econ test

Alice purchased two nonrefundable tickets to see a rap artist for $100. Because of recent publicity and the release of a new album, she can sell the tickets on eBay for a total of $400. If she and her boyfriend go to the concert, they will give up going to a party with their friends. Their cost of going to the concert is the enjoyment of party plus:

$400

Which of the following statements are positive? 1. We should save the rainforests 2. The greatest number of accidents are caused by drunk drivers 3. Most iPods are purchased by teenagers 4. Every house should have a pet

2 & 3

A firm is deciding whether or not to complete the building of a new office.Given the following data, what is the relevant cost of building an office building?I. $10 million has been spent to date.II. The partially completed building and land can be sold for $4 million.III. Additional labor and material necessary to complete the office building costs $5 million.

9 mil bc you give up 4 mill by finishing builiding plus cost to finish builiding. 10 mill is not coming back no matter what so leave it out

Distinguish between production efficiency and allocative efficiency. ______________ efficiency occurs when we produce goods and services at the lowest possible cost ______________ efficiency occurs when goods and services are produced at the lowest possible cost and in the quantities that provide the greatest possible benefit.

Production; Allocative

Brent would love to go to India. In fact, he would be willing to pay as much $5,000 to go, but only has to pay $3,000. Knowing what we know, the best description of his opportunity cost of going to India would be which of the following?

What he could buy with $3,000 and what he would do with his time instead of going.

Yucatan faces ______________ opportunity cost of food and ______________ opportunity cost of sunscreen, which can be seen by the shape of the PPF. \ \ \

a constant; a constant

Monday Island produces only tomatoes and pineapples.The marginal cost of a tomato is the number of pineapples that ______________ to get one more ______________. a people are willing to forgo; pineapple b people are willing to forgo; tomato c must be forgone; tomato

c

Why do people specialize and trade?With specialization and trade, people can ______________.

c consume at a point outside their PPF

The production possibilities frontier is the boundary between the combinations of goods and services that ______________, given the available factors of production and the state of technology.

can be produced and the combinations that cannot be produced

If there is a surplus, then the price will ______________ to its equilibrium, which ______________.

fall; increases the quantity demanded and decreases the quantity supplied; increase in quanitity demanded because its being sold at a lower price so it is now more appealing and they are willing to buy, suppliers are not going to sell because they dont want to sell at low prices

In the market for natural gas, what will likely happen to current natural gas prices and output if the producers expect future prices to decrease? Current supply will _________, and, as a result, current prices will _________

increase; decrease. they supply more now so that they can get the produce for a higher price before the prirce decreases bc it will have more supply abailable at the same price

Why does the PPF bow outward and what does that imply about the relationship between opportunity cost and the quantity produced?

increases. Resources are not equally productive in all activities

how do you determine quanitity supplied or demanded

it is AT A GIVEN PRICE

(a.) An increase in the demand for smartphones together with an increase in the supply of smartphones ________ create a surplus or a shortage of smartphones at the original price.The equilibrium price of smartphones _________.

might; might fall, rise or not change

Which of the following items should be considered as the cost of a spring break trip? 1. A non-refundable hotel deposit that you paid last month. 2. Food that will be consumed during the trip that is no more expensive than the food consumed if you did not go.

neither bc they both have to be paid either way

Why is the equilibrium price the best deal available for both buyers and sellers?The equilibrium price is the best deal available for both buyers and sellers because buyers ______________ and sellers ______________.

pay the highest price they are willing to pay; receive the lowest price at which they are willing to sell

when opposite shifts you know what happens to the

price but not the quanitiy unless you know by how much

All points on the PPF are points of ______________ efficiency. When we produce at the point on the PPF that we prefer above all other points we achieve ______________ efficiency.

production; allocative

in a shortage price, quanitiy supplied, and quanitity demanded do what

rise; decreases the quantity demanded and increases the quantity supplied, less people are gonna want to buy becaue of the price, inc supply because the market needs more of that product and they want to sell product for more money with the rise in the prices

What does the supply curve tell us about the producer's minimum supply price?A supply curve ______________.

tells us the lowest price at which someone is willing to sell to produce

The equilibrium price is the price at which __________ and the equilibrium quantity is the __________.

the quantity demanded equals the quantity supplied; the quantity bought and sold at the equilibrium price