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Review Part 1 - Positive economics is an approach to...

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Unformatted text preview: Positive economics is an approach to economics that A) seeks to understand behaviour and the operation of systems without making judgments. B) analyzes outcomes of economic behaviour, evaluates them as good or bad, and may prescribe preferred courses of action. C) applies statistical techniques and data to economic problems. D) examines the role of government in the economy. Positive economics is an approach to economics that A) seeks to understand behaviour and the operation of systems without making judgments. B) analyzes outcomes of economic behaviour, evaluates them as good or bad, and may prescribe preferred courses of action. C) applies statistical techniques and data to economic problems. D) examines the role of government in the economy. Which acquisition of more of the following will shift the production possibilities frontier to the right? A) land B) labour C) capital D) all of the above Which acquisition of more of the following will shift the production possibilities frontier to the right? A) land B) labour C) capital D) all of the above If the unemployment rate increases from 10% to 12%, the A) economy will move closer to the production possibility frontier. B) economy will move farther away from the production possibility frontier. C) economy will move up its production possibility frontier. D) economy's production possibility frontier will shift back and to the left. If the unemployment rate increases from 10% to 12%, the A) economy will move closer to the production possibility frontier. B) economy will move farther away from the production possibility frontier. C) economy will move up its production possibility frontier. D) economy's production possibility frontier will shift back and to the left. An economy that is producing at the wrong point on its production possibility frontier is A) efficient, since it is on the production possibility frontier. B) inefficient, since the combination of goods and services produced is not what people want. C) efficient, since the economy is producing goods at the lowest possible cost. D) inefficient, since that combination of goods could be produced at a lower cost if more efficient technology were employed. An economy that is producing at the wrong point on its production possibility frontier is A) efficient, since it is on the production possibility frontier. B) inefficient, since the combination of goods and services produced is not what people want. C) efficient, since the economy is producing goods at the lowest possible cost. D) inefficient, since that combination of goods could be produced at a lower cost if more efficient technology were employed. A society can produce two goods: bread and cookies. The society's production possibility frontier is negatively sloped and "bowed outward" from the origin. As this society moves down its production possibility frontier producing more and more units of cookies, the opportunity cost of producing cookies A) decreases. B) remains constant. C) increases. D) could decrease or increase depending on the technology. A society can produce two goods: bread and cookies. The society's production possibility frontier is negatively sloped and "bowed outward" from the origin. As this society moves down its production possibility frontier producing more and more units of cookies, the opportunity cost of producing cookies A) decreases. B) remains constant. C) increases. D) could decrease or increase depending on the technology. The following table shows the units of output a worker can produce per month in China and Japan. Food Electronics China 20 5 Japan 8 4 The opportunity cost of 1 food in China is A) 5 electronics B) 1/5 electronics C) 4 electronics D) 1/4 electronics. The following table shows the units of output a worker can produce per month in China and Japan. Food Electronics China 20 5 Japan 8 4 The opportunity cost of 1 food in China is A) 5 electronics B) 1/5 electronics C) 4 electronics D) 1/4 electronics. The following table shows the units of output a worker can produce per month in China and Japan. Food Electronics China 20 5 Japan 8 4 Which statement is true? A) China has comparative advantage in food; Japan has comparative advantage in electronics B) Japan has comparative advantage in food; China has comparative advantage in electronics C) China has comparative advantage in both goods D) Japan has comparative advantage in both goods. The following table shows the units of output a worker can produce per month in China and Japan. Food Electronics China 20 5 Japan 8 4 Which statement is true? A) China has comparative advantage in food; Japan has comparative advantage in electronics B) Japan has comparative advantage in food; China has comparative advantage in electronics C) China has comparative advantage in both goods D) Japan has comparative advantage in both goods. The following table shows the units of output a worker can produce per month in China and Japan. Food Electronics China 20 5 Japan 8 4 Which statement is true? A) China has absolute advantage in food; Japan has absolute advantage in electronics B) Japan has absolute advantage in food; China has absolute advantage in electronics C) China has absolute advantage in both goods D) Japan has absolute advantage in both goods. The following table shows the units of output a worker can produce per month in China and Japan. Food Electronics China 20 5 Japan 8 4 Which statement is true? A) China has absolute advantage in food; Japan has absolute advantage in electronics B) Japan has absolute advantage in food; China has absolute advantage in electronics C) China has absolute advantage in both goods D) Japan has absolute advantage in both goods. Sweaters are produced using wool and labour. In Montega, a sweater can be produced with 3 skeins of wool and 3 hours of labour time. In Xena, a sweater can be produced with 3 skeins of wool and 2 hours of labour time. Which of the following is TRUE? A) Xena has both a comparative and an absolute advantage in the production of sweaters. B) Montega has both a comparative and an absolute advantage in the production of sweaters. C) Xena has an absolute advantage in the production of sweaters, but from this information it cannot be determined if Xena has a comparative advantage in the production of sweaters. D) Montega has an absolute advantage in the production of sweaters, but from this information it cannot be determined if Montega has a comparative advantage in the production of sweaters. Sweaters are produced using wool and labour. In Montega, a sweater can be produced with 3 skeins of wool and 3 hours of labour time. In Xena, a sweater can be produced with 3 skeins of wool and 2 hours of labour time. Which of the following is TRUE? A) Xena has both a comparative and an absolute advantage in the production of sweaters. B) Montega has both a comparative and an absolute advantage in the production of sweaters. C) Xena has an absolute advantage in the production of sweaters, but from this information it cannot be determined if Xena has a comparative advantage in the production of sweaters. D) Montega has an absolute advantage in the production of sweaters, but from this information it cannot be determined if Montega has a comparative advantage in the production of sweaters. According to the law of demand there is __________ relationship between price and quantity demanded. A) a positive B) a negative C) either a positive or negative D) a constantly changing According to the law of demand there is __________ relationship between price and quantity demanded. A) a positive B) a negative C) either a positive or negative D) a constantly changing The Halifax Corporation produces chairs. An economist working for the firm predicts that "if people's incomes rise next year, then the demand for our chairs will increase, ceteris paribus." The accuracy of the economist's prediction depends on whether the chairs Halifax produces A) have many complementary goods. B) have few substitutes. C) have few complementary goods. D) are normal goods. The Halifax Corporation produces chairs. An economist working for the firm predicts that "if people's incomes rise next year, then the demand for our chairs will increase, ceteris paribus." The accuracy of the economist's prediction depends on whether the chairs Halifax produces A) have many complementary goods. B) have few substitutes. C) have few complementary goods. D) are normal goods. During an economic downturn when consumer income falls, the demand for ice cream increases and the demand for chocolate cake decreases. This implies that A) ice cream and chocolate cake are complements. B) ice cream is a normal good and chocolate cake is an inferior good. C) ice cream is an inferior good and chocolate cake is a normal good. D) ice cream is an economic bad and chocolate cake is an economic good. During an economic downturn when consumer income falls, the demand for ice cream increases and the demand for chocolate cake decreases. This implies that A) ice cream and chocolate cake are complements. B) ice cream is a normal good and chocolate cake is an inferior good. C) ice cream is an inferior good and chocolate cake is a normal good. D) ice cream is an economic bad and chocolate cake is an economic good. Demand curves are derived while holding constant A) income, tastes, and the price of the good. B) income and tastes. C) income, tastes, and the price of other goods. D) tastes and the price of other goods. Demand curves are derived while holding constant A) income, tastes, and the price of the good. B) income and tastes. C) income, tastes, and the price of other goods. D) tastes and the price of other goods. The quantity demanded of Pepsi has decreased. The best explanation for this is that A) the price of Coca Cola has increased. B) Pepsi's advertising is not as effective as in the past. C) the price of Pepsi increased. D) Pepsi consumers had an increase in income. The quantity demanded of Pepsi has decreased. The best explanation for this is that A) the price of Coca Cola has increased. B) Pepsi's advertising is not as effective as in the past. C) the price of Pepsi increased. D) Pepsi consumers had an increase in income. The Pizza World restaurant had to increase the price of its pizzas due to higher input costs, but found that the number of pizzas sold actually increased slightly. The likely explanation is: A) a violation of the law of supply. B) a violation of the law of demand. C) an outward shift in the demand curve for pizzas. D) pizza is an inferior good. The Pizza World restaurant had to increase the price of its pizzas due to higher input costs, but found that the number of pizzas sold actually increased slightly. The likely explanation is: A) a violation of the law of supply. B) a violation of the law of demand. C) an outward shift in the demand curve for pizzas. D) pizza is an inferior good. A change in the price of a good or service leads to a ________ which leads to a _______. A) change in demand; movement along the demand curve B) change in quantity demanded; movement along the demand curve C) change in demand; shift in the demand curve D) change in quantity demanded; shift in the demand curve A change in the price of a good or service leads to a ________ which leads to a _______. A) change in demand; movement along the demand curve B) change in quantity demanded; movement along the demand curve C) change in demand; shift in the demand curve D) change in quantity demanded; shift in the demand curve An increase in the price of ground beef will A) increase the demand for chicken, a substitute for beef. B) increase the quantity demanded of ground beef. C) increase the demand for hamburger buns, a complement for beef. D) decrease the quantity demanded of ground beef. E) both A and D. An increase in the price of ground beef will A) increase the demand for chicken, a substitute for beef. B) increase the quantity demanded of ground beef. C) increase the demand for hamburger buns, a complement for beef. D) decrease the quantity demanded of ground beef. E) both A and D. Turnips are inferior goods if A) an increase in income decreases the demand for turnips. B) an increase in income increases the demand for turnips. C) turnips violate the law of demand. D) an increase in the price of turnips decreases the quantity of turnips that consumers want to buy. E) turnips are a low quality good. Turnips are inferior goods if A) an increase in income decreases the demand for turnips. B) an increase in income increases the demand for turnips. C) turnips violate the law of demand. D) an increase in the price of turnips decreases the quantity of turnips that consumers want to buy. E) turnips are a low quality good. If a 10 percent rise in price leads to an 8 percent decline in quantity demanded, the price elasticity of demand is A) 0.8. B) 1.25. C) 0.125. D) 80. E) 8. If a 10 percent rise in price leads to an 8 percent decline in quantity demanded, the price elasticity of demand is A) 0.8. B) 1.25. C) 0.125. D) 80. E) 8. A demand curve that has a price elasticity of A) infinity will be vertical. B) zero will be vertical. C) 1 will be horizontal. D) zero will be horizontal. E) 1 will be vertical. A demand curve that has a price elasticity of A) infinity will be vertical. B) zero will be vertical. C) 1 will be horizontal. D) zero will be horizontal. E) 1 will be vertical. Suppose a rise in the price of a good from $6.50 to $7.50 leads to a decrease in quantity demanded from 10,500 to 9,500 units. In this range of the demand curve, the price elasticity of demand is A) 0.7. B) 7. C) 1. D) 14. E) 1,000. Suppose a rise in the price of a good from $6.50 to $7.50 leads to a decrease in quantity demanded from 10,500 to 9,500 units. In this range of the demand curve, the price elasticity of demand is A) 0.7. B) 7. C) 1. D) 14. E) 1,000. For which one of the following will demand be the most price inelastic? A) The Toronto Star. B) Daily newspapers. C) Ontario newspapers. D) Toronto newspapers. E) Each of the above will exhibit the same demand elasticity For which one of the following will demand be the most price inelastic? A) The Toronto Star. B) Daily newspapers. C) Ontario newspapers. D) Toronto newspapers. E) Each of the above will exhibit the same demand elasticity If the cross-price elasticity of demand between goods A and B is positive, then A) A and B are complements. B) the demands for A and B are both price inelastic. C) the demands for A and B are both price elastic. D) A and B are substitutes. E) none of the above. If the cross-price elasticity of demand between goods A and B is positive, then A) A and B are complements. B) the demands for A and B are both price inelastic. C) the demands for A and B are both price elastic. D) A and B are substitutes. E) none of the above. In order to be included in "quantity demanded" the consumer must A) have actually purchased the product in the past. B) be willing and able to purchase the product. C) be actually purchasing the product. D) be able to purchase the product. E) be willing to purchase the product In order to be included in "quantity demanded" the consumer must A) have actually purchased the product in the past. B) be willing and able to purchase the product. C) be actually purchasing the product. D) be able to purchase the product. E) be willing to purchase the product At some rock concerts we observe long lineups for tickets. One possible explanation for this is that A) the market price for rock concert tickets is above its equilibrium price. B) the market price for rock concert tickets is at its equilibrium value, but concert goers line up for tickets out of habit. C) the market price for rock concert tickets is below its equilibrium price. D) CD prices have increased. E) concert goers are not rational At some rock concerts we observe long lineups for tickets. One possible explanation for this is that A) the market price for rock concert tickets is above its equilibrium price. B) the market price for rock concert tickets is at its equilibrium value, but concert goers line up for tickets out of habit. C) the market price for rock concert tickets is below its equilibrium price. D) CD prices have increased. E) concert goers are not rational If a demand and a supply curve can be stated functionally as Qd = 100 - 5P; and Qs = 90 + 5P respectively, then the equilibrium quantity and price (Q, P) would be A) 190, 1. B) 1, 95. C) 190, 10. D) 95, 10 E) 95, 1. If a demand and a supply curve can be stated functionally as Qd = 100 - 5P; and Qs = 90 + 5P respectively, then the equilibrium quantity and price (Q, P) would be A) 190, 1. B) 1, 95. C) 190, 10. D) 95, 10 E) 95, 1. If a demand and a supply curve can be stated functionally as Qd = 100 - 5P; and Qs = 90 + 5P respectively, then consumer surplus would be A) $1900 B) $950 C) $95 D) $902.50 E) insufficient information to determine. If a demand and a supply curve can be stated functionally as Qd = 100 - 5P; and Qs = 90 + 5P respectively, then consumer surplus would be A) $1900 B) $950 C) $95 D) $902.50 E) insufficient information to determine. If the total revenue of automobile producers increases when the price of automobiles rises, the price elasticity of demand is A) less than one (demand is inelastic). B) equal to one (demand is unit elastic). C) greater than one (demand is elastic). D) exactly zero. E) not determinable from the information given. If the total revenue of automobile producers increases when the price of automobiles rises, the price elasticity of demand is A) less than one (demand is inelastic). B) equal to one (demand is unit elastic). C) greater than one (demand is elastic). D) exactly zero. E) not determinable from the information given. If the demand for some good fluctuates, but supply is constant, then which of the following combinations would generally yield the greatest quantity fluctuations? A) large demand fluctuations and elastic supply B) small demand fluctuations and unit elastic supply C) small demand fluctuations and inelastic supply D) large demand fluctuations and inelastic supply E) small demand fluctuations and elastic supply If the demand for some good fluctuates, but supply is constant, then which of the following combinations would generally yield the greatest quantity fluctuations? A) large demand fluctuations and elastic supply B) small demand fluctuations and unit elastic supply C) small demand fluctuations and inelastic supply D) large demand fluctuations and inelastic supply E) small demand fluctuations and elastic supply Given the demand function P = 20 – Q and the supply function P = Q in a free market, producer surplus will be A) $100 B) $50 C) $10 D) $0 E) insufficient information to calculate Given the demand function P = 20 – Q and the supply function P = Q in a free market, producer surplus will be A) $100 B) $50 C) $10 D) $0 E) insufficient information to calculate Table 1 ____________________________________________________________ Price per pizza Quantity demanded Quantity supplied (pizzas per month) (pizzas per month) ____________________________________________________________ $4 1 000 700 $6 900 750 $8 800 800 $10 700 850 $12 600 900 Refer to Table 1. This market will be in equilibrium if the price per pizza is A) $6. B) $8. C) $10. D) $12. Table 1 ____________________________________________________________ Price per pizza Quantity demanded Quantity supplied (pizzas per month) (pizzas per month) ____________________________________________________________ $4 1 000 700 $6 900 750 $8 800 800 $10 700 850 $12 600 900 Refer to Table 1. This market will be in equilibrium if the price per pizza is A) $6. B) $8. C) $10. D) $12. As a result of a technological breakthrough at ABC Computers, the supply curve shifted out, the equilibrium price of computers decreased, and total revenue decreased. This suggests the price elasticity of demand for computers is A) inelastic. B) elastic. C) perfectly inelastic. D) perfectly elastic. As a result of a technological breakthrough at ABC Computers, the supply curve shifted out, the equilibrium price of computers decreased, and total revenue decreased. This suggests the price elasticity of demand for computers is A) inelastic. B) elastic. C) perfectly inelastic. D) perfectly elastic. The ABC Computer Company wants to increase the quantity of computers it sells by 5%. If the price elasticity of demand is 2.5 the company must A) increase price by 2.0%. B) decrease price by 2.0%. C) decrease price by 0.5%. D) increase price by 0.5%. The ABC Computer Company wants to increase the quantity of computers it sells by 5%. If the price elasticity of demand is 2.5 the company must A) increase price by 2.0%. B) decrease price by 2.0%. C) decrease price by 0.5%. D) increase price by 0.5%. ...
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Review Part 1 - Positive economics is an approach to...

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