sg27 Parte8

Part
1 Review
1 Introduction
1) All economic questions arise because
A) of scarcity.
B) production possibilities are unlimited.
C) our wants are limited.
D) people are irrational.
Answer: A
Topic: Scarcity
Skill: Recognition
Question history: Previous edition, Part Review 1
AACSB: Reflective Thinking
2) Which of the following is NOT a factor of production?
A) mineral resources
B) money
C) a computer programmer
D) a commercial aircraft
Answer: B
Topic: Factors of Production
Skill: Recognition
3) The opportunity cost of a good is
A) the income you forgo to get it.
B) the lowest valued alternative you give up to get it.
C) the highest valued alternative you give up to get it.
D) all alternatives you give up to get it.
Answer: C
Topic: Opportunity Cost
Skill: Recognition
4) Jen won $900 in a lottery. She has a choice between using the money to buy a sofa, a television,
or going on a vacation. If she chooses to buy a television, the opportunity cost of this decision is
A) zero because she won the money.
B) the sofa and the vacation trip.
C) the sofa, the vacation trip, and $900.
D) the sofa if that was her second choice.
Answer: D
Skill: Analytical
Copyright © 2012 Pearson Education, Inc.
Part 1 Review 577
Cheese DVDs
(tons) (thousands)
0 60
2 56
4 48
6 36
8 20
10 0
5) The table above lists six points on the production possibilities frontier for cheese and DVDs.
Given this information, which of the following combinations is unattainable?
A) 2 tons of cheese and 56 thousand DVDs
B) 8 tons of cheese and 21 thousand DVDs
C) 6 tons of cheese and 34 thousand DVDs
D) 7 tons of cheese and 20 thousand DVDs
Answer: B
Topic: Production Possibilities Frontier
Skill: Analytical
AACSB: Analytical Skills
From this information you can conclude that production is inefficient if this economy produces
A) 2 tons of cheese and 56 thousand DVDs.
B) 8 tons of cheese and 21 thousand DVDs.
C) 5 tons of cheese and 48 thousand DVDs.
D) 7 tons of cheese and 20 thousand DVDs.
Answer: D
Topic: Production Possibilities Frontier
Skill: Analytical
What is the opportunity cost of producing the 7th ton of cheese?
A) 16 DVDs per ton of cheese
B) 8 DVDs per ton of cheese
C) 20 DVDs per ton of cheese
D) 28 DVDs per ton of cheese
Answer: B
Skill: Analytical
Question history: Modified 10th edition
578 Parkin · Macroeconomics, Tenth Edition
8) An opportunity cost of economic growth is
A) the capital accumulation given up to increase present consumption.
B) the increased future consumption.
C) the present consumption given up to accumulate capital.
D) None of the above because there is no opportunity cost since if an economy grows, it can
produce more of all goods.
Answer: C
Topic: Economic Growth Rate
Skill: Conceptual
9) Country X devoted 70 percent of its resources to consumption, while Country Y devoted 80
percent to consumption. Other things being equal, you can predict that
A) Country Xʹs opportunity cost of economic growth is lower than Country Yʹs.
B) Country Yʹs rate of capital accumulation is higher than Country Xʹs
C) Country Yʹs economy will grow faster than Country Xʹs.
D) Country Xʹs economy will grow faster than Country Yʹs.
Answer: D
Topic: Economic Growth Rate
Skill: Conceptual
10) Lizzie takes 20 seconds to stuff an envelope and 10 seconds to seal it. Arnold takes 15 seconds to
stuff an envelope and 5 seconds to seal it. Lizzie has a comparative advantage in ________ and
Arnold has a comparative advantage in ________.
A) sealing envelopes; stuffing them
B) stuffing envelopes; sealing them
C) neither of these activities; both activities
D) both activities; neither of these activities
Answer: B
Topic: Comparative Advantage
Skill: Analytical
11) According to the principle of comparative advantage, if the United States trades with Mexico,
most likely,
A) the United States will benefit and Mexico will lose.
B) the United States will lose and Mexico will benefit.
C) neither of the countries will benefit.
D) both countries will benefit.
Answer: D
Topic: Comparative Advantage and Trade
Skill: Conceptual
Part 1 Review 579
12) Which of the following increases the demand for chicken?
A) an increase in the price of the grain used to feed chickens
B) an increase in the number of chicken farmers
C) an increase in the price of beef, a substitute for chicken
D) a fall in the price of chicken
Answer: C
Topic: Change in Demand, Prices of Related Goods
Skill: Conceptual
13) If pizza is a normal good, then an increase in peopleʹs incomes shifts the ________ curve
________.
A) demand; rightward
B) demand; leftward
C) supply; rightward
D) supply; leftward
Answer: A
Topic: Change in Demand, Income
Skill: Conceptual
14) If the wood used to produce houses rises in price, then the ________ houses shifts ________.
A) demand curve for; rightward
B) demand curve for; leftward
C) supply curve of; rightward
D) supply curve of; leftward
Answer: D
Topic: Change in Supply, Prices of Resources
Skill: Conceptual
15) If the wood used to produce houses rises in price, then the ________ houses ________.
A) demand for; increases
B) demand for; decreases
C) supply of; increases
D) supply of; decreases
Answer: D
Skill: Conceptual
16) If OPEC cuts oil production, then the
A) demand for gasoline will decrease.
B) price of gasoline will fall.
C) demand for gasoline will increase.
D) supply of gasoline will decrease.
Answer: D
Skill: Conceptual
17) A processor of alligator hides can produce either purses or shoes. If the demand for alligator
shoes increases, then the ________ alligator purses will ________.
A) supply of; increase
B) supply of; decrease
C) demand for; decrease
D) demand for; increase
Answer: B
Topic: Change in Supply, Prices of Related Goods Produced
Skill: Conceptual
Question history: Previous edition, Chapter 3
18) Jelly beans and popcorn are substitutes. A fall in the price of a bag of jelly beans will ________
the demand for popcorn and the price of popcorn will ________.
A) increase; rise
B) increase; fall
C) decrease; fall
D) decrease; rise
Answer: C
Topic: Predicting Changes in Price and Quantity; Demand Changes
Skill: Conceptual
Question history: Previous edition, Chapter 3
Part 1 Review 581
19) The figure above shows the market for film cameras. If the price of digital cameras falls, the
equilibrium quantity of film cameras will be ________ thousand cameras and the price of a film
camera will be ________.
A) less than 300; less than $300
B) greater than 300; less than $300
C) 300; greater than $300
D) greater than 400; greater than $310
Answer: A
Skill: Analytical
20) The figure above shows the market for digital cameras. If consumersʹ incomes rise and a digital
camera is a normal good, the equilibrium quantity of digital cameras will be ________ thousand
cameras and the price of a digital camera will be ________.
A) less than 300; less than $300
B) greater than 300; less than $300
C) 300; greater than $300
D) greater than 300; greater than $300
Answer: D
Skill: Analytical
21) Shoes are a normal good and peopleʹs incomes rise. As a result, the equilibrium price of a pair of
shoes ________ and the equilibrium quantity ________.
A) rises; increases
B) rises; decreases
C) falls; increases
D) falls; decreases
Answer: A
Skill: Analytical
22) The number of companies making shoes decreases. As a result, the equilibrium price of a pair of
shoes ________ and the equilibrium quantity ________.
A) rises; increases
B) rises; decreases
C) falls; increases
D) falls; decreases
Answer: B
Topic: Predicting Changes in Price and Quantity; Supply Decreases
Skill: Analytical
23) Shoes are a normal good and peopleʹs incomes rise. Simultaneously the number of companies
making shoes decreases. As a result, the equilibrium price of a pair of shoes ________ and the
equilibrium quantity ________.
A) definitely rises; might increase, decrease, or not change
B) definitely rises; definitely increases
C) might rise, fall, or not change; might increase, decrease, or not change
D) None of the above answers is correct.
Answer: A
Topic: Predicting Changes: Demand Increases, Supply Decreases
Skill: Analytical

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