Econ 231 Exam 1 Chapter 3 & 4 Practice
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Problems exam with verified answers
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According |to |the |law |of |comparative |advantage, |a |NASCAR |driver |who |is |also |a |good |chef |should
devote |more |time |to |cooking |and |less |time |to |racing.
give |up |NASCAR.
not |open |a |restaurant.
hire |a |chef |if |he |opens |a |restaurant. |- |VERIFIED |ANSWER✔✔-hire |a |chef |if |he |opens |a |restaurant.
The |basic |principle |of |production |possibilities |frontier |is |that, |if |there |are |no |idle |resources |in |an
|economy,
the |marginal |cost |of |production |equals |the |total |cost |of |production.
the |production |of |one |good |can |be |increased |only |if |the |production |of |the |other |good |is |decreased.
the |increase |in |the |production |of |one |good |will |increase |the |profits |earned |by |all |firms.
the |economy |will |produce |its |potential |output |level |and |there |will |be |no |unemployment. |- |VERIFIED
|ANSWER✔✔-the |production |of |one |good |can |be |increased |only |if |the |production |of |the |other |good
|is |decreased.
The |U.S. |government |imposes |tariffs |(an |import |tax) |on |all |imported |steel, |which |is |a |major |input
|used |in |making |golf |clubs. |How |will |this |tariff |affect |the |market |for |golf |balls?
It |would |have |no |impact |since |golf |ball |production |uses |no |steel |in |the |manufacturing |process.
The |demand |for |golf |balls |would |fall, |and |the |price |of |golf |balls |will |fall.
The |supply |of |golf |balls |would |rise, |and |the |price |of |golf |balls |will |fall.
The |supply |of |golf |balls |would |fall, |and |the |price |of |golf |balls |will |rise. |- |VERIFIED |ANSWER✔✔-The
|demand |for |golf |balls |would |fall, |and |the |price |of |golf |balls |will |fall.
The |supply |curve |of |a |product |is |a |graphical |representation |of
the |quantity |of |goods |that |should |be |produced |to |maximize |profit.
the |willingness |of |sellers |to |sell |the |product |over |time.
,the |total |amount |supplied |in |the |market |during |a |specified |period |of |time.
the |quantity |produced |as |a |function |of |the |price. |- |VERIFIED |ANSWER✔✔-the |quantity |produced |as |a
|function |of |the |price.
If |the |government |decides |to |impose |rent |controls |in |the |city |of |Prunia, |it |is |likely |to
increase |the |demand |for |apartments.
decrease |the |number |of |apartments |converted |to |office |spaces.
increase |the |number |of |apartments |available |for |rent.
increase |the |problem |of |shortage. |- |VERIFIED |ANSWER✔✔-increase |the |problem |of |shortage.
Suppose |that |people |regard |coffee |and |tea |as |substitute |products. |If |a |freeze |occurs |in |Brazil,
|severely |damaging |the |current |coffee |crop, |what |will |happen |to |the |price |of |tea?
A |fall |in |the |price |of |tea |since |tea |buyers |now |must |pay |more |for |coffee.
A |rise |in |the |price |of |tea |because |the |supply |of |tea |increases.
No |change |since |coffee |supplies |do |not |affect |the |tea |market.
A |rise |in |the |price |of |tea |because |the |demand |for |tea |increases. |- |VERIFIED |ANSWER✔✔-A |rise |in |the
|price |of |tea |because |the |demand |for |tea |increases.
Refer |to |the |following |graph |that |shows |the |production |possibilities |curve |of |an |economy |that
|produces |two |goods: |wine |and |cheese. |If |the |economy |is |currently |operating |at |point |D,
the |opportunity |cost |of |moving |to |point |B |is |zero.
the |economy |faces |capital |constraints |and |cannot |move |beyond |point |D.
the |marginal |cost |of |moving |to |point |B |is |200 |bottles |of |wine.
the |current |consumption |level |in |the |economy |is |too |high. |- |VERIFIED |ANSWER✔✔-the |opportunity
|cost |of |moving |to |point |B |is |zero.
Efficient |production |occurs
, on |the |points |on |the |production |possibilities |frontier.
on |the |production |possibilities |frontier |or |at |points |beyond |the |production |possibilities |frontier.
on |the |production |possibilities |frontier |or |inside |the |production |possibilities |frontier.
on |the |points |inside |the |production |possibilities |frontier. |- |VERIFIED |ANSWER✔✔-on |the |points |on |the
|production |possibilities |frontier.
Price |ceilings |tend |to |create |imbalances |in |the |market |as
the |surplus |created |by |price |ceilings |leads |to |very |high |levels |of |investment.
quantity |demanded |exceeds |quantity |supplied, |but |price |cannot |fall |to |remove |the |surplus.
quantity |demanded |exceeds |quantity |supplied, |but |price |cannot |rise |to |remove |the |shortage.
the |surplus |created |by |price |ceilings |leads |to |a |problem |of |disposal. |- |VERIFIED |ANSWER✔✔-quantity
|demanded |exceeds |quantity |supplied, |but |price |cannot |rise |to |remove |the |shortage.
Refer |to |the |following |table. |At |a |price |of |$3, |there |is |a
shortage |of |100 |pairs |of |socks.
shortage |of |600 |pairs |of |socks.
surplus |of |600 |pairs |of |socks.
surplus |of |100 |pairs |of |socks. |- |VERIFIED |ANSWER✔✔-shortage |of |600 |pairs |of |socks.
A |decrease |of |which |of |the |following |would |shift |the |supply |curve |of |gasoline |to |the |left?
The |number |of |gasoline |producers
The |price |of |gasoline
The |demand |for |gasoline
The |price |of |crude |oil, |which |is |an |input |in |the |gasoline |production |process |- |VERIFIED |ANSWER✔✔-
The |number |of |gasoline |producers
Which |economist |first |explained |the |principle |of |comparative |advantage?
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Problems exam with verified answers
| | | | |
According |to |the |law |of |comparative |advantage, |a |NASCAR |driver |who |is |also |a |good |chef |should
devote |more |time |to |cooking |and |less |time |to |racing.
give |up |NASCAR.
not |open |a |restaurant.
hire |a |chef |if |he |opens |a |restaurant. |- |VERIFIED |ANSWER✔✔-hire |a |chef |if |he |opens |a |restaurant.
The |basic |principle |of |production |possibilities |frontier |is |that, |if |there |are |no |idle |resources |in |an
|economy,
the |marginal |cost |of |production |equals |the |total |cost |of |production.
the |production |of |one |good |can |be |increased |only |if |the |production |of |the |other |good |is |decreased.
the |increase |in |the |production |of |one |good |will |increase |the |profits |earned |by |all |firms.
the |economy |will |produce |its |potential |output |level |and |there |will |be |no |unemployment. |- |VERIFIED
|ANSWER✔✔-the |production |of |one |good |can |be |increased |only |if |the |production |of |the |other |good
|is |decreased.
The |U.S. |government |imposes |tariffs |(an |import |tax) |on |all |imported |steel, |which |is |a |major |input
|used |in |making |golf |clubs. |How |will |this |tariff |affect |the |market |for |golf |balls?
It |would |have |no |impact |since |golf |ball |production |uses |no |steel |in |the |manufacturing |process.
The |demand |for |golf |balls |would |fall, |and |the |price |of |golf |balls |will |fall.
The |supply |of |golf |balls |would |rise, |and |the |price |of |golf |balls |will |fall.
The |supply |of |golf |balls |would |fall, |and |the |price |of |golf |balls |will |rise. |- |VERIFIED |ANSWER✔✔-The
|demand |for |golf |balls |would |fall, |and |the |price |of |golf |balls |will |fall.
The |supply |curve |of |a |product |is |a |graphical |representation |of
the |quantity |of |goods |that |should |be |produced |to |maximize |profit.
the |willingness |of |sellers |to |sell |the |product |over |time.
,the |total |amount |supplied |in |the |market |during |a |specified |period |of |time.
the |quantity |produced |as |a |function |of |the |price. |- |VERIFIED |ANSWER✔✔-the |quantity |produced |as |a
|function |of |the |price.
If |the |government |decides |to |impose |rent |controls |in |the |city |of |Prunia, |it |is |likely |to
increase |the |demand |for |apartments.
decrease |the |number |of |apartments |converted |to |office |spaces.
increase |the |number |of |apartments |available |for |rent.
increase |the |problem |of |shortage. |- |VERIFIED |ANSWER✔✔-increase |the |problem |of |shortage.
Suppose |that |people |regard |coffee |and |tea |as |substitute |products. |If |a |freeze |occurs |in |Brazil,
|severely |damaging |the |current |coffee |crop, |what |will |happen |to |the |price |of |tea?
A |fall |in |the |price |of |tea |since |tea |buyers |now |must |pay |more |for |coffee.
A |rise |in |the |price |of |tea |because |the |supply |of |tea |increases.
No |change |since |coffee |supplies |do |not |affect |the |tea |market.
A |rise |in |the |price |of |tea |because |the |demand |for |tea |increases. |- |VERIFIED |ANSWER✔✔-A |rise |in |the
|price |of |tea |because |the |demand |for |tea |increases.
Refer |to |the |following |graph |that |shows |the |production |possibilities |curve |of |an |economy |that
|produces |two |goods: |wine |and |cheese. |If |the |economy |is |currently |operating |at |point |D,
the |opportunity |cost |of |moving |to |point |B |is |zero.
the |economy |faces |capital |constraints |and |cannot |move |beyond |point |D.
the |marginal |cost |of |moving |to |point |B |is |200 |bottles |of |wine.
the |current |consumption |level |in |the |economy |is |too |high. |- |VERIFIED |ANSWER✔✔-the |opportunity
|cost |of |moving |to |point |B |is |zero.
Efficient |production |occurs
, on |the |points |on |the |production |possibilities |frontier.
on |the |production |possibilities |frontier |or |at |points |beyond |the |production |possibilities |frontier.
on |the |production |possibilities |frontier |or |inside |the |production |possibilities |frontier.
on |the |points |inside |the |production |possibilities |frontier. |- |VERIFIED |ANSWER✔✔-on |the |points |on |the
|production |possibilities |frontier.
Price |ceilings |tend |to |create |imbalances |in |the |market |as
the |surplus |created |by |price |ceilings |leads |to |very |high |levels |of |investment.
quantity |demanded |exceeds |quantity |supplied, |but |price |cannot |fall |to |remove |the |surplus.
quantity |demanded |exceeds |quantity |supplied, |but |price |cannot |rise |to |remove |the |shortage.
the |surplus |created |by |price |ceilings |leads |to |a |problem |of |disposal. |- |VERIFIED |ANSWER✔✔-quantity
|demanded |exceeds |quantity |supplied, |but |price |cannot |rise |to |remove |the |shortage.
Refer |to |the |following |table. |At |a |price |of |$3, |there |is |a
shortage |of |100 |pairs |of |socks.
shortage |of |600 |pairs |of |socks.
surplus |of |600 |pairs |of |socks.
surplus |of |100 |pairs |of |socks. |- |VERIFIED |ANSWER✔✔-shortage |of |600 |pairs |of |socks.
A |decrease |of |which |of |the |following |would |shift |the |supply |curve |of |gasoline |to |the |left?
The |number |of |gasoline |producers
The |price |of |gasoline
The |demand |for |gasoline
The |price |of |crude |oil, |which |is |an |input |in |the |gasoline |production |process |- |VERIFIED |ANSWER✔✔-
The |number |of |gasoline |producers
Which |economist |first |explained |the |principle |of |comparative |advantage?
