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Unit 1 Test review
Terms in this set (43)
Olivia was accepted to Notre Dame and another college. She is trying to decide where to go. Which of the following should she include in making her decision?
The difference between living expenses at Notre Dame and her second choice but not how much she spent applying to Notre Dame nor the difference between living expenses at Notre Dame and her second choice
When the government redistributes income from the wealthy to the poor
people work less and produce fewer goods and services
Opportunity cost is measured in terms of
both monetary value and time.
What does trade allow?
Allows Specialization which reduces cost
Katie is planning to sell her house, and she is considering making two upgrades to the house before listing it for sale. Replacing the carpeting will cost her $2,500 and replacing the roof will cost her $9,000. Katie expects the new carpeting to increase the value of her house by $3,000 and the new roof to increase the value of her house by $7,000.
She should replace the carpet but not the roof
Fred and Ann are both given free tickets to see a movie. Both decide to see the same movie. We know that
both bear an opportunity cost of seeing the movie because they could have done other
things instead of seeing the movie.
The principle that "trade can make everyone better off" applies to interactions and trade between
All of the above are correct.
Answers:families, states within the United States, nations.
According to a recent study of Chilean bus drivers, drivers who are paid by the number of passengers they transport have higher productivity than drivers who are paid by the hour. This result is an example of which principle of economics?
People respond to incentives.
refers to how much a society can produce with its resources. Equality refers to how evenly the benefits from using resources are distributed among members of society
After much consideration, you have chosen Cancun over Ft. Lauderdale as your Spring Break destination this year. However, Spring Break is still months away, and you may reverse this decision. Which of the following events would prompt you to reverse this decision?
The marginal cost of going to Ft. Lauderdale decreases.
A production possibilities frontier can shift outward if
There is technological improvement
Production possibilities frontiers are usually bowed outward. This is because
resources are specialized; that is some that are better at producing particular goods rather than other goods
If an economy is producing efficiently, then
there is no way to produce more of one good without producing less of another good.
Factors of production are
inputs into the production process
Jane produces only corn, measured in tons, and cloth, measured in bolts. For her, the opportunity cost of one more ton of corn is
the inverse of the opportunity cost of one more bolt of cloth.
Suppose that a worker in Caninia can produce either 2 blankets or 8 meals per day, and a worker in Felinia can produce either 5 blankets or 1 meal per day. Each nation has 10 workers. For many years, the two countries traded, each completely specializing according to their respective comparative advantages. Now war has broken out between them and all trade has stopped. Without trade, Caninia produces and consumes 10 blankets and 40 meals per day and Felinia produces and consumes 25 blankets and 5 meals per day. The war has caused the combined daily output of the two countries to decline by
15 blankets and 35 meals
Tom Petty excels at producing rock videos. Tom Clancy excels at writing military novels. The difference in their skills is one reason why the production possibilities frontier for videos and novels
is bowed out.
Mike and Sandy are two woodworkers who both make tables and chairs. In one month, Mike can make 4 tables or 20 chairs, while Sandy can make 6 tables or 18 chairs. Given this, we know that
Mike has an absolute advantage in chairs.
At one point along a PPF, 50 tons of coffee and 100 tons of bananas are produced. At another point along the same PPF, 30 tons of coffee and 140 tons of bananas are produced. The opportunity cost of a ton of coffee between these points is
2 tons of bananas per ton of coffee.
Abe can catch 15 pounds of fish an hour or pick 30 pounds of fruit an hour. He works an 8 hour day, spending 5 hours picking fruit and 3 hours catching fish. Calculate Abe's opportunity cost of a pound of fruit.
d 0.3 pounds of fish
Ham and eggs are complements. If the price of ham rises, the demand for eggs will
decrease and the demand curve for eggs will shift leftward.
Assume that there is an improvement in production technologies and also an increase in the expected future price. Which of the following will happen?
The technological improvement causes the supply curve to shift rightward while the increase in the expected future price causes the supply curve to shift leftward. The net effect is not known.
The quantity of iPods that people plan to buy this month depends on all of the following EXCEPT the
technology used to produce an iPod
It is expected that the price of a bushel of wheat will increase in one month. This belief will result in
a decrease in current supply of wheat.
In March, the quantity of orange juice sold in the town of Jackson was 3000 cartons and the price $3. In May, the quantity of orange juice sold in the town of Jackson was 3500 cartons and the price was $3.20. This change in the price and quantity sold could have been the result of
the release of a medical study suggesting that consuming orange juice helps prevent cancer
As the price of a pound of peanuts falls
the quantity of peanuts demanded will increase.
Which of the following best reflects an increase in quantity supplied rather than an increase in supply
The government stops controlling the price of a product, allowing the price to increase.
A shift of the supply curve for pick-up trucks might be the result of all of the following EXCEPT
a change in the price of pick-up trucks.
You observe that an increase in the price of salsa decreases the demand for tortilla chips and increases the demand for potato chips. You can conclude that
salsa and tortilla chips are complements
If the price of chocolate chip cookies rises, then
there would be a movement upward along the demand curve.
Along a straight-line demand curve, as the price falls the
demand becomes less elastic.
On most days the price of a rose is $1 and 80 roses are purchased. On Valentine's Day the demand increases so that the price of a rose rises to $2 and 320 roses are purchased. Therefore, the price elasticity of
supply of roses is about 1.8
Taco Bell's economists determine that the price elasticity of demand for their tacos is 2.0. So, if Taco Bell raises the price of its tacos by 6.0 percent, the quantity demanded will
decrease by 12%
Last year when John graduated and received a 20 percent pay increase, the average number of restaurant meals he consumed rose from once a week to three time a week. Hence his income elasticity for restaurant meals is
The route from Dallas to Mexico City is served by more than one airline. The demand for tickets from American Airlines for that route is probably
elastic and more elastic than the demand for all tickets for that route.
The marketing people for AT&T believe that if they lower the price of long-distance phone calls by 5 percent, their quantity sold will increase by 15 percent. If they are correct in their belief, then
the total revenue from long-distance services will increase if they lower the price
Joe likes peanut butter and jelly sandwiches for lunch. We can conclude that for Joe
the cross elasticity of demand for peanut butter with respect to jelly is negative because jelly and peanut butter are complements.
If the elasticity of supply is 4, a 10 % increase in the price of a good leads to a
40 % increase in the quantity of supply.
A straight-line demand curve with negative slope intersects the horizontal axis at 200 tons per week. The point on the demand curve at which the price elasticity of demand is 1 corresponds to a quantity demanded
of 100 tons.
when society gets the most from its scarce resources. Refers to the size of the economic pie.
when prosperity is distributed uniformly among society's members. Refers to how the pie is divided into individual slices.
To achieve greater equality, could redistribute income from wealthy to poor. But this reduces incentive to work and produce, shrinks the size of the economic "pie."
To achieve greater equality could redistribute
Why was ocean thermal-energy conversion abandoned by the United States?
In the four-scenario slide (tilted: Quantify "How Do You Differ?"), under which scenario(s) does the analyst deserve credit for having an out-of-consensus EPS estimates?
What factors contributed to the superficial prosperity of the 1920s?
How does Brabantio react to the news of Desdemona marrying Othello?
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