Unit 1 Basic Economic Concept Retest

If the production possibilities curve is a straight line, then economists say that

• Resources are scarce in the economy

• Resources are not equally suited for the production of both goods

• Economic growth is occurring in the economy

• Resources are equally suited for the production of either good

A point inside the production possibilities curve would represent

• An efficient use of resources

• Future output once producers become more efficient

• An inefficient use of resources

• A combination that cannot be achieved due to scarcity

• Full employment of resources in the economy

Assuming Ramen noodles are an inferior good, an increase in income will shift the

• supply curve for Ramen noodles to the left.

• supply curve for Ramen noodles to the right.

• demand curve for Ramen noodles to the left.

• demand curve for Ramen noodles to the right

• there is no shift

If Mike can make 2 surfboards per hour or 10 bikes per hour and Joe can produce 4 surfboards per hour and 12 bikes. Which of the following is true?

• Mike has an absolute advantage in the production of surfboards

• Mike’s opportunity cost for producing one bike is 5 surfboards

• Joe has a comparative advantage in the production of both surfboards and bikes

• Mike has a comparative advantage in the production of surfboards

• Joe’s opportunity cost for producing one surfboard is 3 bikes

Other things equal, if the government increases taxes on producers for product X the result is :

• product supply curve of X will shift to the right.

• product demand curve of X will shift to the right.

• product supply curve of X will shift to the left.

• product demand curve of X will shift to the left.

• both the supply and demand of X will increase

If the government subsidizes cell phones producers, the price and equilibrium quantity of cell phones will most likely change in which of the following ways?

• P: Increase Q: Increase

• P: Decrease Q: Increase

• P: Increase Q: Decrease

• P: Decrease Q: Decrease

In the cellphone market analyze the following change: a decrease in the price of earbuds assume earbuds are a complementary product. What happens to price and equilibrium quantity of cell phones?

• P: Increases Q: increases

• P: Increases Q: Decreases

• P: Decreases Q: Decreases

• P: Decreases Q: Increases

• No shift point moves along the curve

Which of the following will NOT cause the demand for video games to change ( a shift) ?

• a change in the price of a close substitute

• a change in consumer incomes

• a change in the price of video games

• a change in consumer tastes

• a change in consumer preferences

The relationship between quantity supplied and price is _____ and the relationship between quantity demanded and price is _____.

• direct, inverse

• inverse, direct

• inverse, inverse

• direct, direct

• strong, weak

When making a decision, the next best alternative is called

• The production possibilities

• The opportunity cost

• Scarcity

• The absolute advantage

• Efficiency