Economics assumes people are: 0 irrational O rational O selfinterested 0 both rational and selfinterested Question 2 Microeconomics is the study of decision making by: 0 individuals 0 all of these answers are correct 0 businesses 0 industries Production Possibilities Frontier (PPF) Pizza A B C Sugar Question 3 Point C represents: O a recession O an inefficient product mix with current resources O an unattainable product mix with current resources O efficient productionWhich point on the PPF represents a combination of pizza and sugar that is unattainable? O Point D O Point E O Point A O Point B Question 5 2 pt What would happen to the PPF if the destruction of war caused the production of both sugar and pizza to decrease permanently? O The PPF would shift outward O The PPF would tilt to the right O The PPF would shift inward O The PPF would stay the sameAndre is at work instead of at home, sleeping. This is an example of: O an opportunity cost O ceteris paribus O allocation efficiency O an absolute advantage Question 7 involves providing products at the lowest possible resource cost. O Total efficiency O Both Production Efficiency and Allocationficiency O Allocation efficiency O Production efficiencyIf Country A has the comparative advantage in airplane production over Country B, this means: O Country B can produce airplanes at a lower opportunity cost, than Country A. O Country A can produce airplanes at a lower opportunity cost than Country B. O Country A can produce more airplanes than Country B. O Country B can produce more airplanes.For questions 9-11, refer to the figures below. The figures show the production possibilities curves for the Netherlands and Greece in the production of boats and windmills. The Netherlands: Production Greece: Production Boats Possibility Frontier Boats Possibility Frontier 1400 950 Windmills 2750 1200 Windmills Question 9 3 pts In the Netherlands, what is the opportunity cost of each windmill produced? O 1.71 windmills O 1.96 boats O 0.51 boats O 0.79 boatsQuestion 10 4 pts Which of the following statements is true? Feel free to use the virtual calculator re.- 0 The Netherlands has the comparative advantage in producing both goods. 0 Greece has a comparative advantage in boat production, and the Netherlands has a comparative advantage in the production of windmills. 0 Greece has a comparative advantage in windmill production, and the Netherlands has a comparative advantage in boat production. 0 Greece has the comparative advantage in producing both goods. Question 11 2 pts If each country specializes according to its comparative advantage. what will be the outcome? 0 Greece will manufacture windmills and import boats. 0 Greece will do all the manufacturing for both countries. 0 The Netherlands will manufacture boats and import windmills. 0 Greece will manufacture boats and import windmills. Question 12 2 pts Two countries will benet from trading with one another if: 0 each country produces only goods that the other cannot. 0 each country concentrates on producing those goods for which it has the lowest opportunity cost. 0 each country concentrates on producing those goods at which it has an absolute advantage. 0 the country with the greatest productive capacity does all of the production. Question 13 2 pts The law of demand states: 0 the quantity supplied of a good decreases, when its price increases. 0 the quantity demanded of a good decreases, when its price decreases. O the quantity demanded of a good increases, when its price decreases. O demand does not depend on price. Question 14 2 pts The law of supply states: 0 supply of a good does not depend on price. 0 the quantity demanded increases as supply decreases. O the quantity of a good supplied will decrease as its price increases. 0 the quantity of a good supplied will increase as its price increases. Question 15 2 pts An increase in the supply of a good can be shown as: O rightward shift of its supply curve. 0 leftward shift of its supply curve. 0 upward movement along its supply curve. 0 downward movement along its supply curve. Question 16 2 pts Assuming milk and cereal are complements, which of the following would cause an decrease in the demand for milk? 0 An increase in the number of people shopping for breakfast foods. 0 A higher price of cereal. O A lower price of cereal. C) A lower price of milk. Question 17 2 pts Consider the market for Coca-Cola. Suppose the state of California implements a tax on producers of sugary beverages (soda included). How will this affect the market for Coca-Cola? 0 Demand will increase. 0 Supply will decrease. 0 Supply will increase. 0 Supply will remain unchanged