Ohio State University ECONOMICS 2001

Ohio State University

ECONOMICS 2001.01

Quiz 2

1)Which point on a production possibilities frontier is inefficient?

2. At point A, a producer could produce 4 units of food and 50 units of clothing. Moving to point B she now produces 1 unit of food and 100 units of clothing. What is the opportunity cost of mov- ing from point A to point B?

3. Consider the circular flow model. Jenny has a business tutoring economics. Stan comes to Jenny for tutoring. Which of the following is true?

a)            Jenny participates in the product market and receives revenue from Stan.

b)            Jenny participates in the resource market and receives income from Stan.

c)            Jenny participates in the product market and receives income from Stan.

d)            Jenny participates in the resource market and receives revenue from Stan.

4. According to the law of demand,        

5. Which of the following describes the income effect?

a)            As the price of a product rises, the purchasing power of a consumer’s budget will fall.

b)            As the price of a product rises, the consumer becomes less willing to purchase the prod- uct.

c)            As the price of a product rises, the consumer substitutes lower cost products for it.

d)            As the price of a product rises, the seller earns higher profits.

6. Suppose that the price of a product has increased. This would be shown as     .

7. Which of the following would increase the demand for video games?

a)            Video games are inferior goods and incomes are falling.

b)            Prices of video games are falling.

c)            The population of video game players is falling.

d)            People expect the price of video games to fall in the future.

8. Which of the following would cause the demand curve to shift to the right? a The price of Gyros, a substitute, decreases.

e)            The price of tortilla chips, a complement, decreases.

f)             The number of Mexican restaurants increases.

g)            The price of burritos increases.