Liberty University ECON 213 quiz 2 complete solutions correct answers A+ work

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Question 1 The area inside (within) the production possibilities frontier (PPF) contains:

Question 2 Michael and Angelo are both artists who can create sculptures or paint paintings each day. The following table describes their maximum outputs per day. Does either person have an absolute advantage?

Question 3 The figures below depict the production possibilities frontiers (PPFs) for two people who can allocate the same amount of time between building wooden boats and solving crimes. Refer to these figures to answer the questions that follow. What is Gibbs’s opportunity cost of making a wooden boat?

Question 4 The ability of one producer to create more of a good than another producer using the same quantity of resources is called:

Question 5 The figures below depict the production possibilities frontiers (PPFs) for two people who can allocate the same amount of time between building wooden boats and solving crimes. Refer to these figures to answer the questions that follow. Which statement best describes absolute advantage?

Question 6 You have a comparative advantage in producing a good whenever:

Question 7 Mrs. Abel has a comparative advantage in producing cabbage if, in comparison to Mrs. Bee, Mrs. Abel can grow cabbage:

Question 8 The important act of holding all other variables constant while examining a particular variable is known as:

Question 9 An increase in general resources that affects the production of both goods on a production possibilities frontier (PPF) would cause an:

Question 10 Use these production possibilities frontier (PPF) curves, which compare the ancient production of agricultural products to art and literature, to answer the questions that follow. Suppose the plow is invented and agricultural productivity greatly increases. Which of the following graphs best depicts how this would affect the PPF?

Question 11 Suppose you find a production possibilities frontier (PPF) that is shaped like a straight line. What can you determine about the production of the two goods?

Question 12 A town on the Gulf Coast is battered by a massive hurricane that destroys most of its productive resources. The community’s production possibilities frontier (PPF) would show an:

Question 13 Think of the production possibilities frontier (PPF) model. When society is producing the largest possible output from its resources, it is operating:

Question 14 Which of the following is a positive statement?

Question 15 When the opportunity cost of producing a good rises as you produce more of it, you experience:

Question 16 Which of the following is a normative statement?

Question 17 Refer to the following figure to answer the questions that follow. In the figure, point E is:

Question 18 An economist’s use of experiments and realworld data to test a theory is an example of:

Question 19 Consider the production possibilities frontier (PPF) shown in the figure below to answer the questions that follow. Given current resources and technology, the unattainable range is best described as:

Question 20 Refer to the following figure to answer the questions that follow. Which point in the corresponding figure represents a combination of smoothies and milk shakes that society cannot currently produce?

Question 1 Economists use the scientific method and the tools of economics to study:

Question 2 Ceteris paribus, if a society is producing at a point on the production possibilities frontier (PPF), it can only increase the production of one good by:

Question 3 Goods that are produced today in order to make other valuable goods and services in the future are called:

Question 4 Use these production possibilities frontier (PPF) curves, which compare the ancient production of agricultural products to art and literature, to answer the questions that follow. Suppose the printing press is invented. Which graph best depicts how this would affect the PPF?

Question 5 Refer to the following table to answer the questions that follow. Given the same quantity of resources, what is JayZ’s opportunity cost of producing a New York pizza?

Question 6 Refer to the following figure to answer the questions that follow. Which point in the corresponding figure represents a combination of smoothies and milk shakes that society cannot currently produce?

Question 7 Which of the following is a normative statement?

Question 8 Refer to the following figure for the questions that follow. The opportunity cost of increasing production of apple pies from 14 to 16 pies is:

Question 9 Which of the following is a positive statement? Selected Answer: e. Increases in the minimum wage cause unemployment. Question 10 Refer to the following figure to answer the questions that follow. In the figure, point E is:

Question 11 The figures below depict the production possibilities frontiers (PPFs) for two people who can allocate the same amount of time between building wooden boats and solving crimes. Refer to these figures to answer the questions that follow. What is DiNozzo’s opportunity cost for solving a crime?

Question 12 Greater investment in capital goods today leads to:

Question 13 Suppose that Sheldon and Leonard can either run errands or wash dishes. Their maximum output per hour is listed in the following table. Given the same quantity of resources, at what terms of trade (relative price ratio) could they specialize and trade so that both consume outside their own production possibilities frontier (PPF)?

Question 14 For both parties to benefit from specialization and trade, the trading parties must agree on:

Question 15 Which of the following is NOT an assumption that economists make when developing a production possibilities frontier (PPF)?

Question 16 Which of the following is a positive statement?

Question 17 The figures below depict the production possibilities frontiers (PPFs) for two people who can allocate the same amount of time between making pizzas and making stromboli. Refer to these figures to answer the questions that follow. What is Jim’s opportunity cost of making 1 stromboli?

Question 18 Consider the following scenario to answer the questions that follow: Two friends, Rachel and Joey, enjoy baking bread and making apple pies. Rachel takes two hours to bake 1 loaf of bread and one hour to make 1 pie. Joey takes four hours to bake 1 loaf of bread and four hours to make 1 pie. What is Rachel’s opportunity cost of baking 1 loaf of bread?

Question 19 The _________ illustrates the various combinations of output that a society can produce if all of its resources are being used efficiently.

Question 20 A graph that shows the maximum attainable combinations of two goods when society efficiently uses its productive resources is called:

Question 1 When one producer has a comparative advantage in production, she:

Question 2 The process of using current resources to create or buy new capital is called:

Question 3 A positive statement:

Question 4 An increase in general resources that affects the production of both goods on a production possibilities frontier (PPF) would cause an:

Question 5 Refer to the following table to answer the questions that follow. Given the same quantity of resources, what is JayZ’s opportunity cost of producing a New York pizza?

Question 6 Refer to the following figure for the questions that follow. According to the figure, a new technology that makes it easier to peel, core, and prepare apples will cause:

Question 7 To determine which of two producers has a comparative advantage, you would need to know their:

Question 8 Consider the following scenario. Two friends, Rachel and Joey, enjoy baking

bread and making apple pies. Rachel takes two hours to bake one loaf of bread and one hour to make one pie. Joey takes four hours to bake one loaf of bread and four hours to make one pie. If Rachel and Joey decide to specialize in order to maximize their combined output, who should produce what?

Question 9 Refer to the accompanying figure to answer the questions that follow. Unemployed resources are evident at:

Question 10 Refer to the following table to answer the questions that follow. Suppose that Alicia Keys and JayZ could each make either New York–style pizza or Philly cheesesteaks. Given an eighthour workday, which of the following would permit them to consume outside their respective production possibilities frontiers (PPFs)?

Question 11 When the opportunity cost of producing a good rises as you produce more of it, you experience:

Question 12 The figures below depict the production possibilities frontiers (PPFs) for two people who can allocate the same amount of time between making pizzas and making stromboli. Refer to these figures to answer the questions that follow. What is Jim’s opportunity cost of making 1 stromboli?

Question 13 Ceteris paribus means:

Question 14 The ability of one producer to create more of a good than another producer using the same quantity of resources is called:

Question 15 Which of the following is a positive statement?

Question 16 Refer to the following table to answer the questions that follow. Given an eighthour workday, and to experience gains from trade,

Question 17 Consider the production possibilities frontier (PPF) shown in the figure below to answer the questions that follow. Given current resources and technology, the attainable range is best described as:

Question 18 Which of the following is a normative statement?

Question 19 Consider the following scenario to answer the questions that follow: Two friends, Rachel and Joey, enjoy baking bread and making apple pies. Rachel takes two hours to bake 1 loaf of bread and one hour to make 1 pie. Joey takes four hours to bake 1 loaf of bread and four hours to make 1 pie. What is Joey’s opportunity cost of baking 1 pie?

Question 20 Suppose you are studying a production possibilities frontier (PPF) that has a bowedout shape relative to the origin. What causes this shape?

The process of using current resources to create or buy new capital is called

The movie Saving Private Ryan is about a military mission to find and recover a particular soldier—Private Ryan. The movie is predominantly about how much was given up in an effort to save this one particular soldier. The main economic theme of the movie is

An increase in the labor force would be reflected in a society’s production possibilities

frontier (PPF) by an

Refer to the following figure for the questions that follow According to the figure, a new technology that makes it easier to peel, core, and prepare apples will cause.

The ability of one producer to produce a good at a lower opportunity cost than another producer is called

The figures below depict the production possibilities frontiers (PPFs) for two people who can allocate the same amount of time between building wooden boats and solving crimes. Refer to these figures to answer the questions that follow. Which statement best describes absolute advantage?

Refer to the following table to answer the questions that follow. Given the same quantity of resources, what is Alicia Keys’s opportunity cost of producing a New York pizza?

If Jim can sell paper at a lower opportunity cost than Dwight can, then

Greater investment in capital goods today leads toConsider the following scenario to answer the questions that follow: Two friends, Rachel and Joey, enjoy baking bread and making apple pies. Rachel takes two hours to bake 1 loaf of bread and one hour to make 1 pie. Joey takes four hours to bake 1 loaf of bread and four hours to make 1 pie. What is Rachel’s opportunity cost of baking 1 loaf of bread?

One reason that economists make assumptions when designing models is to

Suppose you are studying a production possibilities frontier (PPF) that has a bowed-out shape relative to the origin. What causes this shape?

Ceteris paribus means

The important act of holding all other variables constant while examining a particular variable is known as:

Variables that are controlled for in a model are called

Refer to the following figures to answer the questions that follow. Which allocation point in the short-run production possibilities frontier (PPF) will lead to the most significant growth in the long-run PPF?You have a comparative advantage in producing a good whenever

The figures below depict the production possibilities frontiers (PPFs) for two people who can allocate the same amount of time between building wooden boats and solving crimes. Refer to these figures to answer the questions that follow. What is Gibbs’s opportunity cost of solving a crime?

When testing a paper airplane on your campus quad, which of the following would be an exogenous factor?

Consider the following scenario to answer the questions that follow: Two friends, Rachel and Joey, enjoy baking bread and making apple pies. Rachel takes two hours to bake 1 loaf of bread and one hour to make 1 pie. Joey takes four hours to bake 1 loaf of bread

and four hours to make 1 pie. What is Joey’s opportunity cost of baking 1 pie?

When the price is the equilibrium price, we would expect there to be a causing the market to put pressure on the price until it went back to the equilibrium price.

Suppose that Dwight and Jim can either make salads or grill steaks. Their maximum output per hour is listed in the following table. Given the same quantity of resources, at what terms of trade (relative price ratio) could they specialize and trade so that both consume outside their own production possibilities frontier (PPF)?

What would you expect to happen to the price of bagels if the price of flour decreased and the price of cream cheese decreased?

To determine which of two producers has a comparative advantage, you would need to know their

The area inside (within) the production possibilities frontier (PPF) contains

Economics professors are well aware of the importance of incentives. Which of the following situations shows the use of a positive incentive

Which one of the following pairs of goods is likely to have a negative cross-price elasticity of demand

The accompanying figures depict the production possibilities frontiers (PPFs) for two people who can allocate the same amount of time between making pizzas and making stromboli. If Jim and Pam were to specialize and trade, at what exchange rate would they find some quantity of trade to be mutually beneficial?Use the following table to answer the questions that follow. What is the surplus when the price floor is $0.75 in the market for public transportation?

Why are binding price ceiling laws passed?

The figures below depict the production possibilities frontiers (PPFs) for two people who can allocate the same amount of time between building wooden boats and solving crimes. Refer to these figures to answer the questions that follow. Which statement best describes absolute advantage?

Which of the following will cause a movement along a good’s supply curve?

What would happen in the market for SUVs if the government started to subsidize the production of SUVs that get very few miles per gallon and the price of gasoline went up?

If the percentage change in the quantity consumed of pizza is 8% and the percentage change in income is 2%, what is the income elasticity of demand for pizza?

If the price and quantity for a normal good, Good X, is $8 and 6 units at the original equilibrium, what is one possibility for the new equilibrium of Good X if we see income increase and all other factors stay constant?

Chris runs a sporting goods store and knows that the price elasticity of demand for his sports clothing line is –1.5. He is planning to lower prices by 10%. The percentage change in quantity demanded will beIf the cross-price elasticity of demand for two goods is zero, the two goods are

The price of peanut butter increases from $2.50 to $3.00 and the quantity of jelly demanded falls from 30 jars to 24 jars. Calculate the cross-price elasticity of demand

During the winter months, many elderly persons leave their homes in northern New York and travel south to Florida or Arizona. What would you expect to happen to the equilibrium price and quantity of items most used by the elderly in northern New York?

When Heavenly Cookies prices its sugar cookies at $1.00, they sell 75 cookies. They lowered the price to $0.50 and sold 200 cookies. Their total revenue because the price elasticity of demand for sugar cookies is

For a market to be competitive

If a good is subject to a binding price ceiling and you purchase it on the black market, what do you expect to happen to the price over time?

Use these production possibilities frontier (PPF) curves, which compare the ancient production of agricultural products to art and literature, to answer the questions that follow. Suppose a great plague wipes out half of the society’s population. Which of the following graphs best depicts how this would affect the PPF?

In the first few months of 2012, the price of gasoline increased by approximately 15%. Because of this increase, we would expect the curve in the market for hybrid cars to

An increase in general resources that affects the production of both goods on a production possibilities frontier (PPF) would cause an

Use the following scenario to answer the questions that follow: Dairy Dream, a local ice cream store, finds that it sells out of ice cream sandwiches at the current price of $1. It raises the price to increase its revenues and finds that no one buys ice cream sandwiches anymore.

While there are many pizza places in Curtisville, Pappy’s Pizza is known for its distinctive deep-dish pizza with an almost pie-like crust, whereas Momma’s Pizza Pizzazz is comparable to many other restaurants. Pappy’s is likely to find that it can prices to increase total revenue, and Mommas must prices to increase total revenue.

The scientific method and the tools of economics are useful in examining

A positive statement

When the price of a basketball is $15, the quantity supplied is 5,000. When the price increases to $20, the quantity supplied is 10,000. The price elasticity of supply is

Which of the following will cause the demand curve for burgers to shift the right?

You have an absolute advantage in producing something whenever

From the accompanying table, we would expect that, for recreational skaters, the price elasticity of demand for ice skates between $10 and $20 to be than that of hockey players because

Refer to the accompanying figure. What event would cause the supply curve to shift out?

The production possibilities frontier (PPF) shows

With no barriers to entry or exit and when firms in a market are operating at a loss, you can expect other firms to exit, causing the curve to shift to the and making the equilibrium price and the equilibrium quantity

Google has started a project to scan all books and make those that are not copyrighted available to people free of charge. Why is it important that only books without a copyright are available?

According to economists, one reason few professional athletes have PhD’s is that the

What will happen in a market where a binding price floor is removed?

What would you expect to happen to the price and quantity of Pepsi if the price of Coke increases and Pepsi develops a new technology that makes its production process more efficient?

Which statement best describes the absolute advantage as shown in the graphs?

The figures below depict the production possibilities frontiers (PPFs) for two people who can allocate the same amount of time between building wooden boats and solving crimes. Refer to these figures to answer the questions that follow. What is DiNozzo’s opportunity cost for solving a crime?

Ceteris paribus, if a society is producing at a point on the production possibilities frontier (PPF), it can only increase the production of one good by

In the accompanying table, assume that the price of ice skates increases from $10 to $20 per pair. Using the midpoint method, calculate the price elasticity of demand for ice skates for hockey players.

Refer to the following figure for the questions that follow. As you move from points N to M to L, the opportunity cost of additional apple pie

Assume that the market for pencils is in equilibrium and that demand is very price elastic. The popularity of digital tablets and electronic pens increases and demand for pencils declines. The equilibrium change in quantity demanded is

Refer to the accompanying figure. When the price changes from P1 to P2, we will see a(n)

Use the following scenario to answer the questions that follow. Dairy Dream, a local ice cream store, finds that it sells out of ice cream sandwiches at the current price of $1. It raises the price to increase its revenues and finds that no one buys ice cream sandwiches anymore. The owners raised the price because they believed that the demand for ice cream sandwiches is

Spam is considered an inferior good. What would happen to the equilibrium price and quantity of Spam if income decreased and more firms started producing Spam?

Refer to the accompanying table to answer the questions that follow. The

price of erasers increases from $0.50 to $1.00 per eraser. Use the midpoint method to calculate the cross-price elasticity of demand between pencils and erasers.

Question 1Economics is the study of:Select one:a. marketsb. How to make workers more productive and firms more profitable.c. How to allocate resources to satisfy wants and needs.d. How to make money.e. CapitalismQuestion 2An example of a direct positive incentive is:Select one:a. Threatening to fire those who do not perform well.b. Unemployment insurance for those who are laid off.c. A prison sentence for committing a crime.d. Providing a workplace safety program.e. Providing a commission for sales.Question 3A health insurance company may offer its policyholders a discount on their premiums if they prove thatthey have stopped smoking. What type of incentive is the health insurance company offering?Select one:a. an unintended incentive.b. A neutral incentive.c. complementary incentive.d. A direct incentive.e. An indirect incentive.Question 4The cost of a trade-off is known as the ________ of that decision.Select one:a. opportunity costb. marginal costc. net costd. comparative coste. explicit costQuestion 5Instead of taking an economics course, you could have taken a history course that meets at the exactsame time. The total cost of taking the economics course would be:Select one:a. the fact that you could not take the history course at the same time.b. the tuition cost, the cost of the textbook and notebook, and the fact that you could not take the historycourse at the same time.c. the tuition cost for the economics course plus the price of the textbook and a notebook for theeconomics course.d. the price of the textbook and a notebook for the economics course.e. the tuition cost for the economics course.FeedbackQuestion 6The opportunity cost of working rather than going to school is:Select one:a. zero because the person is earning an income by working.

b. the cost of clothing and transportation.c. the higher wages that come with additional education.d. the cost of food and housing.e. the annual wages earned by working.

Question 7On the television show “MythBusters,” the hosts design experiments, collect data, and test theories basedon popular myths. This is an example of:Select one:a. the scientific method as used in economics.b. economic growth.c. absolute advantage.d. gains from trade.e. production possibilities.Question 8The area inside (within) the production possibilities frontier (PPF) contains:Select one:a. normative points.b. inefficient points.c. efficient points.d. positive points.e. high opportunity cost points.

Question 9How will a reduction in the national unemployment rate affect a nation’s production possibilities frontier(PPF)?Select one:a. It will move society to a point farther inside the PPF.b. It will cause the PPF to shift inward.c. It will move society outward to a point closer to or on the PPF.d. It will push society to a point outside its PPF.e. It will cause the PPF to shift outward.Question 12The movie Saving Private Ryan is about a military mission to find and recover a particular soldier—Private Ryan. The movie is predominantly about how much was given up in an effort to save this oneparticular soldier. The main economic theme of the movie is:Select one:a. opportunity cost.b. comparative advantage.c. positive advantage.

d. normative analysis.e. absolute advantage.Question 15Consider the following scenario to answer the questions that follow: Two friends, Rachel and Joey, enjoybaking bread and making apple pies. Rachel takes two hours to bake 1 loaf of bread and one hour tomake 1 pie. Joey takes four hours to bake 1 loaf of bread and four hours to make 1 pie.What is Joey’s opportunity cost of baking 1 loaf of bread?Select one:a. 1 loaf of breadb. 1/2 loaf of bread.c. 1 pied. 2 piese. 4 piesQuestion 16

Consider the following scenario to answer the questions that follow: Two friends, Rachel and Joey, enjoybaking bread and making apple pies. Rachel takes two hours to bake 1 loaf of bread and one hour tomake 1 pie. Joey takes four hours to bake 1 loaf of bread and four hours to make 1 pie.

What is Rachel’s opportunity cost of baking 1 pie?Select one:a. 1 pieb. 2 piesc. 2 loaves of bread.d. 1 loaf of breade. 1/2 loaf of breadQuestion 17The ability of one producer to create more of a good than another producer using the same quantity ofresources is called:Select one:a. a positive-sum game.b. absolute advantage.c. gains from traded. the law of increasing relative cost.e. comparative advantage.Question 18The ability of one producer to produce a good at a lower opportunity cost than another producer is called:Select one:a. absolute advantage.b. a zero-sum game.c. comparative advantage.d. a normative statement.e. the law of increasing relative cost.Question 19For both parties to benefit from specialization and trade, the trading parties must agree on:Select one:a. the appropriate level of investment for the future.b. the source of comparative advantage.c. who has the absolute advantage in production.d. a plan not to trade with other parties.e. a price somewhere between their opportunity costs of production.Question 20Why do economists use models?Select one:a. Models allow us to control exogenous factors.b. Models allow us to study a simplified version of a complex world.c. Models make the world harder to understand.d. Models allow us to examine more factors than what actually exists in our world.e. Models are used to add complexity to a simple world.

The basic goal of economics is:The patent system acts as:Economics is concerned with the trade-offs that emerge because of scarcity. The term "trade-offs" refers to:An opportunity cost is the:How are changes in opportunity cost related to decision-making behavior?Why would economists find it surprising if the CEP of a large company does his or her own housework?Economists believe that optimal decisions are made up to the point where:

One way to promote a new business is to offer free items. If you were to open a new restaurant and offer free food, you likely would have a line out the door. How would economists understand the behavior of those standing in line?Many stores are open 24 hours a day. When store managers make the decision to stay open 24 hours, it must be the case that:More oranges are grown in Florida than North Dakota because Florida's warm climate gives it a ___________ in growing organgesWhich of the following is a normative statement?a) you should wear a helmet when cyclingb) the sky is bluec) a bicycle has two wheelsd) a unicycle has five wheelse) electricity follows the path of least resistanceThe area inside (within) the production possibilities frontier (PPF) contains:Think of the production possibilities frontier (PPF) model. When society is producing the largest possible output from its resources, it is operating:a) inefficientlyb) efficientlyc) with no opportunity costd) inside (within) the PPFe) beyond its opportunity costSuppose you find a production possibilities frontier (PPF) that is shaped like a straight-line. What can you determine about the production of the two goods?A monopoly:Imperfect markets: a) do not exist in democraciesb) always result in supply exceeding demandc) always result in demand exceeding supplyd) occur when the buyer or seller has an influence on the pricee) can't occur if there are many buyers and many sellersTwo goods that are used together are called:When the price of ground beef increases and all else is held constant, we would expect the supply of hamburgers to ________, causing the price to ________If the number of buyers in a market increases from 50 to 100, you would expect the equilibrium price to ________ and the equilibrium quantity to _________, holding all else constantWhy does surplus exist under a binding price floor?Suppose you live in a community with no price controls. What do you expect will happen if your town borders a community where there is a binding price ceiling on most products?Suppose you live in a community with no price controls. What do you expect to happen if your town borders a community where there is a binding price floor on most products?What will happen in a market where a nonbinding price floor is removed?A tax on consumers of a good would shift the _______ curve down and cause the price paid by consumers to ________The net cost to society from the imposition of a tax is also known as:If a tax is imposed on a good with a perfectly inelastic demand, the burden of the tax will be borne:a) by both consumers and producers equallyb) by consumers alonec) by producers alone

d) mostly by consumers but partially by producerse) mostly y producers but partially by consumersTo evaluate the change in average living standards over time, it is best to use:When John buys new tires for his car it ________, and when Ford buys tires to put on new cars it _________Net exports can be defined as:Real GDP is equal to:Real GDP is GDP measured in:a) current pricesb) base year pricesc) average pricesd) marginal pricese) nominal pricesReal GDP can be calculated as:GDP increases if prices decrease by _______ and quantities produced increase by ________Between two given years, if real GDP and nominal GDP grow at the same rate, then:If real GDP grew by 2% and the inflation rate was 2%, then nominal GDP grew by:Real GDP would be better measure of economic well-being if it included the value of:Official unemployment is identified as when:Jamal works in a factory in Lake Zurich, Illinois, assembling toy trains. The factory owner updates the current equipment and installs new robots that can do Jamal's job. As a result, Jamal is laid off and is now unemployed. Jamal would be considered:Unemployment caused by delays in matching available jobs and workers is called:Government policies such as unemployment compensation and government regulations related to hiring and firing employees results in:An unemployment rate that is above the natural rate indicates _________, and we say that economy is producing at ___________A member of the labor force is defined as:The unemployment rate is:Discouraged workers are defined as:One shortcoming of the official unemployment rate is that:Inflation occurs when:Typically the largest percentage category in the consumer price index (CPI) is:If 51% of all goods in the consumer price index (CPI) became more expensive and 49% became chapter:How do you convert a price of a good from an earlier time into today's price?Typically if real wages fall, the quantity demand of labor rises. If workers agree to 3% wage increases for a four-year period and inflation is more than 3% then, based on this information alone:A price confusion problem is best described as:The notion of the loanable funds market is:Borrowers in the loanable funds market consist of:The demand for loanable funds is:Gross domestic product requires:A bond is an instrument that allows the bearer to earn interest. The bearer would be best described as:If interest rates rise:If real wages were higher than nominal rates in 2009, the implication is that:Typically a college degree is "worth it", but it requires:a) high time preferences

b) low time preferencesc) smoothed consumptiond) variable correlated consumptione) the supply of loanable funds to be largeOne would correctly argue that higher capital productivity:The demand for loanable funds decreases while the supply simultaneously increases. This would cause:Firms that help to channel funds from savers to borrowers are known as:The sellers (or lenders) in financial markets are:The two different paths through the loanable funds market are:A security is:A bond is:The maturity date of a bond is:The par value of a bond is:Bonds contain three important pieces of information. These three pieces are:The interest rate of a bond is equal to:The risk that the borrower will not pay the face value of a bond at the maturity date is called the:All else equal, the greater the default risk:Typical individuals have difficulty judging the default risk of any one company, let alone the thousands of firms that sell bonds in a developed economy. To address this problem:Stocks are:A shareholder who owns more than 50% of the shares of the firm is called the:A majority shareholder:Which of the following is a secondary stock market?a) North American Stock Exchangeb) The S&P 500c) New York Stock Exchanged) The Dow Jones Industrial Averagee) The United States Stock ExchangeThe two largest foreign holders of U.S. Treasury securities are:A home mortgage loan is:Economic growth is defined as:Real per capita gross domestic product (GDP) is defined as:Average world income began to increase rapidly during:Which of the following are the three major categories of resources?All countries have some resources and technology available to them. The ones that grow faster are the ones that:Which of the following is an example of an institution that promotes economic growth?a) private propertyb) bartering as a means of tradec) high barriers to international traded) constant war and conflicte) collective property ownershipAccording to modern growth theory, the key to economic growth is:Economic growth is determined by:A restaurant's production function would show the relationship between:If capital is increasing, then:a) the production function will shift upwardb) the production function will shift downwardc) there is an upward movement along the production function

d) there is a downward movement along the production functione) there is an upward shift of the production function and an upward movement along the production functionIf net investment is positive then:If a country experiences an epidemic that reduces human capital, then:Consider a country that improves its educational system such that a greater percentage of workers become college educated. It is reasonable to expect:If more natural resources are discovered, then:There are diminishing returns to:According to the Solow growth model, growth will eventually:Modern growth theory views technological innovation as __________, whereas Solow growth theory views technological change as ________Consider a country that suffered through five years of civil war, but now has a stable government that has the support of the majority of the people. In this country, we are likely to observe:A type of policy that would be advocated by modern growth theory would be to:The term ________ is a popular way to describe the recession-expansion pattern followed by the economyAggregate demand is determined by adding up the spending of:Consider the wealth effect, interest rate effect, and international trade effect. Of these, the ________ effect is the most significant and the _______ effects is the least significantThe aggregate demand curve slopes downward because:An increase in the price level that reduces the real value of wealth is likely to _______ consumption and _______ savingSuppose that an increase in the price level reduces the value of real wealth, which then causes a reduction in consumption but no change in saving. In this case:A rise in the price level that leads to a change in the interest rate, and therefore to a change in the quantity of aggregate demand, will cause:If people expect higher income in the future, then spending today ___________ and aggregate demand _________When foreign income rises, U.S. aggregate:The long run is best defined as a period of time such that:When prices in the economy have not fully adjusted, we say that:When inflation pushes up prices in the economy, input prices are _________ and revenues _________ in the short runSuppose new drilling techniques increase the world oil supply. In the long run, output will ______ and the price level will _______An increase in the general price level will lead to:An upward movement along the short-run aggregate supply If inflation turns out to be higher than expected, this will:The economy is in short-run equilibrium when:

An economist's use of experiments and real-world data to test a theory is an example of:a. the scientific method in economics.b. macroeconomics.c. economic growth.d. normative analysis.e. comparative advantage.

Economists use the scientific method and the tools of economics to study:a. only the decisions of individuals.b. only the decisions of business firms.c. only economic growth and gross domestic product (GDP).d. only the production possibilities curve.e. anything around them; the world is the economist's laboratory.A positive statement:a. is a claim that can be tested.b. is a statement about what ought to be.c. is a declaration of opinion.d. is a claim that cannot be tested.e. cannot be evaluated using the scientific method.Which of the following is a normative statement?a. The sky is blue.b. The sky is green with pink polka dots.c. Points on the production possibilities frontier (PPF) are efficient.d. Points outside the PPF are unattainable with current resources.e. We should strive to push the PPF outward.Which of the following is a normative statement?a. You should wear a helmet when cycling.b. The sky is blue.c. A bicycle has two wheels.d. A unicycle has five wheels.e. Electricity follows the path of least resistance.Which of the following is a positive statement?a. Winters in Arkansas are too cold.b. Everyone should work in a bank to understand the true value of money.c. Harvard University is the top education institution in the country.d. On average, people save 15% when they switch to GEICO.e. Everyone ought to have a life insurance policy.The important act of holding all other variables constant while examining a particular variable is known as:a. endogeneity.b. a normative statement.c. a positive statement.d. macroeconomics.e. ceteris paribus.Which of the following is necessary to build a good economic model?a. normative statementsb. assumptionsc. opinionsd. complex mathe. realismWhy do economists use models?a. Models are used to add complexity to a simple world.b. Models allow us to study a simplified version of a complex world.c. Models allow us to control exogenous factors.d. Models make the world harder to understand.e. Models allow us to examine more factors than what actually exists in our world.Variables that are controlled for in a model are called:a. normative statements.

b. positive statements.c. endogenous factors.d. exogenous factors.e. the scientific method.When testing a paper airplane on your campus quad, which of the following would be an exogenous factor?a. the weight of the paper used in making the planeb. the ratio of wingspan to plane lengthc. the height of the body of the planed. the level of wind encounterede. the number of folds in the wingsCar companies build wind tunnels to test the aerodynamics and the handling capabilities of their car designs. The many variables that can be precisely controlled inside the wind tunnel are considered:a. normative factors.b. positive factors.c. comparative factors.d. endogenous factors.e. exogenous factors.A model without any simplifying assumptions:a. is highly complex and likely unworkable.b. excludes important predictive variables.c. is very helpful for solving tough, real-world problems.d. does not look like the real-world problem it is meant to address.e. provides simplified solutions to complex problems.A graph that shows the maximum attainable combinations of two goods when society efficiently uses its productive resources is called:a. a production possibilities frontier (PPF).b. a supply curve.c. opportunity cost.d. a consumer demand curve.e. absolute advantage.The _________ illustrates the various combinations of output that a society can produce if all of its resources are being used efficiently.a. concept of absolute advantageb. law of positive statementsc. law of demandd. production possibilities frontier (PPF)e. principle of comparative advantageCeteris paribus, if a society is producing at a point on the production possibilities frontier (PPF), it can only increase the production of one good by:a. also increasing the production of the second good.b. decreasing the production of the second good.c. increasing the price of the second good.d. decreasing the price of the second good.e. reducing the resources available for production.On a production possibilities frontier (PPF) that shows the trade-off between consumer goods and capital goods given a fixed amount of labor, unemployment is illustrated by:a. movement from a point within the frontier to a point on the frontier.b. a point outside the frontier.c. a point within the frontier.

d. movement from a point on the frontier to another point on the frontier.e. a point on the frontier.Think of the production possibilities frontier (PPF) model. When society is producing the largest possible output from its resources, it is operating:a. inefficiently.b. efficiently.c. with no opportunity cost.d. inside (within) the PPF.e. beyond its opportunity cost.When the opportunity cost of producing a good rises as you produce more of it, you experience:a. normative economics.b. increasing relative costs.c. downward-sloping demand.d. inferior goods.e. increasing marginal utility.Suppose you are studying a production possibilities frontier (PPF) that has a bowed-out shape relative to the origin. What causes this shape?a. economic growthb. the law of increasing relative costc. absolute advantaged. normative economicse. more resourcesSuppose you find a production possibilities frontier (PPF) that is shaped like a straight line. What can you determine about the production of the two goods?a. Production of the two goods is subject to decreasing relative cost.b. Production of the two goods is subject to increasing relative cost.c. Production of the two goods is subject to constant opportunity cost anywhere along the PPF.d. One producer must have an absolute advantage in production.e. More resources will not cause the PPF to shift.Specialization and trade allow individuals to:a. consume outside their own production possibilities frontier (PPF).b. shift their PPF outward.c. produce more goods with less technology.d. eliminate scarcity.e. produce fewer goods with less technology.When one producer can create more of a good than another producer using the same quantity of resources, the first producer has:a. a zero-sum game.b. gains from trade.c. an absolute advantage.d. a comparative advantage.e. increasing relative costs.If Elaine can produce more output from a set amount of resources than Jerry can, you know that:a. Elaine has a comparative advantage.b. Jerry has a comparative advantage.c. Elaine has an absolute advantage.d. Jerry has an absolute advantage.e. Elaine has a normative advantage.

The ability of one producer to produce a good at a lower opportunity cost than another producer is called:a. a normative statement.b. a zero-sum game.c. absolute advantage.d. comparative advantage.e. the law of increasing relative cost.You have a comparative advantage in producing a good whenever:a. you enjoy producing that good.b. you can produce more of the good than someone else can using the same resources.c. your opportunity cost is constant.d. your opportunity cost of producing that good is lower than that of other producers.e. you have specific training in the production of that good.If Jim can sell paper at a lower opportunity cost than Dwight can, then:a. Jim has an absolute advantage in paper sales.b. Dwight has an absolute advantage in paper sales.c. Jim has a positive advantage in paper sales.d. Jim has a comparative advantage in paper sales.e. Dwight has a comparative advantage in paper sales.Consider the following scenario. Two friends, Rachel and Joey, enjoy baking bread and making apple pies. Rachel takes two hours to bake one loaf of bread and one hour to make one pie. Joey takes four hours to bake one loaf of bread and four hours to make one pie. If Rachel and Joey decide to specialize in order to maximize their combined output, who should produce what?a. Joey should specialize in making pies because he has an absolute advantage.b. Rachel should specialize in making pies and Joey should specialize in making bread.c. Joey should specialize in making pies and Rachel should specialize in making bread.d. Rachel should specialize in making bread and pies because she has a comparative advantage in both.e. Rachel should not specialize because she is better at producing both.Consumer goods:a. are produced today to be used to produce more goods in the future.b. are produced today to be consumed at some point in the future.c. are invested today in order to consume more today.d. are produced today to be consumed today.e. generate economic growth.Goods that are produced for current consumption are called:a. capital goods.b. consumer goods.c. investment goods.d. normal goods.e. opportunity goodsForgoing current consumption so that those resources can be used to produce new capital is called:a. absolute advantage.b. comparative advantage.c. investment.d. scarcity.e. saving.The process of using current resources to create new capital is:a. absolute advantage.

b. comparative advantage.c. specialization.d. investment.e. free.Over the last 20 years, countries such as India and China have:a. consumed heavily with little regard for the future.b. invested heavily and enjoyed significant economic growth.c. eliminated the problem of scarcity.d. produced outside their production possibilities frontier (PPF).e. produced wholly for current consumption.Greater investment in capital goods today leads to:a. greater growth in the production possibilities frontier (PPF) in the future.b. greater consumption today.c. the end of scarcity.d. less opportunity cost.e. scarcity.

Georgia institutes a new gas tax to discourage the purchase of "low-gas-mileage" cars. As a result, Kris does not fill his gas tank when he knows he will be visiting friends in S. Carolina (lower gas tax) the coming weekend. This is an example of...The opportunity cost of a purchase is:You are deciding whether to pay movers $250 or to move yourself. It would be economically rational to hire movers if:Although you are feeling full after a large dinner at Bolton, you are considering getting a milkshake. As an economic thinker, you will get a milkshake if:Which of the following is a normative statement?A. You should wear a helmet when cycling.B. The sky is blue.C. A bicycle has two wheels.D. A unicycle has five wheels.E. Electricity follows the path of least resistance.Suppose that as a result of newly patented machinery, Dell can make computers with less material and less time. Ceteris paribus, this should make the price of Dell computers go down because of:Jamal is willing to pay $85 for a new jacket that sells for $70. Eddie is willing to pay $65 for that same jacket. What is the total consumer surplus for Jamal and Eddie?If supply shifts to the left and demand shifts to the right, what can we predict absolute confidence?In the market for pizza, a tax is imposed on wheat, an input for making pizza.What happens in the pizza market?Price "gouging laws implemented in relevant markets after nature disaster are examples of...Certain US cities have higher than average minimum wages laws, but comparable unemployment levels. This suggests...James specializes in college-level economics tutoring. He knows that, during the two weeks before finals, he can charge more for an hour of private tutoring. Expecting this price increases later, James will:In most cases, taxes reduce economic efficiency because...Total revenue is defined as TR = (P)(Q), where P is the equilibrium price and Qis the equilibrium quantity. For a business, which strategy is more likely to increase total revenue?

The local city council establishes a law of maximum rent for apartments in your city. Which of the following is most likely to happen:Taxes will almost always cause consumer prices to increase. How much they increase depends on...In general, macroeconomics is the study of _____.If a macroeconomist were to research a topic for a potential paper in the "Big-Wig Fancy-Shmancy Macroeconomist Journal", it would likely be about ______.Economist study the world around us, so which of the following statements is true (or best option)?"Lowering the home mortgage tax on first time homeowners will increase building in the housing sector of the economy." This is a ______ statement because it is ________.You, a famous UGA economist, are asked to give a talk at the Georgia statehouse to the governor. You are asked to report on the current data of the economy. You are then asked to give a policy suggestion to improve the economy. Your report on the current data will likely be described as _______ statements and your policy advice can be described as ________ statements.When creating models economist make use of the following:A model can be described by which of the following?Suppose the government increased aid-payments to low income parents for each additional child to ensure the parents had enough funds to support a larger family. In the following year, suppose, on average, low income families had more children. This would be an example of a(n) _____________.We are not able to produce all the goods and services that everyone would like to have. That means we live in a world ofGenerally speaking, a market economy rewards people according to their ________.According to Adam Smith, people provide you goods and services because _______A certain production possibilities frontier shows production possibilities for two goods: wheat and shirts. concepts cannot be illustrated in this model?Suppose a Mary produces both turnips and corn in her garden. If she must give up 15 bushels of corn to get 4 bushels of turnips, then her opportunity cost of 1 bushel of turnips isThe Production Possibilities Curve (PPC) shows the different combinations, assuming a two good world, that an economy _____.Assumption in a PPC modelIn our PPC model, an economy is considered to be efficient if ____The PPC model demonstrates what economic concept?A curve PPC model would indicate which of the followingThe benefit to those that specialize and trade means they are able toThe ______ is responsible for measuring and reporting the unemployment rate.In the most commonly reported "Unemployment Rate" which of these is not a category a worker would be placed?Paul works for his dad's company and is unpaid. Paul is consideredWhich of the following is included in the labor force?A. Phil just lost his job at Dunkin' Donuts but has a second job.B. Barney has been filling out job applications for more than 6 months but still know luck.C. Alice works at Jimmy John's but only 10 hours a week.D. Only A and C are correct.E. A, B, and C are correct.Joe is a professional mullet stylist and is currently not working. There are several salons in Gainesville, Florida looking for a mullet stylist but they do not know how to "work the

internet", and Joe is not aware of the openings yet. Joe would be considered ______ unemployed.The L.F.P.R. gives us the % of the population thatCe-Lo gets fired from a TV show and then decides to go back to college for an acting degree. He will not work while in college.The B.L.S. reported in the small country of UGA-tonia the population of 16 years and older of potential workers is 60 million. 36 million are working and 2 million are unemployed. What is the LFPR and U-Rate?Any variation away from the natural rate of unemployment is referred to asHigh school graduates as compared to high school drop-outs generally haveWhich of the following is a rationale (explanation) for frictional unemployment?A market economy is described using supply and demand whichThe following is a determinant of changes in the demand function exceptA. Consumer tastesB. Future ExpectationsC. Prices of SubstitutesD. Technology improvementsE. All of the above can change the demand functionA likely example of complementary goods for most people would beWhich of the following demonstrates the law of demand?A. Tom buys more "Dunkin' Donuts" doughnuts at $0.75 per doughnut than at $1.25 per doughnut, all else the same.B. Relative to last month, Russell buys more doughnuts at $1.50 per doughnuts since he got a raise at work last year.C. Shorty buys fewer "Dunkin' Donuts" muffins at $1 per muffin than at $2 per muffin, all else the same.D. Kim buys fewer D.D. Doughnuts at $1 per doughnut after the price of Krispy Kreme doughnuts fall to $0.75.E. Both B and C are correct.If a decrease in your salary result in you buying more, then the good isWhen the number of buyers in a market increases,A. the market demand curve shifts to the right.B. the demand curves of the individual demanders in the market are unaffected.C. the market demand for the good in question increases.D. All of the above are correct.Steak is a normal good ifA. the demand for steak shifts to the right when income rises.B. the demand for steak rises when the price of steak falls.C. the demand curve for steak slopes upward.D. the demand curve for steak shifts to the right when the price of burritos falls, assuming steak and burritos are substitutes.E. None are correct.Suppose that the demand for a good increases, while at the same time, supply of the good decreases. What would happen in the market for the good?What will happen to the equilibrium price and quantity of new cars if the price of gasoline rises, the price of steel rises, public transportation becomes cheaper and more comfortable, and auto-workers negotiate higher wages?You love peanutbutter. You hear on the news that 50% of the peanut crop in the South has been wiped out by drought, and that this will cause the price of peanuts to double by the end of the year. As a result,Whichofthefollowingoptionswouldnotshiftthedemandcurveforagood?A. a change in income

B. a change in the price of the goodC. a change in expectations about the future price of the goodD. a change in the price of a related good or serviceE. Both A and D are correctIf the number of firms in a market doubles, then you can expectAssume there is an increase in steel prices in the world market. You can expect the supply curve for steel train cars to...If a surplus exists in a market for live lobster, we know that the actual price is...Rent-control laws dictateThe presence of a price control in a market for a good or service usually is an indication thatWhich of the following is the most likely explanation for the imposition of a price ceiling on the market for milk?A price ceiling is binding when it is set...Consumer surplusOn a graph of a market in competitive equilibrium, the are below a demand curve and above the price measuresOn a graph of a market with a tax, deadweight loss is represented by the area...In a market, the marginal buyer is the buyerTo say that a price ceiling is binding is to say the the price ceilingIf a binding price ceiling is imposed on the computer market, thenA. The quantity of computers demanded will increaseB. The quantity of computers supplied will decreaseC. A shortage of computers will developD. The Market will be below equilibrium priceE. all of the above are correctA demand curve reflects:If the government wants to reduce smoking, it should impose a tax onWhen a tax is place on the sellers of a product...When a tax is place on the sellers of cell phones...When a country cannot produce every good people wish to have we say this country facingA good is _______ if it takes even a small amount of time, energy, or money to acquire.Kramer makes great non-fat frozen yogurt and George makes awesome calzones. Kramer and George both enjoy frozen yogurt and calzones. Of the following options, in which is it impossible for both Kramer and George to benefit from trade?A. George can't make soup and Kramer can't make calzones.B. George is better than Kramer at making calzones. Kramer is better at making frozen yogurt than George.C. Kramer can make better frozen yogurt and calzones than George.D. None of the above is correct.If labor in the Dominican Republic is less productive than labor in the United States in all areas of production,If the government wanted to give people a negative direct incentive not to save money, what would be the appropriate policy?A car insurance company is willing to offer accident-free drivers a discount. This is an example of:The U.S. federal government offers homeowners a tax deduction for their home loan interest payments. This reduction in taxes may have encouraged too many people to own a home. If the tax deduction caused people who otherwise would have rentedto own, the tax deduction serves as a(n):

The opportunity cost of a purchase is:Economists believe that optimal decisions are made up to the point where:A graph that shows the maximum attainable combinations of two goods when society efficiently uses its productive resources is called:When the opportunity cost of producing a good rises as you produce more of it, you experience:Specialization and trade allow individuals to:Goods that produced for current consumption are called:When the price of an hour of tutoring increases,Changes in population can:When a hurricane rips through Florida, the price of oranges rise because the:when both supply and demand decrease, the equilibrium price:Many states have laws that limit the maximum amount of interest that a lender can charge a borrower. Such a law is an example of:What will happen in a market where a binding price ceiling is removed?If the local government tells gas stations that they are not allowed to change the price of gas for three weeks during hurricane season, what will be the consequence?The consequence of a price floor set below the equilibrium is:Holding all else constant, when the price of a good increasesAll else held constant, a decrease in the price of a good would necessarily:Social welfare (i.e., the sum of producer and consumer surplus) is maximized when:

When the price is _________ the equilibrium price, we would expect there to be a _________, causing the market to put _________ pressure on the price until it went back to the equilibrium priceSuppose that Dwight and Jim can either make salads or grill steaks. Their maximum output per hour is listed in the following table. Given the same quantity of resources, at what terms of trade (relative price ratio) could they specialize and trade so that both consume outside their own production possibilities frontier (PPF)?What would you expect to happen to the price of bagels if the price of flour decreased and the price of cream cheese decreased?To determine which of two producers has a comparative advantage, you would need to know theirThe area inside (within) the production possibilities frontier (PPF) containsEconomics professors are well aware of the importance of incentives. Which of the following situations shows the use of a positive incentiveWhich one of the following pairs of goods is likely to have a negative cross-price elasticity of demand?The accompanying figures depict the production possibilities frontiers (PPFs) for two people who can allocate the same amount of time between making pizzas and making stromboli. If Jim and Pam were to specialize and trade, at what exchange rate would they find some quantity of trade to be mutually beneficial?Use the following table to answer the questions that follow.What is the surplus when the price floor is $0.75 in the market for public transportation?Why are binding price ceiling laws passed?The figures below depict the production possibilities frontiers (PPFs) for

two people who can allocate the same amount of time between building wooden boats and solving crimes. Refer to these figures to answer the questions that follow. Which statement best describes absolute advantage?Which of the following will cause a movement along a good’s supply curve?What would happen in the market for SUVs if the government started to subsidize the production of SUVs that get very few miles per gallon and the price of gasoline went up?If the percentage change in the quantity consumed of pizza is 8% and the percentage change in income is 2%, what is the income elasticity of demand for pizza?If the price and quantity for a normal good, Good X, is $8 and 6 units at the original equilibrium, what is one possibility for the new equilibrium of Good X if we see income increase and all other factors stay constant?Chris runs a sporting goods store and knows that the price elasticity of demand for his sports clothing line is –1.5. He is planning to lower prices by 10%. The percentage change in quantity demanded will be:If the cross-price elasticity of demand for two goods is zero, the two goods areThe price of peanut butter increases from $2.50 to $3.00 and the quantity of jelly demanded falls from 30 jars to 24 jars. Calculate the cross-price elasticity ofDuring the winter months, many elderly persons leave their homes in northern New York and travel south to Florida or Arizona. What would you expect to happen to the equilibrium price and quantity of items most used by the elderly in northern New York?When Heavenly Cookies prices its sugar cookies at $1.00, they sell 75 cookies. They lowered the price to $0.50 and sold 200 cookies. Their total revenue ________ because the price elasticity of demand for sugar cookies is ________.For a market to be competitive:If a good is subject to a binding price ceiling and you purchase it on the black market, what do you expect to happen to the price over time?Use these production possibilities frontier (PPF) curves, which compare the ancient production of agricultural products to art and literature, to answer the questions that follow. Suppose a great plague wipes out half of the society’s population. Which of the following graphs best depicts how this would affect the PPF?In the first few months of 2012, the price of gasoline increased by approximately 15%. Because of this increase, we would expect the _________ curve in the market for hybrid cars to _________.An increase in general resources that affects the production of both goods on a production possibilities frontier (PPF) would cause anUse the following scenario to answer the questions that follow: Dairy Dream, a local ice cream store, finds that it sells out of ice cream sandwiches at the current price of $1. It raises the price to increase its revenues and finds that no one buys ice cream sandwiches anymore. The demand for ice cream sandwiches is:While there are many pizza places in Curtisville, Pappy’s Pizza is known

for its distinctive deep-dish pizza with an almost pie-like crust, whereas Momma’s Pizza Pizzazz is comparable to many other restaurants. Pappy’s is likely to find that it can ________ prices to increase total revenue, and Mommas must ________ prices to increase total revenue.The scientific method and the tools of economics are useful in examining:A positive statement:When the price of a basketball is $15, the quantity supplied is 5,000. When the price increases to $20, the quantity supplied is 10,000. The price elasticity of supply is:Which of the following will cause the demand curve for burgers to shift the right?You have an absolute advantage in producing something whenever: From the accompanying table, we would expect that, for recreational skaters, the price elasticity of demand for ice skates between $10 and $20 to be ________ than that of hockey players because ________.Refer to the accompanying figure. What event would cause the supply curve to shift out?The production possibilities frontier (PPF) shows:With no barriers to entry or exit and when firms in a market are operating at a loss, you can expect other firms to exit, causing the _________ curve to shift to the _________ and making the equilibrium price _________ and the equilibrium quantity _________.Google has started a project to scan all books and make those that are not copyrighted available to people free of charge. Why is it important that only books without a copyright are availableAccording to economists, one reason few professional athletes have PhD’s is that theWhat will happen in a market where a binding price floor is removed?What would you expect to happen to the price and quantity of Pepsi if the price of Coke increases and Pepsi develops a new technology that makes its production process more efficient?Which statement best describes the absolute advantage as shown in the graphs?The figures below depict the production possibilities frontiers (PPFs) for two people who can allocate the same amount of time between building wooden boats and solving crimes. Refer to these figures to answer the questions that follow. What is DiNozzo’s opportunity cost for solving a crime?Ceteris paribus, if a society is producing at a point on the production possibilities frontier (PPF), it can only increase the production of one good by:In the accompanying table, assume that the price of ice skates increases from $10 to $20 per pair. Using the midpoint method, calculate the price elasticity of demand for ice skates for hockey players.Refer to the following figure for the questions that follow. As you move from points N to M to L, the opportunity cost of additional apple pie:Assume that the market for pencils is in equilibrium and that demand is very price elastic. The popularity of digital tablets and electronic pens

increases and demand for pencils declines. The equilibrium change in quantity demanded is:Refer to the accompanying figure. When the price changes from P1 to P2, we will see a(n):Use the following scenario to answer the questions that follow: Dairy Dream, a local ice cream store, finds that it sells out of ice cream sandwiches at the current price of $1. It raises the price to increase its revenues and finds that no one buys ice cream sandwiches anymore. The owners raised the price because they believed that the demand for ice cream sandwiches is:Spam is considered an inferior good. What would happen to the equilibrium price and quantity of Spam if income decreased and more firms started producing Spam?Refer to the accompanying table to answer the questions that follow. The price of erasers increases from $0.50 to $1.00 per eraser. Use the midpoint method to calculate the cross-price elasticity of demand between pencils and erasers.Question 1

Which of the following concepts do economists focus their study on when explaining how humans behave?

Question 2

If you don’t like changing the oil in your car and pay your father to do it for you, you have provided him with a(n):

Question 3

What is the opportunity cost of taking this exam?

Question 4

The opportunity cost of working rather than going to school is:

Question 5

The term ________ means “additional.”

Question 6

Saudi Arabia has a comparative advantage in producing oil because it:

Question 7

Ceteris paribus means:

Question 8

A graph that shows the maximum attainable combinations of two goods when society efficiently uses its productive resources is called:

Question 9

On a production possibilities frontier (PPF) that shows the trade-off between consumer goods and capital goods given a fixed amount of labor, unemployment is illustrated by:

Question 10

Consider the production possibilities frontier (PPF) shown in the figure below to answer the questions that follow.

The set of efficient points is best described as:

Question 11

The figures below depict the production possibilities frontiers (PPFs) for two people who can allocate the same amount of time between building wooden boats and solving crimes. Refer to these figures to answer the questions that follow.

What is Gibbs’s opportunity cost of solving a crime?

Question 12

The figures below depict the production possibilities frontiers (PPFs) for two people who can allocate the same amount of time between making pizzas and making stromboli. Refer to these figures to answer the questions that follow.

What is Jim’s opportunity cost of making 1 pizza?

Question 13

Specialization and trade allow individuals to:

Question 14

Refer to the following table to answer the questions that follow.

Suppose that Alicia Keys and Jay-Z could each make either New York–style pizza or Philly cheesesteaks. Given an eight-hour workday, which of the following would permit them to consume outside their respective production possibilities frontiers (PPFs)?

Question 15

Suppose that, on a particular Saturday, Mark Zuckerberg and Bill Gates can either plant trees or spread mulch in their gardens. Their maximum output per day is listed in the following table, along with blanks where you can calculate the opportunity cost. At what terms of trade (relative price ratio) could they specialize and trade with one another so that both have more trees planted and mulch spread than they could accomplish on their own?

Question 16

Something is a normal good if the demand for the good:

Question 17

The demand curve for a good will shift to the right if, holding all else constant,

Question 18

Refer to the accompanying figure. When the price changes from P1 to P2, we will see a(n):

Question 19

If the price of Gatorade increases, the

Question 20

Which of the quantity (Q) and price (P) combinations in the accompanying figure represents the market at competitive equilibrium?

Question 21

According to the supply and demand model, when the cotton gin was invented and if all else was held constant, we would expect the equilibrium price of cotton to _________ and the equilibrium quantity of cotton to _________.

Question 22

When the price of scooters drops by 5%, the quantity demanded changes by 20%. You know that the price elasticity of demand for scooters is:

Question 23

Refer to the accompanying table. When the price drops from $5 to $3, price elasticity of demand for sushi (using the midpoint method) at an income of $30,000 is:

Question 24

While there are many pizza places in Curtisville, Pappy’s Pizza is known for its distinctive deep-dish pizza with an almost pie-like crust, whereas Momma’s Pizza Pizzazz is comparable to many other restaurants. Pappy’s is likely to find that it can ________ prices to increase total revenue, and Mommas must ________ prices to increase total revenue.

Question 25

A binding price ceiling will have the following consequences:

Question 26

Refer to the accompanying figure to answer the questions that follow.

The market is currently at market equilibrium. If a binding price ceiling of P1 is imposed, by how much would the quantity demanded change?

Question 27

Refer to the accompanying figure to answer the questions that follow.

If there is a $180 price ceiling imposed on a textbook, what will be the disequilibrium amount?

Question 28

Refer to the accompanying table to answer the questions that follow.

At what price level does the apartment market reach equilibrium?

Question 29

Use the following information to answer the questions that follow.

Market for flat-screen TVs:

Demand: Qd = 2,600 – 5 P

Supply: Qs = –1,000 + 10 P

What would be the quantity demanded if a price floor is set at $300?

Question 30

Use the following table to answer the questions that follow.

At what price level does the labor market experience its largest shortage?

Which of the following is a positive statement?Select one:a. Increases in the minimum wage cause unemployment.b. We ought to deregulate the mortgage market.c. An economist should test every theory at least twice.d. We should forgo some current consumption in order to invest in the future.e. The government must provide unlimited health care to citizens.Which of the following is a positive statement?Select one:a. All dogs should be required to wear leashes at all times.b. You should take your dog to the veterinarian once a year for a checkup.c. Legally requiring dogs to have rabies shots will reduce the number of rabid dogs.d. Chihuahuas are cuter than bulldogs.e. My dog should lose some weight.Consider a production possibilities frontier (PPF) that compares the production of agricultural products to art and literature. Now suppose the printing press is invented. Which graph best depicts how this would affect the PPF?Select one:a. graph db. graph bc. graph ed. graph ce. graph aEconomic growth is represented on a production possibilities frontier (PPF) by:

Select one:a. the PPF getting flatter.b. the PPF rotating downward.c. the PPF shifting outward.d. the PPF shifting inward.e. the PPF getting steeper.Refer to the figure below. Unemployed resources are evident at ____.Select one:a. point C.b. point D.c. point B.d. point A.e. points B, C, and E.Refer to the figure below. What is the most preferred consumption point for a pieappreciating society?Select one:a. Point E.b. Point A.c. Point C.d. Point D.e. Point B.Referring to the graph below, this society could reach point F when there is:Select one:a. an increase in the monetary price of apple pie.b. an increase in technology that makes pie bakers more efficient.c. a credible new study that shows blueberries reduce the risk of heart attack.d. a new regulation that makes pie baking more costly.e. an increase in the monetary price of blueberry pie.Please refer to the accompanying table. Given an eighthour workday, to experience gains from trade,Select one:a. Alicia should produce both pizzas and cheesesteaks.b. Each should make their own cheesesteaks and pizzas.c. Alicia should make cheesesteaks and JayZ should make pizzas.d. Alicia should make pizzas and JayZ should make cheesesteaks.e. JayZ should produce both pizzas and cheesesteaks.FeedbackSuppose that on a particular Saturday Mark Zuckerberg and Bill Gates can either plant trees or spread mulch in their gardens. Their maximum output per day is listed in the following table, along with spaces where you can calculate the opportunity cost. Who has an absolute advantage in spreading mulch? Select one:a. Gates has the advantage because he gives up fewer trees each time he spreads 1 cubic yard of mulch.b. Zuckerberg has the advantage because he gives up fewer trees each

time he spreads 1 cubic yard of mulch.c. Zuckerberg has the advantage because he gives up more trees each time he spreads 1 cubic yard of mulch.d. Neither has an absolute advantage in spreading mulch.e. Both parties have an absolute advantage in planting trees.Forgoing current consumption so that those resources can be used to produce new capital is called:Select one:a. scarcity.b. investment.c. comparative advantage.d. absolute advantage.e. saving.Which of the following is a normative statement?Select one:a. You should wear a helmet when cycling.b. The sky is blue.c. A bicycle has two wheels.d. A unicycle has five wheels.e. Electricity follows the path of least resistance.An economist’s use of experiments and realworld data to test a theory is an example of: the scientific method in economics.Select one:a. comparative advantage.b. normative analysis.c. macroeconomics.d. economic growth.The opportunity cost of increasing the production of apple pies from 12 to 14 pies is:Select one:a. 2 apple pies.b. 4 blueberry pies.c. 7 blueberry pies.d. 2 blueberry pies.e. 14 apple pies.Which point in the corresponding figure shows that productive resources are not fully employed?Select one:a. point Bb. point Ec. point Cd. point Ae. point DThe opportunity cost of increasing production of blueberry pies from 7 to 11 pies is:Select one:a. 2 apple pies.b. 7 blueberry pies.

c. 2 blueberry pies.d. 14 apple pies.e. 4 apple pies.The ___________ states that the opportunity cost of producing a good always rises as you produce more of it.Select one:a. law of demandb. law of positive economicsc. production possibilities frontier (PPF) modeld. law of increasing relative coste. zerosum gameYou have a comparative advantage in producing a good whenever:Select one:a. you have specific training in the production of that good.b. your opportunity cost of producing that good is lower than that of other producers.c. you can produce more of the good than someone else can using the same resources.d. your opportunity cost is constant.e. you enjoy producing that good.The figure below depicts the production possibilities frontiers (PPTs) for two people who can allocate the same amount of time between making pizzas and making stromboli. Which statement best describes the absolute advantage evidenced in the graph?Select one:a. Pam has an absolute advantage in the production of both.b. Jim has an absolute advantage in the production of both.c. Pam has an absolute advantage in the production of pizzas and Jim has an absolute advantage in the production of stromboli.d. They both have an absolute advantage in the production of stromboli.e. Jim has an absolute advantage in the production of pizzas and Pam has an absolute advantage in the production of stromboli.Goods that are produced now so that they can be used to produce other goods in the future are called:Select one:a. investment goods.b. normal goods.c. consumer goods.d. capital goods.e. opportunity goods.

1.Economics is the study of:a. how to make money.b. how to allocate resources to satisfy wants and needs.c. capitalism.d. how to make workers more productive and firms more profitable.e. markets.2.Suppose that, on a particular Saturday, Mark Zuckerberg and Bill Gates can either plant trees or spread mulch in their gardens. Their maximum output per

day is listed in the following table, along with spaces where you can calculate the opportunity cost. Who has an absolute advantage in spreading mulch?Trees PlantedOpportunityCost of 1 TreeAmount ofMulch Spread(in cubic yards)OpportunityCost ofSpreading 1Cubic Yard ofMulchZuckerberg 20 30Gates 15 30a. Zuckerberg has the advantage because he gives up fewer trees each time he spreads 1 cubic yard of mulch.b. Gates has the advantage because he gives up fewer trees each time he spreads 1 cubic yard of mulch.c. Zuckerberg has the advantage because he gives up more trees each time he spreads cubic yard of mulch.d. Neither has an absolute advantage in spreading mulch.e. Both parties have an absolute advantage in planting trees.3. A car insurance company is willing to offer accidentfree drivers a discount. This is an example of:a. a positive incentive.b. a negative incentive.c. an opportunity cost.d. a comparative advantage.e. scarcity.4. Google has started a project to scan all books and make those that are not copyrighted available to people free of charge. Why is it important that only books without a copyright are available?a. If all books were scanned and available free of charge, copyright holders would face positive incentive to continue writing and publishing books.b. If all books were scanned and available free of charge, copyright holders would face a negative incentive to continue writing and publishing books.c. If only copyrighted texts were scanned and available free of charge, copyright holders would face an indirect incentive to continue writing and publishing books.d. If only noncopyrighted books were scanned and available free of charge, copyright holders would face a negative incentive to continue writing and publishing books.e. If only noncopyrighted books were scanned and available free of charge, copyright holders would face an indirect incentive to continue writing and publishing books.5. Indirect incentives create:a. positive consequences.b. negative consequences.c. indirect consequences.d. direct consequences.e. unintended consequences.6. The cost of a tradeoff

is known as the ________ of that decision.a. marginal costb. net costc. opportunity costd. comparative coste. explicit cost7. An opportunity cost:a. can be measured only when the decision involves expenditures of money.b. can be measured only when the decision involves spending time on one thing and not on another.c. is impossible to measure.d. is equal to the value of what is given up to make a purchase or take an action.e. exists for every decision made by individuals and businesses, but not by the government.8.Instead of taking an economics course, you could have taken a history course that meets at the exact same time. The total cost of taking the economics course would be:a. the tuition cost for the economics course.b. the fact that you could not take the history course at the same time.c. the tuition cost for the economics course plus the price of the textbook and a notebook for the economics course.d. the tuition cost, the cost of the textbook and notebook, and the fact that you could not take the history course at the same time.e. the price of the textbook and a notebook for the economics course.9. The opportunity cost of working rather than going to school is:a. the cost of food and housing.b. the cost of clothing and transportation.c. zero because the person is earning an income by working.d. the higher wages that come with additional education.e. the annual wages earned by working.10. The opportunity cost to free trade is:a. economic growth.b. government involvement.c. a gain of domestic jobs.d. lower prices.e. greater efficiency.11. On the television show “MythBusters,” the hosts design experiments, collect data, and test theories based on popular myths. This is an example of:a. the scientific method as used in economics.b. economic growth.c. gains from trade.d. production possibilities.e. absolute advantage.12. Which of the following is a positive statement?a. An economist should test every theory at least twice.b. Increases in the minimum wage cause unemployment.c. We ought to deregulate the mortgage market.d. The government must provide unlimited health care to citizens.e. We should forgo some current consumption in order to invest in the future.13. Which of the following is a normative statement?a. The current exchange rate is 0.7 British pounds per U.S. dollar.b. In January, the average temperature in Fargo, North Dakota, is 56 degrees.c. Winters in Arkansas are too cold.

d. On average, people save 15% when they switch to GEICO.e. University of Virginia graduates earn more than Duke University graduates.14. The process of examining a change in one variable in a model while assuming that all the other variables remain constant is called:a. exogenous factors.b. ceteris paribus.c. normative analysis.d. positive analysis.e. faulty assumptions.15. Variables that are not accounted for in a model are called:a. endogenous factors.b. exogenous factors.c. normative statements.d. positive statements.e. the scientific method.16. You are considering the “dress well, test well” theory, which argues that you perform better on exams when you dress nicely than you do when you wear sweatpants. If you want to test this theory over the course of the semester, which of the following would be an endogenous factor in your experiment?a. your innate ability in the subjectb. the difficulty of the examc. the relative mix of multiplechoice and shortanswer questionsd. your clothing choice for the exame. the amount of time you spend studying for the exam17. The area inside (within) the production possibilities frontier (PPF) contains:a. normative points.b. positive points.c. efficient points.d. inefficient points.e. high opportunity cost points.18. How will a reduction in the national unemployment rate affect a nation’s production possibilities frontier (PPF)?a. It will cause the PPF to shift inward.b. It will cause the PPF to shift outward.c. It will move society to a point farther inside the PPF.d. It will move society outward to a point closer to or on the PPF.e. It will push society to a point outside its PPF.19. Which of the following is NOT an assumption that economists make when developing a production possibilities frontier (PPF)?a. We live in a world with only two goods.b. There are no increases in technology.c. There is no change in available resources.d. Society will always be producing somewhere on the PPF.e. There are no decreases in technology.Consider the production possibilities frontier (PPF) shown in the figure below to answer the next three questions.20. Given current resources and technology, the attainable range is best described as:a. only area O: points outside the PPF.b. points on the PPF only.c. only area I: points inside the PPF.d. area I: points inside the PPF and points on the PPF.e. Area O: points outside the PPF and points on the PPF.

21. The set of efficient points is best described as:a. only area O: points outside the PPF.b. points on the PPF only.c. only area I: points inside the PPF.d. area I: inside the PPF and points on the PPF.e. area O: outside the PPF and points on the PPF.22 At current resources and technology, the unattainable range is best described as:a. only area O: points outside the PPF.b. points on the PPF only.c. only area I: points inside the PPF.d. area I: inside the PPF and points on the PPF.e. Area O: outside the PPF and points on the PPF.23.The _________ states that the opportunity cost of producing a good always rises as you produce more of it.a. law of increasing relative costb. law of positive economicsc. law of demandd. production possibilities frontier (PPF) modele. zerosum game24.As you move from one efficient point on the production possibilities frontier (PPF) to another efficient point on the PPF, you experience:a. decreasing relative cost.b. opportunity cost.c. macroeconomics.d. unlimited resources.e. unattainable combinations.25.Suppose you find a production possibilities frontier (PPF) that is shaped like a straight line. What can you determine about the production of the two goods?a. Production of the two goods is subject to decreasing relative cost.b. Production of the two goods is subject to increasing relative cost.c. Production of the two goods is subject to constant opportunity cost anywhere along the PPF.d. One producer must have an absolute advantage in production.e. More resources will not cause the PPF to shift.Michael and Angelo are both artists who can create sculptures or paintings each day. The following table describes their maximum outputs per day. Use this table to answer the next two questions.Sculptures PaintingsMichael 10 5Angelo 6 226. What is Michael’s opportunity cost of a sculpture?a. 2 paintingsb. 1/2 paintingc. 3 paintingsd. 1/3 sculpturee. 1/2 sculpture27. What is Angelo’s opportunity cost of a sculpture?a. 1/2 paintingb. 1/3 paintingc. 3 paintingsd. 1/3 sculpturee. 6/10 sculpture

28. When one producer can create more of a good than another producer using the same quantity of resources, the first producer has:a. a zerosum game.b. gains from trade.c. an absolute advantage.d. a comparative advantage.e. increasing relative costs.29. Michael and Angelo are both artists who can create sculptures or paintings each day. The following table describes their maximum outputs per day. Does either one have a comparative advantage?Sculptures PaintingsMichael 10 5Angelo 6 2a. Yes, Michael has a comparative advantage in both sculptures and paintings.b. Yes, Angelo has a comparative advantage in both sculptures and paintings.c. Yes, Michael has a comparative advantage in paintings, and Angelo has a comparative advantage in sculptures.d. Yes, Michael has a comparative advantage in sculptures, and Angelo has a comparative advantage in paintings. e. No, neither has a comparative advantage.30. An increase in the labor force would be reflected in a society’s production possibilities frontier (PPF) by an:a. increase in opportunity cost.b. inward shift of the PPF.c. outward shift of the PPF.d. outward rotation along the x axis.e. outward rotation along the y axis.31. Suppose that Dwight and Jim can either make salads or grill steaks. Their maximum output per hour is listed in the following table. Given the same quantity of resources, at what terms of trade (relative price ratio) could they specialize and trade so that both consume outside their own production possibilities frontier (PPF)?MaximumNumber ofSaladsOpportunityCost of 1 SaladMaximumNumber ofSteaksOpportunityCost of 1 SteakDwight 9 1/3 steak 3 3 saladsJim 12 1/2 steak 6 2 saladsa. 1 salad per 1 steakb. 2 salads per 1 steakc. 2.5 salads per 1 steakd. 3 salads per 1 steake. 3.5 salads per 1 steak32. According to the figure below, at the price of $5:a. the equilibrium quantity is 500.b. the quantity demanded is 500.c. the demand is 500.

d. there is a surplus.e. there is a shortage.33.If the price of a good increases, holding all else constant,a. the demand for all of that good’s substitutes will decrease.b. the quantity demanded for that good will increase.c. the demand for all of that good’s complements will increase.d. the demand for all of that good’s substitutes will increase.e. the demand curve will shift to the left.34.Companies use advertising to shift consumer demand. Which of the following demand shifters do you think advertisers most often rely on?a. changes in incomeb. the price of related goodsc. changes in tastes and preferencesd. the number of buyerse. expectations regarding the future price35.The demand curve shift shown in the figure was caused by a(n):a. increase in the input cost of the good.b. increase in the price of a substitute of the good.c. decrease in the number of firms selling the good.d. decrease in the number of buyers in the market for the good.e. expectation that the future price of this good will be higher than it is currently.36. Which of the following is both a shift in supply and a shift in demand?a. the number of firms in an industryb. tastes and preferencesc. income changesd. expectations of future pricese. the number of buyers37. Which of the following could cause the supply curve for the market for oranges to shift to the left?a. an increase in the income of consumers of orangesb. a decrease in the cost of workersc. an increase in the price of orange juiced. a new study saying that eating oranges will give you heart diseasee. a severe hurricane in Florida38. On January 30, 2012, Starbucks India announced plans to open 50 cafes. What would you expect to happen to the market for coffee in India, assuming all other factors are held constant?a. The demand for coffee will increase in India.b. The demand for coffee will decrease in India.c. Both the supply and demand for coffee will increase in India.d. The supply for coffee will increase in India.e. The supply for coffee will decrease in India.39.According to the accompanying figure, if the price is $10, there is a:a. shortage of 15 units.b. surplus of 15 units.c. shortage of 30 units.d. surplus of 30 units.e. surplus of 22 units.40.If the number of buyers in a market increases from 50 to 100, you would expect the equilibrium price to _________ and the equilibrium quantity to _________, holding all else constant.a. increase; increase.

b. increase; decrease.c. decrease; decrease.d. decrease; increase.e. remain the same; remain the same.41. Refer to the accompanying diagram. Which of the following scenarios would explain this change in equilibrium?a. A number of firms left the market.b. A number of buyers entered the market, and a number of firms entered the market.c. The price of a complement of this good increased.d. The price of a substitute of this good increased.e. The price of this good decreased.42.If all else is held constant, what would happen to the equilibrium price and quantity of iPhones if the price of an Android phone decreased?a. They would both increase.b. They would both decrease.c. One would increase and one would decrease, but we don’t know which would do what.d. The price would increase and the quantity would decrease.e. The price would decrease and the quantity would increase.43. The market for footballs is perfectly competitive. If all else is held constant and the price of leather decreases, we would expect that the equilibrium quantity of footballs would:a. fall and the equilibrium price would rise.b. rise and the equilibrium price would fall.c. fall and the equilibrium price would fall.d. rise and the equilibrium price would rise.e. fall and the equilibrium price would remain constant.44. Refer to the accompanying figure. What event would cause the supply curve to shift out?a. Consumers earn higher incomes.b. Consumers earn lower incomes.c. The price of an input increased.d. Firms entered the market.e. Firms expected the price to rise in the future.45. If the price and quantity for a normal good, Good X, is $8 and 6 units at the original equilibrium, what is one possibility for the new equilibrium of Good X if we see income increase and all other factors stay constant?a. $10 and 4 unitsb. $10 and 8 unitsc. $6 and 4 unitsd. $6 and 8 unitse. $10 and 2 units46. When both supply and demand shift to the left, the:a. equilibrium price always rises.b. equilibrium price always falls.c. equilibrium quantity always falls.d. equilibrium quantity always rises.e. equilibrium quantity is indeterminate.47. Spam is considered an inferior good. What would happen to the equilibrium price and quantity of Spam if income decreased and more firms started producing Spam?a. Equilibrium price will go up and equilibrium quantity will go down.

b. Equilibrium price will go up and equilibrium quantity will go up.c. Equilibrium price will go down and equilibrium quantity will be indeterminate.d. Equilibrium price will be indeterminate and equilibrium quantity will go up.e. Equilibrium price will go up and equilibrium quantity will be indeterminate.48. What would you expect to happen to the price of bagels if the price of flour decreased and the price of cream cheese decreased?a. The equilibrium price of bagels will be indeterminate and the equilibrium quantity will go up.b. The equilibrium price will go up and the equilibrium quantity will go up.c. The equilibrium price will go down and the equilibrium quantity will be indeterminate.d. The equilibrium price will be indeterminate and the equilibrium quantity will go down.e. The equilibrium price will go up and the equilibrium quantity will be indeterminate.49. For a market to be competitive:a. each buyer and seller is small, relative to the whole market; no single decisionmaker has any influence over the market price.b. sellers must produce goods and services that are different from their competitors.c. sellers should have substantial pricing power.d. all you need are many buyers and many sellers.e. the price must be a fair price.50. Many stores are open 24 hours a day. When store managers make the decision to stay open 24 hours, it must be the case that:a. the marginal benefit of staying open all day and the marginal cost to remaining open all day are at least equal.b. the marginal benefit of staying open all day must always be greater than the marginal cost to remaining open all day.c. the marginal cost of staying open all day must always be greater than the marginal benefit to remaining open all day.d. the calculation of marginal benefits or marginal costs of remaining open all day play no role.e. the marginal benefit of remaining open all day is zero.

True or False: If you decide to buy a Butterfinger candy bar, instead of an equally priced Almond Joy, the opportunity cost of your purchase is the value you would have received from that Almond Joy.True or False: The axes of the production possibilities frontier are labeled price and quantity.True or False: Economic growth is represented on a production possibilities frontier as a shift outward of that frontier.True or False: The circular flow model of economic activity assumes that resources are owned by businesses.True or False: With international trade, a country is able to produce outside its production possibilities frontierThe opportunity cost of a new city police contract is:a. The amount of money it takes in order to provide the city with the most highly qualified personnel.b. The value of the other goods and services that the city and taxpayers will be forced to give up in order to pay for the contract.

c. The cost of victims of crimes that the new contract would prevent.d. The value of the opportunities that city policemen acquire by accepting it.Which of the following is the best example of an economic resource?a. A stock certificate.b. A one-hundred dollar bill.c. A tractor.d. A plate of spaghetti and meatballs.Which of the following is the best example of earning income from human capital?a. Melody takes a job as an interpreter from the hearing impaired.b. Josie invests her life savings into her own business, "Jeans by Josephine."c. Seth toils all day in the hot summer sun as a common laborer, just to earn enough money to keep food on the table.d. J.R. kicks up his heels and watches the royalty checks flow in from his oil fields.A production possibilities frontier shows combinations ofa. Inputs that can produce a specific quantity of output.b. Outputs that people consume.c. Outputs that can be achieved as technology improves.d. Outputs that can be achieved in a given time period with all available resources employed using current technology.If a nation's production possibilities indicate that 1,000,000 battle tanks and 6,000,000 houses could be produced, or alternatively, 750,000 tanks and 8,000,000 houses could also be produced, the opportunity cost of each additional house would bea. 250,000 tanks.b. 8 tanks.c. 0.125 tanks.d. 2,000,000 houses.As a nation develops economically, its production possibilities frontiera. Remains stables.b. Shifts towards the origin.c. Shifts away from the origin.d. Becomes steeper, but does not shift.Suppose an economy produces only gizmos and widgets. If there is a technological advance in the production of widgets, the economy's production possibilities frontier will shifta. Outward along the widget axis, but not along the gizmo axis.b. Outward along the gizmo axis, but not along the widget axis.c. Outward along both axes.d. Inward along both axes.Of the points listed in Self-Test Figure 2-1, the fastest rate of economic growth would occur ata. Ab. Bc. Cd. DAll points along the production possibilities frontier area. Technologically efficient.b. Allocatively efficient.c. Economically efficient.d. Equitable.In a circular flow diagram, the output market is where a. Goods and services are exchanged for money.

b. Resources are exchanged for money.c. Consumer outlays of dollars are exchanged for wages, rents, interest, and profits.d. Resources are exchanged for goods and services.Money in the economy todaya. Is needed in order for barter to occur.b. Is primarily commodity money.c. Facilitates the circular flow of economic activity.d. Is an economic resource along with land, labor, capital and entrepreneurship.In order to gain from trade, it is necessary toa. Specialize according to comparative advantages.b. Specialize according to absolute advantage.c. Find a trading partner with an absolute advantage in something.d. Find a trading partner without an absolute advantage in something.When a country can produce a good with fewer resources than any other country, the country hasa. A comparative advantage.b. A resource advantage.c. An absolute advantage.d. An unfair advantage.A country has a comparative advantage in the production of a good if it can produce that good _______ than can other countries.a. With fewer raw materialsb. At a lower opportunity costc. At a higher qualityd. With fewer labor-hoursBy having an efficient economy today, a country's future production possibilities frontier will allow the production ofa. Both more guns and more butter.b. More guns, but not more butter.c. More butter, but not more guns.d. Neither more guns nor more butter.

Question 1Refer to the following figure for the questions that follow.The opportunity cost of increasing production of apple pies from 14 to 16 pies is:Question 2The figures below depict the production possibilities frontiers (PPFs) for two people who can allocate the same amount of time between building wooden boats and solving crimes. Refer to these figures to answer the questions that follow.What is Gibbs’s opportunity cost of solving a crime?Question 3Michael and Angelo are both artists who can create sculptures or paintings each day. The following table describes their maximum outputs per day. Does either one have a comparative advantage?Question 4The opportunity cost of every investment in capital goods is:Question 5Refer to the following table to answer the questions that follow.Given the same quantity of resources, what is Alicia Keys’s opportunity cost of producing a New York pizza?Question 6Economic growth is represented on a production possibilities frontier (PPF) by the PPF:Question 7The _________ illustrates the various combinations of output that a society can produce if all of its

resources are being used efficiently.Question 8The accompanying figures depict the production possibilities frontiers (PPFs) for two people who can allocate the same amount of time between making pizzas and making stromboli. If Jim and Pam were to specialize and trade, at what exchange rate would they find some quantity of trade to be mutually beneficial?Question 9Use these production possibilities frontier (PPF) curves, which compare the ancient production of agricultural products to art and literature, to answer the questions that follow.Suppose a great plague wipes out half of the society’s population. Which of the following graphs best depicts how this would affect the PPF?Question 10Consider the following scenario to answer the questions that follow: Two friends, Rachel and Joey, enjoy baking bread and making apple pies. Rachel takes two hours to bake 1 loaf of bread and one hour to make 1 pie. Joey takes four hours to bake 1 loaf of bread and four hours to make 1 pie.What is Rachel’s opportunity cost of baking 1 loaf of bread?Question 11When the opportunity cost of producing a good rises as you produce more of it, you experience:Question 12When one producer can create more of a good than another producer using the same quantity of resources, the first producer has:Question 13If Elaine can produce more output from a set amount of resources than Jerry can, you know that:Question 14A model without any simplifying assumptions:Question 15When one producer has a comparative advantage in production, she:Question 16Refer to the following figure for the questions that follow.According to the figure, a new technology that makes it easier to peel, core, and prepare apples will cause:Question 17Refer to the following table to answer the questions that follow. Given an eighthour workday, which statement best describes the absolute advantage evident in the table?Question 18Consider the production possibilities frontier (PPF) shown in the figure below to answer the questions that follow. The set of efficient points is best described as:Question 19Refer to the following figure to answer the questions that follow. What is the most preferred consumption point for a pieappreciating society?Question 20Which of the following is a positive statement?