1.The table below presents the production possibilities frontier for a nation.Using the information in the table, moving from possibility C to B means that:

PossibilityCapital GoodsConsumption Goods

A060

B255

C445

D625

E80

2 units of capital goods are given up to get 55 additional units of consumption goods.

2 units of capital goods are given up to get 10 additional units of consumption goods.

4 units of capital goods are given up to get 55 units of consumption goods.

4 units of capital goods are given up to get 10 additional units of consumption goods.

2.Which of the following will decrease the equilibrium price (P*) and increase the equilibrium quantity (Q*) in the cotton market?

The boll weevil infects the cotton crop, damaging much of the potential harvest.

People's preferences for synthetic (as opposed to natural) fibers increase.

Eli Whitney invents the cotton gin.This allows for the more efficient production of usable cotton.

Cotton workers receive a sizeable wage increase.

3.In much of the country, homeowners choose to heat their homes with either natural gas or home heating oil.Which of the following would cause a change in the demand for natural gas?

a change in the price of home heating oil.

a change in income.

an increase in consumer tastes for natural gas as an energy source.

all of the above.

4.A price elasticity of demand equal to 5 means:

quantity demanded falls by 1 when price rises by $5.

quantity demanded falls by 5 when price rises by $1.

a 1% change in price will change quantity demanded by 5%.

a 5% change in price will change quantity demanded by 1%.

a 1% change in price will change total revenue by 5%.