Macroeco Test 1 Review
The difference between a change in quantity supplied and a change in supply is that a change in: A. quantity supplied is caused by a change in a good's own, current price, while a change in supply is caused by a change in some other variable, such as input prices, prices of related goods, expectations, or taxes. B. supply is caused by a change in a good's own, current price, while a change in the quantity supplied is caused by a change in some other variable, such as input prices, prices of related goods, expectations, or taxes. C. quantity supplied is a change in the amount people want to sell, while a change in supply is a change in the amount they actually sell. D. supply and a change in the quantity supplied are the same thing.
A. quantity supplied is caused by a change in a good's own, current price, while a change in supply is caused by a change in some other variable, such as input prices, prices of related goods, expectations, or taxes.
If an increase in the price of Good X causes a decrease in the demand for Good Y, we can conclude that: A. Goods X and Y are complements. B. Goods X and Y are substitutes. C. Goods X and Y are normal goods. D. the price of Good Y will increase. E. the quantity supplied of Good Y will increase.
A. Goods X and Y are complements.
Which of the following is true? A. If input prices fall, this will lower the costs of production, causing the supply curve to shift to the right. B. The expectation of higher prices in the future will increase current supply. C. A decrease in the number of suppliers will shift a supply curve upward. D. An increase in the price of a good does increases the supply of that good. E. None of the above is true.
A. If input prices fall, this will lower the costs of production, causing the supply curve to shift to the right.
Maria can produce 100 pounds of tomatoes or 25 pounds of squash in her garden each summer, while Tonya can produce 50 pounds of tomatoes or 25 pounds of squash. ______________ opportunity cost of producing tomatoes is lowest, and ___________ opportunity cost of producing squash is lowest, so __________ should produce tomatoes and ____________ should produce squash. A. Maria ?s, Tonya ?s, Maria, Tonya B. Tonya ?s, Maria ?s, Tonya, Maria C. Maria ?s, Tonya ?s, Tonya, Maria D. Tonya ?s, Maria ?s, Maria, Tonya E. This question can ?t be answered, because they both have the same opportunity cost for producing squash.
A. Maria's, Tonya's, Maria, Tonya
Suppose there are two parallel highways between two cities with approximately equal traffic. What would you expect to happen if the state began charging tolls to drive on one of those highways? A. More drivers would drive on the non-toll road, making the toll road less congested. B. More drivers would drive on the toll road making the non-toll road less congested. C. Traffic would remain evenly divided between the two roads as drivers continuously sought the less-congested route. D. Traffic would decrease on both roads.
A. More drivers would drive on the non-toll road, making the toll road less congested
If Jane can produce 3 pairs of shoes hourly, while Bob can produce 2, then one can infer that the __________ advantage belongs to __________. A. absolute; Jane B. comparative; Jane C. comparative; Bob D. comparative and absolute; Jane
A. absolute; Jane
Buyers who were originally willing to buy 800 units of a good at $4 per unit are now willing to buy 1200 units at $4 per unit. That change would be described as: A. an increase in demand. B. a decrease in demand. C. an increase in quantity demanded. D. a decrease in quantity demanded.
A. an increase in demand.
If a nation has the lowest opportunity cost of producing a good, that nation has a(n): A. comparative advantage. B. absolute advantage. C. comparative advantage and an absolute advantage. D. absolute advantage and possibly a comparative advantage.
A. comparative advantage.
Application of the Principle of Comparative Advantage leads to: A. greater specialization of labor and other factors of production. B. less specialization of labor and other factors of production. C. societies without any specialization of labor. D. lower total output.
A. greater specialization of labor and other factors of production.
Studying how Pat allocates her time between teaching classes and assisting undergraduate students is an example of: A. microeconomics. B. macroeconomics. C. individual economics. D. economic naturalism.
A. microeconomics
Corey can make 12 Pizzas per hour or deliver 6 pizzas per hour. Pat can make 10 Pizzas per hour or deliver 15 pizzas per hour. Based on their comparative advantages, Pat should specialize in _______ while Corey should specialize in _______. A. pizza delivery; pizza production B. pizza production; pizza delivery C. neither pizza production nor pizza delivery; both pizza production and pizza delivery D. both pizza production and pizza delivery; neither pizza production nor pizza delivery
A. pizza delivery; pizza production
A change in which of the following variables does not cause a change in demand? A. prices of unrelated goods B. incomes of demanders C. the number of demanders D. tastes of demanders E. expectations of demanders
A. prices of unrelated goods
A graph that illustrates the maximum amount of one good that can be produced for every possible level of production of the other good is called a(n): A. production possibilities curve. B. consumption possibilities curve. C. production function. D. supply curve.
A. production possibilities curve
The difference between a change in quantity demanded and a change in demand is that a change in: A. quantity demanded is caused by a change in a good's own current price, while a change in demand is caused by a change in some other variable, such as income, tastes, or expectations. B. demand is caused by a change in a good's own current price, while a change in quantity demanded is caused by a change in some other variable, such as income, tastes, or expectations. C. quantity demanded is a change in the amount people actually buy, while a change in demand is a change in the amount they want to buy. D. A change in demand and a change in quantity demanded are the same thing.
A. quantity demanded is caused by a change in a good's own current price, while a change in demand is caused by a change in some other variable, such as income, tastes, or expectations.
Production possibilities curves are downward sloping, reflecting the principle of A. scarcity. B. comparative advantage. C. increasing opportunity cost. D. absolute advantage. E. low-hanging-fruit.
A. scarcity.
The core principle that is illustrated by the production possibilities curve is: A. the Scarcity Principle. B. the Cost-Benefit Principle. C. the Incentive Principle. D. The Principle of Comparative Advantage.
A. the Scarcity Principle
The quantity of a good bought and sold in a market will be below the equilibrium quantity if: A. the market price is either above or below the equilibrium price B. the market price is above the equilibrium price C. the market price is below the equilibrium price D. demand or supply is increasing.
A. the market price is either above or below the equilibrium price
Corey can make 12 Pizzas per hour or deliver 6 pizzas per hour. Pat can make 10 Pizzas per hour or deliver 15 pizzas per hour. According to the data, Corey has an absolute advantage in: A. the production of pizza. B. neither the production of pizza nor the delivery of pizza. C. delivering pizza. D. both the production of pizza and the delivery of pizza.
A. the production of pizza.
Whenever there is a surplus at a particular price, the quantity sold at that price will equal: A. the quantity demanded at that price. B. the quantity supplied minus the quantity demanded. C. the quantity supplied at that price. D. (quantity demanded plus quantity supplied)/2.
A. the quantity demanded at that price.
Which of the following is the correct way to describe equilibrium in a market? A. At equilibrium, demand equals supply. B. At equilibrium, quantity demanded equals quantity supplied. C. At equilibrium, market forces no longer apply. D. Equilibrium is a tendency for price to change, a state of perpetual motion. E. At equilibrium, the "fairest" price for output is achieved.
At equilibrium, quantity demanded equals quantity supplied.
Which of the following is true of a competitive market? A. The rules of supply and demand do not apply to it. B. Buyers and sellers have little market power. C. Each buyer's or seller's effect on market price is substantial. D. Few sellers offer similar products.
B. Buyers and sellers have little market power.
Which of the following statements is always true? A. Absolute advantage implies comparative advantage. B. Comparative advantage does not require absolute advantage. C. Absolute advantage requires comparative advantage. D. Comparative advantage requires absolute advantage.
B. Comparative advantage does not require absolute advantage.
Which of the following would NOT cause a change in the supply of milk? A. an increase in government subsidies to dairy farmers B. an increase in the price of milk C. the discovery of growth hormones to stimulate the milk production of cows D. an increase in the cost of feed for cows E. All of the above will cause a change in the supply of milk.
B. an increase in the price of milk
Ceteris paribus, if the vacancy rate in an apartment complex increased from 5% to 20% over the past two years, we would expect to see A. the rent decrease leading to an increase in quantity supplied. B. the rent decrease leading to an increase in quantity demanded. C. the rent decrease leading to a decrease in quantity demanded. D. the rent increase leading to a decrease in quantity demanded. E. the rent increase leading to an increase in quantity supplied.
B. the rent decrease leading to an increase in quantity demanded.
Several years ago there were two systems for viewing movies at home: Sony's BetaMax machines and VCR machines that played VHS tapes. Despite the higher quality of BetaMax video, VHS became the dominant format. Once VHS tapes were the dominant format, BetaMax virtually disappeared from consumer markets. Why?
B. Consumers gained more benefit by using the same system that others used, allowing them to share movies.
Every time you go to the grocery store, you try to choose the shortest line. But all of the lines always seem to be the same length. Why? A. The store manager tells the cashiers to speed up or slow down to maintain equal line lengths. B. Everyone else is trying to choose the shortest line too. C. The cashiers all work at the same speed. D. Cashiers do not have an incentive to work faster.
B. Everyone else is trying to choose the shortest line too.
If Leslie can produce two pairs of pants in an hour while Eva can make one pair an hour, then it must be the case that: A. Leslie has a comparative advantage. B. Leslie has an absolute advantage. C. Eva has a comparative advantage. D. Leslie has both comparative and absolute advantage.
B. Leslie has an absolute advantage.
If the price of music downloads decreases, which of the following is most likely to occur? A. Quantity demanded will decrease. B. Quantity demanded will increase. C. Demand will increase. D. Demand will decrease.
B. Quantity demanded will increase.
During times of high unemployment, colleges often observe an increase in enrollment even if tuition remains unchanged. Why? A. Students do not know about the decision pitfalls and go to college even though the net benefit is negative. B. The opportunity cost of attending college is lower because students are less likely to have good full-time jobs. C. The opportunity cost of attending college is higher because good jobs are harder to find. D. The benefit of attending college is lower because college graduates are less likely to find jobs upon graduation.
B. The opportunity cost of attending college is lower because students are less likely to have good full-time jobs.
A surplus currently exists in the market for apples. Which of the following statements is correct? A. The quantity of apples supplied exceeds the quantity demanded and the market price is below the equilibrium price. B. The quantity of apples supplied exceeds the quantity demanded and the market price is above the equilibrium price. C. The quantity of apples supplied exceeds the quantity demanded and the market price equals the equilibrium price. D. The quantity of apples demanded exceeds the quantity supplied and the market price is below the equilibrium price. E. The quantity of apples demanded exceeds the quantity supplied and the market price is above the equilibrium price.
B. The quantity of apples supplied exceeds the quantity demanded and the market price is above the equilibrium price.
Some states have started giving tax credits to homeowners who install solar panels. This is an example of: A. A decision pitfall because homeowners will not properly account for the costs and benefits of installing solar panels. B. Using the incentive principle to encourage homeowners to switch to solar energy. C. Normative economics, because people should use clean sources of energy. D. Macroeconomic policy because it involves government tax policy.
B. Using the incentive principle to encourage homeowners to switch to solar energy.
If the price of ice cream increases and the quantity demanded decreases, economists would describe this as: A. a change in demand. B. a change in quantity demanded. C. a change in consumer income. D. a change in one of the variables that shift demand. E. an inferior good.
B. a change in quantity demanded
Sellers who were originally willing to supply 800 units of a good at $4 per unit are now willing to supply 600 units at $4 per unit. That change would be described as: A. an increase in supply. B. a decrease in supply. C. an increase in quantity supplied. D. a decrease in quantity supplied.
B. a decrease in supply.
The United States generally has a comparative advantage in the development of technology because of: A. larger amounts of natural resources. B. a high concentration of the best research universities. C. tax incentives. D. the existence of patent law, which no other country provides.
B. a high concentration of the best research universities.
Which of the following would be least likely to affect the supply of automobiles? A. higher prices for steel and other resources used in producing automobiles B. a successful physical fitness plan encouraging Americans to walk rather than drive to their destinations C. a technological improvement reducing the production costs of automobiles D. increased wages for members of the United Auto Workers union
B. a successful physical fitness plan encouraging Americans to walk rather than drive to their destinations
If a nation can produce a good more quickly than any other nation, that nation has a(n): A. comparative advantage. B. absolute advantage. C. relative advantage. D. specialization advantage.
B. absolute advantage.
If a country experiences increasing opportunity costs, its production possibilities curve will A. be a straight line. B. bow outward. C. bow inward. D. shift out from the origin. E. shift in toward the origin.
B. bow outward
To say that an individual possesses an absolute advantage in the production of software means that individual: A. has a lower opportunity cost of producing software. B. can produce more and/or higher quality software in a given amount of time. C. was the first to create the software. D. charges the lowest price for software.
B. can produce more and/or higher quality software in a given amount of time
In general, individuals and nations should specialize in producing those goods for which they have a(n): A. absolute advantage. B. comparative advantage. C. absolutely comparative advantage. D. absolute advantage and a comparative advantage.
B. comparative advantage.
A supply schedule shows: A. projected sales as ad spending varies. B. how many units producers are willing and able to sell at various prices. C. possible combinations of output as input prices vary. D. how many units consumers would like to buy at various prices.
B. how many units producers are willing and able to sell at various prices.
If the government wanted to use the incentive principle to discourage smoking, it could: A. publicize the health risks associated with second-hand smoke. B. increase taxes on cigarettes, effectively raising the price. C. subsidize hospitals treating lung disease. D. invest more money in health research.
B. increase taxes on cigarettes, effectively raising the price.
The law of demand illustrates a(n) ____ relationship between price and ____. A. direct; quantity demanded B. inverse; quantity demanded C. inverse; demand D. direct; demand
B. inverse; quantity demanded
Last year interest rates fell. The field of economics that would be most concerned with this is: A. microeconomics. B. macroeconomics. C. economic naturalism. D. marginal economics
B. macroeconomics
The impact of government policies on the building of new roads and highways would be studied in the field of: A. microeconomics. B. macroeconomics. C. government economics. D. marginal economics
B. macroeconomics
A study that deals with the salaries of university professors would be considered: A. macroeconomics B. microeconomics C. economic naturalism D. marginal benefit
B. microeconomics
Each point on the supply curve shows the: A. amount that people want to buy at that price. B. quantity supplied at that price. C. productive capacity of an individual producer. D. the amount producers want to sell to buyers of different income levels.
B. quantity supplied at that price.
Along a supply curve: A. supply changes as price changes. B. quantity supplied changes as price changes. C. supply changes as technology changes. D. quantity supplied changes as technology changes.
B. quantity supplied changes as price changes.
Normative economics is concerned with how people _____ make decisions while positive economics is concerned with how people _____ make decisions. A. in the real world; in models B. should; do C. in power; in ordinary life D. in ordinary life; in power
B. should; do
Whenever the price of Good A increases, the demand for Good B increases as well. Good A and B appear to be A. complements. B. substitutes. C. inferior goods. D. normal goods. E. inverse goods.
B. substitutes.
The incentive principle states that a person is more likely to do something if: A. the opportunity costs are high. B. the benefits from doing it increase. C. everyone else is doing the same thing. D. he is paid to do it.
B. the benefits from doing it increase.
If the price of tennis rackets were to increase, we would expect: A. the demand for tennis balls to increase. B. the demand for tennis balls to decrease. C. the supply of tennis balls to increase, leading to a movement along the demand curve for tennis balls. D. the supply of tennis balls to decrease. E. both b. and d. to occur.
B. the demand for tennis balls to decrease.
When there is an excess quantity demanded of a product at the current price, then: A. the price will tend to fall. B. the price will tend to rise. C. the price must be above the equilibrium price. D. producers will reduce output and sales will fall.
B. the price will tend to rise.
In economics, the demand for a good refers to the amount of the good people: A. would like to have if the good were free. B. will buy at various prices. C. need to achieve a minimum standard of living. D. will buy at alternative income levels.
B. will buy at various prices.
Which of the following is not a determinant of supply? A. input prices B. technology C. tastes D. expectations E. the prices of related products
C, tastes
The incentive principle is an example of: A. an economic decision-making pitfall. B. over-estimating the benefits of an action. C. a positive economic principle. D. a normative economic principle.
C. a positive economic principle
A shortage currently exists in the market for strawberries. Which of the following statements is correct? A. The quantity of strawberries supplied exceeds the quantity demanded and the market price is below the equilibrium price. B. The quantity of strawberries supplied exceeds the quantity demanded and the market price is above the equilibrium price. C. The quantity of strawberries demanded exceeds the quantity supplied and the market price is below the equilibrium price. D. The quantity of strawberries demanded exceeds the quantity supplied and the market price is above the equilibrium price. E. The quantity of strawberries demanded exceeds the quantity supplied and the market price equals the equilibrium price.
C. The quantity of strawberries demanded exceeds the quantity supplied and the market price is below the equilibrium price.
The market supply schedule reflects the total quantity: A. supplied at market price. B. supplied by all of the producers at the equilibrium price. C. supplied at each price by all of the producers. D. the vertical summation of the supply curves for individual firms.
C. supplied at each price by all of the producers.
Assume that coffee and tea are substitutes for each other. If weather conditions cause a substantial portion of the available coffee crop to be destroyed, then most probably: A. the price of tea will decrease. B. the price of coffee will decrease. C. the demand for tea will increase. D. the supply of tea will increase. E. both c. and d. are correct.
C. the demand for tea will increase.
Corey can make 12 Pizzas per hour or deliver 6 pizzas per hour. Pat can make 10 Pizzas per hour or deliver 15 pizzas per hour. Corey's opportunity cost of the delivery of an extra pizza is the production of______ pizza(s). A. 6 B. 12 C. 2 D. 1/2
C. 2
Corey can make 12 Pizzas per hour or deliver 6 pizzas per hour. Pat can make 10 Pizzas per hour or deliver 15 pizzas per hour. Pat's opportunity cost of the production of an extra pizza is the delivery of______ pizza(s). A. 3 B. 2 C. 3/2 D. 2/3
C. 3/2
The last time gas prices increased drastically, sales of large Sport Utility Vehicles (SUVs) fell. What economic reason would explain this decrease in sales? A. SUVs were a fad and were no longer popular. B. People who liked SUVs had already purchased one. C. Higher gas prices increased the cost of owning a SUV. D. The price of SUVs increased because it cost more to build them.
C. Higher gas prices increased the cost of owning a SUV.
Ginger and Maryann are lost in the jungle, where the only things to eat are mangoes and fish. Ginger can gather mangoes faster than Maryann and can also catch more fish per hour than can Maryann. Therefore: A. Ginger should specialize in fishing because it is harder than gathering mangoes, and Maryann should specialize in gathering mangoes. B. Ginger should strike out on her own, because Maryann reduces their combined productivity. C. Maryann should specialize in the activity for which she has a comparative advantage. D. Ginger should specialize in the activity for which she has an absolute advantage.
C. Maryann should specialize in the activity for which she has a comparative advantage
Curly used his frequent flyer miles to fly to visit Moe. Curly told Moe that it didn't cost him anything to visit. Is Curly correct? A. Yes, because Curly's frequent flyer miles made the trip free. B. Yes, because Curly could stay at Moe's house for free. C. No, because Curly could have used his frequent flyer miles to go somewhere else, but chose to visit Moe. D. No, because Curly had to pay for earlier trips in order to earn the frequent flyer miles.
C. No, because Curly could have used his frequent flyer miles to go somewhere else, but chose to visit Moe.
How will a decrease in price tend to affect supply? A. Supply will increase. B. Supply will decrease. C. Supply will not change. D. It is uncertain
C. Supply will not change.
Assume the demand schedule for cookies is downward sloping. If the price of cookies falls from $2.50 to $2.25 per dozen: A. the demand for cookies will fall. B. the demand for cookies will rise. C. a larger quantity of cookies will be demanded. D. a smaller quantity of cookies will be demanded.
C. a larger quantity of cookies will be demanded.
An economic naturalist is described as someone who: A. uses economic arguments to protect forests and wetlands from development. B. has a natural talent for drawing graphs. C. applies economic insights to everyday life. D. studies the process of natural selection in a marginal cost and marginal benefit framework.
C. applies economic insights to everyday life.
The number of US households with access to the Internet and those with broadband connections is growing rapidly. As an economic naturalist, one could predict that when a major purchase is being considered, families will: A. always buy online. B. never buy online. C. collect more information before making the purchase because the cost of finding and acquiring it is lower. D. collect more information before making the purchase because the benefit of information is now larger.
C. collect more information before making the purchase because the cost of finding and acquiring it is lower.
When each individual concentrates on performing the tasks and producing the goods for which he or she has the lowest opportunity cost, they are producing in accordance with the principle of A. increasing opportunity cost. B. decreasing opportunity cost. C. comparative advantage. D. scarcity E. low-hanging fruit.
C. comparative advantage.
If the price of ice cream increases substantially (ceteris paribus), the equilibrium quantity of hot fudge sauce, a complement, is likely to: A. increase, and the equilibrium price of hot fudge sauce is likely to decrease. B. increase, and the equilibrium price of hot fudge sauce is likely to increase. C. decrease, and the equilibrium price of hot fudge sauce is likely to decrease. D. decrease, and the equilibrium price of hot fudge sauce is likely to increase. E. decrease, while the impact on equilibrium price is uncertain.
C. decrease, and the equilibrium price of hot fudge sauce is likely to decrease.
In general, individuals and nations should specialize in producing goods _________ other individuals or nations. A. that they can produce more quickly than B. that they can produce less quickly than C. for which they have a lower opportunity cost compared to D. for which they have a higher opportunity cost compared to
C. for which they have a lower opportunity cost compared to
The supply curve shows: A. the same basic information as a demand curve. B. how the average cost of production varies with price. C. how the quantity produced varies with price. D. how the quantity demanded varies with price.
C. how the quantity produced varies with price.
The demand schedule for a good: A. indicates the quantity that people will buy at the prevailing price. B. indicates the quantities that suppliers will sell at various market prices. C. indicates the quantities that will be purchased at alternative market prices. D. is determined primarily by the cost of producing the good. E. indicates the quantity that people will buy at different times of the day or year.
C. indicates the quantities that will be purchased at alternative market prices.
The law of demand refers to the: A. decrease in price that results as more units of a product are demanded. B. increase in price that results from an increase in demand for a good of limited supply. C. inverse relationship between the price of a good and the quantity demanded. D. increase in the quantity of a good made available when its price increases.
C. inverse relationship between the price of a good and the quantity demanded.
By convention, there are two major divisions of economics, called: A. marginal benefit and marginal cost. B. reservation price and opportunity cost. C. microeconomics and macroeconomics. D. rational economics and irrational economics.
C. microeconomics and macroeconomics
Which of the following questions would not be answered in macroeconomics? A. What caused the Great Depression? B. At what rate does the US economy typically grow? C. Did the sharp increase in gasoline prices alter SUV sales? D. How does government spending affect the economy?
C. microeconomics and macroeconomics. Did the sharp increase in gasoline prices alter SUV sales?
One thing that distinguishes normative principles from positive principles is that: A. normative principles are pessimistic and positive principles are optimistic. B. normative principles reflect the social norms of the community, and positive principles reflect universal truths. C. normative principles tell us how people should make economic decisions, and positive principles tell us how people actually do make decisions. D. normative principles tell us how people actually make economic decisions, and positive principles tell us how people should make decisions.
C. normative principles tell us how people should make economic decisions, and positive principles tell us how people actually do make decisions.
As a result of an increase in a product's price: A. product supply increases. B. product supply decreases. C. product supply does not change, but quantity supplied increases. D. the impact on product supply is uncertain. Economic theory has no answer to this question.
C. product supply does not change, but quantity supplied increases.
A leftward shift in supply could be caused by: A. an improvement in productive technology. B. a decrease in income. C. some firms leaving the industry. D. a fall in the price of inputs to the industry. E. either a. or d.
C. some firms leaving the industry.
The textbook notes that the last time a major league batter hit .400 was in 1941. This is because: A. the average quality of batters has fallen. B. the league imposes harsh penalties for steroid use. C. specialization by pitchers, infielders, and outfielders has made it harder for batters to hit. D. baseball diamonds have become larger.
C. specialization by pitchers, infielders, and outfielders has made it harder for batters to
The production possibilities curve is: A. the boundary that divides all production combinations into efficient and inefficient ones. B. a graph illustrating the production combinations society would like to choose. C. the boundary that divides all production combinations into attainable ones and unattainable ones. D. a graph illustrating supply curves for different combinations of output.
C. the boundary that divides all production combinations into attainable ones and unattainable ones.
With ATMs, it is possible to retrieve cash from the bank at any time. One hundred years ago, one could only get cash from the bank during business hours, say, 9 am to 3 pm. The difference has arisen because: A. flexibility was not valued 100 years ago. B. it was impossible to provide 24-hour service 100 years ago. C. the cost of providing 24-hour service is much lower today. D. government forced banks to become more convenient.
C. the cost of providing 24-hour service is much lower today.
Which of the following is the basis for an argument against free trade? A. the Principle of Comparative Advantage B. the change in the total value of goods and services resulting from trade C. the distribution of the benefits from trade D. the Principle of Increasing Opportunity Costs E. all of the above
C. the distribution of the benefits from trade
The production possibilities curve shows: A. the minimum production of one good for every possible production level of the other good. B. how increasing the inputs used for one good increases the production of the other good. C. the maximum production of one good for every possible production level of the other good. D. how increasing the production of one good allows production of the other good to also rise.
C. the maximum production of one good for every possible production level of the other good
Having a comparative advantage in a particular task means that: A. you are better at it than other people. B. you give up more to accomplish that task than do others. C. you give up less to accomplish that task than do others. D. you have specialized in that task, while others have not.
C. you give up less to accomplish that task than do others.
Interpret the following statement: "Demand exceeds the available quantity of apartment housing. If the price of apartment rentals were increased, demand would decrease and an equilibrium could be achieved." A. The statement is correct. B. The statement is incorrect because the price should be decreased, not increased, in order to achieve equilibrium. C. The statement would be correct if it read "supply would decrease" in response to a price increase. D. The statement is incorrect because it confuses "demand" with "quantity demanded." E. The statement would be correct only if the terms "demand" and "supply" were interchanged
D. D. The statement is incorrect because it confuses "demand" with "quantity demanded
Which of the following would increase the quantity of LCD TVs demanded but would not increase the demand for LCD TVs? A. an increase in the price of plasma TVs, a substitute B. an increase in incomes assuming that LCD TVs are normal goods C. an increase in the expected future price of LCD TVs D. a decrease in the current price of LCD TVs E. an increase in the current price of LCD TVs
D. a decrease in the current price of LCD TVs
Which of the following would not shift the supply curve for swordfish? A. a reduction in the number of available fishing boats B. unusually stormy weather during fishing season C. the development of innovative new fishing equipment that makes it easier to catch swordfish D. an increase in the price of swordfish E. an increase in the wages of fishermen
D. an increase in the price of swordfish
If there is a surplus, ____ will be frustrated by their inability to exchange at the current price, and they will ____ the prices as a result. A. buyers; raise. B. buyers; lower. C. sellers; raise. D. sellers; lower.
D. sellers; lower.
Corey can make 12 Pizzas per hour or deliver 6 pizzas per hour. Pat can make 10 Pizzas per hour or deliver 15 pizzas per hour. Corey's opportunity cost of the production of an extra pizza is the delivery of ______ pizza(s). A. 2 B. 3/2 C. 2/3 D. 1/2
D. 1/2
Corey can make 12 Pizzas per hour or deliver 6 pizzas per hour. Pat can make 10 Pizzas per hour or deliver 15 pizzas per hour. Pat's opportunity cost of the delivery of an extra pizza is the production of _____ pizza(s). A. 12 B. 10 C. 3/2 D. 2/3
D. 2/3
If two countries specialize and trade, the country that benefits will be A. the country with the lowest opportunity cost. B. the country with the competetive advantage. C. the country with the largest trading volume. D. Both countries will benefit. E. the country with the comparative advantage.
D. Both countries will benefit.
If Scout has an absolute advantage over Dill: A. Scout has more money than Dill. B. the problem of scarcity applies to Dill, but not to Scout. C. the problem of scarcity applies to Scout, but not to Dill. D. Scout can accomplish more in a given period of time than can Dill.
D. Scout can accomplish more in a given period of time than can Dill.
Which of the following would shift a supply curve to the right? A. Taxes B. Import restrictions C. Duties D. Subsidies
D. Subsidies
Which of the following would not be analyzed in microeconomics? A. How to make the largest profit? B. Whether to study or watch TV tonight. C. How an early freeze in California will affect the price of fruit? D. Whether the federal budget should always be balanced.
D. Whether the federal budget should always be balanced.
Which of the following will not increase the demand for iced tea? A. an increase in advertising that makes drinking iced tea more appealing B. an increase in the price of iced coffee, a substitute product C. an increase in the income of consumers (assume that iced tea is a normal good) D. a decrease in the price of iced tea E. a decrease in the price of lemons, a complement to iced tea
D. a decrease in the price of iced tea
Jane can produce 50 pizzas or 100 hamburgers per day, while Sam can produce 30 pizzas or 90 hamburgers per day. Jane has an A. absolute advantage in the production of pizzas, but not hamburgers, and has a comparative advantage in the production of pizzas. B. absolute advantage in the production of hamburgers, but not pizzas, and has a comparative advantage in the production of hamburgers. C. absolute advantage in the production of hamburgers and pizzas, as well as a comparative advantage in the production of hamburgers. D. absolute advantage in the production of hamburgers and pizzas, as well as a comparative advantage in the production of pizzas. E. absolute advantage in the production of hamburgers and pizzas, as well as a comparative advantage in the production of hamburgers and pizzas.
D. absolute advantage in the production of hamburgers and pizzas, as well as a comparative advantage in the production of pizzas.
The United States was unable to maintain its dominance in the production of televisions because: A. the highly technical skills necessary to produce televisions are greater in other countries. B. the raw materials necessary to build televisions became scarce in the United States. C. the product designs evolved too rapidly for United States engineers to keep up. D. automated production allowed production to be outsourced to countries with less-skilled workers.
D. automated production allowed production to be outsourced to countries with less-skilled workers.
Larry has a comparative advantage in writing a term paper if he: A. can write a paper faster than the other students in class. B. has an absolute advantage in writing a term paper. C. always earns an A on his papers. D. has the lowest opportunity cost for writing a term paper.
D. has the lowest opportunity cost for writing a term paper.
A shortage exists in the market for corn at the prevailing price. The shortage can be eliminated by a price: A. increase, increasing the supply and decreasing the demand. B. decrease, increasing the supply and decreasing the demand. C. decrease, increasing the quantity supplied and decreasing the quantity demanded. D. increase, increasing the quantity supplied and decreasing the quantity demanded. E. increase, increasing the supply and decreasing the quantity demanded.
D. increase, increasing the quantity supplied and decreasing the quantity demanded.
A country may have a comparative advantage in the production of cars if: A. it imports most of the raw materials necessary to produce cars. B. its citizens prefer driving cars to other forms of transportation. C. it has strict environmental protection laws governing automobile emissions. D. it has the natural resources needed to produce steel.
D. it has the natural resources needed to produce steel.
According to the incentive principle: A. it is irrational to perform volunteer services. B. people will always take the highest-paying job. C. benefits are more important than costs in making a decision. D. people tend to do more of something when the benefits are greater.
D. people tend to do more of something when the benefits are greater.
Positive economic principles are those that: A. are always correct. B. are influenced by political ideology. C. predict how people should behave. D. predict how people will behave.
D. predict how people will behave
For a given good, the market demand curve is generally ____ than the demand curves for the individual consumers. A. taller B. shorter C. narrower D. wider. E. both a. and d.
D. wider
According to the Low-Hanging-Fruit Principle, in expanding production of a good, you should first employ those resources A. where you have comparative advantage. B. where you have absolute advantage. C. with the highest opportunity cost. D. with the lowest opportunity cost. E. that have the lowest price.
D. with the lowest opportunity cost
At the equilibrium price for gasoline: A. everyone with the desire and the income to buy gasoline at that price can do so. B. surpluses are inevitable. C. quantity demanded exceeds the quantity supplied. D. all sellers willing and able to sell gasoline at that price can do so. E. both a. and d. are correct.
E. both a. and d. are correct.
When there is an excess quantity supplied of a product at the current price, then: A. the market price must be below equilibrium price. B. the market price will tend to rise. C. the market price must be above equilibrium price. D. the market price will tend to fall. E. both c. and d. will occur.
E. both c. and d. will occur.
A decrease in consumer incomes will: A. decrease the demand for an inferior good. B. decrease the supply of an inferior good. C. increase the demand for a normal good. D. increase the supply of a normal good. E. do none of the above.
E. do none of the above.
If Econlandia can only trade with one other country, it should trade with A. A richer country than Econlandia. B. A poorer country than Econlandia. C. a country with the same comparative advantages as Econlandia. D. a country with slightly different comparative advantages than Econlandia. E. a country with very different comparative advantages than Econlandia.
E. a country with very different comparative advantages than Econlandia
At the individual level, comparative advantage results from A. differences in education or training. B. cultural differences. C. language differences. D. the amount of resources available. E. all of the above.
E. all of the above.
Which of the following would be most likely to cause a reduction in the supply of Nintendo video games? A. a decrease in the price of Nintendo video games B. a decrease in the price of computer chips used to make Nintendo games C. an increase in the demand for Nintendo video games D. a decrease in the demand for Nintendo video games E. an increase in the price of computer chips used to make Nintendo games
E. an increase in the price of computer chips used to make Nintendo games
Whenever the price of Good A decreases, the demand for Good B increases. Good A and B appear to be: A. compliments. B. substitutes. C. inferior goods. D. normal goods. E. complements.
E. complements
An editorial in the paper argues that students should only be allowed to attend school so long as the marginal cost of educating that student is less than the marginal benefit of that student's education. The writer's reasoning is an application of: A. positive economics. B. negative economics. C. normative economics. D. economic naturalism.
normative economics
