Microeconomics Test 1-3

As of the year 2000, manufacturing, mining, and construction accounted for what percentage of total U.S. output?

19 percent

The United States has roughly how much of the world's population?

5 percent

The bottom 80 percent of the families in the United States receive approximately ________ percent of total income.

50

To calculate market demand, we

Add the quantities demanded for each individual demand schedule horizontally.

In The Economy Tomorrow analysis in the text stated that thousands of people were waiting for a kidney transplant. Which of the following statements is true?

Allowing the sale of kidneys at a price greater than zero would likely increase the number of available kidneys.

The fundamental problem of economics is

The scarcity of resources relative to human wants

Which of the following is an assumption under which the production possibilities curve is drawn?

The supply of resources is fixed

The market mechanism may best be defined as

The use of market prices and sales to signal desired output.

Economic Growth

is an increase in output or real GDP

Productivity is a measure of

output per unit of input

Which economist argued that free markets unleashed the "animal spirits" of entrepreneurs, propelling innovation, technology, and growth?

John Maynard Keynes

The production possibilities curve illustrates which two of the following essential principles?

Scarce resources and opportunity cost

The fact that there are too few resources to satisfy all our wants is attributed to

Scarcity

As of 2010, to be in the bottom quintile for income distribution in the United States, a family needed in income no more than

$23,000

A decrease in the price of electricity can best be explained by

A decrease in the population

Refer to the World View article titled "North Korea's Food Shortage Grows." If North Korea reduces the size of its military and produces more food, this is most consistent with

A movement along the economy's production possibilities curve.

Refer to the World View article titled "North Korea's Food Shortage Grows." On a production possibilities curve between private and public goods, a decrease in military spending in an effort to increase food production could be represented as

A movement along the production possibilities curve toward more private goods.

The cost or benefit of a market activity borne by a third party is

An externality

In terms of an economy's production possibilities curve, a decrease in the level of human capital, ceteris paribus, will cause

An inward shift of the curve

Ceteris paribus, a consumer that purchases a sports car must consider the price of gasoline because these goods are

Complements in consumption

Who participates in markets?

Consumers and Gov agencies Business Firms consumers

Government intervention may achieve a more optimal outcome than the market mechanism when addressing

Consumption of cigarettes

The government intervenes in the economy to protect labor by

Ensures minimum wages in addition to overtime provisions Ensuring workplace safety conditions Enforcing child labor laws to prevent child exploitation

Ceteris paribus, which of the following is most likely to shift both the demand and the supply curves?

Expectations

One characteristic that has allowed the U.S. economy to change the mix of output in response to consumer demand is the

Factor mobility which is the increased ease with which resources move from one industry to another.

Capital, as economists use the term, refers to

Final goods that are used to produce other goods and services

Opportunity cost may be defined as the

Goods or services that are forgone in order to obtain something else.

A city's decision to limit smoking in public areas is an example of

Government intervention

According to the law of increasing opportunity costs,

Greater production of one good requires increasingly larger sacrifices of other goods.

The investment in human capital through education and training can result in

Greater productivity

Ceteris paribus means

Holding everything constant except for the variables you are interested in examining.

Differences in size of real GDP across countries are best explained by

Human Capital

How will an increase in factor mobility, ceteris paribus, affect an economy's production possibilities curve?

Shift the curve outward

Which of the following will contribute to accelerated growth for the U.S. economy?

Increased use of outsourcing for inputs and increased use of comparative advantage for trade in final goods and services.

If the United States decides to convert automobile factories to tank production, as it did during World War II, but finds that some auto manufacturing facilities are not well suited to tank production, then

Increasing opportunity costs will occur with greater tank production.

Price Ceilings are intended to address the problem of

Inequity in the distribution of goods and services

The World View article titled "The Education Gap between Rich and Poor Nations" says that 85 percent of all Americans graduate from high school. This is an example of

Investment in human capital

A factor market is any place or process where

Land, labor, or capital is bought and sold.

When the invisible hand does not produce optimal outcomes for the economy, there is evidence of

Market failure

Which of the following statements about markets is not true?

Markets necessarily have a physical location.

A production possibilities curve indicates the

Maximum combinations of goods and services an economy can produce given its available resources and technology.

If the market wage for fast-food restaurants is $11 and the government enforces a minimum wage of $7, the unemployment rate will

Not be affected by the minimum wage.

Which determinant of demand changes in the personal computer market as more individuals become interested in "surfing the Internet"?

Number of Buyers

Income inequality is

Often greatest in the poorest countries.

Which of the following is likely to be most capital-intensive?

Oil refining in the United States

A monopoly exists when

One firm produces all the output for a particular good or service.

The most desired goods or services that are given up when a choice is made are called the

Opportunity Cost

The Latin phrase ceteris paribus means

Other things remain equal.

Economic models are used by economists to

Predict economic behavior Explain economic behavior Develop economic policies

When the government provides a legal framework,

Private market transactions benefit and government market transactions benefit.

A market in which final goods and services are exchanged is a

Product Market

Business firms supply goods and services to _____ and purchase factors of production in ____.

Product markets; factor markets

In a market economy with no government intervention, the HOW to produce question is based on

Production Costs Alone

According to the text, there is no such thing as a free lunch because

Resources used to produce the lunch could be used to produce other goods and services.

The World View article in the text titled "Income Share of the Rich" reports, "In poor, developing countries the richest tenth of the population typically gets 40 to 50 percent of all income." Which of the following is a form of government intervention designed to change this situation?

Rich nations opening up their domestic markets to exports from poor nations.

The result of government intervention in the market is that

Society could be better or worse off

In economics, scarcity means that

Society's desires exceed resources available.

The opportunity cost of studying for an economics test is

The activity that is the best alternative use of your time

A buyer is said to have a demand for a good only when

The buyer is both willing and able to purchase the good

Which of the following countries experienced a decline in total output from 2000 to 2015?

Zimbabwe

The term opportunity cost refers to the

The most desired good or service given up when something is obtained

Macroeconomics focuses on the behavior of

The overall economy

If population growth is less than output growth for a country,

The per capita living standard will increase

Which of the following Is a determinant of supply?

The prices of the factors of production.

The goal of the business firms in a market economy is to maximize

Total Profits

A mixed economy

Utilizes both market and non market signals to allocate goods and services

The market mechanism

Works because prices serve as a means of communication between consumers and producers.

According to the law of demand, a demand curve

has a negative slope

An example of a positive externality is

increased factory use of private sector robotics that came from government research

Ceteris paribus, for a farmer, corn and wheat are

substitutes in production

A market shortage is

the amount by which the quantity demanded exceeds the quantity supplied at a given price; excess demand

When the market mechanism is allowed to operate freely, prices will determine

the mix of output to be produced, the resources to be used in the production process, and for whom the output is produced

An increase in the supply of gasoline, ceteris paribus, will cause equilibrium price

to fall and equilibrium quantity to rise