Question 1

Refer to the first graph (Production Possibilities Frontier for Bacon and Eggs). If the economy is operating at point C and wants to produce an additional 15 units of bacon, what is the opportunity cost in terms of eggs?

Accepted Answer

30 units of eggs

Question 2

Based on the PPF graph, which point represents an unattainable combination of bacon and eggs with current resources and technology?

Accepted Answer

Point F

Question 3

If the economy moves from point A to point D on the PPF, what happens to the opportunity cost of eggs in terms of bacon?

Accepted Answer

It rises

Question 4

Refer to the second image (Australia and Korea Output Table). What is the opportunity cost of producing 1 unit of electronics in Australia?

Accepted Answer

$$5$$ units of food

Question 5

Using the same table, which country has a comparative advantage in producing food?

Accepted Answer

Australia

Question 6

Given the production data, what is the range of prices (in units of food) for electronics at which both Australia and Korea could benefit from trade?

Accepted Answer

Greater than $$2$$ but less than $$4$$

Question 7

Refer to the third image (PPFs for Peru and Argentina). What is the opportunity cost of producing one tonne of beef in Peru?

Accepted Answer

$$3$$ tonnes of fruit

Question 8

Based on the PPFs, which country should specialize in fruit production?

Accepted Answer

Peru

Question 9

Refer to the fourth image (Market for Personal-Sized Pizzas). If demand shifts from $$D_1 to$$ $$D_2$$, what happens to the equilibrium price and quantity?

Accepted Answer

$$P = 4.00$$; $$Q = 150$$

Question 10

In the same pizza market, what happens to supply when demand increases?

Accepted Answer

It neither increases nor decreases, but quantity supplied increases

Question 11

Refer to the fifth image (Market for Hand-Held Calculators). If supply increases from $$S_1 to$$ $$S_2$$, what is the new equilibrium price and quantity?

Accepted Answer

$$P = 5$$; $$Q = 375$$

Question 12

If in the calculator market, demand increases more than supply, what is the net effect on equilibrium price and quantity?

Accepted Answer

Increase in both price and quantity

Question 13

Suppose a country can produce either 6 hats or 24 ties per hour. What is the opportunity cost of producing 1 hat?

Accepted Answer

$$4$$ ties

Question 14

If the price of a substitute for beer (wine) falls, what happens to the demand for beer?

Accepted Answer

It decreases (shifts to the left)

Question 15

If a technological breakthrough doubles corn yield per hectare, what is the most likely effect on the corn market?

Accepted Answer

Increase (shift to the right) in supply

Question 16

If equilibrium quantity rises but equilibrium price remains unchanged, what is the most likely cause?

Accepted Answer

An increase in both supply and demand

Microeconomics Study Guide: Key Concepts and Graphical Analysis

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