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Table 1 Production Possibilities Combination Soybeans(Tons) Plasma TV's A 1,000 0 B 800 100 C 600 150 D 400 175 E 200 190 F 0

Table 1

Production Possibilities

Combination Soybeans(Tons) Plasma TV's

A 1,000 0

B 800 100

C 600 150

D 400 175

E 200 190

F 0 200

1- Using Table 1 above, what is the opportunity cost of producing 800 tons of soybeans instead of 600 tons?

a. There is no opportunity cost; this country can easily produce more tons of soybeans.

b. 100 plasma TV's.

c. Four plasma TV's for every ton of soybeans produced.

d. 50 plasma TV's.

2-When the price of orange juice decreases,

a.

the demand for orange juice decreases.

b.

the demand for orange juice increases.

c.

the demand curve for orange juice shifts.

d.

the quantity demanded for orange juice increases.

e.

the quantity demanded for orange juice decreases.

3-When the price of pencils increases from $1.50 to $2.50, there is an increase in demand of pens from 100 to 150, this is evidence that pen and pencils are

a.

substitute goods.

b.

complement goods.

c.

inferior goods.

d.

normal goods.

e.

not related.

4-You purchased a lamb chop from the grocery store yesterday for $5. The store has a non-refundable policy on lamb chops. The $5 purchase of the lamb chop is best described as

a. an average cost.

b. a variable cost.

c. a sunk cost.

d. a low fixed cost

5-Which of the following is a correct statement about a minimum wage law?

a.

It reduces costs for employers.

b.

It ensures that anyone who wants a job can get a job with a high enough wage.

c.

It causes prices to rise as producers pay more for labor.

d.

It is a price ceiling law that makes wages higher than the market equilibrium price.

e.

It is a price floor law that forces wages to be lower than the market equilibrium price.

6-Mortimer loves sushi. He loves sushi so much that he asks his congressional representative to work for passage of a price ceiling law. Who would be affected by this law and how?

a.

Sellers would benefit from such a law because they would receive a higher price for their products.

b.

Consumers would benefit from such a law because prices would be lower and all would be able to purchase sushi cheaply.

c.

Consumers would benefit from such a law because the sushi would be made of higher-quality fish, and each serving would be larger than it had been with no binding price ceiling in place.

d.

Some consumers would benefit from such a law because prices for sushi would be lower for those able to buy it in the legal market.

e.

Sellers would benefit from such a law because they would be able to sell higher-quality sushi and thus capture a larger share of the market.

7-A business owner makes 5000 tacos by hand in 600 hours. He could have earned $10.00 an hour working at Taco Bell. If a taco sells for $6 each and the explicit costs for his taco business total $14,000, then the business owner's economic profit equals:

  1. $6,000
  2. $10,000
  3. $16,000
  4. $30,000
  5. $11,000

8-. The presence of many buyers and sellers is an important characteristic of perfectly competitive markets because it allows

a.

sellers in the market to have influence over the market price.

b.

buyers in the market to have influence over the market price.

c.

sellers in the market to have influence over the market quantity.

d.

buyers in the market to have influence over the market quantity.

e.

the price and quantity in the market to be determined by market forces.

9=uppose a perfectly competitive broccoli farm can produce 35 crates at an output level where marginal revenue equals marginal cost. The price per crate of broccoli is $60 and the average total cost is $30. What is the total profit or loss that this farm is earning?

a.

$1,050.00

d.

$30

b.

$1,050.00

e.

$30

c.

$2,100

9-. A monopolist can sell 10,000 units of tea at a price of $5 per unit. Lowering the price of tea to $4 raises the quantity demanded to 11,000 units of tea. What is the change in total revenue resulting from this price change?

a.

$6,000

b.

$5,000

c.

-$6,000

d.

-$18,000

---------------

10-If an economist estimates the MPC to be 0.8 and a recession hits an economy, then a decrease in autonomous investment of $2 billion will result in a decrease in Real GDP of as much as

a. $6 billion

b. $1.6 billion

c. $2.5 billion

d. $10 billion

e. $2 billion

11-Here is a consumption function: C = $1,000 + 0.8 YD and disposable income is $7,000. Based on this information, what does savings equal to?

a.

$6,600

b.

$13,000

c.

-$400

d.

$400

e.

none of the above

12-In the Great Recession of 2007, the Federal Reserve system decided to cut interest rates to increase spending on houses and cars in the United States, but consumer spending fell because people lost their jobs and foreclosed on their houses due to not paying their mortgage payments on their houses. This statement is coming from

a. a Classical economist.

b. a Keynesian economist.

c. neither a Classical economist nor a Keynesian economist.

13-Suppose the following occurs: (1) consumers expect the prices of houses to rise in the U.S. within a year and at the same time, labor productivity rises for building houses in the U.S. economy because there is a more educated labor force. (2) the shift in the AD curve shifts more than the shift in the AS curve. Based on this information, the equilibrium Price Level will __________ ; the equilibrium real GDP will _________;and the unemployment rate will __________. (Hint: Draw the initial AD-SRAS curves and then draw the new AD-SRAS curves to derive your final answer).

a.

rise; fall; rise

b.

fall; rise; rise

c.

fall; rise; fall

d.

rise; rise fall

e.none of the above

14-(Hint: Draw the initial AD-AS curves and then on the same graph draw the new AD or AS curves to derive your final answer.) Suppose a country's population is aging and the size of the workforce is declining. The equilibrium Real GDP will _________ and the equilibrium price level will _________.

a. increase; increase

b. increase; decrease

c. increase; remain unchanged

d. decrease; increase

e. remain unchanged; remain unchanged

15-Which of the following would shift aggregate supply curve to the left?

a. A study predicts that the recent drought during the summer of 2019 will increase food prices and lower output this winter.

b. There is a rise in the median price of houses.

c. A rise in the price level reduces saving and increases interest rates for consumers.

d. Using more robotics in the mass assembly line will result in producing more computers much faster and output increasing.

16-If the U.S. dollar price per Mexican peso moves from $0.10 = 1 peso to $0.05 = 1 peso, the peso is said to have __________ and the dollar to have __________.

a.

depreciated; appreciated

b.

appreciated; appreciated

c.

appreciated; depreciated

d.

depreciated; depreciated

17-Foreign national income rises and people from Europe and Asia buy more of our goods here in the U.S. such as houses and computers. This raises U.S. ___________ which ________ aggregate demand (AD). The AD curve shifts ___________.

a.

net exports; raises; rightward

b.

imports; raises; rightward

c.

prices; reduces; leftward

d.

investment; reduces; leftward

e.

none of the above

18-Consider a country with a nominal gross domestic product (GDP) of $10 billion in 2010 and $11 billion in 2015. In the same period the population increased by 4 percent and price levels increased by 5 percent. What is the economic growth rate for this country?

a.1 percent d. 9 percent

b.4 percent e. 10 percent

c.6 percent

19-When computing economic growth, changes in nominal gross domestic product (GDP) must be adjusted to reflect population growth because

a. if real GDP remains the same, an increase in the population actually means a lower average standards of living.

b.an increase in population will tend to reduce nominal GDP.

c. changes in population tend to have no effect on standards of living.

d. if real GDP remains the same, an increase in the population actually means a raised average standards of living.

e.an increase in the population will tend to decrease average prices.

20-.Assume tuition and fees at North Carolina State University cost $5,000 in 2004 and $8,500 in 2012. If the price index was 195 in 2004 and 250 in 2012, then we could say

a. tuition has increased more slowly than inflation.

b. tuition has increased more rapidly than inflation.

c. tuition has increased at about the same rate as inflation.

d. nominal tuition has decreased.

e. tuition suffers from money illusion due to inflation.

21-n year 1 the CPI is 175, and in year 2 the CPI is 270. From year 1 to year 2, Martha's salary rises from $50,000 to $60,000, and Chiang's salary rises from $75,000 to $90,000. Who is "more than keeping up with inflation"?

a.

Martha

b.

Chiang

c.

both Martha and Chiang

d.

neither Martha nor Chiang

22-Suppose a basket of goods and services has been selected to calculate the consumer price index (CPI) and 2002 has been selected as the base year. In 2002, the basket's cost was $600; in 2004, the basket's cost was $650; and in 2006, the basket's cost was $700. The value of the CPI in 2006 was__________ (rounded to one decimal place)

a. 92.3. d. 116.7.

b. 106.3. e. more than 155.0.

c. 108.3.

23-One argument against unemployment insurance is that unemployment insurance

a. limits the effects of a recession.

b.is only available during recessions.

c. creates an indirect incentive that can make it less attractive for workers to stay unemployed.

d. can be extended by the government during times of recession.

24-In 2008, the Rhode Island's unemployment rate fell from 4.5% to 3%, when the U.S. economy was in a recession, which was very unusual. That's because:

a. there were more jobs being created.

b. more people retired and left the civilian labor force.

c. more people became discouraged and left the civilian labor force simply because they couldn't find a job and stopped actively looking for work.

d. both b and c.

e. all of the above.

25-In NBC's hit TV show 30 Rock, actor Dean Winters plays Dennis Duffy, who works as a beeper salesman in New York City. Because beepers are an old technology that has been taken over by cell phones, Dennis loses his job. What kind of unemployment is Dennis experiencing in this scenario?

a. cyclical d. frictional

b.structural e.seasonal

c.natural

26-The U.S. federal government offers homeowners a tax deduction for their home loan interest payments. This reduction in taxes serves as a(n) incentive to buy a house.

a. direct d. complementary

b. indirect e. unintended

c. neutral

27-A recession has crippled the United States economy, producing a high rate of unemployment. Which of the following would be a macroeconomic decision?

a.

Congress decides to institute a tax cut and encourage consumer spending in the United States.

b.

The United States negotiates a new trade agreement with Japan, hoping to bolster its exports.

c.

The federal government extends the duration of unemployment benefits in the United States.

d.

A Congresswoman decides to delay the purchase of a new car.

e.

a,b,c are all correct choices.

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