Principles of Microeconomics – Quiz 1

Suppose you currently live and work in​ Cleveland, earning a salary of $75,000 per year and spending $30,000 for housing. You just heard that you will be transferred to a city in California where housing is 50 percent more expensive. In negotiating a new​ salary, your objective is to keep your real income constant.
Your new target salary is?

___ questions study they concept of what ought to be. ___ questions study the concept of what is.
A 22- year old student is asking a ___ question when she considers the opportunities opened after she finishes graduate school. The decision of whether government should provide forgiveness for student loan debt is a ___ question.

In one​ minute, Country B can produce either 500 TVs and no computers or 250 computers and no TVs.​ Similarly, in one​ minute, Country C can produce either 800 TVs or 200 computers. This information is summarized by the following table.
Calculate the opportunity cost of production for each country.
Country B 500 TVs , 250 computers
Country C 800 TVs , 200 computers

Based on the comparative opportunity cost data in your table, the comparative advantage in TVs lies with Country ___ , while the comparative advantage in computers is held by Country ___

Bella can produce either a combination of 60 silk roses and 80 silk leaves or a combination of 70 silk roses and 55 silk leaves. If she now produces 60 silk roses and 80 silk​ leaves, what is the opportunity cost of producing an additional 10 silk​ roses?

All​ decisions, and the​ trade-offs associated with​ them, embody an opportunity cost because of

Refer to the diagram to the right. Point A is

Adam Smith listed three reasons for specialization to increase productivity. What are​ they?

The table above shows the output per week of two​ jewelers, Serena and Haley. They can either devote their time to making bracelets or making necklaces.
Serena 8 bracelets & 16 necklaces
Haley 9 bracelets & 12 necklaces
What is​ Serena's opportunity cost of making a​ bracelet?

If the production possibilities frontier is​ ___, then opportunity costs are constant as more of one good is produced.

Outsourcing ___ production costs and ___ consumer prices.

The table above shows the output per month of two​ people, Fred and Barney. They can either devote their time to making pogo sticks or making unicycles.
Fred 24 pogo sticks & 8 unicycles
Barney 28 pogo sticks & 14 unicycles
Which of the following statements is true​?

Adam Smith suggested that people are motivated exclusively by self-interest.

Selma is a better salesperson than Mark in both city A and city B.
Selma 48 in city A & 40 in city B
Mark 34 city A & 10 city B

a. If each person handles one city and the objective is to maximize total​ sales, then Selma should handle ___ and Mark should handle city ___.

b.According to your​ answer, does Selma handle the city for which she has the larger productivity advantage over​ Mark?

Refer to the diagram to the right which shows various points on three different production possibilities frontiers for a nation. A movement from X to Y

For each bottle of wine that Italy​ produces, it gives up the opportunity to make 10 pounds of cheese. France can produce 1 bottle of wine for every 25 pounds of cheese it produces. Which of the following is true about the comparative advantage between the two​ countries?

The production possibilities curve illustrates the notion of opportunity cost because

A heart surgeon is skillful at unplugging arteries and rerouting the flow of​ blood, and these skills also make her a very skillful plumber. She can clear a clogged drain in 6​ minutes, about 10 times faster than the most skillful plumber in town. Suppose the surgeon earns
​$25 per minute in heart surgery and the best plumber in town charges $75 per hour.

a. Should the surgeon clear her own clogged​ drains?
b. How much does the surgeon gain by hiring the plumber to clear a clogged​ drain?

Consider a bicycle producer that initially employs 200 production workers and 10​ customer-service workers. When the firm outsources its​ customer-service operation to​ India, the 10​ customer-service workers lose their jobs.
a. The net effect from outsourcing could be a loss of fewer than 10 jobs in the firm because

b. There will be a net gain in jobs in the firm if

The table above shows the output per week of two​ jewelers, Serena and Haley. They can either devote their time to making bracelets or making necklaces.
Serena 8 bracelets & 16 necklaces
Haley 9 bracelets & 12 necklaces

What is​ Haley's opportunity cost of making a​ necklace?

A production possibilities frontier with a​ bowed-outward shape indicates

Shannon is the mother of a​ 3-year old. She currently stays home with her child. Before giving​ birth, Shannon worked as a marketing consultant making
$32,000 annually.
The cumulative opportunity cost of​ Shannon's decision to stay at home with her child is
​$___
Shannon is offered a position with a marketing company that pays $28,000 annually.​However, Shannon would need to spend an additional $1,500 per month for day care services for her child.
The annual opportunity cost of Shannon turning this job down is $___

The difference between a nominal value and a real value is that a nominal value

Refer to the diagram to the right which shows various points on three different production possibilities frontiers for a nation. A movement from Y to Z

Why might pollution from a paper mill be an example of a market​ failure?

Which of the following is NOT considered a factor of​ production?

The following graph shows the relationship between the number of Frisbees produced and the cost of production.

The vertical intercept is ​$___, and the slope of the line is ​$___ per Frisbee.
Point c shows that the cost of producing ___ Frisbees is ​$___.
The cost of producing 15 Frisbees is ​$___.

The table above shows the output per week of two​ jewelers, Serena and Haley. They can either devote their time to making bracelets or making necklaces.
Serena 8 bracelets & 16 necklaces
Haley 9 bracelets & 12 necklaces
Which of the following statements is true?

Consider an accounting firm with two accountants. The​ accountants' productivity is presented in the following table.
Quigley: 2 FS , 12 Tax Returns output per hour
Slokum: 1 FS , 2 Tax Returns output per hour

For​ Quigley, the opportunity cost of producing 1 financial statement is ___ tax​ return(s) and the opportunity cost of producing 1 tax return is ___ financial​ statement(s).

For​ Slokum, the opportunity cost of producing 1 financial statement is ___ tax​ return(s) and the opportunity cost of producing 1 tax return is ___ financial​ statement(s).

Quigley has a comparative advantage in ___​, while Slokum has a comparative advantage in ___.

In a production possibilities frontier​ model, a point​ ___ the frontier is productively inefficient.

Which of the following is not a factor of​ production?

Refer to the diagram to the right which shows the production possibilities frontier for​ Mendonca, an agrarian nation that produces two​ goods, meat and vegetables. What is the opportunity cost of one pound of​ vegetables?

Suppose you belong to a tennis club that has a monthly fee of
​$50 and a charge of​ $5 per hour to play tennis.

b. The slope of the line is $ ___.

c. Suppose you start with 10 hours of tennis and then decide to increase your tennis time by
2 hour(s). By how much will your monthly bill​ increase? $___.

d. Suppose you start with 10 hours and then decide to spend an additional $40 on tennis. How many additional hours can you​ get? ___ hours

Refer to the diagram to the right which shows various points on three different production possibilities frontiers for a nation. A movement from X to Y

The table above shows the output per week of two​ jewelers, Serena and Haley. They can either devote their time to making bracelets or making necklaces.
Serena 8 bracelets & 16 necklaces
Haley 9 bracelets & 12 necklaces
What is​ Haley's opportunity cost of making a​ bracelet?

A​ small, one-unit change in value is called

Comparative advantage is

Managers use ___ analysis to decide how to produce goods and​ services, how much to​ produce, and how much to charge for them.

Problem​ statement: → The line labeled D1 in the graph to the right shows the number of cups of lemonade that Caroline and Emily can sell at their lemonade stand at various prices. Caroline and Emily have noticed that they sell more lemonade when​ it's hotter.
At a price of​ $0.50, how many more or fewer cups of lemonade do Caroline and Emily sell when the temperature is 100 degrees than when the temperature is 80​ degrees?

What is the​ economist's solution to the congestion​ problem?

Specialization and exchange result from differences in productivity that lead to ___ advantage.

One reason for studying ___ is to better understand how markets work and to predict how various events affect the prices and quantities of products in markets.

When there is a nonlinear relationship between two​ variables, the slope will

Suppose your expenses for this term are as​ follows: tuition: $10,000, room and​ board: $6,000, books and other educational​ supplies: $1,000.​ Further, during the​ term, you can only work part−time and earn​ $8,000 instead of your full−time salary of​ $20,000. What is the opportunity cost of going to college this​ term, assuming that your room and board expenses would be the same even if you did not go to​ college?

In​ 1990, the average income for an American worker was​ $1,518 per month. In​ 2000, the average income for an American worker was​ $2,632 per month. During this time​ period, a basket of necessities​ (food, housing,​ etc.) increased from​ $657 per month in 1990 to​ $1,402 per month in 2000.
The real value of income ___ over that 10-year period.

We can use ___ analysis to determine how well the government performs its roles in the market economy and explore the​ trade-offs associated with various public policies.

Refer to the diagram to the right. Point C is

If one nation is more productive than a second nation in producing all​ goods, trade will be beneficial if the first nation has

When a business asks how much its sales would increase if another employee is​ hired, it is considering which of the​ following?

The figure to the right shows the production possibilities frontier for​ Mendonca, an agrarian nation that produces two​ goods, meat and vegetables.
What is the opportunity cost of one pound of​ meat?

Sergio Vignetto raises cattle and llamas on his land. A portion of his land is more suitable for raising​ cattle, and the other portion is better suited for raising llamas. Which of the graphs represent his production possibilities​ frontier?

Suppose that stricter emissions standards would reduce​ health-care costs by $50 million but increase the costs of fuel and emissions equipment by $40 million. Is it sensible to tighten the emissions​ standards?

President​ Lincoln's discomfort with imports resulted from his failure to recognize that money sent to England eventually returns to the United States to buy American exports.

Who is the United States largest trading​ partner?

Is the president doing a good​ job?

Should the highway speed limit be​ raised?

What will happen to my income if I have to pay more​ taxes?

Should the government raise​ taxes?

Suppose a country has a comparative advantage in computer chips but not shirts. Workers in the chip industry will be ___ with trade.

Refer to the diagram to the right. Point B is

Cindy and Lou work for the phone company. Below is a table showing the installations they completed over the last 2 weeks. They do both phone installations and internet installations.

Cindy 17 II , 18 PI
Lou 26 II , 22 PI

___ has a comparative advantage in internet installations and ___ has a comparative advantage in phone installations.

The production possibilities frontier shows the​ ___ combinations of two products that may be produced in a particular time period with available resources.

The table above shows the output per week of two​ jewelers, Serena and Haley. They can either devote their time to making bracelets or making necklaces.
Serena 8 bracelets & 16 necklaces
Haley 9 bracelets & 12 necklaces
Which of the following statements is ​true?

The table to the right shows the output per month of two​ people, Fred and Barney. They can either devote their time to making pogo sticks or making unicycles.
Fred 24 pogo sticks & 8 unicycles
Barney 28 pogo sticks & 14 unicycles

Which of the following statements is true​?