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CECN 104Assignment 1cecn.pdf

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Department
Economics
Course
ECN 104
Professor
seyedayelzid
Semester
Winter

Description
CECN 104                 Name:  Seyda Yild                 ID #:  Assignment 1 (each question is worth of 3 points)  (due on Tuesday, May 8)  1. With allocative efficiency: A. the state of technology, or methods used to produce output, do not change. B. the available supplies of factors of production are fixed in both quantity and quality. C. there is production of any particular mix of goods and services in the least costly way. D. there is production of that particular mix of goods and services most wanted by society. 2. The law of increasing opportunity costs states that: A. if society wants to produce more of a particular good, it must sacrifice larger and larger amounts of other goods to do so. B. the sum of the costs of producing a particular good cannot rise above the current market price of that good. C. if the sum of the costs of producing a particular good rises by a specified percent, the price of that good must rise by a greater relative amount. D. if the prices of all the resources devoted to the production of goods increase, the cost of producing any particular good will increase at the same rate. 3. The fact that the slope of the production possibilities curve becomes steeper as we move down along the curve indicates that: A. the principle of increasing opportunity costs is relevant. B. society's resources are limited. C. the opportunity cost of producing each product is constant. D. resources are perfectly shiftable between alternative uses. 4. If an economy is operating inside its production possibilities curve for consumer goods and capital goods, this means that it: A. can only produce more consumer goods by producing fewer capital goods. B. can only produce more capital goods by producing fewer consumer goods. C. can produce more of both consumer goods and capital goods by using its resources more efficiently. D. must improve its technology to produce more output. 5. The institution that coordinates actions of consumers and producers to establish prices for goods and services is known as: A. a market. B. a monopoly. C. an economic system. D. consumer sovereignty. 6. The market system is an economic system that: A. produces more consumer goods than capital goods. B. produces more capital goods than consumer goods. C. gives private individuals and institutions the right to own resources used in production. D. gives the government the right to tax individuals and corporations for the production of capital goods. 7. Suppose an economist says that "Other things equal, the lower the price of bananas, the greater the amount of bananas purchased." This statement indicates that: A. the quantity of bananas purchased determines the price of bananas. B. all factors other than the price of bananas (for example, consumer tastes and incomes) are assumed to be constant. C. economists can conduct controlled laboratory experiments. D. one cannot generalize about the relationship between the price of bananas and the quantity purchased. 8. Refer to the above diagram. The combination of computers and bicycles shown by point G is: A. attainable, but too costly. B. unattainable, given currently available resources and technology. C. attainable, but involves unemployment. D. irrelevant because it is inconsistent with consumer preferences. 9. Refer to the circular flow model of the economy. In the diagram flow (2) represents: A. wage, rent, interest, and profit income. B. land, labour, capital, and entrepreneurial ability. C. goods and services. D. consumer expenditures. 10. Refer to the circular flow model of the economy. In the diagram flow (4) represents: A. wage, rent, interest, and profit income. B. land, labour, capital, and entrepreneurial ability. C. goods and services. D. consumer expenditures. 11. "Consumer sovereignty" refers to the: A. fact that resource prices tend to be high relative to product prices in capitalistic economies. B. idea that the pursuit of self-interest will prove ultimately to be in the public interest. C. notion that the decisions of producers and resource suppliers with respect to the kinds and amounts of goods produced must be appropriate to consumer demands. D. fact that a federal agency exists to protect consumers from harmful and defective products. 12. As a result of a decrease in the price of hamburger, consumers buy more hamburger and more T-bone steak. This is an illustration of: A. irrational consumer behaviour. B. changing tastes and preferences. C. the substitution effect. D. the income effect. 13. As a result of the decrease in the price of hamburger, consumers buy more hamburger and fewer frankfurters. This is an illustration of: A. consumer sovereignty. B. the income effect. C. the substitution effect. D. changing tastes and preferences. 14. Refer to the diagram, which shows three demand curves for coffee. Which of the following would cause the change in the demand for coffee illustrated by the shift from D to 1 ? 2 A. a decrease in the price of tea B. an increase in consumer incomes C. an increase in the price of sugar D. a technological improvement in the production of coffee 15. If Z is an inferior good, a decrease in money income will shift the: A. supply curve for Z to the left. B. supply curve for Z to the right. C. demand curve for Z to the left. D. demand curve for Z to the right. 16. If two goods are complements: A. they are consumed jointly. B. an increase in the price of one will reduce the demand for the other. C. a decrease in the price of one will increase the demand for the other. D. All of these will be true. 17. If two goods are close substitutes: A. consumers will always buy the one that has the highest price. B. a fall in the price of one will decrease the demand for the other. C. an increase in the price of one causes the demand for the other to decrease. D. a decrease in the price of one causes an increase in the demand for the other. 18. Which will not cause a shift in the demand for product A? A. a change in consumer preferences B.
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