Question 1

A person has a comparative advantage in the production of a good when they can produce the product at a(n) ________ opportunity cost compared to another person.

Group of answer choices

higher

increasing

lower

equal

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Question 2

2.5pts

Consider two points onthe production possibilities frontier (PPF): point A, at which there are 10 apples and 20 pears, and point B, at which there are 7 apples and 21 pears. If the economy is currently at point A, the opportunity cost of moving to point B is

Group of answer choices

1 pear.

7 apples.

3 apples.

21 pears.

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Question 3

2.5pts

If an economy is operating on its production possibilities frontier (PPF), are there any unemployed resources in the economy?

Group of answer choices

Yes, because if there weren't any unemployed resources the economy would be producing beyond its PPF.

No, because if there were any unemployed resources the economy would be producing below its PPF.

It depends on whether the economy's PPF is a concave (downward-sloping) curve or a straight line.

Yes, because there are always some natural resources that are unemployed.

The answer is "yes," but not for any of the reasons specified in answers a through d.

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Question 4

2.5pts

Michael can produce the following combinations of X and Y: 10X and 10Y, 5X and 15Y, and 0X and 20Y. Vernon can produce the following combinations of X and Y: 100X and 20Y, 50X and 30Y, or 0X and 40Y. It follows that

Group of answer choices

Michael has the comparative advantage in producing X and Vernon has the comparative advantage in producing Y.

Michael has the comparative advantage in producing Y and Vernon has the comparative advantage in producing X.

Neither Michael nor Vernon has a comparative advantage in producing X.

Neither Michael nor Vernon has a comparative advantage in producing Y.

There is not enough information to answer the question.

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Question 5

2.5pts

If the law of increasing opportunity costs is operable, and currently the opportunity cost of producing the 101st unit of good X is 5Y, then the opportunity cost of producing the 201st unit of good is X is most likely to be

Group of answer choices

less than 5Y.

more than 1/5Y but less than 5Y.

more than 5Y

less than 1/5Y but more than zero.

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Question 6

2.5pts

Points that lie outside (or beyond)the production possibilities frontier (PPF)are

Group of answer choices

attainable.

unattainable.

efficient.

inefficient.

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Question 7

2.5pts

A decrease in the quantity of resources

Group of answer choices

shifts the production possibilities frontier (PPF) leftward/inward.

shifts the PPF rightward/outward.

moves the economy up a given PPF.

moves the economy down a given PPF.

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Question 8

2.5pts

Economic growth causesthe production possibilities frontier (PPF)to

Group of answer choices

shift leftward.

shift rightward.

remain constant.

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Question 9

2.5pts

Exhibit 2-8

Maria

Maya

Good X

Good Y

Good X

Good Y

90

0

60

0

60

30

40

10

30

60

20

20

0

90

0

30

Refer to Exhibit 2-8. Who has the comparative advantage in the production of good Y?

Group of answer choices

Maria

Maya

Both Maria and Maya

Neither Maria nor Maya

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Question 10

2.5pts

Currently an economy is producing (at a point on its production possibilities frontier) 100 units of good X and the opportunity cost of producing 1X is 3Y. If good X is produced at increasing opportunity costs, then when the economy produces 120 units of good X (on the same PPF) the opportunity cost of producing 1Y (not 1X) could be

Group of answer choices

1/4X.

1/3X.

1/2X.

1X.

none of the above

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Question 11

2.5pts

Country X has a high unemployment rate. It follows that country X is operating

Group of answer choices

beyond its production possibilities frontier (PPF).

on its PPF.

inside (below) its PPF.

at a productive efficient point.

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Question 12

2.5pts

Exhibit 2-9

Alex

Adam

Good A

Good B

Good A

Good B

0

300

0

160

25

225

30

120

50

150

60

80

75

75

90

40

100

0

120

0

Refer to Exhibit 2-9. For Alex, the opportunity cost of producing one unit of good A is ____________ unit(s) of good B.

Group of answer choices

3.00

0.33

0.75

1.33

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Question 13

2pts

On a supply-and-demand diagram, equilibrium is found

Group of answer choices

where the supply curve intercepts the vertical axis.

where the demand curve intercepts the horizontal axis.

where the demand and supply curves intersect.

at every point on either curve

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Question 14

2pts

The equilibrium price of a good in market A is $24. The current price of the good in market A is $21. At this price, a(n) ________________________ of the good exists in market A.

Group of answer choices

surplus

shortage

excess supply

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Question 15

2pts

The law of demand states that, other things being equal, price and ______________ are _____________ related.

Group of answer choices

demand; inversely

quantity demanded; inversely

demand; directly

quantity demanded; directly

quantity supplied; directly

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Question 16

2pts

If the supply curve and the demand curve for lettuce both shift to the left by an equal amount, what can we say about the resulting changes in equilibrium price and quantity?

Group of answer choices

The price will increase, but the quantity may increase or decrease.

The price will increase, and the quantity will increase.

The price will decrease, and the quantity will increase.

The price will stay the same, but the quantity will increase.

The price will stay the same, but the quantity will decrease.

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Question 17

2pts

Given that frozen yogurt and ice cream are substitutes, a shift in preferences in favor of yogurt would be predicted to do all of the following EXCEPT

Group of answer choices

raise the equilibrium price of frozen yogurt.

increase the equilibrium quantity of frozen yogurt.

increase the supply of frozen yogurt.

increase the demand for frozen yogurt.

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Question 18

2pts

One reads in the newspaper: "Today the president and Congress enacted a law which adds new requirements that child care providers must meet before they can offer their services for sale." As a result, an economist would predict that

Group of answer choices

the supply of child care services will increase, thus lowering the price of child care services.

the supply of child care services will be unaffected by the stiffer requirements and therefore the price of child care services will not change.

the demand for child care services will fall because people who buy child care services do not want stiffer requirements placed on child care providers.

the supply of child care services will decrease, thus raising the price of child care services.

none of the above

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Question 19

2pts

Which of the following pairs of goods would be most likely to be complements?

Group of answer choices

olive oil and vegetable oil

peanuts and peanut butter

DVD's and DVD players

hiking boots and tennis shoes

all of the above

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Question 20

2pts

Which of the following statements represents a correct and sequentially accurate economic explanation?

Group of answer choices

Goods X and Y are substitutes. The price of X falls, the quantity demanded of X rises, and the demand for Y rises.

Goods X and Y are substitutes. The price of X rises, the demand for X falls, and the demand for Y rises.

Goods X and Y are substitutes. The price of X falls, the demand for X rises, and the quantity demanded of Y rises.

Goods X and Y are substitutes. The price of X falls, the quantity demanded of X rises, and the demand for Y falls.

Goods X and Y are complements. The price of X falls, the quantity demanded of X rises, and the demand for Y falls.

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Question 21

2pts

Resource X is necessary to the production of good Y. If the price of resource X rises, the _____________ curve for good Y will shift ____________ resulting in a(n) _____________ in the equilibrium price of Y and a(n) ____________ in the equilibrium quantity of Y.

Group of answer choices

supply; rightward; decrease; increase.

demand; leftward; decrease; decrease

demand; rightward; increase; increase

supply; leftward; increase; decrease

supply; leftward; increase; increase

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Question 22

2pts

Resource X is necessary to the production of good Y. If the price of resource X falls,

Group of answer choices

the supply curve of Y shifts leftward.

the supply curve of Y shifts rightward.

the supply curve of Y is unaffected.

there is a movement down the supply curve of Y.

there is a movement up the supply curve of Y.

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Question 23

2pts

At a price above the equilibrium price, there is

Group of answer choices

a shortage.

a surplus.

excess demand.

super-equilibrium.

none of the above

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Question 24

2pts

"As the price of apples goes up, the demand for apples goes down." The author of this statement

Group of answer choices

implies that price and demand are unrelated.

uses the word "demand" when he should use the word "supply."

uses the word "demand" when he should use the words "quantity demanded."

implies that demand and price have a direct relationship.

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Question 25

2pts

If a supply curve shifts rightward, this means

Group of answer choices

suppliers are willing and able to offer less of the good for sale at every price.

suppliers are willing and able to offer more of the good for saleonly at one particular price.

quantity supplied is greater at every price.

suppliers are willing and able to offer more of the good for sale only at a particular price.

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Question 26

2pts

Suppose the government decides that every family should own its own home. To bring this about, the government decides to subsidize the home-construction industry by giving the home-construction companies $10,000 for every house that they build. As a result of this,

Group of answer choices

the supply curve of new houses would shift leftward, since it now costs $10,000 more for builders to produce a house.

the demand curve for new houses would shift rightward, since now every family would want to buy a house.

the demand curve for new houses would shift leftward.

the supply curve of new houses would shift rightward, since builders would be willing to produce and sell more houses at each given price.

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Question 27

2pts

According to the law of demand, the higher the price of an assigned textbook, the _______________ the quantity demanded of assigned textbooks will be,ceteris paribus, and the ______________ likely students will seek out an alternative to the assigned textbook.

Group of answer choices

lower; less

lower; more

higher; less

higher; more

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Question 28

2pts

At a price for which quantity demanded exceeds quantity supplied, a __________ is experienced, which pushes the price __________ toward its equilibrium value.

Group of answer choices

surplus; downward

surplus; upward

shortage; downward

shortage; upward

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Question 29

2pts

Good X is a normal good. If the average income of those who buy good X rises, the _____________ curve for good X will shift ____________ resulting in a(n) _____________ in the equilibrium price of X and a(n) ____________ in the equilibrium quantity of X.

Group of answer choices

supply; rightward; decrease; increase.

demand; leftward; decrease; decrease

demand; rightward; increase; increase

supply; leftward; increase; decrease

supply; leftward; increase; increase

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Question 30

2pts

If people begin to favor science fiction novels to a greater degree than previously, the demand curve for science fiction novels

Group of answer choices

shifts rightward.

shifts leftward.

stays constant.

can shift either rightward or leftward.

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Question 31

2pts

Tobacco production is one of the more heavily subsidized industries in the United States. Suppose that as a result of intense lobbying from health-related concerns, Congress repeals the tobacco firms' subsidies. Which of the following scenarios would likely occur?

Group of answer choices

The tobacco firms' supply curve would shift rightward, as it would now be cheaper to produce each level of output.

The tobacco firms' supply curve would shift leftward, since it would now cost more to produce each level of output.

The tobacco firms would not experience any shift in their supply curves; subsidies don't affect output.

There would be a movement along the supply curve for tobacco, but the supply curve would not shift.

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Question 32

2pts

On a supply-and-demand diagram, consider a price for which the horizontal distance to the supply curve exceeds the horizontal distance to the demand curve. There is a __________ at that price and the current price must be __________ the equilibrium price.

Group of answer choices

shortage; above

shortage; below

surplus; above

surplus; below

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Question 33

2pts

If Joe says that nothing comes close to a Pepsi, his demand for Pepsi is likely to be:

Group of answer choices

relatively price elastic.

relatively income elastic.

relatively price inelastic.

unit elastic.

perfectly elastic.

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Question 34

2pts

All other things being equal, the __________ the percentage of one's budget spent on a good, the __________ the price elasticity of demand.

Group of answer choices

greater; higher

greater; lower

smaller; higher

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Question 35

2pts

If a good is income elastic, it follows that the percentage change in quantity demanded of a good

Group of answer choices

is less than the percentage change in income.

is greater than the percentage change in income.

is equal to the percentage change in income.

is greater than the percentage change in the price of another good.