Microeconomics Homework Review
B
"An increase in supply decreases equilibrium price. The decrease in price increases demand." This statement is A- false, increases in supply decrease price B- false, decreases in price affect the quantity demanded, not demand C- false, increases in supply increase price. Decreases in price increase demand D- true, increases in supply decrease price. Decreases in price increase demand
D
A free market exists: A- when the government places significant restrictions on how a good or a service can be produced or sold or on how a factor of production can be employed B- when the government places absolutely no restrictions on how a good or service can be produced or sold or on how a factor of production can be employed C- Only in fiction. There are no markets or economies which even come close to approaching the status of a free market D- when the government places few restrictions on how a good or a service can be produced or sold or on how a factor of production can be employed
D
According to the law of supply A- there is a positive relationship between price and quantity supplied B- as the price of a product increases, firms will supply less of it to the market C- as the price of a product increases, firms will supply more of it to the market D- A and C
C
Adam Smith says "It is not from the benevolence of the butcher, the brewer, or the baker, that we expect or dunner, but from regard to their own interest." What does Smith mean? A- Following government regulations, entrepreneurs produce goods and services most desired by their customers for the market to function properly B- Pursuing the interest of their customers, entrepreneurs produce the goods and services most desired by their customers for equality C- Pursuing their own self-interest, entrepreneurs produce the goods and services most desired by their customers for financial reward D- Acting irrationally, entrepreneurs produce the goods and services most desired by their customers with no apparent reward in return
C
Alzania produces and consumes 500,000 tons of cotton during a year. Reports indicate that Alzania's neighbor, which also employs the same number of people in the cotton industry, consumed 400,000 tons of cotton. This lead industry experts to believe that Alzania had an absolute advantage in the production of cotton over its neighbor. Which of the following, if true, could weaken this view? A- The cotton industry in Alzania is heavily regulated by the government B- Alzania is a closed economy C- Alzania's neighbor exported half its production of cotton that year D- Alzania's neighbor has been producing cotton longer E- Workers in Alzania have a higher productivity due to better education and training
A
Consider the supply of crude oil on the world market. In August 2011, the price of oil was roughly $80 per barrel. Which of the following changes would increase the supply of oil? The oil supply curve would shift to the right if... A- future oil prices were expected to be lower B- the cost of transporting oil were to increase C- the world price of oil were to increase D- the prices of substitutes were to increase E- the number of oil producing countries were to decrease
A
Economists use the word marginal to mean an extra or additional benefit or cost of a decision. An optimal decision occurs when: A- marginal benefit equals marginal cost B- marginal benefit is maximized C- marginal benefit is greater than marginal cost D-marginal cost is zero
B
Firms choose how to produce the goods and services they sell. In many cases, firms face a trade-off between using more workers or machines. For example A- a local service station has to choose whether to provide car repair services using more diagnostic computers to support their auto mechanics and fewer tools to support their auto mechanics or more tools to support their auto mechanics and fewer diagnostic computers to support their mechanics. B- Many times in the past several decades, firms may have chosen between a production method in the US that uses fewer workers and more machines and a production method in China that uses more workers and fewer machines C- Many times in the past several decades, firms may have chosen between a production method in the US that uses fewer machines and more workers and a production method in China that uses more machines and fewer workers D- Movie studios have to choose whether to produce animated films using more highly skilled animators or fewer highly skilled animators and more low-skill animators
A
From the list below, select the variable that will cause the demand curve to shift: A- consumer income B- technology and productivity C- the number of firms in the market D- the cost of raw materials
D
How can a country gain from specialization and trade? A- a country can specialize in producing that for what it has an absolute advantage and then trade for other needed goods and services B- a country can specialize in producing that which is most scarce and than trade for other needed goods and services C- a country can specialize by using all available resources to produce goods and service to avoid trading D- a country can specialize in producing that for which it has a comparative advantage and then trade for other needed goods and services E- a country can specialize by using all available resources to invest in capital goods and promote economic growth
C
Is it possible for a country to have a comparative advantage in producing a good without also having an absolute advantage? A country without an absolute advantage in producing a good... A- will not have a comparative advantage because it has fewer resources B- will have a comparative advantage if it produces more efficiently C- will have a comparative advantage if it has a lower opportunity cost of producing that good D- will have a comparative advantage if it is able to produce that good at a low total cost E- will have a comparative advantage if it devotes more resources toward that good's production
C
It is possible for the price of water to be much lower than the price of diamonds if which of the following is true? A- the supply of diamonds is greater than the supply of water B- the supply of diamonds is a horizontal line C- the supply of diamonds and water are the same D- the supply of water is greater than the supply of diamonds E- the supply of water is vertical
Complementary
Jiffy peanut butter and smuker's jam are considered to be _____ goods
C
MCD's distributes $1 off coupons. This will cause A- demand for MCDs Big Mac hamburgers to shift to the right B- demand for MCDs Big Mac hamburgers to shift to the left C- a movement along the demand curve for MCDs big mac hamburgers
C
Opportunity cost is: A- When unlimited wants exceed the limited resources available to fulfill those wants B- When consumers and firms use all available information as they act to achieve their goals C-The highest valued alternative that must be give up to engage in an activity D- The idea that because of scarcity, producing more of one good or service means producing less of another good or service
D
Prepping for a next-day exam over the course of an evening poses increasing costs since: A- tutors charge higher rates past 7pm B- evenings are less productive time to study compared to daylight C- studying productivity declines sharply as the effort extends through the evening D- the longer you choose to study will result in an increase in number and value of foregone activities
A
Relative to a market economy, a centrally-planned economy would be expected to be: A) Better at neither productive efficiency nor allocative efficiency B) Better at allocative efficiency but not productive efficiency C) Better at productive efficiency and allocative efficiency D) Better at productive efficiency and allocative efficiency
No
Suppose that your local police department recovers 100 tickets to a big NASCAR race in a drug raid. It decides to distribute these to residents and announces that tickets will be given away at 10 am Monday morning at City Hall. Productive efficiency occurs when a good or service is produced at the lowest possible cost. Is this an efficient way to distribute tickets?
Benefits, Cost
Suppose that your local police department recovers 100 tickets to a big NASCAR race in a drug raid. It decides to distribute these to residents and announces that tickets will be given away at 10 am Monday morning at City Hall. The groups of people most likely to get the tickets will be those for whom the expected marginal _____ of going are greater than the expected marginal _____.
D
Suppose that your local police department recovers 100 tickets to a big NASCAR race in a drug raid. It decides to distribute these to residents and announces that tickets will be given away at 10 am Monday morning at City Hall. What is the actual cost and opportunity cost of distributing the tickets this way? A- cost of travel to city hall B- The activities that can't be done when standing in line C- The cost of people blocking traffic in and around city hall D- all of the above E- A and B
D
Suppose the equilibrium price and equilibrium quantity of gold both increase. Which of the following would produce such a change? A- the market supply for gold could have increased B- the market supply for gold could have increased or the market demand for gold could have decreased C- the market supply curve for gold could have increased or the market demand curve for gold could have increased D- the market demand curve for gold could have increased E- the market demand curve for gold could have decreased
D
Suppose the price of a substitute to LCD TV falls. What effect will this have on the market equilibrium for LCD TVS? The equilibrium price of LCD TVS will... A- decrease and the equilibrium quantity will increase B- increase and the equilibrium quantity will decrease C- not change and the equilibrium quantity will not change D- decrease and the equilibrium quantity will decrease E- increase and the equilibrium quantity will increase
B
The US economy enters a period of rapid growth in incomes. this will cause A- demand for MCDs Big Macs to shift to the right if they are inferior goods B- the demand for MCDs Big macs to shift to the left if they are inferior goods C- a movement along the demand curve for MCDs Big Macs if they are normal goods
A
The price of BK's Whopper hamburger declines. This will cause A- demand for MCD's Big Mac to decrease B- demand for MCD's Big Mac to increase C- a movement along the demand curve for MCD's Big Macs
a
The price of fries increases due to a potato shortage. This will A- decrease demand for MCDs Big Macs B- increase demand for MCDs Big Macs C- cause a movement along the demand curve for MCD's Big Macs
C
What do economists mean by market equilibrium? A- a condition where a good is no longer scarce B- a condition where a good is abundantly available C- a market outcome where quantity supplied is equal to quantity demanded
D
What is absolute advantage? A- the ability to produce a good or service at a lower opportunity cost than other producers B- the ability to use all available resources to produce output C- the gain from consuming a product whose benefit is greater than its cost D- the ability to produce more of a good or service than competitors using the same amount of resources E- the gain from selling a product for more than its costs to produce the product
A
What is comparative advantage? A- the ability to produce a good or service at a lower opportunity cost than other producers B- the ability to use all available resources to produce output C- the gain from consuming a product whose benefit is greater than its cost D- the ability to produce more of a good or service than competitors using the same amount of resources E- the gain from selling a product for more than its costs to produce the product
D
When economists speak of a surplus, they mean a situation in which.. A- the market price is above the equilibrium price B- the quantity supplied exceeds quantity demanded C- firms have unsold goods piling up D- all of the above E- A and B only
C
With respect to the demand for iphones, the increase in availability of apps for android phones would be expected to: A- have an indeterminate effect because many things other than the availability of apps for androids are changing b- increase demand for iphones because android phones will now be more expensive to operate c- reduce the demand for iphones because enhancements as apps to androids increase their relative appeal d- have no impact because these smartphones use different operating systems
