problem 1: If they devote all of their resources, Japan can produce 150 cars per year or 100 buses per year. Vietnam is able to produce 100 cars a year or 95 buses year. If the two countries were to trade, they would produce:
A) 150 cars and 100 cars
B) 100 buses and 95 buses
C) 150 cars and 95 buses
D) 100 buses and 100 cars
problem 2: Dan owns a donut shop and wants to increase his revenue. He knows that the elasticity for the demand of donuts in his town is -.80. What would be his best course of action to raise revenue?:
A) Keep prices the same, but make more donuts.
B) Increase his prices.
C) Decrease his prices
D) Keep prices the same, but make less donuts.
problem 3: The following group of goods would be considered nearly perfectly inelastic:
A) Medicine
B) Grains
C) Cars
D) Lumber
problem 4: A major clothing corporation attempted to alter their overall revenue by increasing prices on all of their pants by 5%. In response, they sold 200 pairs of pants instead of their normal 300. What is the elasticity of demand for their product?:
A) -6.67
B) 0.15
C) -1.15
D) 1.15
For problems 5-8, refer to the graph of a taxed good below:
problem 5: The amount of dead weight loss due to this tax is:
A) $50
B) $100
C) $300
D) $800
problem 6: The amount of revenue made from just the consumers is equal to:
A) $50
B)$200
C) $400
D) $450
problem 7: The region(s) of the graph that correspond to the loss of producer surplus is/are:
A) B
B) A
C) D and B
D) A and C
problem 8: The burden of the tax displayed above is placed on:
A) The producers
B) The consumers
C) Split equally between consumers and producers
D) There is not enough information
problem 9: The UK had a great economic year and produced an extra 500,000 tons of goods to export to the US. Doing so caused which following change to their currency:
A) It did not change.
B) It depreciated versus the US dollar.
C) It appreciated versus the US dollar.
D) It will change, but cannot determine direction.
problem 10: Russia is running an account deficit and currently imports much of their manufactured goods. The Russian government decides to institute a large tariff on imported manufactured good. What is the likely effect of the tariff:
A) The account deficit will increase.
B) More manufactured goods will be imported.
C) The economy will grow weaker
D) Russia will produce more manufactured goods.