ECON 1BB3 Lecture Notes - Lecture 2: Absolute Advantage, Demand Curve, Oregon Route 18
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1. If the government institutes an effective price ceiling on potato chips, then there will be a
decrease in demand for and an increase in supply of potato chips. | |
decrease in supply of potato chips. | |
decrease in quantity supplied of potato chips. | |
decrease in demand for potato chips. | |
decrease in quantity demanded for potato chips. |
2. Lindsay can either wash two dogs or clean four windows in two hours. Amy can either wash two dogs or clean ten windows in two hours. Based on this information, which of the following is true?
The opportunity cost of washing 2 dogs for Lindsay is cleaning 2 windows. | |
The opportunity cost of washing 1 dog for Amy is cleaning 5 windows. | |
The opportunity cost of washing 1 dog for Amy is cleaning 1/5 of a window. | |
Lindsay has the absolute advantage in cleaning windows because she has the lowest opportunity cost. | |
Amy has the absolute advantage in cleaning windows because she has the lowest opportunity cost |
3.
Oranges | Bananas | |
---|---|---|
United States | 4 acres | 5 acres |
Costa Rica | 3 acres | 2 acres |
The table above lists the number of acres it takes to produce one cargo container of oranges and one cargo container of bananas in the United States and Costa Rica. Assume each nation has 120 acres available to produce both products. If terms of trade were one cargo container of oranges for one cargo container of bananas and both nations agreed to trade according to comparative advantage, how many cargo containers of bananas would be grown?
24 cargo containers | |
30 cargo containers | |
40 cargo containers | |
60 cargo containers | |
120 cargo containers |
4. The balance of payments includes all of the following except
transfer payments for welfare. | |
goods and services sold overseas. | |
foreign purchases of domestic assets. | |
imported goods and services. | |
capital goods purchased by foreigners. |
1
The following table shows the market demand schedule and supply schedule for notebooks.
Price ($/unit) |
Quantity Demanded (units) |
Quantity Supplied (units) |
1 |
20 |
4 |
2 |
16 |
6 |
3 |
14 |
10 |
4 |
12 |
12 |
5 |
10 |
14 |
6 |
7 |
17 |
7 |
4 |
20 |
8 |
2 |
22 |
9 |
1 |
25 |
Refer to the table above. Assume that the market for notebooks is in equilibrium.
1. Which of the following is likely to happen if there is an increase in the school enrollment rate, everything else remaining unchanged?
A. Both the equilibrium price and quantity of notebooks decrease.
B. The equilibrium price and quantity remain unchanged.
C. Both the equilibrium price and quantity of notebooks increase.
D. The equilibrium price increases, but the equilibrium quantity of notebooks decreases.
2. A shortage occurs in a market when:
A.price is lower than the equilibrium price.
B. price is higher than the equilibrium price.
C. supply exceeds demand.
D. the marginal utility of consumption is negligible.
3. A change in the quantity demanded of a good is:
A. the outcome of a change in income.
B. the outcome of a change in tastes and preferences.
C. represented by a shift to a new demand curve.
D. represented by a movement along the demand curve.
4. The following table shows the demand schedules of three consumers of wine. Assume that these three buyers constitute the entire market.
PRICE ($/Bottle) |
Sandra's Demand (Bottles) |
David's Demand (Bottles) |
Mary's Demand (Bottles) |
â$8 |
2 |
10 |
|
â$6 |
14 |
15 |
18 |
â$4 |
23 |
24 |
|
â$2 |
24 |
27 |
28 |
Refer to the table above. If the market price of wine is $8/bottle, and the market demand for wine is 19 bottles, David's consumption of wine is:
A. 12 bottles.
B. 9 bottles.
C. 4 bottles.
D. 7 bottles.
5. Which of the following factors will NOT cause a shift in the demand for a good?
A. A change in the number of consumers
B. A change in the market price of the good
C. A change in tastes and preferences
D. A change in consumer incomes
6. Are all markets perfectly competitive?
A. No, there are other market types where firms have considerable power to control the price.
B. Yes, any economic system with a market structure is by definition perfectly competitive.
C. No, there are also command and control markets that are run by a central government.
D. No, in other types of markets, sellers offer identical goods and simply accept the market price.
7. Assume that a seller in a perfectly competitive market charges more than the equilibrium price. It is likely that this seller will:
A. increase his profit.
B. lose only a few buyers.
C. increase his sales.
D. lose almost all of his buyers.
8. The willingness to pay for a commodity:
A. increases as the consumption of the commodity increases.
B. is always less than the market price of the commodity.
C. decreases as the consumption of the commodity increases.
D. is always greater than the market price of the commodity.
9. Which of the following is likely to lead to a right shift in the supply curve of cotton?
A. An increase in labor productivity due to training programs
B. A rise in labor costs due to wage demands by labor unions
C. An increase in the price of cotton
D. A decrease in the price of cotton
10. The buyers of a good will want to purchase it as long as their willingness to pay for the good is:
A. equal to zero.
B. greater than or equal to the price.
C. greater than zero.
D. less than the price.