Quiz 1 (Ch 1)

Which question is an illustration of a microeconomic question?

Is the volume of wine produced in one year dependent upon the price of wine?

Suppose that resources in North Cantina and South Cantina are identical in quantity and quality. We can conclude that

North Cantina has better technology than South Cantina in producing consumer goods but not capital goods.

The absolute value of the slope of the budget line is

PC / PD.

Which of the following is a microeconomic statement?

The price of smartphones declined 2.8 percent last year.

Which one of the following is a normative economic statement?

The worsening balance of trade must be corrected if this nation is to remain competitive in the world economy.

The alternative combinations of two goods that a consumer can purchase with a specific money income is shown by

a budget line

Which of the following is the best synonym for "marginal" in economics?

additional

In recent years the economy of Japan has grown, despite the fact that the population of Japan has declined. Which of the following would best explain Japan's economic growth despite having a smaller population?

advancements in technology that make labor more productive

Specialization and international trade allow a nation to

consume a combination of goods that is beyond (or outside) its production possibilities.

If a nation is operating at a point inside the production possibilities curve, it indicates that the nation could

increase its production of both goods X and Y simultaneously.

The slope of the typical production possibilities curve

increases as one moves southeast along the curve.

Refer to the diagram. The vertical intercept

is 50.

A normative statement is one that

is based on value judgements

Unemployment

is illustrated by a point inside the production possibilities curve.

Answer the question on the basis of the data given in the following production possibilities table. Production Possibilities (Alternatives) A B C D E F Capital Goods 5 4 3 2 1 0 Consumer Goods 0 5 9 12 14 15 Refer to the table. For these data, the law of increasing opportunity costs is reflected in the fact that

larger and larger amounts of capital goods must be sacrificed to get additional units of consumer goods.

(Last Word) A caller to a radio talk show states that oil companies are "greedy price gougers." This is an example of

loaded terminology

The graph provided shows the production possibilities curve for an economy producing two goods, X and Y. All of the following may allow the economy to produce combination D in the future, except

lower unemployment

Suppose that a consumer purchases just two goods, X and Y. The Y-intercept of the budget line in this case would indicate the

maximum quantity of good Y that the consumer could buy with a given budget.

(Consider This) Free products offered by firms

may or may not be free to individuals but are never free to society.

When a state government chooses to build more roads, the resources used are no longer available for public education programs. This dilemma illustrates the concept of

opportunity cost

For economists, the word "utility" means

pleasure or satisfaction.

Suppose that a fully employed economy produces only two goods, hamburgers and flat-panel TVs. If the economy is currently producing more than the optimal quantity of hamburgers, then to attain the optimal allocation of resources, it should

produce more TVs and fewer hamburgers.

According to Emerson: "Want is a growing giant whom the coat of Have was never large enough to cover." According to economists, "Want" exceeds "Have" because

productive resources are limited.

A nation's production possibilities curve is bowed out from the origin because

resources are not generally equally efficient in producing every good.

The basic truth that underlies the study of economics is the fact that we all face

scarcity

The optimal output of a product is

the intersection of lines

Mia wants to buy a book. The economic perspective suggests that Mia will buy the book if

the marginal benefit of the book is greater than its marginal cost.

The process by which economists test hypotheses against facts to develop theories, principles, and models is called

the scientific method

The process of observing real-world behavior, developing hypotheses, testing them against facts, then using the results to construct theories is called

the scientific method

Kelly works at an ice cream shop and observes that the number of people buying ice cream varies greatly from day to day. For a couple of weeks, she has recorded the number of people at the shop each day, as well as the daily temperature. If Kelly is using the scientific method to better understand ice cream buying habits, her next step is to

use the observed data to form a hypothesis about ice cream buying behavior.

In constructing the demand graph to show how the price of a good price affects how much of it the buyers will buy, the convention that economists follow is to measure price on the

vertical axis even though it is the independent variable.

Normative statements are concerned primarily with

what ought to be

The optimal allocation of resources is found

where MB = MC.

Assume that a consumer has a given budget or income of $12 and that she can buy only two goods, apples or bananas. The price of an apple is $1.50 and the price of a banana is $0.75. This means that, in order to buy two bananas, this consumer must forgo

1 Apple

The question below is based on the following four sets of data-pairs: (1) A and B, (2) C and D, (3) E and F, and (4) G and H. In each set, the independent variable is in the left column and the dependent variable is in the right column. (1) (2) (3) (4) A B C D E F G H 0 6 2 10 0 12 0 3 7 5 3 20 1 10 2 5 14 4 4 30 2 8 4 7 21 3 5 40 3 6 6 9 Which of the four sets of data pairs show an inverse relationship between the independent and dependent variable?

1 and 3

A nation can produce two products: steel and wheat. The table below is the nation's production possibilities schedule. Production Possibilities Product A B C D E F Steel 0 1 2 3 4 5 Wheat 100 90 75 55 30 0 A change from combination C to B means that

1 unit of steel is given up to get 15 more units of wheat.

A nation can produce two products: steel and wheat. The table below is the nation's production possibilities schedule. Production Possibilities Product A B C D E F Steel 0 1 2 3 4 5 Wheat 100 90 75 55 30 0 The marginal opportunity cost of the third unit of steel is

20 units of wheat

Technological advance that improves the ability to produce capital goods but not consumer goods is shown by the shift of the production possibilities curve from AB to

BE

Which point or output-combination in the provided graph could the nation produce only if it experienced economic growth?

Combination G (outside)

Purposeful behavior implies that everyone will make identical choices.

False

Rational behavior implies that different people faced with similar choices will make the same decisions.

False

The budget line shows the various incomes that an individual can earn from different jobs.

False

The entrepreneur's sole function is to combine other resources (land, labor, and capital) in the production of some good or service.

False

The fundamental economic problem faced by a society is that productive resources are so varied and versatile that it is hard to decide what to do with them.

False

The scientific method does not apply to economics, because economics studies human behavior, which cannot be generalized.

False

Which of the following is a normative statement?

Point C is superior to point B because it is important to enhance the future of society.

The shift of the budget line from cd to ab in the figure is consistent with

a decrease in money income.

Economists would classify all of the following as "land," except

a hydroelectric dam

The production possibilities curve has

a negative slope that increases as we move along it from left to right.

If we say that two variables are directly related, this means that

an increase in one variable is associated with an increase in the other variable.

An economic model is a purposeful simplification of reality, whose function includes

analyzing the behavior of a typical or average consumer or firm.

Economists

are somewhat arbitrary in assigning independent and dependent variables to the horizontal and vertical axes.

The individual who brings together economic resources and assumes the risk of business ventures in a capitalist economy is called the

entrepreneur.

When economists talk about the capital resources in the economy, they are referring to the amount of money circulating in the economy.

false

The purpose of the ceteris paribus assumption used in economic analysis is to

focus on the effect of a single factor on a certain variable

Refer to the provided graph. Which of the following movements would indicate a reduction in unemployment and an increase in capacity utilization?

from point F to point H.

What would shift the production possibilities curve to the right?

immigration of skilled workers into the economy