9. A model without any simplifying assumptions: a. is highly complex and likely
ID: 1226841 • Letter: 9
Question
9. A model without any simplifying assumptions:
a. is highly complex and likely unworkable.
b. excludes important predictive variables.
c. is very helpful for solving tough, real-world problems.
d. does not look like the real-world problem it is meant to address.
e. provides simplified solutions to complex problems.
11. Which of the following is NOT an assumption that economists make when developing a production possibilities frontier (PPF)?
a. We live in a world with only two goods.
b. There are no increases in technology.
c. There is no change in available resources.
d. Society will always be producing somewhere on the PPF.
e. There are no decreases in technology.
20. Pepsi and Coke are considered substitute goods. Because of this, one would predict that, holding all else constant, if the price of Pepsi increases, we would see:
a. the demand curve for Coke shift to the right.
b. the demand curve for Coke shift to the left.
c. no change in the demand for Coke.
d. the demand curve for Pepsi shift to the right.
e. the demand curve for Pepsi shift to the left.
21. Which following change in the coffee market would shift the supply curve to the right?
a. A study finds that drinking coffee leads to higher grades.
b. The wage for employees in the coffee business decreases.
c. The income in the economy increases.
d. Firms expect the price of coffee to increase in the future.
e. Fifty Starbucks coffee shops close down.
Explanation / Answer
9. a. is highly complex and likely unworkable.
11. d. Society will always be producing somewhere on the PPF. Society can be producing inside PPF by not utilising its resources fully.
20. a. the demand curve for Coke shift to the right. Demand of coke will increase due to increase in price of pepsi.
21. b. The wage for employees in the coffee business decreases.Cost of production will fall for producers and hence supply will rise.
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