macroeconomics midterm 1

The supply curve for apples is (BLANK) The demand curve for apples with the tariff on bananas is farther to the (blank)than the demand curve without the tariff on bananas.

upward sloping right

Identify whether each of the following statements describes a change in supply or a change in the quantity supplied. a. To take advantage of high prices for snow shovels during a very snowy​ winter, Alexander​ Shovels, Inc., decides to increase output. b. The success of​ Apple's iPod leads more firms to begin producing digital music players. c. In the six months following Hurricane​ Katrina, production of oil in the Gulf of Mexico declined by 25 percent.

A change in quantity supplied A change in supply A change in supply

What is an​ entrepreneur? A.Entrepreneurs manage the free market. B.Entrepreneurs operate businesses that produce goods and services. C.Entrepreneurs regulate profits. D.Entrepreneurs manage households that consume goods and services. E.Entrepreneurs are policymakers in the government.

B.Entrepreneurs operate businesses that produce goods and services.

What does increasing marginal opportunity costs​ mean? A.Increasing the production of a good requires larger and larger decreases in the production of another good. B.The economy is unable to produce increasing quantities of goods and services. C.Increasing the production of a good requires decreases in the production of another good. D.Production is not occurring on the production possibilities frontier. E.Increasing the production of a good requires smaller and smaller decreases in the production of another good.

A. Increasing the production of a good requires larger and larger decreases in the production of another good.

What happens if a country produces a combination of goods that efficiently uses all of the resources available in the​ economy? A.The country is operating on its production possibilities frontier. B.The country is maximizing its opportunity cost. C.The country has eliminated scarcity. D.All of the above occur if a country uses all available resources.

A. The country is operating on its production possibilities frontier.

What is a free​ market? A.A free market is one where the government does not control the production of goods and services. B.A free market is one where the government restricts how a factor of production can be employed. C.A free market is one without property rights. D.A free market is one where the government restricts how a good or service can be produced. E.A free market is one with perfect equality.

A.A free market is one where the government does not control the production of goods and services.

Which would be better news for firms selling traditional canned​ tuna: Fact ​(i​) is more important in explaining their declining sales than fact ​(ii​), or the​ reverse? A.Firms would prefer fact ​(ii​) more than fact ​(i​) because it is easier for the traditional canned tuna producers to change their marketing strategy and also offer their tuna in pouches and trendy flavors than it is to change the minds of millennial and generation Z consumers about the desirability of eating tuna. B.Firms would prefer fact ​(i​) more than fact ​(ii​) because it is easier for the traditional canned tuna producers to change the minds of millennial and generation Z consumers about the desirability of eating tuna than it is to change their marketing strategy and also offer their tuna in pouches and trendy flavors.

A.Firms would prefer fact ​(ii​) more than fact ​(i​) because it is easier for the traditional canned tuna producers to change their marketing strategy and also offer their tuna in pouches and trendy flavors than it is to change the minds of millennial and generation Z consumers about the desirability of eating tuna.

Why do entrepreneurs play a key role in a market​ system? A.They bring together factors of production. B.They determine what goods and services are produced. C.They influence income distribution through taxes and transfer payments. D.They supply labor as a factor of production. E.They determine who will receive goods and services.

A.They bring together factors of production.

The primary difference between absolute and comparative advantage is A.absolute advantage refers to the ability to produce more of a good or service using the same amount of resources and comparative advantage refers to the ability to produce a good or service at a lower opportunity cost. B.absolute advantage refers to the ability to produce a good or service at a lower opportunity cost and comparative advantage refers to the ability to produce more of a good or service using the same amount of resources. C.absolute advantage can never change while comparative advantage depends on the relative cost of a​ good's resources. D.absolute advantage is a concept that was utilized in communist countries and comparative advantage is a capitalist idea.

A.absolute advantage refers to the ability to produce more of a good or service using the same amount of resources and comparative advantage refers to the ability to produce a good or service at a lower opportunity cost.

Does it indicate that​ gasoline-powered cars and hybrids are substitutes or​ complements? A.Complements, because they are used for the same purpose. B.Substitutes, because the more consumers buy of one​ good, the less they will buy of the other good. C.Substitutes, because the more consumers buy of one​ good, the more they will buy of the other good. D.Complements, because they are used together.

B.Substitutes, because the more consumers buy of one​ good, the less they will buy of the other good.

We can show economic​ inefficiency: A.with points on the production possibilities frontier. B.with points inside the production possibilities frontier. C.with points on and outside the production possibilities frontier. D.with points outside the production possibilities frontier. E.with points inside and on the production possibilities frontier.

B. with points inside the production possibilities frontier.

What do economists mean when they use the Latin expression ceteris paribus​? A.The whole is just the sum of the parts. B.All else equal. C.The thing speaks for itself. D.Prior to an event

B.All else equal.

What is the basis for​ trade? A.Efficiency. B.Comparative advantage. C.Economic growth. D.Available resources. E.Absolute advantage.

B.Comparative advantage.

About 1.4 billion pounds of​ American, cheddar and other kinds of cheese is socked away at​ cold-storage warehouses across the​ country, the biggest stockpile since federal​ record-keeping began a century ago...Many​ [cheese companies] are paying to store their excess cheese in hopes demand and prices will improve. What effect did the strategy of warehousing cheese have on the supply of​ cheese? A.The supply of cheese​ decreased, resulting in a movement downward along the supply curve for cheese. B.The supply of cheese​ decreased, shifting the supply curve for cheese to the left. C.The supply of cheese​ increased, shifting the supply curve for cheese to the left. D.The supply of cheese​ increased, shifting the supply curve for cheese to the right.

B.The supply of cheese​ decreased, shifting the supply curve for cheese to the left

An article in the Wall Street Journal on the market for traditional canned tuna stated the following two​ facts: i. Firms selling traditional canned tuna are struggling to connect with millennial and generation Z​ consumers, "who favor​ fresher, less-processed​ options" in the food they eat. ii. Firms selling traditional canned tuna are facing competition from firms that offer tuna for sale in​ "pouches and kits with trendy flavors or as a healthy​ snack." ​Source: Jesse Newman and Annie​ Gasparro, "The Trouble With with​ Tuna: 'A Lot of Millennials​ Don't Even Own Can​ Openers,'" Wall Street Journal​, December​ 2, 2018. a. From this​ information, can we conclude that falling sales of traditional cans of tuna is likely the result of a movement along the demand curve for traditional cans of tuna or a shift in the demand​ curve? The falling sales of traditional cans of tuna are the result of A.an upward movement along the demand curve for tuna. B.a shift in the demand curve for tuna to the left. C.a shift in the demand curve for tuna to the right. D.a downward movement along the demand curve for tuna.

B.a shift in the demand curve for tuna to the left.

In what ways does a free market economy differ from a centrally planned​ economy? Unlike a free market​ economy, A.centrally planned economies do not trade internationally. B.centrally planned economies have extensive government controls. C.centrally planned economies have no government. D.centrally planned economies do not use money. E.centrally planned economies have no government restrictions.

B.centrally planned economies have extensive government controls.

Years​ ago, an apple producer argued that the United States should enact a​ tariff, or a​ tax, on imports of bananas. His reasoning was​ that: ​"the enormous imports of cheap bananas into the United States tend to curtail the domestic consumption of fresh fruits produced in the United​ States." This producer apparently assumed apples and bananas to be substitutes. In a graph​ (not shown) of the banana market in the United​ States, the imposition of a tariff on banana imports would A.shift demand​ leftward, decreasing equilibrium price and equilibrium quantity. B.shift supply​ leftward, increasing equilibrium price and decreasing equilibrium quantity. C.shift supply​ leftward, decreasing equilibrium price and increasing equilibrium quantity. D.not shift any curve but raise the equilibrium price because taxes are always passed on to the consumer.

B.shift supply​ leftward, increasing equilibrium price and decreasing equilibrium quantity.

Consider the market for college textbooks. Suppose a recent economic recession has resulted in significantly higher tuition costs for college. Significantly higher tuition costs for college will shift A.the supply curve for textbooks to the right. B.the demand curve for textbooks to the left. C.the supply curve for textbooks to the left. D.the demand curve for textbooks to the right. The new equilibrium will be where A.the new demand curve intersects the supply curve. B.there is a surplus. C.the original demand curve intersects the supply curve. D.demand is greater than supply. In​ particular, the equilibrium price will (blank) and the equilibrium quantity will (blank) .

B.the demand curve for textbooks to the left. A.the new demand curve intersects the supply curve. decrease decrease

The law of demand is the assertion that A.the demand for a product is negatively related to its price. B.the quantity demanded of a product is inversely related to its price. C.the quantity demanded of a product is directly related to its price. D.changes in price and changes in quantity demanded move in the same direction.

B.the quantity demanded of a product is inversely related to its price.

How can a country gain from specialization and​ trade? A.A country can specialize by using all available resources to produce goods and services to avoid trading with other countries. B.A country can specialize in producing that for which it has an absolute advantage and then trade for other needed goods and services. C.A country can specialize in producing that for which it has a comparative advantage and then trade for other needed goods and services. D.A country can specialize by using all available resources to invest in capital goods to promote economic growth. E.A country can specialize in producing that which is most scarce and then trade for other needed goods and services.

C. A country can specialize in producing that for which it has a comparative advantage and then trade for other needed goods and services.

A perfectly competitive market is a market that meets the conditions of A.(1) few buyers and​ sellers, (2) all firms selling identical​ products, and​ (3) no barriers to new firms entering the market. B.(1) many buyers and​ sellers, (2) all firms selling identical​ products, and​ (3) significant barriers to new firms entering the market. C.(1) many buyers and​ sellers, (2) all firms selling identical​ products, and​ (3) no barriers to new firms entering the market. D.(1) many buyers and​ sellers, (2) all firms selling differentiated​ products, and​ (3) no barriers to new firms entering the market.

C.(1) many buyers and​ sellers, (2) all firms selling identical​ products, and​ (3) no barriers to new firms entering the market.

The Toyota Prius is a​ gasoline-electric hybrid car that gets 54 miles to the gallon. An article in the Wall Street Journal notes that sales of the Prius have been hurt by low gasoline prices and​ that: "Americans are now more likely to trade in a hybrid or an electric vehicle for an​ SUV...." Does the article indicate that​ gasoline-powered cars and gasoline are substitutes or​ complements? Briefly explain. A.Complements, because they are used for the same purpose. B.Substitutes, because the more consumers buy of one​ good, the more they will buy of the other good. C.Complements, because they are used together. D.Substitutes, because the more consumers buy of one​ good, the less they will buy of the other good.

C.Complements, because they are used together.

According to the law of demand​, there is an inverse relationship between price and quantity demanded. That​ is, the demand curve for goods and services slopes downward.​ Why? A.When the price of a good​ increases, consumers purchase complementary goods that are now relatively less expensive. B.When price​ increases, demand decreases. C.When the price of a good​ increases, consumers' purchasing power​ decreases, and they cannot buy as much of the good as they did prior to the price change. D.When the price of a good​ increases, consumers' purchasing power​ increases, and they can buy more of the good than they did prior to the price change.

C.When the price of a good​ increases, consumers' purchasing power​ decreases, and they cannot buy as much of the good as they did prior to the price change.

According to a news​ article, "The health benefits of coconut oil have been challenged by the American Heart Association and other organizations in recent years and that has hurt​ demand." The article also noted that more plantations growing coconuts had​ "sprung up in the​ [Philippines] and​ elsewhere." . Can we use this information to be certain whether the equilibrium price of coconut oil increased or​ decreased? A.No, the change in the equilibrium price depends on the relative shifts of demand and supply. If demand shifts more than​ supply, the equilibrium price decreases. B.Yes, the equilibrium price unambiguously increased. C.Yes, the equilibrium price unambiguously decreased. D.No, the change in the equilibrium price depends on the relative shifts of demand and supply. If demand shifts more than​ supply, the equilibrium price increases. Part 2 Can we use this information to be certain whether the equilibrium quantity of coconut oil increased or​ decreased? A.No, the change in the equilibrium quantity depends on the relative shifts of demand and supply. If demand shifts more than​ supply, the equilibrium quantity increases. B.No, the change in the equilibrium quantity depends on the relative shifts of demand and supply. If demand shifts more than​ supply, the equilibrium quantity decreases. C.​Yes, the equilibrium quantity unambiguously decreased. D.Yes, the equilibrium quantity unambiguously increased.

C.Yes, the equilibrium price unambiguously decreased. and B.No, the change in the equilibrium quantity depends on the relative shifts of demand and supply. If demand shifts more than​ supply, the equilibrium quantity decreases.

The production possibilities frontier will shift outward A.if technology declines. B.if resources are used to produce consumption goods. C.if resources are used to produce capital goods. D.if resources are not used in production. E.if production occurs outside the production possibilities frontier.

C.if resources are used to produce capital goods.

Suppose we can divide all the goods produced by an economy into two​ types: consumption goods and capital goods. Capital​ goods, such as​ machinery, equipment, and​ computers, are goods used to produce other goods. Suppose a technological advance occurs that affects the production of consumption goods but not capital goods. If a technological advance occurs that affects the production of consumption goods but not capital ​goods, then the production possibilities frontier will A.shift outward along the capital goods axis. B.shift outward along both axes. C.shift outward along the consumption goods axis. D.remain unchanged. The new production possibilities frontier will indicate that with the technological​ advance, more *consumption goods* can be produced.

C.shift outward along the consumption goods axis

In the​ 1950s, the economist Bela Balassa compared 28 manufacturing industries in the United States and Britain. In every one of the 28​ industries, Balassa found that the United States had an absolute advantageLOADING.... In these​ circumstances, would there have been any gain to the United States from importing any of these products from​ Britain? Explain. A.Even with an absolute​ advantage, the United States would have benefited from importing those products that Britain could have produced at lower total cost. B.Since the United States had an absolute advantage in all 28​ industries, it also had a comparative advantage in each industry and would not have gained anything from importing any of these products from Britain. C.Even with an absolute​ advantage, the United States would have benefited from importing those products for which Britain had the same opportunity cost. D.Even with an absolute​ advantage, the United States would have benefited from importing those products for which Britain had a comparative advantage.. E.Since the United States had an absolute advantage in all 28​ industries, it had more bargaining power and would have gained from importing all of these products from Britain.

D.Even with an absolute​ advantage, the United States would have benefited from importing those products for which Britain had a comparative advantage.

The late Nobel Laureate Gary Becker once described how an economist should analyze the demand for​ butter: An economist​ "would want to consider the price of butter and probably the level of​ income, the price of​ margarine, and the size of the population as well. But​ [the economist] would neglect thousands and thousands of other​ variables...." ​Source: Gary​ Becker, Economic Theory​, New​ Brunswick, NJ: Aldine​ Transaction, 2007, p. 5. a. What approach to analyzing demand curves is Becker​ describing? A.the holding everything else variable condition B.the whole is just the sum of its parts condition C.the ceteris paribus condition D.the scarcity condition Part 2 b. As an​ economist, how can you hope that your analysis of the demand for butter is accurate if you neglect thousands and thousands of other​ variables? A.Economic models are a more complicated version of​ reality, so even if you ignore thousands of​ variables, they will still be complex enough to be accurate. B.In the model of demand and​ supply, we focus only on the variables that experience has shown are the most important in determining the demand for a​ product: income, price of substitutes and​ complements, taste for the​ good, population, and the expected future price. C.You must include as many variables as you possibly can in each model in order to hold out hope that the model will be accurate. D.You​ can't: there is no way that your analysis will be accurate if you neglect thousands and thousands of other variables.

C.the ceteris paribus condition and B. In the model of demand and​ supply, we focus only on the variables that experience has shown are the most important in determining the demand for a​ product: income, price of substitutes and​ complements, taste for the​ good, population, and the expected future price.

Is it possible for a country to have a comparative advantage in producing a good without also having an absolute​ advantage? A country without an absolute advantage in producing a good A.will have a comparative advantage if it devotes more resources toward that​ good's production. B.will not have a comparative advantage because it has fewer resources. C.will have a comparative advantage if it has a lower opportunity cost of producing that good. D.will have a comparative advantage if it is able to produce that good at a low total cost. E.will have a comparative advantage if it produces more efficiently.

C.will have a comparative advantage if it has a lower opportunity cost of producing that good.

Lawrence Summers served as secretary of the treasury in the Clinton administration and as director of National Economic Council in the Obama administration. He has been quoted as giving the following moral defense of the economic approach. ​"There is nothing morally unattractive about​ saying: We need to analyze which way of spending money on health care will produce more benefit and which​ less, and using our money as efficiently as we can. I​ don't think there is anything immoral about seeking to achieve environmental benefits at the lowest possible​ costs." It would be more moral to reduce​ pollution, A.taking the cost into account because reducing pollution often reduces economic growth. B.not taking the cost into account because pollution reduction is typically associated with large benefits. C.taking the cost into account because the total cost of reducing pollution is likely enormous. D.taking the cost into account because money spent on pollution reduction is not available for other worthy activities. E.not taking the cost into account because pollution is potentially harmful to our health.

D. taking the cost into account because money spent on pollution reduction is not available for other worthy activities.

What do economists mean by​ scarcity? A.Economists mean that production is inefficient. B.Economists mean that trade is not possible. C.Economists mean that the economy is unable to produce increasing quantities of goods and services. D.Economists mean that unlimited wants exceed limited resources. E.Economists mean that people are not employed.

D.Economists mean that unlimited wants exceed limited resources.

What is absolute​ advantage? A.The ability to use all available resources to produce output. B.The gain from selling a product for more than it costs to produce that product. C.The ability to produce a good or service at a lower opportunity cost than other producers. D.The ability to produce more of a good or service than competitors using the same amount of resources. E.The gain from consuming a product whose benefit is greater than its cost.

D.The ability to produce more of a good or service than competitors using the same amount of resources.

A production possibilities​ frontier: A.shows how unlimited wants exceed the limited resources available to fulfill those wants. B.shows the act of buying and selling. C.shows how participants in the market are linked. D.shows the maximum attainable combinations of two goods that may be produced with available resources. E.shows the market for a good or service.

D.shows the maximum attainable combinations of two goods that may be produced with available resources.

With the​ tariff, the market equilibrium for apples is where A.there is a surplus. B.the demand curve without the banana tariff intersects the supply curve. C.demand is greater than supply. D.the demand curve with the banana tariff intersects the supply curve.

D.the demand curve with the banana tariff intersects the supply curve.

Goods X and Y are perfect substitutes. When the market price of good X is​ $5/unit, firm F produces 500 units of X. When the price of Y​ rises, 100 consumers of Y shift to the consumption of good X. This causes industry analysts to believe that firm F has increased quantity supplied of X by 100 units to meet the higher demand for it. To arrive at this​ conclusion, the industry analysts are assuming that A.good Y is an inferior good. B.good X is the only substitute of Y available to them. C.each person will now buy more of X than they did prior to the increase in the price of Y. D.the new buyers of good X​ will, on​ average, consume one unit each. E.the law of supply does not hold for good Y.

D.the new buyers of good X​ will, on​ average, consume one unit each.

An increase in the price of a product causes a decrease in quantity demanded because of the income and substitution effects. More​ specifically, A.the substitution effect is the decrease in quantity demanded because there are fewer consumers and the income effect is the decrease in quantity demanded because consumer incomes failed to increase. B.the substitution effect is the decrease in quantity demanded because consumer tastes have changed and the income effect is the decrease in quantity demanded because consumer incomes have fallen. C.the substitution effect is the decrease in quantity demanded because the​ consumers' purchasing power is reduced and the income effect is the decrease in quantity demanded owing to the fact that the product is more expensive relative to other goods. D.the substitution effect is the decrease in quantity demanded because the product is more expensive relative to other goods and the income effect is the decrease in quantity demanded owing to the decline in​ consumers' purchasing power.

D.the substitution effect is the decrease in quantity demanded because the product is more expensive relative to other goods and the income effect is the decrease in quantity demanded owing to the decline in​ consumers' purchasing power.

What are the implications of this idea for the shape of the production possibilities​ frontier? A.The production possibilities frontier will be a straight line. B.The production possibilities frontier will be bowed inward. C.The production possibilities frontier will have a positive slope. D.The production possibilities frontier will have a negative slope. E.The production possibilities frontier will be bowed outward.

E. The production possibilities frontier will be bowed outward.

We can show economic​ efficiency: A.with points on and outside the production possibilities frontier. B.with points outside the production possibilities frontier. C.with points inside and on the production possibilities frontier. D.with points inside the production possibilities frontier. E.with points on the production possibilities frontier

E. with points on the production possibilities frontier.

What is comparative​ advantage? A.The gain from selling a product for more than it costs to produce that product. B.The gain from consuming a product whose benefit is greater than its cost. C.The ability to use all available resources to produce output. D.The ability to produce more of a good or service than competitors using the same amount of resources. E.The ability to produce a good or service at a lower opportunity cost than other producers.

E.The ability to produce a good or service at a lower opportunity cost than other producers.

Goods X and Y are perfect substitutes. When the market price of good X is​ $5/unit, firm F produces 500 units of X. When the price of Y​ rises, 100 consumers of Y shift to the consumption of good X. This causes industry analysts to think that firm F will increase quantity supplied of X to match this increased demand. This conclusion is flawed because A.it assumes that firm F does not export good X. B.it assumes that the price of X will not increase in the near future. C.it assumes that the supply curve of X will shift to the right in response to the increased demand. D.it assumes that firm F does not export good X. E.it assumes that firm F is the only producer of good X

E.it assumes that firm F is the only producer of good X.

The recession that began in December 2007 resulted in declining incomes as some people lost their jobs and others were forced to work fewer hours or have their wages reduced. How did this affect the market for casual dining​? A decrease in income as people lose their jobs will shift the market (blank) curve for casual dining In​ particular, the demand curve will shift to the A.left​,if casual dining is a normal good. B.left​,if casual dining is an inferior good. C.right​,if casual dining is a normal good. D.right​,if casual dining is unrelated to income.

demand A.left​,if casual dining is a normal good

higher input prices (labor, raw materials, energy) shifts the supply curve to the left or right?

left

In the market for orange​ juice, the effect of a tax on carbonated sodas is the demand curve will

shift right

In the market for orange​ juice, the effect of a cure for citrus greening is the supply curve will The new market equilibrium will be where A.the original demand curve intersects the new supply curve. B.the new demand curve intersects the new supply curve. C.the new demand curve intersects the original supply curve. D.the new demand curve intersects the original demand curve. The equilibrium quantity of orange juice will (blank)and the equilibrium price of orange juice may (blank) .

shift right B.the new demand curve intersects the new supply curve. will increase may increase or decrease

The equilibrium price and quantity of a product was​ $100 and​ 1,000 units per month in 2020 and is​ $150 and 800 units per month in 2021. Assume that relative to demand in​ 2020, the market demand curve shifts to the right. Relative to supply in​ 2020, the market supply curve (blank) The new market equilibrium is where A.the new demand curve intersects the new supply curve. B.the initial demand curve intersects the initial supply curve. C.there is a surplus. D.demand is greater than supply. From 2020 to​ 2021, A.supply increased more than demand increased. B.supply decreased more than demand decreased. C.supply increased more than demand decreased. D.supply decreased more than demand increased.

shifts to the left A.the new demand curve intersects the new supply curve. D.supply decreased more than demand increased.

​Tom's lawn service specializes in mowing lawns and trimming bushes. Tom has 4 hours to devote to lawn services. In 1​ hour, he can mow 4 lawns or trim 5 bushes. ​Tom's PPF is a (blank) line. ​Tom's PPF intersects the​ graph's axis for mowing lawns at (blank) and intersects the​ graph's axis for trimming bushes at (blank). ​ ​Tom's opportunity cost of mowing lawns in terms of trimming bushes is (blank)trimmed bushes per mowed lawn.

straight 16 20 1.25