ECON 1000 Study Guide - Final Guide: Externality, Unit, Social Cost
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A bowed out PPF reflects which of the following ideas?
i.increasing opportunity cost
ii. resources are not equally productive in all activities
iii. prices of goods increase over time
Ā | Ā |
I only |
Ā | Ā |
I and iii |
Ā | Ā |
ii and iii |
Ā | Ā |
I and ii |
1 point
QUESTION 2
With no international trade, a country ________ consume at a point outside of its PPF; with international trade, a country ________ consume at a point outside of its PPF.
Ā | Ā |
can; cannot |
Ā | Ā |
cannot; can |
Ā | Ā |
cannot; cannot |
Ā | Ā |
can; can |
1 point
QUESTION 3
If the production possibilities frontier between two goods is a straight line, then the
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the line does not qualify as a production possibilities frontier because the unattainable production points are too close to the inefficient production points. |
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opportunity cost is not a ratio. |
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increasing opportunity costs. |
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resources are equally productive in both goods. |
1 point
QUESTION 4
As an economy produces more of one of the goods on a bowed out production possibilities frontier, what happens to the opportunity cost of producing the good?
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It might increase, decrease, or remain constant depending on how much people value the additional units of the good. |
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It decreases. |
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It increases. |
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It remains constant. |
1 point
QUESTION 5
"Comparative advantage" is defined as a situation in which one person can produce
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more of a good than another person. |
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a good for a lower dollar cost than another person. |
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a good for a lower opportunity cost than another person. |
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more of all goods than another person. |
1 point
QUESTION 6
When a production possibilities frontier is bowed outward, as more of one good is produced, its opportunity cost
Ā | Ā |
increases. |
Ā | Ā |
decreases. |
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might increase, decrease, or remain constant depending on how much people value the additional units of the good. |
Ā | Ā |
remains constant. |
1 point
QUESTION 7
A bowed out production possibility frontier shows that the
Ā | Ā |
opportunity cost relationship is linear. |
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the opportunity cost of a good is constant as more of the good is produced. |
Ā | Ā |
the opportunity cost of a good increase as more of the good is produced. |
Ā | Ā |
the opportunity cost of a good decrease as more of the good is produced. |
1 point
QUESTION 8
Which of the following statements is correct?
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The production possibilities frontier shows that there are no limits to production. |
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Any point on or within the PPF is production efficient. |
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If capital is idle, the economy is producing at its full potential. |
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A tradeoff is a limit that forces an exchange or a substitution of one thing for something else. |
1 point
QUESTION 9
A major earthquake occurs in the central part of the United States. What impact would this have on the nation's production possibilities frontier and why?
Ā | Ā |
A tradeoff would occur to replace the resources and goods destroyed. |
Ā | Ā |
It would shift inward because some of the nation's resources, such as capital and labor, would be destroyed. |
Ā | Ā |
It would shift outward because unemployment would be reduced. |
Ā | Ā |
Nothing would happen because the nation would still have the same capabilities. |
1 point
QUESTION 10
When a nation is producing on its production possibilities frontier, if more resources are used to produce one good, then the production of other goods
Ā | Ā |
must increase. |
Ā | Ā |
must decrease. |
Ā | Ā |
must remain the same. |
Ā | Ā |
must change but they might increase or decrease. |
1 point
QUESTION 11
Moving along a country's PPF, a reasonable opportunity costs increase is that
Ā | Ā |
unemployment increases as a country produce more and more of one good. |
Ā | Ā |
unemployment decreases as a country produces more and more of one good. |
Ā | Ā |
some resources are better suited for producing one good rather than the other. |
Ā | Ā |
technology declines as a country produce more and more of one good. |
1 point
QUESTION 12
A reason the production possibilities frontier exists is
Ā | Ā |
scarcity of resources and unlimited technology. |
Ā | Ā |
unemployment. |
Ā | Ā |
scarcity of resources. |
Ā | Ā |
unlimited resources and technology. |
1 point
QUESTION 13
Moving from one point to another on a production possibilities frontier implies
Ā | Ā |
increasing the production of one good and decreasing the production of another. |
Ā | Ā |
increasing the production of both goods. |
Ā | Ā |
decreasing the production of both goods. |
Ā | Ā |
holding the production levels of both goods constant. |
1 point
QUESTION 14
Specialization and trade make a country better off because with trade the country can consume at a point
Ā | Ā |
outside its production possibilities frontier. |
Ā | Ā |
on its trading partner's production possibilities frontier. |
Ā | Ā |
inside its production possibilities frontier. |
Ā | Ā |
on its production possibilities frontier. |
1 point
QUESTION 15
The production possibilities frontier is the
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the boundary between the combinations of goods and services that can be produced and the combinations that cannot be produced when technology is changing. |
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the minimum output that can be produced when resources are used inefficiently. |
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the boundary between the combinations of goods and services that can be produced and the combinations that cannot be produced, given the available factors of production and the state of technology. |
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maximum output that can be produced at an opportunity cost of zero. |
1 point
QUESTION 16
The opportunity cost of economic growth is ________ and the benefit of economic growth is ________.
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decreased current consumption; decreased future consumption |
Ā | Ā |
decreased current consumption; increased future consumption |
Ā | Ā |
increased current consumption; increased future consumption |
Ā | Ā |
increased current consumption; decreased future consumption |
1 point
QUESTION 17
In terms of a nation's production possibilities frontier, what impact does international trade have?
Ā | Ā |
International trade shifts the nation's production possibilities frontier outward. |
Ā | Ā |
International trade shifts the production possibilities frontier outward for the goods that are exported and inward for the goods that are imported. |
Ā | Ā |
International trade shifts the nation's production possibilities frontier inward. |
Ā | Ā |
International trade allows the nation to consume at a point outside its production possibilities frontier. |
1 point
QUESTION 18
The production possibilities frontier illustrates the
Ā | Ā |
goods and services that people want. |
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limits to people's wants. |
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resources the economy possesses, but not it is the level of technology. |
Ā | Ā |
maximum combinations of goods and services that can be produced. |
1 point
QUESTION 19
As we move along the production possibilities frontier,
Ā | Ā |
the possibilities of tradeoffs diminish. |
Ā | Ā |
the production of one good increases as the production of the other good decreases. |
Ā | Ā |
more of both goods can be produced. |
Ā | Ā |
a tradeoff is not possible because nations need all goods. |
1 point
QUESTION 20
What is the opportunity cost of economic growth?
Ā | Ā |
Eliminate scarcity |
Ā | Ā |
Land. |
Ā | Ā |
Capital goods. |
Ā | Ā |
Consumption of goods. |
1 point
QUESTION 21
Which of the following statements is correct?
i.As the economy grows, the opportunity costs of economic growth decrease.
ii. Economic growth has no opportunity cost.
iii. The opportunity cost of economic growth is current consumption forgone.
Ā | Ā |
ii only |
Ā | Ā |
iii only |
Ā | Ā |
I only |
Ā | Ā |
I and iii |
1 point
QUESTION 22
Does economic growth depend upon which of the following?
i. Increasing the quantity of labor.
ii. Lowering the prices of goods and services.
iii. Advancing technology.
Ā | Ā |
ii only. |
Ā | Ā |
I only. |
Ā | Ā |
I and iii. |
Ā | Ā |
iii only. |
1 point
QUESTION 23
When drawing a production possibilities frontier, which of the following is held constant?
Ā | Ā |
the amount of money in the economy |
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the prices of goods and services |
Ā | Ā |
the quantity of the goods and services that are produced |
Ā | Ā |
the available factors of production and the state of technology |
1 point
QUESTION 24
To increase its economic growth, a nation should
Ā | Ā |
encourage spending on goods and services. |
Ā | Ā |
increase in current consumption. |
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encourage education because that increases the quality of labor. |
Ā | Ā |
limit the number of people in college because they produce nothing. |
1 point
QUESTION 25
The opportunity cost of one more slice of pizza in terms of sodas is the
Ā | Ā |
some pizza slices we have to give up to get one extra soda. |
Ā | Ā |
the total number of sodas that we have divided by the total number of pizza slices that we have. |
Ā | Ā |
the total number of pizza slices that we have divided by the total number of sodas that we have. |
Ā | Ā |
the number of sodas we have to give up to get one extra pizza slice. |
QUESTION 1
The demand for oranges increases while the supply decreases. The equilibrium price of oranges ________, and the equilibrium quantity ________.
falls; increases | ||
falls; perhaps changes but we can't say if it increases, decreases, or stays the same | ||
rises; decreases | ||
rises; perhaps changes but we can't say if it increases, decreases, or stays the same |
1 points
QUESTION 2
Assume a competitive market is in equilibrium. There is an increase in demand, but no change in supply. As a result the equilibrium price ________, and the equilibrium quantity is ________.
rises; increases | ||
falls; decreases | ||
falls; does not change | ||
rises; does not change |
1 points
QUESTION 3
Bagels and cream cheese are complementary goods. Suppose that the price for flour, which is used to produce bagels, increases. The equilibrium price of cream cheese ________ and the equilibrium quantity of cream cheese ________.
does not change; does not change | ||
rises; increases | ||
falls; decreases | ||
rises; decreases |
1 points
QUESTION 4
If consumers buy a large number of plug-in electric cars, the equilibrium price of electricity will ________ and the equilibrium quantity of electricity will ________.
rise; increase | ||
rise; decrease | ||
fall; increase | ||
fall; decrease |
1 points
QUESTION 5
Which of the following shifts the supply curve for oranges?
an increase in income for all orange consumers if oranges are a normal good | ||
disastrous weather that destroys about half of this year's orange crop | ||
an increase in the price of bananas, a substitute in consumption for oranges | ||
a newly discovered increase in the nutritional value of oranges |
1 points
QUESTION 6
Which of the following shifts the supply curve of rutabagas rightward? (A rutabaga is a potato-like vegetable.)
normal goods in production. | ||
an exceptionally cold summer that killed much of the rutabaga crop. | ||
a fall in the price of fertilizer used to grow rutabagas. | ||
an increase in the price of a rutabaga |
1 points
QUESTION 7
Suppose over the next several years the productivity of firms producing electric cars improves dramatically. The advance in productivity leads to
an increase in the supply electric cars so that the supply curve shifts rightward. | ||
an increase in the supply of electric cars so that the supply curve shifts leftward. | ||
a decrease in the supply of electric cars so that the supply curve shifts rightward. | ||
a decrease in the supply of electric cars so that the supply curve shifts leftward. |
1 points
QUESTION 8
Hot dogs and hot dog buns are complements. If the price of a hot dog falls, then
the demand for hot dogs will increase. | ||
the demand for hot dog buns will decrease. | ||
the quantity demanded of hotdogs will decrease. | ||
the demand for hot dog buns will increase. |
1 points
QUESTION 9
Demand curves slope ________ because as the price increases and other things remain the same, the quantity demanded ________.
upward; increases | ||
downward; decreases | ||
upward; decreases | ||
downward; increases |
1 points
QUESTION 10
Water bottlers announce that next month the price of bottled water will rise by 25 percent. Which of the following occurs immediately?
The quantity of bottled water demanded increases. | ||
The demand for bottled water increases. | ||
The quantity of bottled water demanded decreases. | ||
The demand for bottled water decreases. |
1 points
QUESTION 11
If the price of carrots is below the equilibrium price, the
quantity supplied of carrots exceeds the quantity demanded and a shortage exists. | ||
quantity demanded of carrots exceeds the quantity supplied and a shortage exists. | ||
quantity supplied of carrots exceeds the quantity demanded and a surplus exists. | ||
quantity demanded of carrots exceeds the quantity supplied and a surplus exists. |
1 points
QUESTION 12
Which of the following is true regarding demand?
i. Demand is the relationship between quantity demanded and the price of a good when all other influences on buying plans remain the same.
ii. Demand refers to one quantity at one time.
iii. "Demand" and " quantity demanded" are the same thing.
both i and ii | ||
i only. | ||
ii only. | ||
iii only. |
1 points
QUESTION 13
Suppose the current price of a pound of steak is $6 per pound and the equilibrium price is $9 per pound. What takes place?
There is a shortage, so the price rises and quantity demanded decreases. | ||
There is a shortage, so the price rises and quantity demanded increases. | ||
There is a shortage, so the price falls and quantity demanded increases. | ||
There is a surplus, so the price falls and quantity demanded increases. |
1 points
QUESTION 14
The number of corn producers increases, so the supply of corn ________ and the supply curve of corn ________.
decreases; shifts leftward | ||
decrease; shifts rightward | ||
increases; shifts rightward | ||
increases; shifts leftward |
1 points
QUESTION 15
Market equilibrium
i. can never occur because there are always people who want a good but cannot afford it.
ii. occurs at the intersection of the supply and demand curves.
iii. is the point where the price equals the quantity.
iii only | ||
ii and iii | ||
ii only | ||
i only |
1 points
QUESTION 16
Milk can be used to produce cheese or butter. If the price of a pound of butter rises, what happens to the supply of cheese?
The supply of cheese stays the same and there is a decrease in the quantity supplied of cheese. | ||
The supply of cheese decreases. | ||
The supply of cheese stays the same and there is no change in the quantity supplied of cheese. | ||
The supply of cheese increases. |
1 points
QUESTION 17
Consumers regard Dell computers and Apple computers as substitutes. If the price of a Dell computer decreases, the
demand for Dell computers decreases. | ||
demand for Apple computers increases. | ||
demand for Apple computers decreases. | ||
demand for Dell computers increases. |
1 points
QUESTION 18
Suppose the current price of a pound of steak is $12 per pound and the equilibrium price is $9 per pound. In this case, there is a
surplus, so the price rises and quantity demanded increases. | ||
shortage, so the price rises and quantity demanded decreases. | ||
surplus, so the price falls and quantity demanded increases. | ||
shortage, so the price falls and quantity demanded increases. |
1 points
QUESTION 19
Plywood is used in the construction of houses. If the price of plywood rises, what happens to the supply of houses?
The supply increases so that the supply curve shifts rightward. | ||
The quantity supplied increases but there is no shift in the supply curve. | ||
The supply decreases so that the supply curve shifts leftward. | ||
The quantity supplied decreases but there is no shift in the supply curve. |
1 points
QUESTION 20
In stores, it is common to find seasonal products marked down when the season ends. What explains this behavior?
The store is trying to increase its customers' demand for the product. | ||
The law of demand is being used to increase the quantity demanded. | ||
The store manager must be trying to drive away customers by selling low quality products. | ||
The store is trying to increase its consumer's incomes by increasing their purchasing power. |
1 points
QUESTION 21
Suppose that the price of flour used to produce bagels increases. Hence the equilibrium price of a bagel ________ and the equilibrium quantity ________.
rises; increases | ||
rises; decreases | ||
falls; increases | ||
falls; decreases |
1 points
QUESTION 22
If both the supply and demand curves shift simultaneously, we can always predict what will happen to
either the price or the quantity, but not both. | ||
only the quantity. | ||
only the price. | ||
both the price and the quantity. |
1 points
QUESTION 23
If income increases and the demand for bus rides decreases,
bus rides are a substitute good. | ||
consumers are behaving irrationally. | ||
bus rides are an inferior good. | ||
bus rides are a normal good. |
1 points
QUESTION 24
A surplus of cardboard boxes means that
at the current price of a cardboard box, the quantity demanded equals the quantity supplied and the price will fall to restore the equilibrium.. | ||
the current price of a cardboard box is less than the equilibrium price. | ||
at the current price of a cardboard box, the quantity demanded exceeds the quantity supplied. | ||
at the current price of a cardboard box, the quantity demanded is less than the quantity supplied. |
1 points
QUESTION 25
If a freeze destroys oranges before they are harvested, the equilibrium price of an orange ________ and the equilibrium quantity ________.
rises; increases | ||
rises; decreases | ||
falls; increases | ||
falls; decreases |
1 points