Econ 103: HW & Quiz Answers
Adapt the graph below to show an increase in production technology for O only but not for W. (the graph moved up and towards O) so the graph shifted to the right) -True -False
False
Adapt the graph below to show an increase in production technology for O only but not for W. (the graph only shifted up to the W, so the arch is larger but ended in the same place on the O graph) -True -False
False
As this economy reallocates resources away from producing oranges while increasing the production wheat, they will experience decreasing opportunity costs of producing wheat. -True -False
False
As x increases, y decreases at a decreasing rate, reaches a minimum and then increases at an increasing rate -True -False
False
As x increases, y decreases at an increasing rate -True -False
False
Building on the previous question (11), if this economy did increase the production of medical care as described, this would be illustrated as sliding along the PPF to show more medical care production, but there would not be any resulting opportunity cost from this change. -True -False
False
If Japan has an absolute advantage in the production of an item, it must also have a comparative advantage in the production of that item. -True -False
False
If each country specialized in producing the good they have a comparative advantage in, mutually beneficial trade between these two countries could not occur at the exchange rate of 2/3 of a camera for each 1 cell phone. -True -False
False
If the price in a market is below the equilibrium price, we would expect to see the price rise in order to eliminate the surplus in the market. -True -False
False
If there is a health warning that eating red meat increases the risk of heart attack, then we would expect to see an increase in the price of hamburger coupled with a decrease in the quantity of hamburger bought and sold as the market for hamburgers adjusts to restore equilibrium after this shock. -True -False
False
If there is an increase in supply accompanied by a decrease in demand for coffee, then there will be a decrease in both the equilibrium price and quantity in the market for coffee. -True -False
False
If two goods are related as complement goods then a rise in the price of one good would cause an increase in the demand for the other good. -True -False
False
In exploring the responsiveness of Qd to a price increase for gasoline that arises due to an OPEC supply reduction, we would expect to see a large price increase coupled with a small quantity decrease if the demand curve were drawn shallow, while we would expect to see a small price increase coupled with a large quantity decrease if the demand curve were drawn steep. -True -False
False
It would never make sense for Monique to choose to live and work in Superior because the opportunity cost is too high. -True -False
False
Thailand has a comparative advantage in producing cameras while neither country has an absolute advantage in producing cell phones. -True -False
False
The definition, (c) the amount of a good that buyers are willing and able to purchase at a given price, is best associated with the term demand, while the definition, (j) the relationship between the price of a good and the quantity demanded of that good, is best associated with the term quantity demanded. -True -False
False
The opportunity cost of attending college for a male between the ages of 18-20 is $8,000. -True -False
False
The resulting disequilibrium caused by the drought shock would be a shortage in the ground beef market which would put upward pressure on the P leading sellers to respond by producing less ground beef at the new higher price. -True -False
False
The slope for the Mexico PPF is 1/4 indicating that 4 units of guns are given up for each 1 unit of butter produced. -True -False
False
The slope for the US PPF is 1/3 indicating that 3 units of guns are given up for each 1 unit of butter produced. -True -False
False
The statement, (a) free trade causes the loss of high paying manufacturing jobs and reduces unskilled wages for the US, is correctly classified as a normative economic statement. -True -False
False
The statement, (b) the government should limit free trade to save high paying US jobs, is correctly classified as a positive economic statement. -True -False
False
The supply curve illustrates all of the possible combinations of goods and services that an economy could produce at a point in time with the available resources and technology. -True -False
False
When the price of a good is below the equilibrium price, it causes a surplus, while if there is a shortage of a good, the price of that good will tend to decline. -True -False
False
Adapt the graph below to show an increase in production technology for O only but not for W. (the graph shifted to the right and ended in the same place on the W graph, so the arch got wider) -True -False
True
As x increases, y decreases at a constant rate -True -False
True
As x increases, y increases at a constant rate -True -False
True
As x increases, y increases at a decreasing rate, reaches a maximum and then decreases at an increasing rate -True -False
True
Based on all of the examples from question 8 on HW1 and the lecture material presented/discussed on this topic, all valid normative economic analysis should flow out of sound positive economic analysis. -True -False
True
Given the drought shock we would expect to see a ↓ S in the market for ground beef meaning the S curve will shift to the left. -True -False
True
If Monique values the solitude and access to outdoor recreation activities available in Superior at more than $20,000, then it would be rational for her to choose to live and work in Superior. -True -False
True
If a country has a comparative advantage in the production of a good, it does not mean that this country also has an absolute advantage in producing that good. -True -False
True
If an early freeze destroys a large portion of the wheat crop, then we would expect to see an increase in the price of wheat coupled with a decrease in the amount of wheat bought and sold as the market for wheat adjusts to restore equilibrium after this shock. -True -False
True
If the price of microchips (an important component used in the production of a computer) decreases, then we would expect to see a decrease in the price of computers coupled with an increase in the quantity of computers bought and sold as the market for computers adjusts to restore equilibrium after this shock. -True -False
True
If we see an aging population in the US then we would expect to see an increase in demand for health care as tastes and preferences for society shift to favor medical care (older people have more health problems). As this happens we would also expect to see increased production of medical care in response to the rising price of medical care as the market for medical care adjusts to restore equilibrium after this shock. -True -False
True
In the market for ground beef after the adjustment to the shock, the new P will be higher and the new Q will be lower compared to the initial equilibrium before the shock. -True -False
True
It is impossible for this economy to produce 160 tons of oranges and 120 tons of wheat at this time. However, over time with more resources or advances in technological capabilities this economy could possibly produce this combination of output (160 tons oranges, 120 tons wheat) in the future. -True -False
True
Scarcity means that there are not enough resources available to meet societies' many and often competing wants and desires (needs). -True -False
True
The definition, (g) the claim that, all else equal, the quantity demanded of a good falls when the price of that good rises, is best associated with the term law of demand, while the definition, (e) the claim that, all else equal, the quantity supplied of a good rises when the price of that good rises, is best associated with the term law of supply. -True -False
True
The definition, (l) a situation in which the price has reached a level such that the amount of a good that buyers and sellers wish to transact is the same and therefore there is no tendency for the price to rise or fall, is best associated with the term equilibrium, while the definition, (h) a situation in which, at a given price, the quantity demanded is greater than quantity supplied for some good, is best associated with the term shortage. -True -False
True
The equilibrium price and quantity in a competitive market are said to be efficient because there are no additional transactions that could benefit both a buyer and a seller. -True -False
True
The horizontal intercept for the Mexico PPF indicates that 120 units of butter could be produced if 0 units of guns were produced. -True -False
True
The law of supply states that an increase in the price of a good increases the quantity supplied of that good. -True -False
True
The marginal benefit associated with consuming the 50th unit of pizza is $5 and can be seen as the height of the demand curve at Q=50. -True -False
True
The opportunity cost for this economy to move from possibility d to possibility e would be giving up the production of 1.5 tons of oranges for each ton of wheat produced. -True -False
True
The opportunity cost of attending college is greater for a male between the ages 28-30 compared to a male between the ages of 18-20. -True -False
True
The slope = -2 for the equation (b) P = 100 - 2Q. -True -False
True
The slope = 1 for the equation (d) P = 25 + Q -True -False
True
The slope of any PPF always represents the opportunity cost of producing one unit of the good on the horizontal axis so in this example for both the US and Mexico, the slope indicates the opportunity cost of producing one unit of butter. -True -False
True
The statement, (b) The impact of monetary policy on the rate of inflation, is correctly classified as a macroeconomic statement. -True -False
True
The statement, (i) the impact of government mandated increased automobile fuel efficiency standards on the production decisions made by General Motors Corporation, is correctly classified as a microeconomic statement. -True -False
True
The total cost associated with producing 50 units of pizza is $125 and can be seen as the area under the supply curve from Q=0 to Q=50. -True -False
True
The vertical intercept = 10 for the equation (a) P = 10 - Q. -True -False
True
The vertical intercept = 50 for the equation (c) P = 50 + 2Q. -True -False
True
The vertical intercept for the US PPF indicates that 100 units of guns could be produced if 0 units of butter were produced. -True -False
True
The vertical intercept of the China PPF indicates that they could produce 60 cameras if they produced 0 cell phones, while the slope of the Thailand PPF indicates that they must give up the production of 1/2 of a camera for each 1 cell phone produced. -True -False
True
Typically, the opportunity cost of attending college will never be lower than right after high school graduation. -True -False
True