econ 101 Lecture Note Questions - Lecture Note Questions...

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Lecture Note Questions (relevant for Prelim 1): (1). To increase the “Wealth of Nations” or to “reduce poverty,” it is most important to a) ensure that people who work hard never lose their jobs b) ensure that no firms that produce valuable services go out of business c) ensure that consumers receive the goods and services they are most willing and able to pay for at the lowest price d) ensure that stockholders receive a positive return on their investment (2). The table below gives the number of automobiles and computers that can be produced in Japan and the USA by employing the same amount of productive resources: Automobiles Computers Japan 8 4 USA 18 6 Based on opportunity cost of resources, it is likely that the USA would find it adventageous to: a) Import automobiles and export computers b) Export automobiles and import computers c) Import both automobiles and computers and export nothing d) Export both automobiles and computers and import nothing (3). The table below gives units of computers and cattle that can be produced in the USA and Mexico if both countries use the same amount of all relevant resources. Computers Cattle USA 15 30 Mexico 3 10 Based upon the theory of comparative advantage, the USA should: a) Import computers and export cattle. b) Import cattle and export computers. c) Import nothing, because it has a comparative advantage in both. d) Export both goods because it has an absolute advantage in both. (4). One would expect that if the price of staples doubled a) the price of staplers would fall b) the demand for staplers would increase c) the quantity of staplers produced would increase d) there would be no change in the market for staplers
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(5). One would expect that an increase in the price of tomato juice from $1.50 to $2.00 would: a) Decrease the demand for orange juice b) Decrease the output of orange juice c) Decrease the price of orange juice d) Increase the price of orange juice e) Have no effect on the orange juice market (6). The following diagram concerns the demand for chocolate milk. Other things constant, news that chocolate milk is a cure for cancer would cause a move: a) From D to D1 b) From A to B c) From D1 to D d) From B to A (7). The following diagram concerns the demand for chocolate milk. Other things constant, an increase in the price of feed grain would cause a move Chocolate Milk Q P D 1 D A B
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a) From D1 to D b) From A to B c) From D to D1 d) From B to A (8). The following diagram concerns the supply for red apples. All else being equal, an increase in the price of agricultural equipment would cause a move: Chocolate Milk Q P D 1 D A B Red Apples Q P S S X Y
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From SA to SB b) From SB to SA c) From Y to X d) From X to Y (9). The following diagram concerns the supply of coffee available in the Ithaca market. All else equal, an increase in the income of Cornell students would cause a move: a) From SA to SB b) From SB to SA c) From Y to X d) From X to Y (10). The following diagram concerns the supply of coffee available in the Ithaca market. All else equal, a decrease in the price of herbal tea would cause a move:
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This note was uploaded on 03/30/2008 for the course ECON 1110 taught by Professor Wissink during the Fall '06 term at Cornell University (Engineering School).

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econ 101 Lecture Note Questions - Lecture Note Questions...

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