Question 1 In One Week: Susan Can Sew 4 Blouses Or Bake 280

Question 1in One Week Susan Can Sew 4 Blouses Or Bake 280 Piesthe Op

QUESTION 1 In one week, Susan can sew 4 blouses or bake 280 pies. The opportunity cost per pie for Susan is a.$70 b.70 blouses c.4 blouses d.1/70 of a blouse e.70 pies

QUESTION 2 If the production possibilities frontier curve is linear and downward-sloping instead of bowed out, that indicates a.constant opportunity cost. b.infinite resources exist instead of scarcity. c.inefficient applications. d.indecision on the part of society. e.specialization.

QUESTION 3 The concept of the "invisible hand" Adam Smith described can best be expressed as a. actions of entrepreneurs in creating businesses. b.the allocation of resources within markets by market forces. c.the need for government intervention in markets. d.trade is best between two or more countries. e.monopolies directing economic behavior.

QUESTION 4 A surplus of hats will cause a. a decrease in the supply of hats. b.an increase in the price of hats. c.a decrease in the price of hats. d.a decrease in the demand for hats.e.a decrease in both supply and demand for hats.

QUESTION 5 A price below the equilibrium price and quantity between demand and supply will lead to a.surpluses. b.shortages. c.no change in markets. d.underground markets. e.both b and d.f.none of the above.

QUESTION 6 If the supply of petroleum were reduced by petroleum firms due to rising inventories, we can expect a.prices to rise.b.quantity demanded to risec.quantity supplied to fall.d.quantity demanded to fall. e.none of the above. f.a, c, and d. g.a and c only.

QUESTION 7 What can we expect to occur to hot dog buns if the price of hot dogs were to decrease? a.Quantity demanded of hot dog buns would increase. b.Quantity demanded of hot dog buns would decrease. c.The demand curve for hot dog buns would shift inward. d.Demand for hot dog buns would increase. e.The supply curve of hot dog buns would shift outward.

QUESTION 8 If suppliers of tea cut supply in markets, what can we expect to happen if the market for coffee? a.A decrease in price and decrease in quantity of coffee. b.A decrease in price and increase in quantity of coffee. c.An increase in price and increase in quantity of coffee. d.An increase in price and decrease in quantity of coffee. e.None of the above.

QUESTION 9 A shift outward of the production possibilities frontier line indicates a.economic expansion has occurred and more of each good or resource can be produced. b.less of both goods can be produced. c.the producer is less efficient and incurring a reduction in economic wealth. d.a change between two goods produced.

QUESTION 10 If the demand curve and supply curve arrive at an equilibrium price of $5 and quantity of 6, while the height of the consumer surplus triangle is 5, and the height of the producer surplus triangle is 5, it is correct to say a.producer surplus equals 30. b.consumer surplus and producer surplus are both the same and equal 3. c.consumer surplus equals 30. d.consumer surplus equals 15.

QUESTION 11 If the equilibrium price is $10 and equilibrium quantity 10 units, and a price ceiling of $8 is imposed, we can expect a.surpluses to occur in markets soon afterwards. b.shortages to occur in markets soon afterwards. c.quantity demanded to fall. d.quantity supplied to fall. e.both answers b and d.

QUESTION 12 We can expect that government price floors will eventually lead to a.market disequilibrium. b.surpluses. c.higher prices. d.underground markets. e.all of the above.

QUESTION 13 An increase in consumer income will affect the supply of a product. True False

QUESTION 14 A change in demand is movement along the same demand curve . True False

QUESTION 15 Government actions, such as that of price floors and price ceilings, actually will lead to reduced unemployment and raise efficiency and equity in markets. True False

QUESTION 16 The production possibility frontier assumes the level of technology varies when applying the model. True False

QUESTION 17 Government price controls like price ceilings and price floors will still lead to equilibrium between demand and supply. True False

QUESTION 18 In the circular flow model, firms own the economic resources and households buy the manufactured products and services . True False

QUESTION 19 Economics is a social science concerned with satisfying man's unlimited wants with limited resources. True False

QUESTION 20 If incomes of Americans decrease, we can expect the supply curve to shift leftward and be negatively affected . True False

QUESTION 21 A demand curve is negatively sloped, while a supply curve is positively sloped . True False

QUESTION 22 A complementary good is a determinant of supply . True False

QUESTION 23 If the price of petroleum is rising, we can expect both the supply curve and demand curve to shift leftward. True False

QUESTION 24 The law of comparative advantages in trade typically applies only to trade between nations and favors the party who has the highest opportunity cost. True False

QUESTION 25 " Big corporations like Exxon Mobil and Ford Motor Company have deep pockets and need to be hiring more people." This is a positive statement about economic policy . True False

Paper For Above instruction

Economics as a discipline encompasses a broad array of principles concerning the allocation of scarce resources to satisfy human wants. It operates on fundamental concepts such as opportunity cost, supply and demand, market equilibrium, and the intricacies of production possibilities. This paper delves into these concepts, illustrating their relevance through various examples and analyzing their implications in contemporary economic contexts.

Opportunity Cost and Production Choices

In question 1, the opportunity cost of baking pies for Susan indicates the value of the next best alternative forgone. Given Susan can sew 4 blouses or bake 280 pies per week, the opportunity cost of one pie is calculated by dividing the alternative activities. Since sewing 4 blouses equals one blouse per week, the opportunity cost per pie is the number of blouses foregone for producing one pie. Therefore, the opportunity cost per pie is 4/280 blouses, which simplifies to 1/70 of a blouse, making option d the correct choice (Mankiw, 2014).

Production Possibilities Frontier and Opportunity Cost

The shape of the production possibilities frontier (PPF) indicates the opportunity cost associated with producing additional units of a good. A linear PPF, as referenced in question 2, suggests constant opportunity costs, implying resources are easily adaptable between the two goods without increasing costs. In contrast, bowed-out PPFs indicate increasing opportunity costs, aligning with the concept of resource specialization (Samuelson & Nordhaus, 2010).

The Invisible Hand and Market Efficiency

Question 3 addresses Adam Smith’s concept of the "invisible hand," which describes how individual self-interest in markets unintentionally benefits society through efficient resource allocation. This process arises from competitive markets where prices adjust based on supply and demand, guiding resources to their most valued uses without direct intervention by government (Smith, 1776; Hayek, 1945).

Supply, Demand, and Market Surpluses

Market surpluses, like excess hats in question 4, typically result in downward pressure on prices. When supply exceeds demand, sellers lower prices to clear inventories, leading to a decrease in equilibrium prices. A surplus, therefore, causes a contraction in the price of hats as sellers attempt to attract buyers (Krugman, 2012).

Similarly, in question 5, if the price falls below equilibrium, shortages emerge because the quantity demanded surpasses the quantity supplied, causing persistent market imbalance until prices adjust (Mankiw, 2014).

Market Dynamics and Price Changes

In the context of petroleum supply reduction due to rising inventories (question 6), the decreased supply would typically lead to higher prices—since fewer units are available at current prices—cid the quantity demanded would decrease as consumers are deterred by higher prices. The decrease in supply creates upward pressure on prices, reducing equilibrium quantity (Case & Fair, 2015).

When the price of hot dogs decreases (question 7), the law of demand suggests that more hot dogs—and related products like hot dog buns—would be demanded, shifting the consumption patterns accordingly (Mankiw, 2014).

Cross-Market Effects and Market Interactions

Market interactions such as supply cuts for tea affecting the coffee market (question 8) demonstrate how complementary or substitute goods influence each other. Here, a reduction in tea supply may not directly impact coffee unless consumers view them as substitutes; closer analysis suggests an increase in coffee price might occur if demand for coffee increases as consumers shift away from tea (Rosen & Gayer, 2013).

Production Possibilities Frontier and Economic Growth

An outward shift of the PPF (question 9) signifies economic growth, often driven by technological innovations or capital accumulation, enabling an economy to produce more of all goods. Conversely, an inward shift indicates a decline in productive capacity, possibly due to resource depletion or setbacks (Mankiw, 2014).

Market Equilibrium and Policy Interventions

Calculations involving consumer and producer surpluses (question 10) help measure the benefits derived by participants in the market. When the equilibrium is established at a specific price and quantity, areas representing surpluses can be computed geometrically based on the demand and supply curves (Rosen & Gayer, 2013).

Price controls such as ceilings and floors disrupt market equilibrium, often leading to shortages or surpluses, as discussed in questions 11 and 12. These interventions distort market signals, resulting in either excess demand or supply and potential emergence of underground markets (Case & Fair, 2015).

Market Fundamentals and Macroeconomic Indicators

Increased consumer income typically shifts demand curves to the right, whereas supply is generally unaffected directly by income levels unless considering income effect on producers (Mankiw, 2017). Further, demand curves are negatively sloped reflecting the inverse relationship between price and quantity demanded, whereas supply curves slope upward, indicating a direct relationship (Rosen & Gayer, 2013).

Complementary goods, like hot dog buns and hot dogs, are demand determinants—an increase in the price of hot dogs would typically increase demand for hot dog buns, aligning with the concept of complementarity (Krugman, 2012).

Changes in supply and demand influence price and quantity but not simultaneously shift both curves inward unless external shocks occur. For example, rising petroleum prices impact both supply and demand, often shifting the supply curve leftward due to increased costs, while demand may decline, shifting it inward as well (Samuelson & Nordhaus, 2010).

Trade and Comparative Advantage

The law of comparative advantage, as discussed in question 24, asserts that nations should specialize in producing goods with the lowest opportunity costs, maximizing global efficiency. Trade, in this context, benefits all trading partners by allowing each to focus on their comparative advantages rather than absolute production capabilities (Ricardo, 1817; Krugman et al., 2015).

Economic Statements and Policy Implications

Finally, examining simplified assertions such as the statement about large corporations hiring more (question 25), it exemplifies a positive statement—an objective fact that can be tested empirically—rather than normative opinions about economic policy (Rosen & Gayer, 2013).

Conclusion

In conclusion, understanding core economic principles such as opportunity costs, market equilibrium, effects of government interventions, and international trade fosters better comprehension of real-world economic phenomena. These concepts underpin economic analysis and policy decisions, influencing how societies allocate their limited resources to improve overall welfare.

References

• Case, K. E., & Fair, R. C. (2015). Principles of Economics (11th ed.). Pearson.
• Hayek, F. A. (1945). The Use of Knowledge in Society. The American Economic Review, 35(4), 519-530.
• Krugman, P. R. (2012). Economics (绿色版). Worth Publishers.
• Mankiw, N. G. (2014). Principles of Economics (7th ed.). Cengage Learning.
• Mankiw, N. G. (2017). Principles of Economics (8th ed.). Cengage.
• Rosen, H. S., & Gayer, T. (2013). Microeconomics (10th ed.). McGraw-Hill Education.
• Ricardo, D. (1817). On the Principles of Political Economy and Taxation.
• Samuelson, P. A., & Nordhaus, W. D. (2010). Economics (19th ed.). McGraw-Hill Education.
• Smith, A. (1776). An Inquiry into the Nature and Causes of the Wealth of Nations.