Chapter 14-17
Refer to Exhibit 2-8. For Maria, the opportunity cost of producing one unit of good Y is ___________ unit(s) of good X.
1
If the absolute price of a new car is $30,000 and the relative price of a laptop computer in terms of cars is 1/30 of a car, it follows that the absolute price of the laptop is
1,000.
Refer to Exhibit 20-1. The marginal utility of the third plum is
10 utils.
Refer to Exhibit 20-1. The marginal utility of the second plum is
12 utils
Refer to Exhibit 34-10. Danielle's opportunity cost of mowing the lawn is
2.00 clean houses.
Suppose an economy can produce a maximum of 10 units of good X and the opportunity cost of 1X is always 2Y. What is the maximum number of units of good Y the economy can produce?
20
Refer to Exhibit 2-1. The opportunity cost of moving from point B to A is
20,000 units of butter.
Refer to Exhibit 2-1. The opportunity cost of moving from point A to B is
20,000 units of guns.
Refer to Exhibit 3-14. At a price of $12, there is a ____________ unit ____________ of good X.
230; shortage
Refer to Exhibit 20-7. For graph (3), if the price of Y is $200, the price of X is
25.
Refer to Exhibit 2-6. Which graph depicts a technological breakthrough in the production of good X only?
3
Refer to Exhibit 3-16. Which of the graphs best represents the market for theater tickets that are already sold out on the day of the performance?
3
Refer to Exhibit 1-2. According to the data provided in this table, what is the slope of the line between points C and D, if these data were graphed with X on the horizontal axis and Y on the vertical axis?
3.00
If the price of good X is $100 and the price of good Y is $25, it follows that the relative price of one unit of good X is _____________ unit(s) of good Y.
4.00
Refer to Exhibit 34-9. In the no specialization-no trade case, suppose country X produces and consumes 100 units of good A and 20 units of good B. Country Y produces and consumes 20 units of good A and 60 units of good B. If the two countries specialize and trade, and the actual amounts traded are 125 units of good A for 25 units of good B, how many more units of good B will country Y consume by specializing and trading?
5
Refer to Exhibit 1-1. The student whose study habits are illustrated in this diagram will maximize the net benefits of studying when she has studied __________ hours.
6
Suppose Will receives 190 utils from consuming one banana and 280 utils from consuming two bananas. What is the marginal utility of the second banana?
90 utils
Refer to Exhibit 2-5. Which of the following labeled points are productive efficient?
A, B, C, D, and E
Which of the following founders of the United States used the infant-industry argument to support trade restrictions?
Alexander Hamilton
Rich has $100,000 and Poore has $1,000. Which of these statements is most strongly supported by the theory of consumer choice?
An extra dollar given to Rich is worth less to him than his 100,000th dollar.
Refer to Exhibit 30-5. If a positive externality exists, then the external benefits associated with the positive externality equal the distance between points ____________ and the socially optimal output is
D and B; Q2.
Refer to Exhibit 3-9. A large number of immigrants who love to consume X enter the country. An economist would expect a movement in the market for X from
D1 to D2
Which of the following is an example of an externality that has been internalized?
Erica Evans, a beekeeper, decides to keep more bees because her neighbor, an orchard owner, has agreed to compensate her for the bees' pollination of the orchard.
Economic growth is illustrated by a shift inward (toward the origin) of the PPF.
F
Asymmetric information can exist before, but not after, a transaction.
False
Which of the following statements is true?
If a consumer is in equilibrium, it necessarily follows that he or she is also achieving the greatest total utility.
Refer to Exhibit 4-7. The number of unskilled workers who want to work at the minimum wage is
N2
Through war, many of the factories in country 1 are destroyed and many of its people are killed. As a result, the country's
PPF after the war has probably shifted to the left compared to its PPF prior to the war.
Which of the following statements is true?
Productive inefficiency implies that it is possible to produce more of one good and no less of another, even without additional resources.
Refer to Exhibit 3-15. In Exhibit 3-15,
Q1 doctors are employed at fee F1.
Refer to Exhibit 30-l. If the exhibit represents a negative externality situation, the benefit of expanding output from Q2 to Q1 is the area of
Q2BAQ1
Economists sometimes refer to the resource category land as natural resources.
T
The law of increasing opportunity cost helps to explain why PPF's are typically bowed-outward.
T
With respect to a PPF for goods X and Y, productive efficiency implies that in order to produce more of good X there will be a reduction in production of good Y.
T
Maria lives next door to Alice. Alice regularly plays loud music, which often disturbs Maria. Maria went over to Alice's house yesterday and asked her to turn down her music because loud music adversely affects her. Alice has complied. Which of the following best describes the economists' view of what has happened?
The marginal social costs of loud music were greater than the marginal private costs of loud music and the problem was solved by Maria persuading Alice to internalize her (Maria's) external costs.
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
Refer to Exhibit 2-7. For which of the following is the statement "In order to get more military goods, we have to forfeit some civilian goods" true?
a movement from B to A
Equilibrium and disequilibrium
a, b and c
The effects of a quota include:
a, b, and c
Some racing horse breeders keep a few of their foals and sell the others. Generally, they put the poorest quality foals up for sale early in the season. Buyers have limited information about the foals up for sale, but they know that the first foals from some breeders will not be good racers. Other breeders sell all their foals. Since buyers cannot know which breeders are keeping back their good foals, they are suspicious of all foals offered for sale early in the season, lowering the sale prices. Breeders who sell all their foals are therefore forced to hold back their better foals until later in the season, to get true market prices for them. The market for foals is therefore subject to the
adverse selection problem.
Refer to Exhibit 3-10. $20 is the
all of the above
Hank goes to a Korean restaurant for the first time and he has no prior knowledge of Korean. He orders the Daenjang Chigae prepared medium hot and hopes for the best. Here an information __________ is __________ a market outcome.
asymmetry; not affecting
The point where the PPF intersects the vertical axis is
attainable and productive efficient
When marginal private cost is equal to marginal social cost,
b or d
An advance in technology commonly refers to the ability to produce
both a and b
When economists speak of scarcity, they are referring to the
condition in which people's wants outstrip the limited resources available to satisfy those wants.
Refer to Exhibit 20-1. In this example, marginal utility
constantly diminishes
Economists use the ceteris paribus assumption primarily in order to
designate what they believe is the correct relationship between two variables.
Refer to Exhibit 1-2. Based on the data provided in this table, what type of relationship exists between variables X and Y?
direct
Refer to Exhibit 1-3. Based on the data provided in this table, if these data were plotted in a two-variable diagram the result would be a ______________ sloping _____________.
downward; (nonlinear) curve
Which of the following is definitely not a nonexcludable public good?
elementary education
Suppose that for a given good demand decreases and supply increases at the same time. If demand decreases by a greater amount than supply increases, then equilibrium price __________ and equilibrium quantity __________ for that good.
falls; falls
Refer to Exhibit 34-1. Country A is the lower opportunity cost producer of
good X
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.
Negative externalities arising from the production of a good
impose costs on third parties
A decrease in the expected price of corn would likely do the following to the current supply and demand for corn:
increase the supply, but decrease the demand.
Refer to Exhibit 34-3. The world price is PW. If a tariff is imposed, the price rises to PW + T. Because of the tariff, producers' surplus is __________ by an amount equal to the area of __________.
increased; 1
Suppose that a tariff is imposed on imported cheese. This will have the effect of __________ the price of cheese, __________ consumers' surplus, and __________ producers' surplus.
increasing; decreasing; increasing
A good is nonrivalrous in consumption if
its consumption by one person does not reduce its consumption by others.
The study of an economy's price level is explicitly a part of
macroeconomics
A negative externality exists when
marginal social costs are greater than marginal private costs.
If a person's income and the prices of both goods all rise by the same percentage, then her budget constraint
moves outward away from the origin, and its slope remains the same.
Within the production possibilities frontier (PPF) framework, choice is depicted by the
need to select among the points making up the PPF.
If society is experiencing a net social cost from the production of a good, this implies that
negative externalities are involved in the production of this good.
The infant industry argument for trade protectionism holds that
new industries sometimes need a protective environment in which to grow so that they can compete with older, more established foreign competitors.
Suppose Andrea is taking just two courses and is at a point inside (or below) her PPF of grades for those two courses. If Andrea changes her work habits then it is impossible for
none of the above is impossible in this situation
The primary difference between private goods and public goods is that
public goods are nonrivalrous in consumption whereas private goods are rivalrous in consumption.
A tariff on avocadoes ______________ the price of avocadoes, _____________ consumers' surplus for avocado buyers, _______________ producers' surplus of avocado growers and __________________ tariff revenue. Because the loss to _____________ is more than the gain to ___________________, there is a net loss to society.
raises; decreases; increases; generates; consumers; producers and governmen
In all cases, microeconomics deals with
relatively small units in the economy.
Dumping refers to a country
selling a good abroad at a price that is below its cost and lower than the price charged in the domestic market.
Refer to Exhibit 2-2. If PPF2 is the relevant production possibilities frontier, a significant loss of the quantity of resources available could
shift this society to PPF1
Refer to Exhibit 3-14. At a price of $11, there is a ____________ of ____________ units of good X.
shortage; 290
Refer to Exhibit 3-8. A price of $1 will result in a ___________________ in this market which will cause the price of the product to gravitate ________________.
shortage; upward
Suppose the production of a good results in negative externalities. If society produces the output consistent with the intersection of the demand curve and the marginal private cost curve, then
society will incur a net social cost.
Refer to Exhibit 4-6. At a wage of $7, there will be a __________ of unskilled workers equal to __________ thousand workers.
surplus; 20
Suppose the economy goes from a point on its production possibilities frontier (PPF) to a point directly to the left of it. Assuming that the PPF has not shifted, this could be due to
the implementation of a new law that interferes with productive efficiency
Productive efficiency implies
the impossibility of gains in one area without losses in another.
Market failure is a situation in which
the market does not provide the ideal or optimal amount of a particular good.
The government's provision of nonexcludable public goods such as national defense is accepted because
the market fails to produce nonexcludable public goods as a result of the free-rider problem.
Refer to Exhibit 4-3. If price P2 is a price ceiling, then
the price at which exchange legally takes place in the market for good X is P2.
Asymmetric information exists when
the two parties to an exchange differ in what they know about the good being exchanged.
There are two divorce laws, A and B. Under A, it takes only one person to agree to a divorce and the divorce is granted. Under B, it takes two persons to agree to a divorce before it is granted. According to Coase,
there will be the same number of divorces under both laws if transaction costs are zero
In all cases, normative economics deals with
what should be
Which of these goods may be considered rivalrous in consumption and nonexcludable?
wilderness areas
