Chapter 1 Quiz

The lowest opportunity cost anywhere in table 1.2 for stealth bombers in terms of b-1 bombers is

.10 B-1 per stealth bombers

In the production range of 180 to 195 Stealth's the opportunity cost of producing 1 more stealth bomber in terms of b-1 bombers is

1

In the production range of 20 to 35 B-1, the opportunity cost of producing 1 more B-1 bomber in terms of Stealth bombers is

1

1.2 shows the hypothetical trade-off between different combinations of Stealth bombers and B-1 bombers that might be produced in a year with the limited U.S. capacity, ceteris paribus. Complete the table by calculating the required opportunity costs for both the B-1 and Stealth bombers. The highest opportunity cost in Table 1.2 for B-1 bombers in terms of Stealth bombers is

10 stealth bomber per B-1

The highest opportunity cost anywhere in Table 1.2 for B-1 bombers in terms of stealth bombers is

10 stealth bombers per b-1 bombers

1.3 shows the hypothetical trade-off between different combinations of brushes and combs that might be produced in a year with the limited capacity for Country X, ceteris paribus. On the basis of Table 1.3, what is the opportunity cost of producing at point M rather than point N?

2 brushes

19.3 Assume the price of cola is $8 per unit and the price of pretzels is $4 per unit. In Table 19.3 the marginal utility per dollar of the second cola is

4

1.1 At which point might society be able to produce if new resources were discovered but cannot produce with current resources? (See Figure 1.1.)

A

If the government required the actual market price to be fixed at $6 per unit in,

A binding or effective price ceiling would result.

1.5 Using Figure 1.5, if an economy is currently producing on PP2, which of the following would shift the production possibilities curve toward PP1?

A decrease in the amount of capital available.

The GDP is

A dollar measure of output produced during a given rime period

Which of the following is considered a service in the calculation of GDP

A rock concert, education, A physical exam by medical doctor, All of the Above

Which of the following is an economic resource

A worker used to build a new highway, An office building used by an insurance company, a vacant piece of land in NYC, All of the above economic resources.

Which of the following statements is true about the United States economy

All of the above are true

In terms of the production possibilities curve, inefficiency is represented by

All points inside the curve

A World View article titled "Secondhand Smoke Kills 600,000 People a Year: Study" implies the harm caused to nonsmokers is

An example of externality costs.

An increase in the equilibrium price of electricity can be caused by

An increase in the demand for electricity.

Ceteris paribus, which of the following is most likely to cause an increase in the quantity supplied of perfume?

An increase in the price of perfume.

Economics is the study of how:

Best to use society's scarce resources.

On the basis of your calculations in Table 1.2 the law of increasing costa apply to

Both B-1 and Stealth Bombers

1.1 shows the hypothetical trade-off between different combinations of Stealth bombers and B-1 bombers that might be produced in a year with the limited U.S. capacity, ceteris paribus. On the basis of Table 1.1, you may infer that the law of increasing opportunity costs applies to increasing production of

Both B-1 bombers and Stealth bombers

Most goods can yield

Both positive and negative marginal utility.

Price discrimination works best when

Buyers do not have perfect information about the price.

An increase in the proportion of the population that is unemployed above the normal rate is best represented in Figure 1.3 and using PP1 by a movement from point

C to point A.

1.7 Refer to Figure 1.7. If this economy is currently producing at point F, then by employing more resources this economy

Can move to points D, G, and J.

When economists refer to the determinants of demand, they are referring to factors that when changed,

Cause the demand curve to shift left or right.

A consequence of the economic problem of scarcity is that

Choices have to be made about how resources are used.

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

Complements in consumption.

Ceteris paribus, an increase in the number of sellers of running shoes causes equilibrium price to

Decrease and equilibrium quantity to increase.

The production possibilities decrease as more resources and better technology are utilized.

False.

Capital, as economists use the term, refers to

Final goods that are used to produce other goods and services.

Th measure of new goods an services produced in the US is

GDP of the US

Government failure will likely arise if

Government officials attempt to maximize their own utility.

As more satisfaction is achieved from consuming a good with diminishing marginal utility, then total utility

Increases at a decreasing rate.

The federal government's role in providing aid to the poor and the aged is justified because of concerns about

Inequity

19.3 Use the indifference curves and the budget lines in Figure 19.3 to answer the indicated question. Assume the price of Y is $1 per unit. In Figure 19.3, point E

Is a high level of utility but not affordable.

Assume Amanda always maximizes her total utility given her budget constraint. Every morning for breakfast she has two eggs and three sausages. If the marginal utility of the last egg is 10 utils and the price of eggs is $1 each, what can we say about the marginal utility of the last sausage if the price of each sausage is $2?

It must be equal to 20 utils.

The market tends to underproduce public goods because

Joint consumption allows those who do not pay for the good to still benefit from the good.

Antitrust activity addresses

Market Power

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

Market failure

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

Market failure.

A production possibilities curve indicates the

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

As the United States economy relies more and more heavily on the production of services rather than goods

Nearly all of the future job growth will be in service producing industries

A line that slopes downward from left to right has a

Negative slope.

Which of the following is a scarce resource

Paper used to produce textbooks, Wheat given to Russia to alleviate hunger, Clean Water. All of the Above

International participants

Participate in both American factor markets and American product markets.

The fastest-growing areas for state expenditures are

Prisons and Welfare

Cities and other local governments receive most of their tax revenues from

Property Taxes

The federal government's role as the provider of national defense is justified by considerations of

Public Goods

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

Scarcity.

Which of the following is not a basic decision that all nations must confront?

Should we have economic growth?

Producing at a point inside the production possibilities curve

Suggests we are forgoing the ability to produce more of both goods.

If there is a surplus at a given price, then

That price is greater than the equilibrium price

In economics, what does scarcity mean?

That society's desires exceed the want-satisfying capability of the resources available to satisfy those desires.

Which of the following is not a factor of production

The 100,000 used to start a new business

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

The buyer is both willing and able to purchase the good.

The slope of a curve at any point is given by the formula:

The change in y coordinates between two points divided by the change in their x coordinates.

Microeconomics is concerned with issues such as

The demand for bottled water by individuals.

Which of the following is true when an economy is producing efficiently?

The economy is producing on the production possibilities curve.

Which of the following is an example of a progressive tax?

The federal income tax.

Tickets to a sporting event go on sale and sell out almost instantly. This suggests that

The price for the tickets is below the equilibrium price.

Which of the following can change without shifting demand, ceteris paribus?

The price of the good itself.

A linear function can be distinguished by

The same slope throughout the line.

The fundamental problem of economics is

The scarcity of resources relative to human wants.

The fundamental problem of economics is:

The scarcity of resources relative to human wants.

In Figure 1.3, a shift of the production possibilities curve from PP1 to PP2 could be caused by

The use of improved production technology.

The market mechanism may best be defined as

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

When sellers price discriminate,

They are attempting to charge a price that is the maximum price each individual is willing to pay.

In Table 1.2 what is the relationship between the opportunity cost of B-1 bombers

They are reciprocals of each other

Economics is the study of how to allocate scarce resources among competing uses.

True.

The central question in determining whether a good is public or private is whether

We have the technical capability to exclude nonpayers from consumption.

The law of diminishing marginal utility gives us a deeper understanding of the downward-sloping demand curve because

When marginal utility is high, we are willing to pay a higher price.

Factors of production are a.) Scarce in every society. b.) Scarce only in United States c.) Scarce only in the poorest countries of the world d.) Unlimited in quantity

a.) Scarce in every society.

Microeconomics is concerned with issues such as: a.) The demand for CD players by individuals. b.) The level of inflation in the economy. c.) Maintaining a strong level of economic growth. d.) All of the above.

a.) The demand for CD players by individuals.

(photos #11) In Figure 1.4, a shift of the production possibilities curve from PP1 to PP2 could be caused by a. Tougher pollution controls for the producers of televisions and smartphones. b. Implementation of training programs that improve the skills of workers. c. An increase in the unemployment rate. d. A flu epidemic that makes many workers sick.

b. Implementation of training programs that improve the skills of workers.

The points on a production possibilities curve show Select one: a. Desired output. b. Potential output. c. None of the choices are correct. d. Actual output.

b. Potential output.

A decrease in the proportion of the population that is unemployed is best represented in Figure 1.4 by a movement from point: a.) C to point B. b.) B to point C. c.) C to point E. d.) E to point F.

b.) B to point C.

Economics is the study of how a.) Society purchases resources, given its macroeconomic goals. b.) Best to use society's scarce resources c.) Society spends the income of individuals. d.) Individual market participants decide what to produce given fixed resource constraints

b.) Best to use society's scarce resources

Using Figure 1.4, an increase in the capacity to produce can be represented by a movement from point: a.) A to point B. b.) C to point E. c.) A to point C. d.) D to point E.

b.) C to point E.

The production-possibilities curve bows outward because: a.) Resources are used inefficiently as more of a good is produced. b.) In order to get more of a particular good, increasing quantities of other goods must be given up. c.) Resources move easily from the production of one good to the production of another. d.) Resources are scarce and choices must be made.

b.) In order to get more of a particular good, increasing quantities of other goods must be given up.

In Figure 1.4, a shift of the production-possibilities curve from PP1 to PP2 could be caused by: a.) A decrease in the unemployment rate. b.) Training programs which improve the skills of workers. c.) Better use of existing technology. d.) More strict pollution controls on submarine and railroad producers.

b.) Training programs which improve the skills of workers.

A technological advance would best be represented by a. A movement from inside the production possibilities curve to a point on the production possibilities curve. b. A movement from the production possibilities curve to a point inside the production possibilities curve. c. A shift outward of the production possibilities curve. d. A shift inward of the production possibilities curve.

c. A shift outward of the production possibilities curve.

If an economy is producing inside the production-possibilities curve, then: a.) There is unemployment of resources. b.) It is operating inefficiently. c.) It can produce more of one good without giving up some of another good. c.) All of the above.

c.) All of the above.

Which of the following is the best description of the origin of the economic problem of scarcity a.) Humans have limited wants for goods and services and resources are also limited b.) Humans have limited wants for goods and services and resources are unlimited c.) Humans have unlimited wants for goods and services but resources are limited. d.) Humans have unlimited wants for goods and services and resources are also unlimited.

c.) Humans have unlimited wants for goods and services but resources are limited.

The Latin phrase ceteris paribus means: a.) The production-possibilities curve never shifts. b.) Laissez faire. c.) Other things remain equal. d.) The invisible hand.

c.) Other things remain equal.

Ceteris paribus, if Russia decreases the size of its military, then its: a.) Production-possibilities curve will shift outward. b.) Production-possibilities curve will shift inward. c.) Production of non-military goods will increase. d.) Production of non-military goods will decrease.

c.) Production of non-military goods will increase.

Refer to Figure 1.4, at Point B: a.) The available technology keeps production inside PP1. b.) All available resources are being used efficiently. c.) There is inefficient use of available resources. d.) An increase in the production of automobiles would definitely require a decrease in the production of tanks.

c.) There is inefficient use of available resources.

The ___________ surplus will rise if the price of the good ________.

consumer; falls

(photos #12) In Figure 1.5, at which of the following points would the opportunity cost of producing more doughnuts be greatest? a. E. b. F. c. A. d. C.

d. C.

A mixed economy a. Is justified by the superiority of laissez faire over government intervention. b. Relies on the use of central planning by private firms rather than the government. c. Is one that allows trade with other countries. d. Utilizes both market and nonmarket signals to allocate goods and services.

d. Utilizes both market and nonmarket signals to allocate goods and services.

A movement from point C to point A in Figure 1.4 results in: a.) More efficient production. b.) Permanent unemployment of workers producing railroads. c.) A reallocation of resources from submarine production to railroad production. d.) A reallocation of resources from railroad production to submarine production.

d.) A reallocation of resources from railroad production to submarine production.

An entrepreneur is a.) An innovator b.) Someone who brings resources together and produces a product c.) A risk taker d.) All of the above

d.) All of the above

Economic models are used by economists to: a.) Predict economic behavior. b.) Explain economic behavior. c.) Formulate economic policy. d.) All of the above.

d.) All of the above.

Which of the following is true about the combination of submarines and railroads represented by point F in Figure 1.4? a.) This economy will never be able to reach point F. b.) Point F is reachable if this economy reduces its unemployment rate. c.) Point F would be more easily reachable if the government took control of all privately-run factories. d.) Point F could possibly be reached if more economic resources become available or technology improves.

d.) Point F could possibly be reached if more economic resources become available or technology improves.

Which of the following is a scarce resource a.) Land b.) Labor c.) Entrepreneurship d.) Capital e.) All of the above

e.) All of the above

According to the law of demand, the quantity of a good demanded in a given time period:

increases as its price falls, ceteris paribus

The maximum price a consumer is willing to pay for a good depends on:

the amount of utility the consumer receives from the good, the consumers' income, the opportunity cost of purchasing that good, All of the above

The goods of market participants include the maximization of

utility, profits, and the general welfare of society