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UCI Econ / IS 13 Homework 1 (100 points)

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UCI Econ / IS 13 Homework 1 (100 points) Due: Check Syllabus for due date For MC Please use F288 Scantron to submit your answers For SA part, please write or type your answer on a separate sheet. Multiple Choice (1 point each) Identify the choice that best completes the statement or answers the question. _c___ 1. Economic models a. cannot be useful if they are based on false assumptions. b. were once thought to be useful, but that is no longer true. c. must incorporate all aspects of the economy if they are to be useful. d. can be useful, even if they are not particularly realistic. Figure 2-6 A B C D G F 2 4 6 8 10 12 14 16 clocks 5 10 15 20 25 30 35 40 45 candles _D___ 2. Refer to Figure 2-6. What is the opportunity cost of moving from point A to point B? a. zero b. 6 clocks c. 6 clocks and 15 candles d. 15 candles ___D_ 3. Which of the following is not an example of a positive, as opposed to normative, statement? a. Higher gasoline prices will reduce gasoline consumption. b. Equality is more important than efficiency. c. Trade restrictions lower our standard of living. d. If a nation wants to avoid inflation, it will restrict the growth rate of the quantity of money. Figure 3-6 Maxine’s Production Possibilities Frontier Daisy’s Production Possibilities Frontier3 6 9 12 15 18 21 24 27 30 pies 8 6 4 2 10 12 14 16 18 20 tarts 3 6 9 12 15 18 21 24 27 30 pies 8 6 4 2 10 12 14 16 18 20 tarts __A__ 4. Refer to Figure 3-6. If the production possibilities frontier shown for Maxine is for 3 hours of work, then how long does it take Maxine to make one pie? a. 1/4 hour b. 1/3 hour c. 3 hours d. 4 hours Figure 3-11 The graph below represents the various combinations of ham and cheese (in pounds) that the nation of Bonovia could produce in a given month. (in pounds) (in pounds) 40 80 120 160 200 240 280 320 360 400 Ham 40 80 120 160 200 240 280 320 360 Cheese ___A_ 5. Refer to Figure 3-11. If the production possibilities frontier shown is for 240 hours of production, then which of the following combinations of ham and cheese could Bonovia produce in 240 hours? a. 225 pounds of ham and 140 pounds of cheese b. 280 pounds of ham and 100 pounds of cheese c. 355 pounds of ham and 80 pounds of cheese d. 330 pounds of ham and 60 pounds of cheese ____ 6. Refer to Figure 3-11. For Bonovia, what is the opportunity cost of a pound of cheese?a. 0.8 pounds of ham b. 1.25 pounds of ham c. 8 pounds of ham d. 16 pounds of ham Figure 3-5 Hosne’s Production Possibilities Frontier Merve’s Production Possibilities Frontier 1 2 3 4 5 6 7 8 9 10 purses 9 8 7 6 5 4 3 2 1 10 wallets 1 2 3 4 5 6 7 8 9 10 purses 9 8 7 6 5 4 3 2 1 10 wallets ___a_ 7. Refer to Figure 3-5. Hosne should specialize in the production of a. purses. b. wallets. c. both goods. d. neither good. _C___ 8. A group of buyers and sellers of a particular good or service is called a(n) a. coalition. b. economy. c. market. d. competition. __C__ 9. In a competitive market, the quantity of a product produced and the price of the product are determined by a. buyers. b. sellers. c. both buyers and sellers. d. None of the above is correct. __B__ 10. For a competitive market, a. a seller can always increase her profit by raising the price of her product. b. if a seller charges more than the going price, buyers will go elsewhere to make their purchases. c. a seller often charges less than the going price to increase sales and profit. d. a single buyer can influence the price of the product but only when purchasing from several sellers in a short period of time.

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