Macro test 1 based on quizzes econlab
Practice absolute advantage calculating
2.18-21
There is often a trade−off between A.economic efficiency and economic equity. B.limited and unlimited resources. C.voluntary and involuntary exchanges. D.productive efficiency and allocative efficiency.
A. economic efficiency and economic equity
Zane's Vanes is a service that restores old weather vanes. Zane has just spent $125 purchasing a 1920s-era weather vane which he expects to restore and sell for $500 once the work is completed. After having spent $125, Zane realizes that he will need to spend an additional $200 on materials to complete the restoration. Alternatively, he can sell the weather vane without restoring it for $200. What should he do? A.He should sell the weather vane now to make the most profit. B.He should finish the restoration and then sell the weather vane. C.He should sell the weather vane back to the party he purchased it from and cut his losses. D.It does not matter what he does; he is going to take a loss on the project.
B. He should finish the restoration and then sell the weather vane.
An office supply store sells a ream of printer paper at a fixed price of $4.50. Which of the following is a term used by economists to describe the money received from the sale of an additional ream of paper? A.net benefit B.marginal costs C.pure profit D.gross earnings E.marginal revenue
B. margina revenue
Economists assume that A.individuals behave in unpredictable ways. B.optimal decisions are made at the margin. C.people put other people's interests ahead of their own. D.consumer behavior is explained by the existence of unlimited resources.
B. optimal decisions are made at the margin
Increasing marginal opportunity cost implies that A.that rising opportunity costs makes it inefficient to produce beyond a certain quantity. B.the more resources already devoted to any activity, the payoff from allocating yet more resources to that activity increases by progressively smaller amounts. C.the law of scarcity. D.the more resources already devoted to any activity, the benefits from allocating yet more resources to that activity decreases by progressively larger amounts.
B.the more resources already devoted to any activity, the payoff from allocating yet more resources to that activity increases by progressively smaller amounts.
At a recent company meeting, Geraldine Erwin, sales manager of Dastoria, a flavored-beverage producer announced, "We have increased our sales by 8 percent in just six months." Suppose six months ago, its sales amounted to $452,000, what is the value of its sales today? A.$36,160 B.$415,840 C.$488,160 D.$565,000
C. $488,160
The Stogie Shop, a cigar store in the mall, sells hand−rolled cigars for $10.00 and machine−made cigars for $2.50 each. What is the opportunity cost of buying a hand−rolled cigar? A.$2.50 B.$10.00 C.4 machine−made cigars D.one−quarter of a machine−made cigar
C. 4 machine-made cigars
Comparative advantage means A.the ability to produce more of a product with the same amount of resources than any other producer. B.compared to others you are better at producing a product. C.the ability to produce a good or service at a lower opportunity cost than any other producer. D.the ability to produce a good or service at a higher opportunity cost than any other producer.
C. the ability to produce a good or service at a lower opportunity cost than an other producer
The Farm Factory, a booth at the local Farmer's Market, sells fresh eggs for $1.50 per dozen and fresh milk for $2.50 per gallon. What is the opportunity cost of buying a dozen eggs? A.$1.50 B.1 2/3 gallons of milk C.$2.50 D.3/5 of a gallon of milk
D. 3/5 of a gallon of milk
If the price of milk was $1.25 a gallon and it is now $2.25 a gallon, what is the percentage change in price? A.4.4 percent B.8 percent C.44 percent D.80 percent
D. 80 percent
A technological advancement would be represented by a movement from
Right shift
Which of the following would cause an increase in the equilibrium price and decrease in the equilibrium quantity of watermelon? -an increase in demand and an increase in supply greater than the increase in demand -a decrease in demand and an increase in supply -a decrease in supply -an increase in demand and an increase in supply
a decrease in supply
A production possibilities frontier with a ________ shape indicates increasing opportunity costs as more and more of one good is produced. -linear -perfectly horizontal -bowed outward -bowed inward
bowed outward
Which of the following statements is true? A.A straight line has a slope of one. B.A direct relationship has a negative slope value. C.A curved line has slope values that change at every point. D.An inverse relationship has a positive slope value.
c. A curved line has slope values that change at every point
Opportunity cost=
good x/good y
The law of demand implies, holding everything else constant, that as the price of yogurt
increases, the quantity of yogurt demanded will decrease.
Comparative advantage
produce more at a lower opportunity cost than others
Absolute advantage:
produce more using same amount of resources
If the product represented is a normal good, an increase in income would be represented by a change from
right shift
If the price of propane−fueled gas grills was to decrease, then: the demand for propane would decrease. the quantity of propane demanded would increase. the demand for propane would increase. the quantity of propane demanded would decrease.
the demand for propane would increase
Suppose your expenses for this term are as follows: tuition: $9,000, room and board: $1,500, books and other educational supplies: $1,000. Further, during the term, you can only work part−time and earn $3,000 instead of your full−time salary of $8,000. What is the opportunity cost of going to college this term, assuming that your room and board expenses would be the same even if you did not go to college? A.$10,000 B.$13,000 C.$15,000 D.$18,000
$15,000
Cassie's Quilts alters, reconstructs, and restores heirloom quilts. Cassie has just spent $800 purchasing, cleaning, and reconstructing an antique quilt which she expects to sell for $1,500 once she is finished. After having spent $800, Cassie discovers that she would need some special period fabric that would cost her $200 in material and time in order to complete the task. Alternatively, she can sell the quilt "as is" now for $900. What is the marginal cost of completing the task? A.$200 .B.$500 C.$1,000 D.$1,000 plus the value of her time
A. $200
Economists assume that rational people A.respond to economic incentives. B.undertake activities that benefit others and hurt themselves. C.only weigh the benefits and costs of the most desirable alternative actions. D.never use all available information as they act to achieve their goals.
A. respond to economic incentives
________ involves undertaking an activity until its marginal benefits equal marginal costs. A.Scarcity reduction B.Marginal analysis C.Market intervention D.Central planning
B. Marginal analysis
Which of the following is a macroeconomics question? A.What determines the wages and benefits of flight attendants? B.What determines the unemployment rate? C.What factors determine the price of iPhones? D.How is the production quantity of digital cameras determined?
B. What determines the unemployment rate
What does the term "marginal" mean in economics? A.illegal B.an additional or extra C.the edge of a market D.secondary E.trivial
B. an additional or extra
Cassie's Quilts alters, reconstructs, and restores heirloom quilts. Cassie has just spent $800 purchasing, cleaning, and reconstructing an antique quilt which she expects to sell for $1,500 once she is finished. After having spent $800, Cassie discovers that she would need some special period fabric that would cost her $200 in material and time in order to complete the task. Alternatively, she can sell the quilt "as is" now for $900. What should she do? A.She should not do any more work on the quilt because she has already spent too much time on it and has not been paid for that time. B.It does not matter what she does; she is going to take a loss on her project. C.She should purchase the period fabric, complete the task and then sell the quilt. D.She should cut her losses and sell the quilt now.
C. She should purchase the period fabric, complete the task and then sell the quilt
Suppose when the price of hybrid automobiles rises, consumers buy fewer hybrid automobiles. This implies that A.there is a positive relationship between hybrid automobile prices and quantities purchased by consumers. B.there is a one−to−one relationship between hybrid automobile prices and quantities purchased by consumers. C.there is a negative relationship between hybrid automobile prices and quantities purchased by consumers. D.there is a direct relationship between hybrid automobile prices and quantities purchased by consumers.
C. There is a negative relationship between hybrid automobile prices and quantities purchased by consumers
Opportunity cost is defined as A.the monetary expense associated with an activity. B.the benefit of an activity. C.the highest valued alternative that must be given up to engage in an activity. D.the total value of all alternatives that must be given up to engage in an activity.
C. the highest valued alternative that must be given up to engage in an activity
The term "market" in economics refers to A.a place where money changes hands. B.an organization which sells goods and services. C.a legal institution where exchange can take place. D.a group of buyers and sellers of a product and the arrangement by which they come together to trade.
D. a group of buyers and sellers of a product and the arrangement by which they come together to trade
Economics is the study of the ________ people make to attain their goals, given their ________ resources. A.income; available B.purchases; unlimited C.decisions; household D.choices; scarce
D. choices; scarce
Increasing opportunity cost along a bowed-out production possibilities frontier occurs because A. of the scarcity of factors of production. B. of inefficient production. C. of ineffective management by entrepreneurs. D. some factors of production are not equally suited to producing both goods or services.
D. some factors of production are not equally suited to producing both goods or services.
In 2015, Smileytown consumed 50,000 tubes of toothpaste. In 2016, toothpaste consumption rose to 62,000 tubes. Calculate the percentage change in toothpaste consumption. A.12% B.16.42% C.19.35% D.24%
D.24%
In January, buyers of gold expect that the price of gold will fall in February. What happens in the gold market in January, holding everything else constant? The quantity demanded increases. The quantity demanded decreases The demand curve shifts to the left. The demand curve shifts to the right.
The demand curve shifts to the left
"Because Coke and Pepsi are substitutes, a decrease in the price of Pepsi will cause the demand for Coke to decrease. This initial shift in demand for Coke results in a lower price for Coke; this lower price will cause the demand curve for Coke to shift to the left." Which of the following correctly comments on this statement? -The statement will be true if consumer tastes for Coke and Pepsi do not change. -The statement is false because a change in the price of Coke would not change the demand for Coke. -The statement is false because one cannot assume that Coke and Pepsi are substitutes for all consumers. -The statement is false because Pepsi is an inferior good; Coke is a normal good.
The statement is false because a change in the price of Coke would not change the demand for Coke
Which of the following would cause the equilibrium price of apple juice to decrease and the equilibrium quantity of apple juice to increase? -a decrease in the price of apples -a decrease in the price of granola bars, a complement for apple juice -an increase in the price of apples -an increase in the price of orange juice, a substitute for apple juice
a decrease in the price of apples
The phrase "demand has increased" means that
a demand curve has shifted to the right.
An increase in the price of MP3 players will result in an increase in the supply of MP3 players. a smaller quantity of MP3 players supplied. a larger quantity of MP3 players supplied. a decrease in the demand for MP3 players.
a larger quantity of MP3 players supplied
Last month, the Tecumseh Corporation supplied 400 units of threeminus−ring binders at $6 per unit. This month, the company supplied the same quantity of binders at $4 per unit. Based on this evidence, Tecumseh has experienced a decrease in supply. a decrease in the quantity supplied. an increase in supply. an increase in the quantity supplied.
an increase in supply
Which of the following will not shift the demand curve for a good? an increase in population an increase in the price of the good an increase in consumer incomes a decrease in the price of a substitute good
an increase in the price of the good
The production possibilities frontier model assumes all of the following except -labor, capital, land and natural resources are fixed in quantity. -the level of technology is fixed and unchanging. -any level of the two products that the economy produces is currently possible. -the economy produces only two products.
any level of the two products that the economy produces is currently possible
A decrease in the expected future price of the product would be represented by a change from
left shift
An increase in the price of a complement would be represented by a change from
left shift
The principle of ________ is that the economic cost of using a factor of production is the alternative use of that factor that is given up. -normative economics -marginal cost -entrepreneurship -opportunity cost
opportunity cost
If the production possibilities frontier is linear, then -opportunity costs are constant as more of one good is produced. -it is easy to efficiently produce output. -opportunity costs are decreasing as more of one good is produced. -opportunity costs are increasing as more of one good is produced.
opportunity costs are constant as more of one good is produced
The production possibilities frontier shows -the various products that can be produced now and in the future. -the maximum attainable combinations of two products that may be produced in a particular time period with available resources. -what an equitable distribution of products among citizens would be. -what people want firms to produce in a particular time period.
the maximum attainable combinations of two products that may be produced in a particular time period with available resources.
Hurricane Katrina damaged a large portion of oil refining and pipeline capacity in the Gulf coast states. In the market for gasoline, -the demand curve shifted to the right resulting in an increase in the equilibrium price. -the supply curve shifted to the right resulting in an increase in the equilibrium price. -the supply curve shifted to the left resulting in an increase in the equilibrium price. -the demand curve shifted to the left resulting in a decrease in the equilibrium price.
the supply curve shifted to the left resulting in an increase in the equilibrium price