Econ: Supply and Demand and Fewer Electric Guitars

ECON 5103 Sample Mid Session | 1. To say that a country possesses an absolute advantage means that: |

A. | it is relatively more endowed with natural resources than another country. |

B. | it is relatively more efficient at producing some but not all goods and services than another country. |

C. | it is relatively more efficient at producing goods and services than another country. |

D. | there are no gains to specialisation for this country. | | |

| | | | 2. | Use the table to answer the question. Employee | Electric guitars per hour | Acoustic guitars per hour | Mark | 10 | 1 | Glenn | 8 | 8 | Dennis | 2 | 20 | | | |
The opportunity cost of an extra acoustic guitar for Mark is: |

A. | 0.01 fewer electric guitars. |

B. | 0.69 fewer electric guitars. |

C. | 1 fewer electric guitar. |

D. | 10 fewer electric guitars. | | | | |

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3. | Shane and Barry live in the same house and share the washing and cooking duties around the house. Shane can either prepare four meals or do 16 washes and Barry can either prepare 16 meals or do eight washes in an hour. If they want to specialise and trade their work load, what would be a relative exchange of work in terms of meals and washes for Shane and Barry so that they both benefit? |

A. | 4 meals per wash |

B. | 3 meals per wash |

C. | 2 meals per wash |

D. | 1 meal per wash | | | | |

| | 4. | As the price of a good rises: |

A. | firms earn larger profits. |

B. | more firms can cover their opportunity costs of producing the good. |

C. | firms find they can raise price by even more. |

D. | consumers become more willing to purchase the good. | | | | |

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5. | Suppose the marginal cost of producing the third TV is $200 and the total cost of producing three TVs is $750. TVs are sold for $250 each. What is the seller 's reservation price for the