Unit 1 Progress Check- AP MACRO

Claire is an economist who can earn $150 per hour. She is also an excellent chef who can cook three times as fast as the best chef in the area, whose hourly wage is $20 per hour. Which of the following is a correct economic statement? a. Claire has a comparative advantage in economics so she should specialize in economics and hire the chef to cook for her. b. Claire has an absolute and comparative advantage in both economics and cooking, so she work as an economist and as a chef. c. Claire is three times faster than any chef so she could give up economics to become a chef. d. When chefs work for economists, they should charge $150 per hour instead of $20 per hour. e. Because Claire is an excellent chef, when the best chef works for Claire, she should pay the chef only 1/3 the hourly wage.

a. Claire has a comparative advantage in economics so she should specialize in economics and hire the chef to cook for her.

Which of the following is true for all economies regardless of their economic system? a. Every economy must determine what to produce and how it produces goods and services b. Every economy must find a way to distribute income equally c. Every economy must find ways to privatize markets to maximize efficiency d. Every economy must prevent unemployment through government intervention e. Every economy must open free trade with other economies

a. Every economy must determine what to produce and how it produce goods and services.

Refer to Figure A. At price $20, which of the following would occur? (Disregard the dollar signs on the Quantity axis, those are not dollars....just quantity) a. Shortage of 100 b. Shortage of 150 c. Surplus of 200 d. Surplus of 50 e. Surplus of $100

a. Shortage of 100

The relationship between quantity supplied and price is _____ and the relationship between quantity demanded and price is _____. a. direct, inverse b. inverse, direct c. inverse, inverse d. direct, direct e. strong, weak

a. direct, inverse

If the cost of producing cell phones increases, the price and equilibrium quantity of cell phones will most likely change in which of the following ways? a. product supply curve of X will shift to the right. b. product demand curve of X will shift to the right. c. product supply curve of X will shift to the left. d. product demand curve of X will shift to the left. e. both the supply and demand of X will increase

a. product supply curve of X will shift to the right.

Other things equal, if the price of a key resource used to produce product X falls, the: a. product supply curve of X will shift to the right. b. product demand curve of X will shift to the right. c. product supply curve of X will shift to the left. d. product demand curve of X will shift to the left. e. both the supply and demand of X will increase

a. product supply curve of X will shift to the right.

In which way does a straight-line production possibilities curve differ from a concave production possibilities curve? a. A straight-line production possibilities curve has a decreasing opportunity cost. b. A straight-line production possibilities curve has a constant opportunity cost. c. A straight-line production possibilities curve has an increasing opportunity cost. d. A straight-line production possibilities curve does not show opportunity cost e. Upward-sloping production possibilities curve.

b. A straight-line production possibilities curve has a constant opportunity cost.

When the government establishes a binding price floor on a good or service then there will be a. An increase in demand for the good or service b. A surplus because of the quantity demanded will decrease c. A shortage because the quantity supplied will decrease d. No incentive to place a tax on the good or service e. A decrease in the price once the market adjusts

b. A surplus because of the quantity demanded will decrease

Atlantis can produce either 2 tons of grain or 4 cars with 10 units of labor. Zoltar can produce either 5 tons of grain or 25 cars with 10 units of labor. Based on this information, which of the following is true? a. Atlantis has an absolute advantage in the production of grain, while Zoltar has a comparative advantage in the production of grain. b. Atlantis has a comparative advantage in the production of grain, while Zoltar has a comparative advantage in the production of cars. c. Atlantis has an absolute advantage in the production of grain, while Zoltar has a comparative advantage in the production of cars. d. Atlantis has a comparative disadvantage in the production of both goods. e. Neither country has a comparative advantage in the production of either good.

b. Atlantis has a comparative advantage in the production of grain, while Zoltar has a comparative advantage in the production of cars.

According to the theory of comparative advantages, a good should be produced where a. Its explicit costs are least. b. Its opportunity costs are least. c. The cost of real resources used is least. d. Production can occur with the greatest increase in employment. e. Production can occur with the lowest increase in employment.

b. Its opportunity costs are least.

It is most accurate to say a. Normative statements focus on facts while positive statements involve value judgments. b. Normative statements involve value judgements while positive statements focus on facts. c. Normative and positive statements both focus on facts and neither involve value judgments. d. Normative and positive statements both involve value judgements and neither focuses on facts. e. Normative statements involve value judgements and focus on facts while positive statements only focus on facts.

b. Normative statements involve value judgements while positive statements focus on facts.

If the production possibilities curve is concave from the origin (or bowed out), then economists say that a. Resources are scarce in the economy b. Resources are not equally suited for the production of both goods c. Economic growth is occurring in the economy d. Resources are being inefficiently used in the economy e. Resources are equally suited for the production of either good

b. Resources are not equally suited for the production of both goods

When making a decision, the next best alternative is called a. The production possibilities b. The opportunity cost c. Scarcity d. The absolute advantage e. Efficiency

b. The opportunity cost

Economists are likely to disagree most often over a. opportunity costs b. normative statements c. positive statements d. normative and positive statements e. they seldom disagree over either normative or positive statements

b. normative statements

Which of the following is the best example of physical capital? a. A $100,000 business loan from a bank b. A business hiring 10,000 workers at a factory c. A truck for a delivery company d. An oven for a family of four e. An increase in construction jobs

c. A truck for a delivery company

Which of the following would cause a leftward shift of the production possibilities curve? a. An increase in unemployment b. An increase in inflation c. An increase in capital equipment d. A decrease in consumer demand e. A decrease in working-age population

c. An increase in capital equipment

Which of the following would cause an outward or rightward shift in the production possibilities curve? a. An increase in unemployment b. An increase in inflation c. An increase in capital equipment d. A decrease in natural resources e. A decrease in the number of workers

c. An increase in capital equipment

If the price of cars significantly increases, then the a. Supply of cars will increase b. Supply of auto repair shops will decrease c. Quantity supplied of cars will increase d. The demand for cars will decrease e. Car producers will find it more profitable to produce trucks

c. Quantity supplied of cars will increase

If demand for mp3 players decreases when the price of mobile phones decreases, we can say that cell phones and mp3 players are a. Normal goods b. Inferior goods c. Substitute goods d. Complementary goods e. Unrelated due to the substitution effect

c. Substitute goods

Which of the following will NOT cause the demand for video games to change? a. a change in the price of a close substitute b. a change in consumer incomes c. a change in the price of video games d. a change in consumer tastes e. a change in consumer preferences

c. a change in the price of video games

A point outside the production possibilities curve would represent a. An efficient use of resources b. Future output once producers become more efficient c. An inefficient use of resources d. A combination that cannot be achieved due to scarcity e. Full employment of resources in the economy

d. A combination that cannot be achieved due to scarcity

The crucial problem of economics is a. Establishing a fair tax system. b. Providing social goods and services c. Developing a price mechanism that reflects the relative scarcities of products and resources. d. Allocating scarce productive resources to satisfy wants e. Enacting a set of laws that protects resources from overuse.

d. Allocating scarce productive resources to satisfy wants

Which of the following statements is correct? :a. A decrease in the price of X will increase the demand for substitute product Y b. A decrease in income will decrease the demand for an inferior good c. An increase in income will decrease the demand for a normal good d. An increase in the price of X will decrease the demand for complementary product Y e. An increase in the price of X will increase the demand for complementary product Y

d. An increase in the price of X will decrease the demand for complementary product Y

An increase in which of the following would cause an outward shift of the production possibilities curve for consumer goods and capital goods? a. An increase in the demand for consumer goods b. An increase in taxes on consumers c. A decrease in unemployment d. An increase in the resources to produce capital goods e. The efficient production of consumer goods

d. An increase in the resources to produce capital goods

Which of the following statements is correct? a. If demand increases and supply decreases, equilibrium price will fall. b. If the demand and the supply both fall at the same time, quantity will be indeterminate c. If demand decreases and supply increases, equilibrium price will rise. d. If supply increases and demand decreases, equilibrium price will fall. e. If supply falls and demand remains constant, equilibrium price will fall.

d. If supply increases and demand decreases, equilibrium price will fal

Which of the following best explains why many U.S. economists support free trade? a. Workers who lose their jobs due to free trade can collect unemployment compensation. b. It is more important to reduce global inflation than to reduce domestic unemployment. c. Workers are not affected by free trade since only domestic businesses suffer. d. The long-run gains to consumers and some producers exceed the losses to other producers. e. Government can protect domestic industries while encouraging free trade.

d. The long-run gains to consumers and some producers exceed the losses to other producers.

An economist for a computer company predicts that a rise in consumer incomes will increase the demand for consumers. This prediction assumes that: a. there are many substitutes for computers b. there are many complementary goods for computers c. there are few goods that are substitutes for computers d. computers are normal goods e. computers are an inferior good

d. computers are normal goods

Assuming Ramen noodles are an inferior good, a decrease in income will shift the a. supply curve for Ramen noodles to the left. b. supply curve for Ramen noodles to the right. c. demand curve for Ramen noodles to the left. d. demand curve for Ramen noodles to the right e. there is no shift

d. demand curve for Ramen noodles to the right

A leftward shift of a supply curve for avocados (a normal good) might be caused by: a. an improvement in avocado picking techniques b. a decrease in the wages that must be paid to avocado pickers c. an increase in consumer incomes d. some avocado farmers leaving the market e. a news report stating that avocados are associated with good health

d. some avocado farmers leaving the market

Refer to Figure A. What would be the effect of a price floor at $60? (disregard the dollars on the quantity axis, those are not dollars) a. It would ineffective b. A shortage of 50 c. Quantity demanded would increase d. A shortage of 100 e. A surplus of 100

e. A surplus of 100

Which of the following goods would be considered scarce? I. Education II. Gold III. Time a. I only b. II only c. III only d. I and II only e. I, II, and III

e. I, II, and III

If Mike can make 2 surfboards per hour or 10 bikes per hour and Joe can produce 4 surfboards per hour and 12 bikes. Which of the following is true? a. Mike has an absolute advantage in the production of surfboards b. Mike's opportunity cost for producing one bike is 5 surfboards c. Joe has a comparative advantage in the production of both surfboards and bikes d. Mike has a comparative advantage in the production of surfboards e. Joe's opportunity cost for producing one surfboard is 3 bikes

e. Joe's opportunity cost for producing one surfboard is 3 bikes

Which of the following must be true if an individual's next best alternative to going to the beach is studying for an economics exam? a. They will decide to study for the exam b. The opportunity costs is seeing their friends at the beach c. The person prefers playing volleyball at the beach to study for the exam d. The opportunity cost of going to the beach is all the other things they could have done e. The opportunity cost of going to the beach is being better prepared for the exam

e. The opportunity cost of going to the beach is being better prepared for the exam