1) Opportunity cost is best defined asA) The amount of money that an individual is willing to pay to purchase a good thatmeans a great deal to that person.B) The amount of money lost by one individual in an exchange process so thatanother individual might gain.C) The highest-valued alternative that is forgone when choosing among variousalternatives.D) A situation in which one individual cannot have an absolute advantage overanother individual in the production of all goods.2) One of the opportunity costs of economic growth isA) capital accumulation.B) technological change.C) reduced current consumption.D) the gain in future consumption.6) Anna and Maria produce shirts and ties. The figure above shows Anna's PPF andMaria's PPF. Anna and Maria can achieve the gains from trade if Anna produces________ and Maria produces ________. A) ties; shirtsB) shirts and ties; only tiesC) only ties; shirts and tiesD) shirts; ties7) Missouri can produce 10,000 tons of pecans per year or 5,000 tons of pears peryear. Washington can produce 12,000 tons of pecans per year or 48,000 tons of pearsper year. Which of the following statements is true?1A) Washington has an absolute advantage in the production of both pecans and pears.B) Washington has a comparative advantage in the production of both pecans andpears.C) Washington has a comparative advantage in producing pears and Missouri has acomparative advantage in producing pecans.D) Both answers A and C are correct.8) In the above figure, if 2 million computers are produced per year then the________ should be produced to achieve the allocatively efficient use of resourcesA) marginal cost of a computer exceeds the marginal benefit of a computer, so morecomputers B) marginal cost of a computer exceeds the marginal benefit of a computer, so fewercomputersC) marginal benefit of a computer exceeds the marginal cost of a computer, so morecomputersD) marginal benefit of a computer exceeds the marginal cost of a computer, so fewercomputers9) The quantity demanded isA) always equal to the equilibrium quantity.B) independent of the price of the good.C) the amount of a good that consumers plan to purchase at a particular price.D) independent of consumers' buying plans.10) The "law of supply" refers to the fact that, all other things remaining the same, when the price of a good risesA) the supply curve shifts leftward.B) the supply curve shifts rightward.C) there is a movement up along the supply curve to a larger quantity supplied.D) there is a movement down along the supply curve to a smaller quantity supplied.211) Which of the following events shifts the supply curve of gasoline rightward?A) A situation in which the quantity demanded exceeds the quantity suppliedB) An increase in the price of gasolineC) A decrease in the price of a resource used to produce gasoline, such as crude oilD) An increase in the demand for gas-guzzling, sport utility vehicles12) Each point on a supply curve representsA) the highest price buyers will pay for the good.B) the lowest price for which a supplier can profitably sell another unit.C) the lowest price buyers will accept per unit of the good.D) the highest price sellers can get for each unit over time.13) The above figure shows the market for pizza. Which figure shows the effect of a decrease in the price of a hamburger, which for consumers is a substitute for pizza?A) Figure AB) Figure BC) Figure DD) Figures B and C314) Using the above figure, suppose there is a decrease in the number of suppliers. ThenA) the equilibrium price will decrease below $25 per dozen roses.B) we cannot predict what will happen to equilibrium quantity.C) the equilibrium quantity will decrease below 10 dozen roses.D) both the equilibrium price and quantity will increase.15) Using the above figure, suppose that roses are a normal good. If incomes decreasewhile simultaneously there is an increase in the price of the resources used to produce roses, thenA) the price will definitely increase above $25 per dozen roses.B) the quantity will definitely decrease below 10 dozen roses.C) the price will definitely decrease below $25 per dozen roses.D) we cannot tell what will happen to equilibrium quantity.16) Elasticity measures theA) percentage change in a variable.B) slope of a curve.C) change in a variable.D) responsiveness of a variable to a change in another variable.417) The above figure illustrates the demand curve for a good. The good hasA) no substitutes.B) only one substitute.C) only a few substitutes.D) many substitutes.18) The figure illustrates the demand for peanuts. If the price falls from $12 to $9 a bag, total revenue will ________, and if the price rises from $3 to $6 a bag, total revenue will ________.A) increase; decreaseB) increase; increaseC) decrease; increaseD) decrease; decrease519) In the above figure, the price elasticity of supply at any given quantity isA) highest along S1, next highest along S2, and lowest along S3.B) highest along S3, next highest along S2, and lowest along S1.C) equal to zero on each of the three supply curves.D) equal to one on each of the three supply curves.20) The air route from New York to Chicago is served by more than one airline. The demand for tickets from United Airline for that route is probably _________.A inelastic, but more elastic than the demand for all tickets for that routeB elastic and more elastic than the demand for all tickets for that routeC inelastic and less elastic than the demand for all tickets for that routeD elastic, but less elastic than the demand for all tickets for that route21) The cross elasticity of demand is calculated as the percentage change in the ________.A quantity demanded of one good divided by the percentage change in the price of another goodB price of one good divided by the percentage change in the quantity demanded of another good.C quantity demanded of one good divided by the percentage change in the quantity demanded of another goodD price of one good divided by the percentage change in the price of another good.22) Business people often speak about price elasticity without actually using the term.6Which statement describes a good with an elastic demand?A) "A price cut won't help me. It won't increase my sales, and I'll just get less money for each unit."B) "I don't think a price cut will help my bottom line any. Sure, I'll sell a bit more, but I'll more than lose because