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Homework 1 ECON1200 โ Principles of Microeconomics Fall 2023
- For what reason do both households and societies face many decisions?
a. because resources are scarce
b. because populations may increase or decrease over time
c. because wages for households and therefore society fluctuate with business cycles
d. because people, by nature, tend to disagree
- A furniture maker currently produces 100 tables per week and sells them for a profit.
She is considering expanding her operation in order to make more tables. Should she
expand?
a. Yes, because making tables is profitable.
b. No, because she may not be able to sell the additional tables.
c. It depends on the marginal cost of producing more tables and the marginal revenue she
will earn from selling more tables.
d. It depends on the average cost of producing more tables and the average revenue she
will earn from selling more tables.
- What does a point on a country's production possibilities frontier represent?
a. a combination of two goods that an economy will never be able to produce.
b. a combination of two goods that an economy can produce using all available resources
and technology.
c. a combination of two goods that an economy can produce using some of its resources
and technology.
d. a combination of two goods that an economy may be able to produce sometime in the
future with additional resources and technology
- What does it mean if an economy is producing efficiently?
a. there is no way to produce more of one good without producing less of the other.
b. it is possible to produce more of both goods.
c. it is possible to produce more of one good without producing less of the other.
d. it is not possible to produce more of one good at any cost.
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Lin
Homework 1 ECON1200 โ Principles of Microeconomics Fall 2023
- Refer to Figure 2-1. At which point or points can the economy produce?
a. point B, D, E
b. point A, B, D, E
c. point D, C
d. point D
- Refer to Figure 2-1. Which point represents the maximum possible production of
tubas?
a. point A
b. point B
c. point C
d. point E
- Refer to Figure 2-1. At which point or points can the economy NOT produce?
a. point A
b. point C
c. point A, C
d. point A, C, D
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Homework 1 ECON1200 โ Principles of Microeconomics Fall 2023
c. economic growth
d. opportunity cost
- Refer to Figure 3-1. What is the opportunity cost of 1 pair of tap shoes for Fred?
a. 1/3 pair of ballet slippers.
b. 1/5 pair of ballet slippers.
c. 3/5 pair of ballet slippers.
d. 5/3 pairs of ballet slippers.
- Refer to Figure 3-1. What is the opportunity cost of 1 pair of ballet slippers for
Ginger?
a. 1/4 pair of tap shoes.
b. 1/3 pair of tap shoes
c. 3/4 pair of tap shoes.
d. 4/3 pairs of tap shoes.
- Refer to Figure 3-1. Which of the following is true?
a. Ginger has a comparative advantage in tap shoes and Fred has a comparative
advantage in ballet slippers.
b. Ginger has a comparative advantage in both goods and Fred has a comparative
advantage in neither good.
c. Ginger has a comparative advantage in ballet slippers and Fred has a comparative
advantage in tap shoes.
d. Ginger has a comparative advantage in neither good and Fred has a comparative
advantage in both goods
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Homework 1 ECON1200 โ Principles of Microeconomics Fall 2023
- Refer to Figure 3-1. What should Fred produce?
a. Only tap shoes.
b. Only ballet slippers.
c. Both ballet slippers and tap shoes.
d. Neither ballet slippers nor tap shoes
- Refer to Figure 3-1. If Fred and Ginger both specialize in the good in which they have
a comparative advantage, what would the total production be?
a. 6 ballet slippers and 6 tap shoes.
b. 8 ballet slippers and 6 tap shoes.
c. 8 ballet slippers and 8 tap shoes.
d. 8 ballet slippers and 10 tap shoes.
- For two people who are planning to trade, it is impossible to:
a. have a comparative advantage in both goods.
b. have an absolute advantage in both goods.
c. specialize in the production of one good.
d. trade so that both people will be better off.
- An economy consists of three workers: Larry, Moe, and Curly. Each works ten hours
a day and can produce two services: mowing lawns and washing cars. In an hour, Larry
can either mow one lawn or wash one car; Moe can either mow one lawn or wash two
cars; and Curly can either mow two lawns or wash one car.
a. Calculate how much of each service is produced under the following circumstances,
which we label A, B, C, and D:
- All three spend all their time mowing lawns. (A)
- All three spend all their time washing cars. (B)
- All three spend half their time on each activity. (C)
- Larry spends half his time on each activity, while Moe only washes cars and Curly only
mows lawns. (D)
b. Using your answers to part (a), identify points A, B, C, and D on a graph. Graph the
production possibilities frontier for this economy (Note: the frontier is not a straight line
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predict
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there will
be
no
trade
between
these two
countries
since
they
have the
same
opportunity
cost
for
the
same
thing
