Figure 2-12. One segment of the circular flow diagram in the Figure shows the flow of funds from market F to economic agents G. The funds represent spending on goods and services. What is market F and who are economic agents G?
ANSWER IS NOT F = product markets; G = households
Figure 2-4 shows various points on three different production possibilities frontiers for a nation.Refer to Figure 2-4. Consider the following events: a.an increase in the patent protection period to 75 years b.a hurricane that destroys a substantial portion of a nation's capital stock c.the implementation of a secure and enforceable property rights system Which of the events listed above could cause a movement from W to Z?
ANSWER IS NOT a only
Refer to Figure 3-2. A technological advancement would be represented by a movement from
ANSWER IS NOT a to b
The opportunity cost of taking an on-line history class is
ANSWER IS NOT zero because there is no classroom time involved if you are enrolled in the course.
Refer to figure 3-1. If the product represented is an inferior good, a decrease in income would be represented by a movement from
ANSWER ISN'T D2 to D1
A guild is
ANSWER ISN'T a group of nations who agree not to compete with each other
In a market economy, who decides what goods and services will be produced
ANSWER ISN'T only consumers
Consider the following economic agents a. government b. consumers c. producers Who, in a modern mixed economy, decides what goods and services will be produced with the scarce resources available in that economy?
ANSWER ISN'T producers
Refer to figure 3-8. The graph in this figure illustrates an initial competitive equilibrium in the market for motorcycles at the intersection of D2 and S2 (point E). If the technological to produce motorcycles improves and the number of buyers increases, how will the equilibrium point change
ANSWER ISN'T the equilibrium point will move from E to B
Assume that both the demand curve and the supply curve for DVD players shift to the left but the demand curve shifts more than the supply curve. As a result
ANSWER ISN'T the equilibrium price of DVD players will increase, the equilibrium quantity may increase or decrease
Assume Dina's diner only produces sliders and hot wings. A combination of 60 sliders and 25 hot wings would appear
Along dina's ppf
___ means the supply curve has shifted to the right, while ___ refers to a movement along a given supply curve in responsible in an increase in price
An increase in supply, an increase in quantity supplied
Which of the following countries does not come close to the free market benchmark?
Cuba
Let d=demand, s=supply, p=equilibrium price, q=equilibrium quantity. What happens in the market for sushi is the Surgeon general announces that a majority of the raw fish that is imported to make sushi contains high levels of toxic mercury
D decreases, S no change, P and Q decrease
Refer to figure 3-1. An increase in the price of a substitute would be represented by a movement from
D1 to D2
Refer to Figure 3-1. An increase in taste or preference would be represented by a movement from
D1 to D2.
Refer to Figure 3-1. A decrease population would be represented by a movement from
D2 to D1
Refer to Figure 3-1. An increase in the price of a complement would be represented by a movement from
D2 to D1.
Which of the following would shift the supply curve for smartphones to the right?
a decrease in the price of an input used to produce smartphones
Two U.S. Senators have introduced a bipartisan bill to strengthen patent protection in the United States. The STRONGER Patents Act, designed to improve the patent system, includes provisions which would permit injunctions to protect patent owners against infringement both during and after court cases and guarantee fairness in administrative proceedings by limiting repetitive and harassing challenges against inventors. Changes over the last decade have lessened some U.S. patent rights, while countries such as China and Germany have moved to strengthen their own patent protections. In 2016, the United States fell to 10th place in the U.S. Chamber of Commerce's international ranking of patent system strength.Source: Brian Pomper, "Senators Coons and Cotton Introduce STRONGER Patents Act of 2017," ipwatchdog.com, June 21, 2017.Refer to the Article Summary. If the STRONGER patents Act of 2017 does not become law and patent protection in the United States continues to fall further behind patent protection in other countries, which of the following would most likely occur in the United States?
Fewer patents would be issued to innovators and inventors.
Which of the following is motivated by an efficiency concern
Following a six-month drought, a city banned homeowners from watering their lawns in an effort to conserve water
Which of the following is a microeconomic question
How does Fiat decide on the price of the 500 Pop model
Refer to Figure 2-13. Which two arrows in the diagram depict the following transaction: Carter earns a $400 commission for selling men's designer shoes at Brooks Brothers.
J and M
In January, buyers of gold expect that the price of gold will fall in February. What happens in the gold market in January, holding everything else constant?
NOT THE ANSWER The demand curve shifts to the right.
Refer to article summary. The article decreases income inequality and how economic growth alone is no longer resulting in a more equitable distribution of income. Would an equitable distribution of income necessarily be the most efficient distribution of income
No, an economically efficient distribution of income would not necessarily be equitable
Refer to figure 3-7. Assume the graphs in this figure represent the demand and supply curves for mustard and that bratwurst and mustard are complements. What panel describes what happens in this market when the price of bratwurst falls
Panel (c)
________ exists because unlimited wants exceed the limited resources available to fulfill those wants.
Scarcity
Technological advancements have led to lower prices and an increase in the sale of color laser printers. How does this affect the market for laser printer ink cartridges
The demand curve for laser printer ink cartridges shifts to the right
How does the increasing use of digital cameras affect the market for traditional camera film?
The demand curve for traditional camera film shifts to the left.
Assume that the price for lawn care has fallen and sales of lawn care services have also fallen. One can conclude that
The demand for lawn care service has decreased
A decrease in input costs in the production of LCD televisions caused the price of LCD televisions to decrease. Holding everything else constant, how would this affect the market for video game consoles (a complement to LCD televisions)?
The demand for video game consoles would increase and the equilibrium price of video game consoles would increase.
Suppose a positive technological change in the production of disease-resistant corn caused the price of corn to fall. Holding everything else constant, how would this affect the market for wheat (a substitute for corn)?
The demand for wheat would decrease and the equilibrium price of wheat would decrease.
Refer to Figure 3-8. The graph in this figure illustrates an initial competitive equilibrium in the market for motorcycles at the intersection of D2 and S2 (point E). If the technology to produce motorcycles improves and the number of buyers increases, how will the equilibrium point change?
The equilibrium point will move from E to A.
The decline in the popularity of clothing made from animal fur has enticed large department stores like jc penny and sears to discontinue sales of animal fur products. How does discontinuing sales of these products affect the animal fur clothing markets
The supply curve for animal fur clothing shifts to the left
In April, market analysts predict that the price of titanium will fall in May. What happens in the titanium market in April, holding everything else constant?
The supply curve shifts to the right.
If the demand for letters written by Abe Lincoln is higher than the demand for letters written by John Wilkes Booth, what would have to be true for the market equilibrium prices for these letters to be equal
The supply of Booth letters would have to be far less than the supply of Lincoln letters
Figure 2-4 shows various points on 3 different ppfs for a nation. Refer to figure 2-4. A movement from ___ is the result of advancements in plastic production technology
Y to Z
Which of the following would cause an increase in the equilibrium price and decrease in the equilibrium quantity of watermelon?
a decrease in supply
A decrease in the demand for eggs due to changes in consumer tastes, accompanied by a decrease in the supply of eggs as a result of an outbreak of Avian flu, will result in
a decrease in the equilibrium quantity of eggs; the equilibrium price may increase or decrease
Which of the following would shift the supply curve for energy drinks to the left?
a decrease in the number of firms that produce energy drinks
If a decrease in income leads to a decrease in the demand for ice cream, then ice cream is
a normal good
Figure 2-4 Figure 2-4 shows various points on three different production possibilities frontiers for a nation.Refer to Figure 2-4. Consider the following events:a.an increase in the unemployment rateb.general technological advancementc.an increase in consumer wealthWhich of the events listed above could cause a movement from Z to V?
a only
A decrease in the price of pork will result in
a smaller quantity of pork supplied.
Which of the following is a factor of production?
an acre of forested land
Figure 3-8Refer to Figure 3-8. The graph in this figure illustrates an initial competitive equilibrium in the market for motorcycles at the intersection of D2 and S1 (point C). Which of the following changes would cause the equilibrium to change to point B?
an increase in the wages of motorcycle workers and a decrease in the price of motorcycle insurance, a complement to motorcycles
Productive efficiency is achieved when firms produce goods and services
at the lowest cost.
Assume that the demand for DVD players shifts to the left and the supply curve for DVD players shifts to the right, but the supply curve shifts less than the demand curve. As a result
both the equilibrium price and quantity of DVD players will decrease
A ppf with a ___ shape indicates increasing opportunity costs as more and more of 1 good is produced
bowed outward
Figure 2-4 shows various points on three different production possibilities frontiers for a nation.Refer to Figure 2-4. Consider the following movements: a.from point V to point W b.from point W to point Y c.from point Y to point Z Which of the movements listed above represents advancements in technology with respect to only plastic production?
c only
All ________ economies have been political dictatorships.
centerally planned
Which of the following would shift a nation's production possibilities frontier outward?
discovering a more efficient process to desalinate water
There is often a trade-off between
economic efficiency and economic equity.
Refer to the article summary. Assume that more global tourist destinations begin to offer and publicize sustainable tourism to American tourists and, due to the growing number of millennials attracted to sustainability, more Americans choose to embrace sustainable tourism. All else equal, what will happen to the equilibrium price and equilibrium quantity in the market for sustainable tourism as a result of these 2 factors
equilibrium price may increase or decrease, and equilibrium quantity will increase
To compete in the automobile market, Tesla must make many strategic, decisions such as whether to introduce a new car model, how to sell and service its cars, and where to advertise. At Tesla's Fremont, California plant, manager's must decide on the monthly production quantities of their 5 and X models. In making this decision, the managers
face a trade-off, because producing more of one model means producing less of the other
Allocative efficiency is achieved when
firms produce the goods and services that consumers value most
Allocative efficiency is achieved when
firms produce the goods and services that consumers value most.
Refer to figure 2-10. In the circular flow diagram, economic agents M represent
households
Skeeter's Skeeball Castle has seen its business slow down ever since Kerrie's Off-Key Karaoke opened up next door. Since the opening of Kerrie's Off-Key Karaoke, the opportunity cost of playing skeeball at Skeeter's has
increased
How are the fundamental economic decisions determined in Canada?
individuals, firms, and the government interact in a market to make these economic decisions.
When a celebrity has the desire to have his image protected following his death, then this is best described as an example of the protection of
intellectual property
Adam Smith's ________ refers to the process by which individuals acting in their own self-interest bring about a market outcome that benefits society as a whole.
invisible hand
Tesla opened its Gigafactory nears sparks, Nevada..... Refer to figure 2-7. Assume that in response to changing consumer demands, Tesla cuts back on the production automobile batteries and increases its production of Powerwall batteries. The strategy is best represented by the
movement from J to H in graph B
The concept of ___ is that the economic cost of using a factor of production is the alternative use of that factor that is given up
opportunity cost
Suppose that when the price of oranges decreases, Sarita decreases her purchases of peaches. To Sarita
oranges and peaches are substitutes.
Refer to Table 2-1. Assume Dina's Diner only produces sliders and hot wings. A combination of 60 sliders and 50 hot wings would appear
outside Dina's production possibilities frontier.
Refer to table 2-1. Assume dina's diner only produces sliders and hot wings. A combination of 50 sliders and 50 hot wings would appear
outside dina's ppf
Refer to figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for tuna. Which panel best describes what happens in the market when there is a decrease in the productivity of commercial fisherman
panel (b)
Refer to figure 2-1. ___ is (are) insufficient in that not all resources are being used
point A
Competition among sellers generates
productive efficiency
When goods and services are produced at the lowest possible cost, ___ occurs
productive efficiency
In a production possibilities frontier, a point inside the frontier is
productively inefficient.
At market equilibrium
quantity demanded equals quantity supplied
A critical function of the government in facilitating the operation of a market economy is
setting up and enforcing private property rights.
Economic growth is represented on a ppf model by the ppf
shifting outward
The supply curve for umbrellas
shows the relationship between the price of umbrellas and the quantity of umbrellas supplied
The substitution effect of a price change refers to
the change in quantity demanded that results from a change in price making a good more or less expensive relative to other goods that are substitutes.
According to the production possibilities model, if more resources are allocated to the production of physical and human capital, then all of the following are likely to happen except
the country's total production will fall.
Buyers scrambled to secure stocks of Australian wool following a forecast of an 11 percent decline in wool production. What happens in the Australian wool market as a result of this announcement?
the demand curve for australian wool shifts to the right in anticipation of higher prices in the future
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.
Assume that both the demand curve and the supply curve for DVD players shift to the left but the supply curve shifts more than the demand curve. As a result
the equilibrium price of DVD players will increase; the equilibrium quantity will decrease.
If a firm expects that the price of its product will be lower in the future than it is today
the firm has an incentive to increase supply now and decrease supply in the future.
Which of the following are represented by the same flow in the circular flow model?
the flow of costs and the flow of revenue
When Feeding America changed its food allocation system to one that resembled a market, each food program was given a number of "shares" that they could use in bidding against other food programs for the types of food that best met the needs of the people using their programs. This is an example of how the market leads firms to provide consumers with the goods they want, which Adam Smith described by using the metaphor
the invisible hand.
A demand curve shows the relationship between
the price of a product and the quantity of the product demanded
A demand curve shows the relationship between
the price of a product and the quantity of the product demanded.
Assume that there is a surplus in the market for hybrid automobiles. Which of the following statements correctly describes the situation
the price of hybrid automobiles will fall in response to the surplus, as the price falls the quantity demanded will increase and the quantity supplied will decrease
The circular flow model demonstrates
the roles played by households and firms in the market system
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.
Refer to figure 3-5. At a price of $5
there is a shortage of 4 units
Refer to figure 3-5. At a price of $0
there is a shortage of 8 units
Which of the following generates allocative efficiency in a market economy
voluntary exchange between buyers and sellers
An increase in the equilibrium price for a product will result
when there is a decrease in supply and an increase in demand for the product
