HOMEWORK#1MACROECONOMICPRINCIPLESECN211,SECTION1004,LEC71306FALLSEMESTER,2012

Dr.FilerDue:Attheendofclass,Monday,September17,2012.

MultipleChoice:Answereachofthesequestionsbydarkeningthebubbleonyourscantronsheet,asifyouweretakinganexaminclass.Handinonlythescantronsheet.Makesureyouhavedarkenedinyournameand10digitASUAffiliateIDnumberonthescantronsheet.YOUMUSTUSETHE(81/2INCHBY11INCH)SCANTRONFORM229633BYEXAMSYSTEMII,AVAILABLEINTHEASUBOOKSTORE.NOOTHERTYPEOFSCANTRONFORMWILLBEACCEPTABLE.

1. Thesuccessfuldevelopmentofalowcostsyntheticfuel,suchasethanolfromcorn,wouldbeexpectedtoaffectthemarketforcrudeoilinwhichofthefollowingways?A) Decreasethepriceofoil.B) Decreasetheequilibriumquantityofoilproducedandpurchased.C) Decreasethedemandforoil.D) Decreasethequantitysuppliedofoil.E) Allofthese.

Usethefollowingtoanswerquestions24:

Combination Clothing FoodA 0 110B 10 105C 20 95D 30 80E 40 60F 50 35G 60 0

2. Accordingtothetableabove,acombinationof20unitsofclothingand80unitsoffoodisA) possiblebygivingup15unitsoffood.B) possibleifanimprovementintechnologymakestheproductionpossibilitiescurveshift

inward.C) inefficient.D) unattainable.E) possibleiftheeconomyobtainsmoreresources.

3. Accordingtothetableabove,acombinationof50unitsofclothingand70unitsoffoodA) ispossibleifanimprovementintechnologyshiftstheproductionpossibilitycurveinward.B) doesnotfullyutilizeresources.C) isunattainable.D) isinefficient.E) isobtainablebygivingup35unitsoffood.

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4. Accordingtothetableabove,iftheeconomyiscurrentlyproducingatpointF,theopportunitycostof10additionalunitsofclothingisA) 35unitsoffood.B) 3.5unitsoffood.C) 25unitsoffood.D) 5unitsoffood.E) 10unitsoffood.

5. Whichofthefollowingwillnotcausearightwardshiftinanation'sproductionpossibilitiescurve?A) Anincreaseinthegenerallevelofeducation.B) Areductioninunemployment.C) Advancesintechnology.D) Anincreaseinthequantityofthenation'sresources.E) Anincreaseinthelaborforce.

6. IfthepriceofCD(compactdisk)playersissuddenlycutinhalfduetoatechnologicalinnovation,whatislikelytohappentothedemandforCDs?A) ThedemandcurveforCDplayerswillprobablyshiftout.B) TherewillbeamovementupwardalongthedemandcurveforCDs.C) ThedemandcurveforCDswillprobablyshiftout.D) TherewillbenoimpactonthedemandforCDs.E) TherewillbeamovementdownwardalongthedemandcurveforCDplayers.

7. WhichofthefollowingisnotheldconstantwhenconstructingademandcurveforpizzaintheTempepizzamarket?A) ThepopulationoftheTempepizzamarket.B) TheincomeofconsumersintheTempepizzamarket.C) ThepricesofbeerandsubsandwichesinTempe.D) ThetastesofconsumersintheTempepizzamarket.E) ThepriceofpizzasintheTempepizzamarket.

8. ThequantitysuppliedofbicyclepartsisafunctionofA) thequantitysuppliedofbicycleriders.B) thepriceofbicycleparts.C) howexpensivebicyclesare.D) whatpercentofthepopulationconsistsofcollegestudentsatagiventime.E) thequantitysuppliedofbicycles.

9. WhatwouldhappenintheTempepizzamarketifthepricesofingredientsusedtoproducepizzasdecreasedatthesametimethatthepricesofingredientsusedtoproducebeerincreased?Assumebeerandpizzaarecomplements.A) Thepriceofpizzafalls;thequantitypurchaseddecreases.B) Thepriceofpizzafalls;thechangeinthequantitypurchasedisuncertain.

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C) Thechangeinthepriceofpizzaisuncertain.Thechangeinthequantitypurchasedisuncertain.

D) Thepriceofpizzarises;thechangeinthequantitypurchasedisuncertain.E) Thepriceofpizzarises;thequantitypurchasedincreases.

10. AssumebeerandpizzaarecomplementarygoodsintheTempepizzamarket.Anincreaseinthepriceofbarleyandhops,whicharekeyingredientsintheproductionprocessofbeer,otherthingsbeingequal,willcause,intheTempepizzamarket,A) anincreaseinthedemandforpizzas.B) anincreaseinthequantitydemandedofbeer.C) adecreaseinthedemandforbeer.D) anincreaseinthedemandforbeer.E) adecreaseinthedemandforpizzas.

11. WhatwouldhappenintheTempepizzamarket,iftherewereatechnologicaladvancementintheproductionprocessforpizza,atthesametimethattherewasanincreaseintheinputpricesoftheresourcesusedtoproducepizza?A) Thepriceofpizzaswouldincrease,whilethequantityproducedandexchangedofpizzas

woulddecrease.B) Thepriceofpizzaswouldincrease,whilethequantityproducedandexchangedofpizzas

wouldincrease.C) Thepriceofpizzaswoulddecrease,whilethequantityproducedandexchangedofpizzas

woulddecrease.D) Thepriceofpizzaswoulddecrease,whilethequantityproducedandexchangedofpizzas

wouldincrease.E) Thereisnotenoughinformationprovidedtoanswerthequestion.

12. Hopsandbarleyareinputsintothebeerproductionprocess.Recently,farmersthatoncegrewhopsandbarleyhavestoppedgrowinghopsandbarleyandhavestartedgrowingcornasaresultofincreasedgovernmentsubsidiestocorngrowers.Whatimpactdidthesechangeshaveonthebeermarket?A) Thepriceofbeerfellandthequantityofbeersoldinthemarketincreased.B) Thepriceofbeerfellandthequantityofbeersoldinthemarketdecreased.C) Thepriceofbeerincreasedandthequantityofbeersoldinthemarketdecreased.D) Thepriceofbeerincreasedandthequantityofbeersoldinthemarketincreased.E) Noneoftheaboveoccurred.

13. IfeveryoneexpectsthepriceofpizzasinTempetofallinthenearfuture,whatwillhappentothemarketforpizzasinTempe?A) Theamountboughtandsoldtodaywillincrease.B) Theamountboughtandsoldtodaywilldecrease.C) Thesupplywillincreasetoday.D) Peoplewillbuymorenow,causingadecreaseindemandinthefuture.E) Peoplewillbuythesameamountnow.

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14. Whichofthefollowingwouldnotshiftthedemandcurveforgolfballs?A) Adecreaseinthepriceofgolfballs.B) Anincreaseinthepriceofgolfclubs.C) Adecreaseinthepopularityofgolf.D) Anincreaseinthenumberofgolfers.E) Anexpectedincreaseinthepriceofgolfballs.

15. ThecircularflowofincomemodelshowsthatA) moneyflowstothehouseholdsectorincludethepaymentstoresourceownersexceptfor

paymentstoentrepreneurs.B) moneyflowsfromhouseholdtobusinesstofinancialintermediaryuntilthereisno

shortageorsurplus.C) revenueflowstohouseholdswhentheybuygoodsandservices.D) incomeisequaltothevalueofoutput.E) businessesareonlydemanders,andhouseholdsareonlysuppliers.

Usethefollowingtoanswerquestions1619:

ProductionPossibilitiesScheduleCombination CapitalGoods ConsumerGoods

A 4 0B 3 4C 2 7D 1 9E 0 10

16. Considerthetableabove.ThePPCrepresentingthisschedulewouldbeA) bowedinifconsumergoodsareplottedonthehorizontalaxisandbowedoutifcapital

goodsareplottedonthehorizontalaxis.B) apositivelyslopedstraightline.C) bowedout(concavetotheorigin).D) bowedin(convextotheorigin).E) anegativelyslopedstraightline.

17. Inthetableabove,acombinationof9unitsofconsumergoodsand5unitsofcapitalgoodsisA) attainablewithoutanynewresources.B) unwantedbecauseresourceswouldbecomeunemployed.C) attainableifinefficientuseoftechnologicalknowhowisdecreased.D) attainableifunemployedresourcesreturntowork.E) unattainableandbeyondtheproductionpossibilitiesofthisnation.

18. Ifthenationdepictedinthetableaboveproduced4unitsofconsumergoodsand2unitsofcapitalgoods,thenitA) wouldbeusingallitstechnologicalknowhow.

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B) wouldhaveunemployedresources.C) wouldbeproducingatmaximumefficiency.D) wouldbeusingallitsresources.E) Noneofthese;thisnationisnotcurrentlyabletoproducethiscombination.

19. IfthenationdepictedinthetableaboveisproducingatcombinationE,theopportunitycostofthetenthunitofconsumergoodswasA) 1unitofcapitalgoods.B) 4unitsofcapitalgoods.C) nounitsofcapitalgoods.D) 10unitsofcapitalgoods.E) 6unitsofcapitalgoods.

20. WhatwouldhappenintheTempepizzamarketiftherewereanincreaseinthepricesofinputsusedintheproductionprocessofpizza,whileatthesametimetherewasanincreaseintheincomesofpizzaconsumersinTempe,andpizzaisaninferiorgood?A) Thequantityofpizzaspurchasedincreases;thepriceofpizzasdecreases.B) Thequantityofpizzaspurchasedincreases;thechangeinthepriceofpizzasisuncertain.C) Thechangeinthequantityofpizzaspurchasedisuncertain;thechangeinthepriceof

pizzasisuncertain.D) Thequantityofpizzaspurchasedincreases;thepriceofpizzasincreases.E) Thequantityofpizzaspurchaseddecreases;thechangeinthepriceofpizzasisuncertain.

21. WhatwouldhappenintheTempepizzamarketifpizzaisanormalgood,andthereisadecreaseintheincomeofthehouseholdsthatconsumepizzaintheTempepizzamarket?A) Thepriceofpizzawouldincrease,andthequantityproducedandexchangedwould

increase.B) Thepriceofpizzawoulddecrease,andthequantityproducedandexchangedwould

decrease.C) Thepriceofpizzawouldincrease,andthequantityproducedandexchangedwould

decrease.D) Thepriceofpizzawoulddecrease,andthequantityproducedandexchangedwould

increase.E) Thereisnotenoughinformationprovidedtoanswerthequestion.

22. WhichofthefollowingwillcauseanincreaseinthedemandforpizzaintheTempepizzamarket?A) Thepriceofpizzasfalls.B) ThepricesofotherItaliandinnersinTempedecrease.C) Consumersexpectthepriceofpizzastodecreaseinthefuture.D) Newstudiesindicatethateatingpizzadecreasesthechanceofgettingcoloncancer.E) Tempeconsumers'incomesriseandpizzaisaninferiorgood.

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Usethefollowingtoanswerquestions2325:

ProductionPossibilitiesScheduleGoodA GoodB

Choice1 100 0Choice2 90 20Choice3 70 40Choice4 40 60Choice5 0 80

23. Accordingtotheproductionpossibilitiesscheduleinthetableabove,astheeconomyproducesmoreandmoreofgoodB,thenA) itmusthaveacomparativeadvantageintheproductionofgoodB.B) wewillexperienceagreaterrateofeconomicgrowth.C) itmustsacrificelargerandlargeramountsofgoodA.D) thevalueofgoodBthatmustbeforgonedecreases.E) theresourcestransferredwillbeincreasinglyefficientinproducinggoodB.

24. Accordingtotheproductionpossibilitiesscheduleinthetableabove,whichofthefollowingstatementsistrue?A) Ifthiseconomyweretofullyandefficientlyemployallitsresources,itcouldprovide100

unitsofAand80unitsofB.B) Thiseconomycouldproduce70unitsofAand40unitsofB.C) Thiseconomycouldproduce100unitsofAand20unitsofB.D) TheopportunitycostofproducingmoreofBdecreasesasBincreases.E) TheopportunitycostofproducingmoreofAdecreasesasAincreases.

25. Accordingtotheproductionpossibilitiesscheduleinthetableabove,whichofthefollowingstatementsistrue?A) Movingfromchoice3tochoice4,theopportunitycostof20moreBis30unitsofA.B) Movingfromchoice1tochoice2,theopportunitycostof20moreBis10unitsofA.C) ThereareincreasingopportunitycostsassociatedwithgettingmoreB.D) Movingfromchoice2tochoice3,theopportunitycostof20moreBis20unitsofA.E) Alloftheabove.

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