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Question 1 (Worth 3 points)
Macroeconomics is best defined as the study of
how people make decisions about operating businesses.
the overall operation of the national and global economy.
how the government makes decisions about regulating businesses.
how scarce resources are used by households and businesses.
the study of the interaction of supply and demand.
Points earned on this question: 3
Question 2 (Worth 3 points)
Mike asked Rachael to go to the beach with him. Rachael knew she should stay home and study for her
Macroeconomics exam but felt she could spend some time doing both. In the past, she had always
studied about five hours for her exams but today she studied for only two hours. Her normal grade of an A
fell to a B. What was the opportunity cost of going to the beach?
The B she received on the exam.
The 2 hours she studied.
The 3 hours she spent at the beach.
The 3 hours she could have spent studying.
The 5 hours she spent at the beach.
Points earned on this question: 0
Question 3 (Worth 3 points)
When the government determines what to produce and how to produce, the economy would be called a
command economy.
free market economy.
market economy.
mixed economy.
traditional economy.
Points earned on this question: 3
Question 4 (Worth 3 points)
When two variables have a direct relationship, then
if A decreases, B increases.
if B decreases, A is unchanged.
if A increases, B is decreases.
the slope of the graph is positive.
the slope of the graph is negative.
Points earned on this question: 3
Question 5 (Worth 3 points)
If the government institutes an effective price ceiling on hamburgers, then there will be a
decrease in demand for and an increase in supply of hamburgers.
decrease in supply of hamburgers.
decrease in quantity supplied of hamburgers.
decrease in demand for hamburgers.
decrease in quantity demanded for hamburgers.
Points earned on this question: 3
Question 6 (Worth 3 points)
Refrigerator Magnets
Price
Quantity
Demanded
Quantity
Supplied
$10
0
10
$8
3
8
$6
6
6
$4
9
4
$2
12
2
$0
15
0
Market clearing equilibrium would be at a price of
$10.
$8.
$6.
$4.
$0.
Points earned on this question: 3
Question 7 (Worth 3 points)
When the government sets the price of a good or service above equilibrium, then there will be a(n)
increase in demand for the good or service.
shortage because of the price ceiling.
shortage because of the price floor.
surplus because of the price ceiling.
surplus because of the price floor.
Points earned on this question: 3
Question 8 (Worth 3 points)
A production possibilities curve that is a diagonal line represents
increasing opportunity cost.
decreasing opportunity cost.
constant opportunity cost.
zero opportunity cost.
static opportunity cost.
Points earned on this question: 3
Question 9 (Worth 3 points)
According to the graph above, the opportunity cost of producing 10 additional bottles of lime juice is
75 bottles of coconut oil.
125 bottles of coconut oil.
200 bottles of coconut oil.
125 or more bottles of coconut oil.
125 or fewer bottles of coconut oil.
Points earned on this question: 3
Question 10 (Worth 3 points)
If aloe balm was a free good, the production possibilities curve would look like choice
A.
B.
C.
D.
E.
Points earned on this question: 0
Question 11 (Worth 3 points)
If the opportunity cost of producing specialty t-shirts was constant, the production possibilities curve
would look like choice
A.
B.
C.
D.
E.
Points earned on this question: 3
Question 12 (Worth 3 points)
Given a normal market supply curve for bicycles, if the price of bicycle seats increased, then there is a/an
increase in supply for bicycles.
increase in quantity supplied of bicycles.
decrease in supply for bicycles.
decrease in quantity supplied of bicycles.
increase in demand for bicycles.
Points earned on this question: 0
Question 13 (Worth 3 points)
A hurricane destroys most of the fishing boats on the Macro Islands but leaves the lobster traps
untouched. Boats are not needed to collect the trapped lobsters. People enjoy eating fresh fish with tartar
sauce and lobster with drawn butter equally. Explain the effect of the hurricane on the demand and supply
for drawn butter.
Demand / Supply
Increase / Decrease
Increase / No Change
No Change / Decrease
Decrease / No Change
Decrease / Increase
Points earned on this question: 3
Question 14 (Worth 3 points)
Florida citrus growers announce there is an extra large crop of oranges this year. Using the graphs
above, which graph is representative of the market for orange juice?
A
B
C
D
E
Points earned on this question: 3
Question 15 (Worth 3 points)
A hurricane destroys most of the fishing boats on the Macro Islands but leaves the lobster traps
untouched. Boats are not needed to collect the trapped lobsters. People enjoy eating fresh fish with tartar
sauce and lobster with drawn butter equally. Explain the effect of the hurricane on the demand and supply
for lobster.
Demand / Supply
Increase / Decrease
Increase / No Change
No Change / Decrease
Decrease / No Change
Decrease / Increase
Points earned on this question: 3
Question 16 (Worth 3 points)
The graph above shows the market for premium chocolate ice cream in Florida. Which of the following
would cause a shift from S3 to S2?
I.
II.
III.
The price of chocolate ice cream increases.
The price of chocolate increases.
Ben and Jerry open a new ice cream factory in Florida.
I only.
II only.
III only.
I and III only.
I, II and III.
Points earned on this question: 3
Question 17 (Worth 3 points)
Using the graphs above, which graph is representative of a decrease in personal and business taxes?
A
B
C
D
E
Points earned on this question: 0
Question 18 (Worth 3 points)
Given a typical market demand curve for cell phones (a normal good), if personal income tax rates are
decreased, then
there is an increase in demand for cellular phones.
there is an increase in the quantity demanded of cellular phones.
there is a decrease in demand for cellular phones.
there is a decrease in the quantity demanded of cellular phones.
cannot be determined from information given.
Points earned on this question: 3
Question 19 (Worth 3 points)
Given a normal market supply curve for ice cream, if the surgeon general states that ice cream causes
cancer, then
there is an increase in supply of ice cream.
there is an increase in the quantity supplied of ice cream.
there is an decrease in supply of ice cream.
there is a decrease in the quantity supplied of ice cream.
cannot be determined from information given.
Points earned on this question: 0
Question 20 (Worth 3 points)
Given a normal market demand curve for M&M’s®, if the price of chocolate increases, then
there is an increase in demand for M&M’s®.
there is an increase in the quantity demanded of M&M’s ®.
there is a decrease in demand for M&M’s®.
there is a decrease in the quantity demanded of M&M’s ®.
cannot be determined from information given.
Points earned on this question: 0
Question 21 (Worth 3 points)
If the demand for hybrid cars increases, then
the price of hybrid cars will decrease.
the quantity supplied of hybrid cars will decrease.
the quantity demanded of hybrid cars will decrease.
supply will increase to match the increase in demand.
the quantity supplied of hybrid cars will increase.
Points earned on this question: 0
Question 22 (Worth 3 points)
Which of the following would cause a shift from D3 to D2?
I.
II.
III.
The price of bicycles increases.
The price of scooters increases.
The price of bicycle helmets increases.
I only.
II only.
III only.
I and III only.
I, II and III.
Points earned on this question: 0
Question 23 (Worth 3 points)
Given a normal market supply curve for bicycles, if the government required warning labels on all
bicycles, then there is a/an
increase in supply for bicycles.
increase in quantity supplied of bicycles.
decrease in supply for bicycles.
decrease in quantity supplied of bicycles.
increase in demand for bicycles.
Points earned on this question: 3
Question 24 (Worth 3 points)
Given a normal market supply curve for computers, if the price of computer parts increased, then
there is an increase in supply of computers.
there is an increase in the quantity supplied of computers.
there is a decrease in supply for computers.
there is a decrease in the quantity supplied of computers.
cannot be determined from information given.
Points earned on this question: 3
Question 25 (Worth 3 points)
A hurricane destroys most of the fishing boats on the Macro Islands but leaves the lobster traps
untouched. Boats are not needed to collect the trapped lobsters. People enjoy eating fresh fish with tartar
sauce and lobster with drawn butter equally. Explain the effect of the hurricane on the demand and supply
for tartar sauce.
Demand / Supply
Increase / Decrease
Increase / No Change
No Change / Decrease
Decrease / No Change
Decrease / Increase
Points earned on this question: 0
Question 26 (Worth 3 points)
Taylor's Production
Alex's Production
Birdhouses
Trellises
Birdhouses
Trellises
4
20
1
16
8
15
2
12
12
10
3
8
16
5
4
4
According to the table above, Taylor’s opportunity cost of producing one trellis is
5/4 birdhouses and Alex’s opportunity cost is 4 birdhouses.
4/5 birdhouses and Alex’s opportunity cost is 1/4 birdhouses.
4/5 birdhouses and Alex’s opportunity cost is 4 birdhouses.
5/4 birdhouses and Alex’s opportunity cost is 1/4 birdhouses.
4 birdhouses and Alex’s opportunity cost is 1 birdhouse.
Points earned on this question: 3
Question 27 (Worth 3 points)
Taylor's Production
Alex's Production
Birdhouses
Trellises
Birdhouses
Trellises
4
20
1
16
8
15
2
12
12
10
3
8
16
5
4
4
According to the table above, Taylor’s opportunity cost of producing one birdhouse is
5/4 trellises and Alex’s opportunity cost is 4 trellises.
4/5 trellises and Alex’s opportunity cost is 1/4 trellises.
4/5 trellises and Alex’s opportunity cost is 4 trellises.
5/4 trellises and Alex’s opportunity cost is 1/4 trellises.
20 trellises and Alex’s opportunity cost is 16 trellises.
Points earned on this question: 3
Question 28 (Worth 3 points)
Number of each product produced per hour:
Surfboards Sailboats
Macro Islands 5
15
Micro Islands 12
18
According to the table above, the Macro Islands opportunity cost of producing one surfboard is
1/3 Sailboat and the Micro Islands opportunity cost is 3 Sailboats.
15 Sailboats and the Micro Islands opportunity cost is 18 Sailboats.
3 Sailboats and the Micro Islands opportunity cost is 1 and 1/2 Sailboats.
3 Sailboats and the Micro Islands opportunity cost is 2 Sailboats.
1/3 Sailboats and the Micro Islands opportunity cost is 2/3 Sailboats.
Points earned on this question: 3
Question 29 (Worth 3 points)
The Macro Islands can produce either 250 bamboo towels or 500 botanical soaps using all its resources.
The Micro Islands can produce either 30 bamboo towels or 300 botanical soaps using all its resources.
Based on this information, which of the following is true?
The Micro Islands have a comparative advantage in producing bamboo towels.
The Macro Islands have a comparative advantage in producing both goods.
The Micro Islands have a comparative advantage in producing both goods.
The Micro Islands have a comparative advantage in producing neither good.
The Micro Islands have a comparative advantage in producing botanical soaps.
Points earned on this question: 3
Question 30 (Worth 3 points)
The diagram above shows the production possibilities curves for Eric and Sanjay. They both produce
hockey sticks and tennis rackets using the same amount of resources. Based on this information,
Eric’s opportunity cost of producing one hockey stick is one half of a tennis racket.
Eric’s opportunity cost of producing one hockey stick is one tennis racket.
Eric’s opportunity cost of producing one hockey stick is two tennis rackets.
Sanjay’s opportunity cost of producing one hockey stick is one half of a tennis racket.
Sanjay’s opportunity cost of producing one hockey stick is two tennis rackets.
Points earned on this question: 3