Test 1 (Chapters 1 - 4)

Refer to Table 3-9. Which of the following points would not be on Jim's production possibilities frontier, based on a 40-hour week?

60 computers set up, 12 computers tested

Refer to Table 3-1. What is Zardia's opportunity cost of producing one pound of beef?

2/3 bushel of wheat

A leftward shift of a supply curve is called a(n)

decrease in supply

Suppose the US and Mexico both produce semiconductors and auto parts and the US has a comparative advantage in semiconductors while Mexico has a comparative advantage in auto parts. Also suppose the US has an absolute advantage in the production of both semiconductors and auto parts. The US should

export semiconductors to Mexico and import auto parts from Mexico.

The producer that requires a smaller quantity of inputs to produce a certain amount of a good, relative to the quantities of inputs required by other producers to produce the same amount of that good

has an absolute advantage in the production of that good

Equilibrium quantity must increase when demand

increases and supply does not change, when demand does not change and supply increases, and when both demand and supply increase.

When quantity demanded decreases at every possible price, the demand curve has

shifted to the left.

An example of a perfectly competitive market would be the market for

soybeans

The forces that make market economies work are

supply and demand.

A surplus exists in a market if

the current price is above its equilibrium price

A downward-sloping demand curve illustrates

the law of demand.

An economy's production possibilities frontier is also its consumption possibilities frontier

when the economy is self-sufficient.

Refer to Figure 4-18. What is the equilibrium price in this market?

$10

Refer to Figure 4-11. If these are the only two sellers in the market, then the market quantity supplied at a price of $4 is

14 units.

Refer to Table 3-1. Assume that Andia and Zardia each has 360 minutes available. If each person divides his time equally between the production of wheat and beef, then total production is

21 bushels of wheat and 33 pounds of beef

Refer to Table 3-1. Which of the following combinations of wheat and beef could Zardia not produce in one 10-hour day?

25 bushels of wheat and 25 pounds of beef

Refer to Table 3-1. What is Andia's opportunity cost of producing one pound of beef?

3/5 bushel of wheat

Suppose that a worker in Cornland can grow either 40 bushels of corn or 10 bushels of oats per year, and a worker in Oatland can grow either 5 bushels of corn or 50 bushels of oats per year. There are 20 workers in Cornland and 20 workers in Oatland. If the two countries do not trade, Cornland will produce and consume 400 bushels of corn and 100 bushels of oats, while Oatland will produce and consume 60 bushels of corn and 400 bushels of oats. If each country made the decision to specialize in producing the good in which it has a comparative advantage, then the combined yearly output of the two countries would increase by

340 bushels of corn and 500 bushels of oats.

Refer to Table 4-1. If the market consists of Michelle, Laura, andHillary and the price falls by $1, the quantity demanded in the market increases by

5 units.

Refer to Table 3-9. The number of minutes needed by Barb to test a computer is

60

Refer to Table 3-16. The values in the table represent the amounts of lemonade and pizzas that Alice and Betty can produce in one week without and with specialization and trade. What are Alice and Betty's gains from specialization and trade?

Alice gains 7 pitchers of lemonade and 10 pizzas, while Betty gains 13 pitchers of lemonade and 10 pizzas.

In a market economy, supply and demand are important because they

All of the above are correct. (play a critical role in the allocation of the economy's scarce resources; determine how much of each good gets produced; can be used to predict the impact on the economy of various events and policies.)

Which of the following statements is correct? (A. Buyers determine supply, and sellers determine demand.)(B. Buyers determine demand, and sellers determine supply.)(C. Buyers determine both demand and supply.)(D. Sellers determine both demand and supply.)

Buyers determine demand, and sellers determine supply.

Which of the following is not an example of a market?

In the United States, a sick person cannot legally purchase a kidney.

Suppose Jim and Tom can both produce baseball bats. If Jim's opportunity cost of producing baseball bats is lower than Tom's opportunity cost of producing baseball bats, then

Jim has a comparative advantage in the production of baseball bats.

Refer to Figure 4-10. Which of the following would cause the supply curve to shift from Supply A to Supply C in the market for tennis racquets?

a decrease in the price of tennis racquet strings

Trade can make everybody better off because it

allows people to specialize according to comparative advantage.

Refer to Figure 4-1. The movement from point A to point B on the graph shows

an increase in quantity demanded.

If the demand for a product increases, then we would expect equilibrium price

and equilibrium quantity both to increase.

A competitive market is one in which there

are so many buyers and so many sellers that each has a negligible impact on the price of the product.

Suppose you make jewelry. If the price of gold falls, then we would expect you to

be willing and able to produce more jewelry than before at each possible price.

Specialization and trade are closely linked to

comparative advantage

When describing the opportunity cost of two producers, economists use the term

comparative advantage.

A competitive market is a market in which

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

A demand schedule is a table that shows the relationship between

price and quantity demanded.