principle of macroeconomics exam 1

Question 1

Without trade, jake consumers 20 pounds of green beans and 80 pounds of corn, and jane consumes 40 pounds of green beans and 40 pounds of corn. If the terms of trade are 1 pound of green beans for 3 pounds of corn, and jake sells jane 72 pounds of corn after specialization, then jake consumes _ pounds of green beans and _ pounds of corn

Answer 1

1) divide what jake sells jane (72 lb of corn) by 3 since that the term of trade
=24
2) Then do lb of corn he consumes (80) minus the corn he sells jane (72) and it that number to the corn he consumes
=88

Question 2

Marginal Cost

Answer 2

Change in cost divided by the change in quantity

Question 3

Opportunity Cost of attending college for one year

Answer 3

The sum of tuition and the foregone income

Question 4

Opportunity cost of knitting a sweater

Answer 4

When she knits one sweater, look at the amount that changes in scarves. That’s 8-6, which is 2.

Question 5

A point or combination that is on the production possibilities frontier is

Answer 5

attainable and efficient

Question 6

Capital resources

Answer 6

(no labor or land resources)
automobiles owned by a car rental firm; computers at the car rental agency; the vans that shuttle rental customers to and from the airport

Question 7

Specialization is important because it

Answer 7

increases standards of living

Question 8

Market interactions and economic development can be limited when property rights enforcement:

Answer 8

is not predictable

Question 9

when people do not own resources they use, they tend to

Answer 9

underinvest in them

Question 10

the three conditions of a competitive market

Answer 10

internalized cost and benefits
free entry and exit
many buyers and seller

Question 11

specilization:

Answer 11

ensures that goods and services are produced by low-cost producers

Question 12

when all the costs of production are paid by sellers and all the benefits are received by consumers, there are:

Answer 12

no externalities

Question 13

which of the following best explains why people eventually stop eating when they dine at all you can eat buffet

Answer 13

diminishing marginal utility

Question 14

what would shift the demand for wheat bread to the right and what does that mean

The pop of arizone grows by 20%
a drought in Kansas makes people believe that the price of wheat bread will increase in a couple months
People learn that certain bread additives may be bad for their health

Answer 14

it means an increase in the quanitity demanded at every price

The pop of arizone grows by 20%
a drought in Kansas makes people believe that the price of wheat bread will increase in a couple months

Question 15

The upward slope of the supply curve reflects the

Answer 15

law of supply

Question 16

If a tax is placed on the production of good X, this will shift the

Answer 16

supply curve for X to the left (smaller quantity at each price)

Question 17

an increase in the supply of music downloads indicates that more music downloads will be

Answer 17

supplied, even if prices of music downloads stayed the same

Question 18

there is excess production of tomatoes in the market, this implies that

Answer 18

the current price is above the quilibrium level

Question 19

a tax on buyers will __ the price paid by the consumer and _ the price received by the seller

Answer 19

increase, decrease

Question 20

if the price of gasoline increases significantly, then we’d expect the price for hybrid and electric cars to

Answer 20

increase, and the quantity increase