Microeconomics

Which of the following statements about comparative advantage is not true?

Comparative advantage is determined by which person or group of persons can produce a given quantity of a good using the fewest resources.

In the simple circular-flow diagram, which of the following is not true?

Households are the only decision makers.

You lose your job and as a result you buy fewer mystery books. This shows that you consider mystery books to be a/n

Normal good

Trade can make everybody better off because it

allows people to specialize according to comparative advantage

If goods A and B are complements, then an increase in the price of good A will result in

less of good B being sold

Russell spends an hour studying instead of playing tennis. The opportunity cost to him of studying is

the enjoyment and exercise he would have received had he played tennis.

Which of the following is NOT included in the decisions that every society must make?

what determines consumer preferences

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

A market

The gains from trade are

A result of more efficent resource allocation than would be ovserved in the absence of trade

Japan has a comparative advantage in

Airplanes and the united states has an absolute advantage in cars

Japan has an absolute advantage in

Airplanes and the united stayes has a comparative advantage in cars

What would happen to the equilibrium price and quantity of smartphones if consumers' incomes rise and smartphones are a normal good?

Both the equilibrium price and quantity would increase

The United States and Japan could benefit by the United States specializing in

Cars and Japan specializing in airplanes

The use of theory and observation is more difficult in economics than in sciences such as physics due to the difficulty in

Conducting laboratory experiments

I'm a competitive market

Each seller has limited control over the price of his product

Which of the following is true?

Efficiency refers to the size of the economic pie; equality refers to how the pie is divided.

When society gets the most it can from its scarce resources, then the outcome is called

Efficient

Supposed the income of buyers in a market for an inferior food decreases and a technological advancement occurs also. What would we expect to happen in the market

Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous

A hair stylist 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

Which best represents the concept represented by the adage, "There is no such thing as a free lunch"?

Kendra must decide between going to Colorado or Cancun for spring break

A donut shop sells fresh fresh-baked donuts from 6 a.m. until 5 p.m. every day. The shop does not sell day-old donuts, so all unsold donuts are thrown away at 5 p.m. each day. The cost of making and selling a dozen donuts is $1 ; there are no costs associated with throwing donuts away. If the manager has seven dozen donuts left at 4 p.m. on a particular day, which of the following alternatives is most attractive?

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

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

People face tradeofs

Fundamentally, economics deals with

Scarcity

If Singapore is capable of producing either toy cars or toy trains or some combination of the two, then

Singapores opportunity cost of toy cars is the inverse of its opportunity cost of toy trains

Which of the following events would cause a movement upward and to the left along the demand cure for olives ?

The price of olives rises

Supposed there are only two people in the world. Each persons production possibilities frontier also represents his or her consumption possibilities when

They choose not to trade with one another

Which is the best statement about the way economists study the economy?

They devise theories, collect data, then analyze the data to test the theories.

Which of the following changes would not shift the supply curve for a good or service

a change in the price of the good or service

Currently you purchase 6 packages of hot dogs a month. You will graduate from college in December and you will start a new job in January. You have no plans to purchase hot dogs in January. For you, hot dogs are

an inferior good

Currently you purchase ten frozen pizza per month. You will graduate from college in December, and you will start a new job in January. You have no plans to purchase frozen pizzas in January. For you, frozen pizzas are

an inferior good

The outer loop of the circular-flow diagram represents the flow of dollars in the economy. Which of the following is not measured in dollars and therefore does not appear on the outer loop?

capital

Making rational decisions "at the margin" means that people

compare the marginal costs and marginal benefits of each decision

Economists make assumptions to

focus their thinking on the essence of the problem at hand

Suppose the United States has a comparative advantage over Mexico in producing pork. The principle of comparative advantage asserts that

in order to consume beyond its PPF, the United States should produce more pork than what it requires and export some of it to Mexico.

Warrensburg is a small college town in Missouri. At the end of August each year, the market demand for fast food in Warrensburg

increases

absolute advantage is found by comparing different producers

input requirements per unit of output

A demand curve illustrates the

negative relationship between price and quantity demanded

A competitive market is a market in which

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

Where can an economy not produce?

outside its production possibilities frontier

While pollution regulations yield the benefit of a cleaner environment and the improved health that comes with it, the regulations come at the cost of reducing the incomes of the regulated firms' owners, workers, and customers. This statement illustrates the principle that

people face tradeoffs

A supply schedule is a table that shows the relationship between

price and quantity supplied

When an economist points out that you and millions of other people are interdependent, he or she is referring to the fact that we all

rely upon one another for the goods and services we consume.

The phenomenon of scarcity stems from the fact that

resources are limited

Economics deals primarily with the concept of

scarcity

As a student, Jordyn spends 40 hours per week writing term papers and completing homework assignments. On one axis of her production possibilities frontier is measured the number of term papers written per week. On the other axis is measured the number of homework assignments completed per week. Jordyn's production possibilities frontier is a straight line if

she can switch between writing term papers and completing homework assignments at a constant rate.

Workers at a bicycle assembly plant currently earn the mandatory minimum wage. If the federal government increases the minimum wage by $1.00 per hour, then it is likely that the

supply of bicycles will shift to the left.

Workers at a bicycle assembly plant currently make minimum wage. If the federal government increases the minimum wage by $1.00 an hour it is likely that the

supply of bicycles will shift to the left.

The production possibilities frontier illustrates

the combinations of output that an economy can produce

Suppose a nation is currently producing at a point inside its production possibilities frontier. We know that

the nation is not using all available resources or is using inferior technology or both.

When computing the opportunity cost of attending a professional football game as a spectator, you should include

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

If an economist develops a theory about international trade based on the assumption that there are only two countries and two goods,

the theory can be useful in helping economists understand the complex world of international trade involving many countries and many goods.