ECON 2010 Study Guide - Midterm Guide: Mark Zuckerberg, Mulch, Boogie 2Nite

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Published on 17 Apr 2019
School
TNTECH
Department
Economics
Course
ECON 2010
Professor
Exam 1 Study Aid
Multiple Choice
Identify the choice that best completes the statement or answers the question.
____ 1. What would happen to the equilibrium price and quantity for the market for cigarettes if the government
increased the producer’s tax and a scientific study came out confirming that smoking cigarettes increased the
rate of heart disease? (Events occurring simultaneously)
a.
Equilibrium price will be indeterminate and equilibrium quantity will go down.
b.
Equilibrium price will go up and equilibrium quantity will go up.
c.
Equilibrium price will go down and equilibrium quantity will be indeterminate.
d.
Equilibrium price will be indeterminate and equilibrium quantity will go up.
e.
Equilibrium price will go up and equilibrium quantity will be indeterminate.
____ 2. When both supply and demand decrease, the equilibrium price ________ and equilibrium quantity ________.
a.
increases; increases
d.
increases; is indeterminate
b.
is indeterminate; increases
e.
is indeterminate; decreases
c.
decreases; is indeterminate
____ 3. The ________ illustrates the various combinations of output that a society can produce if all of its resources are
being used efficiently.
a.
concept of absolute advantage
b.
law of positive statements
c.
law of demand
d.
production possibilities frontier (PPF)
e.
principle of comparative advantage
Consider the following scenario to answer the following questions: On a particular Saturday, Mark Zuckerberg
and Bill Gates can either plant trees or spread mulch in their gardens. Their maximum output per day is listed
in the following table, along with spaces where you can calculate the opportunity cost.
Trees
Planted
Opportunity
Cost of 1 Tree
Amount of Mulch
Spread (in cubic
yards)
Zuckerberg
20
30
Gates
15
30
____ 4. At what terms of trade (relative price ratio) could they specialize and trade with one another so that both have
more trees planted and mulch spread than they could accomplish on their own?
a.
12 trees planted per 12 cubic yards of mulch spread
b.
10 trees planted per 12 cubic yards of mulch spread
c.
9 trees planted per 12 cubic yards of mulch spread
d.
7 trees planted per 12 cubic yards of mulch spread
e.
5 trees planted per 12 cubic yards of mulch spread
____ 5. The ability of one producer to produce a good at a lower opportunity cost than another producer is called
a.
a normative statement.
d.
comparative advantage.
b.
a zero-sum game.
e.
the law of increasing relative cost.
c.
absolute advantage.
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____ 6. Someone has a comparative advantage in producing a good whenever
a.
one enjoys producing that good.
b.
one can produce more of the good than someone else using the same resources.
c.
one’s opportunity cost is constant.
d.
one’s opportunity cost of producing that good is lower than that of other producers.
e.
one has specific training in the production of that good.
____ 7. Consumer goods
a.
are produced today to be used to produce more goods in the future.
b.
are produced today to be consumed at some point in the future.
c.
are invested today in order to consume more today.
d.
are produced today to be consumed today.
e.
generate economic growth.
____ 8. If the price of a good increases, holding all else constant,
a.
the demand for all of that good’s substitutes will decrease.
b.
the quantity demanded for that good will increase.
c.
the demand for all of that good’s complements will increase.
d.
the demand for all of that good’s substitutes will increase.
e.
the demand curve will shift to the left.
____ 9. On January 30, 2012, Starbucks India announced plans to open 50 cafés. What would you expect to happen to
the market for coffee in India, assuming all other factors are held constant?
a.
The demand for coffee will increase in India.
b.
The demand for coffee will decrease in India.
c.
Both the supply and demand for coffee will increase in India.
d.
The supply for coffee will increase in India.
e.
The supply for coffee will decrease in India.
____ 10. Ceteris paribus, if a society is producing at a point on the production possibilities frontier (PPF), it can only
increase the production of one good by
a.
also increasing the production of the second good.
b.
decreasing the production of the second good.
c.
increasing the price of the second good.
d.
decreasing the price of the second good.
e.
reducing the resources available for production.
____ 11. One has an absolute advantage in producing something whenever
a.
one enjoys producing that good.
b.
one can produce more of it than someone else using the same quantity of resources.
c.
one’s opportunity cost is constant.
d.
one’s opportunity cost is lower than that of other producers.
e.
one has specific training in the production of that good.
____ 12. At the price of $5 per pack of batteries, Duracell sells 10,000 packs of batteries and Energizer sells 15,000 packs
of batteries. When the price rises to $7.50, Duracell sells 12,000 packs of batteries and Energizer sells 16,000
packs of batteries. What is the market supply at $7.50?
a.
12,000
d.
28,000
b.
16,000
e.
25,000
c.
4,000
____ 13. Which of the following situations would cause the demand curve to shift to the right?
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Document Summary

Identify the choice that best completes the statement or answers the question. ___: when both supply and demand decrease, the equilibrium price ________ and equilibrium quantity ________. increases; increases is indeterminate; increases, decreases; is indeterminate increases; is indeterminate is indeterminate; decreases. Consider the following scenario to answer the following questions: on a particular saturday, mark zuckerberg and bill gates can either plant trees or spread mulch in their gardens. Their maximum output per day is listed in the following table, along with spaces where you can calculate the opportunity cost. ___: the ability of one producer to produce a good at a lower opportunity cost than another producer is called, a normative statement, a zero-sum game, absolute advantage, comparative advantage. the law of increasing relative cost. ___: on january 30, 2012, starbucks india announced plans to open 50 caf s.

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