237. Trade allows countries to consume more than their ability to produce.
238. Employing comparative advantage increases the total satisfaction with what's produced,
but not the total amount of what's produced.
239. If J
40. In the market for pharmaceuticals, the issue of drug lag illustrates which of the
A) The longer a drug is tested for safety, the lower the opportunity cost in terms of
B) If a drug is not tested for safety, it might kill m
209. The human brain has no limits, so the division of knowledge decreases the total
knowledge in society.
210. Without trade, specialization is impractical.
211. The U.S. interstate highway system probably allowed more p
160. Central banking in the United States refers to:
A) the operation of the Federal Reserve in its attempts to affect the economy.
B) how commercial banks interact with one another to earn more profits.
C) the federal government's control of the United S
244. A market has a demand equation as follows: Qd = 60 4P. The market price of the
product is $5. Calculate the dollar amount of consumer surplus in this market, and
illustrate your answer graphically.
245. A market has a demand equation as follows: Qd =
175. If the government decided to heavily regulate small farmers who grow organic and
free-range food, the supply of that food:
A) would increase because the regulations would improve the quality of that food.
B) would decrease because the regulations are
159. Figure: Supply Shift
According to the figure, the:
A) costs of producing output have decreased.
B) technology for producing output has improved.
C) costs of producing output have increased.
D) price of the product has decreased.
160. In the oil marke
214. An increase in the price of a good will typically increase demand for that good.
215. When income increases, the demand for all goods increases as well.
216. The demand curve for an inferior good reacts inversely to
126. Figure: United States Production Possibility Frontier
Suppose the figure illustrates the United States PPF for the production of corn
and TVs. Which of the following statements is TRUE?
A) The United States should specialize in the production of corn
134. Iceland produces two goods: Viking hats (Y) and fish (X). Its production possibilities
frontier is characterized as: Y = 50 2X. What is the opportunity cost of producing a
tenth unit of fish (i.e., going from nine units of fish production to 10)?
190. One result of the North American Free Trade Agreement was that the number of
Canadian lumber companies selling in United States markets _, causing a(n) _
in the total market supply of lumber in the United States.
A) increased; decrease
103. Suppose that consumers begin to believe that the price of housing will be lower next
period. What will happen in the market for housing as a result of these expectations?
A) Nothing will happen now. Consumers will wait for the price to actually decre
211. While economic growth does increase the quality of life, the trade-off is that life
expectancy is now shorter than in the past.
212. People in developing countries are more vulnerable to illness and disease than people in
95. The average tax on a professor's income of $100,000 is 18 percent, and the marginal tax
rate above $100,000 is 45 percent. If the professor teaches during the summer and earns
an additional $10,000 (bringing her total earnings for the year to $110,000
2. Figure: Demand Curve
Which statement is TRUE regarding the figure?
A) At a price of $6 per unit, consumers are willing and able to buy 10 units.
B) The maximum price demanders are willing to pay for 15 units is $6 per unit.
C) The higher the price, the
19. Adam Smith coined the term invisible hand to mean:
A) a physical hand that leads individuals to promote social interest by pursuing
B) a metaphorical hand that leads individuals to promote social interest by pursuing
products from all over the world and how millions of other people provide the public
with food, clothing, and shelter. Paraphrasing Adam Smith: people do these things out
of their own self-interest to earn money, not fro
15. Specialization and trade can _ the per-unit cost of production because _ .
A) decrease; it allows for more small-scale production.
B) decrease; it creates economies of scale associated with large-scale production
C) increase; it requires more expensiv
41. If the university president valued a parking space close to the administration building at
$500 and paid $30 for a parking permit, he would receive consumer surplus equal to:
42. The difference between the maximum pr
LESSON 5 ACTIVITY 17
The Business Cycle
The Business Cycle
PERIODS OF TIME
The curved line on Figure 17.1
LESSON 2 ACTIVITY 51
Barriers to Trade
The free trade movement started about 200 years ago. Previously, it appears that one of the goals of
governments was to stifle international trade, presumably for the benefit of their own econom
LESSON 2 ACTIVITY 12
All About GDP
Is This Counted as Part of GDP?
Which of the following are included and which are excluded in calculating GDP? Explain your decisions.
1. A monthly check received by an economics student who
Problem Set 6 Solution
1. There are many foreign embassies in the Washington, DC. In fact, there is an
area of the city where quite a few of them are very close to each other. As you
walk along one of the streets you observe thr
115. One of the effects of economic growth is:
A) a higher rate of infant mortality.
B) less leisure time.
C) a lower level of reported happiness.
D) better sanitation and health outcomes.
116. How are wealth and economic growth related?
A) Increases in w
Microeconomics II notes:
Primary focus on
1. Welfare economics
2. General equilibrium uses concepts on theories of welfare economics.
3. Public goods
Prepare your own notes regarding the lecture and reading references.
1. Paretian welfare conditions are Pareto
How do we determine whether the state is Pareto optimal or efficient?
We have a set of conditions to determine the set of states is
MRS= for all individuals
Problem Set VI: Edgeworth Box
Exercises solved in class on March 15th, 2010
Recap: pure exchange
The simplest model of a general equilibrium theory is a model with no production: a pure exchange
M. Utku Unver
M. Utku Unver Micro Theory (BC)
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So far we have been analyzing the behavior of a single consumer. In this
chapter, we will see how consumers interact in a market setting