Micro Exam 1

The diagram above shows a hypothetical demand curve for apples. The slope of this curve is: ​(Enter your response rounded to two decimal places. Include a minus sign if​ appropriate.)

-1 (slope)

In which good does each farmer have a comparative advantage?: -Annie has a comparative advantage in apples and Bret has a comparative advantage in cherries. -Bret has a comparative advantage in growing both fruits. -Annie has a comparative advantage in growing both fruits. -Bret has a comparative advantage in apples and Annie has a comparative advantage in cherries.

-Annie has a comparative advantage in apples and Bret has a comparative advantage in cherries.

The information in this question refers to the next nine questions.Annie and Bret produce apples and cherries and originally live on their own farms and do not trade with each other. Their opportunity costs of producing each crop are constant.In one year, if Annie completely focuses on growing apples, she has 100 pounds of apples. If Annie completely focuses on growing cherries, she has 50 pounds of cherries.In one year, if Bret completely focuses on growing apples, he has 60 pounds of apples. If Bret completely focuses on growing cherries, he has 60 pounds of cherries.First: who has the absolute advantage in producing apples? Who has the absolute advantage in producing cherries? Explain why. -Annie has the absolute advantage in producing cherries and producing apples. -Bret has the absolute advantage in producing cherries and producing apples. -Annie has the absolute advantage in producing apples but Bret has the absolute advantage in producing cherries. -Annie has the absolute advantage in producing cherries but Bret has the absolute advantage in producing apples.

-Annie has the absolute advantage in producing apples but Bret has the absolute advantage in producing cherries.

Which of the following will cause an outward (rightward) shift in supply for a good?: -A reduction in consumer income for an inferior good. -The cost of an input decreases. -A decline in labor productivity. -An increase in the market price of the good.

-The cost of an input decreases.

Which of the following represents an inferior good?: -When income goes up, the demand for peanut butter decreases. -When income goes up, the demand for bottled water is unchanged. -When income goes up, the demand for ferris wheel rides increases. -When income goes down, the demand for automobiles decreases.

-When income goes up, the demand for peanut butter decreases.

Most economists agree that governments should: -protect property rights. =raise taxes on those most able to pay. -abolish the minimum wage. -apply the same tax rate on everyone to achieve equity.

-protect property rights.

At the market equilibrium price: -quantity demanded equals quantity supplied -quantity equals price -society has achieved equity -demand equals supply

-quantity demanded equals quantity supplied

All of the following scenarios depict the characteristics of complements except: -the price of coffee increases and the demand for cream decreases. -the price of milk decreases and the demand for eggs decreases. -the price of tennis racquets increases and the demand for tennis shoes decreases. -the price of automobiles decreases and the demand for tires increases.

-the price of milk decreases and the demand for eggs decreases.

What is Annie's opportunity cost for producing apples in terms of cherries? That is, how many pounds of cherries does she give up per pound of apples? Enter the exact number as a decimal rounded to the nearest tenth of a pound.

0.5

What is Bret's opportunity cost for producing apples in terms of cherries? That is, how many pounds of cherries does he give up per pound of apples? Enter the exact number as a decimal rounded to the nearest tenth of a pound.

1

What is Bret's opportunity cost for producing cherries in terms of apples? That is, how many pounds of apples does he give up per pound of cherries? Enter the exact number as a decimal rounded to the nearest tenth of a pound.

1

In one equation, Y = 16 - 1.5X. In another equation, Y = 4 + 2.5 X When the two equation lines cross, the value of Y is:

11.5

If the initial value is 53 and the final value is 125, what is the percentage change? Enter your answer as a percentage number rounded to two decimal points. (Do not use the midpoint formula we discussed for elasticity here. Instead, just express the percentage using the initial value as the reference point.)

135.85

What is Annie's opportunity cost for producing cherries in terms of apples? That is, how many pounds of apples does she give up per pound of cherries? Enter the exact number as a decimal rounded to the nearest tenth of a pound.

2

In one equation, Y = 16 - 1.5X. In another equation, Y = 4 + 2.5 X When the two equation lines cross, the value of X is:

3

________________ occurs when production is in accordance with consumer preferences. _______________ occurs when a good or service is produced at the lowest possible cost. Allocative Efficiency Production Efficiency Productive Efficiency

Allocative Efficiency, Productive Efficiency

Which of the following is a positive economic statement?: -Decreasing the price of bottled water causes an increase in the quantity of beer demanded. -Orange juice is preferable to both beer and water. -People should drink more water to improve life expectancy. -The government should tax beer more to address substance abuse.

Decreasing the price of bottled water causes an increase in the quantity of beer demanded.

In the circular flow model of the economy, __________ are the suppliers of goods and services: -Firms -Households -Foreign consumers -Financial intermediaries

Firms

Assume people become concerned that Corona beer causes a virus. From the list below, what happens in the market for Budweiser beer?I. Demand for Budweiser beer increases II. Supply for Budweiser beer increases III. Quantity demanded for Budweiser beer increases IV. Quantity supplied for Budweiser beer increases. V. Price of Budweiser beer increases. VI. Price of Budweiser beer decreases.: -II. III., IV. and VI. -I., III., IV. and V. -I., III. IV. and VI. -II. III., IV. and V. -I., III. and V. -I., II. III., IV. and V.

I., III., IV. and V.

In the above diagram, when supply increases from S1 to S2, a __________ develops at the original price. Equilibrium price will __________ and equilibrium quantity will __________ as a new equilibrium is established.

In ipad

Economists believe that an individual or firm should continue any activity until: -Marginal benefit is more than marginal cost. -Marginal benefit is less than marginal cost. -Marginal benefit is more than opportunity cost. -Marginal benefit is equal to marginal cost.

Marginal benefit is equal to marginal cost.

The United States is best classified as a: -Mixed economy -Free Market Economy -Centrally Planned Economy -Fuel Economy

Mixed Economy

When we graph the relationship between two​ variables, we often want to draw conclusions about whether changes in one variable are causing changes in the other variable. Doing​ so, however, can lead to incorrect conclusions. The best reason below for drawing incorrect conclusions about cause and effect is: -Omitted variables -Omitted variables and reverse causality -Reverse causality

Omitted variables and reverse causality

Which of the following is not a factor of production?: -Entrepreneurship -Labor -Physical Capital -Natural Resources -Pollution

Pollution

Cheese is a key input in the production of pizza. Due to a drought, cheese gets more expensive. What happens to the price of pizza and the quantity of pizza demanded at equilibrium as a result of the drought?: -Quantity demanded increases and price increases -Quantity demanded decreases and price increases -Quantity demanded increases and price decreases -Quantity demanded decreases and price decreases

Quantity demanded decreases and price increases

The baby boomers retire and there are suddenly millions more interested in obtaining more services for eye exams. At the same time, a surge of young workers go to optometry school and there are more people who provide eye exams. Which of the following can we say for sure?: -Quantity demanded of eye exams increases and the price of eye exams decreases. -Quantity demanded of eye exams changes ambiguously and the price of eye exams increases. -Quantity demanded of eye exams increases and the price change of eye exams is ambiguous. -Quantity demanded of eye exams decreases and the price of eye exams decreases. -Quantity demanded of eye exams changes ambiguously and the price change of eye exams is ambiguous. -Quantity demanded of eye exams increases and the price of eye exams increases. -Quantity demanded of eye exams changes ambiguously and the price of eye exams decreases. -Quantity demanded of eye exams decreases and the price change of eye exams is ambiguous. -Quantity demanded of eye exams decreases and the price of eye exams increases.

Quantity demanded of eye exams increases and the price change of eye exams is ambiguous.

Economics is the study of choice under conditions of: -Opportunity -Demand -Scarcity -Abundance

Scarcity

Assume Annie eats 60 pounds of apples and 20 pounds of cherries when she does not trade and assume Bret eats 40 pounds of apples and 20 pounds of cherries when he does not trade. Suppose they then agree to specialize in the crop they are best in and then trade with each other. Are there more apples between the two of them after this arrangement? Are there more cherries between the two of them?: -There are more apples but not more cherries. -There are more cherries but not more apples. -There is more of neither fruit. -There are more of both fruits.

There are more cherries but not more apples.

Can Annie consume 60 pounds of apples and 20 pounds of cherries per year without trading with Bret?

Yes

Can Bret consume 40 pounds of apples and 20 pounds of cherries per year without trading with Annie?

Yes

The basis for trade is: -comparative advantage -absolute advantage

comparative advantage

A(n) ____________ is someone who operates a​ business, bringing together the factors of production—​labor, capital, and natural resources—to produce goods and services.

entrepreneur

If a country has a comparative advantage in the production of a good, then that country: -has a lower opportunity cost in the production of that good -has an absolute advantage in producing that good -should consume as much of this good as possible, -should allow another country to specialize in the production of that good

has a lower opportunity cost in the production of that good

The best reason below that economics is a social science is because: -it considers human behavior- particularly ​decision-making behavior. -it is based on studying the actions of individuals. -it applies the scientific method to the study of the interactions among individuals. -of all of the reasons listed.

of all of the reasons listed.

Absolute advantage is the ability of an individual, firm, or country to: -produce more of a good or service than competitors using the same amount of resources -consume more goods or services than others at lower costs -produce a good or service at a lower opportunity cost than other producers -reach a higher production possibilities frontier by adding additional resources

produce more of a good or service than competitors using the same amount of resources

The principle of increasing marginal opportunity cost states that the more resources devoted to any activity, the__________ the payoff to devoting additional resources to that activity. -more equitable -greater -more efficient -smaller

smaller

Given linear demand curves, if demand increases and supply decreases, then: -the equilibrium price will increase but the effect on the equilibrium quantity will be ambiguous -the effect on the equilibrium price will be ambiguous but equilibrium quantity will decrease -the equilibrium price will decrease but the effect on the equilibrium quantity will be ambiguous -the effect on the equilibrium price will be ambiguous but equilibrium quantity will increase

the equilibrium price will increase but the effect on the equilibrium quantity will be ambiguous

Opportunity cost is: -the highest valued alternative that must be given up to engage in an activity. -when unlimited wants exceed the limited resources available to fulfill those wants. -when consumers and firms use all available information as they act to achieve their goals. -the idea that because of​ scarcity, producing more of one good or service means producing less of another good or service.

the highest valued alternative that must be given up to engage in an activity.

Opportunity Cost (Question).

whatever must be given up to obtain some item