Amani Econ 102 Exam #1

An art museum decides to offer tours by having visitors listen to cassette tapes rather than have tour guides. The museum is answering the ________ part of one of the two big economic questions. A) "why" B) "scarcity" C) "how" D) "what"

"how"

33) Which graph shows the impact of scientists developing a more powerful fertilizer? A) Figure A B) Figure B C) Figure C D) Figure D

A

Agnes can produce either 1 unit of Xor 1 unit of Yin an hour, while Brenda can produce either 2 units of Xor 4 units of Yin an hour. The opportunity cost of producing a unit of Yis A) 1 unit of Xper unit of Yfor Agnes and 1/2 unit of Xper unit of Yfor Brenda. B) 1 our for Agnes and 2 hours for Brenda. C) 1 hour for Agnes and 1/2 hour for Brenda. D) 1 unit of Xper unit of Y for Agnes and 2 units of Xper unit of Yfor Brenda.

A

Demands differ from wants because A) demands reflect a decision about which wants to satisfy and a plan to buy the good, while wants are unlimited and involve no specific plan to acquire the good. B) wants imply a decision about which demands to satisfy, while demands involve no specific plan to acquire the good. C) wants require a plan to acquire a good but demands require no such plan. D) demands are unlimited, whereas wants are limited by income.

A

Georginebuys more sweaters when her income increases. For Georgine, sweaters are A) a normal good. B) a complement. C) an inferior good. D) a substitute.

A

If workers who make DVDs get a pay raise, the equilibrium price of a DVD ________ and the equilibrium quantity of DVDs ________. A) rises; decreases B) falls; increases C) rises; increases D) falls; decreases

A

In 2014,peanut butter sellers wereexpectingthat the price of peanut butter would rise in the future. Consequently, in the currentmarket for peanut butter there was ________ which resulted in ________ in the price of peanut butter and ________ in the quantity of peanut butter. A) a decrease in supply of peanut butter; an increase; a decrease B) an increase in supply of peanut butter; a decrease; an increase C) a decrease in demand for peanut butter; a decrease; a decrease D) an increase in demand for peanut butter; an increase; an increase

A

In the table above, country B is producing 4 units of Xand 6 units of Y. For country B, the opportunity cost of producing an additional unit of Yis A) 2/3 unit of X per unit of Y. B) 3 units of X per unit of Y. C) 1/2 unit of X per unit of Y. D) 2 units of X per unit of Y.

A

Producers of tablet computers will be able to lower the wage rate that they pay to their workers. You are asked to predict the effects on the supply of tablet computers, and the price of a tablet computer. You predict that the supply curve shifts A) rightward, and the price falls. B) rightward, and the price is constant. C) leftward, and the price is constant D) leftward, and the price rises.

A

Scarcity guarantees that A) wants will exceed demands. B) most demands will be satisfied. C) demands will be equal to wants. D) demands will exceed wants.

A

The "law of supply" states that, other things remaining the same, firms produce A) more of a good the higher its price. B) less of a good as the required resources become scarcer. C) more of a good the less it costs to produce it. D) less of a good the more it costs to produce it.

A

The opportunity cost of a good is the same as its A) relative price. B) money price. C) price index. D) none of the above.

A

The relative price of a good is A) an opportunity cost. B) equal to the price of that good divided by the quantity demanded of the good. C) equal to the money price of that good. D) expressed in dollar amounts.

A

The table shows the demand and supply schedules for jeans. A) At $40 a pair, there is a shortage of jeans and the price will rise. B) At $60 a pair, there is a shortage of jeans and the price will fall. C) At $60 a pair, there is a surplus of jeans and the price will rise. D) At $40 a pair, there is a shortage of jeans and the price will fall.

A

Which of the following shifts the demand curve for hot dogs leftward? A) an increase in the price of a hot dog bun B) an increase in the price of a hamburger C) an increase in the price of a hot dog D) a decrease in the price of a hot dog bun

A

f a producer can use resources to produce either good A or good B, then A and B are A) substitutes in production. B) substitutes in consumption. C) complements in consumption. D) complements in production.

A

Economic growth is shown on the production possibilities frontier as A) an outward shift in the PPF. B) an inward shift in the PPF. C) a movement from one point on the PPFto another. D) the curvature of the PPF.

A)

We measure the marginal ________ of a good by what a ________ for another unit of the good. A) benefit; person is willing to pay B) benefit; person must pay C) cost; person is willing to pay D) cost; person's preferences are

A)

Suppose that you are spending two hours a day studying economics, and your grade is 85 percent. You want a higher grade and decide to study for an extra hour a day. As a result, your grade rises to 90 percent. Your marginal benefit is the A) 5 point increase in your grade. B) three hours per day you spend on studying. C) extra hour per day you spend on studying. D) 5 point increase in your grade minus the opportunity cost to you of spending the hour studying.

A) 5 point increase in your grade

The statement "Unemployment should be below 6 percent" is A) a normative statement. B) a prediction. C) an assumption. D) a positive statement.

A) A normative statement

A positive statement is A) about what is. B) about what ought to be. C) always true. D) one that does not use marginal concepts.

A) About what is

Which of the following is a positive statement? A) An increase in gas prices leads people to car pool more. B) State lotteries are good methods to use for raising revenues. C) Increased prison sentences are the best way to reduce the crime rate. D) Inflation is a more serious problem than is deflation.

A) An increase in gas prices leads people to car pool more

A country produces only pencils and erasers. Pencil production is allocatively efficient if the marginal ________ of a pencil equals the marginal ________ of ________. A) benefit; cost; a pencil B) benefit; benefit; an eraser C) cost; benefit; an eraser D) cost; cost; an eraser

A) Benefit; cost; a pencil

Which of the following is an example of a positive statement? A) Increasing the minimum wage results in more unemployment. B) The Federal Reserve ought to cut the interest rate. C) We should cut back on our use of carbon-based fuels such as coal and oil. D) Every American should have equal access to health care.

A) Increasing the minimum wage results in more unemployment

Today, Julie attended her 12:30 Economics class. If she hadn't gone to class, Julie would have gone out to lunch with friends. She had other options; she could have worked or slept in. Julie's opportunity cost of going to class is the A) lunch she gave up. B) income from working, lunch, and sleep she gave up. C) sleep she gave up. D) income from working she gave up.

A) Lunch she gave up

Allocative efficiency occurs when it is A) not possible to produce more of one good without giving up the production of some other good that is valued more highly. B) possible to produce more of all goods. C) not possible to produce more of one good without giving up the production of some other good that is valued less highly. D) possible to produce more of one good without giving up the production of some other good.

A) Not possible to produce more of one good without giving up the production of some other good that is valued

Suppose the United States discovers a way to produce clean nuclear fuel. The effect of this discovery would be to A) shift the U.S. PPFoutward. B) shift the U.S. PPFinward. C) force the United States to produce at a point inside its PPF. D) lead the United States to produce less nuclear fuel.

A) Shift the U.s. PPFoutward

The statement that ________ is a positive statement. A) the price of sugar in the United States is higher than the price in Australia B) more students should study economics C) too many people in the United States have no health care insurance D) the price of gasoline is too high

A) The price of sugar in the United States is higher than the price in Australia

Allocative efficiency occurs when A) we cannot produce more of any good without giving up some other good that we value more highly. B) marginal benefit exceeds marginal cost. C) we cannot produce more of any one good without giving up some other good. D) opportunity costs are decreasing.

A) We cannot produce more of any good without giving up some other good that we value more highly

Marginal cost is the cost A) that arises from an increase in an activity. B) that arises from the secondary effects of an activity. C) that your activity imposes on someone else. D) of an activity that exceeds its benefit.

A) that arises from an increase in an activity

Joe likes to sleep late in the mornings and play tennis in the afternoons. The opportunity cost of Joe attending his morning class for one hour is A) both the tennis given up and the sleep given up. B) an hour of tennis given up. C) an hour of sleep given up. D) nothing because he is paying for his class.

An hour of sleep given up

A change in which of the following would NOTshift the supply curve for sneakers? A) an increase in technology for making sneakers B) an increase in the price of sneakers C) an increase in the price of rubber, used to make sneakers D) None of the above, that is, each change shifts the supply curve

B

A decrease in the price of bowling shifts the A) supply curve of bowling balls leftward. B) demand curve for bowling balls rightward. C) supply curve of bowling balls rightward. D) demand curve for bowling balls leftward.

B

A relative price is A) not an opportunity cost. B) the ratio of one price to another price. C) the number of dollars that must be given up in exchange for the good. D) also called the money price.

B

Anna and Maria produce shirts and ties. The figure above shows Anna's PPFand Maria's PPF. Anna and Maria can achieve the gains from trade if Anna produces ________ and Maria produces ________. A) only ties; shirts and ties B) ties; shirts C) shirts; ties D) shirts and ties; only ties

B

For consumers, goods A and B are complementary goods. The cost of a resource used in the production of A decreases. As a result A) the equilibrium price of B will fall and the equilibrium price of A will rise. B) the equilibrium price of B will rise and the equilibrium price of A will fall. C) the equilibrium prices of both A and B will rise. D) the equilibrium prices of both A and B will fall.

B

In a market, at the equilibrium price A) buyers are paying the minimum price they are willing to pay for any amount of output and sellers are charging the maximum price they are willing to charge for any amount of production. B) neither buyers nor sellers can do business at a better price. C) buyers are willing to pay a higher price, but sellers do not ask for a higher price. D) None of the above is true.

B

In a world lacking property rights, it would be ________ to realize the gains from trade and there would be ________ specialization. A) harder; more B) harder; less C) easier; more D) easier; less

B

In one week Alice can produce 5 pairs of shoes or 4 bookshelves while Roger can produce 10 pairs of shoes or 6 bookshelves. Alice should specialize in the production of A) shoes. B) bookshelves. C) either shoes or bookshelves. D) neither shoes nor bookshelves.

B

In order forsocieties to reap the gains from trade, it is necessary to A) achieve productive efficiency. B) define and enforce property rights. C) distribute resources equally. D) foster economic growth.

B

In the figure above, Joe is producing at point A. Joe's opportunity cost of producing one shirt is A) 5 pairs of pants per shirt. B) 2 pairs of pants per shirt. C) 3/5 of a pair of pants per shirt. D) 5/3 of a pair of pants per shirt.

B

The figure above shows supply curves for soft drinks. Suppose the economy is at point a. A decrease in the price of sugar used to make soft drinks is shown as a movement from point ato a point such as A) none of the points that are illustrated. B) point b. C) point c. D) point d.

B

The figure above shows supply curves for soft drinks. Suppose the economy is at point a. A movement to point dwould be the result of A) an increase in the number of soft drink suppliers. B) an increase in the relative price of a soft drink. C) an increase in technology. D) a decrease in the relative price of a soft drink.

B

The price of a DVD rental is $1.50 and the price of a downloaded movie is $1.00. If the price of a DVD rental increases by$0.50, the relative price a downloaded movie A) does not change. B) falls. C) rises. D) might change but more information is needed.

B

The term "market" refers to A) locations where buyers and sellers physically meet. B) any arrangement that enables buyers and sellers to get information and trade with one another. C) trading arrangements that have been approved by the government. D) physical structures only.

B

Which of the following is NOTone of the factors that influences the supply of a product? A) expected future prices B) income C) technology D) number of suppliers

B

Consider a production possibilities frontier with corn on the vertical axis and cars on the horizontal. Unusually good weather for growing corn shiftsA) the horizontal intercept rightward but does not shift the vertical intercept.B) the vertical intercept upward but does not shift the horizontal intercept.C) neither the horizontal intercept nor the vertical intercept.D) the horizontal intercept rightward and the vertical intercept upward.

B)

A positive statement is A) about what ought to be. B) about what is. C) valid only in the context of a model with simple assumptions. D) the result of a model's normative assumptions.

B) About what is

If the marginal benefit of consuming another unit of a good is positive, then to reach the allocatively efficient level of output more of the good should be produced and consumed A) no matter what. B) if the marginal benefit of the good is greater than its marginal cost. C) if the total benefit of the good is greater than its total cost. D) as long as the consumer can afford to pay for it.

B) If the marginal benefit of the good is greater than its marginal cost

Which of the following is a positive statement? A) Corporations should be more socially responsible. B) People buy more of a good or service when its price falls. C) The distribution of income is fair. D) The government ought to provide health care to everyone.

B) People buy more of a good or service when its price falls

An opportunity cost of economic growth is A) so high that places such as Hong Kong have had to do without it. B) the decrease in production of consumption goods in the present time period. C) essentially zero because economic growth leads to such large gains in the long run. D) decreased by the creation of capital goods rather than consumption goods.

B) The decrease in production of consumption goods in the present time period

You have the choice of going to Hawaii for a week, staying at work for the week, or spending the week skiing. If you decide to go to Hawaii, the opportunity cost is A) working, because you would be giving up a week's pay. B) the value of working or skiing, depending on which you would have done rather than go to Hawaii. C) the value of working and skiing. D) none of the above if you enjoy the time spent in Hawaii.

B) The value of working or skiing, depending on which you would have done rather than go to Hawaii

The figure above shows the demand for fruit snacks. Which movement reflects an increase in income if fruit snacks are an inferior good? A) from point ato point e B) from point ato point b C) from point ato point c D) from point ato point d

C

Marginal benefit is the benefit A) that arises from the secondary effects of an activity. B) that arises from an increase in an activity. C) of an activity that exceeds its cost. D) that your activity provides to someone else.

B) that arises from an increase in an activity

Marginal benefit is the benefit A) of producing a good or service when the total benefit from the good or service exceeds its total cost. B) that is received from consuming one more unit of a good or service. C) of consuming another good or service divided by the total number of goods or services produced. D) that your activity provides tosomeone else.

B) that is received from consuming one more unit of a good or service

30) The above figure shows the market for oil. Because of the development of a new deep sea drilling technology the A) demand curve does not shift, and the supply curve shifts from S2to S1. B) demand curve shifts from D1to D2and the supply curve shifts from S1to S2. C) demand curve does not shift, and the supply curve shifts from S1to S2. D) demand curve shifts from D1to D2and the supply curve does not shift.

C

An inferior good is a good for which demand A) decreases when population increases. B) increases when population increases. C) decreases when income increases. D) increases when income increases.

C

As the price of a pound of peanuts falls, the A) supply of peanuts increases. B) quantity of peanuts supplied increases. C) quantity of peanuts supplied decreases. D) supply of peanuts decreases.

C

At a price of $10 in the above figure, there is A) a shortage of 200 units. B) a surplus of 200 units. C) a surplus of 400 units. D) a shortage of 400 units.

C

Consider the demand curves for soft drinks shown in the figure above. Suppose the economy is at point a. What of the following could result in a movement to point b? A) a decrease in the price of bottled water B) an increase in the opportunity cost of soft drinks C) an increase in the price of bottled water D) a decrease in the relative price of a soft drink

C

If both the demand and supply increase, the equilibrium quantity ________ and the equilibrium price ________. A) decreases; might rise, fall, or not change B) decreases; rises C) increases; might rise, fall, or not change D) increases; falls

C

If the price of a hot dog is $2 and the price of a hamburger is $4, then the A) money price of a hot dog is 2 hamburgers per hot dog. B) money price of a hamburger is 2 hot dogs per hamburger. C) relative price of a hot dog is 1/2 of a hamburger per hot dog. D) relative price of a hamburger is 1/2 of a hot dog per hamburger.

C

Individuals A and B both produce goodX. A has a comparative advantage in the production of good Xif A A) can produce more units of Xin a given time period than can B. B) can produce Xusing newer technology than can B. C) has a lower opportunity cost of producing good Xthan has B. D) has a lower opportunity cost of producing good Xthan of producing good Y.

C

The above figure shows the market for french fries at fast food joints. If the price of potatoes rises and simultaneouslypeople become concerned that french fries can cause heart attacks the A) demand curve for french fries does not shift, and the supply curve of french fries shifts from S1to S2. B) demand curve for french fries shifts from D2to D1and the supply curve of french fries shifts from S1to S2. C) demand curve for french fries shifts from D2to D1and the supply curve of french fries shifts from S2to S1. D) demand curve for french fries shifts from D2to D1and the supply curve of french fries does not shift.

C

The existence of a shortage A) means resources are being allocated efficiently. B) pushes the price down. C) pushes the price up. D) is impossible in a market economy.

C

The initial supply and demand curves for agood are illustrated in the above figure. If there are technological advances in the production of the good, then the new equilibrium price for the good A) is more than $6. B) is $6. C) is less than $6. D) could be less than, equal to, or morethan $6.

C

The opportunity cost of a hot dog in terms of hamburgers is the A) ratio of the slope of the demand curve for hot dogs to the slope of the demand curve for hamburgers. B) money price of a hot dog minus the money price of a hamburger. C) ratio of the money price of a hot dog to the money price of a hamburger. D) ratio of the slope of the supply curve for hot dogs to the slope of the supply curve for hamburgers.

C

The opportunity cost of good A in terms of good B is equal to the A) money price of good A minus the money priceof good B. B) ratio of the money price of good B to the money price of good A. C) ratio of the money price of good A to the money price of good B. D) money price of good B minus the money price of good A.

C

Two countries, Blue Violet and Sweet Pansy, produce only two goods: teapots and coffeepots. The table above gives their production possibilities. A) Sweet Pansy has a comparative advantage in teapots B) Both have a comparative advantage in teapots. C) Blue Violet has a comparative advantage in teapots. D) Sweet Pansy has an absolute advantage in teapots.

C

Using the above figure, suppose that roses are a normal good. If there is an increase in income A) we cannot predict what will happen to the equilibrium quantity. B) the equilibrium quantity will decrease below 10 dozen roses. C) the equilibrium price will rise above $25 per dozen roses. D) we cannot predict what will happen to the equilibrium price.

C

Which of the following does NOThelp organize trade? A) markets B) property rights C) the production possibilities frontier D) None of the above because all these answers given help organize trade.

C

Which of the following is TRUEregarding markets?I)Economists define a market as a geographic location where trade occurs.II)A market enables buyers and sellers to get information about each other and to buy and sell from each other.III)Markets coordinate decisions through prices. A) I only B) I and III C) II and III D) I, II and III

C

f the quantity supplied exceeds the quantity demanded, then there is A) a shortage and the price is below the equilibrium price. B) a shortage and the price is above the equilibrium price. C) a surplus and the price is above the equilibrium price. D) a surplus and the price is below the equilibrium price.

C

After Hurricane Katrina devastated parts of Mississippi andNew Orleans in 2005, we can be sure that the production possibilities frontier for that area temporarily A) shifted outward, away from the origin. B) became steeper. C) shifted inward, toward the origin. D) became flatter.

C)

When economic growth occurs, the A) economy moves along its production possibilities frontier. B) production possibilities frontier becomes steeper. C) production possibilities frontier shifts outward. D) production possibilities frontier shifts outward but no longer limits the amount that can be produced.

C)

During the summer you have made the decision to attend summer school, which prevents you from working at your usual summer job in which you normally earn $6,000 for the summer. Your tuition cost is $3,000 and books andsupplies cost $1,300. In terms of dollars, the opportunity cost of attending summer school is A) $4,300. B) $3,300. C) $10,300. D) $6,000.

C) 10,300

Which of the following is a positive statement? A) What to do with Social Security is the most important economic issue today. B) The United States should fight inflation even if it raises unemployment. C) A 5 percent increase in income leads to a 3 percent increase in the consumption of orange juice. D) Because they decrease productivity, labor unions should be eliminated.

C) A 5 percent increase in income leads to a 3 percent increase in the consumption of orange juice

Which of the following creates an incentive to increase the amount of an activity? A) an increase in the marginal cost of the activity and a decrease in the marginal benefit of the activity B) constant marginal cost and constant marginal benefit of the activity C) a decrease in the marginal cost of the activity and an increase in the marginal benefit of the activity D) None of the above create an incentive to increase the amount of an activity.

C) A decrease in the marginal cost of the activity and an increase in the marginal benefit of the activity

Making a choice at the margin means A) waiting until the last minute to make a choice. B) letting someone else choose for you. C) deciding to do a little bit more or a little bit less of an activity. D) making a choice by comparing the total benefit and the total cost.

C) Deciding to do a little bit more or a little bit less of an activity

Which of the following statements can be used to describe efficiency?I.Efficiently using resources means that producers make the highest profits possible.II.Using resources efficiently means that we cannot produce more of one good without producing less of another good that has a higher value.III.Resource use is efficient when we produce goods and services that people value most highly. A) I only B) I and II C) II and III D) I, II and III

C) II and III

The principle of decreasing marginal benefit means that as the quantity of a good consumed A) decreases, its marginal benefit decreases. B) increases, its total benefit decreases. C) increases, its marginal benefit decreases. D) None of the above answers is correct.

C) Increases, its marginal benefit decreases

On the vertical axis, the production possibilities frontier shows ________; on the horizontal axis, the production possibilities frontier shows ________. A) the quantity of a good; a weighted average of resources used to produce the good B) the quantity of a good; the number of workers employed to produce the good C) the quantity of one good; the quantity of another good D) the quantity of a good; the price of the good

C) The quantity of on good; the quantity of another good

Resource use is allocatively efficient A) whenever marginal cost exceeds marginal benefit. B) when the maximum possible quantity is being produced. C) when marginal benefit equals marginal cost. D) whenever marginal benefit exceeds marginal cost.

C) When marginal benefit equals marginal cost

The marginal benefit is the A) additional gain from one more unit of an activity minus the additional cost from one more unit of the activity. B) loss of the highest-valued alternative. C) additional gain from one more unit of an activity D) additional cost from one more unit of an activity.

C) additional gain from one more unit of an activity

Marginal cost is the A) cost of all forgone alternatives. B) cost of an activity minus the benefits of the activity. C) cost of an increase in an activity. D) total cost of an activity.

C) cost of an increase in an activity

The opportunity cost of attending college includes the cost of A) tuition, books, and the lost wages for the hours spent studying. B) the tuition but not the job at which you would otherwise have worked. C) the highest valued alternative to attending college plus the cost of tuition. D) the highest valued alternative to attending college.

C) the highest valued alternative to attending college plus the cost of tuition

Which of the following questions is NOT a microeconomic question? A) How would a tax on e-commerce affect eBay? B) Can the Federal Reserve keep income growing by cutting interest rates? C) Does the United States have a comparative advantage in information technology services? D) What is Britney's opportunity cost of having another baby?

Can the Federal Reserve keep income growing by cutting interest rates

1) The money price of a pizza is $12 per pizza and the money price of a taco is $2 per taco. The relative price of a pizza is A) $24 per pizza. B) 1/6 pizza per taco. C) $12 per pizza. D) 6 tacos per pizza.

D

A normal good is a good for which demand A) decreases when income increases. B) decreases when population increases. C) increases when population increases. D) increases when income increases.

D

Based on the above figure, which of the following is TRUE?A) At a price of $4, quantity demanded is greater than quantity supplied. B) At a price of $6, quantity demanded is equal to quantity supplied. C) At a price of $8, quantity demanded is less than quantity supplied. D) All of the above answers are correct.

D

Both Mergatroid and the Geebocks produce only gizmos and widgets. It is possible for Mergatroid to have A) a comparative but not an absolute advantage in both products. B) an absolute and a comparative advantage in both products. C) neither a comparative nor an absolute advantage in both products. D) an absolute but not a comparative advantage in both products.

D

Comparative advantage is A) the ability to perform an activity at a zero opportunity cost. B) the ability to perform an activity at a higher opportunity cost than anyone else. C) another name for absolute advantage. D) the ability to perform an activity at a lower opportunity cost than anyone else.

D

Flights to Paris are a normal good and people's incomes rise. At the same time, the price of jet fuel rises. The equilibrium price of a flight to Paris ________ and the equilibrium quantity of flights to Paris ________. A) rises; increases B) falls; decreases. C) might rise, fall, or not change; increases D) rises; might increase, decrease, or not change

D

Good A and good B are substitutes in production. The demand for good A decreases, which lowers the price of good A. The decrease in the price of good A A) decreases the demand for good B. B) increases the demand for good B. C) decreases the supply of good B. D) increases the supply of good B.

D

If the quantity of textbooks supplied is 10,000 per year and the quantity of textbooks demanded is 12,000 per year, thereis a ________ in the market and the price will ________. A) surplus; rise B) shortage; fall C) surplus; fall D) shortage; rise

D

In goods markets ________ and in factor markets ________. A) firms sell to households; firms sell to households B) households sell to firms; firms sell to households C) households sell to firms; households sell to firms D) firms sellto households; households sell to firms

D

In the figure above, suppose that Mac and Izzie trade and reach point c. Then A) Mac and Izzie should both produce at point a. B) Mac should produce at point dand Izzie should produce at point b. C) Mac and Izzie should both produce at point c. D) Mac should produce at point band Izzie should produce at point d.

D

Joe pays $8,000.00 in tuition. The 8,000 dollar tuition Joe pays is an example of what economists call A) an indexed price. B) a relative price. C) an opportunity price. D) a money price.

D

Kelly graduates and her income increases by $25,000 a year. Other things remaining the same, she increases the quantity of clothes she buys. For Kelly, clothes are ________. A) a complement good B) an inferior good C) a substitute good D) a normal good

D

Refer to the above figure. Mario is self-sufficient and so is Mia. Each produces 6 dishes of pasta and 4 pizzas. Mario and Mia decide to specialize and trade. After they have specialized and traded, compared to the initial situation, Mia's opportunity cost of pasta has ________ and Mario's opportunity cost of a pizza has ________. A) increased, decreased B) decreased, decreased C) decreased, increased D) increased, increased

D

The above figures show the market for gasoline. Which figure(s) shows the effect of a new U.S. tax on oil that suppliers must pay? A) Figures A and C B) Figures B and D C) Figure A only D) Figure C only

D

The above figures show the market for oranges. Which figure shows the effect of great growing conditions that produce an above-average sized crop? A) Figure A B) Figure B C) Figure C D) Figure D

D

The equilibrium price will fall and the equilibrium quantity might increase, decrease, or stay the same when the A) demand and the supply of a good both decrease. B) demand and the supply of a good both increase. C) demand for a good increases and the supply of it decreases. D) demand for a good decreases and the supply of it increases.

D

The figure illustrates the market for pens. The equilibrium quantity is A) 2 pens a month. B) between 400 and 600 pens, but it is impossible to be precise. C) 5 pens a month. D) 500 pens a month.

D

The price of a bag of corn chips is $3, and the price of a bottle of soda is $1. What is the relative price of a bag of corn chips? A) $3 B) 33¢ C) 1/3 bottle of soda per bag of corn chips D) 3 bottles of soda per bag of corn chips

D

When there is a shortage in the market, the quantity sold is A) less than the quantity bought. B) greater than the quantity supplied. C) less than the quantity supplied. D) equal to the quantity supplied.

D

Marginal benefit is the benefit ________ one more unit of the good and ________ of the good increases. A) of producing; decreases as production B) of producing; increases as production C) from consuming; increases as consumption D) from consuming; decreases as consumption

D)

The tradeoff between current consumption and the production of capital goods also reflects a tradeoff betweenA) economic growth and technological change.B) the future production of capital goods and future consumption of goods.C) satisfying today the needs of the poor and the wants of the wealthy.D) current consumption and future consumption.

D)

The money price of a pizza is $12 per pizza and the money price of a taco is $2 per taco. The relative price of a pizza is A) $24 per pizza. B) 1/6 pizza per taco. C) $12 per pizza. D) 6 tacos per pizza.

D) 6 tacos per pizza

From 8 to 11 p.m., Sam can either attend a basketball game, a hockey match or the symphony. Suppose that Sam decides to attend the hockey match and thinks to herself that if she did not go to the match she would go to the symphony. Then the opportunity cost of attending the hockey match is A) going to the basketball game. B) three hours of time. C) going to the symphony and the basketball game. D) going to the symphony.

D) Going to the symphony

In economics we learn that A) opportunity costs are all of the possible alternatives given up when we make a choice. B) tradeoffs allow us to avoid the problem of opportunity cost. C) tradeoffs allow us to have more of everything we value. D) None of the above answers is correct.

D) None of the above answers is correct

Which of the following is NOTa normative statement? A) The distribution of income is fair. B) Corporations should be more socially responsible. C) The government ought to provide health care to everyone. D) People buy more of a good or service when its price falls.

D) People buy more of a good or service when its price falls

Technological progress makes the production possibilities frontier A) become more linear and less bowed. B) become less linear and more bowed. C) shift inward toward the origin. D) shift outward from the origin.

D) Shift outward from the origin

Whichof the following is a normative statement? A) An increase in tax rates means people work fewer hours. B) Studying more hours leads to an increase in your GPA. C) Taking extra vitamin C prevents catching a cold. D) States should require all motorcycle riders to wear helmets to reduce the number of riders killed.

D) States should require all motorcycle riders to wear helmets to reduce the number of riders killed

On Saturday morning, you rank your choices for activities in the following order: go to the library, work out at the gym,have breakfast with friends, and sleep late. Suppose you decide to go to the library. Your opportunity cost is A) not clear because not enough information is given. B) zero because you do not have to pay money to use the library. C) working out at the gym, having breakfast with friends, and sleeping late. D) working out at the gym.

D) Working out at the gym

A cost due to an increase in activity is called A) the total cost. B) an incentive loss. C) a negative marginal benefit D) a marginal cost.

D) a marginal cost

Jill, an economics student, has already spent 5 hours cleaning her room. In deciding whether or not to continue cleaning for another hour, she applies the economic principle of A) scarcity. B) ceteris paribus. C) productivity. D) choosing at the margin.

D) choosing at the margin

The loss of the highest-valued alternative defines the concept of A) marginal benefit. B) entrepreneurship. C) scarcity. D) opportunity cost.

D) opportunity cost

When the government hires people to serve in the army, these people are no longer available to do other work. This choiceillustrates the concept of A) an incentive. B) marginal benefit. C) a social interest/private interest conflict. D) opportunity cost.

D) opportunity cost

One of the opportunity costs of economic growth is A) technological change. B) capital accumulation. C) the gain in future consumption. D) reduced current consumption.

D) reduced current consumption

According to Adam Smith A) in a market transaction buyers can either get what they want for less than they would be willing to pay or sellers can earn a profit, but both buyers and sellers can't gain simultaneously. B) politicians are well-equipped to regulate corporations and intervene in markets to improve market outcomes. C) government intervention in markets is not desirable because an invisible hand leads decisions made in pursuit of self-interest to unintentionally promote the social interest. D) when big corporations pursue their self-interest of maximum profit, they will inevitably conflict with social interest.

Government intervention in markets is not desirable because an invisible hand leads decisions made in pursuit of self interest to unintentionally promote the social interest

One economist says that raising taxes on gas would be in the social interest. What does this economist mean? A) Higher taxes on gas would benefit everyone. B) Raising taxes on gas would benefit most of the people. C) Higher taxes on gas would benefit society as a whole. D) Both answers A and C are correct.

Higher taxes on gas would benefit society as a whole

Joy is training to become a chef. The skills she is obtaining from her training and education will increase Joy's ________. A) human capital B) entrepreneurship C) physical capital D) None of the above answers are correct.

Human Capital

Samantha goes to college to become an engineer. This is an example of an A) increase in entrepreneurship. B) investment in physical capital. C) increase in labor. D) investment in human capital.

Investment in Human Capital

The branch of economics that deals with the analysis of the whole economy is called A) marginal analysis B) metroanalysis. C) microeconomics. D) macroeconomics.

Macroeconomics

Fundamental economic problems basically arise from A) turmoil in the stock market. B) our wants exceeding our scarce resources. C) the fact that society has more than it needs. D) the unequal distribution of income.

Our wants exceeding our scarce resources

n part, microeconomics is concerned with the study of: A) unemployment and economic growth. B) national output of goods and services. C) the Federal Reserve's policies D) the effect government regulation has on the price of a product.

The effect government regulation has on the price of a product

Laura is a manager for HP. When Laura must decide whether to produce a few additional printers, she is choosing at the margin when she compares A) the total revenue from sales of printers to the total cost of producing all the printers. B) the extra revenue from selling a few additional printers to the extra costs of producing the printers. C) HP's printers to printers from competing companies, such as Lexmark. D) the extra revenue from selling a few additional printers to the average cost of producing the additional printers.

The extra revenue from selling a few additional printers to the extra costs of producing the printers

When an economy produces more houses and fewer typewriters, it is answering the ________ part of one of the two big economic questions. A) "how" B) "for whom" C) "where" D) "what"

What

The 2010 Patient Protection and Affordable Care Act (Obamacare) contains a provision that may require individuals to either purchase private health insurance or pay a tax(see "The Protest Against Market Capitalism"on page 8 in the Parkin textbook). This is an example of A) a mixed economy. B) centrally planned socialism. C) the invisible hand. D) market capitalism.

a mixed economy

The Occupy Wall Street movement advocates A) following the teachings of Adam Smith. B) centrally planned socialism. C) a shift away from market capitalism. D) a shift towards more market capitalism.

a shift away from market capitalism

Economists point out that scarcity confronts A) the rich but not the poor. B) both the poor and the rich. C) the poor but not the rich. D) neither the poor nor the rich.

both the poor and the rich

Entrepreneurs directly do all of the following EXCEPT A) face risks that arise from making business decisions. B) create new ideas about what and how to produce. C) make business decisions. D) decide for whom goods and services are produced.

decide for whom goods and services are produced

Factors of production include A) the economic system. B) labor and capital (not land, which is fixed). C) land, labor, capital and entrepreneurship. D) only capital, land, and labor.

land, labor, capital, and entrepreneurship

Scarcity requires that people must A) make choices. B) compete. C) cooperate. D) trade.

make choices

Scarcity is a situation in which A) some people can get all they want and some cannot. B) people can satisfy all their wants. C) most people can get only bare necessities. D) people cannot satisfy all their wants.

people cannot satisfy all their wants

Microeconomics is the study of ________. A) all aspects of scarcity B) the global economy C) the national economy D) the choices that individuals and businesses make

the choices that individuals and businesses make

Which of the following is a macroeconomic issue? A) the effect of increasing the money supply on inflation B) the hiring decisions that a business makes C) the purchasing decisions that an individual consumer makes D) the effect of an increase in the tax on cigarettes on cigarette sales

the effect of increasing the money supply on inflation

An example of a question that might be explored in microeconomics is to determine A) why the U.S. economy has grown more rapidly than the Japanese economy. B) the number of workers employed by Intel. C) the total employment within the U.S. economy. D) savings by the household sector.

the number of workers employed by Intel