Econ final

ryan produces a hair clip and earrings. celia also produces hair clips and earrings, but ryan is better at producing both goods. In this case, trade could

benefit both celia and ryan

if one producer has the absolute advantage in the production of all goods, then that same producer will have the comparative advantage in the production of all goods as well

false

prices direct economic activity in a market economy by

influencing the actions of buyers and sellers

Absolute advantage is found by comparing different producers'

input requirements per unit of output

a farmer has the ability to grow either corn or cotton or some combination of the two. Given no other information, it follows that the farmer's opportunity cost of a bushel of corn multiplied by his opportunity cost of a bushel of cotton

is equal to 1

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

which of the following demonstrates the law of demand

jayden buys more donuts at $.25 per donut than at .50 per donut, other things equal

Candice is planning her activities for a hot summer day. She would like to go to the local swimming pool and see the latest blockbuster movie, but because she can only get tickets to the movie at the same time that the pool is open she can only choose one activity. This illustrates the basic principle that

people face tradeoffs

The adage, "there ain't no such thing as a free lunch," means

people face tradeoffs

if miguel expects to earn a higher income next month, he may choose to

save less now and spend more of his current income on goods and services

Fundamentally, economics deals with

scarcity

Suppose the cost of flying a 200-seat plane for an airline is $100,000 and there are 10 empty seats on a flight. If the marginal cost of flying a passenger is $200 and a standby passenger is willing to pay $300, the airline should

sell the ticket because the marginal benefit exceeds the marginal cost.

which of the following is an example of a positive, as opposed to normative, statement?

Prices rise when the government prints too much money

which of the following changes would not shift the demand curve for a good or service

a change in the price of the good or service

suppose scientists provide evidence that people who drink energy drinks are more likely to have a heart attack than people who do not drink energy drinks. We would expect to see

a decrease in the demand for energy drinks

Consider Luis'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. Luis's cost of going to college is

$42,600

suppose that a worker in radioland can produce either 4 radios or 1 tv per year, and a worker in teeveeland can produce either 2 radios or 4 televisions per year. Each nation has 100 workers. also, suppose that each country completely specializes in producing the good in which it has a comparative advantage. If radioland trades each year, then each country's maximum consumption of new radios and tvs per year will be

300 radios, 100 tvs in radioland and 100 radios, 300 tvs in teeveeland.

A hairstylist currently cuts and colors hair for 50 clients per week and earns a profit. He is considering expanding his operation in order to serve more clients. Should he expand?

It depends on the marginal cost of serving more clients and the marginal revenue he will earn from serving more clients.

suppose jim and tom can both produce two goods: baseball bats and hockey sticks. Which of the following is not possible?

Jim has a comparative advantage in the production of baseball bats and in the production of hockey sticks

assume lianna buys coffee beans in a competitive market. it follows that

Lianna cant influence the price of coffee beans even if he buys a large quantity of them

A bagel shop sells fresh-baked bagels from 5 am until 7pm every day. The shop does not sell day-old bagels, so all unsold bagels are thrown away at 7pm each. The cost of making and selling a dozen is $1.00; there are no costs associated with throwing bagels away. If the manager has eight dozen bagels left at 6:30 pm on a particular day, which of the following alternatives is most attractive?

Lower the price of the remaining bagels, even if the price falls below $1 per dozen.

Suppose the state of Wyoming passes a law that increases the tax on cigarettes. As a result, smokers who live in Wyoming start purchasing their cigarettes in surrounding states. Which of the following principles does this best illustrate?

People respond to incentives

What is the most accurate statement about trade?

Trade can make every nation better off.

which of the following statements about trade is false?

With trade, one country must win and one country must lose

a group of buyers and sellers of a particular good or service is called

a market

you lose your job and, as a result you buy fewer ITunes music downloads. this shows that you consider iTunes music downloads to be

a normal good

when we move along a given demand curve

all nonprice determinants of demand are. held constant

A typical society strives to get the most it can from its scarce resources. At the same time, society attempts to distribute the benefits of those resources to the members of the society in a fair manner. However, redistributing income from rich to poor reduces the reward for working hard. Therefore, society faces a tradeoff between

efficiency and equality

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

the $60 minus the enjoyment she would have received from going to the park.

the ppf illustrates

the combinations of output that an economy can produce

In most societies, resources are allocated by

the combined actions of millions of households and firms.

The bowed-outward shape of the production possibilities frontier can be explained by the fact that

the opportunity cost of one good in terms of the other depends on how much of each good the economy is producing

when the quantity demanded has increased at every price, it might be because

the price of a complementary good has decreased

When computing the opportunity cost of attending a concert you should include

the price you pay for the ticket and the value of your time.

when constructing a ppf, which of the following assumptions is not made

the quantities of the factors of production that are available are increasing over the relevant time period

when a country has a comparative advantage in producing a certain good,

then specializing in the production of that good and trading for other goods could allow that country to consume at a point beyond its production possibilities frontier

which of the following is not a characteristic of a perfectly competitive market?

there are no free entry or exit

Jake can complete an oil change in 45 minutes and he can write a poem in 90 minutes. Ming-la can complete an oil change in 30 minutes and she can write a poem in 90 minutes. Jake's opportunity cost of writing a poem is lower than Ming-la's opportunity cost of writing a poem.

true

Trade-offs are involved in most policy decisions

true

economists acting as scientists make positive statements, while economists acting as policy advisers make normative statements

true

evaluating normative statements involves values as well as facts

true

for a country producing two goods, the opportunity cost of one good will be the inverse of the opportunity cost of the other good.

true

it is possible for the US to gain from trade with germany even if it takes US workers fewer hours to produce every good than it takes german workers

true

points inside the production possibilities frontier represent feasible levels of production

true

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

true

to produce 100 bushels of wheat, farmer a requires fewer inputs than does farmer b. We can conclude that farmer a has an absolute advantage over farmer b in producing what

true

Economics is the study of how society manages its

unlimited wants and limited resources.