Econ 102 – Exam 3 – Flashcards

Refer to Figure 9-1. Suppose the government allows imports of leather footwear into the United States. What will be the quantity demanded?: 5 units 10 units 15 units 20 units

Why specialize?: There is no economic rationale for specialization. It usually increases productivity. To decrease our dependence on each other. Because assigning each worker a variety of tasks makes her more productive.

If Vice President Smith is a better typist than his assistant, he is said to have a(n) ________ advantage in typing over his assistant.: relative absolute comparative unusual

Refer to Figure 9-1. Suppose the government allows imports of leather footwear into the United States. What will be the quantity of imports? Selected Answer: Incorrect 20 units Answers: 5 units 10 units 15 units 20 units

The division of labor refers to: workers performing multiple tasks. workers being assigned specific tasks. separating men and women in the workforce. creating jobs that all people can perform at the same level.

Tiger Woods, a professional golfer, pays a garage mechanic to change the motor oil of his car even though he can do the work himself. Which of the following best explains why Tiger Woods does not change the oil himself?: Tiger Woods has a comparative advantage in changing oil. There is no opportunity cost for the garage mechanic to change oil. The opportunity cost of changing oil is higher for Tiger Woods than for the garage mechanic. Tiger Woods has an absolute advantage in changing oil.

Suppose Ethan and Ava work in a farm that grows apples and oranges of the same size. In one hour, Ethan can pick 8 pounds of apples or 1 pound of oranges. Ava can pick 6 pounds of apples or 1 pound of oranges. It can be concluded that: Ethan has a comparative advantage in picking apples. Ethan has an absolute advantage in picking oranges. Ava has a comparative advantage in picking apples. Ava has an absolute advantage in picking apples.

Refer to Figure 9-1. Suppose the government allows imports of leather footwear into the United States. The market price falls to $18. What is the value of domestic producer surplus?: $0. $40. $320. $360.

Which of the following is TRUE about comparative advantage?: Comparative advantage explains trade among nations, but not within nations. Comparative advantage has nothing to do with trade among nations; it only is concerned with specialization within a firm. Comparative advantage explains trade within nations, but not among nations. Comparative advantage explains trade within nations and among nations.

In the long run, if imports increase, then exports: will not change. will also increase. will decrease. will become zero.

Refer to Figure 9-1. Suppose the government allows imports of leather footwear into the United States. The market price falls to $18. What is the value of consumer surplus?: $0 $270 $305 $320.

International trade between two nations increases the standard of living of both nations due to: specialization and gains from comparative advantage. specialization and gains from absolute advantage. political intervention. high tariffs.

The division of productive activities among persons and regions so that no one individual or area is totally self-sufficient is known as: specialization. comparative value. advantage-taking. outsourcing.

Import restrictions: hurt people who work in importing companies, but makes consumers better off. can protect United States jobs in the protected industry which increases economic welfare of the country as a whole. cannot protect American jobs in any sector of the economy. can protect United States jobs in the protected industry but will also lead to job reductions in other export industries.

A tariff hurts: the government by decreasing its revenue. consumers who pay more for the imported good. domestic producers who can't compete with cheaper imports. All of the above answers are correct.

Goods that are produced domestically and then sold in other countries are called: quotas. exports. imports. tariffs.

Economists argue that if avocado growers in Mexico can produce avocadoes cheaper than avocado growers in the United States, this will not reduce total jobs available in the United States. The logic underlying this argument is that: avocado growers in the United States did not earn much anyway. avocado growers in Mexico need the jobs more than Americans do. avocado growers in the United States will switch to specializing in a crop in which they hold the comparative advantage. avocado growers in the United States are welcome to emigrate to Mexico.

In general, who will benefit as the result of a tariff? I. Domestic producers II. Domestic consumers III. The domestic government: both I and III II only I only both II and III All of the above are correct

Refer to Figure 9-1. Suppose the government allows imports of leather footwear into the United States. What will the market price be?: $10 $18 $24 >$24

Suppose that at a bicycle shop, instead of having each worker assemble an entire bicycle themselves, one person welds the frames, another person works on the braking system, another person works on the tires, and another person works on the gears. This best demonstrates the concept of: absolute advantage. microeconomics. comparative advantage. division of labor.

Specialization and the division of labor typically result in: cost overruns. decreased output. increased output. a greater reliance upon imports.

If a person can make $70,000 as an accountant, $60,000 as a chef, $20,000 as a mechanic, and nothing as an opera singer, he or she has a comparative advantage in: accounting. opera singing. being a chef. being a mechanic.

Absolute advantage is: producing a good only when demand is high. producing a good that requires imported components. producing at a lower opportunity cost. producing a good using the fewest inputs.

Based on the table below, at what world price would the country import the good? Price Q Demanded Q Supplied 2 100 70 4 95 75 6 90 80 8 85 85 10 80 90 12 75 95 at exactly $8 a price below $8 a price above $8 It is impossible to say.

Which of the following is TRUE for a firm in the long run?: All costs are variable costs. Variable costs will equal marginal cost at all output levels. Variable costs will initially increase and then decrease. The law of diminishing marginal product holds.

Refer to the above table. When output rises from 4 units to 5 units, marginal costs are: $31. $22. $19. $10.

You rent a DVD of The Dark Knight Rises. The rental is for seven days and you watch the movie on the first day. You tell a friend about the film and your friend asks to come over and watch the movie with you before it is due back. What is your opportunity cost if you decide to watch the movie a second time instead of going to a football game?: the entire cost of the movie rental, since you have already watched the movie one half the rental cost, because you have already watched the movie one time The answer depends on how much you liked the movie in the first place. the football game you forego by watching the movie again

Refer to the above figure. The market supply and demand curves in a perfectly competitive market intersect at $4. Which of the graphs represent the situation for an individual firm?: Panel A Panel B Panel C Panel D

The implicit cost incurred by a firm to use its resources to produce its output is the firm's: explicit cost. total cost. accounting cost. opportunity cost.

Refer to the above figure. Curve (4) is the: average fixed cost curve. average variable cost curve. marginal product curve. total fixed cost curve.

When accounting profits are positive, economic profits: must be positive. could be positive, negative or zero. will be negative. will equal zero.

The law of diminishing marginal product is responsible for: economies of scale. diseconomies of scale. constant returns to scale. none of the long-run relationships.

Suppose that the implicit cost for a business was $1,000 and the explicit cost was $5,000 and that the firm sold 1,000 units of its products at $6 per item. We can conclude that the firm's: accounting profit was $1,000, and economic profit cannot be determined. accounting profit was $6,000, and its economic profit was $0. accounting and economic profits were both $0. accounting profit was $1,000, and economic profit was $0.

Refer to the above figure. Average variable costs are represented by curve: 1. 2. 3. 4.

Refer to the above figure. The figure represents the market demand and supply curves for widgets. If this industry is perfectly competitive, what statement can be made about the demand curve for an individual firm's products?: An individual firm's demand curve will be a smaller version of the market demand curve. An individual firm's demand curve will be horizontal at $5. An individual firm's demand curve will be horizontal at a price below $5. An individual firm's demand curve cannot be determined from the graph above.

Refer to the above table. What are total costs at an output of 2 units?: $100 $200 $50 $150

When MR < MC for a firm, the firm should: stop producing. increase output, unless P < AVC. reduce its level of output. stay at the same level of output.

A perfectly competitive firm is selling 300 units of output at $4 each. At this output level, total fixed cost is $100 and total variable cost is $500. The firm: is earning a profit, but not necessarily the maximum profit. is maximizing its profit. should shut down. is experiencing an economic loss.

Refer to the above table. What are total fixed costs at an output of 2 units?: $200 $150 $50 $100

If, as an entrepreneur, I am earning accounting profits of $60,000 per year and the opportunity cost of my time is $50,000,: I am earning economic losses of $10,000. I am earning economic profits of $60,000. I am earning economic profits of $10,000. I should close my business.

After some point successive equal increases in a variable factor of production, when added to a fixed amount of inputs, will result in smaller increases in output. This is known as: short run average cost. the law of diminishing marginal product. marginal physical product. the long run.

The price per unit times the total quantity sold is: average revenue. marginal revenue. total revenue. price revenue.

Refer to the above table. At an output of 4 units, average variable costs are: $38.50. $22. $16. $44.

Marginal revenue equals: total revenue divided by output. total revenue divided by average revenue. price times quantity, divided by average revenue. the change in total revenue from selling one more unit.

If, as an entrepreneur, I am earning accounting profits of $50,000 per year and the opportunity cost of my time is $60,000,: I am in a long-run equilibrium position. I should close my business. I am earning economic profits of $50,000. I am earning economic profits of $10,000.

You are a student at a university. You pay $8,000 per year in tuition, $5,000 per year in living expenses, and $1,000 per year for books. Were you not in school, you could earn $15,000 per year and you would not live with your parents. What is your economic cost of a year in college?: $9,000 $15,000 $24,000 $29,000

As successive equal increases in a variable factor of production are added to fixed factors of production, there will be a point beyond which the extra product that can be attributed to each additional unit of the variable factor of production will decline. This is known as the law of: diminishing marginal product. decreasing product. diminishing average product. diminishing total product.

In the above figure, the long-run cost curve between points A and B illustrates: constant returns to scale. diminishing marginal product. diseconomies of scale. economies of scale.

After some point successive equal increases in a variable factor of production, when added to a fixed amount of inputs, will result in smaller increases in output. This is known as: the long run. the law of diminishing marginal product. short run average cost. marginal physical product.

Refer to the above table. What are total costs at an output of 3 units?: $270 $150 $120 $90