eco-210 macroeconomics
A choice made by comparing all relevant alternatives systematically and incrementally is A. a sunk cost. B. an opportunity cost. C. a choice on the margin. D. a benefit. E. a choice made in the social interest.
a choice on the margin.
Which of the following increases the quantity supplied of yoga pants but does NOT increase the supply of yoga pants? A. an increase in the price of yoga pants B. a decrease in the number of suppliers of yoga pants C. new technology that lowers the cost of producing yoga pants D. a decrease in the price of yoga pants E. an increase in the price of the resources used to produce yoga pants
an increase in the price of yoga pants
As the circular flow model shows, the factors of production flow from A. firms to households through the goods market. B. households to firms through the factor market. C. firms to households through the factor market. D. the goods market through firms to the factor markets. E. households to firms through the goods market.
households to firms through the factor market.
When Fresh Express Salads decides to mechanically pick all of its lettuce, it directly answers the ________ question. A. how B. where C. when D. for whom E. what
how
As a factor of production, oil reserves are counted as A. financial capital. B. capital. C. labor. D. land. E. entrepreneurship.
land.
In the circular flow model, which of the following owns the factors of production? A. firms, households, and all levels of government B. only firms C. both firms and households D. only households E. only federal, state, and local governments
only households
The figure shows the production possibility frontier for an economy. The point or points that are attainable and production efficient are A. points B and C. B. points A and D. C. point E. D. points A, B, C, and D. E. points A, B, and C.
points A, B, and C.
The opportunity cost of a good increases as more of it is produced because A. the number of forgone alternatives also increases. B. people want the good less as more is produced. C. there is no such thing as a free lunch. D. resources are not equally productive in all activities. E. producing more of a good requires additional resources.
resources are not equally productive in all activities.
Moving along the production possibilities frontier itself illustrates A. the existence of tradeoffs. B. how tradeoffs need not occur if the economy is efficient. C. how free lunches can be exploited through trade. D. the existence of unemployment of some factors of production. E. the benefits of free lunches.
the existence of tradeoffs.
The "law of demand" indicates that if the University of Maine increases tuition, all other things remaining the same A. the quantity of classes demanded will decrease at the University of Maine. B. the quantity of classes demanded will increase at the University of Maine. C. both the demand for and the quantity of classes demanded will decrease at the University of Maine. D. the demand for classes will increase at the University of Maine. E. the demand for classes will decrease at the University of Maine.
the quantity of classes demanded will decrease at the University of Maine.
Correlation means A. a natural experiment has been conducted. B. "after this, therefore because of this." C. other things remaining the same. D. the tendency for the values of two variables to move in a predictable and related way. E. "on the margin."
the tendency for the values of two variables to move in a predictable and related way.
Opportunity cost is best defined as A. the sunk cost of any decision. B. the value of the highest−valued alternative that is forgone in making a choice. C. how much money and time it takes to consume something. D. the total of all other alternatives that are forgone in making a choice. E. how much money is paid for something.
the value of the highest−valued alternative that is forgone in making a choice.
On a production possibilities frontier, 500 pounds of apples and 1,200 pounds of bananas can be produced while at another point on the same frontier, 300 pounds of apples and 1,300 pounds of bananas can be produced. Between these points, what is the opportunity cost of producing a pound of apples? A. 5/12 of a banana B. 100 pounds of bananas C. 2 pounds of bananas D. 0.5 a pound of bananas E. 2 pounds of apples
0.5 a pound of bananas
Deb and Pete have volunteered to help their favorite charity mail out fundraiser information. The figure shows their production possibilities frontiers for assembling packets and stuffing envelopes. If Deb and Pete specialize and trade, how many packets will be assembled? A. 40 B. 80 C. more than 80 and less than 160 D. 160 E. more than 40 and less than 80
160
Consumers eat salsa with taco chips. The price of salsa rises. How does the increase in the price of salsa affect the demand for taco chips? A. It decreases the demand for taco chips. B. It has no effect on the demand for taco chips. C. It increases the demand for taco chips. D. It will decrease the demand for taco chips only if taco chips are a normal good. E. It could increase, decrease, or have no effect on the demand for taco chips, but more information is needed to determine the impact.
A. It decreases the demand for taco chips.
The marginal benefit of an activity is i. the benefit from a one−unit increase in the activity ii. the benefit of a small, unimportant activity. iii. measured by what the person is willing to give up to get one additional unit of the activity. A. i and iii B. ii and iii C. ii only D. iii only E. i only
A. i and iii
The figure shows the market for pizza. The market is in equilibrium when the wages paid pizza workers increases. What point represents the most likely new price and quantity? A. A B. B C. C D. D E. E
B
An increase in the number of pineapple growers results in A. an increase in the quantity of pineapples supplied and no shift in the supply curve of pineapples. B. an increase in the supply of pineapples and a rightward shift in the supply curve of pineapples. C. no change in the supply of pineapples and a movement along the supply curve of pineapples. D. an increase in the supply of pineapples and a leftward shift in the supply curve of pineapples. E. None of the above answers is correct.
B. an increase in the supply of pineapples and a rightward shift in the supply curve of pineapples.
The production possibilities frontier illustrates the A. amount of each good that people want to buy. B. maximum combinations of goods and services that can be produced. This is the correct answer. C. resources the economy possess, but not its level of technology. D. limits to people's wants. E. goods and services that people want.
B. maximum combinations of goods and services that can be produced.
Entrepreneurship, as a factor of production, refers to A. the human capital accumulated by workers. B. the human resource that organizes labor, land, and capital. C. the capital the firm uses. D. the value of the firm's stock. E. the technology used by firms.
B. the human resource that organizes labor, land, and capital.
The price of cotton clothing falls. As a result, A. the quantity demanded of cotton clothing decreases. B. the quantity demanded of cotton clothing increases. C. the demand for cotton clothing increases. D. the demand for cotton clothing decreases. E. both the demand for cotton clothing increases and the quantity demand of cotton clothing increases.
B. the quantity demanded of cotton clothing increases.
Ali decides to attend the one−hour review session for microeconomics instead of working at his job. His job pays him $10 per hour. Ali's opportunity cost of attending the review session is A. nothing, because the review session does not cost anything. B. the $10 he could have earned at his job. C. the one−hour review session. D. the value of the session minus the $10 he could have earned at his job. E. equal to the benefit he gets from the review session.
B. the $10 he could have earned at his job.
Consider the market for frozen yogurt. Assume the market starts at point A. An increase in income causes a movement to point A. D because the price of resources used to make frozen yogurt will increase. B. B because the price of resources used to make frozen yogurt will decrease. C. D if frozen yogurt is a normal good. D. B if frozen yogurt is a normal good. E. C because the price of resources used to make frozen yogurt will increase.
C. D if frozen yogurt is a normal good.
Which of the following would most likely cause a country's production possibilities set to shift outward at every point along the frontier? A. a decrease in unemployment B. a decrease in idle capital C. a general technological advance that affects all sectors of the economy D. a technological advance in only one sector of the economy E. none of the above
C. a general technological advance that affects all sectors of the economy
When all of the available factors of production are being efficiently employed, the A. PPF disappears. B. opportunity cost of changing production is infinite. C. economy is producing at a point on its PPF. D. economy is producing at a point beyond its PPF. E. economy is producing at a point within its PPF.
C. economy is producing at a point on its PPF.
What typically happens to benefits as the amount of an activity is increased? A. Marginal benefit remains constant. B. Total benefits remain constant. C. The marginal benefit changes only if the marginal cost changes. D. Marginal benefit decreases.
D. Marginal benefit decreases.
Of the following, the largest single component of U.S. federal government expenditures is spent on A. transfers to state and local governments. B. purchases of goods and services for purposes other than national defense. C. national defense. D. Medicare and Medicaid. E. interest paid on the national debt.
D. Medicare and Medicaid.
In the circular flow model with the government sector, transfers A. flow only through the goods market. B. to households flow in the same direction as do expenditures on goods and services. C. to firms flow in the same direction as do rent, wages, interest, and profits. D. flow in the opposite direction as do taxes. E. flow in the same direction as do taxes.
D. flow in the opposite direction as do taxes.
Jan is attending college and studying to be an investment broker. To improve her chances of employment following college, she has interned at a top brokerage firm during the last two summers. Jan's internship has increased her A. consumption services. B. entrepreneurship capital. C. natural labor. D. human capital. E. natural resources.
D. human capital.
In the circular flow model, which of the following is on the buying side in the goods market? i. firms ii. households iii. federal, state, and local governments A. i only. B. i and ii. C. ii only. D. ii and iii. E. iii only.
D. ii and iii.
Suppose improvements in technology cause the supply of natural gas to increase and at the same time the demand for natural gas increases. What are we sure of? A. Equilibrium price increases. B. Equilibrium price decreases. C. Equilibrium quantity decreases. D. Both equilibrium price and quantity increase. E. Equilibrium quantity increases.
Equilibrium quantity increases.
Which of the following is a normative statement? A. An increase in the supply of computers has caused computer prices to fall. B. Hurricanes strike mainly Florida and North Carolina. C. Recessions lead to increases in the unemployment rate. D. When the price of kiwi fruit increases, fewer people eat kiwi fruit. E. Flood victims should pay for their own rebuilding.
Flood victims should pay for their own rebuilding.
Which of the following is a positive statement? A. Everyone should have some knowledge of economics. B. Taxes on gasoline should be lower so that gasoline is more affordable to the poor. C. If we reduce welfare payments given to the poor, they will find jobs. D. The rich should pay more in taxes. E. social Security must be reformed.
If we reduce welfare payments given to the poor, they will find jobs.
If John can produce 10 chairs or 20 lamps during a week while Mary can produce 12 chairs or 22 lamps in the same time, who has the absolute advantage in producing each good? A. Mary in producing chairs, John in producing lamps B. John in producing chairs, Mary in producing lamps C. John in producing both goods D. Mary in producing both goods E. Both Mary and John in both goods
Mary in producing both goods
Suppose India and France start off on PPF0, but at different production points, shown in the figure. Based on their current production points, relative to India, which is France's most likely future PPF? A. PPF1 with India on PPF2. B. PPF1 with India on PPF0. C. PPF2 with India on PPF1. D. PPF2 with India on PPF0. E. None of the above because France and India will always end up on the same PPF.
PPF1 with India on PPF2.
Scott and Cindy both produce only pizza and tacos. In one hour, Scott can produce 20 pizzas or 40 tacos. In one hour, Cindy can produce 30 pizzas or 40 tacos. Based on these data, A. Cindy has a comparative advantage at producing tacos. B. Scott has a comparative advantage at producing tacos. C. Cindy and Scott have the same comparative advantage in producing tacos. D. neither Cindy nor Scott has a comparative advantage in producing tacos. E. Cindy and Scott have the same comparative advantage in producing pizzas.
Scott has a comparative advantage at producing tacos.
In a recession, consumers have less income to spend. As a result, if dining out is a normal good, then which of the following would happen to the demand curve for dining out? A. The demand curve would shift leftward. B. The effect on the demand curve is unknown. C. The demand curve would not shift but the price of dining out would rise. D. The demand curve would not shift but the price of dining out would fall. E. The demand curve would shift rightward.
The demand curve would shift leftward.
For consumers, taco chips and salsa are complements. If the price of salsa rises, what is the effect on the equilibrium price and quantity of taco chips? A. The equilibrium price of taco chips could rise, fall, or stay the same and the equilibrium quantity increases. B. There is no change in the equilibrium price of taco chips and the equilibrium quantity increases. C. The equilibrium price of taco chips falls and the equilibrium quantity decreases. D. The equilibrium price of taco chips rises and the equilibrium quantity increases. E. The equilibrium price of taco chips rises and the equilibrium quantity decreases.
The equilibrium price of taco chips falls and the equilibrium quantity decreases.
Pizza and tacos are substitutes, and the price of a pizza increases. Which of the following correctly indicates what happens? A. The quantity of tacos demanded increases and the quantity of pizza demanded decreases. B. The quantity of pizza demanded decreases and the demand for tacos increases. C. The demand for each decreases because both are normal goods. D. The demand for pizzas decreases and the demand for tacos increases. E. The demand for both goods decreases.
The quantity of pizza demanded decreases and the demand for tacos increases.
A decrease in the price of a complement in production leads to A. no change in the supply of the good in question. B. a decrease in the quantity supplied of the good in question. C. an increase in the supply of the good in question. D. a decrease in the supply of the good in question. E. an increase in the supply of the good in question and a decrease in the quantity supplied of the good in question.
a decrease in the supply of the good in question.
Which factor of production is paid "interest"? A. capital B. land C. labor D. entrepreneurship E. human capital
capital
In order to make a rational choice, people must A. be able to afford the choice decided upon. B. compare marginal costs and marginal benefits. C. only know what they want. D. decide quickly without wasting time. E. determine what is in the social interest.
compare marginal costs and marginal benefits.
The decisions of firms and households are A. coordinated by but not totally controlled by the government. B. made independently of one another. C. unexplainable by the circular flow model. D. controlled by but not totally coordinated by the government. E. coordinated by markets.
coordinated by markets.
The study of economics is best described as a study of A. coping with scarcity, and choices made as a result of scarcity in a society. B. how people earn a living. C. the factors that influence the stock and bond markets. D. the choices made in producing goods and services. E. capitalism.
coping with scarcity, and choices made as a result of scarcity in a society.
The primary focus of microeconomics is A. to examine the operation of the entire (aggregate) economy. B. our government's monetary policy. C. the levels of employment and inflation. D. to study how we managed to eliminate scarcity. E. to examine the behavior and operation of the individual units or sectors that make up the economy.
to examine the behavior and operation of the individual units or sectors that make up the economy.
The question "Should we produce LCD televisions or computer monitors?" is an example of a ________ question. A. why B. for whom C. how D. what E. where
what
Scott and Cindy both produce only pizza and tacos. In one hour, Scott can produce 20 pizzas or 40 tacos. In one hour, Cindy can produce 30 pizzas or 40 tacos. Scott's opportunity cost of producing 1 taco is A. 2 tacos. B. 1/2 of a pizza. C. 1 pizza. D. 20 pizzas. E. 2 pizzas.
1/2 of a pizza.
The figure shows the production possibilities frontier for a country. The opportunity cost of a gallon of milk between combination point A and B is A. 1/3 of a gallon of ice cream for a gallon of milk. B. 1 gallon of ice cream for a gallon of milk. C. zero because at point A zero milk is being produced. D. 4 gallons of ice cream for a gallon of milk. E. 3 gallons of ice cream for a gallon of milk.
1/3 of a gallon of ice cream for a gallon of milk.
In the circular flow model, rent, wages, interest, and profit paid flow from ________ through ________ to ________. A. firms; factor markets; households B. firms; goods markets; households C. households; factor markets; firms D. households; goods markets; firms as payment for goods E. firms; goods market; firms
firms; factor markets; households
Suppose that the price of flour used to produce bagels increases. Hence the equilibrium price of a bagel ________ and the equilibrium quantity ________. A. does not change; does not change B. falls; decreases C. rises; decreases D. rises; increases E. falls; increases
rises; decreases