Micro Exam 1

The graph illustrates the market for tea. The initial equilibrium is at point A. After one or more changes, the new equilibrium moves to point B. You predict that the market for tea was influenced by ?

• a fall in household income and an increase in the number of plantations

• a rise in household income and an increase in the wage rate paid to tea pickers

• a rise in household income and an increase in the number of plantations

• a fall in the wage rate paid to tea pickers and a fall in household income

When the price of a resource used in production rises, ___ and the price ___

• supply and demand decrease; rises, falls, or remains unchanged

• supply decreases; rises

• demand decreases; falls

• supply increases; falls

The table shows the demand schedule for computer chips. At what price is total revenue at its maximum?

• $250

• $300

• $350

• $400

With the same amount of resources, Country A can produce 25 tons of chicken or 50 tons of wheat. What is Country A's opportunity cost of producing 1 ton of wheat?

• 1/2 ton of chicken

• 2 tons of chicken

• 25 tons of wheat

• 25 tons of chicken

 Assuming there are only two countries, Country A can produce 10 tons of wheat or 20 tons of rice, while Country B can produce 5 tons of wheat or 15 tons of rice. Which country has the highest opportunity cost for producing 1 ton of rice?

• Country A

• Country B

• Both countries are the same

• Country A up to 1/2 ton then it is Country B

 Assume that there are only two countries, Country A and Country B, producing only two goods, corn cereal and designer jeans. The table here shows the production possibilities for these two countries. Which of the following statements is correct?

• Country A has an absolute advantage in the production of both goods.

• Country B has an absolute advantage in both goods.

• Country A has an absolute advantage in one good, but not both.

• Country B has an absolute advantage in one good, but not both.