ECON 2106
Which of the following is a statement of positive economics? Question options: New tax laws are needed to help the poor. Teenage unemployment should be reduced. We should increase Social Security payments to the elderly. An increase in tax rates will reduce unemployment.
An increase in tax rates will reduce unemployment.
Which of the following best illustrates the fallacy of composition? Question 13 options: I hate driving to work when the traffic is so heavy, so I decide to leave 30 minutes earlier than in the past. If everyone were to leave 30 minutes earlier for work, we'd all get to work faster. A great many people have been immunized against polio because it can be such a devastating disease. As a result, I probably do not personally need to be immunized against polio. Whenever I attend a baseball game at the local stadium, the home team wins. Therefore, if I attend all of the team's local games, they will achieve a perfect winning record at home. The parking at Ohio State University is in short supply on the main campus. It would be better for more people to ride the bus to school.
I hate driving to work when the traffic is so heavy, so I decide to leave 30 minutes earlier than in the past. If everyone were to leave 30 minutes earlier for work, we'd all get to work faster.
Macroeconomics primarily examines: Question 9 options: the behavior of individual households and firms. how prices are determined within individual markets. the output levels that maximize the profits of business firms .broad issues such as national output, employment and inflation.
broad issues such as national output, employment and inflation.
In economic terms, religious and spiritual services are treated as: Question options: goods that people desire. resources or inputs. marginal benefits. priceless commodities.
goods that people desire.
"Ceteris paribus" means: Question options: if events A and B occur together, one must cause the other. all relevant details are included. what is true for the individual must be true for the whole. holding other things constant.
holding other things constant.
Economics is primarily the study of: Question 14 options: human greed. how firms compete for profits in the marketplace. how limited resources are allocated to satisfy unlimited wants. how successful investors make money in the stock market.
how limited resources are allocated to satisfy unlimited wants.
The fallacy of composition is the erroneous view that: Question options: an increase in the supply of money will cause a general increase in the level of prices. a small change in an economic variable will have an unrecognizable but significant effect on the economy. when two events are associated, the one observed first must have caused the second. if something is true for an individual, then it must also be true for a group.
if something is true for an individual, then it must also be true for a group.
Ceteris paribus, a decrease in the price of a good will Question 9 options: increase demand. decrease demand. increase quantity demanded. decrease quantity demanded.
increase quantity demanded.
The law of demand illustrates a(n) ____ relationship between price and ____. Question 3 options:direct; quantity demandedinverse; quantity demandedinverse; demanddirect; demand
inverse; quantity demanded
The ceteris paribus assumption is used in economic analyses in order to: Question options: cover special cases.include all relevant factors. add realism. keep the relationship between the two variables isolated from other events.
keep the relationship between the two variables isolated from other events.
Scarcity means that: Question 5 options: resources are unlimited. human wants are limited. limited resources cannot satisfy all of our unlimited human wants. choices are unnecessary.
limited resources cannot satisfy all of our unlimited human wants.
Economics can be divided into two main branches of study: Question options: capitalism and communism. capitalism and socialism. demand and supply. microeconomics and macroeconomics.
microeconomics and macroeconomics.
Microeconomics differs from macroeconomics in that: Question 12 options: Microeconomics studies individual decision making while macroeconomics examines aggregate decision making.Microeconomics studies aggregate decision making while macroeconomics examines individual decision making.Microeconomics utilizes positive economic analysis while macroeconomics utilizes normative economic analysis.Microeconomics is concerned with consumer behavior while macroeconomics is concerned with firm behavior.
microeconomics studies individual decision making while macroeconomics examines aggregate decision making.
Economists believe that individuals act as if they are motivated: Question options: primarily by the opinions of their peers.primarily by human emotions. primarily by self-interest. only by concern for the larger community.
primarily by self-interest.
Economics is primarily concerned with the study of: Question options: problems such as poverty and unemployment. limited desires pursuing unlimited resources. production and distribution of goods in a world of unlimited resources. production and distribution of goods in a world of limited resources.
production and distribution of goods in a world of limited resources.
Economists believe that most individuals act as if they are motivated by self-interest and: Question options: respond selfishly. respond in predictable ways to changing circumstances. it leads to inconsistent and unpredictable behavior. all of the above.
respond in predictable ways to changing circumstances.
A movement along the demand curve might be caused by a change in Question 14 options: income the prices of substitutes or complements. expectations about future prices. the price of the good.
the price of the good.
Macroeconomic topics do not generally include: Question options: inflation. aggregate demand. government spending and taxation. the production decisions of individual firms.
the production decisions of individual firms.
Bill says: "The imposition of a tax on tequila will increase its price." Bob says: "Taxes should be imposed on tequila because college students drink too much." Question options: Both statements are normative.Both statements are positive. Bill's statement is normative, and Bob's statement is positive. Bill's statement is positive, and Bob's statement is normative.
Bill's statement is positive, and Bob's statement is normative.
Which of the following is true of a competitive market? Question 6 options: The rules of supply and demand do not apply to it. Buyers and sellers have little market power. Each buyer's or seller's effect on market price is substantial. Few sellers offer similar products.
Buyers and sellers have little market power.
A decrease in demand and an increase in supply are indicated by Question 11 options: Upward shifts in both curves. Downward shifts in both curves.Rightward shifts in both curves. Leftward shifts in both curves.
Downward shifts in both curves.
Suppose Sprite and 7-Up are considered by consumers to be substitutes. The likely economic impact of a decrease in the price of 7-Up is a: Question 7 options: movement up along the demand curve for Sprite. decrease in the supply of 7-Up. rightward shift of the demand curve for Sprite. leftward shift of the demand curve for Sprite.
leftward shift of the demand curve for Sprite.
Which of the following is most likely a topic of discussion in macroeconomics? Question 3 options: an increase in the price of a pizza a decrease in the production of DVD players by a consumer electronics company an increase in the wage rate paid to automobile workers a decrease in the unemployment rate
a decrease in the unemployment rate
Which of the following lies primarily within the realm of macroeconomics? Question 10 options: a study of the elasticity of demand for gasoline a study of how tax cuts stimulate aggregate production an analysis of supply and demand conditions in the electricity market a study of the impact of "mad cow" disease on the price of beef worldwide
a study of how tax cuts stimulate aggregate production
In a congressional debate about agricultural price supports, senators, members of congress, and other experts made the following four statements. Which of these is a normative statement? Question 1 options: "Price supports are important because America should preserve the small family farm. ""Without price supports, the price of wheat and corn will fall by over twenty percent. ""The decline in commodity prices caused by the removal of price supports will result in fewer, larger farms." "The decline in commodity prices caused by the removal of price supports will reduce the number of tractors sold in the United States."
"Price supports are important because America should preserve the small family farm.
Refer to Exhibit 4-1. At $4 the quantity demanded in the market would be: Question 1 options: 12. 22 31. 39.
39
Understanding economics would be helpful to which of the following individuals? Question options: a college student planning her next semester courses a fashion designer selecting fabric for a new spring collection a restaurant owner deciding whether to expand his establishment's hours of operation All of the above
All of the above
Which of the following is a positive statement? Question options: Increased money supply growth will lead to a higher rate of inflation. There are more millionaires in Uganda than in the United States. People watch more TV during finals week than during the rest of the term. All of the above are positive statements.
All of the above are positive statements
Which of the following statements most likely lies within the realm of macroeconomics? Question 2 options: An increase in the price of automobiles will lead to a decrease in the quantity of automobiles demanded. Due to process innovations in computer chip manufacturing, the market supply of computers increased. Due to an economic recession, manufacturing firms began implementing layoffs of their workforces. Anticipating that the benefits would outweigh costs involved, an undergraduate student purchases the course textbook.
Due to an economic recession, manufacturing firms began implementing layoffs of their workforces.
When President Harry Truman said that he wanted to find a one-armed economist because his economic advisors always said, "On the one hand... and on the other hand... " he recognized that the advice of economists is often open to more than one interpretation. Why is this? Question 8 options: Economists cannot make up their minds on policy matters. Economists agree with each other on all policy issues. Economists are aware that tradeoffs are involved in most policy questions.Economists are often unable to identify the critical questions involved in policy issues.
Economists are aware that tradeoffs are involved in most policy questions.
Which of the following best illustrates the fallacy of composition? Question options: If I have more money, I will be better off; therefore if we all had more money, we all would be better off. If I buy more gas each week, my gas consumption increases; therefore, if all gas consumers buy more gas each week, total gas consumption will increase If I spend more time studying, I will learn more; therefore, if all students spend more time studying, they will learn more. If women's hemlines are higher this year, the Dow Jones Industrials average will fall.
If I have more money, I will be better off; therefore if we all had more money, we all would be better off.
Which of the following is a normative statement? Question 6 options: An increase in taxes will cause higher unemployment. An increase in tariffs will increase the domestic prices paid by consumers.Income should be redistributed from the top 2% of wage earners to the lower income brackets. Running government budget deficits leads to higher market interest rates.
Income should be redistributed from the top 2% of wage earners to the lower income brackets.
If individuals who sit in the back of the classroom receive lower grades on average than the rest of the class, does that mean that sitting in the back of a classroom causes one to perform poorly on exams? Question options: Not necessarily. The reoccurrence of a certain relationship between two variables does not necessarily imply causation. It is not possible for an economist to determine causation between variables.The reoccurrence of such a relationship is sufficient evidence that sitting in the back of a classroom will lead to lower grades.none of the above
Not necessarily. The reoccurrence of a certain relationship between two variables does not necessarily imply causation.
The real core of the economic problem is to: Question 4 options: increase the amount of leisure time available to people. guarantee everyone on the planet a minimum level of food, shelter and clean water. allocate limited resources among competing uses. eliminate scarcity
allocate limited resources among competing uses.
When President Harry Truman said that he wanted to find a one-armed economist because his economic advisors always said, "On the one hand... and on the other hand... " he recognized that the advice of economists is often open to more than one interpretation. Why is this? Question options: Economists cannot make up their minds on policy matters. Economists agree with each other on all policy issues. Economists are aware that tradeoffs are involved in most policy questions.Economists are often unable to identify the critical questions involved in policy issues.
Economists are aware that tradeoffs are involved in most policy questions.
Which of the following would lead to a decrease in the supply of watches? Question 7 options: An increase in the price of watches A decrease in the price of watches A decrease in the expected future price of watches None of the above
None of the above
"The minimum wage should be increased so that low-income workers can afford to feed their families." This is an example of: Question options: a positive economic statement.a negative economic statement. the fallacy of composition. a normative economic statement.
a normative economic statement.
"A reduction in the rate at which stock dividends are taxed will lead to greater investment in the stock market." This is an example of: Question 11 options: a positive economic statement. a negative economic statement. the fallacy of composition. a normative economic statement.
a positive economic statement.
If oil is considered a non-renewable resource, than oil is Question 7 options: an unlimited resource. a scarce resource. not a productive resource. has no opportunity cost.
a scarce resource.
The supply curve of books (which are produced using paper made from trees) will shift to the left in response to: Question 4 options: a decline in college tuition. a sharp increase in the demand for and construction of wood-frame homes. an increase in the supply of lumberjacks.an end to government regulations that limit timber harvesting in national forests.
a sharp increase in the demand for and construction of wood-frame homes.
Which of the following would cause an increase in demand for golf balls? Question 2 options: a decrease in the price of golf balls an increase in the price of green fees an expectation by buyers that their incomes will increase in the very near future a change in consumer tastes away from golf and toward tennis
an expectation by buyers that their incomes will increase in the very near future
All of the following factors will affect the supply of shoes except one. Which will not affect the supply of shoes? Question 14 options: higher wages for shoe factory workershigher prices for leather a technological improvement that reduces waste of leather and other raw materials in shoe production an increase in consumer income
an increase in consumer income
When the price of a good is lower than the equilibrium price, Question 12 options: a surplus will exist. buyers desire to purchase more than is produced. sellers desire to produce and sell more than buyers wish to purchase. quantity supplied exceeds quantity demanded.
buyers desire to purchase more than is produced.
If the demand for milk is downward sloping, then an increase in the price of milk will result in a(n): Question 8 options: increase in the demand for milk. decrease in the demand for milk. increase in the quantity of milk demanded. decrease in the quantity of milk demanded.
decrease in the quantity of milk demanded.
Refer to Exhibit 4-3. The University Theater faces market demand curve D0 and has begun charging $10, up from $5, for tickets for Friday and Saturday night shows. As a result, students have: Question 12 options: increased their demand for tickets to Q4.increased their quantity of tickets demanded to Q4. decreased their demand for tickets to Q1.decreased their quantity of tickets demanded to Q1.
decreased their quantity of tickets demanded to Q1.
As a result of the decrease in donut prices at Real Yum Donuts, Dippin Donuts managers discover that the demand for their donuts has: Question 16 options: increased. decreased. not changed. none of the above
decreased.
Two goods are substitutes when a decrease in the price of one good Question 13 options: decreases the demand for the other good. decreases the quantity demanded of the other good. increases the demand for the other good.increases the quantity demanded of the other good.
decreases the demand for the other good.
Pizza is a normal good if the demand Question 5 options: for pizza rises when income rises. for pizza rises when the price of pizza falls. curve for pizza slopes upward. curve for pizza shifts to the right when the price of burritos rises, assuming pizza and burritos are substitutes.
for pizza rises when income rises.
An increase in quantity demanded Question 9 options: illustrated by a movement downward and to the right along a demand curve. illustrated by a movement upward and to the left along a demand curve. shifts the demand curve to the left. shifts the demand curve to the right.
illustrated by a movement downward and to the right along a demand curve.
An increase in the price of a good will Question 16 options: increase supply. decrease supply. increase quantity supplied. decrease quantity supplied.
increase quantity supplied.
The law of demand refers to the: Question 2 options: negative relationship between the price of a good and the willingness of producers to sell it. price increase that results from an increase in demand. inverse relationship between the price of a good and the quantity demanded.increase in the quantity of a good made available when its price increases.
inverse relationship between the price of a good and the quantity demanded.
When a surplus exists in a market, sellers Question 5 options: Raise price, which increases quantity demanded and decreases quantity supplied, until the surplus is eliminated.Raise price, which decreases quantity demanded and increases quantity supplied, until the surplus is eliminated.Lower price, which increases quantity demanded and decreases quantity supplied, until the surplus is eliminated.Lower price, which decreases quantity demanded and increases quantity supplied, until the surplus is eliminated.
lower price, which increases quantity demanded and decreases quantity supplied, until the surplus is eliminated.
Which of the following would not cause an increase in the demand for cheese? Question 6 options: a decrease in the price of crackers, which are consumed with cheese an increase in the income of cheese consumers, assuming that cheese is a normal good an increase in the population a technological advance that makes it cheaper to produce cheese
lower price, which increases quantity demanded and decreases quantity supplied, until the surplus is eliminated.
You lose your job and, as a result, you buy fewer iTunes music downloads. This shows that you consider iTunes music downloads to be a(n) Question 17 options: luxury good. inferior good. normal good. complementary good.
normal good.
Each of the following is a determinant of demand except Question 4 options: tastes. production technology. expectations. the prices of related goods.
production technology.
The difference between a change in quantity demanded and a change in demand is that a change in: Question 8 options: quantity demanded is caused by a change in a good's own current price, while a change in demand is caused by a change in some other variable, such as income, tastes, or expectations. Demand is caused by a change in a good's own current price, while a change in quantity demanded is caused by a change in some other variable, such as income, tastes, or expectations. Quantity demanded is a change in the amount people actually buy, while a change in demand is a change in the amount they want to buy. A change in demand and a change in quantity demanded are the same thing.
quantity demanded is caused by a change in a good's own current price, while a change in demand is caused by a change in some other variable, such as income, tastes, or expectations.
When the price of a good is higher than the equilibrium price, Question 3 options: a shortage will exist. buyers desire to purchase more than is produced. sellers desire to produce and sell more than buyers wish to purchase. quantity demanded exceeds quantity supplied.
sellers desire to produce and sell more than buyers wish to purchase.
Suppose roses are currently selling for $20 per dozen, but the equilibrium price of roses is $30 per dozen. We would expect a Question 1 options: shortage to exist and the market price of roses to increase. shortage to exist and the market price of roses to decrease. surplus to exist and the market price of roses to increase. surplus to exist and the market price of roses to decrease.
shortage to exist and the market price of roses to increase.
An upward-sloping supply curve shows that: Question 10 options: buyers are willing to pay more for particularly scarce products. suppliers expand production as the product price falls. suppliers are willing to increase production of their goods if they receive higher prices for them. buyers are willing to buy more as the product price falls.buyers are not affected either directly or indirectly by the sellers' costs of production.
suppliers are willing to increase production of their goods if they receive higher prices for them.
Which of the following is not a determinant of supply? Question 15 options: input prices technology tastes expectations
tastes
If the price of tennis rackets were to increase, we would expect: Question 15 options: the demand for tennis balls to increase.the demand for tennis balls to decrease.the supply of tennis balls to increase, leading to a movement along the demand curve for tennis balls. the supply of tennis balls to decrease.
the demand for tennis balls to decrease.
When there is an excess quantity supplied of a product at the current price, then: Question 11 options: the market price must be below equilibrium price. the quantity demanded is greater than the equilibrium quantity. the market price will tend to rise. the market price will tend to fall.
the market price will tend to fall.
When quantity demanded decreases in response to a change in price: Question 13 options: the demand curve shifts to the right. the demand curve shifts to the left. there is a movement down along the demand curve. there is a movement up along the demand curve.
there is a movement up along the demand curve.
In economics, the demand for a good refers to the amount of the good people: Question 10 options: would like to have if the good were free.Will buy at various prices. Need to achieve a minimum standard of living. Will buy at alternative income levels.
will buy at various prices.