EC201.w04.m1 - mid.term.1.w04 Multiple Choice Identify the...

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mid.term.1.w04 Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. Graph 3-2 These figures illustrate the production possibilities available to Tom and Nicole with 40 hours of labor. ____ 1. Refer to Graph 3-2. The opportunity cost of 1 video for Tom is a. 4 books. b. 2 books. c. 1 book. d. 1/2 book. ____ 2. Refer to Graph 3-2. The opportunity cost of 1 book for Nicole is a. 40 videos. b. 8 videos. c. 5 videos. d. 1/8 video. ____ 3. Refer to Graph 3-2. Nicole has an absolute advantage in __________ and Tom has an absolute advantage in __________. a. both goods, neither good b. neither good, both goods c. books, videos d. videos, books ____ 4. Refer to Graph 3-2. Nicole has a comparative advantage in __________ and Tom has a comparative advant- age in __________. a. videos, books b. both goods, neither good c. books, videos d. neither good, books ____ 5. Refer to Graph 3-2. If Tom and Nicole devote 1/2 of their time (20 hours) to the production of each good, total production of books by both would be __________ and total production of videos by both would be __________.
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____ 6. Refer to Graph 3-2. If Tom and Nicole both specialize in the good in which they have a comparative advant- age, total production of books will be __________ and total production of videos will be __________. ____ 7. The gains from trade are ____ 8. Suppose that a decrease in the price of X results in less of good Y sold. This would mean that X and Y are a. complementary goods. b. substitute goods. c. unrelated goods. d. normal goods. ____ 9. If a decrease in income increases the demand for a good, then ____ 10. Which of the following is a determinant of demand? ____
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