Microeconomics Unit 1 and 2 Review

Scarcity is correctly described by which of the following statements?

I. Scarcity exists if there are more uses for resources than can be satisfied at one time.

II. Scarcity exists if decisions must be made about alternative uses for resources.

III. Scarcity would not exist in a society in which people wanted to help others instead of themselves.

• I only

• II only

• III only

• I and II only

The fundamental difference between a market economy and a command economy lies in which of the following?

• Property rights and protection of private property

• Absolute and comparative advantages

• Specialization and trade

• Positive and negative externalities

According to the graph, if a country is currently producing at point X, the opportunity cost of producing another consumer good is

• 20 capital goods

• more than 20 capital goods

• less than 20 capital goods

• 20 consumer goods

Which of the following statements is true according to the chart?

• Trade should take place, with Gamma specializing in clothing production and Omega specializing in food production.

• Trade should take place, with Gamma specializing in food production and Omega specializing in clothing production.

• Since Omega can produce both food and clothing using fewer resources than Gamma, it cannot benefit from trade with Gamma

• Since Gamma can produce both food and clothing using fewer resources than Omega, it cannot benefit trade with Omega.

An opportunity cost is entailed in which of the following situations?

I. A student decides to attend college full-time.

II. A family uses its $20,000 savings to purchase an automobile.

III. A farmer decides to grow more wheat and less corn.

• I and II only

• II and III only

• I, II, and III

• II only

If the student purchases 2 units of pizza and 2 units of pens, the student’s total utility will be

• 25 utils

• 28 utils

• 50 utils

• 53 utils

If the demand for good Y increases as the price of good X decreases, it can be concluded that

• X and Y are substitute goods

• X and Y are complementary goods

• X is an inferior good and Y is a superior good

• X is a superior good and Y is an inferior good

Which of the following events will cause the demand curve for hamburgers to shift to the right?

• An increase in the price of pizza, a substitute for hamburgers

• An increase in the price of a french fries, a complement to hamburgers

• An increase in the price of hamburgers

• A decrease in the price of hamburgers

A change in which of the following will cause a change in the supply of personal computers (PC’s) in the short run

• Technology

• Demand for PC’s

• Price of disks, which are a complement to PC’s

• Price of PC’s

Assume that apple juice and grape juice are substitutes. Which of the following will cause an increase in the quantity of apple juice supplied?

• A decrease in subsidies to apple juice producers

• A decrease in the price of grape juice

• An increase in the price of apple juice

• An increase in the price of insecticides used on apple trees