Question

2. A demand curve indicate

a. the maximum willingness to pay for a given quantity

b.the consumer's gain from exchange

c.the market price of a good or service

d. the equilibrum quantity

3. trade permitts countries to

a. consume more than they capable of producing

b.produce based on their comparative advantage

c.specialize more fully

d.all of above

4. which of the following dose not impact how elastic supply is?

a. whether the supply is local or global

b.the share of the input market the product takes up

c. whether or not the product in question is a name brand or a generic

d. how quickly per unit cost increase

5.A comparative advantage exists if

a. one country has a lower opportunity cost of producing a good than another country

b. one country is more productive that another in producing a good

c. one country cannot produce a good that another country can

d. one country has lower cost of production than another country

6. A movement along the demand curve is reffered to as an

a. change in demand

b. increase in income

c. change in quantity demanded

d. decrease in price

7. The price of wheat has decreased. Farmers observe this and react. what is the most likely outcome?

a. a decresed supply of corn

b. a increased supple of corn

c. a increased supply of wheat

d. a decreased supply of cows

8. Trade makes people worse off when

a. industrialized countries trade with developing countries

b.a country with an absolute advantage trades with a country that lacks any absolute advantage.

c. low productivity countries trade with high productivity countries

d. Societies are always better off with trade than without trade

9. which of the following is an application of marginal analysis?

a. dave performs a financial analysis to determine if his landscaping business should remain open

b. scott weighs the benefits of running an extra mile against how much work he has to do after his run

c. billy determines the average cost of building a dog house

d. carlos calculate the total cost necessary to open a farmers' market

10. Which of the following illustrates opportunity cost?

a. an additional gallon of gasoline costs $1.99.

b. taking a new job requires you to give up playing rec league softball

c. the set of drill bits that go with a new cordless drill cost $19.99

d. a torn pair of dress pants can be fixed for $7.50 or replaced for $35.00

11. A tariff on imports will

a. increase domestic production

b. decrease imports

c. produce government revenue

d. ...

12. Gains from trade are maximized when

a. consumer surplus is maximized

b. prices are lowest

c. there are no unexploited gains from trade

d.consumers willingness to pay exceeds the cost of production

13. If the price of orange juice increases 11 percent and the quantity demanded decreases by 8 percent, calculate the elasticity of demand.

a. -1.375

b.-0.73

c.-1.03

d. There is not enough information to find the elasticity

14.The price of gasoline has increased. What will happen in the short run and long run in the automobile market?

15 Producer surplus tells us

a. how much producers gain from exchange

b. the equilibrum quantity

c. what consumers are willing to pay

d. the cost of production

16. Which of the following is an example of trade that is beneficial due to preferences differing?

a. will sells Chris vinyl records that he no longer wants

b. Julee trade cookies to joy in exchange for beet chips

c. Jim specialized in electrical work and trades for lawn care services

d. Martha manages a stock portfolio while hiring someone to clean her house

17. A hurricane is approaching Louisiana. Which of the following will lumber sellers do in anticipation?

a. increase the supply of plywood

b. decrease the supply of plywood

c. decrease the price of plywood

d. shutdown until the hurricane has passed

18. Using the concept of elasticities, explain why drug prohibition law are largely ineffective at reducing drugs use.

19.when a tariff is introduced on a good. Which of the following is true?

a. the domestic country is made better off

b. domestic producer surplus increases

c. imports increase

d.domestic consumer welfare increases

20. when Miranda's income increases, she purchases more frozen pizza. For her, frozen pizza is an

a. normal good

b. Substitute good

c. inferior good

d. preferred good.

21. Which of the following is an example of comparative advantage?

a. me carrying the feed bucket and water can back from the chicken pen because i am stronger than my son is

b. i dust when my wife isn't around due to dust activating her allergies

c. my son carrying the feed bucket back from the chicken pen while i carry the water cans

d. my wife telling me i can either load the dishwasher or take out the trash

22. The government places a tax on sugary sodas. Which of the following will occur?

a. the price of soda will increase

b. the supply of soda will shift to the right

c. the supply of soda will increase

d. the price of sodas will decrease

23. what group in a country lose as a result of a tariff?

a.gavernment

b. domestic producers

c. Domestic consumers

d. all of above lose

24. What insight has experimental economics given to the field of economics?

25. Which of the following is true at equilibrium?

a. all of above

b. unexploited gains from trade remain in the market

c. producer surplus is maximized

d. quantity supplied equals quantity demanded

26. A new tariff is placed on imported cars in the amount of $2,000 per car. if 900,000 cars were imported before the tariff and 825,000 are after the tariff then

a. the government gets tariff revenue of $150 million

b. consumers surplus decreases by $1.8 billion

c. the government gets tariff revenue of $1.65 billion

d.75,000 more domestic cars are sold after the tariff

27. Tariff produce deadweight losses due to

a. a reduction in the number of trades

b. domestic producer profits increasing

c. an increase in imports

d. the government receiving tax revenue

28. If as the price of stesk increases, the demand for eggplant increases then steak and eggplant are

a. Complements

b. Substitute

c. inferior goods

d. Normal goods

29. A quota is

a. a tax on imports

b. a tax on exports

c. a prohibition on International trade

d. a limit on the amount of imports

30. the price of cotton had increased. which of the following will occur in the market for cotton shirts?

a.the demand will decrease

b.the price of cotton shirts will increase

c. the quantity supplied will increase

d. the supply will decrease

31. A recent study found that coffee has health benefits. which of the following is most likely to occur?

a. the supply of coffee will increase

b. the demand for coffee will increase

c. the supply of coffee will decrease

d. the price of coffee will decrease

32. Which of the following would have the most inelastic demand?

a. airline tickets

b. chicken thighs

c. table salt

d. dr. pepper

Answer 1

2. Ans is A. Demand curve shows maximum willingness to pay for various level of quantity and there is an inverse relation between price and quantity demanded.

3. Ans is D. Trade is beneficial when countries produces according to comparative advantage and countries specilaize completely and then both countries can consume beyond their PPF.

4. Ans is D. Cost of production doesnot change the elasticity of supply and the rate at which cost changes, will shift the supply curve

5. Ans is A. A country has a comparative advantage in a good in which it has lower opportunity cost.

6.c. when price changes then dewmnd changes and this change in demand is known as change in quantity demanded and there will be movement along the demand curve