Microeconomics Quiz 1, Quiz 2, Quiz 3

Scarcity
- applies only to people living in poverty
- used to exist everywhere but has been eliminated in advanced economies
- is not something that affects very rich people
- is the inability to satisfy all our wants

Gloria wants to go to the movies tonight; if she decides to go to the movies she will miss her 2 hours of work. What is the opportunity cost of going to work for Gloria?
- Two hours of work
- Going to the movie
- There is no opportunity cost
- Going to the local band show

We study economics because _________ exceeds _________.
- Human wants, resources
- Money, human wants
- Resources, human wants
- Money, cost

The opportunity cost of reading Chapter 1 of the textbook:
- is about 1/20 of the price you paid for the book because the chapter is about one twentieth of the book
- zero since you have already paid for the book
- is 1/20 the price of the book plus 1/20 the price of the tuition
- has nothing to do with the price you paid for the book

A rational decision maker will:
- minimize marginal cost
- maximize marginal benefit
- pursue an action as long as the marginal benefit exceeds the marginal cost
- pursue an action as long as the marginal cost exceeds the marginal benefit

Which of the following is not a factor of production?
- entrepreneurship
- land
- money
- labor
- capital

Refer to 'Problems for Practice', Chapter 1, question 1-1 from your textbook (Page 23). How long will Jole Miner study for Econ?
- 3 hours
- 1 hour
- 2 hours
- 4 hours
- 0 hours

Models are:
- simplified pictures of reality
- None of the above
- more complicated views of the world
- not important for economics

Which of the following is an example of capital?
- money in a checking account
- factory buildings and machines
- cash
- money in a checking account
- the existing state of technology

If we say that two variables are directly related, this means that:
- an increase in one variable is associated with an increase in the other
- the two graph as a down sloping line
- an increase in one variable is associated with a decrease in the other
- the relationship between the two is purely random

To engage in economic reasoning, you must compare:
- average cost and total benefit
- total cost and marginal cost
- marginal cost and marginal benefit
- total benefit and marginal benefit

Refer to problems for practice of your textbook, Chapter 2, question 2-1 (page 47). What is the opportunity cost of moving from C to D?
- 35 All Other Good
- 50 All Other Good
- 85 All Other Good
- 35 Steel
- There is no cost associated with this move

The construction of a society's production possibility frontier (PPF) assumes that:
- the society is to choose between the production of two kinds of goods
- the society's supply of resources are constant
- the society's level of technological knowledge is fixed
- All of these

The problem of determining what goods and services society should produce exists because:
- resources are plentiful
- resources are scarce
- most of our resources are privately rather than socially owned
- most of our resources are socially rather than privately owned
- other countries can provide us with most of the things that we now produce ourselves

In analyzing a production possibility frontier (PPF), a situation of unemployment (or unused resources) many be depicted by a point located:
- on the PPF, near the middle
- on the PPF, near the top
- inside the PPF
- on the PPF, near the bottom
- outside the PPF

Draw a PPF based on the information:
Production possibilities
A: Capital goods- 0, Consumer goods- 20
B: Capital goods- 1, Consumer goods- 18
C: Capital goods- 2, Consumer goods- 14
D: Capital goods- 3, Consumer goods- 8
E: Capital goods- 4, Consumer goods- 0

The production of 14 units of consumer goods and 1 unit of capital goods would:
- be impossible
- result in some unused resources
- result in full employment
- result in no unused resources
- increase economic growth

The slope of a production possibility frontier (PPF):
- has no economic relevance or meaning
- is always constant
- is always zero
- measures the marginal opportunity cost of producing more of a good
- is always positive

Refer to Problems for Practice, chapter 2 of your textbook, question 2-4 (page 50). How would the immigration of 10 units of labor affect the PPF?
- The PPF expands or shifts outwards to the right
- The PPF remains fixed
- The PPF shrinks or shifts inward to the left
- A move up or down on the PPF curve

The exchange of goods and services across international borders is called:
- Closed economy
- Self-sufficiency
- Money
- Trade
- Specialization
- Growth

The economic criteria for decision making is
- Lottery
- Democracy
- Maximization of happiness
- Efficiency

Draw a PPF based on the information:
Production possibilities
A: Capital goods- 0, Consumer goods- 20
B: Capital goods- 1, Consumer goods- 18
C: Capital goods- 2, Consumer goods- 14
D: Capital goods- 3, Consumer goods- 8
E: Capital goods- 4, Consumer goods- 0

Which point represents a combination of consumer goods and capital goods that can be attained only by economic growth?
- 14 units of consumer goods and 2 units of capital goods
- 18 units of consumer goods and 4 units of capital goods
- 20 units of consumer goods and 0 units of capital goods
- 3 units of consumer goods and 3 units of capital goods

Draw a PPF based on the information:
Production possibilities
A: Capital goods- 0, Consumer goods- 20
B: Capital goods- 1, Consumer goods- 18
C: Capital goods- 2, Consumer goods- 14
D: Capital goods- 3, Consumer goods- 8
E: Capital goods- 4, Consumer goods- 0

Which point represents a combination of consumer goods and capital goods that is inefficient but attainable?
- A
- B
- C
- D
- E
- None of the above

Refer to Problem for Practice Chapter 4, question 4-2 (page 126). Which country has a comparative advantage in wine?

- Both
- Alpha
- Beta
- None of them

A nation's gains from trade are best measured by:
- the increase in revenue
- the greater availability of goods and services for consumption as a result of trade
- absence of wars
- the increase in wages received by workers in its exports industries

The major difference between tariff and quota
- consumer pays more with tariffs
- exploring nations prefer quotas
- producer benefits more from tariffs
- government receives revenue with tariffs

The expression "terms of trade" refers to:
- the terms on which an importer borrows from his bank
- the period of tie within which an importer can pay an exporter without incurring a finance charge
- the number of units of a good that a nation gives up for one unit of another good received

Columbia can produce coffee at a lower opportunity cost than the United States can, and the United States can produce machinery at a lower opportunity cost than Columbia can. Therefore, according to the law of ______, a basis for trade exists between the two countries.
- tariff
- demand
- supply
- absolute advantage
- comparative advantage

The most likely effects of tariffs and/or import quotas is to ______ prices of the protected goods in the importing country.
- lower
- stabilize
- raise
- no effect on price

Which one of the following is LEAST appropriate in relation to the other three?
- invisible hand
- government regulation and control
- Adam Smith
- free markets

If, in response to an increase in the price of chocolate, the quantity demanded of chocolate decreases economists would describe this as

- a decrease in demand
- a decrease in the consumers' taste for chocolate
- a decrease in quantity demanded
- a change in consumer income

Which of the following are substitutes?

- Coffee and creamer
- Milk and cereal
- Pink pen and purple pen
- Tennis shoe and socks

Consider Michael's monthly demand for tacos: Qd=50-2P, where P is price in cents and Qd is units of taco demanded. What is the maximum he is willing to pay for his sixth taco?
- 22 cents
- 44 cents
- 50 cents
- 25 cents
- 48 cents

Tennis rackets and tennis balls are complements. If the price of tennis balls increases dramatically, everything else remaining the same, the demand of tennis rackets should:
- increase
- first rise, then fall
- stay the same
- decrease

Draw a production possibility table for good X and Y (assume constant marginal opportunity cost)
United States: Good Y- 24 units, Good X- 4 units
Canada: Good Y- 8 units, Good X- 2 units

If there were unrestricted trade and complete specialization according to comparative advantage:
- the United States would export X and Canada would Export Y
- the United States would export both X and Y
- Canada would export both X and Y
- the United States and Canada would each be self-sufficient in both X and Y
- the United States would export Y and Canada would export X

Draw a production possibility table for good X and Y (assume constant marginal opportunity cost)
United States: Good Y- 24 units, Good X- 4 units
Canada: Good Y- 8 units, Good X- 2 units

The cost to the United States of producing 1 unit of Y is:
- 2 units of X
- 12 units of X
- 1/6th units of X
- 24 units of X
- 3 units of X

Economists draw a demand curve with _______ on the vertical axis and ________ on the horizontal axis.
- price, price
- quality, price
- price, quantity
- quantity, quantity