ASU ECON 211 FINAL EXAM QUESTIONS AND VERIFIED
ANSWERS
What does a production possibilities frontier display? - CORRECT ANSWER✅✅✅Possible
combinations of output an economy can produce given available factors of production and technology.
What is a normative statement? - CORRECT ANSWER✅✅✅Policymakers should increase the
minimum wage to improve standard of living.
The opportunity cost of helping a friend move is... - CORRECT ANSWER✅✅✅the next best use of the
time and energy spent helping your friend.
An entity has a comparative advantage if it can produce what? - CORRECT ANSWER✅✅✅At a lower
opportunity cost than another entity.
T/F: Suppose the United States has an absolute advantage in the production of oil and wheat. This
means that the U.S. would not gain from trading these goods. - CORRECT ANSWER✅✅✅FALSE
The United States has a comparative advantage in the production of wheat and an absolute advantage
in the production of both apples and wheat relative to Canada. If the U.S. and Canada specialize and
trade, the U.S. should produce what? - CORRECT ANSWER✅✅✅Wheat
The law of the demand states that if price rises, quantity demanded does what? - CORRECT
ANSWER✅✅✅Decreases
We would expect demand for cars to increase if... - CORRECT ANSWER✅✅✅The price of gasoline
falls.
As income increases, consumers purchase more cars. Cars what type of good? - CORRECT
ANSWER✅✅✅Normal goods
Supply curves show the relationship between price and quantity demanded. Assuming the law of supply
holds, supply curves are what? - CORRECT ANSWER✅✅✅Upward sloping
, Which causes a leftward shift in the supply curve for apples? - CORRECT ANSWER✅✅✅An increase
in the price of labor
An increase in the equilibrium price of coffee could be caused by - CORRECT ANSWER✅✅✅A
decrease in supply of coffee.
What is Consumer surplus? - CORRECT ANSWER✅✅✅The amount a buyer is willing to pay for a
good less the amount the buyer actually pays.
When is a market is efficient? - CORRECT ANSWER✅✅✅The sum of consumer and producer surplus
is maximized.
What is Producer surplus? - CORRECT ANSWER✅✅✅The difference between the price producers
collect and the minimum price required to bring goods to market.
Rent control is an example of what? - CORRECT ANSWER✅✅✅A price ceiling
A price ceiling on a coffee would likely cause what? - CORRECT ANSWER✅✅✅A shortage of coffee
What is minimum wage an example of? - CORRECT ANSWER✅✅✅A price floor
In the labor market, suppliers of labor are - CORRECT ANSWER✅✅✅Households
T/F: A payroll tax on a firm will raise more revenue than an income tax of the same amount on
households. - CORRECT ANSWER✅✅✅FALSE
T/F: If the government decides to impose a $1 tax on coffee, it makes no difference if the government
collect the tax from producers or consumers. - CORRECT ANSWER✅✅✅TRUE
ANSWERS
What does a production possibilities frontier display? - CORRECT ANSWER✅✅✅Possible
combinations of output an economy can produce given available factors of production and technology.
What is a normative statement? - CORRECT ANSWER✅✅✅Policymakers should increase the
minimum wage to improve standard of living.
The opportunity cost of helping a friend move is... - CORRECT ANSWER✅✅✅the next best use of the
time and energy spent helping your friend.
An entity has a comparative advantage if it can produce what? - CORRECT ANSWER✅✅✅At a lower
opportunity cost than another entity.
T/F: Suppose the United States has an absolute advantage in the production of oil and wheat. This
means that the U.S. would not gain from trading these goods. - CORRECT ANSWER✅✅✅FALSE
The United States has a comparative advantage in the production of wheat and an absolute advantage
in the production of both apples and wheat relative to Canada. If the U.S. and Canada specialize and
trade, the U.S. should produce what? - CORRECT ANSWER✅✅✅Wheat
The law of the demand states that if price rises, quantity demanded does what? - CORRECT
ANSWER✅✅✅Decreases
We would expect demand for cars to increase if... - CORRECT ANSWER✅✅✅The price of gasoline
falls.
As income increases, consumers purchase more cars. Cars what type of good? - CORRECT
ANSWER✅✅✅Normal goods
Supply curves show the relationship between price and quantity demanded. Assuming the law of supply
holds, supply curves are what? - CORRECT ANSWER✅✅✅Upward sloping
, Which causes a leftward shift in the supply curve for apples? - CORRECT ANSWER✅✅✅An increase
in the price of labor
An increase in the equilibrium price of coffee could be caused by - CORRECT ANSWER✅✅✅A
decrease in supply of coffee.
What is Consumer surplus? - CORRECT ANSWER✅✅✅The amount a buyer is willing to pay for a
good less the amount the buyer actually pays.
When is a market is efficient? - CORRECT ANSWER✅✅✅The sum of consumer and producer surplus
is maximized.
What is Producer surplus? - CORRECT ANSWER✅✅✅The difference between the price producers
collect and the minimum price required to bring goods to market.
Rent control is an example of what? - CORRECT ANSWER✅✅✅A price ceiling
A price ceiling on a coffee would likely cause what? - CORRECT ANSWER✅✅✅A shortage of coffee
What is minimum wage an example of? - CORRECT ANSWER✅✅✅A price floor
In the labor market, suppliers of labor are - CORRECT ANSWER✅✅✅Households
T/F: A payroll tax on a firm will raise more revenue than an income tax of the same amount on
households. - CORRECT ANSWER✅✅✅FALSE
T/F: If the government decides to impose a $1 tax on coffee, it makes no difference if the government
collect the tax from producers or consumers. - CORRECT ANSWER✅✅✅TRUE
