UA EC 110 – Macroeconomics – Flashcards
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Finland's opportunity cost of producing 1 unit of ham is
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2/3 dozen eggs. This is lower than Denmark's opportunity cost.
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When the price of a good or service changes,
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there is a movement along a given supply curve.
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Which of the following events would cause a movement upward and to the right along the supply curve for mangos?
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The price of mangos rises.
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The market supply curve
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represents the sum of the quantities supplied by all the sellers at each price of the good.
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Which of the following would shift the supply of Green Bay Packers football jerseys to the left?
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The cost of the fabric used to make the jerseys increases.
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A market supply curve shows
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the total quantity supplied at all possible prices.
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Economists speaking like policy advisers make
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normative statements.
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Positive statements are
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claims about how the world is.
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Which of the following is not an example of a positive, as opposed to normative, statement? A. Trade restrictions lower our standard of living. B. If a nation wants to avoid inflation, it will restrict the growth rate of the quantity of money. C. Higher gasoline prices will reduce gasoline consumption. D. Equality is more important than efficiency.
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D. Equality is more important than efficiency.
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Which of the four panels illustrates an increase in quantity supplied?
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Panel A
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If the supply of a product increases, then we would expect equilibrium price
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to decrease and equilibrium quantity to increase.
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All else equal, a large number of people becoming vegetarians would cause a move from
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DA to DB.
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Refer to Figure 4-18. At the equilibrium price,
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400 units would be supplied and demanded.
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Refer to Figure 4-22. At a price of $12, there is a
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shortage of 4 units
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Refer to Table 4-13. Suppose Harry, Darby, and Jake are the only demanders of sandwiches. Also suppose the following: • x = 2. • The current price of a sandwich is $5.00. • The market quantity supplied of sandwiches is 10. • The law of supply applies to the supply of sandwiches. Then there is a
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surplus of 5 sandwiches, and the price would be expected to fall from its current level of $5.00.
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Refer to Figure 4-26. Which of the following movements would illustrate the effect in the market for wedding cakes resulting from a decrease in the number of pastry chefs?
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Point C to Point D
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The study of how society manages its scarce resources is most closely associated with which field of study?
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economics
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Which of the following areas of study typifies microeconomics as opposed to macroeconomics?
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the impact of minimum-wage laws on employment in the fast food industry
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Consider the production possibilities curve for a country that can produce sweaters, apples (in bushels), or a combination of the two If this society is producing at point T,
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there is unemployment.
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Inefficient production is represented by which point(s)?
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T
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Refer to Figure 2-8. For this economy, as more and more hammers are produced, the opportunity cost of an additional hammer produced, in terms of nails,
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Increases
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Harvey receives his first paycheck for working as an ice cream vendor. To which of the arrows does this transaction directly contribute?
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C & D
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Suppose an economy only produces two goods, robots and ice cream. Last month, the economy produced 10 robots and 200 gallons of ice cream. This month, the same economy produced 15 robots and 240 gallons of ice cream. Which of the following statements could explain this change? a. This month, the economy reduced the unemployment of its resources. b. This month, the economy experienced an improvement in technology. c. This month, the economy experienced an increase in resources D. All of the above are correct.
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D. All of the above are correct
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Which of the following is an example of a capital input?
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a computer
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When an economy is operating inside its production possibilities frontier, we know that
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there are unused resources or inefficiencies in the economy
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Refer to Figure 3-16. Hosne's opportunity cost of one purse is
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4/5 wallet and Merve's opportunity cost of one purse is 3/2 wallets.
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The farmer has an absolute advantage in the production of
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Tomatoes
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Refer to Table 3-26. Korea has an absolute advantage in the production of
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neither good and a comparative advantage in the production of airplanes.
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Refer to Figure 3-20. Canada has a comparative advantage in the production of
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Good Y and Mexico has a comparative advantage in the production of Good X.
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Suppose Madagascar is willing to trade 40 rubies to Peru for each emerald that Peru produces and sends to Madagascar. Which of the following combinations of emeralds and rubies could Peru then consume, assuming Peru specializes in emerald production?
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2 emeralds and 240 rubies
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Suppose Perry is willing to trade 4 poems to Jordan for each novel that Jordan writes and sends to Perry. Which of the following combinations of novels and poems could Jordan then consume, assuming Jordan specializes in novel production and Perry specializes in poem production?
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2 novels and 8 poems
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Refer to Figure 3-18. The opportunity cost of 1 bowl for Juba is
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3/2 cups.
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If a seller in a competitive market chooses to charge more than the going price, then
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buyers will make purchases from other sellers.
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In a competitive market, the price of a product a. is determined by buyers, and the quantity of the product produced is determined by sellers. b. is determined by sellers, and the quantity of the product produced is determined by buyers. c. and the quantity of the product produced are both determined by sellers. d.None of the above is correct.
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None of the above is correct
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An example of a perfectly competitive market would be the
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soybean market
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Which of the following is not a reason perfect competition is a useful simplification, despite the diversity of market types we find in the world?
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There are many buyers and many sellers in all types of markets.
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Which of the following might cause the demand curve for an inferior good to shift to the left? a. a decrease in income b. an increase in the price of a substitute c. an increase in the price of a complement d. None of the above is correct.
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c. an increase in the price of a complement
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Refer to Figure 4-5. Which of the following would cause the demand curve to shift from Demand B to Demand C in the market for mattresses? a. a decrease in the number of people in the United States b. a decrease in the price of custom wooden sleigh bed frames c. a change in consumer tastes away from wooden bedroom furniture d. a decrease in the price of mattresses
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b. a decrease in the price of custom wooden sleigh bed frames
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Which of the following would shift the demand curve for gasoline to the right? a. a decrease in the expected future price of gasoline b. an increase in the price of cars, a complement for gasoline c. a decrease in the price of gasoline d. an increase in consumer income, assuming gasoline is a normal goo
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an increase in consumer income, assuming gasoline is a normal good
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An increase in quantity demanded
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results in a movement downward and to the right along a demand curve.
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Opponents of cigarette taxes often argue that tobacco and marijuana are substitutes so that high cigarette prices
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encourage marijuana use, but the evidence does not support this argument.
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Suppose Phil and Miss Kay are the only consumers in the market. If the price is $6, then the market quantity demanded is
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12 units
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If these are the only two consumers in the market, then the market quantity demanded at a price of $6 is
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19 units
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Refer to Table 3-17. If the production possibilities frontier is bowed outward, then "?" could be
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180
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Refer to Figure 3-11. If the production possibilities frontier shown is for 240 hours of production, then which of the following combinations of ham and cheese could Bonovia not produce in 240 hours? a. 250 pounds of ham and 120 pounds of cheese b. 100 pounds of ham and 240 pounds of cheese c. 200 pounds of ham and 160 pounds of cheese d. 160 pounds of ham and 200 pounds of cheese
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160 pounds of ham and 200 pounds of cheese
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Refer to Figure 3-2. If the production possibilities frontier shown is for two months of production, then which of the following combinations of peanuts and cashews could Brazil not produce in two months? a. 4 peanuts and 115 cashews b. 1 peanuts and 200 cashews c. 3 peanuts and 155 cashews d. 5 peanuts and 88 cashews
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3 peanuts and 155 cashews
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Refer to Figure 3-7. If Bintu and Juba each divides her time equally between making bowls and making cups, then total production is
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3 bowls and 7 cups
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Your professor loves her work, teaching economics. She has been offered other positions in the corporate world that would increase her income by 25 percent, but she has decided to continue working as a professor. Her decision would not change unless the marginal
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cost of teaching increased
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After much consideration, you have chosen Ireland over Spain for your Study Abroad program next year. However, the deadline for your final decision is still months away and you may reverse this decision. Which of the following events would prompt you to reverse this decision? a. The marginal cost of going to Ireland decreases. b. The marginal cost of going to Spain increases. c. The marginal benefit of going to Spain increases. d. The marginal benefit of going to Ireland increases.
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The marginal benefit of going to Spain increases
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Efficiency
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refers to how much a society can produce with its resources. Equality refers to how evenly the benefits from using resources are distributed among members of society.
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A microeconomist — as opposed to a macroeconomist — might study
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the effect of new regulations on production in the pulp and paper industry.
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Which of these statements best represents the law of supply? a. When input prices increase, sellers produce less of the good. b. When production technology improves, sellers produce less of the good. c. When the price of a good decreases, sellers produce less of the good. d. When sellers' supplies of a good increase, the price of the good increases.
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c. When the price of a good decreases, sellers produce less of the good.
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A decrease in the price of a good will
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decrease quantity supplied.
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Refer to Figure 4-12. If these are the only two sellers in the market, then the market quantity supplied at a price of $8 is
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29 units
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A movement along the supply curve might be caused by a change in
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the price of the good or service that is being supplied.
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Wheat is the main input in the production of flour. If the price of wheat decreases, then we would expect the
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supply of flour to increase.
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Refer to Table 3-34. India's opportunity cost of producing rice is
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2 units of bananas. This is higher than Indonesia's opportunity cost of producing rice.
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The supply of a good or service is determined by
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those who sell the good or service.
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A monopoly is a market with one
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seller, and that seller sets the price.
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Which of the following is not a reason perfect competition is a useful simplification, despite the diversity of market types we find in the world?
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There are many buyers and many sellers in all types of markets.
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For a competitive market,
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if a seller charges more than the going price, buyers will go elsewhere to make their purchases.
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When a production possibilities frontier is bowed outward, the opportunity cost of producing an additional unit of a good
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increases as more of the good is produced.
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An economy's production of two goods is efficient if
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it is impossible to produce more of one good without producing less of the other
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Which markets are represented in the simple circular-flow diagram?
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markets for goods and services and markets for factors of production
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Which of the following statements about models is correct?
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Models assume away irrelevant details.
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The production possibilities frontier illustrates a. the trade-off between efficiency and equality. b. the combination of output that an economy should produce. c. the combination of output that each member of society should consume. d. None of the above is correct.
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None of the above is correct.
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The inner loop of the circular-flow diagram represents the flows of inputs and outputs. Which of the following does not appear on the inner loop? a. wages b. land c. goods and services sold d. capital
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wages
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Refer to Figure 2-5. If this economy devotes all of its resources to the production of dryers, then it will produce
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80 dryers and 0 washers.
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If scientists discover that steamed milk, which is used to make lattés, prevents heart attacks, what would happen to the equilibrium price and quantity of lattés?
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Both the equilibrium price and quantity would increase.
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Refer to Figure 4-26. Which of the following movements would illustrate the effect in the market for wedding cakes resulting from a decrease in the number of pastry chefs?
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Point C to Point D
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A university's football stadium is never more than half-full during football games. This indicates
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the ticket price is above the equilibrium price.
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If macaroni and cheese is an inferior good, what would happen to the equilibrium price and quantity of macaroni and cheese if consumers' incomes rise?
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Both the equilibrium price and quantity would decrease.`
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If, at the current price, there is a shortage of a good, then
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the price is below the equilibrium price.
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Refer to Figure 4-26. Which of the following movements would illustrate the effect in the market for ballroom dancing lessons resulting from the introduction of a popular new television show called "Dancing with the Stars"?
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Point A to Point D
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If there is a shortage of farm laborers, we would expect
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the wage of farm laborers to increase.
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Economists view positive statements as
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descriptive, making a claim about how the world is.
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Normative statements are
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prescriptive, whereas positive statements are descriptive.
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When an economist is asked a question like "why is unemployment higher for teenagers than for older workers?" the economist
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is asked to explain the cause of an economic event.
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Which of the following is not an expression for the sum of all the individual demand curves for a product?
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equilibrium demand
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Today's demand curve for gasoline could shift in response to a change in
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the expected future price of gasoline.
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Soup is an inferior good if the demand
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for soup falls when income rises.
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A decrease in demand is represented by a
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leftward shift of a demand curve
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If the number of buyers in a market decreases, then
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demand will decrease.
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The law of demand states that, other things equal, an increase in
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price causes quantity demanded to decrease.
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If textbooks and study guides are complements, then an increase in the price of textbooks will result in
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fewer study guides being sold.
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The marginal benefit Kyra gets from eating a second sandwich is
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the total benefit Kyra gets from eating two sandwiches minus the total benefit she gets from eating one sandwich.
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A rational decision maker takes an action if and only if
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the marginal benefit of the action exceeds the marginal cost.
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For a college student who wishes to calculate the true costs of going to college, the costs of room and board
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should be counted only to the extent that they are more expensive at college than elsewhere.
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Refer to Figure 3-3. If Arturo and Dina each divides his/her time equally between the production of tacos and burritos, then total production is
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400 tacos and 250 burritos.
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Refer to Table 3-3. Which of the following combinations of cheese and wine could France produce in 40 hours?
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6 units of cheese and 5 units of wine
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Refer to Table 3-19. The values in the table represent the amounts of lemonade and pizzas that Alice and Betty can produce in one week without and with specialization and trade. What are Alice and Betty's gains from specialization and trade?
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Alice gains 7 pitchers of lemonade and 10 pizzas, while Betty gains 13 pitchers of lemonade and 10 pizzas.
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Refer to Table 3-8. Assume that England and Spain each has 24 labor hours available. If each country divides its time equally between the production of cheese and bread, then total production is
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10 units of cheese and 6 units of bread
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The overriding reason why households and societies face many decisions is that
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resources are scarce.
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Assume that Maya and Miguel can switch between producing mixers and producing toasters at a constant rate.
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0.625 mixers.
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Refer to Figure 3-18. Suppose Juba is willing to trade one bowl to Bintu for every two cups that Bintu makes and sends to Juba. Which of the following combinations of bowls and cups could Bintu then consume, assuming Bintu specializes in making cups and Juba specializes in making bowls?
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2 bowls and 4 cups
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Refer to Figure 3-23. Whenever Bonovia increases its production of ham by 1 pound per month, then it must decrease its production of cheese by
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0.80 pound.
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Refer to Figure 3-14. Arturo would incur an opportunity cost of 36 burritos if he increased his production of tacos by
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48
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Refer to Figure 3-20. Canada has an absolute advantage in the production of
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Good Y and Mexico has an absolute advantage in the production of Good X.
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If he devotes all of his available resources to cantaloupe production, a farmer can produce 120 cantaloupes. If he sacrifices 1.5 watermelons for each cantaloupe that he produces, it follows that
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his opportunity cost of one watermelon is 2/3 of a cantaloupe.
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If labor in Mexico is less productive than labor in the United States in all areas of production,
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then both Mexico and the United States still can benefit from trade.
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Refer to Figure 3-14. Without trade, Arturo produced and consumed 240 tacos and 120 burritos and Dina produced and consumed 100 tacos and 150 burritos. Then, each person agreed to specialize in the production of the good in which they have a comparative advantage and trade 260 tacos for 156 burritos. As a result, Arturo gained
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20 tacos and 24 burritos and Dina gained 40 tacos and 6 burritos.
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Refer to Table 3-31. For the farmer, the opportunity cost of 1 pound of potatoes is
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0.625 pound of meat.
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Refer to Figure 3-15. Which of the following is not correct?
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Perry and Jordan could each consume 2 novels and 6 poems without trade.
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The opportunity cost of 1 parasol for Huang is
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1/3 plate.
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At which of the following prices would both Maxine and Daisy gain from trade with each other?
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8 tarts for 12 pies
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Which of the following areas of study typifies macroeconomics as opposed to microeconomics?
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the effect on the economy of changes in the nation's unemployment rate
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Economics deals primarily with the concept of
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scarcity
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Which of the following demonstrates the law of supply
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When the price of leather belts rose, leather belt sellers increase their quantity supplied of leather belts.
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A supply schedule is a table that shows the relationship between
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price and quantity supplied.
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In the markets for goods and services in the circular-flow diagram,
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firms provide households with output.
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Unemployment would cause an economy to
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produce inside its production possibilities frontier.
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In the circular-flow diagram
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income paid to the factors of production flows from firms to households.
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In the circular-flow diagram, another name for goods and services produced by firms is
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output
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What is the opportunity cost to Footville of increasing the production of shoes from 400 to 600?
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300 socks
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Table 2-5 shows one set of production possibilities. Which of the following statements is correct?
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The opportunity cost of a bushel of corn increases as more corn is produced.
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At which point is this economy producing its maximum possible quantity of doors?
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U
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At which of the following prices, if any, can India and Indonesia both gain from trade?
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3/5 units of bananas per unit of rice.
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Which of the following is correct concerning opportunity cost?
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Except to the extent that you pay more for them, opportunity costs should not include the cost of things you would have purchased anyway.
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You go to the movieplex where movies ordinarily cost $9. You are intending to see a movie for which you have a $3 off coupon good for only that movie at that time. However, when you get there you see a friend who asks if you would rather see a new release. Both movies start and end at the same time. If you decide to see the new release with your friend, what is your opportunity cost?
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the amount you value the first movie + $3
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Barb's aunt gave her $100 for her birthday with the condition that Barb buy herself something. In deciding how to spend the money, Barb narrows her options down to four choices: Option A, Option B, Option C, and Option D. Each option costs $100. Finally she decides on Option B. The opportunity cost of this decision is
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the value to Barb of the option she would have chosen had Option B not been available.
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If Uzbekistan and Azerbaijan each divides its time equally between making bolts and making nails, then total production is
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25 bolts and 70 nails.
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If the production possibilities frontier shown is for 240 hours of production, then which of the following combinations of ham and cheese could Bonovia not produce in 240 hours?
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160 pounds of ham and 200 pounds of cheese
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If the production possibilities frontier shown for Lisa is for 4 months of work, then how long does it take Lisa to produce one jacket?
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1/4 month
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The production possibilities frontier illustrates
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the combinations of output that an economy can produce.
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Assume the market for tennis balls is perfectly competitive. When one tennis ball producer exits the market,
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the price of tennis balls does not change
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Assume Leo buys coffee beans in a competitive market. It follows that a. Leo has a limited number of sellers from which to buy coffee beans. b. Leo will negotiate with sellers whenever he buys coffee beans. c. Leo can influence the price of coffee beans if he buys a large quantity of them. d. None of the above is correct
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. None of the above is correct.
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Which of the following would most likely serve as an example of a monopoly?
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a local cable television company
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In a competitive market, the price of a product a.is determined by buyers, and the quantity of the product produced is determined by sellers. b.is determined by sellers, and the quantity of the product produced is determined by buyers. c. and the quantity of the product produced are both determined by sellers. d. None of the above is correct.
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None of the above is correct.
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Consider the market for portable air conditioners in equilibrium. A summer of unseasonably cool weather would cause
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both the equilibrium price and quantity to decrease.
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During the last few decades in the United States, health officials have argued that eating too much beef might be harmful to human health. As a result, there has been a significant decrease in the amount of beef produced. Which of the following best explains the decrease in production?
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Individual consumers, concerned about their own health, decreased their demand for beef, which lowered the equilibrium price of beef, making it less attractive to produce.
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If the four suppliers listed are the only suppliers in this market and the market quantity demanded is 500 cases when the price is $5.00, which of the following statements is correct?
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The market is in equilibrium at a price of $5.00.
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All else equal, sellers expecting the price of paper to decrease next month when many college students leave campuses for the summer would cause a current move from
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SA to SB.
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Which of the following events must cause equilibrium quantity to fall?
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demand and supply both decrease
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All else equal, a decrease in the price of the grain fed to turkeys would cause a move from
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y to x.
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Which of the following is an example of a normative - as opposed to a positive - statement?
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The government should increase the tax on gasoline.
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Which of the following is not correct?
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Normative statements can be judged using data alone.
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A positive economic statement such as "Pollution taxes decrease the quantity of pollution generated by firms"
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would require data but not values to be evaluated.
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Which of the following would cause the demand curve to shift from Demand A to Demand B in the market for golf balls in the United States?
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an expectation by buyers that their incomes will increase in the very near future
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"Other things equal, when the price of a good rises, the quantity demanded of the good falls, and when the price falls, the quantity demanded rises." This relationship between price and quantity demanded is referred to as
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the law of demand.
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Which of the following changes would not shift the demand curve for a good or service?
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a change in the price of the good or service
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Pizza is a normal good if the demand
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for pizza rises when income rises.
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Suppose Spencer and Kate are the only two demanders of lemonade. Each month, Spencer buys six glasses of lemonade when the price is $1.00 per glass, and he buys four glasses when the price is $1.50 per glass. Each month, Kate buys four glasses of lemonade when the price is $1.00 per glass, and she buys two glasses when the price is $1.50 per glass. Which of the following points is on the market demand curve?
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B and D only
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Suppose that when income rises, the demand curve for doctor's visits shifts to the right. In this case, we know doctor's visits are
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normal goods.
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Refer to Table 4-5. If the four families listed in the table are the only demanders of Mt. Dew in the market, which of the following is a correct graph of the market demand?
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b
