Opportunities
PPC
Absolute/Comparative
Supply/Demand
Anything Goes
100
Allie is shopping when she finds a pair of running shoes priced at $90. When Allie uses her debit card to pay, it is declined because her balance is insufficient to cover the cost of the running shoes. Allie’s situation best illustrates which economic concept?
What is scarcity
carcity is a condition in which wants exceed resources. In this case, the value of Allie’s wants (price of the pair of running shoes) exceeds her resources (her bank account balance).
100
Use the graphs to answer the question below.
What type of opportunity costs do PPC1 and PPC2 illustrate?
What is PPC 1 is increasing opportunity cost
PPC is constant opportunity cost
PPC1 reflects increasing opportunity costs because it is a downward-sloping curve that is concave, or bowed out to the origin. PPC2 reflects constant opportunity costs because it is a downward-sloping straight line with a constant slope.
100
The table below shows the landscaping productivity of Simone and Irina during an eight hour workday with the same amount of resources. Simone can mow twelve lawns or trim twenty-four trees in eight hours. Irina can mow nine lawns or trim twelve trees in eight hours.
Number of Lawns Mowed Number of Trees Trimmed Simone 12 24
Irina 9 12
Who has absolute advantage in mowing lawns and trimming trees?
Who is Simone has absolute advantage in both
Absolute advantage describes a situation in which an individual can produce more of a good or service than any other person using the same amount of resources. Simone has an absolute advantage in both mowing lawns and trimming trees because she can mow more lawns and trim more trees in eight hours than Irina.
100
How will An increase in subsidies to automobile manufacturers affect market supply for new automobiles?
What is supply will shift to the right (increase)
An increase in subsidies encourages manufacturers to produce more automobiles at the same prices. Therefore, there will be an increase in supply or a rightward shift in the supply curve.
100
Based on the provided graph of the market for clinkers, if the current price in the market for clinkers is $20 what happens in the market?
What is There is a surplus of 2 clinkers.
At a price of $20, the quantity supplied is 4 clinkers and the quantity demanded is 2 clinkers. When quantity supplied exceeds quantity demanded, there is a surplus in the market; in this case, this surplus is
(4-2)=2 clinkers.
200
List the 4 factors of production
What are land, labor, capital and entreprenuership
200
What will be the effect of a decrease in an economy’s resources on a production possibilities curve (PPC)?
What is shift inward (left)
The PPC will shift inward and to the left to indicate a reduction in capacity as a result of the decrease in resources.
200
Michael and Martha run a mechanic shop. In one hour Michael can perform eight oil changes or change ten tires. In one hour Martha can perform seven oil changes or change fourteen tires. Michael and Martha have the same amount of resources. Who has absolute and comparative advantage in changing oil?
Who is Michael has absolute and comparative advantage in changing oil
Absolute advantage describes a situation in which an individual can produce more of one good than any other person using the same amount of resources. Michael has an absolute advantage over Martha in changing oil because Michael can perform 8 oil changes in one hour while Martha can only perform 7 oil changes in one hour. Comparative advantage describes a situation in which an individual can produce a good or provide a service at a lower opportunity cost than another individual. Martha’s opportunity cost of performing 1 oil change is 2 tire changes, while Michael’s opportunity cost of performing 1 oil change is 1.25 tire changes. Therefore, Michael has a comparative advantage in oil changes.
200
What is relationship between price and quantity demanded according to the law of demand?
What is as price goes up quantity demanded decreases or as price goes down quantity demanded goes up
According to the law of demand, price and quantity demanded move in opposite directions (an inverse, or negative, relationship), leading to a downward-sloping demand curve. As price increases, the quantity demanded decreases, which leads to a downward-sloping demand curve.
200
First person to hit the buzzer gets 200 free points
LETS GO
300
Why are societies faced with a trade-off for every decision?
What is because resources are scarce
Because there are limited resources, societies have to make choices of how to use their resources to satisfy their needs, which involves tradeoffs.
300
A city government received a $1 million grant to build swimming pools and skating rinks for youth. Based on the data provided in the graph, what is the opportunity cost of building one swimming pool?
What is 2 skating rinks
The opportunity cost of building one swimming pool is two skating rinks. The opportunity cost is the slope of the PPC(=2/1=2) the number of skating rinks that will be forgone to build one swimming pool. The opportunity cost is constant throughout the PPC because it is a straight line. Any point on the curve involves giving up 2 skating rinks for each additional swimming pool.
300
Two nations sign a trade agreement expecting to enjoy mutual gains from the trade of a certain good. How will this event likely affect the supply of the good in the two nations?
What is This event will likely cause an increase in the supply of the good in both nations.
The trade agreement will increase competition in domestic markets by increasing the number of potential suppliers, which is a determinant of supply. Overall supply will increase or the supply curve will shift to the right.
300
describe the relationship between price and quantity supplied according to the law of supply?
What is as price increases quantity supplied increases and as price decreases quantity supplied decreases
According to the law of supply, price and quantity supplied have a positive relationship, illustrated by an upward-sloping supply curve. With all else being constant, as the price increases, the quantity supplied increases, which leads to an upward-sloping supply curve.
300
Use the table to answer the question below.
Price of Candy Bar Q Demanded Q Supplied $1.00. 1000. 0
$2.00 775. 100
$4.00 600 250
$5.00 525 525
$6.00 375 700
$7.00 200 975
$8.00 501 200
When the price of a candy bar is $6.00, what will happen?
What is The market does not clear because the price is higher than the equilibrium price and there will be a surplus in the market.
At a price of $6.00, the price is higher than the equilibrium price ($5.00) and quantity demanded is less than quantity supplied, creating a surplus in the market. There is a surplus of 325 candy bars, and the market will not clear until the price drops to $5.00, where quantity demanded equals quantity supplied.
400
On the basis of the diagram above showing an economy's production possibilities curve for two goods, which of the following statements must be true?
The opportunity cost of moving from point P to point R is 10 units of Y.
The opportunity cost of moving from point R to point P is 8 units of X.
The opportunity cost of moving from point Q to point R is 0 units of Y.
What is 1 2 and 3
400
How will A reduction in the size of the country’s labor force affect the countries PPC?
What is a leftward (inward) shift
400
The graph above shows the production possibilities curve for Factory X and Factory Y. If Factory X uses the same amount of resources to produce skateboards and bikes as Factory Y uses, who has a comparative advantage in producing skateboards?
Who is Factory X
Comparative advantage describes a situation in which a factory can produce a good at a lower opportunity cost than another factory. Factory X’s opportunity cost of producing 1 skateboard is 0.67 of a bike, while Factory Y’s opportunity cost of producing 1 skateboard is 1.33 bikes. Therefore, Factory X has a comparative advantage in producing skateboards.
400
How will An increase in the price of scooters, a substitute good affect the demand for bicycles?
What is demand will increase (shift to the right)
An increase in the price of scooters (a substitute good) increases the demand for bicycles and shifts the demand curve to the right.
400
What will occur in a competitive market when the price of a good is less than the equilibrium price?
What is Price will increase to eliminate the shortage and restore equilibrium.
500
Use the table to answer the question below.
Trucks Coffee (in tons)
China. 250 50
Malaysia 300 100
The table above shows the maximum amount of trucks or coffee that China and Malaysia can produce using the same amount of resources. Based on the data provided, which of the following terms of trade are mutually beneficial for the two countries?
What is 1 ton of coffee for 4 trucks
Mutually beneficial terms of trade depend on identifying which country has a comparative advantage, which involves the calculation of opportunity costs. China’s opportunity cost of producing 1 ton of coffee is 5 trucks, and Malaysia’s opportunity cost of producing 1 ton of coffee is 3 trucks. Therefore, China has a comparative advantage in producing trucks while Malaysia has a comparative advantage in producing coffee. Mutually beneficial terms of trade should fall between the two opportunity costs. With terms of trade of 1 ton of coffee for 4 trucks, both countries will gain. Malaysia will trade 1 ton of coffee for 4 trucks (instead of 3 trucks with no trade), and China will trade 1 truck for one-fourth of a ton of coffee (instead of one-fifth of a ton of coffee with no trade). Therefore, these terms are mutually beneficial.
500
Assume an economy produces two goods, capital goods and consumer goods. If the production of capital goods increases in the current period, what will occur for the current and future production possibilities curve (PPC) for consumer goods and capital goods?
What is a movement along the current PPC and a rightward shift of the future
There will be a movement along the current PPC toward greater production of capital goods and less production of consumer goods. The increased production of capital goods improves productivity and enhances future production possibilities; therefore, the future PPC shifts to the right.
500
The data above indicates labor-hours needed to produce a single unit of each of two commodities in each of two countries. If labor is the only factor used to produce the commodities, which of the following statements must be correct?
Country A has an absolute advantage in the production of both commodities, but a comparative advantage in the production of wheat.
Country B has an absolute advantage in the production of both commodities, but a comparative advantage in the production of fish.
Mutually advantageous trade can occur between the two countries when 2.5 units of fish are exchanged for 1 unit of wheat.
What is 1 and 3 only
500
Matcha green tea is primarily cultivated by Japanese farmers. Suppose that Matcha green tea grows in popularity as its health benefits, namely its lower caffeine content, become known, and at the same time the government reduces taxes imposed on Japanese tea farmers. What is the likely effect on the equilibrium price and equilibrium quantity in the Japanese Matcha tea market?
What is The equilibrium price will be indeterminate, and the equilibrium quantity will increase.
Demand for Matcha green tea will increase as a result of the change in consumer tastes and preferences, and supply of Matcha green tea will increase as a result of the reduction in taxes. When both the supply and the demand curves shift to the right, price is indeterminate (because the increase in demand increases the price and the increase in supply decreases the price) and quantity increases.
500
Assume household income has fallen dramatically in Country X and the cost of construction materials for building new houses has increased. How will these changes affect the equilibrium price and equilibrium quantity for new houses?
What is the equilibrium price will be indeterminate, and the equilibrium quantity will decrease.
Consumer income is a determinant of demand. A fall in consumer income decreases consumer demand at all prices. This results in a leftward shift in the demand curve, reflecting a decrease in equilibrium price and quantity. Cost of production is a determinant of supply. An increase in the cost of production decreases the supply at all prices. This results in a leftward shift in the supply curve, reflecting an increase in equilibrium price and a decrease in equilibrium quantity. The decrease in both demand and supply will therefore result in a decrease in the equilibrium quantity but will have an indeterminate effect on the equilibrium price.