Econ 104 Exam 2

If Shawn can produce donuts at a lower opportunity cost than Sue, then a) Shawn has a comparative advantage in the production of doughnuts b) Sue has a comparative advantage in the production of donuts c) Shawn should not produce doughnuts d) Shawn is capable of producing more doughnuts than Sue

a) Shawn has a comparative advantage in the production of doughnuts

trade between countries a) allows each country to consume at a point outside its PPF b) limits a country's ability to produce goods & services on its own c) must benefit both countries equally; otherwise, trade is not mutually beneficial d) can best be understood by examining the countries' absolute advantages

a) allows each country to consume at a point outside its PPF

to produces baseball gloves & baseball bats. Steve also produces baseball gloves & baseball bats, but Tom is better at producing both goods. in this case, trade could a) benefits both Steve & Tom b) benefits Steve, but not Tom c) benefits Tom, but not Steve d) benefits neither Steve nor Tom

a) benefits both Steve & Tom

an increase in quantity demanded a) results in movement downward & to the right along a demand curve b) results in the movement upward & to the left across demand curve c) shifts the demand curve to the left d) shifts the demand curve to the right

a) results in movement downward & to the right along a demand curve

a PPF shifts outward when a) the economy experiences technological growth b) the desire of the economy's citizens change c) at least one of the basic principles of economics is violated d) opportunity costs are lessened

a) the economy experiences technological growth

assume the market for tennis ball is perfectly competitive. When one tennis ball producer exits the market a) the price of the tennis ball increases b) the price of the tennis ball decreases c) the price of a tennis ball does not change d) there is no longer a market for tennis ball

a) the price of the tennis ball increases

if buyers & sellers in a certain market are price takers, then individually a) they have no influence on market prices b) they have some influence on market price, but that influence is limited c) buyers will be able to find prices lower than those determined in the market d) sellers will find it difficult to sell all they want to sell at the market price

a) they have no influence on market prices

which of the following changes would NOT shift the supply curve for a good or service? a) a change in production technology b) a change in the price of the good or service c) a change in expectations about the future price of the good or service d) a change in input prices

b) a change in the price of the good or service

if toast & butter are complements, then which of the following would increase the demand of toast? a) a decrease in the price of toast b) a decrease in the price of butter c) an increase in the price of butter d) both a & b are correct

b) a decrease in the price of butter

any point on a country's PPF represents a combination of two goods that an economy a) will never never be able to produce b) can produce using all available resources & technology c) can produce using some portion, but not all, of its resource & technology d) may be able to produce in the future with more resources and/or superior technology

b) can produce using all available resources & technology

the sum of all individual supply curves for a product is called a) total supply b) market supply c) aggregate supply d) total output

b) market supply

each of the following is a determinant of demand except a) tastes b) production in technology c) expectations d) the prices of related goods

b) production in technology

if Miguel expects to earn a higher income next month, he may choose a) save more now & spend less of his current income on goods & services b) save less now & spend more of his current income on goods & services c) decreases his current demand for goods & services d) move along his current demand curves & goods services

b) save less now & spend more of his current income on goods & services

Ford Motor Company announces that next month it will offer $3,000 rebates on new Mustangs. As a result of this info, today's demand curve for Mustang's a) shifts ti the right b) shifts to the left c) shifts either to the right or to the left, but we cannot determine the direction of the shift from the given info d) will not shift, rather, the demand curve for Mustangs will shift to the right next month

b) shifts to the left

Matthew bakes apple pies that he sees the local farmer's market. If the price of apples increases, the a) supply curve for Matthew's pies will increase b) supply curve for Matthew's pies will decrease c) demand curve for Matthew's pies will increase d) demand curve for Matthew's pies will decrease

b) supply curve for Matthew's pies will decrease

if the number of sellers in a market increases, then the a) demand in the market will increase b) supply in the market increase c) supply in that market will decrease d) demand in the market will decrease

b) supply in the market increase

the opportunity cost of an item is a) the number of hours one must work in order to buy one unit of the item b) what you give up to get that item c) always less than the dollar value of the item d) always greater than the cost of producing the item

b) what you give up to get that item

the quantity demanded of a good is the amount that buyers are a) willing to purchase b) willing & able to purchase c) willing, able, & need to purchase d) able to purchase

b) willing & able to purchase

today's people change their expectations about the future. This change a) can cause a movement along a demand curve b) can effect future demand but not today's demand c) can affect today's demand d) cannot affect either today's demand or future demand

c) can affect today's demand

a likely example of complementary goods for most people would be a) butter & margarine b) lawnmowers & automobiles c) chips & salsa d) cola & lemonade

c) chips & salsa

if muffins & bagels are substitutes, a higher price for bagels would result in a(n) a) increase in the demand for bagels b) decrease in the demand for bagels c) increase in the demand for muffins d) decrease in the demand for muffins

c) increase in the demand for muffins

which of the following events would cause a movement upward & to the right along the supply curve for mangos? a) the numbers of sellers of mangos would increase b) there is an advance in technology that reduces the cost of producing mangos c) the price of fertilizers decreases, & fertilizers is an input in the production of mangos d) the price of mangos

c) the price of fertilizers decreases, & fertilizers is an input in the production of mangos

a production possibilities frontier is a straight line when a) the more resources the economy uses to produce one good, the fewer resources it has available to produce the other good b) an economy is interdependent & engaged in trade instead of self-sufficient c) the rate of trade-off between the two goods being produced is constant d) the rate of trade-off between the two goods being produced depends on how much of each good is being produced

c) the rate of trade-off between the two goods being produced is constant

Belarus has a comparative advantage in the production of linen, but Russia has an absolute advantage in the production of linen. If these two countries decide to trade, a) Belarus should export linen to Russia b) Russia should export linen to Belarus c) trading linen would no net advantage to either country d) without additional information about opportunity costs, this question cannot be answered

c) trading linen would no net advantage to either country

which of these statements best represents the law of demand a) when buyers' tastes for goods increase, they purchase more of the good b) when income levels increase, buyers purchase more of most goods c) when the prices of a good decreases, buyers purchase more of the good d) when buyers' demand for a good increases, the price of the good increases

c) when the prices of a good decreases, buyers purchase more of the good

If Korea is capable of producing either shoes or soccer balls or some combination of the two, then a) Korea should specialize in the product in which it has an absolute advantage b) it would be impossible for Korea to have an absolute advantage over another country in both products c) it would be difficult for Korea to benefit from trade with another country if Korea is efficient in the production of both goods d) Korea's opportunity cost of shoes is the inverse of its opportunity cost of soccer balls

d) Korea's opportunity cost of shoes is the inverse of its opportunity cost of soccer balls

Which of the following is not correct? a) trade allows for specialization b) trade has the potential to benefit all nations c) trade allows nations to consume outside of their production d) absolute advantage is the driving force for specialization

d) absolute advantage is the driving force for specialization

a supply curve slopes upward because a) as more is produced, total cost of production falls b) an increase in input prices increase supply c) the quantity supplied of most goods & services increases over time d) an increase in price gives producers an incentive to supply a larger quantity

d) an increase in price gives producers an incentive to supply a larger quantity

if an increase in income decreases the demand for a good, then the good is a(n) a) substitute good b) complementary good c) normal good d) inferior good

d) inferior good

a movement along the supply curve might be caused by a change in a) production technology b) input prices c) expectations about future prices d) the price of the good or service that is being supplied

d) the price of the good or service that is being supplied

when the price of a good or service changes, a) the supply curve shifts in the opposite direction b) the demand curve shifts in the opposite direction c) the demand curve shifts in the same direction d) there is a movement along a given demand curve

d) there is a movement along a given demand curve

suppose there are only two people in the world. each person's ppf also represents his or her consumption possibilities when a) neither person faces trade-offs b) the frontiers are straight lines c) the frontiers are bowed out d) they choose not to trade with one another

d) they choose not to trade with one another