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ECON312N Principles of Economics Week 1 Homework

ECON312N Principles of Economics Week 1 Homework

ECON312N Principles of Economics

Week 1 Homework

Question 1

Label each entry in the list as dealing with a microeconomic topic or a macroeconomic topic. Type microeconomic or macroeconomic for each item.

Motor vehicle production in China is growing by 10 percent a year.

Coffee prices rocket.

Globalization has reduced African poverty.

The government must cut its budget deficit.

microeconomic Apple sells 20 million iPhone 6 a month.

Question 2

A professor changes the penalty for cheating on exams from getting a 0 on the exam to getting an F in the course. The professor has

recognized that students don’t respond to incentives.

increased the marginal cost of cheating.

decreased the marginal benefit of cheating.

made all the students act in the social interest.

recognized that students don’t make rational choices.

 

Question 3

John has two hours of free time this evening. He ranked his alternatives, first go to a concert, second go to a movie, third study for an economics exam, and fourth answer his e-mail. What is the opportunity cost of attending the concert for John?

attending a movie

studying for an economics exam

answering his e-mail

going to the concert because that is what John choose to do

attending a movie, studying for an economics exam, and answering his e-mail

 

Question 4

The vertical axis in a graph

has no origin.

measures time only in a time series graph.

measures time in a cross-section and time series graph.

is named the x-axis.

is named the y-axis.

 

Question 5

If workers in Mexico produce fewer goods and services per hour than workers in the United States in all areas of production, then

both the United States and Mexico will benefit from trade with the other.

the United States will benefit from trade with Mexico but Mexico will not.

Mexico will benefit from trade with the United States but the United States will not.

it is unknown whether either country can benefit from trade with the other.

neither Mexico nor the United States will benefit from trade with the other.

 

Question 6

In a production possibilities frontier graph, the cost of producing more units of a good is measured by the

None of the above answers is correct.

area in the arc between the PPF and a straight line drawn between the starting point and the ending point.

dollar value of the resources used to produce the good.

dollar value of the additional output.

amount of the other good or service that must be forgone.

 

Question 7

If Jessie studies economics for two hours instead of going to the movies with her friends, then

the benefit of studying is the missed movie.

Jessie is not responding to any incentives.

the opportunity cost of studying is the missed movie.

Jesse definitely is making a rational choice.

Jessie is ignoring a sunk cost.

 

Question 8

Which of the following is the best definition of economic growth?

The opportunity cost of consumption

The investment in capital and consumption goods by an economy

The sustained expansion of production possibilities

Increased development of land and entrepreneurship

The opportunity cost of capital

 

Question 9

The figure above shows the relationship between the price of a dozen roses and the quantity of roses a florist can sell. The slope between points A and B is

16.

2.

nonexistent because at point A, no roses are sold.

4

20.

 

Question 10

When Ford decides to increase production of hybrid cars, it directly answers the ________ question.

where

how

for whom

why

what

 

Question 11

Because human wants are insatiable and unlimited while available resources are limited, people are said to face the problem of

scarcity.

social interest versus self-interest.

why to produce.

macroeconomics.

microeconomics.

 

Question 12

Economics is the social science that studies

the real reasons people buy goods and services.

whether a nation has enough natural resources.

the psychology of individuals and businesses.

how people make choices to cope with scarcity.

how choices made in the social interest could eliminate scarcity.

 

Question 13

A country has a comparative advantage in the production of a good if it can

tradeoff producing the good for another good.

produce more of the good most efficiently.

produce the good at the lowest opportunity cost.

produce the good on and remain on its production possibilities frontier.

produce more of the good than another country.

 

Question 14

“As the price of gasoline increases, fewer people buy cars that are gas guzzlers.” A graph showing this relationship would

have a positive relationship.

be a horizontal line.

have a negative slope.

be a vertical line.

have a direct relationship.

 

Question 15

A graph shows the average SAT scores for males and females in 2012. The kind of graph used to show these data would be a

time-series graph.

time-stationary graph.

scatter diagram.

trend figure.

cross-section graph.

 

Question 16

Suppose that Germany, France, Estonia, and India all have the same production possibilities, illustrated in the figure above. Based on the production points in the figure, which country is most likely to expand its PPF to PPF3?

India

France and Germany equally

France

Estonia

Germany

 

Question 17

If a nation devotes a larger share of its current production to consumption goods, then

its economic growth will slow down.

it must produce at a point within its PPF.

its PPF will shift inward.

its PPF will shift outward.

some productive factors will become unemployed.

 

Question 18

Hank requires 1 hour to cut the grass and 3 hours to clean the house. His sister Holly requires 1 hour to cut the grass and 4 hours to clean the house. Which of the following statements is true?

Holly has a comparative advantage in cutting the grass.

Hank has a lower opportunity cost of cutting the grass.

Hank has a comparative advantage in both cutting the grass and cleaning the house.

Hank has an absolute advantage in both cutting the grass and cleaning the house.

Hank and Holly both have a comparative advantage in cutting the grass.

 

Question 19

The above figure shows the production possibility frontier for an economy. The point or points that are attainable and production efficient are

points A, B, C, and D.

points B and C.

points A, B, and C.

points A and D.

point E.

 

Question 20

When Fresh Express Salads decides to mechanically pick all of its lettuce, it directly answers the ________ question.

for whom

where

what

how

when

 

Question 21

As a shoe factory adds more workers, shoe production grows, reaches a maximum, and then shrinks. In a diagram that has the number of workers on the horizontal axis and the number of shoes on the vertical axis, the relationship between the number of workers and the number of shoes starts as ________ and then, after the maximum point, is ________.

positive; negative

positive; nonexistent

positive; linear

linear; negative

negative; positive

 

Question 22

In the above figure, a negative relationship between x and y is shown in Figure

B.

C.

D.

A.

B and C.

 

Question 23

Canada has nationalized health care, so that everyone, regardless of their ability to pay, has some access to health care. Based on this observation, Canada has decided that “everyone, regardless of their ability to pay” is the answer to what microeconomic question?

For whom will health care be produced?

How will health care be produced?

What type of health care will be produced and in what quantity?

Must we offer health care?

Why will we offer health care?

 

Question 24

For country Gamma, the opportunity cost for producing 1 computer is 10 tons of steel. For country Beta, the opportunity cost for producing 1 computer is 6 tons of steel. Which country has the comparative advantage in the production of steel?

Neither country has the comparative advantage in the production of steel.

More information is needed to determine which of the two nations has the comparative advantage.

Beta

Both have the comparative advantage in the production of steel.

Gamma

 

Question 25

A graph shows the wage rate of factory workers. The slope of the line is positive for periods when the wage rate is

high and falling.

low and falling.

rising.

falling.

high and not changing.

 

Question 26

Which of the following would most likely cause a country’s production possibilities set to shift outward at every point along the frontier?

a decrease in idle capital

a general technological advance that affects all sectors of the economy

none of the above

a technological advance in only one sector of the economy

a decrease in unemployment

 

Question 27

A major earthquake occurs in the central part of the United States. What impact would this have on the nation’s production possibilities frontier and why?

It would shift inward because some of the nation’s resources, such as capital and labor, would be destroyed.

Nothing would happen because the nation would still have the same capabilities.

It would shift outward because unemployment would be reduced.

A tradeoff would occur to replace the resources and goods destroyed.

It would not shift because people would get to work to replace any capital that was destroyed.

 

Question 28

The decision to go to graduate school is a rational one for a college student if the

opportunity cost of graduate school equals zero.

marginal benefit of graduate school exceeds the marginal cost.

student carefully compared the social benefits of this decision.

marginal cost exceeds the marginal benefit of graduate school.

cost is not too great.

 

Question 29

If John can produce 10 chairs or 20 lamps during a week while Mary can produce 12 chairs or 22 lamps in the same time, who has the absolute advantage in producing each good?

Mary in producing chairs, John in producing lamps

John in producing both goods

Mary in producing both goods

Both Mary and John in both goods

John in producing chairs, Mary in producing lamps

 

Question 30

To increase its economic growth, a nation should

limit the number of people in college because they produce nothing.

eliminate expenditure on capital goods.

increase current consumption.

encourage education because that increases the quality of labor.

encourage spending on goods and services.

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