ECON MIDTERM #1

Which of the following is considered a microeconomic issue?
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Which of the following is considered a microeconomic issue?
The local university decides to raise tuition for online course offerings.
Image: Which of the following is considered a microeconomic issue?
Which of the following is considered a macroeconomic topic?
The U.S. labor force participation rate falls.
Image: Which of the following is considered a macroeconomic topic?
When we assume that consumers want to pay the lowest price possible, we assume that consumers are:
rational
Image: When we assume that consumers want to pay the lowest price possible, we assume that consumers are:
Scarcity can best be defined as a situation in which:
all wants cannot be satisfied due to resource constraints.
Image: Scarcity can best be defined as a situation in which:
The problem of having unlimited wants under the constraint of limited resources describes:
scarcity.
Image: The problem of having unlimited wants under the constraint of limited resources describes:
Mimi gets a job twenty miles from her house and purchases a new car to commute. As a result of this new expense, Mimi decides to sell her season tickets to the local football stadium. Mimi's situation can be described as:
a trade-off.
Image: Mimi gets a job twenty miles from her house and purchases a new car to commute. As a result of this new expense, Mimi decides to sell her season tickets to the local football stadium. Mimi's situation can be described as:
Economists assume that people choose to do something when they believe:
the benefits outweigh the costs of the decision.
Image: Economists assume that people choose to do something when they believe:
You decide to drive your car on a long road trip of 1,500 miles. The opportunity cost of driving your car:
includes lost wages you could have earned instead of driving.
Image: You decide to drive your car on a long road trip of 1,500 miles. The opportunity cost of driving your car:
Your sister always brags about how savvy she is as a grocery shopper, claiming she saves lots of money by using coupons and shopping at multiple stores to get the lowest prices on all goods. Why might your sister be overestimating her savings?
+She does not count the value of the time it takes her to sort and clip coupons as a cost. +She does not count the cost of the gas she uses driving extra miles to multiple grocery stores.
+She does not count the value of the time it takes her to check out at multiple stores and use multiple coupons, compared to a trip to one store with no coupons. All of these are correct.
Image: Your sister always brags about how savvy she is as a grocery shopper, claiming she saves lots of money by using coupons and shopping at multiple stores to get the lowest prices on all goods. Why might your sister be overestimating her savings?
Making a decision "on the margin" involves comparing:
additional benefits against additional costs.
Image: Making a decision "on the margin" involves comparing:
Jasmin purchases a coffee cup from her local gas station for $5.00 that can be refilled at any time for $0.50. The marginal cost of her 10th cup of coffee is:$0.50.Aria purchases a coffee cup from her local gas station for $5.00 that can be refilled at any time for $0.50. Economists would say that the $5.00 she spent on the cup is:a sunk cost.A college student decides to spend his afternoon watching three movies rented from Redbox. The cost of each movie is $1. The student was willing to pay $4 to rent each of the first two movies and $2 to rent the third movie. What was the marginal benefit received by the student when renting the second movie?$4After paying $12 to enter an all-you-can-eat buffet, you can eat as much food as you desire. The marginal cost of an additional plate of food is:zero dollars.After paying $12 to enter an all-you-can-eat buffet, you can eat as much food as you desire. Which of the following statements is true?The marginal benefit of your first plate of food is larger than the marginal benefit of your third plate of food.An Italian restaurant decreases the price of pizza relative to the price of spaghetti, so customers buy more pizza. This is an example of responding to:incentives.A fast-food chain announces a "buy one get one free" offer on breakfast sandwiches bought before 9am. This is an example of:the use of incentives.A university posts a notice that anyone who registers for classes after the deadline will be charged an additional $30 fee. This is an example ofa disincentive.Which of the following is an example of a positive incentive?Discover offers 0 percent balance transfer rates to anyone who opens a new credit card.The idea of efficiency is used to address which of the following questions?Are resources being allocated in the best way possible?Suppose you have an idea that you believe offers substantial opportunity, but no one has ever implemented this idea before. What conclusion should you draw? I. People are irrational. II. You have come up with a new innovative idea. III. Your may have misevaluated how people will respond to new incentives. IV. You are being irrational.II and III onlyThe idea of efficiency is used to address which of the following questions?Are resources being allocated in the best way possible?When two variables have been observed to have a tendency to occur at the same time, we can say there is ______ but not necessarily ______.correlation; causationThe statement "People who drink coffee tend to wake up early" implies that:drinking coffee is positively correlated with waking up early.Your friend comments that "A hair stylist should not have to obtain a cosmetology license." Her statement is an example of what kind of statement?NormativeWhich of the following is an example of a positive statement?An increase in the minimum wage results in higher teenage unemployment.Which of the following is an example of a positive statement?Individuals with a bachelor's degree earn higher average incomes than those with only a high school diploma.Which is NOT a characteristic of a good economic model?Utilizes vague assumptionsA news article reports that students who take SAT preparation courses tend to have higher test scores. Which of the following describes an omitted variable that could explain this correlation? I. Parents with more education are more likely to enroll their children in SAT preparation courses. II. SAT preparation courses improve students' test-taking abilities. III. Students who are more motivated to attend college are more likely to enroll in SAT preparation courses.I and III onlyWhen the occurrence of one event brings about the other, the relationship between the two events is best described as:causationAs corn prices rise, salsa sales tend to fall. This is an example of:a negative correlation.When the price of milk rises, there is no change in the amount of dog food purchased. This is an example of:two items that are uncorrelated.The invisible hand refers to the coordination that occurs from:everyone working in his or her own self-interest.A production possibilities frontier is a line or curve that:shows all the possible combinations of outputs that can be produced using all available resources.Consider the production possibilities frontier displayed in the figure shown. The fact that the line slopes downward displays which economic concept? (YELLOW)Trade-offsConsider the production possibilities frontier displayed in the figure shown. Which points are efficient and attainable with existing resources?Points I and IVConsider the production possibilities frontier displayed in the figure shown. A society faced with this curve currently:cannot obtain point II.Considering the production possibilities frontier displayed in the figure shown, producing at point ______ would be inefficient.IIIThe slope of a production possibilities frontier measures:the opportunity cost of producing one good in terms of the other.Consider the production possibilities frontier displayed in the figure shown. The opportunity cost of a bushel of apples is:1/20 watermelons.Consider the production possibilities frontier displayed in the figure shown. The opportunity cost of one watermelon is:20 bushels of apples.Consider the production possibilities frontier displayed in the figure shown. If a society with this frontier chooses to produce 200 bushels of apples, it can produce no more than:10 watermelons.Consider the production possibilities frontier displayed in the figure shown. The opportunity cost of one watermelon:is constant.If we consider the reality that each worker has different skills, then the production possibilities frontier should:be bowed outward.A realistic production possibilities curve is _____, while a simple production possibilities curve _____.bowed outward; has constant opportunity costs.Consider the production possibilities frontier in the figure shown. As more and more cars are produced, the opportunity cost of producing more cars:increases.Consider the production possibilities frontier in the figure shown. The opportunity cost of one cigar between points A and B is:1/5 car.Consider the production possibilities frontier in the figure shown. The opportunity cost of cars between points B and C isgreater than the opportunity cost of cars between points A and B.If society were to experience an increase in its available resources, its production possibilities frontier wouldshift outward.Hurricane Katrina destroyed much of New Orleans and other parts of the South. Which of the following statements is true? The hurricane:caused the U.S. production possibilities frontier to shift inward.Consider a society facing the production possibilities frontiers in the figure shown. Out of the options provided, which is the most likely cause of a society moving from PPF1 to PPF3?More workersConsider a society facing the production possibilities frontiers in the figure shown. Out of the options provided, which is the most likely cause of a society moving from PPF1 to PPF2?Better printing press technologyWhen nations trade, the result would most likely be a(n):increase in total production, which would benefit every nation involved.Suppose the figure shown represents the production possibilities frontier for Country A. Which of the following combinations of goods could Country A consume in the absence of trade?(5 airplanes, 30 trucks)Refer to the figure shown, which represents the production possibilities frontiers for Countries A and B. The slope of Country A's production possibilities frontier:+measures the opportunity cost of trucks in terms of cars. +measures the trade-off that Country A faces when deciding how to allocate resources. +is constant, because the opportunity cost remains constant. All of these statements are true.Refer to the figure shown, which represents the production possibilities frontiers (PPFs) for Countries A and B. The slope of Country A's PPF is _____ and the slope of Country B's PPF is _____.−5; −3Consider the production possibilities frontier displayed in the figure shown. The opportunity cost of one scarf between points C and D is:1 sweater.Consider the production possibilities frontier displayed in the figure shown. The opportunity cost of one scarf is largest betweenpoints C and D.If the opportunity cost of producing corn is lower for Ohio than for Iowa, then:Ohio has a comparative advantage at producing corn.Suppose that a worker in Country A can produce either 25 bananas or 5 tomatoes each year. Country A has 200 workers. Suppose a worker in Country B can produce either 18 bananas or 6 tomatoes each year. Country B has 400 workers. For a worker in Country B, the trade-off to producing one tomato is:3 bananas.Suppose that a worker in Country A can make either 25 bananas or 5 tomatoes each year. Country A has 200 workers. Suppose a worker in Country B can make either 18 bananas or 6 tomatoes each year. Country B has 400 workers. For a worker in Country A, the trade-off of making one tomato is:5 bananas.Suppose that a worker in Country A can make either 10 iPhones or 5 iPads each year. Country A has 100 workers. Suppose a worker in Country B can make either 2 iPhones or 10 iPads each year. Country B has 200 workers. Country B has a comparative advantage at producing:iPads.Suppose that a worker in Country A can make either 10 iPhones or 5 iPads each year. Country A has 100 workers. Suppose a worker in Country B can make either 2 iPhones or 10 iPads each year. Country B has 200 workers. Country A has an absolute advantage at producing:iPhones.Suppose that, given the same number of workers, the United States can produce twice as many televisions or 20 times as many potatoes as Chile. Which of the following statements is true?The United States has an absolute advantage at producing both televisions and potatoes.Suppose that only two goods are produced in an economy. If a country possesses a comparative advantage at producing one good, then it:cannot also possess a comparative advantage at producing the other good.Suppose an American worker can make 20 pairs of shoes or grow 100 apples per day. On the other hand, a Canadian worker can produce 10 pairs of shoes or grow 20 apples per day. Which of the following statements is true?The United States has an absolute advantage at producing both shoes and apples.Suppose an American worker can make 20 pairs of shoes or grow 100 apples per day. On the other hand, a Canadian worker can produce 10 pairs of shoes or grow 20 apples per day. The opportunity cost of one pair of shoes for the United States is _____, while the opportunity cost of one pair of shoes for Canada is ______.5 apples; 2 applesSuppose an American worker can make 20 pairs of shoes or grow 100 apples per day. On the other hand, a Canadian worker can produce 10 pairs of shoes or grow 20 apples per day. The opportunity cost of a pair of shoes is _____ for the United States than Canada, so Canada has a(n) _____ advantage at producing shoes.higher; comparativeSuppose an American worker can make 100 nets or catch 1000 fish per day. On the other hand, a Chilean worker can produce 40 nets or catch 400 fish per day. The United States has a(n) _____ advantage at producing nets, but does NOT have a(n) _____ advantage at producing fishabsolute; comparativeWhen a producer has the ability to produce a good or service at a lower opportunity cost than others, economists say the producer:has a comparative advantage at producing that good.Suppose that a worker in Country A can produce either 25 bananas or 5 tomatoes each year. Country A has 200 workers. Suppose a worker in Country B can produce either 18 bananas or 6 tomatoes each year. Country B has 400 workers. The opportunity cost of one tomato is:higher in Country A than Country B.Suppose that a worker in Country A can produce either 25 bananas or 5 tomatoes each year. Suppose that a worker in Country B can produce either 18 bananas or 6 tomatoes each year. Country B has an absolute advantage at:producing tomatoes, but not bananas.Suppose that a worker in Country A can make either 15 cars or 5 computers each year. Country A has 1,000 workers. Suppose a worker in Country B can make either 4 cars or 20 computers each year. Country B has 600 workers. _____ has a comparative advantage at producing cars, and _____ has a comparative advantage at producing computers.Country A; Country BTwo countries will choose to specialize and trade only if:the terms of trade fall between the two nations' opportunity costs for producing the goods on their own.If France is capable of producing cheese, wine, or some combination of those two, it should:produce the good for which it has a comparative advantage.Suppose that a worker in Country A can produce either 25 bananas or 5 tomatoes each year. Country A has 200 workers. Suppose a worker in Country B can produce either 18 bananas or 6 tomatoes each year. Country B has 400 workers. The workers in Country A should specialize in producing _____ because it has a(n) _____ at producing that goodbananas; comparative advantageSuppose that a worker in Country A can make either 10 iPhones or 5 iPads each year. Country A has 100 workers. Suppose a worker in Country B can make either 2 iPhones or 10 iPads each year. Country B has 200 workers. Country B has a(n) _____ advantage at producing iPads, which means it should specialize in _____.comparative; iPadsRefer to the figure shown, which represents the production possibilities frontiers for Countries A and B. After comparing each country's production possibilities frontier, it is clear that:Country A should specialize in cars, Country B should specialize in trucks, and both could benefit from trade.Suppose the figure shown represents the production possibilities frontier for Country A. Country B offers to trade four trucks for every airplane. Assuming Country A specializes in airplane production, which of the following combinations of goods could Country A consume?(15 airplanes, 20 trucks)Suppose that a worker in Country A can make either 10 iPhones or 5 iPads each year. Country A has 100 workers. Suppose a worker in Country B can make either 2 iPhones or 10 iPads each year. Country B has 200 workers. Which of the following is true?Country B should produce iPads and Country A should produce iPhones, and they could both benefit from trade.Suppose that a worker in Country A can produce either 25 bananas or 5 tomatoes each year. Country A has 200 workers. Suppose a worker in Country B can produce either 18 bananas or 6 tomatoes each year. Country B has 400 workers. Country B specializes in producing tomatoes and Country A specializes in producing bananas. What terms of trade would both countries be willing to agree to?One tomato for four bananasSuppose that a worker in Country A can produce either 25 bananas or 5 tomatoes each year. Country A has 200 workers. Suppose a worker in Country B can produce either 18 bananas or 6 tomatoes each year. Country B has 400 workers. Country A specializes in producing bananas and Country B specializes in producing tomatoes. Regarding the terms of trade, Country A will give no _____ than _____ for every _____.more; 5 bananas; one tomatoTom and Jerry have one day to work, but two tasks to focus on: building chairs and tables. If Tom spends all day building chairs, he will make 16 chairs. If he instead devotes his day to building tables, Tom will make 4 tables. If Jerry spends his day building chairs, he will make 14 chairs; if he spends the day building tables, he will make 7 tables. If Jerry decides to specialize in building tables, what are the limits to his terms of trade?Jerry will accept no less than 2 chairs for each table.Suppose the figure shown represents the production possibilities frontier for Country A. Country B offers to give 3 TVs to Country A for every cellphone it receives. Assuming Country A fully specializes in cellphone production, which of the following combinations of goods could Country A now consume that it could not achieve before trade?(400 cellphones, 1,200 TVs)Suppose the figure shown represents the production possibilities frontier for Country A. Country B offers to give 4 TVs to Country A for every cellphone it receives. Assuming Country A fully specializes in cellphone production and that it wishes to consume 24 cellphones total, how many TVs can Country A consume after trade?48 TVsRefer to the figure shown, which represents the production possibilities frontiers for Countries A and B. Which of the following statements is true? I. Country A has an absolute advantage at producing both avocados and t-shirts. II. Country B has a comparative advantage at producing t-shirts. III. Country B would benefit from trade, but Country A would notI and II onlyRefer to the figure shown, which represents the production possibilities frontiers for Countries A and B. What terms of trade would both countries be willing to agree to?One t-shirt for 1.5 avocadosRefer to the figure shown, which represents the production possibilities frontiers for Countries A and B. What terms of trade would both countries be willing to agree to?One solar panel for 8 bikesThe term market refers to:the buyers and sellers who trade a particular good or service, not to a physical location.The four important characteristics that define a perfectly competitive market are:a standardized good, full information, no transaction costs, and price-taking participants.Demand describes how much of something people:are willing and able to buy at alternative prices under certain circumstances.For almost all goods, the:lower the price goes, the higher the quantity demanded.The law of demand describes the:inverse relationship between price and quantity demanded.The table shows individual demand schedules for a market. At a price of $1.00, how much of the good will be demanded by Betty?11The table shows individual demand schedules for a market. If the price of the good is $0.50, total demand by Betty and Barney will be:36 units.The demand curve is a(n) _____ line that reflects the _____ relationship between price and quantity.downward-sloping; inverseThe amount of a particular good that sellers in a market will sell at a given price during a specified period is called:quantity supplied.For almost all goods, the _____ the price goes, the _____.higher; higher the quantity suppliedThe law of supply is described as the:direct relationship between price and quantity supplied.The supply curve is a(n) _____ line that reflects the _____ relationship between price and quantity suppliedupward-sloping; direct