Exam 1 Prep Flashcards
Production is efficient if the economy is producing at a point:
- on or inside the production possibilities frontier.
- on the production possibilities frontier.
- outside the production possibilities frontier.
- inside the production possibilities frontier.
on the production possibilities frontier.
Table 3-4
Refer to Table 3-4. The opportunity cost of 1 car for Japan is:
- 3 airplanes.
- 1/3 airplane.
- 4 airplanes.
- 1/4 airplane.
1/3 airplane.
Which of the following is not a factor of production?
- labor
- money
- natural resources
- capital
money
Which of the following areas of study typifies macroeconomics as opposed to microeconomics?
- the effect on the economy of changes in the nation’s unemployment rate
- how tariffs on shoes affects the shoe industry
- the economic impact of tornadoes on cities and towns in Oklahoma
- the effects of rent control on the availability of housing in New York City
the effect on the economy of changes in the nation’s unemployment rate
Productivity is defined as the
- amount of goods and services produced from each unit of labor input.
- actual amount of effort workers put into an hour of working time.
- amount of labor that can be saved by replacing workers with machines.
- number of workers required to produce a given amount of goods and services.
amount of goods and services produced from each unit of labor input.
Figure 3-9
Refer to Figure 3-9. The opportunity cost of 1 nail for Uzbekistan is
- 1/4 bolt
- 4 bolts
- 2 bolts
- 1/2 bolt
1/2 bolt
Refer to Figure 3-9.
Uzbekistan has a comparative advantage in the production of
- neither bolts of nails.
- both bolts and nails.
- nails and Azerbaijan has a comparative advantage in the production of bolts.
- bolts and Azerbaijan has a comparative advantage in the production of nails.
bolts and Azerbaijan has a comparative advantage in the production of nails.
If Shawn can produce more donuts in one day than Sue can produce in one day, then
- Shawn has an absolute advantage in the production of donuts.
- Sue has an absolute advantage in the production of donuts.
- Sue has a comparative advantage in the production of donuts.
- Shawn has a comparative advantage in the production of donuts.
Shawn has an absolute advantage in the production of donuts.
Economics is the study of
- the interaction of business and government.
- how society manages its scarce resources.
- production methods.
- how households decide who performs which tasks.
how society manages its scarce resources.
Figure 2-3
Refer to Figure 2-3. This economy has the ability to produce at which point(s)?
- J, K, M, N
- M
- K, M, N
- K, N
K, M, N
Figure 2-10
Refer to Figure 2-10. Which of the following events would explain the rotation of the production possibilities frontier from A to B?
- The economy’s citizens developed an enhanced taste for books.
- The economy experienced a technological advance in the production of books.
- More capital became available in the economy.
- More labor became available in the economy.
The economy experienced a technological advance in the production of books.
If Iowa’s opportunity cost of corn is lower than Oklahoma’s opportunity cost of corn, then
- Oklahoma has a comparative advantage in the production of corn.
- Iowa has an absolute advantage in the production of corn.
- Iowa has a comparative advantage in the production of corn.
- Iowa should not produce corn.
Iowa has a comparative advantage in the production of corn.
The unique point at which the supply and demand curves intersect is called
- coincidence.
- equilibrium.
- cohesion.
- market harmony.
equilibrium.
If the supply of a product decreases, then we would expect
- equilibrium price and equilibrium quantity both to increase.
- equilibrium price and equilibrium quantity both to decrease.
- equilibrium price to increase and equilibrium quantity to decrease.
- equilibrium price to decrease and equilibrium quantity to increase.
equilibrium price to increase and equilibrium quantity to decrease.
Other things equal, when the price of a good falls, the
- quantity demanded of the good decreases.
- quantity supplied of the good decreases.
- supply decreases.
- demand increases.
quantity supplied of the good decreases.
Two goods are substitutes if a decrease in the price of one good
- reduces the demand for the other good.
- increases the quantity demanded of the other good.
- increases the demand for the other good.
- reduces the quantity demanded of the other good.
reduces the demand for the other good.
Which of the following changes would not shift the demand curve for a good or service?
- a change in the price of the good or service
- a change in the price of a related good or service
- a change in expectations about the future price of the good or service
- a change in income
a change in the price of the good or service
The law of demand says that
- an increase price causes demand to decrease.
- an increase in price causes quantity demanded to decrease.
- an increase in price causes quantity demanded to increase.
- an increase in quantity demanded causes price to decrease.
an increase in price causes quantity demanded to decrease.
The amount of the good buyers are willing and able to purchase is called the
- demand.
- supply.
- quantity supplied.
- quantity demanded.
quantity demanded.
Two goods are complements if a decrease in the price of one good
- decreases the demand for the other good.
- increases the demand for the other good.
- increases the quantity demanded of the other good.
- decreases the quantity demanded of the other good.
increases the demand for the other good.
Which of the following events could cause an increase in the supply of ceiling fans?
- There is an increase in the price of the motor that powers ceiling fans.
- All of the above are correct.
- The number of sellers of ceiling fans increases.
- There is an increase in the price of air conditioners, and consumers regard air conditioners and ceiling fans as substitutes.
The number of sellers of ceiling fans increases.
Figure 4-7
Refer to Figure 4-7. At a price of $15,
- there would be a shortage of 400 units.
- there would be a shortage of 200 units.
- there would be an excess demand of 200 units.
- there would be a surplus of 400 units.
there would be a shortage of 400 units.
Suppose the number of buyers in a market increases and a technological advancement occurs also. What would we expect to happen in the market?
- Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.
- The equilibrium price would increase, but the impact on the amount sold in the market would be ambiguous.
- Both equilibrium price and equilibrium quantity would increase.
- The equilibrium price would decrease, but the impact on the amount sold in the market would be ambiguous.
Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.
Lead is an important input in the production of crystal. If the price of lead decreases, other things equal, we would expect the
- supply of crystal to decrease.
- quantity supplied of lead to decrease.
- supply of crystal to increase.
- quantity supplied of crystal to increase.
supply of crystal to increase.
