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Econ 13 Global Economy. Homework 1. University of California Irvine. Questions and answers. Guaranteed 100% Grade.

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Econ 13 Global Economy. Homework 1. University of California Irvine. Multiple Choice (1 point each) Identify the choice that best completes the statement or answers the question. 1. Economic m... odels a. cannot be useful if they are based on false assumptions. b. were once thought to be useful, but that is no longer true. c. must incorporate all aspects of the economy if they are to be useful. d. can be useful, even if they are not particularly realistic. Figure 2-6 2. Refer to Figure 2-6. What is the opportunity cost of moving from point A to point B? a. zero b. 6 clocks c. 6 clocks and 15 candles d. 15 candles Figure 2-7 3. Refer to Figure 2-7. Inefficient production is represented by which point(s)? a. K, M b. L c. L, M d. M Figure 2-8 Panel (a) Panel (b) 4. Refer to Figure 2-8, Panel (a). Production is a. possible at points J, K, L, and M, but efficient only at points J, L, and M. b. possible at points J, K, L, and M, but efficient only at point K. c. possible at points J, L, M, and N, but efficient only at points J, L, and M. d. possible at points J, L, M, and N, but efficient only at point N. 5. Refer to Figure 2-8, Panel (a) and Panel (b). Which of the following is not a result of the shift of the economy’s production possibilities frontier from Panel (a) to Panel (b)? a. the tradeoff between the production of donuts and coffee changes b. the opportunity cost of a cup of coffee is higher at all levels of coffee production c. production of 4 donuts and 2 cups of coffee becomes possible d. production of 1 donut and 4 cups of coffee becomes efficient 6. Which of the following is not an example of a positive, as opposed to normative, statement? a. Higher gasoline prices will reduce gasoline consumption. b. Equality is more important than efficiency. c. Trade restrictions lower our standard of living. d. If a nation wants to avoid inflation, it will restrict the growth rate of the quantity of money. 7. Which of the following is an example of a normative, as opposed to positive, statement? a. Gasoline prices ought to be lower than they are now. b. The federal government should raise taxes on wealthy people. c. The social security system is a good system and it deserves to be preserved as it is. d. All of the above are normative statements. Figure 3-6 Maxine’s Production Possibilities Frontier Daisy’s Production Possibilities Frontier 8. Refer to Figure 3-6. If the production possibilities frontier shown for Maxine is for 3 hours of work, then how long does it take Maxine to make one pie? a. 1/4 hour b. 1/3 hour c. 3 hours d. 4 hours Figure 3-11 The graph below represents the various combinations of ham and cheese (in pounds) that the nation of Bonovia could produce in a given month. 9. Refer to Figure 3-11. If the production possibilities frontier shown is for 240 hours of production, then which of the following combinations of ham and cheese could Bonovia produce in 240 hours? a. 225 pounds of ham and 140 pounds of cheese b. 280 pounds of ham and 100 pounds of cheese c. 355 pounds of ham and 80 pounds of cheese d. 330 pounds of ham and 60 pounds of cheese 10. Refer to Figure 3-11. For Bonovia, what is the opportunity cost of a pound of cheese? a. 0.8 pounds of ham b. 1.25 pounds of ham c. 8 pounds of ham d. 16 pounds of ham Figure 3-5 Hosne’s Production Possibilities Frontier Merve’s Production Possibilities Frontier 11. Refer to Figure 3-5. Hosne should specialize in the production of a. purses. b. wallets. c. both goods. d. neither good. Figure 3-7 Bintu’s Production Possibilities Frontier Juba’s Production Possibilities Frontier 12. Refer to Figure 3-7. The opportunity cost of 1 cup for Bintu is a. 1/8 bowl. b. 1/4 bowl. c. 4 bowls. d. 8 bowls. 13. Tom Brady should probably not mow his own lawn because a. his opportunity cost of mowing his lawn is higher than the cost of paying someone to mow it for him. b. he has a comparative advantage in mowing his lawn relative to a landscaping service. c. he has an absolute advantage in mowing his lawn relative to a landscaping service. d. he might sprain his ankle. 14. A group of buyers and sellers of a particular good or service is called a(n) a. coalition. b. economy. c. market. d. competition. 15. In a competitive market, the quantity of a product produced and the price of the product are determined by a. buyers. b. sellers. c. both buyers and sellers. d. None of the above is correct. 16. For a competitive market, a. a seller can always increase her profit by raising the price of her product. b. if a seller charges more than the going price, buyers will go elsewhere to make their purchases. c. a seller often charges less than the going price to increase sales and profit. d. a single buyer can influence the price of the product but only when purchasing from several sellers in a short period of time. 17. An example of a perfectly competitive market would be the a. cable TV market. b. soybean market. c. breakfast cereal market. d. shampoo market. 18. Nemo rents 5 movies per month when the price is $3.00 per rental and 7 movies per month when the price is $2.50 per rental. Nemo’s demand demonstrates the law of a. price. b. supply. c. demand. d. income. Table 4-1 Price Quantity Demanded by Michelle Quantity Demanded by Laura Quantity Demanded by Hillary 19. Refer to Table 4-1. If the market consists of Michelle and Hillary only and the price falls by $1, the quantity demanded in the market increases by a. 2 units. b. 3 units. c. 4 units. d. 5 units. Table 4-2 Price William’s Quantity Demanded Fergie’s Quantity Demanded Taboo’s Quantity Demanded apl.de.ap’s Quantity Demanded 20. Refer to Table 4-2. Whose demand does not obey the law of demand? a. William’s b. Fergie’s c. Taboo’s d. apl.de.ap’s Figure 4-4 Quantity 21. Refer to Figure 4-4. Which of the following would cause the demand curve to shift from Demand B to Demand C in the market for DVDs in the United States? a. a decrease in the price of DVDs b. a decrease in the price of DVD players c. a change in consumer preferences toward watching movies in movie theaters rather than at home d. a decrease in the number of people in the United States 22. Refer to Figure 4-4. Which of the following would cause the demand curve to shift from Demand C to Demand A in the market for tennis balls in the United States? a. an increase in the price of tennis balls b. a decrease in the price of tennis racquets c. an expectation by buyers that their incomes will increase in the very near future d. a decrease in the number of people in the United States under age 70 23. Which of the following would not shift the demand curve for mp3 players? a. a decrease in the price of mp3 players b. a fad that makes mp3 players more popular among 12-25 year olds c. an increase in the price of digital music downloads, a complement for mp3 players d. a decrease in the price of satellite radio, a substitute for mp3 players 24. Each of the following is a determinant of demand except a. tastes. b. production technology. c. expectations. d. the prices of related goods. 25. If muffins and bagels are substitutes, a higher price for bagels would result in a(n) a. increase in the demand for bagels. b. decrease in the demand for bagels. c. increase in the demand for muffins. d. decrease in the demand for muffins. 26. A higher price for batteries would result in a(n) a. increase in the demand for flashlights. b. decrease in the demand for flashlights. c. increase in the demand for batteries. d. decrease in the demand for batteries. 27. You love peanut butter. You hear on the news that 50 percent of the peanut crop in the South has been wiped out by drought and that this will cause the price of peanuts to double by the end of the year. As a result, your demand for peanut butter a. will increase but not until the end of the year. b. increases today. c. decreases as you look for a substitute good. d. shifts left today. 28. Which of these statements best represents the law of supply? a. When input prices increase, sellers produce less of the good. b. When production technology improves, sellers produce less of the good. c. When the price of a good decreases, sellers produce less of the good. d. When sellers’ supplies of a good increase, the price of the good increases. 29. A supply schedule is a table that shows the relationship between a. price and quantity supplied. b. input costs and quantity supplied. c. quantity demanded and quantity supplied. d. profit and quantity supplied. Figure 4-10 Quantity 30. Refer to Figure 4-10. Which of the following would cause the supply curve to shift from Supply B to Supply A in the market for tennis racquets? a. a decrease in the price of tennis balls b. an expectation by firms that the price of tennis racquets will increase in the very near future c. a decrease in the price of tennis racquet strings d. an improvement in technology that allows firms to use less labor in the production of tennis racquets 31. If something happens to alter the quantity supplied at any given price, then a. we move along the supply curve. b. the supply curve shifts. c. the supply curve becomes steeper. d. the supply curve becomes flatter. 32. In a market, to find the total amount supplied at a particular price, we must a. sum the quantities that individual firms are willing and able to supply at that price. b. calculate the average of the quantities that individual firms are willing and able to supply at that price. c. sum the costs that individual firms incur to supply the product at that price. d. account for all determinants of demand. 2 Firm A Firm B 33. Refer to Figure 4-11. If these are the only two sellers in the market, then the market quantity supplied at a price of $4 is a. 6 units. b. 7 units. c. 8 units. d. 14 units. Figure 4-13 quantity 34. Refer to Figure 4-13. The shift from S to S’ is called a(n) a. decrease in supply. b. decrease in quantity supplied. c. increase in supply. d. increase in quantity supplied. 35. Buyers are able to buy all they want to buy and sellers are able to sell all they want to sell at a. prices at and above the equilibrium price. b. prices at and below the equilibrium price. c. prices above and below the equilibrium price, but not at the equilibrium price. d. the equilibrium price but not above or below the equilibrium price. 36. When supply and demand both increase, equilibrium a. price will increase. b. price will decrease. c. quantity may increase, decrease, or remain unchanged. d. price may increase, decrease, or remain unchanged. Table 4-6 An Increase in Supply A Decrease in Supply An Increase in Demand A B A Decrease in Demand C D 37. Refer to Table 4-6. Which combination would produce an increase in equilibrium quantity and an indeterminate change in equilibrium price? a. A b. B c. C d. D 38. Suppose roses are currently selling for $20 per dozen, but the equilibrium price of roses is $30 per dozen. We would expect a a. shortage to exist and the market price of roses to increase. b. shortage to exist and the market price of roses to decrease. c. surplus to exist and the market price of roses to increase. d. surplus to exist and the market price of roses to decrease. Table 4-7 Price Quantity Demanded Quantity Supplied $10 10 60 $8 20 45 $6 30 30 $4 40 15 $2 50 0 39. Refer to Table 4-7. The equilibrium price and quantity, respectively, are a. $2 and 50 units. b. $6 and 30 units. c. $6 and 60 units. d. $12 and 30 units. Figure 4-17 40. Refer to Figure 4-17. If the price is $10, then there would be a a. shortage of 400 units, and price would rise. b. surplus of 400 units, and price would rise. c. shortage of 600 units, and price would rise. d. surplus of 600 units, and price would rise. Figure 4-18 20 18 16 14 12 10 8 6 4 2 1 2 3 4 5 6 7 8 9 10 quantity 41. Refer to Figure 4-18. What is the equilibrium price in this market? a. $0 b. $5 c. $7.50 d. $10 42. What would happen to the equilibrium price and quantity of peanut butter if the price of peanuts went up, the price of jelly fell, fewer firms decided to produce peanut butter, and health officials announced that eating peanut butter was good for you? a. Price will fall, and the effect on quantity is ambiguous. b. Price will rise, and the effect on quantity is ambiguous. c. Quantity will fall, and the effect on price is ambiguous. d. Quantity will rise, and the effect on price is ambiguous. Figure 4-22 Panel (a) Panel (b) Pe Pe Pe Pe Qe Qe' quantity Qe' Qe quantity Panel (c) Panel (d) Pe Pe Pe Pe Qe Qe' quantity Qe' Qe quantity 43. Refer to Figure 4-22. Which of the four panels represents the market for peanut butter after a major hurricane hits the peanut-growing south? a. Panel (a) b. Panel (b) c. Panel (c) d. Panel (d) 44. Which of the following is a way to compute GDP? a. add up the wages paid to all workers b. add up the quantities of all final goods and services c. add up the market values of all final goods and services d. add up the difference between the market values of all final goods and services and then subtract the costs of producing those goods and services 45. Which of the following is not included in GDP? a. carrots grown in your garden and eaten by your family b. carrots purchased at a farmer’s market and eaten by your family c. carrots purchased at a grocery store and eaten by your family d. None of the above are included in GDP. 46. One bag of flour is sold for $1.00 to a bakery, which uses the flour to bake bread that is sold for $3.00 to consumers. A second bag of flour is sold for $1 to a grocery store who sells it to a consumer for $2.00. Taking these four transactions into account, what is the effect on GDP? a. GDP increases by $3.00. b. GDP increases by $5.00. c. GDP increases by $6.00. d. GDP increases by $7.00. 47. Gross domestic product includes all a. legal and illegal final goods, but it excludes all legal and illegal final services. b. legal and illegal final goods and all legal and illegal final services. c. legal final goods and services, but it excludes illegal final goods and services. d. legal and illegal final goods and legal final services, but it excludes illegal final services. 48. Which of the following items is included in U.S. GDP? a. the estimated value of production accomplished at home, such as backyard production of fruits and vegetables b. the value of illegally-produced goods and services c. the value of cars and trucks produced in foreign countries and sold in the U.S. d. None of the above is included in U.S. GDP. 49. Which of the following represents a transfer payment? a. You transfer $1,000 from your bank account to a mutual fund. b. The government sends your grandfather his Social Security check. c. You make a payment to get legal documents showing you purchased a previously owned home. d. Your employer automatically transfers $100 each month from your wages to a non-taxable medical spending account. 50. If a U.S. citizen buys a dress made in Nepal by a Nepalese firm, then a. U.S. consumption increases, U.S. net exports decrease, and U.S. GDP decreases. b. U.S. consumption increases, U.S. net exports decrease, and U.S. GDP is unaffected. c. U.S. consumption decreases, U.S. net exports increase, and U.S. GDP increases. d. U.S. consumption decreases, U.S. net exports increase, and U.S. GDP is unaffected. 51. In the economy of Ukzten in 2010, consumption was $3000, GDP was $5500, government purchases were $1000, imports were $2000, and investment was $1000. What were Ukzten’s exports in 2010? a. -$1500 b. $500 c. $1500 d. $2500 52. Which of the following statements about nominal GDP and real GDP is correct? a. Nominal GDP is a better gauge of economic well-being than real GDP. b. Real GDP is a better gauge of economic well-being than nominal GDP. c. Real GDP and nominal GDP are equally good measures of economic well-being. d. Neither nominal nor real GDP provide a measure of economic well-being. 53. Suppose an economy produces only burgers and bags of fries. In 2010, 4000 burgers are sold at $3 each and 6000 bags of fires are sold at $1.50 each. In 2008, the base year, burgers sold for $2.50 each and bags of fries sold for $2 each. a. nominal GDP is $22,000 real GDP is $21,000, and the GDP deflator is 95.45. b. nominal GDP is $22,000, real GDP is $21,000, and the GDP deflator is 104.77. c. nominal GDP is $21,000, real GDP is $22,000, and the GDP deflator is 95.45. d. nominal GDP is $21,00, real GDP is $22,000, and the GDP deflator is 104.77. Table 23-5 A hypothetical country of Lahland produces only movies and popcorn. Quantities and prices of these goods for the last several years are shown below. The base year is 2009. Prices and Quantities Year Price of Movies Quantity of Movies Price of Popcorn Quantity of Popcorn 2008 $10.00 400 $5 800 2009 $11.00 500 $4 900 2010 $12.00 600 $5 1000 2011 $12.00 600 $6 900 54. Refer to table 23-5 What was this country’s GDP deflator in 2010? a. 86.9 b. 115.1 c. 120.5 d. None of the above is correct. 55. A recession has traditionally been defined as a period during which a. nominal GDP declines for two consecutive quarters. b. nominal GDP declines for four consecutive quarters. c. real GDP declines for two consecutive quarters. d. real GDP declines for four consecutive quarters. 56. Which of the following statements is correct? a. The CPI can be used to compare dollar figures from different points in time. b. The percentage change in the CPI is a measure of the inflation rate, but the percentage change in the GDP deflator is not a measure of the inflation rate. c. Compared to the consumer price index (CPI), the GDP deflator is the more common gauge of inflation. d. The GDP deflator better reflects the goods and services bought by consumers than does the CPI. 57. The price index was 120 in 2006 and 127.2 in 2007. What was the inflation rate? a. 5.7 percent b. 6.0 percent c. 7.2 percent d. 27.2 percent 58. If the price index was 90 in year 1, 100 in year 2, and 95 in year 3, then the economy experienced a. 10 percent inflation between years 1 and 2 ,and 5 percent inflation between years 2 and 3. b. 10 percent inflation between years 1 and 2, and 5 percent deflation between years 2 and 3. c. 11.1 percent inflation between years 1 and 2, and 5 percent inflation between years 2 and 3. d. 11.1 percent inflation between years 1 and 2, and 5 percent deflation between years 2 and 3. Table 24-1 The table below pertains to Pieway, an economy in which the typical consumer’s basket consists of 10 bushels of peaches and 15 bushels of pecans. Year Price of Peaches Price of Pecans 2005 $11 per bushel $6 per bushel 2006 $9 per bushel $10 per bushel 59. Refer to Table 24-1. If 2005 is the base year, then the CPI for 2005 was a. 83.3. b. 100. c. 120. d. 200. 60. Refer to Table 24-1. If 2006 is the base year, then the CPI for 2005 was a. 83.3. b. 100. c. 120. d. 200. Table 24-2 The table below pertains to Iowan, an economy in which the typical consumer’s basket consists of 3 pounds of pork and 4 bushels of corn. Year Price of Pork Price of Corn 2008 $20 per pound $12 per bushel 2009 $25 per pound $18 per bushel 61. Refer to Table 24-2. If 2008 is the base year, then the inflation rate in 2009 was a. 26.5 percent. b. 36.1 percent. c. 39 percent. d. 47 percent. 62. Refer to Table 24-2. If 2009 is the base year, then the inflation rate in 2009 was a. 26.5 percent. b. 36.1 percent. c. 39 percent. d. 47 percent. Table 24-3 The table below pertains to Studious, an economy in which the typical consumer’s basket consists of 5 books and 10 calculators. Year Price of a Book Price of a Calculator 2006 $24 $8 2007 $30 $12 2008 $32 $15 63. Refer to Table 24-3. The cost of the basket in 2006 was a. $32. b. $200. c. $280. d. $480. 64. In the basket of goods that is used to compute the consumer price index, the three largest categories of consumer spending are a. housing, transportation, and recreation. b. housing, transportation, and food & beverages. c. housing, food & beverages, and education & communication. d. housing, medical care, and education & communication. 65. Which of these events would cause the consumer price index to overstate the increase in the cost of living? a. Car makers benefit from a new technology that allows them to sell higher-quality cars to consumers with no increase in price. b. Energy prices decrease, and consumers respond by buying more gas and electricity. c. A new good is introduced that renders cellular telephones inferior and obsolete. d. All of the above are correct. 66. An increase in the price of bread produced domestically will be reflected in a. both the GDP deflator and the consumer price index. b. neither the GDP deflator nor the consumer price index. c. the GDP deflator but not in the consumer price index. d. the consumer price index but not in the GDP deflator. 67. Henri earned a salary of $50,000 in 2001 and $70,000 in 2006. The consumer price index was 177 in 2001 and 265.5 in 2006. Henri's 2001 salary in 2006 dollars is a. $25,000.00. b. $33,333.33. c. $44,250.00 d. $75,000.00. 68. In 1970, Professor Plum earned $12,000; in 1980, he earned $24,000; and in 1990, he earned $36,000. If the CPI was 40 in 1970, 60 in 1980, and 100 in 1990, then in real terms, Professor Plum's salary was highest in a. 1980 and lowest in 1970. b. 1980 and lowest in 1990. c. 1990 and lowest in 1970. d. 1990 and lowest in 1980. Scenario 24-4 Quinn has job offers in Wrexington and across the country in Charlieville. The Wrexington job would pay a salary of $50,000 per year, and the Charlieville job would pay a salary of $40,000 per year. The CPI in Wrexington is 150, and the CPI in Charlieville is 90. 69. Refer to Scenario 24-4. If Quinn only cares about maximizing her purchasing power, then she should a. take the Charlieville job. b. take the Wrexington job. c. take either job because they both have the same purchasing power. d. The answer cannot be determined from the information given because a salary is not the same as purchasing power. 70. Unemployment data are collected a. from unemployment insurance claims. b. through a regular survey of about 60,000 households. c. through a regular survey of about 200,000 firms. d. using all of the above. 71. Who of the following is not included in the Bureau of Labor Statistics' “employed” category? a. those who worked in their own business b. those who worked as unpaid workers in a family member's business c. those waiting to be recalled to a job from which they had been laid off d. those who were temporarily absent from work because of vacation. 72. Who is not included in the labor force by the Bureau of Labor Statistics? a. Calvin, who is on temporary layoff b. Michael, who has retired and is not looking for work c. Lauren, who does not have a job, but has applied for several in the last week d. None of the above is correct. 73. In June 2009 the BLS reported a U.S. foreign-born population of 35.3 million. Of these, 22.7 million were employed and 1.4 million were unemployed. Based on these numbers what were the unemployment rate and the labor-force participation rate of the foreign-born U.S. population? a. 1.4/35.3 and 22.7/35.3 b. 1.4/35.3 and 24.1/35.3 c. 1.4/24.1 and 22.7/24.1 d. None of the above are correct. Table 28-1 Labor Data for Aridia Year 2010 2011 2012 Adult population 2000 3000 3200 Number of employed 1400 1300 1600 Number of unemployed 200 600 200 74. Refer to Table 28-1. The number of adults not in the labor force of Aridia in 2011 was a. 600. b. 1100. c. 1700. d. 2400. 75. Refer to Table 28-1. The unemployment rate of Aridia in 2011 was a. 20%. b. 31.6%. c. 46.2%. d. 63.3%. 76. Refer to Table 28-1. The labor-force participation rate of Aridia in 2011 was a. 43.3%. b. 54.2%. c. 63.3%. d. 68.4%. 77. Which of the following is not correct? a. Most people who become unemployed will soon find jobs. b. In an ideal labor market, wages would adjust to ensure that all workers are always fully employed. c. The unemployment rate occasionally falls to zero. d. There are always some workers without jobs, even when the overall economy is doing well. 78. Frictional unemployment results from a. job searching. It is often thought to explain relatively short spells of unemployment. b. job searching. It is often thought to explain relatively long spells of unemployment c. a surplus in the some labor markets. It is often thought to explain relatively short spells of unemployment. d. a surplus in some labor markets. It is often thought to explain relatively long spells of unemployment. 79. Minimum-wage laws can keep wages a. above equilibrium and cause a surplus of labor. b. above equilibrium and cause a shortage of labor. c. below equilibrium and cause a surplus of labor. d. below equilibrium and cause a shortage of labor. 80. When a union raises the wage above the equilibrium level, a. the quantity of labor supplied and unemployment both rise. b. the quantity of labor supplied and unemployment both fall. c. the quantity of labor supplied rises and unemployment falls. d. the quantity of labor supplied falls and unemployment rises. Short Answer 81. a. What is the difference between a "change in supply" and a "change in quantity supplied?" Graph your answer. b. For each of the following changes, determine whether there will be a change in quantity supplied or a change in supply. i. a change in input costs ii a change in producer expectations iii. a change in price iv. a change in technology v. a change in the number of sellers 82. GDP is defined as the market value of all final goods and services produced within a country in a given period of time. In spite of this definition, some production is left out of GDP. Explain why some final goods and services are not included. 83. The table below uses data for the year 2003 provided by the Bureau of Labor Statistics and adjusted to be comparable to U.S. data. All values are in thousands. Fill in the blank entries in the table. Country Adult Population Labor Force Employed Unemployed Unemployment Rate Labor-Force Participation Rate Japan 109,474 62,510 3,500 France 26,870 2,577 57.41 Germany 70,159 39,591 9.69 84. How does microeconomics relate to macroeconomics? 85. Recent decades have seen a trend toward globalization, which means that buying and selling in markets have crossed national borders to an increasing extent. As a result, firms and workers from different countries are increasingly interconnected. Globalization has occurred for a number of reasons. List three reasons and briefly describe their effect contributing toward globalization. 86. The formal study of economics began when Adam Smith (1723-1790) published his famous book The Wealth of Nations in 1776. In the first chapter of The Wealth of Nations, Smith introduces the idea of the division of labor. Define "division of labor" and illustrate with an example. [Show More]

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THE BEST STUDY GUIDES

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