Exam 1 Practice Q&A – Flashcards

Which of the following is a correct statement about production possibilities frontiers?

If an economy is producing efficiently, then

Kelly and David are both capable of repairing cars and cooking meals. Which of the following scenarios is not possible?

Suppose that a worker in Cornland can grow either 40 bushels of corn or 10 bushels of oats per year, and a worker in Oatland can grow either 5 bushels of corn or 50 bushels of oats per year. There are 20 workers in Cornland and 20 workers in Oatland. If the two countries do not trade, Cornland will produce and consume 400 bushels of corn and 100 bushels of oats, while Oatland will produce and consume 60 bushels of corn and 400 bushels of oats. If each country made the decision to specialize in producing the good in which it has a comparative advantage, then the combined yearly output of the two countries would increase by

In a market economy, supply and demand are important because they

All market participants are price takers that have no influence over prices in markets that feature

Assume the market for pork is perfectly competitive. When one pork buyer exits the market,

The law of demand states that, other things equal,

Pizza is a normal good if

An increase in the number of college scholarships issued by private foundations would

The law of supply states that, other things equal,

Which of the following would not shift the supply curve for mp3 players?

Workers at a bicycle assembly plant currently earn the mandatory minimum wage. If the federal government increases the minimum wage by $1.00 per hour, then it is likely that the

Suppose there is an increase in the price of steel. We would expect the supply curve for steel beams

Wheat is the main input in the production of flour. If the price of wheat decreases, then we would expect the

If, at the current price, there is a surplus of a good, then

When a shortage exists in a market, sellers

What would happen to the equilibrium price and quantity of coffee if the wages of coffee-bean pickers fell and the price of tea fell?

Which of the following events will definitely cause equilibrium quantity to rise?

For a good that is a necessity,

The demand for Neapolitan ice cream is likely quite elastic because

A bakery would be willing to supply 500 bagels per day at a price of $0.50 each. At a price of $0.80, the bakery would be willing to supply 1,100 bagels. Using the midpoint method, the price elasticity of supply for bagels is

Which of the following statements is valid when supply is perfectly elastic at a price of $4?

A price ceiling is

Which of the following statements about the effects of rent control is correct?

To say that a price floor is binding is to say that the price floor

The term tax incidence refers to

Suppose that the demand for picture frames is inelastic and the supply of picture frames is elastic. A tax of $1 per frame levied on picture frames will decrease the effective price received by sellers of picture frames by

Buyers of a good bear the larger share of the tax burden when a tax is placed on a product for which

Suppose that a tax is placed on books. If the sellers bear most of the burden of the tax, then we know that the

You can increase your revenue by raising the price of your product only if the demand for your product is

The minimum wage, if it is binding, lowers the incomes of