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111T1answers - 111: Test 1 Name: 1) Production efficiency...

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Unformatted text preview: 111: Test 1 Name: 1) Production efficiency is achieved when A) all goods and services desired by consumers can be produced in the economy B) producing inside the production possibilities frontier I C) the ability is gained to produce goods and services that are desired beyond the PPF boundary I D) producing one more unit of one good cannot occur without producing less of some other good. 2) Ted can study for his economics exam or go to a concert. He decides to study for his economics exam instead of going to the concert. The concert he will miss is Ted’s studying for the exam. A) opportunity cost B) explicit cost C) implicit cost D) discretionary cost 3) While producing on the production possibilities frontier, if additional units of a good could be produced at a constant opportunity cost, the production possibilities frontier would be A) bowed outward. B) bowed inward. C) positively sloped. D) a straight line. L V E i i t i s i a E mmmwumarm» n-quumwanxwamldnxnwusn‘xuflmum:uvumnlmmmwy’rml U1; (1“ Milk (gallons per hour) 3 4 S Em.fékitésiiesnhsuri. . 2 of Consider the PPF for milk and corn in the above figure. lf currently no corn is being produced, what is the total opportunity cost of producing another 2 bushels of com? A) 2 bushels of corn B) 4 gallons of milk C) 1 gallon of milk D) nothing ,5) Automobiles (units) Computers (units) The bowed outward shape of the production possibilities frontier in the above figure indicates that A) some resources are better suited for producing computers. B) the opportunity cost of producing more computers decreases as more computers are produced. C) computer technology is subject to the principle of decreasing costs. ' D) All of the above answers are correct. 6) According to the figure above, the opportunity cost of producing another computer is A) higher at A. B) higher at B. C) the same at every point along the frontier. D) different at most points along the frontier but equal at points A and B because-they are equally distant from the axes. 7) umb-MmuvInwmmfim:trvvu«rim-ranqwaam‘rwrm"«unlummmunl$qumlmekameflwf~~rw‘nrawnv‘ mm swam . Sodas (miElions per month) 00 17-1 {2’1 o o o M Q Q 0 m 20 30 .40 .50 Pizzas [millions per month} L.'.wwxuu"..‘s‘a~—uJAH-‘Anaa-v-«wut;AN1>31.4-4..5;.r—MluawmzmwwuwwuziJalkzcmua .-.sw..u_..;ac..»s-wmsmuw.w A PPF, such as the oneabove, that bows outward illustrates A) decreasing opportunity cost. B) increasing opportunity cost. C) that technology is improving. D) that productivity is falling. 8) In the figure above, A) moving from point a to point b would require new technology. B) production at point b is efficient whereas production at point a is not efficient. C) some resources must be unemployed at point c. D) opportunity costs are decreasing. 9) Moving from one point on. the production possibilities frontier to another A) involves a tradeoff but does not incur an opportunity Cost ' C) involves a tradeoff andincurs an opportunity cost C B) involves an opportunity cost but no tradeoff ' D) involves no tradeoff but it does incur an opportunity cost 10) Production efficiency occurs when production A) is at a point beyond the production possibilities frontier B) is on the production possibilities frontier or inside it C) is at any attainable point D) is on the production possibilities frontier 11) Hot clogs Hamburgers (nmnb er per hour} (number per hour) Joe’s hot dog stand can produce hot dogs and hamburgers. The table gives Joe’s production possibilities. The opportunity cost of A) the 20th hot dog is O hamburgers B) the 40th hamburger is 20 hot dog C) 1 hamburger is 10 hot dogs .D) the first 20 hot dogs is 20 hamburgers 12) Marginal cost is the opportunity cost A) that your activity imposes on someone else. B) that arises from producing one more unit of a good or service. C) of a good or service that exceeds its benefit. D) of a good or service divided by the number of units produced. 13) The marginal benefit of a good or service is measured by A) willingness to pay for an additional unit of it. B) the consumers ability to pay for it, C) the cost of producing an additional unit of it. D) the average social benefit received from consuming it. 14) If the marginal benefit of a good exceeds its marginal cost A) we’ve achieved efficient resource use. B) we should produce more to achieve efficient resource use. C) we should produce less to achieve efficient resource use. D) we cannot tell if more or less should be produced to achieve efficient resource use. 15) If the marginal benefit from another computer exceeds the marginal cest of the computer, then to use resources efficiently, A) more resources should be used to produce computers. B) fewer resources should be used to produce computers. ’ C) if the marginal benefit exceeds the marginal cost by as much as possible, the efficient amount of resources are being used to produce computers. _ D) None of the above is correct because marginal benefit and marginal cost have nothing to do with using resources efficiently. A 16) Quantity Marginal, (pizzas per benefit clay) (cans per day) Marginal cost (cans per day) The table above shows the marginal benefit from pizza and the marginal cost of pizza in cans of soda forgone. If pizzas are produced, the quantity of soda that people are willing to give up to get an additional pizza is more than the quantity of soda that they must give up to get that additional pizza. A) any quantity other than 40 B) 40 C) more than 40 D) fewer than 40 17) After Hurricane Katrina devastated parts of Mississippi and New Orleans in 2005, we can be sure that the production possibilities frontier for that area temporarily A) shifted inward, toward the origin. B) shifted outward, away from the origin. C) became flatter. D) became steeper. 18) A person has a comparative advantage in producing a particular good if that person A) has higher productivity in producing it than anyone else has. B) can produce it at lower opportunity cost than anyone else can. C) has less desire to consume that good than anyone else has. D) has more human capital related to that good than anyone else has. 19) In an eight-hour day, Andy can produce either 24 loaves of bread or 8 pounds of butter. In an eight-hour day, Bob can produce either 8 loaves of bread or 8 pounds of butter. Andy has a comparative advantage in the production of ' A) bread, while Bob has a comparative advantage in the production of butter. B) butter, while Bob has a comparative advantage in the production of bread. C) bread and neither has a comparative advantage in the production of butter. D) both bread and butter. 20) Both Mergatroid and the Geebocks produce only gizmos and widgets. It is possible for Mergatroid to have t A) an absolute and a comparative advantage in both products. B) an absolute but not a comparative advantage in both products. C) a comparative but not an absolute advantage in both products. D) neither a comparative nor an absolute advantage in both products. 21) Whenever a person can produce more of all goods than anyone else, that person A) should specialize in everything. B) has a comparative advantage in everything. C) should be self—sufficient. D) has an absolute advantage. 22) Homer and Teddy are stranded on a desert island. To feed themselves each day they can either catch fish or pick fruit. In a day, Teddy could pick 60 pieces of fruit or catch 20 fish. Homer could pick 100 pieces of fruit or catch 150 fish. Which of the following is correct? A) Homer has a comparative advantage in catching fish and Teddy has a comparative advantage in picking fruit. . B) Homer has a comparative advantage in picking fruit and Teddy has a comparative advantage in catching fish. C) Homer has a comparative advantage in both catching fish and picking fruit. D) Teddy has a comparative advantage in both catching fish and picking fruit. 23) If the price of a candy bar is $1 and the price of a fast food meal is $5, then the A) relative price of a candy bar is 5 fast food meals. B) money price of a candy bar is 1/5 of a fast food meal. C) relative price of a fast food meal is 5 candy bars. D) money price of a fast food meal is 1/5 of a candy bar. 24) Which of the following is consistent with the law of demand? A) An increase in the price of a DVD causes an increase in the quantity of DVDs demanded. B) An increase in the price of a soda causes a decrease in the quantity of soda demanded. C) A decrease in the price of a gallon of milk causes a decrease in the quantity of milk demanded. ' D) A decrease in the price ofjuice causes no change in the quantity ofjuice demanded. 25) Which of the following influences people’s buying plans and does not shift the demand curve? A) the price of the good B) the prices of related goods C) income D) preferences 26) A drop in the price of a DVD shifts the demand curve for prerecorded video tapes leftward. From that you know DVDs and prerecorded tapes are A) complements. B) substitutes. C) inferior goods. D) normal goods. 27) If income increases orthe price of a complement falls, the A) demand curve for a normal good shifts leftward. B) demand curve for a normal good shifts rightward. C) supply curve of a normal good shifts leftward. D) supply curve of a normal good shifts rightward. 28) By definition, an inferior good is a A) want that is not expressed by demand. B) normal substitute good. C) good for which demand decreases when its price rises. D) good for which demand decreases when income increases. 29) Apple juice and orange juice are substitutes in consumption. Apple juice and apple sauce are substitutes in production. If the price of orange juice or the price of apple sauce , then the price of apple juice will ' A) rises; rises; rise B) falls; rises; fall C) falls; falls; rise D) rises; falls; rise 30 v Price (dollars per pair] U: Q O 'l 50 Quantity (pairs per day} The figure above illustrates the demand for and supply forjeans. Suppose jeans are a normal good and people’s incomes increase. At the initial price of $50 for a pair ofjeans, after the increase in income the quantity demanded is than the equilibrium quantity and there is a ofjeans. A) greater; surplus B) greater; shortage C) less; surplus D) less; shortage 31) A processor of alligator hides can produce either purses or shoes. If the demand for alligator shoes increases, then the alligator purses will A) supply of; increase B) supply of; decrease C) demand for; decrease D) demand for; increase 32) Bicycles are made out of steel. If the price of steel increases, there is a shift in the supply curve of bicycles that leads to A) a shift in the demand curve for bicycles. B) a temporary surplus of bicycles. C) a permanent surplus of bicycles. D) an increase in the price of a bicycle. 33) Doctors find that one aspirin per day reduces the risk of heart attacks. Demand for aspirin will A) increase, so that equilibrium price and equilibrium quantity will increase. B) decrease, so that equilibrium price and equilibrium quantity will increase. C) increase, so that equilibrium price will decrease and equilibrium quantity will increase. D) increase, but the new equilibrium price and quantity are indeterminate. 34) Coffee and sugar are complements. If a poor sugar harvest leads to an increase in the price of sugar, there will also be - A) an increase in the price of coffee. B) a decrease in the price of coffee. C) a rightward shift in the demand curve for coffee. D) a leftward shift of the supply curve of coffee. 35) If the quantity of textbooks supplied is 10,000 per year and the quantity of textbooks demanded is 8,000 per year, there is a in the market and the price will A) shortage; rise B) shortage; fall C) surplus; rise D) surplus; fall 36) the A) price is the lowest possible. B) price is usually affordable to most people. C) supply and demand curves can never shift again. D) quantity supplied equals the quantity demanded. 37) Which of the following statements is TRUE? ‘1 Which of the following is the best way to describe equilibrium in a market? At equilibrium, A) An increase in the price of gasoline will decrease the demand for gasoline. B) An increase in the price of gasoline will increase the quantity demanded of gasoline. C) An increase in the price of gasoline will increase the supply of gasoline. D) An increase in the price of gasoline will increase the quantity supplied of gasoline. 38) Which of the following will NOT shift the supply curve for pick-up trucks? A) a change in production technology. C) a change in the number of suppliers of pick-up trucks. D) a change in the price of pick-up trucks. 39) Price ldollors per soft drink) m. Ina-\Hkr loaf-r Ar:nLI-h Consider the figure above showing supply curves for soft drinks. Su point a. A movement to point 0 could be the result of A) a decrease in technology. B) a decrease in the relative price of a soft drink. C) an increase in the relative price of a soft drink. D) an increase in the money price of a soft drink. B) an increase in the price of a resource used to produce pick-up trucks. ppose the economy is at 40) The ‘law of supply’ states that, other things remaining the same, firms produce A) more of a good the less it costs to produce it. B) less of a good the more it costs to produce it. C) more of a good the higher its price. D) less of a good as the required resources become scarcer. Bonus questions: 1 point added to score for each correct answer. 1) “The recent hurricanes in Florida are bringing financial gain to California citrus growers. Due to extensive damage to the Florida citrus crop, California citrus products are commanding their highest prices ever.” Which of the following statements best explains the economics of this quotation? A) The supply of Florida oranges decreased, causing their price to increase, which then increased the demand for substitute California oranges. B) The supply of Florida oranges decreased, causing the supply of California oranges to increase and the price of California oranges to rise. C) The demand for Florida oranges decreased because of the hurricanes, causing a greater demand for California oranges and an increase in the price of California oranges. I ‘~ 2) if the price of lumber rises, then, in the market for sawdust, A) the supply curve of sawdust shifts leftward. B) the supply curve of sawdust shifts rightward. C) there is a movement downward along the supply curve for sawdust. D) there is a movement upward along the supply curve for sawdust. 3) If the price per bushel of apples increased from $7.00 to $8.00 because of a poor harvest, the A) demand for apples decreases. B) quantity of apples demanded decreases. C) quantity of apples supplied decreases. D) Both answers A and B are correct. 10 .// \ / ...
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111T1answers - 111: Test 1 Name: 1) Production efficiency...

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