Microeconomics chapter 1 exam- J Baker -Online- Owens

23) Which of the following statements is false? A) A straight line has a slope of zero. B) An inverse relationship has a negative slope value. C) A curved line has slope values that change at every point. D) A direct relationship has a positive slope value.

A) A straight line has a slope of zero.

7) Economists assume that individuals A) Are rational and respond to incentives. B) Will never take actions to help others. C) Prefer to live in a society that values fairness above all else. D) Behave in unpredictable ways.

A) Are rational and respond to incentives.

18)The highest valued alternative that must be given up to engage in an activity is the definition of A) Opportunity cost. B) Marginal cost. C) marginal benefit. D) economic equity.

A) Opportunity cost

25) ________ is a situation in which a good or service is produced at the lowest possible cost. A) Productive efficiency B) Equity C) Allocative efficiency D) Optimal marginalism

A) Productive efficiency

24) Who receives the most of what is produced in a market economy? A) Those who are willing and able to buy them B) People who earn the highest incomes C) Everyone receives an equal amount D) Lawmakers and other politically favored groups

A) Those who are willing and able to buy them

22) Which of the following is a macroeconomics question? A) What determines the inflation rate? B) What determines the production of DVDs? C) What factors determine the price of carrots? D) What determines the wage of auto workers?

A) What determines the inflation rate?

10) If the price of milk was $2.50 a gallon and it is now $3.25 a gallon, what is the percentage change in price? A) 13 percent B) 30 percent C) 75 percent D) 77 percent

B) 30 percent

1) An economic ________ is a simplified version of some aspect of economic life used to analyze an economic issue. A) Variable B) Model C) Market D) Trade-off

B) Model

12) In economics, choices must be made because we live in a world of A) Unlimited resources. B) Scarcity. C) Unemployment. D) Greed.

B) Scarcity

2) At a recent faculty meeting, Lorraine Waverly, president of Skywalker College, announced that enrollment is up by 12 percent over the previous semester. If enrollment the previous semester was 3,250 students, what is the student enrollment this semester? A) 390 B) 2,860 C) 3,640 D) 4,030

C) 3,640

16) Microeconomics is the study of A) Topics such as unemployment, inflation, and economic growth. B) The global economy. C) How households and firms make choices. D) The economy as a whole.

C) How households and firms make choices

11) In Estonia, the government pays working women who take time off after having a baby their entire salary for up to 15 months, and women who do not work receive $200 per month after having a baby. How will these benefits affect a woman's decision to have children? A) These incentives will have no effect on having children; the decision to have children is a social and psychological decision, not an economic decision. B) These incentives will encourage only women with high opportunity costs to have more children. C) These incentives will encourage women to have children and increase the birth rate. D) These incentives will encourage only less educated women to have more children.

C) These incentives will encourage women to have children and increase the birth rate.

14) Marginal analysis involves undertaking an activity A) only if its marginal costs are greater than its marginal benefits. B) Only when its marginal benefits are positive. C) Until its marginal benefits equal marginal costs. D) Until its marginal costs start declining.

C) Until its marginal benefits equal marginal costs.

9) Figure 1-1 Refer to Figure 1-1. Using the information in the figure above, calculate the percentage change in sales of alcoholic beverages between 2006 and 2009. A) 23.1% B) 23.8% C) 30% D) 42.9 %

D) 42.9%

19) The relationship between consumer spending and disposable personal income is A) Independent. B) A negative relationship. C) An inverse relationship. D) A direct relationship.

D) A direct relationship

21) When production reflects consumer preferences, ________ occurs. A) Productive efficiency B) Efficient central planning C) Equity D) Allocative efficiency

D) Allocative efficiency

4) Carrie quits her $125,000-a-year job to take care of her ailing parents. What is the opportunity cost of her decision? A) The value she attributes to the satisfaction she receives from taking care of her parents B) It depends on the "going rate" for home-care providers. C) Zero, since she will no longer be earning a salary D) At least $125,000

D) At least $125,000

15) Markets promote A) Equity and competition. B) Equity and equality. C) Voluntary exchange and equality. D) Competition and voluntary exchange

D) Competition and voluntary exchange

13) In economics, the term ________ means "additional" or "extra". A) Equity B) Optimal C) Allocative D) Marginal

D) Marginal

8) Economists reason that the optimal decision is to continue any activity up to the point where the A) Marginal cost is zero. B) Marginal benefit is greater than the marginal cost. C) Marginal benefit is zero. D) Marginal benefit equals the marginal cost

D) Marginal benefits equals the marginal cost

6) Economics does not study correct or incorrect behaviors but rather it assumes that economic agents behave ________, meaning they make the best decisions given their knowledge of the costs and benefits. A) Emotionally B) Selfishly C) Equitably D) Rationally

D) Rationally

3) By definition, economics is the study of A) How to make money in the stock market. B) Supply and demand. C) How to make money in a market economy. D) The choices people make to attain their goals, given their scarce resources.

D) The choices people make to attain their goals, given their scarce resources.

5) Consider the following economic agents: a. the government b. consumers c. producers Who, in a centrally planned economy, decides what goods and services will be produced with the scarce resources available in that economy? A) Producers B) Consumers C) The government, consumers and producers D) The government E) Consumers and producers

D) The government

20) The three fundamental questions that any economy must address are: A) How much will be saved; what will be produced; and how can these goods and services be fairly distributed? B) Who gets jobs; what wages do workers earn; and who owns what property? C) What will be the prices of goods and services; how will these goods and services be produced; and who will receive them? D) What goods and services to produce; how will these goods and services be produced; and who receives them?

D) What goods and services to produce; how will these goods and services be produced; and who receives them?

17) The decision about what goods and services will be produced made in a market economy is made by A) Producers deciding what society wants most. B) Workers deciding to produce only what the boss says must be produced. C) Lawmakers in the government voting on what will be produced. D) Consumers dictating to firms what they need most. E) Consumers and firms choosing which goods and services to buy or produce.

E) Consumers and firms choosing which goods and services to buy or produce.