Econ 104 exam 1

the development of markets.

The text attributes the growth of economies over the last 200 years largely to:

objectively explain how the economy functions.

Positive economics seeks to:

Poland has a comparative advantage in producing wheat but not soy.

Suppose that in Slovakia one unit of labor can produce either 16 tons of wheat or 32 tons of soy and in Poland one unit of labor can produce either 4 tons of wheat or 2 tons of soy. Given this information, which of the following statements is true?

require creativity and innovation.

The text argues that the United States has had a comparative advantage in goods and services that:

markets operate, but government regulates markets significantly.

"Welfare capitalism" is an economic system in which:

it has only one owner who has unlimited liability.

A business is likely a sole proprietorship if:

their self interest.

According to Adam Smith, individuals are directed to do those things for which they have a comparative advantage by:

people to buy fewer trading cards.

According to the law of demand, an increase in the price of baseball trading cards causes:

human beings coordinate their wants and desires in the face of constraints.

According to the text, economics is the study of how:

addresses the questions what is produced, how it is produced, and for whom it is produced.

Any economic system:

Y

Assume the graphs shown reflect the egg market. The arrow that would best capture the impact of cheaper, prefabricated henhouses on the egg market is:

actions with negative externalities should be restricted and actions with positive externalities should be encouraged.

Assuming government's goal is to benefit society as much as possible:

deposits allow banks to make profitable loans.

Banks hold people's cash for free, and sometimes even pay for the privilege of holding it, because:

downward-sloping.

Because you can get more of one good only by giving up some of another good, the shape of a production possibility curve is:

maximizes profits.

Business decisions about what and how much to produce are based on what:

Chuck must be less than $72,000.

Chuck offers $70,000 for a house. The seller turns down the offer but says she will sell the house for $72,000. However, Chuck refuses to pay the higher price. If Chuck was following the economic decision rule, the marginal benefit of the house to:

raise price but lower quantity.

Demand for healthy kidneys is high in both India in Nepal. But it is also illegal to buy or sell organs. Despite the legal and social disapproval, there is an illegal market for organs. Assuming the legal and social disapproval does not influence buyers but discourages sellers from offering organs, the disapproval will:

½ article.

Given the production possibility curve shown, the opportunity cost of listening to each additional CD when moving from point B to point A is on average:

less useful as a unit of account.

During periods of high inflation, money becomes:

blends objective and subjective analyses.

Economics is an art because it:

increase the equilibrium price and quantity of diesel cars.

Given that diesel cars get much better gas mileage than the typical car, an increase in the price of gasoline would be expected to:

there is no reason to move production from the United States to India.

If U.S. workers are paid $16 an hour and Indian workers are paid the equivalent of $4 an hour, but U.S. workers can produce four times as many goods as Indian workers in the same amount of time,

likely include a risk premium.

If a loan has a probability of not being paid back the interest rate will:

will become smaller.

If banks hold excess reserves whereas before they did not, the money multiplier:

banks could not create money.

If people held all their money as cash:

surplus and downward pressure on price.

If the price in a market is above its equilibrium level, there will be a:

quantity supplied of steel will increase.

If the price of steel rises, the law of supply predicts that, other things constant, the:

12.5.

If the reserve ratio is 0.08, the money multiplier is:

upward-sloping.

If there is a direct relationship between two variables, the graph relating those two variables will be:

financial transaction.

In a market economy, every real transaction has a corresponding:

both businesses and the government.

In principle, households ultimately control:

outsourcing.

In recent years many phone banks for telemarketing and customer service have moved from the U.S. to foreign nations such as the Philippines and India. This move is usually called:

1 economics problem.

Laura's production possibility curve for math and economics problems in one night is shown in the graph. Her opportunity cost of finishing 6 math problems instead of 4 math problems is:

checking account deposits.

M1 consists primarily of cash in the hands of the public and:

the study of aggregate economic relationships.

Macroeconomics is:

most economies.

Market economies are present in:

zero

Mary buys cell-phone services from a company that charges $30 per month. For that $30 she is allowed 600 minutes of free calls and then pays 25 cents per minute for any calls above 600 minutes. Mary has used 300 minutes this month so far. What is her marginal cost per minute of making 2 more calls lasting 10 minutes each?

property rights.

McDonald's Corporation lost a battle to keep a Singapore firm, Future Enterprises, from selling goods under the labels MacNoodles, MacTea and MacChocolate. The court system in Singapore was, in this case, defining

greater accountability.

One advantage of a partnership over a corporation is:

how to assign initial property rights

People can reasonably expect that an economic system will decide all of the following except:

real economic activity, such as the construction of a house.

Real assets are created by:

4 CDs per week.

Refer to the graph shown. If the price is changed from $12.00 to $4.00, the quantity demanded increases by:

C

Refer to the graphs shown. Assume the graph reflects demand in the automobile market. Which arrow best captures the impact of increased gasoline prices on the automobile market?

C

Refer to the graphs shown. The arrow that would best illustrate the impact on consumers of reducing sales tax on a good paid by suppliers is:

B

Refer to the graphs shown. The effect of an increase in the price of CDs on consumers is best shown by arrow:

b

Refer to the graphs shown. The market is salmon steaks. Which graph best represents the impact of increased concern that salmon is becoming endangered?

C

Refer to the graphs shown. What arrow shows the effect of an increase in the number of consumers in the market on the demand for CDs?

new wants continue to develop.

Scarcity exists because:

cooperate with one another to meet their needs.

Socialism in theory is based on the principle that individuals should:

innovation.

The Apple iPod has been a trendy product. It was designed by Apple in the United States, manufactured in factories in Asia, and sold throughout the world. Many other firms, both American and foreign, began to try to develop alternatives to the iPod. The iPod is an example of American comparative advantage in:

increased the power of capitalists and eventually led to a revolution instituting capitalism as the dominant economic system.

The Industrial Revolution was important to the history of economic systems because it:

workers lacked incentives to work and production was inefficient.

The Soviet socialist economy fell apart primarily because:

the application of the knowledge gained by positive economics to the goals set in normative economics.

The art of economics is:

demand is represented graphically by a curve and quantity demanded as a point on that curve.

The distinction between demand and the quantity demanded is best made by saying that:

required reserve ratio.

The fraction of deposits a bank must hold in the form of reserves is called the:

gold receipts were rarely exchanged for gold.

The goldsmith's ability to create money was based on the fact that:

a decrease in the demand for bread.

The growing popularity of the Atkins (low-carb) Diet caused:

up, the quantity demanded goes down.

The law of demand states that the quantity demanded of a good is inversely related to the price of that good. Therefore, as the price of a good goes:

a direct relation between price and the quantity supplied.

The law of supply states that, other things constant, there is:

value of the next-best activity forgone by attending college.

The opportunity cost of attending college for one year is best measured by the:

cheaply as possible.

The term efficiency involves achieving a goal as:

invisible hand.

The price mechanism that guides our actions is called the:

the equilibrium price of tickets to the concert is more than $35.

The price of a ticket to the Maroon 5 concert is set at $35. All the tickets for the concert sell out one hour after they go on sale and there are still 1,000 fans who want to buy tickets. It follows that:

4 to 5.

The price of each tape rental is reduced from $2.99 to $1.99. Assuming that the price of a rental accurately reflects the marginal cost to Carol and that she is rational she will increase the number of tapes rented per month from:

securitization.

The process of packaging a variety of loans together and slicing them up into new financial instruments is called:

horizontal.

The slope of a line is zero when it is:

a type of socialism that departed from theory was implemented.

Through most of the 20th century in the former USSR:

marginal cost and marginal benefit.

To engage in economic reasoning, one must compare:

consumers in all countries.

Trade based on comparative advantage benefits:

both produce and consume more.

Two countries that specialize their production along the lines of comparative advantage and then trade with each other will be able to:

All financial assets

What is exchanged in the financial sector?

Social convention

What makes a Federal Reserve note function as money?

The art of economics

What relates positive economics to normative economics?

serving as an economic referee.

When a government intervenes in an economy in a way that influences the relationship between households and businesses, it is:

falls, lowering their equilibrium price and quantity.

When gasoline prices fall, the demand for alternative fuel cars likely:

Positive externality

When my neighbors benefit from my cleaning up of my yard. They are experiencing a:

the supply curve right.

When the number of Alaskan fishermen increased, salmon prices fell to record lows. This could be shown graphically by a shift in:

What combination of outputs is best.

Which of the following cannot be determined using a production possibility table?

Wages in India are lower than wages in the United States, and so firms move their call centers to India. This tends to raise wages in India and depress wages in the United States.

Which of the following is an example of the law of one price in action?

Government ownership of capital

Which of the following is not a characteristic of pure capitalism?

How are price and quantity demanded related?

Which of the following is the best example of a positive question?

The decision by a nurse to change professions

Which of the following topics is most appropriately studied in a microeconomics course?

An increase in the price of other vegetables

Which of the following would best explain a decrease in the supply of squash?