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6

Economics

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6. Other things remaining the same, as Japanese imports from the U.S. increase, the quantity of

a. U.S. dollars supplied increases.

b. U.S. dollars demanded increases.

c. yen supplied decreases.

d. U.S. dollars demanded decreases.

e. none of the above.

7. Suppose the world’s iron mines are running out of ore, and new sources of iron are not being discovered. In a market system, the users of iron (such as auto manufacturers who buy steel) will

a. continue buying the same amount of iron.

b. be surprised when the world suddenly runs out of iron.

c. increase their buying of iron in the long run.

d. decrease their use of iron in response to rising iron prices.

e. need a government agency to inform them of the impending iron shortage.

8. Jane spends an hour studying instead of working at her part time job which pays $5/hour. The opportunity cost to her of studying is

a. the improvement in her grades from studying for the hour.

b. the difference between the value she places on the improvement in her grades and the $5 she would have earned if she had worked instead of studying.

c. the $5 she would have earned if she worked for another hour instead of studying.

d. zero since it costs nothing to study.

e. the increase in her earning power from getting an education.

9. A lighthouse is typically considered a good example of a public good because

a. the owner of the lighthouse is able to exclude beneficiaries from enjoying the lighthouse.

b. there is rarely another lighthouse nearby to provide competition.

c. a nearby port authority cannot avoid paying fees to the lighthouse owner.

d. all passing ships are able to enjoy the benefits of the lighthouse without paying.

e. the more ships there are, the less light each ship gets.