Quiz 1

Which of the following is a positive microeconomics statement?

Ford Motor Company's new advertising campaign ended up hurting General Motors's sales.

Consider two points on a PPF: point A, at which there are 500 oranges and 100 apricots, and point B, at which there are 501 oranges and 95 apricots. If the economy is currently at point B, the opportunity cost of moving to point A is

1 orange.

Consider two points on the PPF: point A, at which there are 50 apples and 40 pears, and point B, at which there are 46 apples and 41 pears. If the economy is currently at point A, the opportunity cost of moving to point B is

4 apples.

Which of the following statements is true?

If scarcity did not exist, neither would a PPF.

Which of the following is an example of a positive economic statement?

If you drop a ball from the top of a building, it will fall to the ground.

It usually takes less time to buy a six-pack of Pepsi, a loaf of bread, and a bag of potato chips at a small convenience store (such as 7-Eleven) than at a large, full-service grocery store. Which of the following persons is most likely to buy these items at a convenience store?

a person with a high opportunity cost of time

An advance in technology in the production of good X causes

a rightward shift in the supply curve for good X.

The fundamental reason why most supply curves are upward sloping is that

higher production raises the opportunity costs of production and so price must rise to induce more output.

Oil producers expect that oil prices next year will be higher than oil prices this year. As a result, oil producers are most likely to

hold some oil off the market this year, thus shifting the present supply curve of oil leftward.

Microeconomics is the branch of economics that deals with

human behavior and choices as they relate to relatively small units --- an individual, a firm, an industry.

Minerals, water, and forests are all considered to be part of the broad resource category known as

land

Oil producers expect that oil prices next year will be lower than oil prices this year. As a result, oil producers are most likely to

place more oil on the market this year, thus shifting the present supply curve of oil rightward.

Attempts to determine "what is" are part of __________ economics.

positive

A demand schedule is a numerical tabulation of the ___________________ of a good at different ____________________.

quantity demanded; prices

An increase in the number of buyers in a particular market for a good will result in a ___________________ for that good.

rightward shift in the demand curve

The condition in an economy that makes a "rationing device" a necessity is:

scarcity exists.

A PPF can

shift inward or outward.

If people begin to favor science fiction novels to a greater degree than previously, the demand curve for science fiction novels

shifts rightward.

As the price of good A rises as a result of a decrease in the supply of good A, the demand for good B rises. Therefore, goods A and B are

substitutes for one another.

"As the price of apples goes up, the demand for apples goes down." The author of this statement

uses the word "demand" when he should use the words "quantity demanded."

Here are three things you could do if you do not attend your economics class: watch television with some friends (you value this at $25), read a good book (you value this at $17), or go to work (you could earn $20 during the economics class). The opportunity cost of going to your economics class is

$25, because this is the highest valued alternative forfeited.

Which of the following is a normative macroeconomics statement?

The central bank should increase the nation's money supply.

Which of the following is a positive macroeconomics statement?

The increase in the nation's money supply helped push the nation's unemployment rate down in the short run.

Suppose that good X is one of the more heavily subsidized industries in the United States. Suppose further that as a result of intense lobbying from health-related concerns, Congress repeals the subsidies on good X. Which of the following scenarios would likely occur?

The supply curve for good X would shift leftward, since it would now cost more to produce each level of output.

If the workers of a firm successfully negotiate an increase in wages, which of the following is most likely to happen?

The supply curve of the product the firm produces shifts leftward.

Which of the following is true about the relationship between price and quantity supplied?

There is usually a direct relationship between price and quantity supplied.

The latest Taylor Swift album is available to be downloaded for $12.99. Is this price a rationing device?

Yes, because the album will only be purchased by people who are willing and able to pay $12.99.

Which of the following will not shift a supply curve?

a change in the good's own price

If increasingly more units of good Y must be given up as each successive unit of good X is produced, then the PPF for these two goods is

a downward-sloping curve that is bowed outward.

Consider the following combinations of guns and butter that can be produced: 0 guns, 20,000 units of butter; 5,000 guns, 15,000 units of butter; 10,000 guns, 10,000 units of butter; 15,000 guns, 5,000 units of butter; 20,000 guns, 0 units of butter. The PPF between guns and butter is

a downward-sloping straight line.

If there is always a three-for-one tradeoff between goods X and Y, then the PPF between X and Y is

a downward-sloping straight line.

If Max's demand for hot dogs falls as his income rises, then for Max hot dogs are

an inferior good.

The point where the PPF intersects the vertical axis is

attainable and productive efficient.

Points that lie inside (or below) the PPF are

attainable and productive inefficient.

As the price of good X rises as a result of a decrease in supply, the demand for good Y falls. Therefore, goods X and Y are

complements to one another.

Both country 1 and country 2 are located on their respective production possibilities frontiers (PPFs) for consumer goods and capital goods, but country 1 produces twice the output of both types of goods compared to country 2. It follows that

country 1's PPF lies further to the right than country 2's PPF.

The law of supply states that price and quantity supplied are

directly related, ceteris paribus.

What is the most prominent rationing device you will likely find at your campus bookstore?

dollar price

The opportunity cost of attending college is

the highest valued alternative one forfeits to attend college.

The higher the opportunity cost of attending college,

the less likely an individual will go to college.

Which of the following is a microeconomics topic?

the study of how prices are determined in the computer industry

Resource X is necessary to the production of good Y. If the price of resource X rises,

the supply curve of Y shifts leftward.

Suppose the government decides that every family should own its own home. To bring this about, the government decides to subsidize the home-construction industry by giving the home-construction companies $10,000 for every house that they build. As a result of this,

the supply curve of new houses would shift rightward, since builders would be willing to produce and sell more houses at each given price.