Daviseric.files.wordpress.com



Unit 1 and 2 ReviewMultiple ChoiceIdentify the choice that best completes the statement or answers the question.____1.You can either spend $100 on a new economics textbook or a new CD player. If you choose to buy the new economics textbook, the opportunity cost is:A.$100.B.the new economics textbook.C.both the $100 and the new CD player.D.impossible to determine.E.the new CD player.____2.A new fast-food restaurant offered a free meal (valued at $5) a week for a year to its first 100 customers. Ramona camped out for 48 hours before the opening to be one of the first 100 customers. The cost of the free meal a week for a year for Ramona was:A.zero.B.$260.C.whatever she would have done with those 48 hours.D.the cost is impossible to determine.E.$500____3.The best measure of the opportunity cost of any choice is:A.the monetary cost of that choice.B.whatever you have given up to make that choice, even if no monetary costs are involved.C.the cost associated with not taking full advantage of the opportunity offered by that choice.D.your hourly wage.E.the cost associated with producing the item you choose to buy.____4.Which of the following principles underlie the economics of individual choices?A.There are gains from trade.B.Markets move toward equilibrium.C.People usually exploit opportunities to make themselves better off.D.Resources should be used as efficiently as possible to achieve society's goals.E.One person’s spending is another person’s income.____5.Of the following statements, which reflect(s) a normative view?I. The U.S. needs to increase the minimum wage to $10 per hour.II. An effective minimum wage results in unemployment.III. An effective minimum wage is a form of a price floor.A.I onlyB.I and II onlyC.II onlyD.II and III onlyE.I and III only____6.“During the Great Depression, consumers and producers in the United States dramatically reduced their spending relative to the quantity of goods and services available at the time.” This statement best represents the economic concept of:A.resources are scarce.B.when markets don't achieve efficiency, government intervention can improve society's welfare.C.overall spending sometimes gets out of line with the economy's productive capacity.ernment policies can change spending.E.people usually exploit opportunities to make themselves better off.____7.When overall price levels rise over time, this is referred to as:A.deflation.B.inflation.C.purchasing power parity.D.the consumer price index.E.the foreign exchange index.____8.Technological improvements will:A.leave the production possibility curve unchanged.B.shift the production possibility curve inward.C.shift the production possibility curve outward.D.necessarily lead to increased unemployment.E.increase the slope of the production possibility curve.____9.The production possibility curve for producing goods X and Y is bowed out from the origin because:A.resources are not equally suited for the production of both goods.B.resources are scarce.C.economic growth leads to inefficiency.D.resources are inefficiently used.E.consumers don’t view goods X and Y as equally substitutable.____10.Suppose that Indiana produces only steel and corn with fixed amounts of land, labor, and capital resources. Which of the following best reflects the potential for economic growth of the Indiana economy?A.The unemployment rate in Indiana falls from 6% to 5%.B.The U.S. experiences a devastating drought.C.The percentage of Indiana residents with a college degree rises from 25% to 30%.D.The U.S. imports more and more low-cost steel from Asian countries.E.The unemployment rate in Indiana rises from 8% to 10%.Figure 3-8: Sugar and Freight Trains____11.Use the “Sugar and Freight Trains” Figure 3-8. Suppose the economy is operating at point C. The opportunity cost of producing the fourth freight train would be:A.19 tons of sugar.B.45 tons of sugar.C.80 tons of sugar.D.3 freight trains.E.100 tons of sugar.____12.At the point at which it is currently producing, the United States must give up the production of 500 bicycles to produce 20 additional tractors. The opportunity cost of producing 100 bicycles is ________ tractor(s).A.1B.4C.25D.100E.5____13.At the point at which it is currently producing, the United States must give up the production of 500 bicycles to produce 20 additional tractors. The opportunity cost of producing 5 tractors is ________ bicycles.A.5B.20C.100D.125E.150____14.If the opportunity costs of production are constant, then the production possibility curve is:A.bowed out from the origin.B.bowed in toward the origin.C.a straight line.D.circular.E.a U-shaped curve.____15.Specialization and trade usually lead to:A.lower economic growth.B.the exchange of goods and services in markets.C.lower living standards.D.higher prices.E.less efficiency.____16.Which book illustrates the advantages of specialization using an eighteenth-century pin factory?A.Free to Choose by Milton Friedman.B.The Wealth of Nations by Adam Smith.C.Das Kapital by Karl Marx.D.The General Theory by John Maynard Keynes.E.The Audacity of Hope by Barack Obama.____17.Beth and Alice decide to trade services. Beth promises to do Alice's taxes, and in exchange, Alice will create several spreadsheets for Beth's household budget. This mutual agreement of trade will most likely:A.be beneficial to both individuals.B.hurt both individuals.C.help Beth, but hurt Alice.D.help Alice, but hurt Beth.E.neither help nor hurt these individuals as they are not exchanging money for these services.____18.Trade can be beneficial to an economy because:A.it results in a more efficient use of the combined resources of some of the trading countries, even though it reduces efficiency in others.B.more goods and services can be obtained at a lower opportunity cost.C.it prevents specialization in those activities in which countries have a comparative advantage.D.it prevents unemployment.E.it allows wealthy nations to exploit the natural resources of poorer nations.Sweden and Finland produce only two goods, herring and cell phones, and this table shows the maximum amount that each nation can produce of the two goods.SwedenFinlandHerring100,00050,000Cell phones10,00010,000Table 4-3: Comparative Advantage I____19.Use Table 4-3. The opportunity cost of producing 1 unit of cell phones for Sweden is:A.10 units of herring.B.1/5 unit of herring.C.5 units of herring.D.1/10 unit of herring.E.10 units of cell phones.____20.Use Table 4-3. The opportunity cost of producing 1 unit of herring for Sweden is:A.10 units of cell phones.B.1/5 unit of cell phones.C.5 units of cell phones.D.1/10 unit of cell phones.E.10 units of herring.Figure 4-2: Comparative AdvantageEastland and Westland produce only two goods, peaches and oranges, and this figure shows each nation's production possibility curve for the two goods.____21.Use the “Comparative Advantage” Figure 4-2. Eastland has a comparative advantage in producing:A.oranges only.B.peaches only.C.both oranges and peaches.D.neither oranges nor peaches.E.a combination of oranges and peaches.____22.If the opportunity cost of manufacturing automobiles is higher in the United States than in Britain and the opportunity cost of manufacturing airplanes is lower in the United States than in Britain, then the United States will:A.export both airplanes and automobiles to Britain.B.import both airplanes and automobiles from Britain.C.export airplanes to Britain and import automobiles from Britain.D.import airplanes from Britain and export automobiles to Britain.E.neither import nor export goods to Britain.Figure 4-3: Production Possibility Curve for Jackson and Tahoe____23.Use “Production Possibility Curve for Jackson and Tahoe” Figure 4-3. The figure shows the production possibility curves for two countries, Jackson and Tahoe. Without trade, Jackson produces and consumes 30 units of cattle and 80 units of wheat, while Tahoe produces and consumes 80 units of cattle and 60 units of wheat. If both nations specialize completely in the good of their comparative advantage and Jackson exports 120 units of wheat to Tahoe for 60 units of cattle, then the new consumption point for Jackson after trade is ________ units of wheat and ________ units of cattle.A.120; 30B.120; 60C.80; 60D.200; 100E.60; 80The table shows the maximum amounts of machinery and petroleum that the United States and Mexico can produce if they only produce one good. Both nations face constant costs of production.CountriesMachinery (units)Petroleum (units)United States8040Mexico60180Table 4-5: Production Possibilities for Machinery and Petroleum____24.Use Table 4-5. Which of the following is true?A.The opportunity cost of petroleum is less in the United States than in Mexico.B.The opportunity cost of petroleum is more in the United States than in Mexico.C.Petroleum costs are the same in the United States and in Mexico.D.Machinery costs are the same in the United States and in Mexico.E.The opportunity cost of machinery is less in Mexico than in the United States.____25.Use Table 4-5. The opportunity cost in Mexico of producing 150 units of petroleum is ________ units of machinery.A.50B.70C.90D.160E.10____26.Use Table 4-5. Both the United States and Mexico will gain from trade if one unit of machinery trades for ________ of petroleum.A.2 unitsB.4 unitsC.6 unitsD.8 unitsE.5 units.Figure 4-4: Alphaland and Omegaland____27.Use the “Alphaland and Omegaland” Figure 4-4. The opportunity cost of producing 1 radio in Omegaland is:A.1/2 tire.B.1 tire.C.2 tires.D.6 tires.E.3 tires.____28.Use the “Alphaland and Omegaland” Figure 4-4. Trade will not take place if 1 radio trades for:A.1/2 tire.B.1 tire.C.1 1/2 tires.D.1.75 tires.E.3 tires.____29.If Japan levies tariffs on U.S. goods entering Japan, this will tend in the short run to:A.benefit both Japanese and U.S. producers.B.damage U.S. producers and benefit Japanese producers.C.benefit U.S producers and damage Japanese producers.D.damage both Japanese and U.S. producers.E.benefit U.S. consumers and penalize Japanese producers.____30.If a country imposes a tariff on imported shoes, we expect the domestic price of shoes to ________ and the total quantity of shoes consumed in the domestic market to ________ .A.rise; be unaffectedB.fall; riseC.rise; fallD.rise; riseE.fall; fall____31.In the importing country, the most likely effects of tariffs and/or import quotas is to ________ prices and ________ consumption of the protected goods.A.raise; reduceB.raise; raiseC.raise; not affectD.reduce; reduceE.reduce; raiseScenario 4-2: Production of Wheat and ToysBelow is information regarding Countries A and B's production of two goods, wheat and toys. WheatToysCountry A50100Country B2575Each country has a linear production possibility curve with respect to their production of the two goods. The totals in each column represent the total number of units each country could produce if it used all of its resources to produce the good.____32.Use Scenario 4-2. If each country specializes in the good for which it has the comparative advantage, which combination represents a maximum possible amount of total production of the two goods given the specialization?A.50 wheat and 100 toysB.50 wheat and 75 toysC.25 wheat and 75 toysD.100 toys and 25 wheatE.75 wheat and 50 toys.____33.Which of the following factors cause a movement along the demand curve?A.change in the prices of related goodsB.change in the price of the goodC.change in the populationD.both a change in the price of the good and a change in the populationE.change in the popularity of the good____34.When the economy suffers a downturn, vacationers are more likely to take car trips than to fly. Which of the following provides the most reasonable explanation for this phenomenon?A.Air travel and vacation travel by car are complementary goods.B.Air travel and vacation travel by car are both normal goods.C.Air travel is a normal good and vacation travel by car is an inferior good.D.Air travel is an inferior good and vacation travel by car is a normal good.E.Air travel and vacation travel by car are both inferior goods.Quantity Demanded (bags per month)Price per BagGeorgeBarbaraDan$0.90100600.801510800.7020201000.6025301200.5030401400.4035501600.304060180Table 5-1: The Demand for Chocolate-Covered Peanuts____35.Use Table 5-1. If George, Barbara, and Dan are the only three buyers in the market, and the price of a bag of chocolate-covered peanuts is $0.50, the total market demand is ________ bags per month.A.80B.105C.140D.280E.210____36.A decrease in the price of a good will result in:A.an increase in demand.B.an increase in supply.C.an increase in the quantity demanded.D.more being supplied.E.a rightward shift of the demand curve.____37.Given that chicken and beef are substitute goods, if the price of chicken decreases substantially, there would be:A.an increase in the demand for beef.B.an increase in the supply of chicken.C.an increase in the quantity demanded of beef.D.no change in the demand for beef.E.a decrease in the demand for beef.Price (per bag)Quantity Demanded (bags per month)Quantity Supplied (bags per month)$0.900.800.700.600.500.400.30Table 6-2: The Market for Chocolate-Covered Peanuts____38.Use Table 6-2. If the price of chocolate-covered peanuts is $0.80, there is:A.a surplus of 140 bags per month.B.a shortage of 140 bags per month.C.a surplus of 70 bags per month.D.a shortage of 70 bags per month.E.a surplus of 40 bags per month.____39.A shift of a demand curve to the right, all other things unchanged, will:A.increase equilibrium price and quantity.B.decrease equilibrium price and quantity.C.decrease equilibrium quantity and increase equilibrium price.D.increase equilibrium quantity and decrease equilibrium price.E.increase equilibrium price while leaving equilibrium quantity unchanged.____40.If the economy booms and peoples' incomes rise, then the demand curve for a normal good like new houses will ________ and the equilibrium quantity of new houses produced will ________.A.shift to the right; decreaseB.not shift; not changeC.not shift; increaseD.shift to the left; decreaseE.shift to the right; increase____41.The price of microchips used to produce computers falls. As a result, the equilibrium price of computers ________ and the equilibrium quantity ________.A.rises; increasesB.rises; decreasesC.falls; decreasesD.falls; increasesE.stays the same; decreases____42.An increase in supply, with no change in demand, will lead to ________ in equilibrium quantity and ________ in equilibrium price.A.an increase; an increaseB.an increase; a decreaseC.a decrease; an increaseD.a decrease; a decreaseE.no change; no change____43.The government decides to impose a price ceiling on a good because it thinks the market-determined price is “too high.” If it imposes the price ceiling above the equilibrium price:A.consumers will respond to the higher price and wish to purchase less of the good than at the equilibrium price, but will find a surplus of units for sale.B.producers will respond to the higher price and therefore offer fewer units for sale.C.consumers will purchase less of the good after the price ceiling is imposed.D.consumers will purchase more of the good after the price ceiling is imposed.E.there will be no change to either the price or quantity in the market.Figure 8-2: Price Control____44.Use the “Price Control” Figure 8-2. In the graph, an effective price ceiling would be the price indicated at ________ and a ________ would exist as the difference between ________.A.point b; surplus; points f and eB.point b; shortage; points f and eC.point d; shortage; points i and hD.point d; surplus; points e and hE.point d; shortage; points g and h____45.West African cotton farmers are very upset about the subsidies the U.S. government pays to American cotton farmers. One reason for this could be that subsidized cotton from the United States:A.leads to global cotton surpluses and lower prices for West African farmers.B.raises the world price of cotton.C.has led to a global shortage of cotton.D.has led to an increase in the demand for West African cotton.E.has led to improved efficiency in the global cotton market.____46.A price that the government guarantees farmers will receive for a particular crop is a(n):A.price ceiling.B.price floor (price support).C.deficiency price.D.export price (export subsidy).E.price floor.____47.A market price support policy establishes a price floor, which:A.decreases the price paid by consumers.B.does not change the price paid by consumers.C.increases the price received by farmers.D.decreases the price received by farmers.E.reduces government spending in agricultural markets.____48.Inefficient allocations of goods to consumers often result from:A.price ceilings.B.producer surplus.C.equilibrium prices.D.consumer surplus.E.equilibrium quantities.Figure 8-16: Market I____49.Use the “Market I” Figure 8-16. If a price floor of $15 was imposed on this market, government would need to buy ________ units of the good, and spend a total amount of ________ on its purchase.A.5; $75B.10; $150C.9; $135D.9; $81E.5; $15Figure 9-2: Shrimp Market____50.Use the “Shrimp Market” Figure 9-2. If the government imposes a quota limiting sales of shrimp to 250 pounds, it would have the same effect as a price ________ of ________.A.floor; $17.50B.floor; $10C.floor; $7.50D.ceiling; $15E.ceiling; $5 ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download