1. Suppose that there is a Production Possibility Frontier drawn with milk on the vertical axis and beef on the horizontal axis. The PPF has the usual concave shape.

A new milking machine is invented that assists with the production of milk, but is of no use to beef production.

How will this shift the PPF?

Group of answer choices

A,The PPF will not move

B, The PPF has the same horizontal intercept, and shifts outwards at other points

C,The PPF has the same vertical intercept, and shifts outwards at other points

D, The PPF will shift outwards at all points

2. You were planning to host your own birthday party next month at a local restaurant at a total cost of $700, and have already paid a $100 non-refundable deposit towards this.

Unknown to you, your partner has also organised a special romantic date night at the same time.

You can only do one activity. The date night cannot be postponed. The birthday party can be cancelled and you will not need to pay the remaining cost, but you will have lost the deposit.

You decide to weigh up the costs and benefits of having your birthday party to decide whether to go ahead or whether to cancel.

What is the opportunity cost of still having your birthday party?

Group of answer choices

A, The forgone enjoyment of the date night + $600

B, $700

C, $600

D, The forgone enjoyment of the date night

E, The forgone enjoyment of the date night + $700

3. Assume that bread and jam are complements, and that jam is an inferior good.

Which of the following will increase the demand for jam?

Group of answer choices

A, An increase in people's incomes

B,A decrease in people's incomes

C, A decrease in people's incomes

D, An increase in the price of bread

4. Suppose that there was an unusually bad harvest of apples this year, and at the same time a shift of consumer preferences away from apples.

What can we say about the new equilibrium in the supply and demand model as a result of these two changes?

Group of answer choices

A, the price must decrease

B, the quantity traded must decrease

C, the price must increase

D, the quantity traded must increase

5. Suppose that the price of toilet paper has increased, which of the below describes the 'income effect'?

Group of answer choices

A, You will buy less toilet paper because it is more expensive compared to other products.

B, You will buy less toilet paper because your income has gone down.

C, Your income will decrease because you can sell toilet paper for lower profit.

D, You will buy less toilet paper because your purchasing power has decreased.

6. Using the midpoint method, calculate the price elasticity of supply when an increase from $14 to $15 causes quantity supplied to rise from 2000 to 2600.

Group of answer choices

A, 0.26

B, 0.24

C, 3.8

D, 4.2