ECON 201 Exam questions and
answers rated 100%
The Income Effect - ANS✅✅the change in consumption resulting from a change in real income
(how your income affects what you'll buy)
The Substitution Effect - ANS✅✅when consumers react to an increase in a good's price by
consuming less of that good and more of other goods(You buy more of an item as it changes price)
Price Effect - ANS✅✅after a price increase, each unit sold sells at a higher price, which tends to
raise revenue (how willing you'd be to pay for an item as it changes price.)
socially efficient - ANS✅✅Where demand = MC
To pick a price - ANS✅✅Go off where MR=MC, then look up to see the price and down to see the
quantity.
In one hour, Mike can type 5 pages or wash 2 cars. What is his opportunity cost of washing a car? -
ANS✅✅Typing 2.5 pages.
Comparative Advantage - ANS✅✅the ability to produce a good at a lower opportunity cost than
another producer
Gains from trade come from: - ANS✅✅Shifting tasks to people with low opportunity costs.
A high price gives strangers an incentive to cooperate - ANS✅✅True
Markets reallocate resources to better uses - ANS✅✅True
A low price gives buyers an incentive to consume more - ANS✅✅True
, California has an ideal climate for growing grapes. As a result, it is a major exporter of wine. Thus
California provides the USA with a comparative advantage in wine production due to? -
ANS✅✅Relatively abundant inputs
There is more international trade in cheese than ice cream, even though they are made from similar
materials. This is likely because? - ANS✅✅Shipping ice cream involves higher trade costs, because
ice cream can melt.
In the United States, purchases from foreigners are called: - ANS✅✅Imports
Globalization has made it easier for American companies to offshore work formerly done in the U.S.
Some people think that this has resulted in American workers "competing" against cheaper labor.
Despite this, American wages are still much higher than the wages in China and other low-income
companies. This is mostly because: - ANS✅✅American workers are more productive than the
workers in these countries.
Consider the market for soybeans in Spartania. Initially, Spartania is an autarchy and there is no
international trade, and the world price of soybeans is above the autarchy price. What happens if
Spartania decides to allow free trade? - ANS✅✅Consumer surplus goes down, producer surplus
goes up.
Competition from international companies can prevent a firm from increasing its prices. -
ANS✅✅cause of globalization
The global market makes it more profitable for firms to create specialized products. -
ANS✅✅cause of globalization
U.S. companies may see reduced profits if there is a recession in Japan or China. - ANS✅✅cause of
globalization
International trade makes countries poorer, which limits their ability to buy expensive goods. -
ANS✅✅Not a way firms are affected by globalization!
Nonrival good - ANS✅✅a good whose consumption by one person does not diminish its
availability for others
answers rated 100%
The Income Effect - ANS✅✅the change in consumption resulting from a change in real income
(how your income affects what you'll buy)
The Substitution Effect - ANS✅✅when consumers react to an increase in a good's price by
consuming less of that good and more of other goods(You buy more of an item as it changes price)
Price Effect - ANS✅✅after a price increase, each unit sold sells at a higher price, which tends to
raise revenue (how willing you'd be to pay for an item as it changes price.)
socially efficient - ANS✅✅Where demand = MC
To pick a price - ANS✅✅Go off where MR=MC, then look up to see the price and down to see the
quantity.
In one hour, Mike can type 5 pages or wash 2 cars. What is his opportunity cost of washing a car? -
ANS✅✅Typing 2.5 pages.
Comparative Advantage - ANS✅✅the ability to produce a good at a lower opportunity cost than
another producer
Gains from trade come from: - ANS✅✅Shifting tasks to people with low opportunity costs.
A high price gives strangers an incentive to cooperate - ANS✅✅True
Markets reallocate resources to better uses - ANS✅✅True
A low price gives buyers an incentive to consume more - ANS✅✅True
, California has an ideal climate for growing grapes. As a result, it is a major exporter of wine. Thus
California provides the USA with a comparative advantage in wine production due to? -
ANS✅✅Relatively abundant inputs
There is more international trade in cheese than ice cream, even though they are made from similar
materials. This is likely because? - ANS✅✅Shipping ice cream involves higher trade costs, because
ice cream can melt.
In the United States, purchases from foreigners are called: - ANS✅✅Imports
Globalization has made it easier for American companies to offshore work formerly done in the U.S.
Some people think that this has resulted in American workers "competing" against cheaper labor.
Despite this, American wages are still much higher than the wages in China and other low-income
companies. This is mostly because: - ANS✅✅American workers are more productive than the
workers in these countries.
Consider the market for soybeans in Spartania. Initially, Spartania is an autarchy and there is no
international trade, and the world price of soybeans is above the autarchy price. What happens if
Spartania decides to allow free trade? - ANS✅✅Consumer surplus goes down, producer surplus
goes up.
Competition from international companies can prevent a firm from increasing its prices. -
ANS✅✅cause of globalization
The global market makes it more profitable for firms to create specialized products. -
ANS✅✅cause of globalization
U.S. companies may see reduced profits if there is a recession in Japan or China. - ANS✅✅cause of
globalization
International trade makes countries poorer, which limits their ability to buy expensive goods. -
ANS✅✅Not a way firms are affected by globalization!
Nonrival good - ANS✅✅a good whose consumption by one person does not diminish its
availability for others
