Name: __________________________ Date: _____________1. Opportunity cost is:A) about half of the monetary cost of a product.B) the dollar payment for a product.C) the benefit derived from a product.D) the value of the best alternative forgone in making any choice.2. For which of the following decisions would marginal analysis be most relevant?A) Should George accept a job with Delta Airlines or with Greenpeace?B) Should Mary go to graduate school after graduating from college?C) Should Vevik emigrate to the United States or stay in India?D) Should Hong work an additional hour or take a short nap?3. Nate and Dylan are brothers. They have to mow the lawn and clean their rooms before they can go to the high school football game. Nate mows the lawn and Dylan picks up the rooms and they make it to the football game on time. This statement best represents the economic concept of:A) people usually exploit opportunities to make themselves better off.B) there are gains from trade.C) markets usually lead to efficiency.D) one person's spending is another person's income.4. Which of the following statements is true?A) The concept of equilibrium requires that all individuals have an equal amount of income.B) If equilibrium in a market exists, then the price in that market will not fluctuate by more than 5%.C) If equilibrium in a market exists, then there will be no remaining opportunities for individuals to make themselves better off.D) Equilibrium in a market will exist when the number of buyers is equal to the number of sellers.5. People who live in households decide to spend less in their day-to-day activities. As a result, this will most likely lead to:A) less income for other people in the economy.B) more income for other people in the economy.C) no impact on other people in the economy.D) inflation.Page 16. The models used in economics:A) are usually limited to variables that are directly related.B) are essentially not reliable because they are not testable in the real world.C) are of necessity unrealistic and not related to the real world.D) emphasize basic relationships by abstracting from complexities in the everyday world.Use the following to answer question 7:Figure: Guns and Butter7. (Figure: Guns and Butter) If the economy were operating at point B, producing 16 units of guns and 12 units of butter per period, a decision to move to point E and produce 18 units of butter:A) indicates you can have more butter and guns simultaneously.B) makes it clear that this economy experiences decreasing opportunity costs.C) involves a loss of 8 units of guns per period.D) involves a loss of 4 units of guns per period.8. Consider a possible production possibility frontier for Iraq. If in 2008 Iraq's resources are not being fully utilized, Iraq will be somewhere ________ of its production possibility frontier.A) insideB) outsideC) near the bottomD) near the topPage 2Use the following to answer question 9:Figure: Comparative AdvantageEastland and Westland produce only two goods, peaches and oranges, and this figure shows each nation's production possibility frontier for the two goods.9. (Figure: Comparative Advantage) The opportunity cost of producing 1 unit of oranges for Eastland is:A) 1 unit of peaches.B) 1/4 unit of peaches.C) 4 units of peaches.D) 10 units of peaches.10. The law of demand states that, other things equal:A) as the price increases, the quantity demanded will increase.B) as the price decreases, the demand curve will shift to the right.C) as the price increases, the demand will decrease.D) as the price increases, the quantity demanded will decrease.Page 3Use the following to answer question 11:11. (Table: The Demand for Chocolate-Covered Peanuts) If George, Barbara, and Dan are the only three buyers in the market, and the price of a bag of chocolate-covered peanuts is $0.80, the total market demand is ________ bags per month.A) 70B) 80C) 105D) 28012. The demand for meals at a local Applebee's will fall if:A) the Olive Garden offers a 10% discount coupon in the local newspaper.B) the price of a meal at Applebee's rises.C) local incomes increase and Applebee's is a normal good.D) the price of gasoline falls in the local area.13. An increase in supply is caused by:A) an increase in input prices.B) suppliers' expectations of higher prices in the future.C) an increase in the price of the good.D) a decrease in prices of goods that are substitutes in production.Page 4Use the following to answer question 14:Figure: Market for Hamburgers14. (Figure: Market for Hamburgers) The figure shows the weekly market for hamburgers at the Tasty Burger Palace. If the price of a burger is $2, consumer surplus will equal:A) $650.B) $400.C) $225.D) $450.Use the following to answer question 15:Page 515. (Table: Consumer Surplus) If the price of a ticket to see The Nutty Nutcracker is $75, then Lois's consumer surplus is:A) $25.B) $60.C) $75.D) $100.16. Along the supply curve for brownies, a decrease in the price of brownies will:A) increase producer surplus.B) decrease producer surplus.C) increase consumer surplus.D) increase producer surplus and consumer surplus.Use the following to answer question 17:Figure: Producer Surplus17. (Figure: Producer Surplus) When the price rises from $25 to $35, producer surplus ________ for a total producer surplus of ________.A) increases by $10; $30B) decreases by $10; $30C) increases by $30; $60D) decreases by $35; $100Page 618. The government decides to impose a price ceiling on a good, because it thinks the market-determined price is “too high.” If the government imposes the price ceiling below the equilibrium price:A) consumers will respond to the lower price and therefore wish to purchase more of the good than at the equilibrium price.B) producers will respond to the lower price and therefore offer more units for sale.C) consumers will be able to purchase more of the good after the price ceiling is imposed.D) it will not be binding.Use the following to answer question 19:19. (Table: Market for a Can of Soda) If the government imposes a price ceiling of $0.50 per can of soda, there will be:A) a shortage of 2 units.B) a shortage of 3 units.C) a surplus of 3 units.D) equilibrium in the market for soda.20. Suppose the government sets a price floor of $2.85 per bushel on corn when the current price is $2.55. This price floor will:A) cause a surplus of corn.B) cause a shortage of corn.C) have no effect on the price of corn.D) increase the supply of corn.Page
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