Question 1

Suppose the demand and supply for a good are given by the equations $$Q_d = 50 - 2P$$ and $$Q_s = 3P. At $$the price of $$P = 8$$, which of the following statements is correct?

Accepted Answer

There is a surplus of 26 units.

Question 2

An increase in the price of inputs used to produce a good would be represented by which of the following movements on a supply and demand graph?

Accepted Answer

A shift of the supply curve to the left.

Question 3

If the price of a good is set above the equilibrium price, what will result?

Accepted Answer

A surplus of the good.

Question 4

Which of the following would cause the equilibrium price of apples to increase?

Accepted Answer

A decrease in the number of apple producers and an increase in the price of oranges.

Question 5

If the production possibilities frontier (PPF) is linear, then opportunity costs are:

Accepted Answer

Constant as more of one good is produced.

Question 6

Which of the following is NOT a characteristic of rational decision-making in economics?

Accepted Answer

Ignoring the benefits and costs of all possible alternative actions.

Question 7

If a firm expects the price of its product to increase in the future, what is the most likely effect on current supply?

Accepted Answer

The firm will decrease current supply and increase supply in the future.

Question 8

If Alberta fuel prices are rising and less crude oil is being produced, what type of good is crude oil considered to be?

Accepted Answer

A scarce good.

Question 9

A movement from a point inside the production possibilities frontier (PPF) to a point on the PPF represents:

Accepted Answer

An improvement in resource utilization.

Question 10

If Serena can make 14 bracelets or 7 necklaces per week, and Haley can make 8 bracelets or 8 necklaces per week, what is Haley's opportunity cost of making a bracelet?

Accepted Answer

$$1$$ necklace

Question 11

Which of the following is an example of a factor of production?

Accepted Answer

A worker hired by Bombardier.

Question 12

If an economy is currently considering switching from point X to point Y on its PPF, what is the opportunity cost of each newly produced unit of paper?

Accepted Answer

The decrease in the number of tons of steel.

Question 13

Which of the following best describes a model in economics?

Accepted Answer

A simplified version of some aspect of economic life used to analyze real-world economic situations.

Question 14

Points outside the production possibilities frontier are:

Accepted Answer

Unattainable.

Question 15

Which of the following would NOT cause a shift in the demand curve for a good?

Accepted Answer

A change in the price of the good itself.

Question 16

If the opportunity cost of producing one more unit of good X increases as more of good X is produced, the PPF is:

Accepted Answer

Bowed outward.

Question 17

Which of the following statements about absolute and comparative advantage is true?

Accepted Answer

A country can have an absolute advantage in both goods but a comparative advantage in only one.

Question 18

A rightward shift of the demand curve for a normal good could be caused by:

Accepted Answer

An increase in consumer income.

Question 19

Which of the following is NOT a basic economic question every society must answer?

Accepted Answer

How to maximize profits?

Question 20

If the equilibrium quantity of labor increases but the equilibrium price of labor decreases, what most likely happened?

Accepted Answer

The supply of labor increased more than the demand for labor.

Practice Test #1: Foundations of Introductory Macroeconomics

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