Assignment
1. Economics deals primarily with the concept of
A. scarcity.
B. money.
C. poverty.
D. banking.
2. Hamid spends an hour studying instead of watching TV with his friends. The opportunity cost to him of studying is
A. the improvement in his grades from studying for the hour.
B. the improvement in his grades from studying minus the enjoyment of watching TV.
C. the enjoyment he would have received if he had watched TV with his friends.
D. zero. Since Hamid chose to study rather than to watch TV, the value of studying must have been greater to him than the value of watching TV.
3. Both Dave and Caroline produce sweaters and socks. If Dave's opportunity cost of 1 sweater is 3 socks and Caroline's opportunity cost of 1 sweater is 5 socks, then
A. Dave has a comparative advantage in the production of sweaters.
B. Caroline has a comparative advantage in the production of sweaters.
C. Dave has a comparative advantage in the production of socks.
D. Dave has a comparative advantage in the production of both sweaters and socks.
4. A rational decision-maker
A. ignores marginal changes and focuses instead on "the big picture."
B. ignores the likely effects of government policies when he or she makes choices.
C. takes an action only if the marginal benefit of that action exceeds the marginal cost of that action.
D. takes an action only if the combined benefits of that action and previous actions exceed the combined costs of that action and previous actions.
5. Economists are particularly adept at understanding that people respond to
A. laws.
B. incentives.
C. punishments more than rewards.
D. rewards more than punishments.
6. Which two groups of decision makers are included in the simple circular-flow diagram?
A. markets and government.
B. households and government.
C. firms and government.
D. households and firms.
7. When a production possibilities frontier is bowed outward, the opportunity cost of producing an additional unit of a good
A. increases as more of the good is produced.
B. decreases as more of the good is produced.
C. does not change as more of the good is produced.
D. may increase, decrease, or not change as more of the good is produced.
Figure 2-4
8. Refer to Figure 2-4. Unemployment could cause this economy to produce at which point(s)?
A. Q, S.
B. Q, S, T.
C. R, U.
D. T.
9. Suppose Jim and Tom can both produce two goods: baseball bats and hockey sticks. Which of the following is not possible?
A. Jim has an absolute advantage in the production of baseball bats and in the production of hockey sticks.
B. Jim has an absolute advantage in the production of baseball bats and a comparative advantage in the production of hockey sticks.
C. Jim has an absolute advantage in the production of hockey sticks and a comparative advantage in the production of baseball bats.
D. Jim has a comparative advantage in the production of baseball bats and in the production of hockey sticks.
10. Lawrence is a photographer. He has $230 to spend and wants to buy either a flash for his camera or a new tripod. Both the flash and tripod cost $230, so he can only buy one. This illustrates the principle that
A. trade can make everyone better off.
B. people face trade-offs.1
C. rational people think at the margin.
D. people respond to incentives.
Tabe 3-30
Assume that Falda and Vanck can switch between Producing wheat and producing cloth at a constant rate.
|
|
Quantity Produced in 1 Hour
|
|
|
Bushels of Wheat
|
Yards of Cloth
|
|
Falda
|
8
|
12
|
|
Varick
|
6
|
15
|
11. Refer to Table 3-30. Falda has an absolute advantage in the production of
A. wheat.
B. cloth.
C. both goods.
D. neither good.
Table 3-30
Assume that Falda and Varick can switch between producing wheat and producing cloth at a constant rate.
|
|
Quantity Produced in 1 Hour
|
|
|
Bushels of Wheat
|
Yards of Cloth
|
|
Falda
|
8
|
12
|
|
Varick
|
6
|
15
|
12. Refer to Table 3-30. Varick has a comparative advantage in the production of
A. wheat.
B. cloth.
C. both goods.
D. neither good.
13. The supply of a good or service is determined by
A. those who buy the good or service.
B. the government.
C. those who sell the good or service.
D. both those who buy and those who sell the good or service.
14. Refer to Figure 3-19. Chile's opportunity cost of one pound of coffee is
A. 3/4 pound of soybeans and Colombia's opportunity cost of one pound of coffee is 1/2 pound of soybeans.
B. 3/4 pound of soybeans and Colombia's opportunity cost of one pound of coffee is 2 pounds of soybeans.
C. 4/3 pounds of soybeans and Colombia's opportunity cost of one pound of coffee is 1/2 pound of soybeans.
D. 4/3 pounds of soybeans and Colombia's opportunity cost of one pound of coffee is 2 pounds of soybeans.
15. Which of the following statements is true?
A. Chile should specialize in the production of coffee, Colombia should specialize in the production of soybeans, and the two countries should trade.
B. Chile should specialize in the production of soybeans, Colombia should specialize in the production of coffee, and the two countries should trade.
C. Chile should specialize in the production of soybeans and coffee.
D. Columbia should specialize in the production of soybeans and coffee.
16. At which of the following prices would both Chile and Colombia gain from trade with each other?
A. 6 pounds of soybeans for 9 pounds of coffee.
B. 8 pounds of soybeans for 20 pounds of coffee.
C. 11 pounds of soybeans for 33 pounds of coffee.
D. Chile and Colombia could not both gain from trade with each other at any price.
17. An increase in the price of a good will
A. increase demand.
B. decrease demand.
C. increase quantity demanded.
ID. decrease quantity demanded.)
18. Suppose that when income rises, the demand curve for doctor's visits shifts to the right. In this case, we know doctor's visits are
A. inferior goods.
B. normal goods.
C. perfectly competitive goods.
D. durable goods.
19. When the price of a good or service changes,
A. the demand curve shifts in the opposite direction.
B. the supply curve shifts in the opposite direction.
C. the supply curve shifts in the some direction.
D. there is a movement along a given supply curve.
20. You wear either shorts or sweatpants every day. You notice that sweatpants have gone on sale, so your demand for
A. sweatpants will increase.
B. sweatpants will decrease.
C. shorts will increase.
D. shorts will decrease.
21. The following table contains a supply schedule for a good.
|
Price
|
Quantity Supplied
|
|
$ 10
|
100
|
|
$ 20
|
Q1
|
If the law of supply applies to this good, then Q I could be
A. 0.
B. 50.
C. 100.
D. 150.
22. A decrease in supply is represented by a
A. movement downward and to the left along a supply curve.
B. movement upward and to the right along a supply curve.
C. rightward shift of a supply curve.
D. leftward shift of a supply curve.
23. Which of the following events must cause equilibrium quantity to fall?
A. demand increases and supply decreases.
B. demand and supply both decrease.
C. demand decreases and supply increases.
D. demand and supply both increase.
24. A decrease in input costs to firms in a market will result in a(n)
A. decrease in equilibrium price and an increase in equilibrium quantity.
B. decrease in equilibrium price and a decrease in equilibrium quantity.
C. increase in equilibrium price and a decrease in equilibrium quantity.
D. increase in equilibrium price and an increase in equilibrium quantity.
25. Suppose the number of buyers in a market increases and a technological advancement occurs also. What would we expect to happen in the market?
A. Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous.
B. Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous.
C. Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous.
D. Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.
26. What would happen to the equilibrium price and quantity of coffee if the wages of coffee-bean pickers fell and the price of tea fell?
A. Price would fall, and the effect on quantity would be ambiguous.
B. Price would fall, and the effect on quantity would be ambiguous.
C. Quantity would fall, and the effect on price would be ambiguous.
D. Quantity would rise, and the effect on price would be ambiguous.
27. Over the last few decades, Americans have chosen to cook less at home and eat more at restaurants. This change in behavior, by itself, has
A. reduced measured GDP.
B. not affected measured GDP
C. increased measured GDP by the value of the restaurant meals.
D. increased measured GDP by the value added by the restaurant° preparation and serving of the meals.
Table 23-6
The table below contain data for the country of Batterland, which produce only and pancakes. The base year is 2013.
|
Year
|
Price of Waffles
|
Quantity of Waffles
|
Price of Pancakes
|
Price of Pancakes
|
|
2010
|
$ 2.00
|
20
|
$ 1.00
|
100
|
|
2011
|
$ 2.00
|
100
|
$ 2.00
|
120
|
|
2012
|
$ 2.00
|
120
|
$ 3.00
|
150
|
|
2013
|
$ 4.00
|
150
|
$ 3.00
|
200
|
28. Refer to Table 23-6. From 2012 to 2013, this country's output grew
A. 28.2%.
B. 29.0%.
C. 29.6%.
D. 73.9%.
Table 24-4
The table below pertains to Studious, an economy in which the typical consumer's basket consists of 5 books and 10 calculators.
|
Year
|
Price of a book
|
Price of a Calculator
|
|
2012
|
$24
|
$9
|
|
2013
|
$30
|
$11
|
|
2014
|
$32
|
$12
|
29. Refer to Table 24-4. The cost of the basket
A. increased from 2012 to 2013 and increased from 2013 to 2014
B. increased from 2012 to 2013 and decreased from 2013 to 2014.
C. decreased from 2012 to 2013 and increased from 2013 to 2014.
D. decreased from 2012 to 2013 and decreased from 2013 to 2014.
Table 24-4
The table below pertains to Studious, an economy in which the typical consumer's basket consists of 5 books and 10 calculators.
|
Year
|
Price of a book
|
Price of a Calculator
|
|
2012
|
$24
|
$9
|
|
2013
|
$30
|
$11
|
|
2014
|
$32
|
$12
|
30. Refer to Table 24-4. The inflation rate was
A. 24.3 percent in 2013 and 22.5 percent in 2014.
B. 23.8 percent in 2013 and 9.5 percent in 2014.
C. 23.8 percent in 2013 and 7.7 percent in 2014.
D. 24.3 percent in 2013 and 7.3 percent in 2014.