ASU ECON 211 FINAL EXAM
QUESTIONS WITH ANSWERS +
⩥ What is a normative statement? Answer: Policymakers should
increase the minimum wage to improve standard of living.
⩥ The opportunity cost of helping a friend move is... 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?
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. 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? Answer: Wheat
⩥ The law of the demand states that if price rises, quantity demanded
does what? Answer: Decreases
, ⩥ We would expect demand for cars to increase if... Answer: The price
of gasoline falls.
⩥ As income increases, consumers purchase more cars. Cars what type
of good? Answer: Normal goods
⩥ Supply curves show the relationship between price and quantity
demanded. Assuming the law of supply holds, supply curves are what?
Answer: Upward sloping
⩥ Which causes a leftward shift in the supply curve for apples? Answer:
An increase in the price of labor
⩥ An increase in the equilibrium price of coffee could be caused by
Answer: A decrease in supply of coffee.
⩥ What is Consumer surplus? 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? Answer: The sum of consumer and
producer surplus is maximized.
QUESTIONS WITH ANSWERS +
⩥ What is a normative statement? Answer: Policymakers should
increase the minimum wage to improve standard of living.
⩥ The opportunity cost of helping a friend move is... 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?
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. 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? Answer: Wheat
⩥ The law of the demand states that if price rises, quantity demanded
does what? Answer: Decreases
, ⩥ We would expect demand for cars to increase if... Answer: The price
of gasoline falls.
⩥ As income increases, consumers purchase more cars. Cars what type
of good? Answer: Normal goods
⩥ Supply curves show the relationship between price and quantity
demanded. Assuming the law of supply holds, supply curves are what?
Answer: Upward sloping
⩥ Which causes a leftward shift in the supply curve for apples? Answer:
An increase in the price of labor
⩥ An increase in the equilibrium price of coffee could be caused by
Answer: A decrease in supply of coffee.
⩥ What is Consumer surplus? 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? Answer: The sum of consumer and
producer surplus is maximized.
