Econ 201 Microeconomics

The fact that people with higher incomes get to consume more goods and services addresses the __________ question. A. "for whom" B. "when" C. "where" D. "how"

A. "for whom"

When an economy produces more houses and fewer typewriters, it is answering the ______________ question. A. "what" B. "how" C. "where" D. "for whom"

A. "what"

An economic theory is A. a generalization that summarizes what we understand about economic choices B. always a mathematical, or nonverbal, model C. usually more complex than the real world D. a positive statement that cannot use the ceteris paribus clause

A. a generalization that summarizes what we understand about economic choices

In an eight-hour day, Andy can produce either 24 loaves of bread or 8 pounds of butter. In an eight-hour day, Bob can produce either 8 loaves of bread or 8 pounds of butter. Andy has a comparative advantage in the production of A. bread, while Bob has a comparative advantage in the production of butter B. butter, while Bob has a comparative advantage in the production of bread C. bread and neither has a comparative advantage in the production of butter D. both bread and butter

A. bread, while Bob has a comparative advantage in the production of butter

Which of the following topics would be studied in a microeconomics course? A. how a trade agreement between the United States and Mexico affects both nations' unemployment rates B. comparing inflation rates across countries C. how rent ceilings impact the supply of apartments D. how a tax rate increase will impact total production

C. how rent ceilings impact the supply of apartments

Inferior goods are those for which demand increases as A. the price of a substitute falls B. the price of a substitute rises C. income decreases D. income increases

C. income decreases

An autoworker is considered ____________ and earns ____________. A. labor; rent B. entrepreneurship; wages C. labor; wages D. capital; rent

C. labor; wages

When the government chooses to use resources to build a dam, these sources are no longer available to build a highway. This choice illustrates the concept of A. a market mechanism B. macroeconomics C. opportunity cost D. a fallacy of composition

C. opportunity cost

The opportunity cost of economic growth is A. future consumption that a nation gets if it gives up some present consumption B. future consumption that a nation gives up to consume more today C. present consumption that a nation gives up to accumulate capital D. investment that a nation gives up to increase its economic growth

C. present consumption that a nation gives up to accumulate capital

The law of demand states that, other things remaining the same, the higher the price of a good, the A. smaller is the demand for the good B. larger is the demand for the good C. smaller is the quantity of the good demanded D. larger is the quantity of the good demanded

C. smaller is the quantity of the good demanded

The quantity demanded is A. always equal to the equilibrium quantity B. independent of the price of the good C. the amount of a good that consumers plan to purchase at a particular price D. independent of consumers' buying plans

C. the amount of a good that consumers plan to purchase at a particular price

Which of the following is NOT a factor of production? A. a new computer used by a small business owner B. the time worked by elementary school teacher C. a tractor used by a wheat farmer D. a share of stock issued by a firm

D. a share of stock issued by a firm

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

D. both the poor and the rich

When supply decreases and demand does not change, the equilibrium quantity A. increase and the price rises B. decreases and the price falls C. increases and the price falls D. decreases and the price rises

D. decreases and the price rises

A society that is producing on its production possibilities frontier is A. not utilizing all of its resources B. not being technologically efficient C. producing too much output D. fully utilizing all of its productive resources

D. fully utilizing all of its productive resources

Most goods A. are complements to each other B. are normal goods C. have vertical demand curves D. have vertical supply curves

D. have vertical supply curves

Entrepreneurs do all of the following EXCEPT A. organize labor, land, and capital B. come up with new ideas about what, how, when and where to produce C. bear risk from business decisions D. own all other resources

D. own all other resources

A supply curve shows the relation between the quantity of a good supplied and A. income. Usually a supply curve has negative slope B. income. Usually a supply curve has positive slope C. the price of the good. Usually a supply curve has negative slope D. the price of the good. Usually a supply curve has positive slope

D. the price of the good. Usually a supply curve has positive slope

human capital is A. all capital owned by individuals, but not by corporations or governments B. all capital owned by individuals or corporations, but not by governments C. machinery that meets or exceeds federal safety standards for use by humans D. the skill and knowledge of workers

D. the skill and knowledge of workers

You observe that the price of a good rises and the quantity decreases. These observations can be the result of A. the demand curve shifting rightward B. the demand curve shifting leftward C. the supply curve shifting rightward D. the supply curve shifting leftward

D. the supply curve shifting leftward

Any production point outside the production possibilities frontier A. is unattainable B. is associated with unused resources C. is attainable only if prices fall D. is attainable only if prices rise

A. is unattainable

A PPF bows outward because A. not all resources are equally productive in all activities B. consumers prefer about equal amounts of the different goods C. entrepreneurial talent is more abundant than human capital D. resources are used inefficiently

A. not all resources are equally productive in all activities

The law of demand implies that demand curves A. slope down B. slope up C. shift rightward whenever the price rises D. shift leftward whenever the price rises

A. slope down

A fall in the price of a good causes producers to reduce the quantity of the good they are willing to produce. The fact illustrates A. the law of supply B. the law of demand C. a change in supply D. the nature of an inferior good

A. the law of supply

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

A. the relative price of a hot dog is 1/2 of a hamburger

When a textile company keeps track of its inventory using a computer and its competitor uses a pad of paper and a pencil, they are both answering the ________ part of one of the two big economic questions. A. "what" B. "how" C. "for whom" D. "where"

B. "how"

The most fundamental economic problem is A. security B. scarcity C. health D. the fact the United States buys more goods from foreigners than we sell to foreigners

B. Scarcity

The principle of increasing opportunity cost leads to A. a production possibilities frontier (PPF) that is bowed inward from the origin B. a production possibilities frontier (PPF) that is bowed outward from the origin C. an inward shift of the production possibilities frontier (PPF) D. an outward shift of the production possibilities frontier (PPF)

B. a production possibilities frontier (PPF) that is bowed outward from the origin

If sam is producing at a point on his production possibilities frontier, then he A. cannot produce any more of either good B. can produce more of one good only by producing less of the other C. will be unable to gain from trade D. is not subject to scarcity

B. can produce more of one good only by producing less of the other

A normal good is a good for which A. there are very few complements B. demand increases when income increases C. there are few substitutes D. demand decreases when income increases

B. demand increases when income increases

When demand decreases and supply does not change, the equilibrium price A. rises and the equilibrium quantity increases B. falls and the equilibrium quantity decreases C. rises and the equilibrium quantity decreases D. falls and the equilibrium quantity increases

B. falls and the equilibrium quantity decreases

Which of the following is a macroeconomic issue? A. how a rise in the price of sugar affects the market for sodas B. how federal government budget deficits affect interest rates C. what determines the amount a firm will produce D. the cause of a decline in the price of peanut butter

B. how federal government budget deficits affect interest rates

Economics is best defined as the study of how people, businesses, governments, and societies A. choose abundance over scarcity B. make choices to cope with scarcity C. use their infinite resources D. attain wealth

B. make choices to cope with scarcity

The demand for a good increases when the price of a substitute ___________ and also increases when the price of a complement _____________. A. rises; rises B. rises; falls C. falls; rises D. falls; falls

B. rises; falls

A drop in the price of compact discs shifts the demand for prerecorded tapes leftward. From that, you know compact discs and prerecorded tapes are A. complements B. substitutes C. inferior goods D. normal goods

B. substitutes

The production possibilities frontier illustrates A. all goods that can be produced by an economy B. the combination of goods and services that can be produced efficiently C. all goods and services that are desired but cannot be produced due to scarce resources D. all possible production of capital goods

B. the combination of goods and services that can be produced efficiently

opportunity cost is A. the best choice that can be made B. the highest-valued alternative forgone C. the monetary cost D. the indirect cost

B. the highest-valued alternative forgone

People come to expect that the price of a gallon of gasoline will rise next week. As a result, A. today's supply of gasoline increases B. today's demand for gasoline increases C. the price of a gallon of gasoline falls today D. next week's supply of gasoline decreases

B. today's demand for gasoline increases