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39 Cards in this Set
- Front
- Back
A country should specialize in producing the goods for which |
it has an comparative advantage. |
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For a given question to be considered an economic question, it must involve |
An exchange in the market |
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John collects aluminum cans and sells them to a recycling firm to make extra cash. Each can he finds earns him 10 cents. He also has an open offer to help out his friend who has a landscaping business. Each hour he works for his friend he is paid $10 per hour. John works 5 hours a day and experience has shown that he finds more cans the more hours he spends searching based on the following schedule: He finds 250, 410, 520, 600, or 660 cans in total if he works 1, 2, 3, 4, or 5 hours respectively. Given that John can devote all 5 work hours to either activity, or he can divide the hours between activities, what is the largest amount of income he can earn for all 5 hours? |
72$ |
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Snap and Bolt are two countries that both produce bananas and sugar. In Snap each worker in a one-hour period can produce either 13.61 pounds of bananas or 6.69 pounds of sugar. In Bolt each worker in a one-hour period can produce either 13.21 pounds of bananas or 3.13 pounds of sugar. Suppose both countries have constant opportunity cost of production and decide to specialize and exchange. The country that specializes in sugar is willing to sell 100 pounds of sugar for at least _____ pounds of bananas. |
203.44 |
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A country has constant opportunity cost of production. If they devote all of their resources to the production of blankets they can produce a total of 691 per week. If they devote all of their resources to the production of t-shirts they can produce a total of 226 shirts per week. What is the opportunity cost of producing 1 t-shirt? |
3.06 |
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The price of gas rises during the summer because more people take vacations and so they drive more miles. This is best represented by: |
an upward moving along the supply curve |
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The price of a good has gone down. What would be a good explanation of this? |
the cost of the key input used to produce the good has declined |
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Bill and Ted have a pizza shop. In one hour Bill can make 10 pizzas or he can deliver 4 pizzas. In one hour Ted can make 15 pizzas or he can deliver 5 pizzas. They both work 8 hours a day and can make or deliver the quantities of pizza given above in any given hour. Based on this information, Bill should _____ and Ted should ______. |
deliver pizza: make pizza |
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All else the same, the law of demand defines a |
negative relationship between price and quantity demanded |
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A production possibilities frontier illustrates |
he different quantities of two goods that can be produced with given resources. |
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During the holiday season airline tickets are most expensive and at the same time more people choose to fly. This can be explained by |
an increase in the demand for tickets |
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The equilibrium price and quantity of a good have both increased. Which of the following is a valid explanation? |
demand increased |
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Which of the following would cause the equilibrium price of a good in a college town to fall? |
the price of another good that substitutes for this good falls |
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Which of the following would shift the demand curve for laptop computers to the right? |
all college students are now required to own a laptop |
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Many consumers believe goods X and Y are complements. An increase in the price of good X will cause |
a decrease in demand for good Y |
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The price of gas rises during the summer because more people take vacations and so they drive more miles. This is best represented by: |
a rightward shift of the demand curve |
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The supply curve is upward sloping because |
higher prices encourage firms to devote more resources in producing that good |
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When the price of good A rises, consumers buy less of good B and more of good C. Which goods are complements? |
A and B |
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A farmer is trying to decide how many gallons of water to apply to his cotton crop. He should apply more water as long as |
the marginal benefit of water is at least as great asthe as the marginal cost of water |
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Consider a production possibilities frontier. Which points are efficient? |
points of the frontier |
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Leslie can produce 2 pairs of pants in an hour and Jane can produce 3 pairs of pants in an hour. It must be the case that |
Jane has the absolute advantage of producing pants |
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Which of the following would shift the supply curve for laptop computers to the right? |
a reduction in the cost of producing the computers influences the decrease in the selling price |
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Suppose you observe that the price of ice cream has gone up. Which of the following would be a valid explanation of the increase in the price of ice cream? |
there are a few ice cream stores in the area |
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The supply curve illustrates that firms |
increase in the quantity supplied of a good when the input costs rise |
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You have been offered an extra shift at work this Friday and this will allow you to earn an extra $100. Your friend has invited you to go to Disney the same day and this will cost you $120. What is the implicit cost of going to Disney? |
100$ |
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Opportunity cost is defined as |
the value of the best next alternative of the chosen activity |
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Consider the competitive market for a good called Y that has many buyers and many sellers, where Y is a normal good. Suppose the market is initially in equilibrium. If there is a 10% increase in the cost of a key input used to produce good Y we can expect the equilibrium price for good Y to ______________and the equilibrium quantity to __________. Please answer increase or decrease or uncertain. |
increase: decrease |
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To compare the well being of people in countries A and B it is best to compare |
the value of real GDP per capita in each country |
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If nominal GDP is growing at 5% per year, the inflation rate is 2% per year, and population growth is -1% per year then real GDP per capita is growing at ___ percent per year. |
4 |
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Net exports is defined as |
exports minus imports
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The investment category of GDP has three components. They are |
new purchases of new capital, residential investment, and inventory investment |
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John earns a salary of $75,000 per year. His company has been struggling over the past 3 years so none of the employees have received a pay raise. At the same time, the inflation rate has been positive during each of the three years. John is likely to feel like he can buy _____ goods and services and therefore his real salary will be ____ than his nominal salary. |
fewer: lower |
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A basket of goods and services purchased by an average urban consumer has a cost of $200 in 2012, $210 in 2013, and $220.50 in 2014. You may assume the base year is 2012. The inflation rate between 2012 and 2013 was _____. |
5% |
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The income approach to computing GDP calculates |
wages + interest + rent +profits |
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GDP is best defined as |
the market value of all final goods and services produced during a given year |
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If the value of the GDP deflator is 232 then |
the inflation rate between the base year and the current year is 132% |
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A basket of goods and services purchased by an average urban consumer has a cost of $200 in 2012, $210 in 2013, and $220.50 in 2014. You may assume the base year is 2012. The inflation rate between 2012 and 2013 was _____ the inflation rate between 2013 and 2014. |
the same as |
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When we add up the value of consumption, investment, government purchases, and net exports this is known as the |
expenditure approach |
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A price index is a measure of |
a current value relative to a base value |