ECON E251 EXAM 1 IU JAMES SELF QUESTIONS AND
ANSWERS
1. Which of the following is NOT a factor of production? - Answers -the wages paid to
workers
The ultimate cost of any choice - Answers -is the highest-valued alternative forgone
Your friend Jane makes the statement, "The cost of books has increased 100 percent
over the past year," she is - Answers -making a positive statement
When the production possibilities frontier is bowed outwards, the opportunity cost of
producing more of one good - Answers -increases in terms of the amount forgone of
the other good
Opportunity cost of economic growth is - Answers -present consumption that a nation
gives up to accumulate capital
In an eight-hour day, Andy can produce either 24 loaves of bread or 8 pounds of butter.
In an eight-hour day, Adam can produce either 8 loaves of bread or 8 pounds of butter.
We know that Andy has a comparative advantage in the production of - Answers -
bread, while adam has a comparative advantage in the production of butter
Homer and Teddy are stranded on a desert island. To feed themselves each day they
can either catch fish or pick fruit. In a day, Teddy could pick 60 pieces of fruit or catch
20 fish. Homer could pick 100 pieces of fruit or catch 150 fish. Which of the following is
correct? - Answers -both homer and teddy would be better off if Homer specialized in
catching fish and Teddy specialized in picking fruit
Considering only candy bars and fast food meals, if the price of a candy bar is $1 and
the price of a fast food meal is $5, we can say that - Answers -the relative price of a
fast food meal is 5 candy bars
Consumers come to expect that the price of a gallon of gasoline will decrease next
week. As a result, you would expect: - Answers -todays demand for gasoline decreases
Dvds and cds are substitutes in production and not related in consumption. If there is an
increase in the demand for dvds that increases the market price of a dvds, we would
expect to see - Answers -a decrease in the supply of cds
Beef and leather belts are complements in production. If people's concern about health
decreases the demand for beef, then in the market for leather belts there will be -
ANSWERS
1. Which of the following is NOT a factor of production? - Answers -the wages paid to
workers
The ultimate cost of any choice - Answers -is the highest-valued alternative forgone
Your friend Jane makes the statement, "The cost of books has increased 100 percent
over the past year," she is - Answers -making a positive statement
When the production possibilities frontier is bowed outwards, the opportunity cost of
producing more of one good - Answers -increases in terms of the amount forgone of
the other good
Opportunity cost of economic growth is - Answers -present consumption that a nation
gives up to accumulate capital
In an eight-hour day, Andy can produce either 24 loaves of bread or 8 pounds of butter.
In an eight-hour day, Adam can produce either 8 loaves of bread or 8 pounds of butter.
We know that Andy has a comparative advantage in the production of - Answers -
bread, while adam has a comparative advantage in the production of butter
Homer and Teddy are stranded on a desert island. To feed themselves each day they
can either catch fish or pick fruit. In a day, Teddy could pick 60 pieces of fruit or catch
20 fish. Homer could pick 100 pieces of fruit or catch 150 fish. Which of the following is
correct? - Answers -both homer and teddy would be better off if Homer specialized in
catching fish and Teddy specialized in picking fruit
Considering only candy bars and fast food meals, if the price of a candy bar is $1 and
the price of a fast food meal is $5, we can say that - Answers -the relative price of a
fast food meal is 5 candy bars
Consumers come to expect that the price of a gallon of gasoline will decrease next
week. As a result, you would expect: - Answers -todays demand for gasoline decreases
Dvds and cds are substitutes in production and not related in consumption. If there is an
increase in the demand for dvds that increases the market price of a dvds, we would
expect to see - Answers -a decrease in the supply of cds
Beef and leather belts are complements in production. If people's concern about health
decreases the demand for beef, then in the market for leather belts there will be -
