Question

6. Given these production possibilities, what is the opportunity cost of expanding food production from 5 units to 10 units?

            Books        Food
                10                0
                9                5
                6                10
                0                15
  
                


7. Consider a production possibilities curve with Books on the vertical axis and Food on the horizontal axis.  
    Which of the following would cause the entire production possibilities curve to shift outward?   
     
          A reduction in the unemployment rate
          Decreases in the prices for both books and food
          Increased immigration of persons with skills in both book production and food production
          A new invention that makes it easier to manufacture books
          A wildfire in California that burns 100,000 acres of farm land



8. On National Donut Day your local donut shop gives a free donut to anyone who comes to their store.  
    What is the opportunity cost of getting the free donut?   
     
          There is no cost - the donut is free
          The amount of sales tax on the donut
          Adverse effects on your health
          The value of the next best use of your time
          Guilty pleasure from breaking your diet

                

9. Which of the following would cause an increase in the quantity demanded for a good? (check all that apply)
                    
          An increase in the price of the good
          A decrease in the price of the good
          An increase in the price of a substitute for the good
          A decrease in the price of a substitute for the good
          An increase in the price of a complement for the good
          A decrease in the price for a complement for the good

                

10. What will happen to the equilibrium price and equilibrium quantity for e-cigarettes if new studies show that e-cigarettes cause lung cancer (all else being equal)?   
                    
          Equilibrium price will increase, and equilibrium quantity will increase
          Equilibrium price will increase, and equilibrium quantity will decrease
          Equilibrium price will decrease, and equilibrium quantity will increase
          Equilibrium price will decrease, and equilibrium quantity will decrease

Answer 1