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Exam1_w09_v1 - PART I MULTIPLE CHOICE PROBLEMS Read each of...

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PART I - MULTIPLE CHOICE PROBLEMS Read each of the following questions carefully and circle the letter of the one best answer . Note that diagrams are often helpful in determining the correct answer. 1) Using the figure to the right. As Rainclouds Inc. moves downward along its production possibilities frontier, illustrated in the figure above, the opportunity cost of an umbrella ____. A) decreases B) depends on the initial quantity produced C) increases D) remains the same 2) Suppose we observe that both the equilibrium price of digital cameras and the equilibrium quantity of digital cameras have increased. Which of the following events could be responsible for this? 3) In one day, Brad can change the oil on 20 cars or the tires on 30 cars. In one day, Angelina can change the oil on 30 cars or the tires on 45 cars. Angelina and Brad can gain from trade if Angelina changes the ____ and Brad changes the ____. 4) All grapefruit juice producers have decided to blend tangerine juice with the grapefruit juice. This blend results in a higher cost of production, but studies show that consumers prefer the taste of the blend to straight grapefruit juice. What will happen to the equilibrium price and quantity of the new “blended” grapefruit juice?
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