Unit 1 Test

"If I didn't have class tonight, I would save the $4 campus parking fee and spend four hours at work where I earn $10 per hour." The opportunity cost of attending class this evening is: A.) $0 B.) $4 C.) $40 D.) $44

$44

Who wrote: "The Wealth of the Nations"? A.) Adam Smith B.) Karl Marx C.) John Maynard Keynes D.) Milton Friedman

Adam Smith

Why is there scarcity? A.) Because the opportunity set determines this B.) Because theory dictates it C.) Because our unlimited wants exceed our limited resources D.) Because human wants are limited

Because our unlimited wants exceed our limited resources

In the Circular Flow Model do businesses demand or supply? (tricky question, think about it, there are two markets in the model) A.) Both B.) Demand C.) Supply D.)

Both

Scarcity means: A.) Limited Resources B.) Consume as much as you can C.) Save for later D.) Everything has a cost

Limited Resources

True or False: The demand curve has a negative slope

True

The ___________ is the only price where quantity demanded is equal to quantity supplied. A.) equilibrium price B.) horizontal axis intercept C.) vertical axis intercept D.) market price

equilibrium price

Economists refer to the relationship that a higher price leads to a lower quantity demanded as the _____________. A.) income gap B.) market equilibrium C.) law of demand D.) price model

law of demand

When consumers and businesses have greater confidence that they will be able to repay in the future, _______________________. A.) the quantity demand of financial capital at any given interest rate will remain unchanged B.) the quantity demanded of financial capital at any given interest rate will shift to the left C.) the quantity demanded of financial capital at any given interest rate will shift to the right D.) the quantity demanded of financial capital at any given interest rate will achieve equilibrium

the quantity demanded of financial capital at any given interest rate will shift to the right

What is a chart that shows all possible combinations a country can produce of two different goods. It shows the trade off of producing more of one good over another one. A.) A Productions Possibility Frontier B.) Scarcity C.) Incentives D.) Opportunity Cost

A Productions Possibility Frontier

What could cause the supply of oil to shift to the left A.) A hurricane hits Texas causes oil producers to close for a couple of weeks B.) People are tired of paying high gas prices C.) A frost freezes an apple orchard in FL D.) People start driving more gas consuming vehicles

A hurricane hits Texas causes oil producers to close for a couple of weeks

If a window gets broken and somebody says, 'do not fret, this creates wealth because it creates a job for the glass maker'. What is that an example of: A.) Broken Window Fallacy B.) Scarcity C.) Choices D.) Production Possibilities Frontier

Broken Window Fallacy

If an increase in the price of Good X causes a decrease in the demand for Good Y, we can conclude that: A.) the price of Good Y will increase B.) Goods X and Y are normal goods C.) Goods X and Y are substitute goods D.) Goods X and Y are complement goods

Goods X and Y are complement goods

Steel mill wage costs increase by 18 percent over a year. What is the likely economic effect on the market for steel? A.) There is an increase in the cost of producing steel, which shifts the supply curve of steel to the right, thereby increasing the price of steel. B.) There is an increase in the cost of producing steel, which shifts the supply curve of steel to the left, thereby increasing the price of steel C.) There is a decrease in the cost of producing steel, which shifts the supply curve of steel to the left, thereby increasing the price of steel D.) The increase in wage costs will shift the demand curve for steel to the left, increasing the cost of steel

There is an increase in the cost of producing steel, which shifts the supply curve of steel to the left, thereby increasing the price of steel

What does a budget constraint show? A.) Various combinations of goods or services an individual can purchase with their income B.) The items a person wants, but cannot afford C.) Government Spending Budget Wish List D.) The ups and down of the stock market

Various combinations of goods or services and individual can purchase with their income

Which of the following results in a rightward shift of the market demand curve for labor? A.) a decrease in labor productivity B.) a decrease in the firm's product price C.) an increase in the wage rate D.) an increase in demand for firm's product

an increase in demand for firm's product

Which of the following will not result in a rightward shift of the market supply curve for labor? A.) a decrease in non-wage income B.) an increase in the working-age population C.) an increase in labor productivity D.) an increase in immigration

an increase in labor productivity

Which of the following will not result in a leftward shift of the market demand curve for labor? A.) a decrease in labor productivity B.) a decrease in demand for the firm's product C.) an increase in the wage rate D.) a decrease in the firm's product price

an increase in the wage rate

In a market-oriented economy, the amount of a good that is produced is primarily decided by the interaction of: A.) all consumers B.) buyers and sellers C.) producers and input suppliers D.) producers and government planning committees

buyers and sellers

Specialization: - Understand A.) leads to greater self-sufficiency. B.) can lead to an increase in overall production C.) allows workers to develop skills by working on a large number of tasks D.) is always the result of an inefficient use of resources

can lead to an increase in overall production

Which of the following is generally accepted as a valid criticism of the production of useful goods and services? A.) government involvement B.) the black market C.) environmental pollution D.) economic freedom

environmental pollution

Improvements in the productivity of labor will tend to: A.) decrease wages B.) decrease the supply of labor C.) increase wages D.) increase the supply of labor

increase wages

Which of the following best describes a monetary policy tool? A.) interest rates B.) taxes C.) household savings D.) government spending

interest rates

In the ____________, households work and receive payment from firms. A.) financial investment market B.) financial capital market C.) labor market D.) savings market

labor market

A supply curve is a graphical illustration of the relationship between price, shown on the vertical axis, and ____________, shown on the horizontal axis. A.) demand B.) quantity C.) quantity supplied D.) quantity demanded

quantity

When economists talk about supply, they are referring to a relationship between price received for each unit sold and the _________________. A.) demand schedule B.) market price C.) quantity supplied D.) demand curve

quantity supplied

. A more efficient means of processing algae to produce an anticancer drug is discovered. As a result, the supply curve for the drug will: A.) shift to the right, increasing the price of the drug B.) shift to the left, increasing the price of the drug C.) shift to the right decreasing the price of the drug D.) shift to the left, increasing the price of the drug

shift to the right decreasing the price of the drug

As the __________ substitute for low-skill labor becomes available, the demand curve for low-skill labor will shift to the left. A.) technology B.) high-skill labor C.) lower wage D.) market

technology

The opportunity cost of attending university is likely to include all except which of the following? A.) the cost of haircuts received during the school term B.) the income you forgo in order to attend classes C.) tuition fees D.) the cost of required textbooks

the cost of haircuts received during the school term

Scarcity exists because of: A.) the market mechanism B.) specialization and division of labor C.) the allocation of goods by prices D.) unlimited wants and limited resources

unlimited wants and limited resources

If labor demand is downward sloping and labor supply is upward sloping, then when labor demand rises faster than labor supply, it is expected that real wages __________ A.) will stay the same B.) will decrease C.) will increase D.) may increase, decrease or stay the same depending on the relative slopes

will increase

True or False: In the circular flow model looking at just firms and households. Do physical goods and money flow in the same direction?

False

The �law of supply� functions in labor markets; that is, a higher __________ for labor leads to a higher quantity of labor supplied. A.) price B.) demand C.) supply D.) quantity

price

True or False: Demand for a good goes up. Because of this the price of the good rise.

True

True or False: If measuring opportunity cost on a budget constraint line. Can the opportunity cost be less than one? Can it be one-half a good?

True

True or False: Is the budget constraint a visual of the opportunity cost between two goods?

True

Which one looks at the big picture A.) Macroeconomics B.) Microeconomics

Macroeconomics