Question 4 A supple curve shifts when there is a change in a

Question 4

A supple curve shifts when there is a change in

a) Input prices

b) Technology

c) Number of sellers in the market

d) All of the above

Question 5

Suppose there is a shortage in the market for avocados. Assuming a competitive and unrestrained market, what happens over time?

a) The price of avocados will fall, and the shortage will worsen

b) The price of avocados will rise, and the market will eventually reach equilibrium

c) The price of avocados will rise, and a large surplus will be created

d) Producers will stop growing avocados

Question 6

Assume that Falda and Varick can switch between producing wheat and producing cloth at a constant rate.

Quantity Produced in 1 Hour

Bushels of Wheat

Yards of Cloth

8

12

6

15

Refer to Table. Falda has an absolute advantage in the production of

wheat.

cloth.

both goods.

neither good.

Question 7

Assume that Bonnie and Gary can switch between producing corn and producing pork at a constant rate.

Minutes Needed to Make 1

Bushel of corn

Pound of pork

30

15

15

5

Refer to Table. Assume that Bonnie and Gary each has 480 minutes available. If each person produces the product in which they have comparative advantage then the total production will be

a.

24 bushels of corn and 64 pounds of pork.

21 bushels of corn and 33 pounds of pork.

16 bushels of corn and 96 pounds of pork.

5 bushels of corn and 24 pounds of pork.

Question 8

Labor Hours Needed to Make 1 Pound of

Amount Produced in 40 Hours

Chicken Salad

Fruit Salad

Chicken Salad

Fruit Salad

Kevin

8 hours/pound

5 hours/pound

5 pounds

8 pounds

Chris

4 hours/pound

10 hours/pound

10 pounds

4 pounds

Refer to Table. Which of the following combinations of chicken salad and fruit salad could the Kevin produce in 40 hours?

a.

1 pound of chicken salad and 7.5 pounds of fruit salad.

b.

2.3 pounds of chicken salad and 5 pounds of fruit salad.

c.

3 pounds of chicken salad and 3.2 pounds of fruit salad.

d.

4.5 pounds of chicken salad and 2 pounds of fruit salad.

	Quantity Produced in 1 Hour
Bushels of Wheat	Yards of Cloth
Varick	8	12
Falda	6	15

Solution

Q 4. d) All of the above

Input prices, technology, number of sellers in the market

5 b) price will rise, the market will eventually reach equilibrium

6 b) cloth

7) c) 16 bushels of corn, and, 96 pounds of Pork

8) c) 3 pounds of chicken salad, 3.2 pounds of fruit salad

8*3+5*.2 = 40 hours