Econ. Exam 1
Which of the following is an example of a positive externality?
Vaccinations
REFER TO THE DIAGRAM BELOW: Points A, B, C, D, and E show
combinations of bicycles and computers that society can produce using the resources efficiently.
Cost-benefit analysis attempts to:
compare the benefits and costs associated with any economic project or activity
REFER TO THE DIAGRAM BELOW: This production possibilities curve is
concave to the origin because of increasing opportunity costs.
REFER TO THE DIAGRAM BELOW: (squared chart) Flow (4) represents
consumption expenditures
Microeconomics
is concerned with individual economic units and specific markets.
REFER TO THE DIAGRAM BELOW: (squared chart) Flow (2) represents
land, labor, capital, and entrepreneurial ability
The four factors of production are
land, labor, capital, and entrepreneurial ability
REFER TO THE DIAGRAM BELOW: (squared chart)...Flow (1) represents
wage, rent, interest, and profits.
The division of labor means that
workers specialize in various production tasks.
REFER TO THE DIAGRAMS BELOW: Which of the diagrams illustrate(s) the effect of a decline in the price of personal computers on the market for software?
A only.
Answer on the basis of the relationships shown in the four figures below: The amount of Y is directly related to the amount of X in
1 day
Answer on the basis of the relationships shown in the four figures below: The amount of Y is inversely related to the amount of X in
3 only
Which of the following is an example of a negative externality?
All answers are negative externalities
Which of the following is a public good?
All solutions are public goods
REFER TO THE DIAGRAM BELOW: A price of $60 in this market will result in
a surplus of 100 units
REFER TO THE DIAGRAMS BELOW: Which of the diagrams illustrate(s) the effect of an increase in automobile worker wages on the two market for automobiles?
D only.
A market
Is an institution that brings together buyers and sellers.
REFER TO THE DIAGRAM BELOW: The combination of computers and bicycles shown by point F
Is attainable, but implies that the economy is not using all its resources
REFER TO THE DIAGRAM BELOW: The consumer surplus would be represented by the area
a
REFER TO THE DIAGRAM BELOW: A price of $20 in this market will result in
a shortage of 100 units
REFER TO THE DIAGRAM BELOW: The producer surplus would be represented by the area
b
REFER TO THE DIAGRAM BELOW: (squared chart) Flow (3) represents
goods and services
A price ceiling means that
government is imposing a legal price that is below the equilibrium price
A price floor means that
government is imposing a minimum legal price that is typically above the equilibrium price.
Which of the following is NOT a characteristic of the market system?
government ownership of the major industries.
The simple circular flow model shows that
households are on the selling side of the resource market and on the buying side of the product market
The main characteristics of a public good are:
nonrivalry and nonexcludability
Market failure is said to occur whenever:
private markets do not allocate resources in the most economically desirable way
The two basic markets shown by the simple circular flow model are
product and resource
The term quantity demanded
refers to the amount of a product that will be purchased at some specific price
REFER TO THE DIAGRAM BELOW: An improvement in technology will
shift the production possibilities curve from PP1 to PP2
Macroeconomics can best be described as the
study of the large aggregates of the economy or the economy as a whole.
Because of the free-rider problem
the market demand for a public good is nonexistent or understated
REFER TO THE DIAGRAM BELOW: The combination of computers and bicycles shown by point G is
unattainable given currently available resources and technology