test bank

test bank William Gregg owned a mill in South Carolina. In December 1862, he placed a notice in the Edgehill Advertiser announcing his willingness to exchange cloth for food and other items. Here is an extract: - CORRECT ANSWERS buy bacon and trade it for cloth because they could buy 8 yards of cloth for only $1.60, and use that cloth to obtain a bushel of salt. The opportunity cost of good A in terms of good B is equal to the - CORRECT ANSWERS ratio of the money price of good A to the money price of good B. The opportunity cost of a hot dog in terms of hamburgers is - CORRECT ANSWERS the ratio of the money price of a hot dog to the money price of a hamburger. In April 2014, the money price of a litre of milk was $2.01 and the money price of a litre of gasoline was $1.30. The real price of a litre of gasoline in terms of milk was - CORRECT ANSWERS 0.65 litres of milk. 1) The law of demand states that, other things remaining the same, - CORRECT ANSWERS A) the higher the price of a good, the smaller is the quantity demanded. 2) Which one of the following events shifts the demand curve for grape jelly to the right? - CORRECT ANSWERS A) an increase in income if grape jelly is a normal good 3) The demand curve slopes downward to the right because - CORRECT ANSWERS C) of the law of demand. 6) A turnip is an inferior good if - CORRECT ANSWERS B) an increase in income decreases the demand for turnips. 7) If a turnip is an inferior good, then, ceteris paribus, an increase in the price of a turnip will - CORRECT ANSWERS E) decrease the quantity of turnips demanded. 17) The price of good X falls and the demand for good Y decreases. We can conclude that - CORRECT ANSWERS E) X and Y are substitutes. 20) Good A is a normal good if - CORRECT ANSWERS D) the demand for A increases when income rises. 26) Consider the market for cell phones. Suppose the price of a cell phone falls. Explain the effect of this event on the quantity of cell phones demanded and on the demand for cell phones. - CORRECT ANSWERS C) The quantity of cell phones demanded increases and the demand for cell phones is unchanged. 28) Oatmeal is a normal good and cold cereal is a substitute for oatmeal. Raisins are a complement of oatmeal. Which of the following increases the demand for oatmeal? - CORRECT ANSWERS D) an increase in the price of cold cereal 30) The Government of Canada promises to produce more defence goods without any decrease in the production of other goods. This promise is valid - CORRECT ANSWERS C) if Canada is producing at a point inside its PPF. 32) The substitution effect influences food purchases because when the price of a certain food rises, other things remaining the same, ________. Consumers ________. - CORRECT ANSWERS C) its relative price rises; purchase more of a different food that is less expensive 1) The law of supply tells us that other things remaining the same, as the - CORRECT ANSWERS A) price of gasoline falls, the quantity of gasoline supplied decreases. 2) The supply curve of a good slopes upward to the right because of - CORRECT ANSWERS B) the law of supply. 3) An increase in supply is shown by - CORRECT ANSWERS C) a rightward shift of the supply curve. 4) If goods X and Y are substitutes in production, then a rise in the price of good X - CORRECT ANSWERS D) decreases the supply of good Y. 5) If a producer can use its factors of production to produce either good A or good B,