ECON MIDTERM 1
The price of a bag of corn chips is $3, and the price of a bottle of soda is $1. What is the relative price of a bottle of soda?
1/3 bag of corn
At one point along a PPF, 10 pizzas and 7 sandwiches can be produced. At another point along the same PPF, 9 pizzas and 10 sandwiches can be produced. The opportunity cost of a pizza between these points is ________ per pizza.
3 sandwiches
If Geoffrey and Hermione devote equal amounts of time and effort to making pretzels, Geoffrey produces more units than Hermione. This information tells us that
Geoffrey has an absolute advantage in producing pretzels.
_____ has a comparative advantage in quilts. _____ has a comparative advantage in chocolate chip cookies
Martha; jane
So ______ has a comparative advantage in producing ______.
Simon; salmon
If macaroni and cheese is an inferior good, then a decrease in income will result in
an increase in the demand for macaroni and cheese
By specialization and trade, two individuals can
consume at a point beyond their individual production possibilities frontiers.
The equilibrium quantity of hot dogs _______.
decreases
an increase in the price of pasta
decreases the quantity of pasta demanded and results in a movement up along the demand curve for pasta
A rise in the price of sawdust _______.
decreases the supply of plywood
As the market moves toward the equilibrium price, the quantity demanded _______ and the quantity supplied _______.
decreases; increase
Producers of pianos expect the price of a factor of production used to produce a piano to fall price of a factor of production used to produce a piano to fall and the number of firms producing and selling pianos to increase. You predict that the price of a piano will ______ and the quantity of pianos bought will ______.
fall; increase
if the price of a sports car gasoline decreases, the demand for gasoline will
increase, and the demand curve for gasoline will shift rightward
A rise in the price of sawdust _________.
increases the supply of logs
The income earned by the people who sell the services of the factor of production _______ is called _______.
labor; wages
The opportunity cost of catching a pound of salmon is ______ for SimonSimon than for Zeb and the opportunity cost of picking a pound of apples is ______ for Simon than for Zeb
lower; higher
Today, Julie attended her 12:30 Economics class. If she hadn't gone to class, Julie would have gone out to lunch with friends. She had other options; she could have worked or slept in. Julie's opportunity cost of going to class is the
lunch she gave up
suppose you always study 5 evenings for an exam, but this week yo decide o study for more evening. The ____ of one more evening of studying is _____
marginal cost; an evening not spent with your friends, if that is your best alternate use of the time
The opportunity cost to produce 1 pretzel for Mark is 2 cookies. For Jessica, the opportunity cost to produce 1 pretzel is 3 cookies. From this information, we know that
mark has comparative advantage in pretzel production
Martha can produce 70 quilts or 140 batches of chocolate chip cookies in a month. Jane can produce 8 quilts or 24 batches of chocolate chip cookies in a month. Distinguish between comparative advantage and absolute advantage. _______ has an absolute advantage in both goods.
martha
a decrease in the demand for hot dogs together with a decrease in the supply of hot dogs ______ create a surplus or a shortage of hot dogs at the original price. The equilibrium price of hot dogs ______
might; might fall, or not change
When people's incomes increase, the demand for a good increases. The good is called
normal good
Suppose a medical study reveals new benefits to consuming beef and at the same time a bumper corn crop reduces the cost of feeding steers. The equilibrium price of beef will
perhaps rise, fall, or stay the same, but more information is needed to determine which it does.
Harry produces 9 balloon rides and 10 boat rides an hour. Harry could not produce more balloon rides without producing fewer boat rides. Harry is ______ his production possibilities frontier.
producing on
When a shortage arises, the price ______ to its equilibrium, which _______.
rises; decreases the quantity demanded and increases the quantity supplied
Flights to Paris are a normal good and people's incomes rise. At the same time, the price of jet fuel rises. The equilibrium price of a flight to Paris ________ and the equilibrium quantity of flights to Paris ________.
rises; might increase, decrease, or not change
a decrease in the supply of sports cars brings a ______ of sports cars at the original price and a _______ in their price
shortage; rise
Good A and good B are substitutes in production. The demand for good A increases so that the price of good A rises. The increase in the price of good A shifts the
supply curve of good B leftward.
a decrease in the demand for chocolate chip cookies brings a ______ chocolate chip cookies at the original price and the market price will _____
surplus; fall
taking a smart phone to the gym when you work out becomes more popular. what is the result of this event? as a result
the demand for smartphones increases
Russell studies instead of playing tennis. The opportunity cost to him of studying is
the forgone value of playing tennis
Why does demand not change when the price of a good changes with no change in the other influences on buying plans? Consider the demand for pasta. The demand for pasta does not change when a change in _______ occurs.
the price of pasta
People come to expect that the price of a gallon of gasoline will rise next week. As a result,
today's demand for gasoline increases.