Econ 2

Which of the following does not describe the term margin or marginal?

"all or nothing"

According to the law of demand, what is the relationship between price and quantity demanded?

Inverse

Which choice represents the best combination of production?

None of these options All points on the ppf are good options

Flour is a factor of production of cupcakes. How will an increase in the price of flour affect the market for cupcakes?

Overall supply will decrease.

Which of the following is an example of a positive economic statement?

The average rainfall in August 2016 was 5 inches nationwide.

Austin, Jensen, Matthew, and Walker can all produce matches, brushes, cans, and shirts. The table below identifies how many of each good they can make in a day if they devote themselves to producing only that good.

Walker

Economics is concerned with the trade-offs that emerge because of scarcity. The term "trade-offs" refers to

alternatives given up when making choices.

Which of the following is a type of incentive?

direct

Which of the following is not an economic resource?

money

Economists use the concept of ceteris paribus to examine a change in ____________ in a model, while assuming that all other variables remain constant.

one variable

Which of the following is an assumption that underlies the construction of a production possibilities frontier?

that the technology available for use in production remains constant

Macroeconomics is the study of

the operation of the economy as a whole.

Suppose your friend can obtain concert tickets for $100 but you can't get them for less than $300. Your friend sells the tickets to you for $200. Which of the five foundations of economics best describes this activity?

trade creates value

The opportunity cost of attending college is likely to be highest for a high school graduate

who is capable of playing a well-paid professional sport.

Which of these is an exogenous factor?

yearly rainfall

A recent study shows the benefits of using public transportation. Government officials have hired your consulting firm to increase the demand for public transportation. They come to you with three of their suggestions. Suggestion 1. Reduce the price of public transportation.Suggestion 2. Increase the price of private transportation by increasing tolls.Suggestion 3. Offer monthly and yearly passes that reduce the price paid per ride of public transportation.Which suggestion(s) does your firm recommend?

2

Judy spent 8 hours studying for an exam. Normally, she would have spent that time watching TV instead of studying. She figures she could have made a "B" after only studying 4 hours, but she really wanted an "A." What is Judy's marginal cost in terms of TV viewing to improve her grade from a "B" to an "A"?

4 hours

Sam has two options this weekend. He could work at his job and earn $9/hour for three hours, or he could go to a show at the theater for that three hours. A ticket to the theater costs $30. What is the opportunity cost of going to the theater?

57 The opportunity cost will contain both the price of the ticket ($30) and the lost wages (3 hours x $9/hour = $27). Therefore, the opportunity cost is $57.

Based on the figure below, what is the opportunity cost in terms of wings when producing 20 more pizzas if the economy is efficiently producing 150 wings and 50 pizzas?

60 wings Graph was in equilibrium at 150 wings and 50 pizzas. If you added 20 pizzas, you lost 60 wings

Refer to the following figure. At a price of $5, this market is experiencing

A Shortage Market is in equilibrium, but at 5 dollars, market is experiencing a shortage

Which of the following firms participates in a competitive market?

A corn farmer at a farmer's market

Which of the following firms operates as a monopoly?

A local cable company

Refer to the following figure. At a price of $15, this market is experiencing

A surplus Market is in equilibrium, but at 15 dollars, market is experiencing a surplus

Which of the following will cause a shift rightward in the supply curve for tobacco?

An improvement in the technology used in the production of tobacco

As the owner of a hotel, you have decided to lower the price for all rooms in the month of October. What should you expect to happen?

As the price is lowered, the quantity demanded of rooms will increase.

Which of the following would be consistent with taking the short-run approach to decision-making?

Buying a new leather jacket instead of saving for retirement

The table below shows the daily production potential of two workers if they devote all their time to making either pizza or wings. Who has the absolute advantage at producing pizzas?

Debra Winger

The table below shows the daily production potential of two workers if they devote all their time to making either pizza or wings. Who has the absolute advantage at producing wings?

Debra Winger

According to the law of supply, what is the relationship between price and quantity supplied?

Direct

Examine the two figures below. Which of these figures will experience a higher long-run growth rate, assuming their ratio of consumer goods to capital goods produced is constant over time?

Economy B, because it produces more capital goods relative to consumer goods. The location of Point B is in the middle of the PPF graph.

Businesses across the country are starting to install extra insulation in their buildings and warehouses. Households are now deciding to install more insulation as well. Which of the following outcomes would you predict will happen to the market for oil?

Equilibrium price and quantity of oil will decrease.

In order to ensure that as many individuals as possible install a smoke detector, the government recently decided to subsidize the production of smoke detectors.

Graph B The graph that has supply increasing

Use these production possibilities frontier (PPF) curves, which compare the ancient production of agricultural products to art and literature, to answer the following questions. Suppose the plow is invented and agricultural productivity greatly increases. Which of the following graphs best depicts how this would affect the PPF?

Graph C

Suppose that Coca Cola and Pepsi are substitutes in consumption. If the price of Coca Cola decreases, then which of the following graphs would be relevant for Pepsi?

Graph C Because Pepsi and Cola are substitutes, the Demand for Pepsi would go down if the price of cola went down

Candy makers face high prices for cocoa butter, the special ingredient that gives chocolate its melt-in-the-mouth texture. This event will be shown in

Graph D. The graph that has supply decreasing

What role does money play in the circular flow model?

It increases the efficiency of a market.

How will a reduction in the national unemployment rate affect a nation's production possibilities frontier (PPF)?

It will cause the PPF to shift outward.

Which of the following statements is consistent with Jonathan having a comparative advantage in producing apples?

Jonathan's opportunity cost for producing apples is lower than anyone else's.

Which of the following statements is normative?

Microeconomics is a great class.

Mike has a linear production possibilities frontier that shows maximum production of trucks or computers of 10 million each. Debra also has a linear production possibilities curve that shows maximum production of 9 million trucks or 3 million computers.

Mike has a comparative advantage in the production of computers.

What must happen to the market price in order for a shortage to be eliminated?

Price must rise.

Refer to the following image. When a market is in equilibrium, which of the following is true?

Quantity supplied is equal to quantity demanded.

Which of the following is NOT a characteristic of a market economy?

Significant government intervention

The market for breakfast cereal is currently in equilibrium. Suddenly there is a storm that destroys the wheat that farmers had been growing for the cereal manufacturer. What will happen to the cereal market after the storm?

Supply will decrease.

Suppose that Tegan is good at cooking but not very good at cleaning up the kitchen afterward and that Sara is good at cleaning kitchens but not very good at cooking. Which of the following statements is true with regard to Tegan and Sara?

Tegan should cook and Sara should clean up the kitchen.

There are a number goods that over time, for a variety of reasons, transition from being a normal good to an inferior good or from being an inferior good to a normal good. One such example of a good is the Toyota Camry. In the 1980s, more income for a household usually resulted in more Camrys being purchased. However, today more Toyota Camrys are purchased by households that have experienced a reduction in income. How could this happen?

The Camry becomes an inferior good because the good is now perceived as lower in quality than a Lexus.

Which of the following is a decision an Italian restaurant owner makes in the long run?

The decision to stay in business

Suppose workers attend several skill-building workshops, increasing their labor productivity. How is this represented by a production possibilities frontier?

The entire PPF shifts out.

Which of the following statements refers to a macroeconomic issue?

The national unemployment rate is currently 7.7%.

A change in which of the following will cause a change in the quantity demanded of coffee?

The price of coffee

A change in which of the following will cause a change in the quantity supplied of coffee?

The price of coffee

Based on the table below, which of the following statements is true?

The terms of trade will be less than 0.5 but greater than 0.33.

Where is unemployment such that employment is below the full-employment level plotted on a production possibilities frontier?

a point inside the PPF

Where would you plot full employment on a production possibilities frontier if all other resources are being used efficiently?

a point on the PPF

Suppose that a politician wants to build more production facilities for solar power and wind power. At the same time, the politician is unwilling to cut any other programs. If the resources that would be used to produce the solar and wind power facilities are already being efficiently used in other programs, where is the point the politician is trying to reach located on the production possibilities frontier?

a point outside the frontier

A production possibilities frontier with constant opportunity cost is

a straight downward-sloping line.

The basic goal of economics is to

address the scarcity problem created because the population's desire for goods exceeds the ability to produce them.

In the figure, point A is

an attainable and inefficient combination of milk shakes and smoothies.

Which of the following would lead to the situation shown in the figure above?

an improvement in technology for production of both pizza and wings The PPF graph is shifting outwards

In an imperfect market, individual firms

are able to influence the price of their product.

Goods that are produced today in order to make other valuable goods and services in the future are called ________ goods.

capital

A physician who hires a plumber to fix a broken toilet is an example of

comparative advantage.

A health insurance company may offer its policyholders a discount on their premiums if they prove that they have stopped smoking. What type of incentive is the health insurance company offering?

direct

Suppose a student has 3 hours of time to spend at her apartment before afternoon classes. She has the option of doing laundry, studying for a test, or watching television. If she decides to do laundry, then her opportunity cost is

either watching television or studying for the test, whichever would have been her second choice to doing laundry.

In a market economy, what to produce, how to produce it and who gets what is produced is addressed by......................(choose all that apply).

government households Firms

For a firm to have market power, it must

have some control over price.

Opportunity cost is the ______________ alternative that must be sacrificed in order to get something else.

highest-valued

The circular flow model shows how resources and final goods and services flow through the economy. There are two groups in the circular flow model. Which of the following make up the two groups?

households and firms

Suppose that government officials want to increase the population, so they offer a $1,000 payment to the parents of each child born. Which of the five foundations of economics best describes the thinking of these government officials?

incentives

You order a $20 sweatshirt online for a Father's Day gift. The shipping charge is $10. You can get free shipping if your order totals $25 or more. Consequently, you order a $5 bobble head doll, even though neither you nor your father really likes bobble head dolls. This is an example of

incentives.

The PPF in this example illustrates

increasing opportunity costs

Your goal as an economic unit is to

incur the lowest opportunity cost when making decisions

The process of using current resources to create or buy new capital is called

investment

Scarcity refers to the __________ nature of society's resources.

limited

The concept of scarcity in economics refers to

limited resources and unlimited wants.

Economics is the study of how people allocate their ________ resources to satisfy their nearly _________ wants.

limited; unlimited

When a student is making a decision about the college she will attend, which of the following would be an endogenous factor?

location of the school

Suppose there is a country where factory production creates a lot of the air pollution. What could be a possible trade-off if the country wanted to lower the levels of pollution?

lower national income

Suppose that Marie is buying bananas. She decides that she would like to purchase three bananas at the price of $0.25/banana but not a fourth banana. Which of the five foundations of economics best describes Marie's thinking?

marginal thinking

Alison goes to an all-you-can-eat restaurant. She has eaten three slices of pizza and is considering having another, but she is quite full from the first three slices. Alison's consideration is an example of

marginal thinking.

The field of economics that studies the decisions of individuals and firms is called

microeconomics

The presence of scarcity means that no choices come without

opportunity costs

An increase in the labor force would be reflected in a society's production possibilities frontier (PPF) by an

outward shift of the PPF.

Suppose that burgers and fries are complements in consumption. If the price of fries increases,

overall demand for burgers will decrease.

Which of the following represents an inefficient point?

point A

Which point on the graph below is unattainable because the economy does not have enough resources to produce it?

point E You have the downward sloping PPF graph and E is outside of it

Which point on the graph below represents an inefficient use of society's resources?

point F You have the downward sloping PPF graph and F is not on the model

Refer to the following graph. The demand curve slopes downward because

prices and quantity demanded move in opposite directions.

Refer to the graph below. The supply curve is upward sloping because

prices and quantity supplied move in the same direction.

The graph below illustrates the effect on the production possibilities frontier if the population grows, making more workers available. This new production possibilities frontier reflects the ability of society to

produce more wings and more pizza.

Constant opportunity costs assume that

resources are identical and are suitable to similar tasks

In a competitive market, the price of the product is

set by market supply and demand.

According to the Food and Drug Administration, "...the ultraviolet (UV) radiation from these devices [sunlamps and tanning beds] poses serious health risks." As a result of reading this, the local mayor decides to introduce legislation that will put a 10% excise tax on tanning consumers. From an economic point of view, this will

shift the demand curve leftward for tanning.

The limiting of one's work to a particular area is referred to as

specialization

The law of increasing opportunity costs states that

the opportunity costs rise as more of the good is produced.

A friend of yours has an interview with an economics consulting firm and has been asked to discuss a microeconomics topic. Which of the following topics would you recommend that your friend discuss?

the study of how prices are determined in the baseball card industry

The difference between the study of microeconomics and the study of macroeconomics is a difference between

the study of individual economic units and the study of aspects of the economy as a whole.

The need to study economics would cease to exist if

there were enough resources to produce all the goods and services people would like to obtain.

What is the term for the voluntary exchange of goods and services between two or more parties?

trade