ECN 104 (15 questions) Question 1 If the PPF of an economy is a straight line, it means that the economy a) Has constant opportunity costs for both goods b) Has increasing opportunity costs for both goods c) Has decreasing opportunity costs for both goods d) Is equally good at producing both goods Question 2 Which of the following would NOT cause a shift in the demand for tea a) An increase in the price of coffee, a substitute for tea b) An increase in the number of tea producers c) Consumers' expectations of a rise in tea prices in the future d) An increase in the incomes of tea drinkers Question 3 Which of the following statements is TRUE? a) If a country has comparative advantage in producing a good but not an absolute advantage, there are benefits of trade for that country b) If a country has a comparative advantage in producing a good, it must also have an absolute advantage in that good c) If a country has absolute advantage in producing all goods, there are no benefits of trade for that country d) If a country has an absolute advantage in producing a good, it must also have a comparative advantage in that good Question 4 Jesse works as a research assistant and is currently surveying participants in a study. In a typical work week Jesse can complete 24 surveys if he only works on surveys and works efficiently. Jesse's professor also wants him to read research papers. In the time it takes Jesse to read 1 research paper he can complete 3 surveys. If Jesse works efficiently, which of the following combinations of surveys and papers can he complete in a typical work week? a) Read 72 papers and complete 0 surveys b) Read 12 papers and complete 4 surveys c) Read 4 papers and complete 12 surveys d) Read 3 papers and complete 18 surveys Question 5 Omar and Max are TAs for ECN 104, they have to grade assignments and write exam questions. In an hour, Omar can either grade 15 assignments or write 10 exam questions, Max can either grade 20 assignments or write 11 exam questions. Which of the following statements is TRUE? a) Max exchanging 10 assignments he has graded for 6 exam questions Omar has written is a mutually beneficial transaction for both TAs b) Max has the comparative advantage in writing exam questions c) Omar has the absolute advantage in grading assignments d) Omar has the comparative advantage in grading assignments The following statements were made during a recent presidential debate. Which of the following is a normative statement? a) "Millions of Canadians are working two or three jobs" b) "This country today has more income and wealth inequality than at any time in history" c) "That is the kind of economy I believe in; we should raise the minimum wage to $18.00 an hour" d) “Real unemployment in this country is ten percent" Question 7 In the circular flow model, General Motors Inc. paying salaries to its executives will be considered as: a) Money flowing from firms to households through the factor market b) Money flowing from households to firms through the factor market c) Money flowing from firms to households through the market for goods and services d) Money flowing from households to firms through the market for goods and services Question 8 In one hour, Greg can either type 200 words or wash 50 dishes. Greg's opportunity cost of washing a dish is: a) ¼ dishes b) 4 words c) 4 dishes d) ¼ words Question 9 Consider the PPFs for Chris and Patt shown above, which of the following statements is TRUE? a) Point B is efficient but not feasible for Chris b) Point A is not feasible for Patt and Point B is not feasible for Chris c) Point A is efficient for Patt and Point B is efficient for Chris d) Point B is feasible for both Patt and Chris Question 10 Chris and Patt work at the local coffee shop and their PPFs are shown above. Can trade between Chris and Patt be mutually beneficial? Why? a) No, because Chris has absolute advantage in both goods b) Yes, because Patt has comparative advantage in one good c) No, because Patt has comparative advantage in both goods d) Yes, because Patt has absolute advantage in one good Question 11 When incomes ____________, demand for ice cream _______________, therefore in this setting ice cream is a(n) ____________ good. Select the correct answer choice to fill in the blanks: a) Increase, decreases, inferior b) Decrease, decreases, inferior c) Increase, decreases, substitute d) Decrease, increases, normal Question 12 Which of the following would cause a decrease in the demand for soda? I. If soda is an inferior good, and consumer income rises. II. If soda is a normal good, and consumer income rises. III. The price of pizza, a complementary good, rises. IV. The price of beer, a substitute good, rises. a) II, IV b) II, III c) I, IV d) I, III Question 13 Which of the following could cause the supply curve for motor boats to shift to the left? a) A blockbuster movie about boating causes popularity for motor boating to increase b) Climate change causes summer boating season to last longer c) New regulations ban the use of the cheapest material to produce boat engines because studies show they cause cancer if ingested d) The price of oars for rowboats increases Question 14 Consider the market for televisions. Which of the following would cause a movement along the market demand curve for televisions: a) The price of a television increases b) Research becomes public that watching television reduces sleep quality c) LEDs, a component of televisions, becomes less expensive d) People prefer to watch Netflix on their laptops instead of on televisions Question 15 Mark gets a new job and starts making more money. After his new job, he buys more apples but fewer oranges. Apples are therefore a _________ and oranges a ___________. a) Normal good, inferior good b) Inferior good, normal good c) Higher quality, lower quality d) Substitute, complement