ECO 233 Exam One Fall 2000 Greenwade

ECON 202 – 2nd Quiz – Key

When a market is in equilibrium, at a price where quantity supplied is equal to quantity demanded.

The law of supply indicates that producers will offer more of a product at high prices than they will at low prices.

According to the law of increasing opportunity costs the slope of the supply curve is positive.

A response to a price change would be described as a: movement along an existing demand curve.

The market demand curve shows the relationship between the price of a good and the quantity that all consumers together are willing to buy.

In order to achieve a high economic freedom rating, a country must protect property rights, enforce contracts even-handedly, and rely extensively on markets to allocate goods and services.

International trade is advantageous because trade makes it possible for people in each country to acquire goods from foreigners more economically than they could be produced domestically.

The law of comparative advantage shows: potential gains in efficiency available through specialization and trade.

While intuitively it makes sense that a demand curve is downward sloping, the technical rationale for the consumer’s inverse relationship between price and quantity demand is the law of decreasing marginal benefits.

At $2 the shortage equals 200 units.

At $6 the surplus equals 200 units.

Why do nations often impose trade barriers that make it difficult for their own citizens to trade with people in another country? Trade restrictions often provide benefits to highly visible special interest groups while imposing a less visible cost on the general populace.

Which of the following best describes the relationship between economic freedom and real per capita Gross Domestic Product (GDP)? As economic freedom increases, real per capita GDP increases.

A country’s level of economic freedom is influenced by all of the above .

If two countries are producing the same two products it is mutually beneficial if the countries specialize then trade. How is it determined who specializes in the production of which product? by the lowest opportunity cost of production, comparative advantage.

The quantity demanded of a product increases as the price of the product falls. If two countries are producing the same two products it is mutually beneficial if the countries specialize then trade. How is it determined who specializes in the production of which product? by the lowest opportunity cost of production, comparative advantage.

The law of demand states that an increase in the price of a good decreases the quantity demanded for that good

Given the following supply and demand schedules, the market equilibrium is achieved at what price? £4