micro-econ midterm exam practice

What causes the quantity supplied of a good to rise? Question options: A) Increase in the market price of the good. B) Increase in input costs for that good. C) Decrease in input costs for that good. D) Increase in consumer preference for that good.

A) Increase in the market price of the good.

Which of the productive resources involves the surface of the earth and the valuable resources located just on the surface and below the surface? Question options: A) Land (Natural Resources) B) Natural Capital C) Technology D) Labor

A) Land (Natural Resources)

Which of the following is NOT correct about economies of scale? Question options: A) In firms that enjoy economies of scale, the long run Average Total Cost curve is more L shaped than U shaped. B) In firms that enjoy economies of scale, the firm's average total cost falls as the scale of the operation increases in the long run. C) A firm with Economies of Scale that has been in business a long time is not likely to have new competitors. D) In firms that enjoy economies of scale, the firm's average total cost rises continually as the scale of the operation increases in the long run.

B) In firms that enjoy economies of scale, the firm's average total cost falls as the scale of the operation increases in the long run.

What is the effect on the PPF from an increase in natural resources, labor and capital? Question options: A) The slope of the PPF will become flatter. B) The PPF line will shift outwards. C) The slope of the PPF will become more vertical. D) The PPF line will shift inward.

B) The PPF line will shift outwards.

Which of the following correctly identifies the relationship between market equilibrium and consumer surplus? Question options: A) Under perfect competition, market equilibrium price and output occurs where consumer surplus is half of the value of producer surplus. B) Under perfect competition, market equilibrium price and output occurs where consumer surplus is maximized. C) Under perfect competition, market equilibrium price and output occurs where consumer surplus exceeds producer surplus by an amount equal to total marginal product. D) Under perfect competition, market equilibrium price and output occurs where the value of consumer surplus and producer surplus are just equal to total firm revenue.

B) Under perfect competition, market equilibrium price and output occurs where consumer surplus is maximized.

Which of the following correctly defines an Externality? Question options: A) While buyers can be impacted by externalities, sellers can never be impacted by them. B) Both buyers and sellers are equally impacted by a given externality. C) An externality is a cost or benefit that accrues to third parties not directly involved in an economic transaction. D) Only parties directly involved in a transaction are impacted by externalities.

C) An externality is a cost or benefit that accrues to third parties not directly involved in an economic transaction.

Which of the following is NOT true about specialization? Question options: A) Specialization increases productivity by allowing a group of workers to produce more than each could do working individually on their own, even after totally up the work that was done individually. B) Specialization results in greater output, higher productivity and greater efficiency of production. C) Specialization degrades the skill set of workers forced to work under a specialized system of production. D) Specialization allows a region or country to achieve higher standards of living by boosting the overall productivity of workers.

C) Specialization degrades the skill set of workers forced to work under a specialized system of production.

Which of the following is NOT true about the factors that cause a change in demand? Question options: A) If an increase in the price of Good A causes an increase in the demand for Good B, then they are substitutes. B) If an increase in the price of Good A causes a DECREASE in the price of Good B, they are complements. C) DVDs and DVD players are complements because an increase in the price of one causes a decrease in the demand for the other. D) A normal good is one in which its demand DECREASES as consumer income increases.

D) A normal good is one in which its demand DECREASES as consumer income increases.

Which of the following is NOT a good made in a perfectly competitive market? Question options: A) Eggs. B) Salt. C) Toothpicks. D) Cell phones.

D) Cell phones.

Which of the following is NOT an implicit cost? Question options: A) Value of owner's time used elsewhere. B) Rental value of building owned by the firm and used in production. C) The sale value of all equipment and machinery that has been paid for. D) Electricity, gas and oil usage.

D) Electricity, gas and oil usage.

Which of the following is NOT true? Question options: A) Marginal product is the addition to total output resulting from increasing a given input by one unit. B) Although marginal returns intially increase as more of a specific input is added to a given amount of fixed resources, eventually marginal returns will begin a never ending decline. C) Increasing marginal returns in the early phases of output are reflected by a falling marginal cost curve during that phase. Eventually as marginal returns fall, the marginal cost curve will begin a never ending rise. D) It is falling marginal costs that cause the long and never ending fall in marginal returns.

D) It is falling marginal costs that cause the long and never ending fall in marginal returns.

Which of the following is NOT true about perfect competition? Question options: A) Highly efficient firms can earn long run economic profit for decades. B) Firms maximize profit by producing to the output level where total revenue exceeds total cost by the widest margin. This output level is where marginal revenue is just equal to marginal cost. C) Perfectly competitive markets generate productive efficiency, which means that perfect competition produces output at minimum average cost in the long run. D) At their profit maximizing level of output, the marginal cost of the last unit fof output will be equal to the price.

A) Highly efficient firms can earn long run economic profit for decades.

In perfect competition, at what price and output level is consumer surplus maximized? Question options: A) Under perfect competition, market equilibrium price and output occurs where consumer surplus is maximized. B) Under perfect competition, market equilibrium price and output occurs long before consumer surplus is maximized. C) Consumer surplus can never be maximized in a perfectly competitive market. D) At the output level where Marginal Revenue is less than Marginal Cost.

A) Under perfect competition, market equilibrium price and output occurs where consumer surplus is maximized.

Which product is not produced in a market of perfect competition? Question options: A) Automobiles B) Salt C) Toothpicks D) Produce

A) Automobiles

Which of the following is NOT correct about firms operating in a perfectly competitive market? Question options: A) Firms in perfectly competitive markets have the maximum ability to raise price of all the market types. B) Under perfect competition, there are many firms making essentially the exact same product. C) Under perfect competition, there are many firms making essentially the exact same product and firms must compete on cost control, not product variety. D) Under perfect competition, firms maximize profit by producing at an output level where marginal revenue from the last unit produced just equals the marginal cost of that unit.

A) Firms in perfectly competitive markets have the maximum ability to raise price of all the market types.

Which of the following correctly describes the short run and long run effect of an increase in demand on market price? Question options: A) In the short run, an increase in demand leads to a higher market price and higher level of output but in the long run the entry of new firms and expansion of output by existing firms will shift the market supply curve to the right until the market price returns to its original position. B) In the short run, an increase in demand leads to a lower market price and lower level of output but in the long run the entry of new firms and expansion of output by existing firms will shift the market supply curve to the left until the market price returns to its original position. C) In the long run, an increase in demand leads to a higher market price and higher level of output but in the long run the entry of new firms and expansion of output by existing firms will shift the market supply curve to the left until the market price returns to its original position. D) There is no difference between the short run and long run effect of an increase in demand.

A) In the short run, an increase in demand leads to a higher market price and higher level of output but in the long run the entry of new firms and expansion of output by existing firms will shift the market supply curve to the right until the market price returns to its original position.

Which of the following is NOT true? Question options: A) the A change in the price of a good will change its demand (shift the entire demand curve). B) An increase in the price of a good will decrease the quantity demanded, which is shown by downward movement on the fixed demand curve, which does not shift. C) A decrease in the price of a good will increase the quantity demanded, which is shown by an upward movement along the fixed demand curve, which does not shift. D) Demand only changes and the demand curve only shifts when all the quantities demanded change. Changes in consumer preferences and consumer income will change all of the quantities demanded at all the possible prices and will thereby change the demand, which is shown by a shift of the demand curve. But a change in the price of the good does not change all of the quantities demanded at all other prices, so demand will not change in response to a change in the price of the good.

A) the A change in the price of a good will change its demand (shift the entire demand curve).

Under which type of market do firms face a horizontal demand curve and what does such a curve imply for that firm? Question options: A) Monopoly. The horizontal demand curve indicates that the firm can sell all it produces at a price any level above the market price. B) Perfect Competition. The horizontal demand curve indicates that the firm can sell all it produces at that market price. C) Perfect Competition. The horizontal demand curve indicates that the firm can sell all it produces at any price above or below the market price. D) Oligopoly. The horizontal demand curve indicates that the firm can sell all it produces at that market price.

B) Perfect Competition. The horizontal demand curve indicates that the firm can sell all it produces at that market price.

Which of the following is correct about profit maximization under perfect competition? Question options: A) Perfectly competitive firms maximize their profit by keeping their selling price consistently higher than the marginal revenue. B) Perfectly competitive firms maximize their profit by increasing output until the marginal revenue of the last unit of output is just equal to the marginal cost of that last unit of output. C) Perfectly competitive firms maximize their profit by raising their price gradually until they reach what is considered by the industry to be a fair price. D) Perfectly competitive firms maximize their profit by keeping their prices constant until the Marginal Product becomes greater than the Average Total Cost.

B) Perfectly competitive firms maximize their profit by increasing output until the marginal revenue of the last unit of output is just equal to the marginal cost of that last unit of output.

Why is it that a firm under perfect competition will not earn long run economic profit? Question options: A) Firms under perfect competition cannot earn long run economic profit because their accounting profit can never exceed their economic profit. B) Firms under perfect competition cannot earn long run economic profit because the government does not permit such firms to earn long run accounting profit. C) Firms under perfect competition cannot earn long run economic profit because the presence of economic profit attracts other firms to enter the market. D) Firms under perfect competition cannot earn long run economic profit because the presence of accounting profit attracts other firms to enter the market and run them out of business.

C) Firms under perfect competition cannot earn long run economic profit because the presence of economic profit attracts other firms to enter the market.

For a perfectly competitive firm, what is true about total revenue as output continues to exceed the output level where marginal revenue equals marginal cost? Question options: A) It is continually rises. B) It rises briefly, falls again but eventually begins to rise permanently. C) It is continually falling. D) It does not change.

C) It is continually falling.

In which type market is the marginal cost of the last unit of output equal to the market price when firms produce to the profit maximizing level of output? Question options: A) Product Market B) Resource Market C) Perfectly Competitive Market D) Monopoly

C) Perfectly Competitive Market

Which of the following is correct about the sole proprietorship? Question options: A) They are the most common form of business organization. B) They generate over 90% of all business revenue. C) The sole proprietorship is the most common business form but it only generates a tiny portion of all business sales. D) It is responsible for the production of over 90% of all shoe production in the United States.

C) The sole proprietorship is the most common business form but it only generates a tiny portion of all business sales.

Which of the following is NOT a characteristic of perfect competition? Question options: A) A market of many firms, so that one firm cannot influence the price by its output decisions. B) No legla or natural barriers to entry exist, so that firms can easily and quickly enter the market. C) Many firms selling an essentially identical product. Sellers and buyers are well informed about market conditions and relevant prices. D) The majority of perfectly competitive markets have one firm that dominates the market while all the other firms closely follow its marketing and pricing strategies.

D) The majority of perfectly competitive markets have one firm that dominates the market while all the other firms closely follow its marketing and pricing strategies.

Which of the following statements correctly describes Perfect Competition? Question options: A) There are a handful of firms producing fairly similar but distinct products with a wide range of features. B) The cell phone market is one of perfect competition because it has somewhat similar products with each firms offering a unique set of features with is phone. C) Perfect Competition markets are those that have just one seller offering the exact same product with no detectable differences. D) A perfectly competitive market is one in which there are many firms offering essentially the same good, such as produce, salt or toothpicks. In this market there are few or no barriers to entry and no long term economic profit is possible.

D) A perfectly competitive market is one in which there are many firms offering essentially the same good, such as produce, salt or toothpicks. In this market there are few or no barriers to entry and no long term economic profit is possible.

Why can't firms under perfect competition continue to earn positive economic profit in the long run? Question options: A) Because of Diminishing Marginal Returns B) Because of Diminishing Marginal Productivity C) Because average total costs will eventually overwhelm all profits. D) Because the lack of barriers to entry in a perfectly competitive market will lead other firms to enter the market in response to the presence of positive economic profits.

D) Because the lack of barriers to entry in a perfectly competitive market will lead other firms to enter the market in response to the presence of positive economic profits.

Which of the following is correct about the demand curve faced by a firm under perfect competition? Question options: A) Firms under perfect competition face a vertical demand curve, indicating that each firm can sell all it makes at the going market price. B) Firms under perfect competition face a downward sloping demand curve, indicating that each firm can sell all it makes at the going market price. C) Firms under perfect competition face an upward sloping demand curve. D) Firms under perfect competition face a horizontal demand curve, indicating that each firm can sell all it makes at the going market price.

D) Firms under perfect competition face a horizontal demand curve, indicating that each firm can sell all it makes at the going market price.

For a perfectly competitive firm, what is true about total revenue as output is less than but continually approaching the level where marginal revenue equals marginal cost? Question options: A) It is continually falling. B) It rises at first but begins to fall after marginal cost equals average variable cost. C) It falls at first but begins to increase only after marginal cost equals average total cost. D) It is continually rising.

D) It is continually rising.

What type of market exists when there are many firms, so that one firm cannot influence the price by its output decisions. These numerous firms are selling an essentially identical product. Sellers and buyers are well informed about market conditions and relevant prices. Question options: A) Monopoly B) Oligopoly C) Fully Formed Market D) Perfect Competition

D) Perfect Competition

Which of the following statements is NOT true about perfect competition? Question options: A) In the short run, the supply curve is just the marginal cost curve. B) Under perfect competition, firms cannot continue to earn positive economic profit in the long run. C) In the short run, an increase in demand leads to a higher market price and higher level of output but in the long run the entry of new firms and expansion of output by existing firms will shift the market supply curve to the right until the market price returns to its original position. D) Short run profit maximization always occurs where average variable cost and average total cost are at their minimum levels.

D) Short run profit maximization always occurs where average variable cost and average total cost are at their minimum levels.

Which of the following states the correct relationship between perfect competition and producer surplus? Question options: A) Under perfect competition, producer surplus must be zero. B) Under perfect competition, producer surplus can never exceed economic profit. C) Under perfect competition, market equilibrium price and output occurs where consumer surplus is twice the value of producer surplus. D) Under perfect competition, market equilibrium price and output occurs where producer surplus is maximized.

D) Under perfect competition, market equilibrium price and output occurs where producer surplus is maximized.

Which of the following provides a correct example of Normative Economics? Question options: A) The inflation rate measures inflation. B) The unemployment rate measures the percent of the labor force that is unemployed. C) The government should provide a minimum total welfare payment to poor people that is at least 80% of the local minimum wage salary. D) The Unemployment Rate for 2017 is lower than it was for 2016.

C) The government should provide a minimum total welfare payment to poor people that is at least 80% of the local minimum wage salary.

What is the difference between the information in the Supply Schedule of a good and its Supply Curve? Question options: A) The supply schedule has larger quantities supplied at each price than occur in the supply curve. B) The supply curve is always much greater than the supply schedule. C) There is no difference. The data in the Supply Schedule is used to graph the Supply Curve. D) The supply schedule has lower quantities supplied at each price than occur on the supply curve.

C) There is no difference. The data in the Supply Schedule is used to graph the Supply Curve.

Which of the following is NOT true about what changes demand (what changes all of the quantities demanded in the demand schedule and shifts the demand curve)? Question options: A) An increase in the price of a product will decrease the demand for the product.That is, it will decrease all of the quantities demanded at each and every price. B) A change in income changes demand. C) A change in consumer preferences and tastes changes demand. D) Changes in the prices of substitutes or complements changes demand.

A) An increase in the price of a product will decrease the demand for the product.That is, it will decrease all of the quantities demanded at each and every price.

Which of the following is NOT true about factors that cause a change in supply? Question options: A) An decrease in the cost of inputs will increase the quantities supplied at every price and therefore shift the supply curve to the right. B) An improvement in technology that improves efficiency of production will shift the supply curve to the right. C) Changes in producer expectations can shift the supply curve. D) A change in the market price of a good will change ALL of the quantities supplied and shift the supply curve.

A) An decrease in the cost of inputs will increase the quantities supplied at every price and therefore shift the supply curve to the right.

Which of the following will cause the Equilibrium Price to rise? Question options: A) No change in supply but an increase in demand. B) No change in demand but an increase in supply. C) Increase in demand but much larger increase in supply. D) No change in demand or supply.

A) No change in supply but an increase in demand.

Which of the following is NOT true? Question options: A) A price floor is when the government enforces a market price that is less than the natural equilibrium price. B) A price ceiling is a government imposed maximum price set that is less than the naturally occurring equilibrium price. It results in a shortage. C) A price floor is a government set minimum price above the equilibrium price and it results in a surplus. D) While a price floor is set by government to benefit suppliers, a price ceiling is set to benefit those demanding a good. Removal of a price floor or a price ceiling results in price moving naturally to its equilibrium level.

A) A price floor is when the government enforces a market price that is less than the natural equilibrium price.

Which of the following is NOT true? Question options: A) A quota is one fourth of a dollar. B) A tariff is a tax placed on an import. C) A quota is a limit of the total amount of a good that can be imported or exported. D) Tariffs and quotas benefit self interested producers who lobby the government to enforce those tariffs and quotas.

A) A quota is one fourth of a dollar.

Which of the following is NOT true? Question options: A) A shortage exists when the quantity demanded is just equal to the quantity supplied. B) A surplus results when the quantity demanded is less than the quantity supplied at a given price. C) A shortage exists when the quantity demanded exceeds the quantity supplied at a given price. D) Both a surplus and a shortage can be resolved by allowing the price to change to the equilibrium price.

A) A shortage exists when the quantity demanded is just equal to the quantity supplied.

Which of the following is NOT true about an externality? Question options: A) An externality is a cost or benefit that accrues to third parties not directly involved in an economic transaction. B) When an externality occurs, the buyer is not affected. C) An externality is a benefit or cost that impacts only the parties directly involved in a transaction, i.e., the buyer and the seller. D) When an externality occurs, the seller is not affected.

A) An externality is a cost or benefit that accrues to third parties not directly involved in an economic transaction.

Which of the following is NOT correct about a progressive tax? Question options: A) As income rises, the progressive tax rate falls. Therefore, lower income earners pay a higher tax RATE than higher income earners. B) The progressive income tax is used in the United States. C) In progressive taxation, the tax rate as a percentage of income increases as the income level increases. D) In progressive taxation, the tax rate rises as certain income levels are surpassed.

A) As income rises, the progressive tax rate falls. Therefore, lower income earners pay a higher tax RATE than higher income earners.

Which of the following is NOT correct about how tariffs impact consumers and domestic producers? Question options: A) Consumers benefit because they are able to buy imports they value above domestic versions at a cheaper price. B) Consumers lose out from tariffs because they are forced to pay a higher price for imports or they must buy the domestic version of a good at a price higher than the original price of the import before it was taxed with a tariff. C) Domestic producers who manufacture goods similar to the import with a tariff benefit because consumers become more likely to buy their higher priced good after the tariff forces the price of the import to rise. D) Tariffs benefit domestic producers of products similar to imports burdened with a tariff because the import now becomes as expensive as the domestic good, so consumers become more likely to buy the domestic good they previously rejected.

A) Consumers benefit because they are able to buy imports they value above domestic versions at a cheaper price.

Initially, marginal product increases as each additional unit of an input is utilized but, eventually, it begins an unending decrease as each additional unit of the input is used. Why? Question options: A) Diminishing Marginal Returns. B) Marginal cost causes Average Total Cost to fall throughout the entire range of output. C) Economies of Scale. D) Marginal Physical Product.

A) Diminishing Marginal Returns.

Which of the following is NOT true about the mixed economic system in the United States? Question options: A) Government spending accounts for over 90% of the total economy. B) Government regulates the private sector in many ways. C) Government plays a limited but very influential role in the economy. D) Federal agencies regulate safety in the workplace, safety of food and medicines, water standards, and ensure maximum competitiveness in the overall economy.

A) Government spending accounts for over 90% of the total economy.

Which of the following provides the correct definition of Progressive Taxation? Question options: A) In progressive taxation, tax as a percentage of income increases as income level increases. The tax rate rises as certain income levels are surpassed. B) A progressive tax places a higher rate on the lowest tier of income earners. C) A progressive tax is a gradual tax that has a rate that stays gradual at gradual income levels. D) Progressive tax is a flat tax that has a rate that stays constant even as income levels rise.

A) In progressive taxation, tax as a percentage of income increases as income level increases. The tax rate rises as certain income levels are surpassed.

Which of the following is NOT true about costs? Question options: A) It is possible for someone who could be making $100,000 a year in another job but who chooses to run a small business with total revenues of $90,000 in 2010 to make positive economic profit for that small business for 2010. B) The two factors accounting for the dramatic fall in average total cost over the initial phase of production are falling average variable cost and falling marginal costs. C) Averge variable cost does not begin to rise until marginal cost exceeds average variable cost. D) Average total cost does not begin to rise until marginal cost exceeds average total cost.

A) It is possible for someone who could be making $100,000 a year in another job but who chooses to run a small business with total revenues of $90,000 in 2010 to make positive economic profit for that small business for 2010.

Which of the following is true about labor as a factor of production? Question options: A) Labor refers to human effort. B) Labor includes physical effort but not mental effort. C) If labor is scarce, the goods produced by labor will never be scarce. D) The cost of labor does not reflect the value of time.

A) Labor refers to human effort.

Which is the correct definition of Macroeconomics? Question options: A) Macroeconomics looks at the entire economy, not at the multitude of individual markets for the numerous individual goods and services. It looks at high level economic measures such as the level of employment, price levels and Gross Domestic Product. B) Macroeconomics focuses entirely on choices made by individual consumers and firms. C) The primary focus of Macroeconomics is limited to profit maximizing decisions by firms operating under conditions of perfect competition. D) Macroeconomics focuses only on output and profit decision-making by firms in competitive and non-competitive markets.

A) Macroeconomics looks at the entire economy, not at the multitude of individual markets for the numerous individual goods and services. It looks at high level economic measures such as the level of employment, price levels and Gross Domestic Product.

Which of the following is correct about the partnership form of business organization? Question options: A) Partnerships are the least common business form. B) Partnerships are the MOST common business form. C) Partnerships generate over 90% of all proprietary revenue. D) Partnerships are formed as subsidiaries of preferred stock companies.

A) Partnerships are the least common business form.

Which of the following is NOT true about positive economic statements? Question options: A) Positive economic statements are ones that are true. B) A good example of a positive economic statement is this: An increase in the price of a good or service causes a decrease in the amount purchased of that good or service. C) A positive economic statement is one that can proved true or proven false by testing it with reference to facts. D) A positive economic statement can be false if it is proven by facts to be false. It need not be true to be a positive economic statement--it only needs to be subject to being proved or disproved by reference to facts.

A) Positive economic statements are ones that are true.

Which of the following is NOT true about price floors? Question options: A) Price floors result in shortages, which hurts producers. B) Price floors increase the quantity supplied while decreasing the quantity demanded, which results in a surplus. C) Price floors are mandated by government on behalf of producers. D) The minimum wage is a price floor but in this case the "producers" are workers who produce labor.

A) Price floors result in shortages, which hurts producers.

Which of the following is NOT true about Product Markets and Resource Markets? Question options: A) Product Markets involve the sale and purchase of factors of production used to make goods and services. B) Firms buy labor, capital and natural resources in Resource Markets. C) Consumers buy goods and services in Product Markets. D) While firms are the buyers in resource markets, consumers (households) are the buyers in product markets.

A) Product Markets involve the sale and purchase of factors of production used to make goods and services.

Which type of good is most likely to be provided by the government because it is valued by society but very unlikely to ever be provided by a private sector firm? Question options: A) Public Good. B) Private Good. C) Publicly Held Private Good. D) Goods produced by private firms.

A) Public Good.

Which curve has a positive slope where the quantity increases as the price increases? Question options: A) Supply Curve B) Demand Curve C) Indifference Curve. D) Bell Curve

A) Supply Curve

Which of the following is NOT true about the impact of tariffs and quotas? Question options: A) Tariffs and quotas allow consumers to save money. B) Tariffs and quotas raise the price of the import upon which they are imposed and allow domestic American producers to raise their price to match the final consumer price of the import. C) Tariffs and quotas are taxes on imports imposed to force the final consumer price of those imports higher. D) Tariffs and quotas raise the price of the import upon which they are imposed and allow domestic American producers to raise their price to match the final consumer price of the import.

A) Tariffs and quotas allow consumers to save money.

Which of the following will NOT change the supply of lead pencils? Question options: A) The cost of wood. B) The cost of lead. C) The cost of production of pencils. D) The price of pencils.

A) The cost of wood.

Which of the following is NOT true about a Production Possibilities Frontier? Question options: A) The curve on a PPF cannot be shifted outward even if more resources are used or if existing technology is vastly improved. B) A production possibilities frontier is the curve on a graph showing the maximum output possible of two goods from a mix of inputs. C) The curve on a PPF shows the maximum output possible when using all resources to their fullest and best extent. D) A point inside the PPF indicates either that resources are not being fully used or they are being used in an inappropriate or inefficient manner.

A) The curve on a PPF cannot be shifted outward even if more resources are used or if existing technology is vastly improved.

Which of the following is NOT correct? Question options: A) The term "supply" as used by economists refers to the entire supply curve which illustrates the various quantities supplied at various prices. B) The term "quantity supplied" only refers to the specific quantity supplied at one specific price. C) An increase in the market price of a good is shown by upward (to the right) movement along a fixed supply curve (which does not shift). D) A change in the market price of a good will change the supply of that good, which is shown by a shift of the entire supply curve, which means that all quantities supplied at all prices have changed.

A) The term "supply" as used by economists refers to the entire supply curve which illustrates the various quantities supplied at various prices.

What two factors account for the significant fall in Average Total Cost over the initial phase of production? Question options: A) The two factors accounting for the dramatic fall in average total cost over the initial phase of production are falling average variable cost and falling marginal costs. B) The two factors accounting for the dramatic fall in average total cost over the initial phase of production are falling marginal productivity and constant marginal costs. C) The two factors accounting for the dramatic fall in average total cost over the initial phase of production are falling average costs and variable input costs. D) Average total cost over the initial phase of production does not fall but actually rises.

A) The two factors accounting for the dramatic fall in average total cost over the initial phase of production are falling average variable cost and falling marginal costs.

As used in economics, to what does the term "marginal" refer? Question options: A) The word "marginal" refers to the incremental or additional change that results from buying one more unit of something or doing one more specified action. B) As used by economists, "marginal" means insignificant or of little consequence. C) Economists used the word "marginal" to express the idea of minimal relevance to an economic transaction. D) Marginal refers to a substitute for a naturally occurring economic good.

A) The word "marginal" refers to the incremental or additional change that results from buying one more unit of something or doing one more specified action.

Which of the following is NOT true about a normative economic statement? Question options: A) This is an accurate example of a normative economic statement: Raising the price of labor will cause a decrease in the amount of labor used by firms. B) A normative economic statement cannot be proved or disproved by using objective facts. C) A normative economic statement reflects an opinion which cannot be confirmed or denied by reference to facts. D) Normative economic statements refer to what should be rather than simply summarizing what currently exists.

A) This is an accurate example of a normative economic statement: Raising the price of labor will cause a decrease in the amount of labor used by firms

In which direction does the supply curve shift when there is an increase in supply? Question options: A) North by Northwest B) Downward to the right. C) Upward to the left. D) The supply curve does not shift when supply increases.

B) Downward to the right.

Which of the following correctly reflects the function of a resource market? Question options: A) Consumers purchase final goods for personal consumption in resource markets. B) Firms buy labor, capital and natural resources in Resource Markets. C) Firms receive payments for goods and services from consumers in resource markets. D) Consumers receive goods and services in resource markets that are used for personal consumption.

B) Firms buy labor, capital and natural resources in Resource Markets.

How do accountants calculate profit? Question options: A) Accountants calculate profit on the basis of explicit and implicit costs that are recorded in the firm's official books. B) Accountants calculate profit on the sole basis of explicit costs that are recorded in the firm's official books. C) Accountants calculate profit on the sole basis of implicit costs that are never recorded in the firm's official books. D) Accountants calculate profit on the sole basis of total revenues minus total costs, which include explicit and implicit costs.

B) Accountants calculate profit on the sole basis of explicit costs that are recorded in the firm's official books.

Which of the following is correct about implicit costs? Question options: A) An implicit cost for a small firm is the fixed cost of all unalterable expenses, such as rent, utilities and electricity. B) An implicit cost for a small firm is the value of the owner's time used elsewhere. An engineer who opens a flower shop gives up a significant income as an engineer and this potential alternative income is counted by economists as an implicit cost for that business. C) Implicit costs are costs that are clearly identified in official accounting documents of a firm. D) Implicit costs are costs that are reported to the Internal Revenue Service on tax returns filed by the firm.

B) An implicit cost for a small firm is the value of the owner's time used elsewhere. An engineer who opens a flower shop gives up a significant income as an engineer and this potential alternative income is counted by economists as an implicit cost for that business.

Which of the following is correct about the relationship between Average Total Cost and Marginal Cost? Question options: A) Average Total Cost will fall after Marginal Cost is greater than Average Total Cost. B) Average Total Cost (ATC) will fall until Marginal Cost is greater than Average Total Cost, then ATC will begin a continuous rise. C) There is no relationship between Average Total Cost and Marginal Cost. D) By definition, marginal cost can never exceed Average Total Cost.

B) Average Total Cost (ATC) will fall until Marginal Cost is greater than Average Total Cost, then ATC will begin a continuous rise.

Which of the following is correct about the term "capital" as defined by economists? Question options: A) As used by economists, the term "capital" refers to gold, stocks, bonds and other highly liquid assets. B) Economists define capital as physical assets (factories, machinery, etc.) used to produce other physical assets or consumer goods. C) Capital is hard money assets in the form of certified bonds, corporate certificates of deposit and preferred stock. D) Capital includes retained earnings, corporate debt and certified receipts.

B) Economists define capital as physical assets (factories, machinery, etc.) used to produce other physical assets or consumer goods.

Which of the following causes a shortage? Question options: A) Price is held below the equilibrium price resulting in quantity demanded exceeding quantity supplied. B) Government forces the price above the equilibrium level making quantity demanded exceed the quantity supplied. C) Natural economic forces cause the market price to remain high above the equilibrium price which causes quantity supplied to remain well below quantity demanded. D) Quantity demanded falls well below quantity supplied from government imposed controls.

B) Government forces the price above the equilibrium level making quantity demanded exceed the quantity supplied.

John is a high school dropout with amazing self taught computer skills and a three year old thriving business setting up and maintaining computer systems. Joan just graduated from dental college but just decided to learn how to set up computer systems. Judy is a doctor who worked her way through college and medical school setting up and maintaining computer systems. Based on the concept of opportunity cost, who should set up and maintain the computer system at the newly formed large scale private medical practice Judy just joined? Question options: A) Judy, because she has 8 years of experience setting up computer systems and John only has 3 years of experience. B) John, because he has the lower opportunity cost of setting up computer systems. Although Judy has more experience, she would have to sacrifice $500 per hour of medical income to save her firm just $100 per hour of computer set up costs. Likewise, Joan is giving up $300 per hour of dental income for each hour she earns $50 for providing computer set up services. C) Joan because she is new and has lots of time to spend setting up the new system. D) None of the three listed has a lower opportunity cost of setting up new computer systems.

B) John, because he has the lower opportunity cost of setting up computer systems. Although Judy has more experience, she would have to sacrifice $500 per hour of medical income to save her firm just $100 per hour of computer set up costs. Likewise, Joan is giving up $300 per hour of dental income for each hour she earns $50 for providing computer set up services.

Who should specialize in making pizza? Question options: A) Joe can make one pizza in the time it takes him to make one woven basket. B) June can make three pizzas in the time it takes her to make on woven basket. C) Joan can make two pizzas in the time it takes her to make one woven basket. D) Jumba can make the most pizzas and woven baskets of anyone.

B) June can make three pizzas in the time it takes her to make on woven basket.

Which law of Economics indicates that the marginal product of an input will reach a point where it begins an unending decline as each additional unit of the input is utilized? Question options: A) Law if Marginal Utility. Marginal utility increases as each additional unit of an input is utilized but, then, it begins an unending decrease as each additional unit of the input is used. B) Law of Diminishing Marginal Returns. Initially, marginal product increases as each additional unit of an input is utilized but, then, it begins an unending decrease as each additional unit of the input is used. C) Law of Demand. As more units are desired, the price must fall accordingly. D) Law of Supply. As more units are supplied, the price falls in proportion.

B) Law of Diminishing Marginal Returns. Initially, marginal product increases as each additional unit of an input is utilized but, then, it begins an unending decrease as each additional unit of the input is used.

What is the correct definition of Marginal Product? Question options: A) Marginal product is the addition to total costs resulting from increasing output by one unit. B) Marginal product is the addition to total output resulting from increasing a given input by one unit. C) Marginal product is the addition to total output resulting from a decline in marginal costs. D) Marginal product is the addition to total output resulting from decreasing usage of a given input by one unit.

B) Marginal product is the addition to total output resulting from increasing a given input by one unit.

Which of the following provides the CORRECT definition of Microeconomics? Question options: A) Microeconomics provides analysis of high level economic measures such as employment, inflation and Grossed Out Domestic Producers. B) Microeconomics studies the phenomenon of individual choice and how markets coordinate those choices. Microeconomics focuses on how prices and quantities sold are determined in defined markets for individual goods. C) Microeconomics studies the overall output of the economy and its general levels of employment and prices. D) Microeconomics looks at large macro level measures of economic outcomes.

B) Microeconomics studies the phenomenon of individual choice and how markets coordinate those choices. Microeconomics focuses on how prices and quantities sold are determined in defined markets for individual goods.

Which of the following is correct about a Production Possibilities Frontier? Question options: A) Points between the PPF and the X and Y axes are not attainable without more resources or better technology. B) Points outside the PPF curve are not attainable with the given level of resources and the current state of technology. Points inside the curve are attainable but not efficient. To shift the PPF outwards, increase total resources or improve technology (or both). C) Points outside the PPF line are not attainable in the future, regardless of changes in resources or technology. D) A change in technology alone cannot push the PPF outwards.

B) Points outside the PPF curve are not attainable with the given level of resources and the current state of technology. Points inside the curve are attainable but not efficient. To shift the PPF outwards, increase total resources or improve technology (or both).

Which of the following is the correct definition and description of Private Goods? Question options: A) Private goods are those that the consumption by one person does not preclude the consumption by many other people, regardless of ability to pay. B) Private goods are exclusive because sellers have the legal right to exclude those who refuse to pay. Private goods are said to be rival in consumption because the amount consumed by one party is unavailable to another for consumption. C) Private goods are those that non-payers cannot be excluded from using. D) Private goods are those typically provided by government because most people will not pay for them.

B) Private goods are exclusive because sellers have the legal right to exclude those who refuse to pay. Private goods are said to be rival in consumption because the amount consumed by one party is unavailable to another for consumption.

Which of the following is true about scarcity? Question options: A) Only items that continually sells out are called scarce. B) Scarcity refers to the long term situation whereby the amount desired exceeds the amount freely available. Therefore, any item that can command any price in an open market is technically scarce. C) A scarce item is one that is hard to find during a brief time period in most retail outlets. D) Scarcity refers to a temporary shortage of any item because the current price is too low.

B) Scarcity refers to the long term situation whereby the amount desired exceeds the amount freely available. Therefore, any item that can command any price in an open market is technically scarce.

Which concept reflects the benefit gained from having people do a specific task in a production process rather than every single step in that process? Question options: A) Opportunity marginal analysis. B) Specialization C) Generalization D) Marginal cost.

B) Specialization

Which of the following is true about comparative advantage? Question options: A) If Country A can produce more tin than Country B, then County A is said to have a Comparative Advantage over Country B in tin. B) The Law of Comparative Advantage indicates that the person or country with the lower opportunity cost of making a good should specialize in making that good. If people or countries specialize according to comparative advantage and then engage in trade,both will be better off. C) If Georgia can grow more peaches than South Carolina, then Georgia is said to have a comparatively advantageous position of advantage over that state. D) Comparative Advantage refers to the country that can produce the most goods in the shortest period of time.

B) The Law of Comparative Advantage indicates that the person or country with the lower opportunity cost of making a good should specialize in making that good. If people or countries specialize according to comparative advantage and then engage in trade,both will be better off.

What factor is key to determining which good a person or country should specialize in producing? Question options: A) The person or country with the greatest opportunity cost of producing a good should specialize in that good. B) The person or country with the comparative advantage in making a good should specialize in making that good. The comparative advantage is based on having the lower opportunity cost. C) Specialization should be based on the personal interest of an individual and the national interest of the country. D) The key factor in determining specialization is the opportunity advantage of comparative production.

B) The person or country with the comparative advantage in making a good should specialize in making that good. The comparative advantage is based on having the lower opportunity cost.

Which of the following statements correctly states the relationship between Comparative Advantage and Specialization? Question options: A) Countries that can compare their advantages over another country have the specialization advantage over those countries. B) The person or country with the comparative advantage in making a good should specialize in making that good. The comparative advantage is based on having the lower opportunity cost. C) The comparative advantage is found by determining the firm with the greatest opportunity cost of production. Companies with the comparative advantage should supply the firms that specialize in that product. D) Comparative Advantage determines the opportunity cost of production. The productive opportunity cost should be highest for those firms that specialize in making one comparative good.

B) The person or country with the comparative advantage in making a good should specialize in making that good. The comparative advantage is based on having the lower opportunity cost.

Which of the following is NOT correct about accounting profit and economic profit? Question options: A) Accountants calculate profit on the sole basis of explicit costs that are recorded in the firm's official books. B) Economists calculate economic profit by considering both explicit and implicit cost. C) Accountants can showed a positive profit while the Economic Profit is actually negative. D) Accounting Profit is calculated based in part on opportunity costs.

D) Accounting Profit is calculated based in part on opportunity costs.

Which of the following is NOT true of the production possibilities frontier (PPF)? Question options: A) To shift the PPF outwards, it is necessary to increase the amount of resources or improve the state of technology (or both). B) Points between the PPF curve and the X and Y axes are not attainable. C) Points outside the PPF curve are not attainable with the given level of resources and the current state of technology. Points inside the curve are attainable but not efficient. D) The slope of the PPF curve shows that the opportunity cost of making one product (in terms of the other product) increases as more of that product is made.

B) Points between the PPF curve and the X and Y axes are not attainable.

Which of the following is correct about Opportunity Cost? Question options: A) The Opportunity Cost of a purchase or action is always the same for everyone. B) The Opportunity Cost of a purchase or action is determined by the average income of a person or the total amount of wealth held by that person. C) Opportunity Cost is highly subjective and varies according to the personal perspective of each individual. D) The Opportunity Cost of a purchase or action is always the same for everyone sharing a given level of income.

C) Opportunity Cost is highly subjective and varies according to the personal perspective of each individual.

Which of the following is NOT correct? Question options: A) The demand schedule of a good communicates the same data as the demand curve for that good. B) The supply schedule for a good shows the same information as the supply curve for that good. C) A change in price will change the entire demand schedule for a good but will not change the demand curve. D) Demand schedules are just table forms of the same data in the demand curve.

C) A change in price will change the entire demand schedule for a good but will not change the demand curve.

Which of the following is NOT true about natural resources? Question options: A) Some of the things included in the category of natural resources are lakes, copper deposits and deer. B) As a factor of production, natural resources refer to naturally occurring resources generating value that exist under the earth and on the surface of the earth. C) All natural resources are renewable or have a supply that man can never exhaust. D) As a category of productive resources, natural resources (like other productive resources such as capital or labor) are inputs used to produce the goods and serves that people want.

C) All natural resources are renewable or have a supply that man can never exhaust.

Which of the following is correct about the relationship between MC and ATC? Question options: A) Average total cost does not begin to rise until marginal cost falls below average total cost. B) Average total cost begins to fall after marginal cost exceeds average total cost. C) Average total cost does not begin to rise until marginal cost exceeds average total cost. D) There is no relationship between average total cost and marginal cost.

C) Average total cost does not begin to rise until marginal cost exceeds average total cost.

Which of the following is NOT true about the cooperative form of business organization? Question options: A) A cooperative or "co-op" is a group of people who pool their resources to buy and sell more efficiently than they could on their own. B) The government grants most co-ops tax exempt status. C) Cooperatives are always formed as Chapter J subsidiaries of preferred stock companies. D) Cooperatives are recognized by the government as legitimate business operations and most receive tax exempt status as a result.

C) Cooperatives are always formed as Chapter J subsidiaries of preferred stock companies.

Which of the following is NOT true about corporations? Question options: A) Although the most common form of business organization, corporations account for less than half of all output and revenue. B) A corporation is a legal entity owned by dispersed stockholders whose liability is limited to the value of their stock. While making up less than a quarter of all businesses, corporations generate more than 3/4 of total output. C) Corporations account for about 75% of total business production. D) While making up less than a quarter of all businesses, corporations generate more than 3/4 of total output.

C) Corporations account for about 75% of total business production.

Which of the following correctly states the relationship between marginal product and marginal cost. Question options: A) As marginal cost decreases, marginal product falls. B) There is no direct relationship between marginal product and marginal cost. C) As marginal product increases, marginal cost rises. D) As marginal product decreases, marginal cost rises.

D) As marginal product decreases, marginal cost rises.

In what phase of production are marginal returns actually increasing and why? Question options: A) Increasing marginal returns never occur in any phase of production. B) Increasing marginal returns in the last phase of output are reflected by a falling marginal cost curve during that phase. Eventually as marginal returns fall, the marginal cost curve will begin a never ending decline. C) Increasing marginal returns occur in the early phases of output and are reflected by a falling marginal cost curve during that phase. Eventually as marginal costs rise, marginal returns will begin a never ending fall. D) Increasing marginal returns can only occur when marginal costs are falling, which only happens after the marginal cost curve crosses the average variable cost curve.

C) Increasing marginal returns occur in the early phases of output and are reflected by a falling marginal cost curve during that phase. Eventually as marginal costs rise, marginal returns will begin a never ending fall.

Which of the following people has the comparative advantage in making pizza? Question options: A) Joe, who has to give up making one rocking horse to make one pizza. B) June, who gives up making one half of a rocking horse to make one pizza. C) Jimbo, who can make one pizza or one fourth of a hobby horse in the same amount of time. D) Jasmine can make more pizzas and hobby horses than anyone.

C) Jimbo, who can make one pizza or one fourth of a hobby horse in the same amount of time.

Which of the following lists the four major categories of economic resources used in the production of consumer goods? Question options: A) Scarcity, shortages, surpluses and extra output. B) Goods, services, inputs, outputs. C) Land, labor, capital and entrepreneurial skill. D) Factories, stores, outlets and malls.

C) Land, labor, capital and entrepreneurial skill.

Which of the following correctly defines and describes marginal product? Question options: A) Marginal Product is the change in fixed cost of production resulting from an increase in an input. B) Marginal Product is the marginal value of a product resulting from the last unit purchased. C) Marginal Product is the change in total product resulting from using another unit of input. For example, the extra output resulting from hiring one more worker is that worker's marginal product. D) Marginal Product always starts close to zero and then gradually and continually rises throughout all increases in the usage of a particular input.

C) Marginal Product is the change in total product resulting from using another unit of input. For example, the extra output resulting from hiring one more worker is that worker's marginal product.

Question 7 1 / 1 point Which of the following is NOT true about Microeconomics and Macroeconomics? Question options: A) Microeconomics studies the phenomenon of individual choice and how markets coordinate those choices. B) Microeconomics focuses on how prices and quantities sold are determined in defined markets for individual goods. C) Microeconomics studies the performance of the economy as a whole. D) Macroeconomics looks at the entire economy, not at the multitude of individual markets for the numerous individual goods and services.

C) Microeconomics studies the performance of the economy as a whole.

Which of the following is NOT true about Normal Profit? Question options: A) Normal profit occurs when economic profit is equal to zero. B) Normal Profit occurs when the difference between total revenue and total cost (explicit and implicit costs) equals zero. C) Normal Profit is equal to Accounting Profit. D) Normal profit occurs when all explicit and implicit costs are just covered by revenue.

C) Normal Profit is equal to Accounting Profit.

Which of the following is true about points inside and outside of the PPF? Question options: A) Points inside the PPF (between the curve and the X&Y axes), are the most efficient points of production. B) Points outside the PPF are the most efficient of the attainable points of output. C) Points outside the PPF are not attainable with the given level of resources the given state of technology being used. D) Points inside the PPF are attainable only if resources are increased or technology is improved or both).

C) Points outside the PPF are not attainable with the given level of resources the given state of technology being used.

Which of the following is NOT correct about Public Goods? Question options: A) Public Goods are those whose usage by one does not preclude usage by another. B) Public Goods are those for which exclusion to non-payers is very difficult and often impossible. C) Public Goods are provided by publicly held corporations with massive subsidies from the government. D) Public goods are goods valued by a society but not likely to be provided by private firms.

C) Public Goods are provided by publicly held corporations with massive subsidies from the government.

Which of the following is NOT true about private and public goods? Question options: A) Private goods are rival in consumption, meaning that consumption by one person precludes its consumption by another. A public good, such as a paved road, is nonrival. B) Private goods are excludable, meaning a nonpayer can be excluded from using or consuming the good. Public goods are nonexcludable. C) Public goods are available to all. Once produced, nonpayers cannot easily be prevented from enjoying the true public good. D) To be a public good, it need only be nonrival or nonexcludable, not both.

C) Public goods are available to all. Once produced, nonpayers cannot easily be prevented from enjoying the true public good.

In which type market do firms buy labor, capital and natural resources? Question options: A) Farmer Market B) Natural Resource Market C) Resource Market D) Urban Markets

C) Resource Market

Which of the following is the correct method to determine comparative advantage? Question options: A) The person with the lowest production possibility frontier has the comparative advantage. B) The country whose PPF curve bowest out the greatest has the comparative advantage in those two goods. C) The country with the lower opportunity cost of making steel is said to have the comparative advantage in making steel. D) If Country A can make more steel in one week than Country B then it must have the comparative advantage in making steel over Country B.

C) The country with the lower opportunity cost of making steel is said to have the comparative advantage in making steel.

Which of the following indicates that the U.S. has a Mixed Economic System? Question options: A) 25% of economy powered by perfectly competitive firms. 35% of production from firms with moderate competition. 30% from monopolies and 10% from government endowed corporations. B) While most corporations have private citizens on their boards of direction, some 25% must include at least one high level federal official. C) While most production is achieved through profit seeking private firms, Federal agencies regulate safety in the workplace, safety of food and medicines, water standards, and ensure maximum competitiveness in the overall economy. D) Half of corporations are purely private while the other half have some form of government subsidy or financial guarantees.

C) While most production is achieved through profit seeking private firms, Federal agencies regulate safety in the workplace, safety of food and medicines, water standards, and ensure maximum competitiveness in the overall economy.

Joe has an extra $30 to spend. His top three choices, in order of preference, are, (1) buying a soccer ball, (2) buying a paid of jeans or (3) going to a concert. What is his opportunity cost of buying the soccer ball? Question options: A) buying a pair of jeans or going to the concert B) the price difference between the concert and the pair of jeans C) buying the pair or jeans D) going to the concert

C) buying the pair or jeans

Which of the following is NOT true about Marginal Product? Question options: A) Initially, marginal product increases as each additional unit of an input is utilized but, then, it begins an unending decrease as each additional unit of the input is used. B) The Law of Diminishing Marginal Returns indicates that the marginal product of an input will reach a point where it begins an unending decline as each additional unit of the input is utilized. C) As marginal product falls, marginal cost rises. D) There is no relationship between marginal product and marginal cost.

D) There is no relationship between marginal product and marginal cost.

What causes a decrease in the quantity demanded of a good? Question options: A) A change in consumer income of massive proportions. B) Decline in preference for the good by all buyers. C) Lack of preference for that good by most high income buyers. D) An increase in the price of that good.

D) An increase in the price of that good.

Which of the following is the correct definition of a co-op? Question options: A) A cooperative is a special corporation endowed by government backed securities but owned by private interests. B) A cooperative is a government monopoly conferred on a regional development commission. C) A co-op is a consortium of firms banded together by commonality of output. D) A cooperative or "co-op" is a group of people who pool their resources to buy and sell more efficiently than they could on their own. Co-ops are recognized by the government as legitimate business operations and most receive tax exempt status as a result.

D) A cooperative or "co-op" is a group of people who pool their resources to buy and sell more efficiently than they could on their own. Co-ops are recognized by the government as legitimate business operations and most receive tax exempt status as a result.

What is the correct definition of a Positive Economic Statement? Question options: A) Positive Economic Statements reflect the values, goals and aspirations of a society. B) Positive Economic Statements are those that express positive expectations about economic forces and events. C) Positive Economic Statements are ones that are believed to be true. D) A positive economic statement is one that can proved true or proven false by testing it with reference to facts. It need not be true but simply able to subjected to testing to determine if in fact it is true.

D) A positive economic statement is one that can proved true or proven false by testing it with reference to facts. It need not be true but simply able to subjected to testing to determine if in fact it is true.

Which of the following correctly describes a Regressive Tax? Question options: A) n regressive taxation, tax as a percentage of income increases as income level increases. The tax rate rises as certain income levels are surpassed. B) A regressive tax is a flat tax that has a rate that stays constant even as income levels rise. C) A regressive tax is one that places a higher tax rate on upper income earners and a very low or nonexistent tax on very lower earners. D) A regressive tax hits low income earners harder than high income earners.

D) A regressive tax hits low income earners harder than high income earners.

Which of the following is NOT true about an outward shift of the PPF? Question options: A) An outward shift of the PPF illustrates economic growth, meaning that more of one good can be produced without reducing the output of the other good. B) An increase in the availability of one or more productive resources will cause the entire PPF to shift outward. C) Even if productive resources are constant, an increase in technology (know-how) can shift the PPF outward. D) A sudden and unexpected decrease in the capital stock is the most effective method of shifting the PPF outward.

D) A sudden and unexpected decrease in the capital stock is the most effective method of shifting the PPF outward.

Which if the following is correct about the effect of marginal cost on average variable cost. Question options: A) There is no relationship between average variable cost and marginal cost. B) Average variable cost does not begin to rise until marginal cost falls below average variable cost. C) Average variable cost falls after marginal cost exceeds average variable cost. D) Average variable cost does not begin to rise until marginal cost exceeds average variable cost.

D) Average variable cost does not begin to rise until marginal cost exceeds average variable cost.

Which of the following is TRUE about Product Markets? Question options: A) Factors of production--such as land, labor and capital- are exchanged in Product Markets. B) Product Markets are where natural resources, labor and capital are purchased by businesses. C) Firms are the only buyers in Resource Markets and and Product Markets. D) Consumers buy final goods and services in Product Markets. While firms are the buyers in resource markets, consumers (households) are the buyers in product markets.

D) Consumers buy final goods and services in Product Markets. While firms are the buyers in resource markets, consumers (households) are the buyers in product markets.

Which of the following is NOT true about factors that change the equilibrium price? Question options: A) If supply is constant and demand increases, the equilibrium price will increase. B) If demand is constant and the supply decreases, the equilibrium price will increase. C) If supply is constant and consumer income increases, the equilibrium price will increase. D) If both supply and demand increases, it is certain that the equilibrium price will increase.

D) If both supply and demand increases, it is certain that the equilibrium price will increase.

Which of the following is NOT true about marginal analysis? Question options: A) Marginal analysis focuses on the change brought about by doing one more thing or buying one more good. B) If the marginal benefit is greater than the marginal cost, then one should take the action or buy the good. C) As used by economists, marginal analysis refers to comparing the expected value and the expected cost of a decision under consideration. D) Marginal analysis refers to the evaluation of relatively inferior goods and services. One might refer to such a good or service as having "marginal quality" or "marginal value."

D) Marginal analysis refers to the evaluation of relatively inferior goods and services. One might refer to such a good or service as having "marginal quality" or "marginal value."

What type profit occurs when the difference between total revenue and total cost (explicit and implicit costs) equals zero? Question options: A) Negative Economic Profit B) Positive Economic Profit C) Accounting Profit D) Normal Profit

D) Normal Profit

As used by economists, which of the following is the correct definition of capital? Question options: A) Checking, Savings and Money Market accounts used by firms to expand their businesses. B) Gold, stocks, bonds and other highly liquid financial assets. C) Hard money assets in the form of certified bonds, corporate certificates of deposit and preferred stock. D) Physical assets (factories, machinery, tools etc.) used to produce other physical assets or consumer goods.

D) Physical assets (factories, machinery, tools etc.) used to produce other physical assets or consumer goods.

Which of the following is NOT correct about price ceilings? Question options: A) While a price ceiling benefits the lucky folks able to find an available instance of the protected good, it creates a substantial number of losers unable to find the good at the artificially low government-set price. B) A price ceiling reduces the quantity supplied while increasing the quantity demanded. Therefore, more people will want to buy the good while fewer units will be available, which results in a shortage. C) Price ceilings are set by government on behalf of consumers. The irony is that many consumers are harmed because they cannot get the good because a shortage results. D) Price ceilings benefit all consumers because everyone can get the good at the lower government mandated price.

D) Price ceilings benefit all consumers because everyone can get the good at the lower government mandated price.

Which of the following is NOT true about private and public goods? Question options: A) Private goods are exclusive because sellers have the legal right to exclude those who refuse to pay. B) Private goods are said to be rival in consumption because the amount consumed by one party is unavailable to another for consumption. C) Public goods are both nonrival and nonexclusive. Consumption by one does not preclude consumption by another. Also, nonpayers benefit as much as those who pay. D) Public goods are those whose consumption by one party precludes consumption by another. Also, public goods are those whose consumption can be denied to nonpayers.

D) Public goods are those whose consumption by one party precludes consumption by another. Also, public goods are those whose consumption can be denied to nonpayers.

Which of the following provides the correct definition of "opportunity cost?" Question options: A) The price of the good expressed as the full cost of purchase. B) All of the other things one could have bought with the money spent on a good or service. C) All of the other things one could have done with the hour spent on studying for an Economics exam. D) The best single alternative given up in order to buy a good or to spend an hour doing a particular activity.

D) The best single alternative given up in order to buy a good or to spend an hour doing a particular activity.

Which of the following causes a surplus? Question options: A) Current price falls exactly on the equilibrium price. B) Natural market forces cause the temporary current price to fall below the equilibrium price, so quantity demanded exceeds quantity supplied. C) Poor government policy forces the short term price below the equilibrium price. D) The minimum price is set above the equilibrium price resulting in quantity supplied exceeding quantity demanded.

D) The minimum price is set above the equilibrium price resulting in quantity supplied exceeding quantity demanded.

Which of the following is correct about the top 1% of income earners? Question options: A) They pay the same amount of taxes as their secretaries. B) They pay 1% of all incomes taxes. C) The top 1% of income earners pay over a third of all tax revenues. D) They pay less in taxes than the bottom 1% of wage earners.

D) They pay less in taxes than the bottom 1% of wage earners.

Which of the followig is NOT true about taxation? Question options: A) In progressive taxation, tax as a percentage of income increases as income level increases. The tax rate rises as certain income levels are surpassed. B) A proportional tax (also known as a "flat" tax) has a tax rate that remains constant as income levels rise. C) The marginal tax rate is the rate paid on the last dollar of income. High marginal tax rates reduce the incentives to work and save. D) A regressive tax is one that places a higher tax rate on upper income earners and a very low or nonexistent tax on very lower earners.

D) A regressive tax is one that places a higher tax rate on upper income earners and a very low or nonexistent tax on very lower earners.