Deck 16: Introduction

Question 1

An opportunity cost of economic growth is

A) the capital accumulation given up to increase present consumption.
B) the increased future consumption.
C) the present consumption given up to accumulate capital.
D) None of the above because there is no opportunity cost since if an economy grows, it can produce more of all goods.

Answer 1

C

Question 2

If the wood used to produce houses rises in price,then the ________ houses ________.

A) demand for; increases
B) demand for; decreases
C) supply of; increases
D) supply of; decreases

Answer 2

D

Question 3

If OPEC cuts oil production,then the

A) demand for gasoline will decrease.
B) price of gasoline will fall.
C) demand for gasoline will increase.
D) supply of gasoline will decrease.

Answer 3

D

Question 4

If pizza is a normal good,then an increase in people's incomes shifts the ________ curve ________.

A) demand; rightward
B) demand; leftward
C) supply; rightward
D) supply; leftward

Question 5

Country X devoted 70 percent of its resources to consumption,while Country Y devoted 80 percent to consumption.Other things being equal,you can predict that

A) Country X's opportunity cost of economic growth is lower than Country Y's.
B) Country Y's rate of capital accumulation is higher than Country X's
C) Country Y's economy will grow faster than Country X's.
D) Country X's economy will grow faster than Country Y's.

Question 6

$$\begin{array} { | c | c | } \hline \begin{array} { c } \text { Cheese } \\\text { (tons) }\end{array} & \begin{array} { c } \text { DVDs } \\\text { (thousands) }\end{array} \\\hline 0 & 60 \\\hline 2 & 56 \\\hline 4 & 48 \\\hline 6 & 36 \\\hline 8 & 20 \\\hline 10 & 0 \\\hline\end{array}$$

-The table above lists six points on the production possibilities frontier for cheese and DVDs.From this information you can conclude that production is inefficient if this economy produces

A) 2 tons of cheese and 56 thousand DVDs.
B) 8 tons of cheese and 21 thousand DVDs.
C) 5 tons of cheese and 48 thousand DVDs.
D) 7 tons of cheese and 20 thousand DVDs.

Question 7

According to the principle of comparative advantage,if the United States trades with Mexico,most likely,

A) the United States will benefit and Mexico will lose.
B) the United States will lose and Mexico will benefit.
C) neither of the countries will benefit.
D) both countries will benefit.

Question 8

The figure above shows the market for film cameras.If the price of digital cameras falls,the equilibrium quantity of film cameras will be ________ thousand cameras and the price of a film camera will be ________.

A) less than 300; less than $300
B) greater than 300; less than $300
C) 300; greater than $300
D) greater than 400; greater than $310

Question 9

$$\begin{array} { | c | c | } \hline \begin{array} { c } \text { Cheese } \\\text { (tons) }\end{array} & \begin{array} { c } \text { DVDs } \\\text { (thousands) }\end{array} \\\hline 0 & 60 \\\hline 2 & 56 \\\hline 4 & 48 \\\hline 6 & 36 \\\hline 8 & 20 \\\hline 10 & 0 \\\hline\end{array}$$

-The table above lists six points on the production possibilities frontier for cheese and DVDs.Given this information,which of the following combinations is unattainable?

A) 2 tons of cheese and 56 thousand DVDs
B) 8 tons of cheese and 21 thousand DVDs
C) 6 tons of cheese and 34 thousand DVDs
D) 7 tons of cheese and 20 thousand DVDs

Question 10

All economic questions arise because

A) of scarcity.
B) production possibilities are unlimited.
C) our wants are limited.
D) people are irrational.

Question 11

Which of the following is NOT a factor of production?

A) mineral resources
B) money
C) a computer programmer
D) a commercial aircraft

Question 12

The opportunity cost of a good is

A) the income you forgo to get it.
B) the lowest valued alternative you give up to get it.
C) the highest valued alternative you give up to get it.
D) all alternatives you give up to get it.

Question 13

$$\begin{array} { | c | c | } \hline \begin{array} { c } \text { Cheese } \\\text { (tons) }\end{array} & \begin{array} { c } \text { DVDs } \\\text { (thousands) }\end{array} \\\hline 0 & 60 \\\hline 2 & 56 \\\hline 4 & 48 \\\hline 6 & 36 \\\hline 8 & 20 \\\hline 10 & 0 \\\hline\end{array}$$

-The table above lists six points on the production possibilities frontier for cheese and DVDs.What is the opportunity cost of producing the 7th ton of cheese?

A) 16 DVDs per ton of cheese
B) 8 DVDs per ton of cheese
C) 20 DVDs per ton of cheese
D) 28 DVDs per ton of cheese

Question 14

Which of the following increases the demand for chicken?

A) an increase in the price of the grain used to feed chickens
B) an increase in the number of chicken farmers
C) an increase in the price of beef, a substitute for chicken
D) a fall in the price of chicken

Question 15

Jen won $900 in a lottery.She has a choice between using the money to buy a sofa,a television,or going on a vacation.If she chooses to buy a television,the opportunity cost of this decision is

A) zero because she won the money.
B) the sofa and the vacation trip.
C) the sofa, the vacation trip, and $900.
D) the sofa if that was her second choice.

Question 16

The figure above shows the market for digital cameras.If consumers' incomes rise and a digital camera is a normal good,the equilibrium quantity of digital cameras will be ________ thousand cameras and the price of a digital camera will be ________.

A) less than 300; less than $300
B) greater than 300; less than $300
C) 300; greater than $300
D) greater than 300; greater than $300

Question 17

Jelly beans and popcorn are substitutes.A fall in the price of a bag of jelly beans will ________ the demand for popcorn and the price of popcorn will ________.

A) increase; rise
B) increase; fall
C) decrease; fall
D) decrease; rise

Question 18

Lizzie takes 20 seconds to stuff an envelope and 10 seconds to seal it.Arnold takes 15 seconds to stuff an envelope and 5 seconds to seal it.Lizzie has a comparative advantage in ________ and Arnold has a comparative advantage in ________.

A) sealing envelopes; stuffing them
B) stuffing envelopes; sealing them
C) neither of these activities; both activities
D) both activities; neither of these activities

Question 19

If the wood used to produce houses rises in price,then the ________ houses shifts ________.

A) demand curve for; rightward
B) demand curve for; leftward
C) supply curve of; rightward
D) supply curve of; leftward

Question 20

A processor of alligator hides can produce either purses or shoes.If the demand for alligator shoes increases,then the ________ alligator purses will ________.

A) supply of; increase
B) supply of; decrease
C) demand for; decrease
D) demand for; increase

Question 21

The number of companies making shoes decreases.As a result,the equilibrium price of a pair of shoes ________ and the equilibrium quantity ________.

A) rises; increases
B) rises; decreases
C) falls; increases
D) falls; decreases

Question 22

Shoes are a normal good and people's incomes rise.Simultaneously the number of companies making shoes decreases.As a result,the equilibrium price of a pair of shoes ________ and the equilibrium quantity ________.

A) definitely rises; might increase, decrease, or not change
B) definitely rises; definitely increases
C) might rise, fall, or not change; might increase, decrease, or not change
D) None of the above answers is correct.

Question 23

Shoes are a normal good and people's incomes rise.As a result,the equilibrium price of a pair of shoes ________ and the equilibrium quantity ________.

A) rises; increases
B) rises; decreases
C) falls; increases
D) falls; decreases