Review Part 1

Any point inside a production possibilities curves is

• better than points on the production possibilities curve

• allocatively efficient but technology inefficient

• associated with inefficient use or unemployment of some resources

• associated with movements along the production possibilities curve

On the basis of the diagram above showing an economy's production possibilities curve for two goods, which of the following statements must be true?

I. The opportunity cost of moving from point P to point R is 10 units of Y.

II. The opportunity cost of moving from point R to point P is 8 units of X.

III. The opportunity cost of moving from point Q to point R is 0 units of Y.

• I

• I and II

• II and III

• I, II, and III

A leftward shift of the supply curve for computers could be caused by which of the following in the short run?

• A decrease in the number of computer manufacturers

• A decease in taxes on computer manufacturers

• A decrease in the price of computers

• A decrease in the price of components used to assemble computers

A simultaneous increase in both the demand for and the supply of a good in a market will lead to which of the following changes in the equilibrium price and quantity of the good?

• Price:Increase Quantity:Increase

• Price:Inderterminate Quantity:Decrease

• Price:Inderterminate Quantity:Increase

• Price:Increase Quantity:Inderterminate

If there is a decrease in the price of the coffee beans used to make brewed coffee, how will this affect the equilibrium price and quantity of brewed coffee?

• Equilibrium price will decrease and equilibrium quantity will increase

• Equilibrium price will decrease and equilibrium quantity will not change

• Equilibrium price will decrease and equilibrium quantity will decrease

• Equilibrium price will increase and equilibrium quantity will decrease

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

• A want

• A bank

• A bond

• Capital

Which of the following is the most fundamental issue that economics addresses?

• Choice of appropriate technology

• Reduction of unemployment

• Reduction of budget deficit

• Use of scarce resources

Which of the following will cause a movement along the demand curve for chicken, a normal good, resulting in an increase in the quantity demanded?

• An increase in consumers' income

• An increase in the price of fish, a substitute good

• An increase in the price of barbecue sauce, a complementary good

• A decrease in the price of chicken

Which of the following changes will most likely cause a shift of the demand curve from D1 to D2 as shown in the diagram?

• An increase in consumers’ income, assuming that video games are a normal good

• An increase in the price of game consoles, a complementary good

• A decrease in the price of mobile games, a substitute good

• A decrease in the number of buyers in the market

Assume that for consumers, pears and apples are substitutes. It is announced that pesticides used on most apples may be dangerous to consumers’ health. As a result of this announcement, which of the following market changes is most likely to occur in the short run in the pear market?

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