Csis 100 liberty university

Name: ___________________________ Class: _________________ Date: __________

Assignment 1

ECON 002

1. A graph that shows the maximum attainable combinations of two goods when society efficiently uses its productive resources is called

1.

a production possibilities frontier (PPF).

1.

a supply curve.

1.

opportunity cost.

1.

a consumer demand curve.

1.

absolute advantage.

2. Which of the following would cause a normal good’s demand curve to shift to the left?

1.

Income decreases.

1.

Income increases.

1.

The price increases.

1.

The price decreases.

1.

The input prices increase.

3. Refer to the table below:

Assume that the market for pairs of shoes has only two consumers: Henry and Ling. According to the table above, if the price of a pair of shoes is $30, the market will demand ________ pairs of shoes.

1.

5

1.

6

1.

14

1.

20

1.

21

4. Refer to the accompanying graph. When the price changes from P1 to P2, we will see a(n)

1.

decrease in supply from Q1 to Q2.

1.

increase in supply from Q2 to Q1.

1.

decrease in quantity supplied from Q1 to Q2.

1.

increase in quantity supplied from Q2 to Q1.

1.

shift of the supply curve.

5. Which of the following will cause a movement along a good’s supply curve?

1.

The price of an input increases.

1.

The price of the good increases.

1.

The production process of the good becomes more efficient.

1.

More firms enter the market.

1.

The government places a subsidy on the producer of the good.

6. The area inside (within) the production possibilities frontier (PPF) contains ________ points.

1.

normative

1.

positive

1.

efficient

1.

inefficient

1.

high opportunity cost

7. Which of the following would cause the demand curve to shift to the right?

1.

Income decreases for an inferior good.

1.

Income decreases for a normal good.

1.

Tastes and preferences for the good decrease.

1.

The price of a substitute decreases.

1.

The price of a complement increases.

Refer to the following graph for the next five questions.

8. The opportunity cost of increasing the production of investment from 21 to 24 is ________.

1.

3 investment

1.

4 consumption

1.

5 consumption

1.

21 investment

1.

10 consumption

9. The opportunity cost of increasing production of consumption from 10 to 15 is ________.

1.

5 consumption

1.

14 investment

1.

3 investment

1.

4 consumption

1.

16 investment

10. The opportunity cost of increasing production of investment from 0 to 18 is ________.

1.

2 investment

1.

9 consumption

1.

7 consumption

1.

16 investment

1.

2 consumption

11. As we move from Points N to M to L, the opportunity cost of consumption

1.

decreases due to the law of increasing opportunity cost.

1.

increases due to the law of increasing opportunity cost.

1.

decreases due to the law of normative economics.

1.

increases due to the law of marginal analysis.

1.

decreases due to enhancements in technology.

12. A technology change that makes the most common investment inputs much easier to work with will tend to cause

1.

the entire production possibilities frontier (PPF) to shift outward.

1.

the entire PPF to shift inward.

1.

the PPF to change shape to show a larger maximum quantity of investment with no change in maximum consumption.

1.

the PPF to change shape to show a smaller maximum quantity of consumption with no change in maximum investment.

1.

the PPF to stay exactly the same because there is no change in resources.

Refer to the following table for the next seven questions. Art Medical Devices and Braun Engineering are both manufacturers of heart implants that can create artificial hearts or pacemakers each fiscal year. The following table describes their maximum outputs per year.

13. What is Art’s opportunity cost of a pacemaker?

1.

1/150 artificial heart

1.

1/100 artificial heart

1.

1/3 artificial heart

1.

100 pacemakers

1.

150 pacemakers

14. What is Art’s opportunity cost of an artificial heart?

1.

150 pacemakers

1.

100 pacemakers

1.

3 pacemakers

1.

1/2 artificial heart

1.

2 artificial hearts

15. What is Braun’s opportunity cost of an artificial heart?

1.

100 pacemakers

1.

2 pacemakers

1.

150 pacemakers

1.

2 artificial hearts

1.

1/2 artificial heart

16. Based on the table, do Art or Braun have a comparative advantage?

1.

Yes, Art has a comparative advantage in both pacemakers and artificial hearts.

1.

Yes, Braun has a comparative advantage in both pacemakers and artificial hearts.

1.

Yes, Art has a comparative advantage in artificial hearts, and Braun has a comparative advantage in pacemakers.

1.

Yes, Art has a comparative advantage in pacemakers, and Braun has a comparative advantage in artificial hearts.

1.

No, neither has a comparative advantage.

Refer to the accompanying graph for the two questions that follow.

17. The demand curve shift shown in the graph was caused by a(n)

1.

increase in the input cost of the good.

1.

increase in the price of a substitute for the good.

1.

decrease in the number of firms selling the good.

1.

decrease in the number of buyers in the market for the good.

1.

expectation that the future price of this good will be higher than it is currently.

18. Which of the following scenarios would explain the change in demand shown in the accompanying graph?

1.

an increase in an input price

1.

a decrease in the number of buyers in a market

1.

an increase in the price of a substitute good

1.

an increase in the expected future price

1.

a negative technological change

Refer to the accompanying graph for the two questions that follow.

19. An increase in the number of buyers would cause the demand curve to

1.

shift from D1 to D3.

1.

remain at D1.

1.

shift from D1 to D2.

1.

shift from D2 to D1.

1.

shift from D2 to D3.

20. If consumers expect the price of a good to decrease in the future and all else is held constant, we would assume that the demand curve would

1.

shift from D1 to D3.

1.

remain at D1.

1.

shift from D1 to D2.

1.

remain at D2.

1.

remain at D3.

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