Macro test 1

1.Which of the following best explains why scarcity exists?

Human wants are unlimited, but resources are limited

2. Maria spends an hour working at her part-time job instead of going to the movies with her friends. The opportunity cost to her of working is

the enjoyment she would have received if she had gone to the movies with her friends

3. Amara has to prepare for two projects and can employ one of two possible strategies: The opportunity cost of receiving a 95 on the finance project is ____ points on the marketing
project.

20

4. A bakery sells a batch of cupcakes for $12. Adding 3 ounces of sprinkles increases the batch's value to $18. According to marginal analysis, the owner should add the sprinkles only if they cost less than:

$2.00 per ounce.

5. Suppose your economics professor is offered a research fellowship with a 20 percent pay increase, and she accepts the offer. For her, the marginal benefit of this fellowship is

greater than its marginal cost

6. Which of the factors of production would a plot of farmland be classified as?

land

7.Exhibit 1: Efficient production is represented by which point(s)?

F, I, H, and J

8. Exhibit 1: Inefficient use of resources, could cause this economy to produce at which point(s)?

K

9.Exhibit 1: Which of the following moves would represent an increase in economic efficiency?

K to I

10. Exhibit 1: The opportunity cost of this economy moving from point I to point H is

120 blankets.

11. Exhibit 1: As more and more pillows are produced the opportunity cost of producing an
additional pillow

increases

12. Refer to Exhibit 2. Which graph depicts a technological breakthrough and/or an increase in one of the factors of production that affects only the production of good X?

(3)

13. Based on the supply and demand schedule below, what is the equilibrium price and quantity?

$10 and 70

14. Suppose the price of textbooks is set at $60 a copy, but the equilibrium price of textbooks is $75 a copy. We would expect a _____ to exist and the market price of textbooks to _____.

shortage; increase.

15. Suppose the price of designer sneakers is set at $250 a pair, but the equilibrium price of designer sneakers is $200 a pair. We would expect a _____ to exist and the market price of designer sneakers to _____.

surplus; decrease

16. According to the law of demand, an increase in the price of a good will

decrease quantity demanded

17. If consumers expect the price of winter coats to increase significantly next month due to a new import tariff, current demand for winter coats will:

increase now

18. Suppose air travel is a normal good and bus tickets are an inferior good. If consumer incomes increase, we would expect demand for air travel to _____ and demand for bus tickets to _____.

increase; decrease

19. Suppose Pepsi and Coke are substitute goods, while gaming consoles and video games are complementary goods. If the price of Pepsi increases and the price of gaming consoles decreases, we would expect demand for Coke to _____ and demand for video games to _____.

increase; increase

20. Suppose a new study reveals that consuming green tea significantly reduces the risk of heart disease. This would most likely cause the demand curve for green tea to shift to the _____, equilibrium quantity to _____, and equilibrium price to _____.

right; increase; increase

21. According to the law of supply, a decrease in the price of avocados will cause the avocado market to experience

a decrease in quantity supplied

22. Suppose almond farmers expect the price of almonds to fall significantly within the next six months. We would expect the current supply curve for almonds to

shift rightward

23. Suppose the government offers a tax credit that lowers production costs for tea producers. The supply curve for tea will shift to the _____, causing equilibrium price to _____ and equilibrium quantity to _____.

right; decrease; increase

24. Suppose a shortage of raw lumber forces furniture manufacturers to use a less efficient production process. This would cause the supply curve for furniture to shift to the ______, equilibrium price to ______, and equilibrium quantity to ______.

left; increase; decrease

25. Assume that laptops are a normal good. The economy has been in a downturn, so consumer incomes have recently decreased. At the same time, the cost of semiconductor chips, which are used in the production of laptops, has risen significantly. The impact of these two events on the market equilibrium for laptops is that price would _____ and quantity would _____.

be ambiguous; decrease