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Economics Final Exam [Chap. 3-4]

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Hell on Earth Economics [Teacher: Abdinova Makpal ; Final Exam + Quizzes] ▼ (Final Exam Prep) Quiz on Economics Final Exam [Chap. 3-4], created by Good Guy Beket on 27/12/2018.
Good Guy Beket
Quiz by Good Guy Beket, updated more than 1 year ago
Good Guy Beket
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Question 1

Question
If a nation has an absolute advantage in the production of a good,
Answer
  • it can benefit by restricting imports of that good.
  • it will specialize in the production of that good and export it.
  • it can produce that good using fewer resources than its trading partner.
  • none of these answers.
  • it can produce that good at a lower opportunity cost than its trading partner.

Question 2

Question
If a nation has a comparative advantage in the production of a good,
Answer
  • it can produce that good at a lower opportunity cost than its trading partner.
  • it can benefit by restricting imports of that good.
  • it can produce that good using fewer resources than its trading partner.
  • it must be the only country with the ability to produce that good.
  • none of these answers.

Question 3

Question
Which of the following statements about trade is true?
Answer
  • Unrestricted international trade benefits every person in a country equally.
  • Trade can benefit everyone in society because it allows people to specialize in activities in which they have a comparative advantage.
  • People that are skilled at all activities cannot benefit from trade.
  • Trade can benefit everyone in society because it allows people to specialize in activities in which they have an absolute advantage.

Question 4

Question
According to the principle of comparative advantage,
Answer
  • countries should specialize in the production of goods that they enjoy consuming.
  • countries with a comparative advantage in the production of every good need not specialize.
  • countries should specialize in the production of goods for which they have a lower opportunity cost of production than their trading partners.
  • countries should specialize in the production of goods for which they use fewer resources in production than their trading partners.

Question 5

Question
Which of the following statements is true?
Answer
  • A self-sufficient country can, at best, consume on its production possibilities frontier.
  • Only countries with an absolute advantage in the production of every good should strive to be self-sufficient.
  • A self-sufficient country consumes outside its production possibilities frontier.
  • Self-sufficiency is the road to prosperity for most countries.

Question 6

Question
Suppose a country's workers can produce 4 watches per hour or 12 rings per hour. If there is no trade,
Answer
  • the domestic price of 1 ring is 1/4 of a watch.
  • the domestic price of 1 ring is 3 watches.
  • the domestic price of 1 ring is 1/3 of a watch.
  • the domestic price of 1 ring is 12 watches.
  • the domestic price of 1 ring is 4 watches.

Question 7

Question
Suppose a country's workers can produce 4 watches per hour or 12 rings per hour. If there is no trade,
Answer
  • the opportunity cost of 1 watch is 1/4 of a ring.
  • the opportunity cost of 1 watch is 4 rings.
  • the opportunity cost of 1 watch is 3 rings.
  • the opportunity cost of 1 watch is 12 rings.
  • the opportunity cost of 1 watch is 1/3 of a ring.

Question 8

Question
Refer to Figure 3-1. Which of the following statements about absolute advantage is true?
Image:
Screenshot 3 (binary/octet-stream)
Answer
  • Australia has an absolute advantage in the production of food while Korea has an absolute advantage in the production of electronics.
  • Korea has an absolute advantage in the production of food while Australia has an absolute advantage in the production of electronics.
  • Australia has an absolute advantage in the production of both food and electronics.
  • Korea has an absolute advantage in the production of both food and electronics.

Question 9

Question
Refer to Figure 3-1. The opportunity cost of 1 unit of electronics in Australia is
Image:
Screenshot 3 (binary/octet-stream)
Answer
  • 4 units of food.
  • 5 units of food.
  • 1/5 of a unit of food.
  • 1/4 of a unit of food.

Question 10

Question
Refer to Figure 3-1. The opportunity cost of 1 unit of electronics in Korea is
Answer
  • 4 units of food.
  • 1/4 units of food.
  • 2 units of food.
  • 1/2 of a unit of food.

Question 11

Question
Refer to Figure 3-1. The opportunity cost of 1 unit of food in Australia is
Image:
Screenshot 3 (binary/octet-stream)
Answer
  • 1/5 of a unit of electronics.
  • 5 units of electronics.
  • 4 units of electronics.
  • 1/4 of a unit of electronics.

Question 12

Question
Refer to Figure 3-1. The opportunity cost of 1 unit of food in Korea is
Answer
  • 1/2 of a unit of electronics.
  • 1/4 units of electronics.
  • 2 units of electronics.
  • 4 units of electronics.

Question 13

Question
Refer to Figure 3-1. Which of the following statements about comparative advantage is true?
Image:
Screenshot 3 (binary/octet-stream)
Answer
  • Australia has a comparative advantage in the production of both food and electronics.
  • Korea has a comparative advantage in the production of both food and electronics.
  • Australia has a comparative advantage in the production of food while Korea has a comparative advantage in the production of electronics.
  • Korea has a comparative advantage in the production of food while Australia has a comparative advantage in the production of electronics.
  • Neither country has a comparative advantage.

Question 14

Question
Refer to Figure 3-1. Korea should
Image:
Screenshot 3 (binary/octet-stream)
Answer
  • produce neither good because it has an absolute disadvantage in the production of both goods.
  • specialize in electronics production, export electronics, and import food.
  • produce both goods because neither country has a comparative advantage.
  • specialize in food production, export food, and import electronics

Question 15

Question
Refer to Figure 3-1. Prices of electronics can be stated in terms of units of food. What is the range of prices of electronics for which both countries could gain from trade?
Image:
Screenshot 3 (binary/octet-stream)
Answer
  • The price must be greater than 1/5 of a unit of food but less than 1/4 of a unit of food.
  • The price must be greater than 4 units of food but less than 5 units of food.
  • The price must be greater than 1/4 of a unit of food but less than 1/2 of a unit of food.
  • The price must be greater than 2 units of food but less than 4 units of food.

Question 16

Question
Suppose the world consists of two countries: the UK and Spain. Further, suppose there are only two goods--food and clothing. Which of the following statements is true?
Answer
  • If the UK has an absolute advantage in the production of food, then Spain must have an absolute advantage in the production of clothing.
  • none of these answers.
  • If the UK has a comparative advantage in the production of food, Spain might also have a comparative advantage in the production of food.
  • If the UK has a comparative advantage in the production of food, it must also have a comparative advantage in the production of clothing.
  • If the UK has a comparative advantage in the production of food, then Spain must have a comparative advantage in the production of clothing.

Question 17

Question
Use the production possibilities frontiers in Exhibit 4 to answer the question. Assume each country has the same number of workers, say 20 million, and that each axis is measured in metric tons per month. Argentina has a comparative advantage in the production of
Image:
Screenshot 4 (binary/octet-stream)
Answer
  • neither fruit nor beef.
  • fruit
  • both fruit and beef.
  • beef

Question 18

Question
Use the production possibilities frontiers in Exhibit 4 to answer the question. Assume each country has the same number of workers, say 20 million, and that each axis is measured in metric tons per month. Peru will export
Image:
Screenshot 4 (binary/octet-stream)
Answer
  • both fruit and beef.
  • beef.
  • fruit
  • neither fruit nor beef.

Question 19

Question
Use the production possibilities frontiers in Exhibit 4 to answer the question. Assume each country has the same number of workers, say 20 million, and that each axis is measured in metric tons per month. The opportunity cost of producing a metric ton of beef in Peru is
Image:
Screenshot 4 (binary/octet-stream)
Answer
  • 1/3 ton of fruit.
  • 6 tons of fruit.
  • 1 ton of fruit.
  • 2 tons of fruit.
  • 3 tons of fruit.

Question 20

Question
Joe is a tax accountant. He receives €100 per hour doing tax returns. He can type 10,000 characters per hour into spreadsheets. He can hire an assistant who types 2,500 characters per hour into spreadsheets. Which of the following statements is true?
Answer
  • none of these answers.
  • Joe should hire the assistant as long as he pays the assistant less than €25 per hour.
  • Joe should not hire an assistant because the assistant cannot type as fast as he.
  • Joe should hire the assistant as long as he pays the assistant less than €100 per hour.

Question 21

Question
A perfectly competitive market has
Answer
  • firms that set their own prices.
  • only one seller.
  • at least a few sellers.
  • many buyers and sellers.
  • none of these answers.

Question 22

Question
If an increase in the price of blue jeans leads to an increase in the demand for tennis shoes, then blue jeans and tennis shoes are
Answer
  • complements.
  • inferior goods.
  • normal goods.
  • none of these answers.
  • substitutes

Question 23

Question
The law of demand states that an increase in the price of a good
Answer
  • increases the supply of that good.
  • decreases the quantity demanded for that good.
  • decreases the demand for that good.
  • increases the quantity supplied of that good.
  • none of these answers.

Question 24

Question
The law of supply states that an increase in the price of a good
Answer
  • none of these answers.
  • increases the quantity supplied of that good.
  • increases the supply of that good.
  • decreases the demand for that good.
  • decreases the quantity demanded for that good.

Question 25

Question
If an increase in consumer incomes leads to a decrease in the demand for camping equipment, then camping equipment is
Answer
  • a normal good.
  • none of these answers.
  • an inferior good.
  • a substitute good.
  • a complementary good.

Question 26

Question
A monopolistic market has
Answer
  • many buyers and sellers.
  • none of these answers.
  • firms that are price takers.
  • only one seller.
  • at least a few sellers.

Question 27

Question
Which of the following shifts the demand for watches to the right?
Answer
  • an increase in the price of watches
  • none of these answers
  • a decrease in the price of watch batteries if watch batteries and watches are complements
  • a decrease in consumer incomes if watches are a normal good
  • a decrease in the price of watches

Question 28

Question
All of the following shift the supply of watches to the right except
Answer
  • an advance in the technology used to manufacture watches.
  • an increase in the price of watches.
  • All of these answers cause an increase in the supply of watches.
  • a decrease in the wage of workers employed to manufacture watches.
  • manufacturers' expectation of lower watch prices in the future.

Question 29

Question
If the price of a good is above the equilibrium price,
Answer
  • there is a surplus and the price will rise.
  • there is a shortage and the price will fall.
  • there is a shortage and the price will rise.
  • the quantity demanded is equal to the quantity supplied and the price remains unchanged.
  • there is a surplus and the price will fall.

Question 30

Question
If the price of a good is below the equilibrium price,
Answer
  • there is a shortage and the price will rise.
  • the quantity demanded is equal to the quantity supplied and the price remains unchanged.
  • there is a shortage and the price will fall.
  • there is a surplus and the price will rise.
  • there is a surplus and the price will fall.

Question 31

Question
If the price of a good is equal to the equilibrium price,
Answer
  • there is a shortage and the price will fall.
  • the quantity demanded is equal to the quantity supplied and the price remains unchanged.
  • there is a surplus and the price will rise.
  • there is a shortage and the price will rise.
  • there is a surplus and the price will fall.

Question 32

Question
An increase (rightward shift) in the demand for a good will tend to cause
Answer
  • an increase in the equilibrium price and quantity.
  • none of these answers.
  • an increase in the equilibrium price and a decrease in the equilibrium quantity.
  • a decrease in the equilibrium price and an increase in the equilibrium quantity.
  • a decrease in the equilibrium price and quantity.

Question 33

Question
A decrease (leftward shift) in the supply for a good will tend to cause
Answer
  • an increase in the equilibrium price and quantity.
  • a decrease in the equilibrium price and an increase in the equilibrium quantity.
  • none of these answers.
  • a decrease in the equilibrium price and quantity.
  • an increase in the equilibrium price and a decrease in the equilibrium quantity.

Question 34

Question
Suppose there is an increase in both the supply and demand for personal computers. In the market for personal computers, we would expect
Answer
  • the equilibrium quantity to rise and the equilibrium price to rise.
  • the equilibrium quantity to rise and the equilibrium price to fall.
  • the equilibrium quantity to rise and the equilibrium price to remain constant.
  • the change in the equilibrium quantity to be ambiguous and the equilibrium price to rise.
  • the equilibrium quantity to rise and the change in the equilibrium price to be ambiguous.

Question 35

Question
Suppose there is an increase in both the supply and demand for personal computers. Further, suppose the supply of personal computers increases more than demand for personal computers. In the market for personal computers, we would expect
Answer
  • the change in the equilibrium quantity to be ambiguous and the equilibrium price to fall.
  • the equilibrium quantity to rise and the equilibrium price to rise.
  • the equilibrium quantity to rise and the change in the equilibrium price to be ambiguous.
  • the equilibrium quantity to rise and the equilibrium price to fall.
  • the equilibrium quantity to rise and the equilibrium price to remain constant.

Question 36

Question
Which of the following statements is true about the impact of an increase in the price of lettuce?
Answer
  • Both the demand for lettuce will decrease and the equilibrium price and quantity of salad dressing will fall.
  • The supply of lettuce will decrease.
  • The demand for lettuce will decrease.
  • The equilibrium price and quantity of salad dressing will fall.
  • The equilibrium price and quantity of salad dressing will rise.

Question 37

Question
Suppose a frost destroys much of the Florida orange crop. At the same time, suppose consumer tastes shift toward orange juice. What would we expect to happen to the equilibrium price and quantity in the market for orange juice?
Answer
  • Price will decrease; quantity is ambiguous.
  • The impact on both price and quantity is ambiguous.
  • Price will increase; quantity will increase.
  • Price will increase; quantity will decrease.
  • Price will increase; quantity is ambiguous.

Question 38

Question
Suppose consumer tastes shift toward the consumption of apples. Which of the following statements is an accurate description of the impact of this event on the market for apples?
Answer
  • There is an increase in the quantity demanded of apples and in the supply for apples.
  • There is an increase in the demand and supply of apples.
  • There is an increase in the demand for apples and a decrease in the supply of apples.
  • There is a decrease in the quantity demanded of apples and an increase in the supply for apples.
  • There is an increase in the demand for apples and an increase in the quantity supplied of apples.

Question 39

Question
Suppose both buyers and sellers of wheat expect the price of wheat to rise in the near future. What would we expect to happen to the equilibrium price and quantity in the market for wheat today?
Answer
  • The impact on both price and quantity is ambiguous.
  • Price will decrease; quantity is ambiguous.
  • Price will increase; quantity will decrease.
  • Price will increase; quantity is ambiguous.
  • Price will increase; quantity will increase.

Question 40

Question
An inferior good is one for which an increase in income causes a(n)
Answer
  • decrease in supply.
  • increase in demand.
  • increase in supply.
  • decrease in demand.
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