Trivia: Famous Thinkers and Current Events
What recent event, starting December 2019, has had the most impact on our economy in the last year?
Henry Weng could be sleeping (valued at $20/hour), working on his college applications (valued at $40/hour), or teaching a class, earning a salary of $30/hour. What is the opportunity cost he incurs if he chooses his best possible option?
$30/hour
What does mutually beneficial trade mean?
Both parties are better off after the exchange.
Name one characteristic of a firm in perfect competition.
Answers may vary: same price for all firms, demand is horizontal, etc.
Which country has the highest GDP?
United States of America
Which economist developed the idea that countries should trade goods in which they have a comparative advantage?
David Ricardo
True or false: an accounting profit is always greater than an economic profit.
True
Why is it always beneficial for any two countries to trade?
At least one of them always has a comparative advantage.
Describe the shape of the average fixed cost curve.
Answers may vary: hyperbola, bowed inwards, concave up, tends to 0, etc.
What is the name of the curve that relates the unemployment rate to the inflation rate?
Phillips curve
What are the two types of goods for which the demand curve will slope upwards?
Giffen and Veblen goods
What is the primary difference between a tariff and an important quota?
The tariff gives revenue, while import quotas do not.
What phenomenon does the following diagram depict?
Perfect Price Discrimination
Suppose the aggregate demand increases. What happens to the nominal GDP and why?
Nominal increases, because both inflation and real GDP do.
Name the two economists who were awarded a Nobel prize this year.
Paul Milgrom and Robert Wilson
When selecting an optimal consumer bundle, consumers should make sure that ___ is constant for all goods in the bundle.
Marginal utility / dollar
Identify the imported quantity with a tariff in the following diagram.
D2 - S2
Under what circumstances should someone always pick a dominant strategy?
When they don’t know what other people are doing.
Name the 3 ways to calculate GDP.
Income method, expenditure method, output method
Which two economists helped develop a mathematical model looking at derivative investment instruments?
Black and Schoels
Which of the following statements of indifference curves is always correct?
Indifference curves never intersect
Indifference curves are bowed inwards
Indifference curves are always continuous.
1 and 2 only.
America can produce a maximum of 50 cars and 10 planes, while Canada can produce a maximum of 40 cars and 20 planes. Name all of the following trades both countries agree to.
America gives 3 cars for a plane
Canada gives 3 cars for a plane
America gives 6 cars for a plane
Canada gives 6 cars for a plane
1 only.
Give an example where the Nash equilibrium is not Pareto optimal.
Prisoner’s dilemma, accept other correct ones.
Suppose the unemployment rate changes from 3% to 5%. According to Okun’s law, approximately how does the GDP change?
Decreases by 4%