Name: ___________________________
Extra Credit for Econ, Test 1
Each question is worth 2 points, unless otherwise indicated.
1. What is a) the opportunity cost of producing at point C instead of D, and b) what is the OC of
producing at point A instead of C?
2. The graph above implies that the opportunity cost of producing 150 units of wine is
approximately 85 units of beer. (Explain why this is a true or false statement. 2 points)
3. Explain how these graphs below (Left vs Right) are different: (worth 2 points)
4. Interpret the graph below. What do you exactly see? Be thorough and detailed. (2 points)
5. Explain how going from point A to B is different from going from A to C: (2 points)
6. Interpret the graph below, and b) explain how J is different from M. (2 points)
6. Indicate the direction of Demand and/or Supply (not quantities or prices): whether they increase or
decrease, in the following situations for Starbucks Coffee (conventional brand), and explain why. (worth
7 points)
a. McDonald’s introduces McCafe:
b. Training baristas is becoming more expensive:
c. The company can sell flavored teas, which have a rising price:
d. Prices in this industry are expected to drop in the future:
e. Local Median income rises:
f. New quality pastries are added to the menu:
g. A coffee tax is added to the producer:
7. Suppose a nation has the following alternative production: (5 points)
a.
b.
c.
d.
If the economy is producing at alternative D, what is the cost of one more unit of Cloth?
If the economy is producing at alternative C, what is the cost of one more unit of Wheat?
Is this economy subject to the law of increasing opportunity costs? How can you tell?
Suppose the economy is currently producing 3 units of Cloth and 7 units of Wheat, is this
economy producing efficiently?
e. Turn the table above into a graph.