macro one practice test
A person has a comparative advantage in producing a particular good if that person A) can produce it at lower opportunity cost then anyone else can B) has less desire to consume that good than anyone else has C) has more human capital related to that good than anyone else has D) has higher productivity in producing it than anyone else has
a
According to the diagram in the figure above, an allocative efficient use of resources requires that production and consumption of gasoline be A) 2 million gallons of gasoline per year B) 4 million gallons of gasoline per year C) 3 million gallons of gasoline per year D) 1 million gallons of gasoline per year
a
If income elasticity of demand is less than zero, the good is ____________. A) inferior B) a substitute C) normal D) a luxury good
a
In economics, positive statements are about A) the way things are B) the way things ought to be C) microeconomics, not macroeconomics D) macroeconomics, not microeconomics
a
In the above figure, what is the total consumer surplus from all the milk bought if the price of milk is $3.00 per gallon? A) $4 million B) $12 million C) $2 million D) $16 million
a
Marginal benefit A) is the maximum amount a person is willing to pay for one more unit of a good. B) is the same as the total benefit received from consuming a good. C) increases as consumption increases. D) is the difference between total benefit and total cost.
a
Marginal cost is the opportunity cost: A) that arises from producing one more unit of a good or service. B) that your activity imposes on someone else. C) of a good or service that exceeds its benefit. D) of a good or service divided by the number of units produced.
a
Studying the determination of prices in individual markets is primarily a concern of A) microeconomics B) macroeconomics C) positive economics D) negative economics
a
The demand and supply curves for Green Tea are given by the following equations: Q = 50,000 - 20P; Q = 25,000 + 30P Where P is measured in dollars and Q is the number of T-shirts sold per year. The equilibrium quantity is _________ and the equilibrium price is___________. A) 40,000;500 B) 35,5 C) 50,000;25,000 D) 50,35
a
The demand and supply curves for T-shirts in Tourist-town, U.S.A.,are given by the following equations: Q = 60 - 3P; Q = 30 + 2P Where P is measured in dollars and Q is the number of T-shirts sold per year. The equilibrium quantity is _________ and the equilibrium price is___________. A) 42,6 B) 6,22 C) 0,0 D) 44,12
a
The demand curve for a good shifts rightward if income ________ or if preferences __________. A) increases; rises B) increases; falls C) decreases; rises D) decreases; falls
a
The market demand curve for CDs is the ________ of all the individual demand curves for CDs. A) sum B) product C) division D) average
a
The price of a pencil increases and people buy more pens. You infer that pens and pencils are ________. A) substitutes B) inferior goods C) normal goods D) complements
a
The table above gives the demand schedule for snow peas. The price elasticity of demand between $4.00 and $5.00 per bushel is A) 1.0 B) 2.0 C) 5.0 D) 2.6
a
The above figures show the market for oranges. Which figure shows the effect of changing consumer preferences for more orange juice and less coffee in the morning? A) Figure A B) Figure B C) Figure C D) Figure D The above figures show the market for oranges. Which figure(s) shows the effect of a new government program that provides each public school child with an orange to start the day? A) Figure A B) Figure D C) Figures A and C D) Figures A and D
a a
A good with a horizontal demand curve has a demand with A) varying elasticity B) infinite elasticity C) unit elasticity D) zero elasticity
b
If the cross elasticity of demand for good x with respect to the price of good y is positive, then goods x and y are A) normal goods B) substitutes C) complements D) inferior goods
b
In the figure above, if Maria and Anna both completely specialized and traded with one another, their joint output would be A) 2 ties and 9 shirts B) 10 ties and 12 shirts C) 10 ties and 0 shirts D) 15 ties and 12 shirts
b
Scarcity requires that people must A) compete B) make choices C) trade D) cooperate
b
The figure above illustrates Maryʹs production possibilities frontier. If Mary wants to move from point b to point c, she must A) improve technology B) give up some of good Y in order to obtain more of good X C) increase the accumulation of capital D) give up some of good X in order to obtain more of good Y .
b
The term used to emphasize that making choices in the face of scarcity involves a cost is A) substitution cost. B) opportunity cost. C) accounting cost. D) utility cost.
b
The value of a good is equal to the A) price you actually pay for it minus the maximum you are willing to pay for it B) maximum price you are willing to pay for it C) maximum you are willing to pay for it minus the price you actually pay for it D) price that you actually pay for it
b
The ʺLaw of Demandʺ is explained by A) resources and technology B) substitution effect and income effect C) prices and income D) substitutes and complements
b
Total surplus is defined as A) another word for profit B) consumer surplus + producer surplus C) another word for total revenue D) consumer surplus - producer surplus
b
When peopleʹs incomes increase, the demand for a good increases. The good is called A) a complement B) a normal good C) an inferior good D) a substitute
b
A fall in the price of lemons from $11.00 to $9.00 per bushel increases the quantity demanded from 35,000 to 45,000 bushels. The price elasticity of demand is A) 8.00 B) 1.20 C) 1.25 D) 0.80
c
A nation produces at a point inside its PPF A) when it trades with other nations B) when its PPF is bowed out C) when it produces inefficiently D) never.
c
A rise in the price of cabbage from $14 to $18 per bushel increases the quantity supplied from 4,000 to 6,000 bushels. The elasticity of supply is A) 0.6 B) 0.8 C) 1.6 D) 1.0
c
An attempt to describe things as they are is A) wishful economics B) normative economics C) positive economics D) macro economics
c
Factors of production include A) Money, land, and labor B) labor and capital (not land, which is fixed) C) land, labor, and capital D) the economic system
c
In the above figure, at point a what is the opportunity cost of producing one more audio tape? A) 14 video tapes B) 2 video tapes C) 1 video tape D) There is no opportunity cost
c
In the above figure, when the efficient quantity of gloves is produced, the producer surplus is A) $15,000 B) $3,000 C) $22,500 D) $45,000
c
In the figure above, if 4 million computers are produced per year then the ________ should be produced to achieve efficient resource use. A) marginal cost of a computer exceeds the marginal benefit of a computer, so more computers B) marginal benefit of a computer exceeds the marginal cost of a computer, so fewer computers C) marginal cost of a computer exceeds the marginal benefit of a computer, so fewer computers D) marginal benefit of a computer exceeds the marginal cost of a computer, so more computers
c
People must make choices because A) there are many goods available B) most people enjoy shopping C) of scarcity D) None of the above answers is correct
c
The production possibilities frontier is the boundary between those combination of goods and services that can be A) produced and those that can be consumed B) consumed and those that cannot be produced C) produced and those that cannot be produced D) consumed domestically and those that can be consumed by foreigners
c
A country that has an absolute advantage when A) that country wins all trade disputes with other countries B) that country can perform the activity at a lower opportunity cost than other countries. C) that country produces only one good. D) that country can produce more goods with a given amount of resources than another country can
d
Because of increasing marginal cost, most supply curves A) have a negative slope B) are horizontal C) are vertical D) have a positive slope
d
Consumer surplus is the ________ summed over the quantity purchased. A) price paid for a good minus the opportunity cost of making it B) opportunity cost of making a good minus the price paid for it C) price paid for a good minus the value of the good D) value of a good minus the price paid for it
d
If a increase in the price of gasoline decreases the demand for large cars, then A) gasoline is an inferior good B) large cars are an inferior good C) gasoline and large cars are substitutes in consumption D) gasoline and large cars are complements in consumption
d
In the figure above, point D is A) production efficient and point B is not production efficient B) less production efficient than point C C) not production efficient and point B is production efficient D) production efficient and point A is not production efficient
d
In the figure above, the marginal cost of the second computer is A) 30 television sets. B) 0 television sets. C) 4 television sets. D) 3 television sets.
d
In the figure above, which movement reflects an increase in demand? A) from point a to point c B) from point a to point e C) from point a to point b D) from point c to point a
d
Opportunity cost is defined as the A) cost of not doing all of the things you would like todo B) lowest-valued alternative given up C) total value of all the alternatives given up D) highest-valued alternative given up
d
Opportunity cost means the A) monetary costs of an activity. B) accounting cost minus the marginal benefit. C) accounting cost minus the marginal cost. D) highest-valued alternative forgone.
d
Scarcity is a situation in which A) most people can get only bare necessities B) some people can get all they want and some cannot C) people can satisfy all their wants D) people cannot satisfy all their wants
d
The figure above shows Claraʹs demand for CDs. If the market price for a CD is $10, then Clara A) receives no consumer surplus B) receives consumer surplus of 8 C) receives consumer surplus of 10 D) receives consumer surplus of 80
d
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) larger is the quantity of the good demanded. D) smaller is the quantity of the good demanded.
d
The ʺlaw of demandʺ states that changes in A) demand are inversely related to changes in supply B) the quantity demanded of a good are not related to changes in the quantity supplied C) demand are related directly to changes in supply D) the quantity demanded of a good are inversely related to changes in its price
d
To say that ʺsupply increasesʺ for any reason, means there is a A) movement leftward along a supply curve B) movement rightward along a supply curve C) shift leftward in the supply curve D) shift rightward in the supply curve
d