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IVY SOFTWARE MBA PREPWORKS
FUNDAMENTALS OF ECONOMICS EXAM LATEST
WITH ACTUAL QUESTIONS AND CORRECT
VERIFIED ANSWERS WITH
RATIONALES/ALREADY GRADED A+ 100%
GUARANTEED SUCCESS!
The main concept demonstrated in the production
possibilities frontier is - .....ANSWER ...✔✔
Opportunity cost
When country A has a lower opportunity cost of
producing sugar relative to country B, then country A is
said to have - .....ANSWER ...✔✔ Comparative
Advantage
A graph that shows the combinations of two goods that
the economy can produce given the available scarce
resources and available technology is called a -
.....ANSWER ...✔✔ Production Possibilities Frontier
Assume a production possibilities frontier for pickup
trucks and big Mac hamburgers. The economy is
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producing 20 big Mac hamburgers and 65 pickup trucks
(point 20, 65). What is the opportunity cost of producing
an additional 20 Big Mac hamburgers (point 40, 60)? -
.....ANSWER ...✔✔ Five Pickup Trucks
The opportunity cost of an item is - .....ANSWER ...✔✔
whatever must be given up to obtain the item.
Consider market for pork, suppose that price of beef, a
substitute for pork, increases. Because of the change in
price of beef, the equilibrium price of pork...? -
.....ANSWER ...✔✔ Increases
Consider the market for pork, suppose that the price of
beef, a substitute for pork, increases. Because of this
change in the price of beef, the equilibrium quantity of
pork will...? - .....ANSWER ...✔✔ Increase because
increase in price of beef causes demand curve for pork
to shift North East. B/c of this shift, the equilibrium
quantity of pork will increase.
Consider the market for pork. Suppose that the price of
hog feed, an input to the production of pork, increases.
Because of that change in the price of hog feed, the
equilibrium quantity of pork ...? - .....ANSWER ...✔✔
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Decreases because the increase in price of hog feed
causes the supply curve for pork to shift NW. B/c of this
shift, the quantity of pork decreases.
Consider the market for pork. Suppose that disposable
income increases and pork is an inferior good. Because
of that change in income, the equilibrium price of pork...?
- .....ANSWER ...✔✔ Decreases because the increase
in disposable income causes the demand curve for pork
to shift south west, because pork is an inferior good.
because of this shift, the equilibrium price of pork
decreases.
Consider the market for pork. Suppose that 1)
disposable income increases and pork is a normal good,
And 2) the price of hog feed decreases. Because of
these changes, the equilibrium price of pork is... -
.....ANSWER ...✔✔ Indeterminate because the
increase in disposable income causes the demand curve
for pork to shift north east because pork is a normal
good. The decrease in price of hog feed causes the
supply curve to shift to the south east. The net effect of
these shifts leaves us unable to say waht will happen to
the equilibrium price of pork.
Consider the market for pork. Suppose that disposable
income increases and pork is a normal good and the
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price of hog feed decreases. The equilibrium quantity of
pork...? - .....ANSWER ...✔✔ Increases.
Suppose the price elasticity for demand for retail phone
service in the US is 0.95. If the # of retail substitutes for
retail telephone service increases, will the price elasticity
of demand become more elastic or more inelastic? -
.....ANSWER ...✔✔ Elastic. When the number of
substitute products increases, the price elasticity of
demand will become more elastic. consumers become
more sensitive to price when they have more options to
chose among.
True or False: the law of demand states that if the price
of a good increases, CP, then the quantity demanded of
that good will increase. - .....ANSWER ...✔✔ False.
quantity demanded of that good will decrease.
Suppose the cross-price elasticity of demand for home
heating oil with respect to the price of natural gas is
+0.6. This number tells us that home heating oil and
natural gas are substitute or compliment goods? -
.....ANSWER ...✔✔ Substitute goods. When the cross
price elasticity is positive then they are substitutes.
IVY SOFTWARE MBA PREPWORKS
FUNDAMENTALS OF ECONOMICS EXAM LATEST
WITH ACTUAL QUESTIONS AND CORRECT
VERIFIED ANSWERS WITH
RATIONALES/ALREADY GRADED A+ 100%
GUARANTEED SUCCESS!
The main concept demonstrated in the production
possibilities frontier is - .....ANSWER ...✔✔
Opportunity cost
When country A has a lower opportunity cost of
producing sugar relative to country B, then country A is
said to have - .....ANSWER ...✔✔ Comparative
Advantage
A graph that shows the combinations of two goods that
the economy can produce given the available scarce
resources and available technology is called a -
.....ANSWER ...✔✔ Production Possibilities Frontier
Assume a production possibilities frontier for pickup
trucks and big Mac hamburgers. The economy is
,2|Page
producing 20 big Mac hamburgers and 65 pickup trucks
(point 20, 65). What is the opportunity cost of producing
an additional 20 Big Mac hamburgers (point 40, 60)? -
.....ANSWER ...✔✔ Five Pickup Trucks
The opportunity cost of an item is - .....ANSWER ...✔✔
whatever must be given up to obtain the item.
Consider market for pork, suppose that price of beef, a
substitute for pork, increases. Because of the change in
price of beef, the equilibrium price of pork...? -
.....ANSWER ...✔✔ Increases
Consider the market for pork, suppose that the price of
beef, a substitute for pork, increases. Because of this
change in the price of beef, the equilibrium quantity of
pork will...? - .....ANSWER ...✔✔ Increase because
increase in price of beef causes demand curve for pork
to shift North East. B/c of this shift, the equilibrium
quantity of pork will increase.
Consider the market for pork. Suppose that the price of
hog feed, an input to the production of pork, increases.
Because of that change in the price of hog feed, the
equilibrium quantity of pork ...? - .....ANSWER ...✔✔
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Decreases because the increase in price of hog feed
causes the supply curve for pork to shift NW. B/c of this
shift, the quantity of pork decreases.
Consider the market for pork. Suppose that disposable
income increases and pork is an inferior good. Because
of that change in income, the equilibrium price of pork...?
- .....ANSWER ...✔✔ Decreases because the increase
in disposable income causes the demand curve for pork
to shift south west, because pork is an inferior good.
because of this shift, the equilibrium price of pork
decreases.
Consider the market for pork. Suppose that 1)
disposable income increases and pork is a normal good,
And 2) the price of hog feed decreases. Because of
these changes, the equilibrium price of pork is... -
.....ANSWER ...✔✔ Indeterminate because the
increase in disposable income causes the demand curve
for pork to shift north east because pork is a normal
good. The decrease in price of hog feed causes the
supply curve to shift to the south east. The net effect of
these shifts leaves us unable to say waht will happen to
the equilibrium price of pork.
Consider the market for pork. Suppose that disposable
income increases and pork is a normal good and the
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price of hog feed decreases. The equilibrium quantity of
pork...? - .....ANSWER ...✔✔ Increases.
Suppose the price elasticity for demand for retail phone
service in the US is 0.95. If the # of retail substitutes for
retail telephone service increases, will the price elasticity
of demand become more elastic or more inelastic? -
.....ANSWER ...✔✔ Elastic. When the number of
substitute products increases, the price elasticity of
demand will become more elastic. consumers become
more sensitive to price when they have more options to
chose among.
True or False: the law of demand states that if the price
of a good increases, CP, then the quantity demanded of
that good will increase. - .....ANSWER ...✔✔ False.
quantity demanded of that good will decrease.
Suppose the cross-price elasticity of demand for home
heating oil with respect to the price of natural gas is
+0.6. This number tells us that home heating oil and
natural gas are substitute or compliment goods? -
.....ANSWER ...✔✔ Substitute goods. When the cross
price elasticity is positive then they are substitutes.
