Econ 102 Final Exam
14) Samantha goes to college to become an engineer. This is an example of an A) investment in human capital. B) increase in entrepreneurship. C) increase in labor. D) investment in physical capital.
A
16) The table above represents different points along a production possibilities curve. What is the marginal cost of moving from 2 bushels to 3 bushels of beans? A) 3 bushels of carrots per bushel of beans B) 9 bushels of carrots per bushel of beans C) 12 bushels of carrots per bushel of beans D) 21 bushels of carrots per bushel of beans
A
16) When China builds a dam using few machines and a great deal of labor, it is answering the ________ part of one of the two big economic questions. A) "how" B) "for whom" C) "where" D) "what"
A
18) The principle of decreasing marginal benefit means that as the quantity of a good consumed A) increases, its marginal benefit decreases. B) increases, its total benefit decreases. C) decreases, its marginal benefit decreases. D) None of the above answers is correct
A
2) In the figure above, moving from production at point d to production at point a requires A) decreasing the output of consumer goods in order to boost the output of capital goods. B) a decrease in unemployment. C) technological change. D) both capital accumulation and a decrease in unemployment.
A
22) An increase in the nation's capital stock will A) shift the PPF outward. B) cause a movement along the PPF down and to the right. C) move the nation from producing within the PPF to producing at a point closer to the PPF. D) cause a movement along the PPF up and to the left.
A
22) From 8 P.M. to 10 P.M., Susan can attend a movie, study, or talk with friends. Suppose that Susan decides to go to the movie but thinks that, if she hadn't, she would otherwise have talked with friends. The opportunity cost of attending the movie is A) talking with friends. B) talking with friends and studying. C) two hours of time. D) studying
A
22) The above figure shows the market for french fries at fast food joints. If the price of potatoes rises and simultaneously people become concerned that french fries can cause heart attacks the A) demand curve for french fries shifts from D2 to D1 and the supply curve of french fries shifts from S2 to S1. B) demand curve for french fries shifts from D2 to D1 and the supply curve of french fries shifts from S1 to S2. C) demand curve for french fries does not shift, and the supply curve of french fries shifts from S1 to S2. D) demand curve for french fries shifts from D2 to D1 and the supply curve of french fries does not shift.
A
26) Fred and Ann are both given free tickets to see a movie. Both decide to see the same movie. We know that A) both bear an opportunity cost of seeing the movie because they could have done other things instead of seeing the movie. B) it is not possible to calculate the opportunity cost of seeing the movie because the tickets were free. C) both bear the same opportunity cost of seeing the movie because they are doing the same thing. D) the opportunity cost of seeing the movie is zero because the tickets were free.
A
32) The equilibrium price in the above figure is A) $6. B) $2. C) $4. D) $8.
A
34) An economic model includes A) only details considered essential. B) only normative statements. C) all known details in order to increase its accuracy. D) no use of marginal concepts
A
34) Ticket scalpers at the NCAA basketball tournament last year charged prices high above the printed ticket price. This observation is evidence of A) a shortage at printed ticket prices. B) the tournament not being televised. C) a surplus at printed ticket prices. D) the tournament getting too much television exposure.
A
40) Which of the following is NOT a normative statement? A) People buy more of a good or service when its price falls. B) Corporations should be more socially responsible. C) The distribution of income is fair. D) The government ought to provide health care to everyone.
A
50) The above figures show the market for hamburger meat. Which figure(s) shows the effect of an increase in the price of a substitute like hot dogs? A) Figure A B) Figure C C) Figure D D) Figures A and C
A
6) As a country that has a bowed-out production possibilities frontier produces more of one good, the opportunity cost of a unit of that good ________. A) increases B) decreases C) might increase or decrease D) remains the same
A
14) In the figure above, the marginal cost of producing a computer A) is the same as the marginal cost of producing a television set. B) increases as more computers are produced. C) decreases as more computers are produced. D) stays the same as more computers are produced.
B
14) The "income effect" in the market for aspirin means that A) a decrease in the price of a substitute good like acetaminophen will make aspirin takers feel a little poorer than they were before. B) an increase in the price of aspirin will reduce the total purchasing power of aspirin takers, making them able to afford fewer aspirin. C) an increase in the price of aspirin will cause headache sufferers to look for a lower priced remedy. D) aspirin are generally taken by people with higher than average incomes.
B
20) A normal good is a good for which demand A) increases when population increases. B) increases when income increases. C) decreases when population increases. D) decreases when income increases.
B
24) Suppose that for the past two months, you have studied economics one hour a day. You now decide to study economics two hours a day. For the past two months, ________. A) your marginal cost of studying economics for an hour must have exceeded its marginal benefit B) your marginal benefit from studying economics an hour must have been greater than its marginal cost C) the opportunity cost of studying economics must have risen. D) the marginal cost of studying economics must have fallen
B
26) An increase in the production of capital goods A) shifts the production possibilities frontier inward in the future. B) shifts the production possibilities frontier outward in the future. C) must increase the current production of consumer goods. D) must decrease the future production of consumer goods.
B
26) The figure above shows the market for candy. People become more concerned that eating candy causes them to gain weight, which they do not like. As a result, the A) demand curve does not shift, and the supply curve shifts from S1 to S2. B) demand curve shifts from D2 to D1 and the supply curve does not shift. C) demand curve shifts from D2 to D1 and the supply curve shifts from S2 to S1. D) demand curve shifts from D1 to D2 and the supply curve shifts from S1 to S2.
B
30) If a producer can use resources to produce either good A or good B, then A and B are A) complements in production. B) substitutes in production. C) complements in consumption. D) substitutes in consumption.
B
36) In a supply and demand figure, the equilibrium price and quantity are found at the A) horizontal intercept of the demand curve. B) point where quantity supplied equals quantity demanded. C) horizontal intercept of the supply and the demand curves. D) vertical intercept of the supply curve.
B
38) When the price of a good is A) above the equilibrium price, quantity demanded exceeds quantity supplied and price rises. B) above the equilibrium price, quantity supplied exceeds quantity demanded and price falls. C) below the equilibrium price, quantity supplied exceeds quantity demanded and price rises. D) below the equilibrium price, quantity demanded exceeds quantity supplied and price falls.
B
4) Scarcity is A) eliminated by choices. B) our inability to satisfy all our wants. C) an economic problem only for poor people. D) a situation that exists during economic recessions but not during economic booms.
B
42) The term "market" refers to A) locations where buyers and sellers physically meet. B) any arrangement that enables buyers and sellers to get information and trade with one another. C) trading arrangements that have been approved by the government. D) physical structures only
B
46) In the above figure, if D2 is the original demand curve and the population falls, which price and quantity might result? A) point a, with price P2 and quantity Q2 B) point b, with price P1 and quantity Q1 C) point c, with price P3 and quantity Q3 D) point d, with price P1 and quantity Q3
B
46) The social arrangements that govern the ownership, use, and disposal of property are referred to as A) private enterprise. B) property rights. C) the double coincidence of wants. D) capitalism.
B
48) In the above figure, if D2 is the original demand curve for a normal good and income decreases, which price and quantity might result? A) point a, with price P2 and quantity Q2 B) point b, with price P1 and quantity Q1 C) point c, with price P3 and quantity Q3 D) point d, with price P1 and quantity Q3
B
48) The rights of an owner to use and exchange property are A) money rights. B) property rights. C) socialist rights. D) capitalist rights.
B
6) If the money price of hats rises and no other prices change, the I. relative price of a hat rises. II. opportunity cost of a hat rises. A) only I B) both I and II C) only II D) neither I nor II
B
8) Economics is the study of A) affluence in a morally bankrupt world. B) the choices we make because of scarcity. C) ways to reduce wants to eliminate the problem of scarcity. D) the distribution of surplus goods to those in need.
B
10) In broad terms the difference between microeconomics and macroeconomics is that A) they use different sets of tools and ideas. B) microeconomics studies the effects of government taxes on the national unemployment rate. C) microeconomics studies decisions of individual people and firms and macroeconomics studies the entire national economy. D) macroeconomics studies the effects of government regulation and taxes on the price of individual goods and services whereas microeconomics does not.
C
10) The production possibilities frontier is the boundary between A) those resources that are limited and those that are unlimited. B) those combinations of goods and services that can be produced and those that can be consumed. C) those combinations of goods and services that can be produced and those that cannot. D) those wants that are limited and those that are unlimited.
C
10) The relative price of a good is A) equal to the price of that good divided by the quantity demanded of the good. B) equal to the money price of a good. C) an opportunity cost. D) what you get paid for babysitting your cousin.
C
12) The "law of demand" states that, other things remaining the same, the quantity demanded of any good is A) directly related to the supply of the good. B) directly related to its price. C) inversely related to its price. D) positively related to its price.
C
16) Which of the following decreases the demand for an inferior good? A) a decrease in the price of a complement B) an increase in the price of a substitute C) an increase in income D) a decrease in income
C
18) Factors of production include A) only capital, land, and labor. B) labor and capital (not land, which is fixed). C) land, labor, capital and entrepreneurship. D) the economic system.
C
2) If the money price of wheat increases and no other prices change, the A) relative price of wheat falls. B) relative price of wheat is unaffected. C) opportunity cost of wheat rises. D) demand for wheat increases.
C
20) The most anyone is willing to pay for another purse is $30. Currently the price of a purse is $40, and the cost of producing another purse is $50. The marginal benefit of a purse is A) $40. B) $50. C) $30. D) an amount not given in the answers above.
C
24) The quantity supplied of a good is A) the same thing as the quantity demanded at each price. B) equal to the difference between the quantity available and the quantity desired by all consumers and producers. C) the amount that the producers are planning to sell at a particular price during a given time period. D) the amount the firm would sell if it faced no resource constraints.
C
28) John has two hours of free time this evening. He ranked his alternatives, first go to a concert, second go to a movie, third study for an economics exam, and fourth answer his e-mail. What is the opportunity cost of attending the concert for John? A) attending a movie, studying for an economics exam, and answering his e-mail B) studying for an economics exam C) attending a movie D) answering his e-mail
C
28) Which of the following leads to a movement along the supply curve for shredded wheat but does not shift the supply curve for shredded wheat? A) perfect weather conditions that resulted in a large wheat crop B) an increase in the cost of machinery used to shred wheat C) a fall in the price of shredded wheat D) a decrease in the number of shredded wheat producers
C
30) In March a factory used new technology to produce its output. Then in August a fire destroys half the factory. The new technology shifted the factory's PPF ________ and the fire shifted it ________. A) outward; outward B) inward; inward C) outward; inward D) inward; outward
C
38) Individuals A and B both produce good X. A has a comparative advantage in the production of good X if A A) can produce more units of X in a given time period than can B. B) can produce X using newer technology than can B. C) has a lower opportunity cost of producing good X than has B. D) has a lower opportunity cost of producing good X than of producing good Y.
C
40) Agnes can produce either 1 unit of X or 1 unit of Y in an hour, while Brenda can produce either 2 units of X or 4 units of Y in an hour. The opportunity cost of producing a unit of X is A) 1 unit of Y per unit of X for Agnes and 1/2 unit of Y per unit of X for Brenda. B) 1 hour for Agnes and 1/2 hour for Brenda. C) 1 unit of Y per unit of X for Agnes and 2 units of Y per unit of X for Brenda. D) 1 hour for Agnes and 2 hours for Brenda.
C
44) A system of property rights A) encourages investment but discourages entrepreneurial activity, so the effect on economic growth is uncertain. B) reduces the efficiency of government, which reduces the growth rate of the economy over time. C) encourages economic growth by creating incentives to invest in capital and to be innovative. D) discourages economic growth by discouraging the development of new ideas and ways of doing things.
C
50) The social arrangement that gives John Grisham, the writer of best-selling novels, the ownership of his novels is A) absolute advantage. B) a market. C) property rights. D) dynamic comparative advantage.
C
8) Assuming farmers can plant either corn or soybeans, as U.S. farmers plant more corn to meet rising global demand, A) the United States produces at a point beyond its PPF. B) the U.S. PPF for corn and other goods and services shifts outward. C) the opportunity cost of producing corn increases. D) the opportunity cost of producing corn decreases.
C
12) Marginal benefit is the benefit A) of consuming another good or service divided by the total number of goods or services produced. B) that your activity provides to someone else. C) of producing a good or service when the total benefit from the good or service exceeds its total cost. D) that is received from consuming one more unit of a good or service.
D
12) The largest part of what the United States produces today is ________ such as ________. A) goods; education and entertainment B) goods; food and electronic equipment C) services; textbooks and computers D) services; trade and health care
D
18) A complement is a good A) used instead of another good. B) of higher quality than another good. C) of lower quality than another good. D) used in conjunction with another good.
D
2) In part, microeconomics is concerned with the study of A) the Federal Reserve's policies. B) national output of goods and services. C) unemployment and economic growth. D) the effect government regulation has on the price of a product
D
20) The Occupy Wall Street movement advocates A) following the teachings of Adam Smith. B) a shift towards more market capitalism. C) centrally planned socialism. D) a shift away from market capitalism.
D
24) The opportunity cost of economic growth is A) future consumption that a nation gets if it gives up some present consumption. B) present investment that a nation gives up to increase its economic growth. C) future consumption that a nation gives up to consume more today D) present consumption that a nation gives up to accumulate capital
D
28) Using a production possibilities frontier, economic growth is illustrated by a A) point inside the curve. B) movement from one point on the curve to another point on the curve. C) point on the curve. D) rightward shift of the curve.
D
30) In economics we learn that A) opportunity costs are all of the possible alternatives given up when we make a choice. B) tradeoffs allow us to have more of everything we value. C) tradeoffs allow us to avoid the problem of opportunity cost. D) None of the above answers is correct.
D
32) Positive economic statements A) are related only to microeconomics. B) cannot be tested against the facts. C) prescribe what should be. D) can be tested against the facts.
D
32) The data in the above table demonstrates that gains from trade can be captured if A) the United States produced concrete in exchange for steel produced in France. B) each country became self-sufficient, produced both goods for itself, and did not engage in trade. C) the United States produced both goods. D) the United States produced steel in exchange for concrete produced in France.
D
34) In the table above, country B is producing 4 units of X and 6 units of Y. For country B, the opportunity cost of producing an additional unit of Y is A) 1/2 unit of X per unit of Y. B) 3 units of X per unit of Y. C) 2 units of X per unit of Y. D) 2/3 unit of X per unit of Y.
D
36) Economic models A) are essentially different from those used in other sciences. B) include all relevant facts. C) always use graphs. D) simplify reality
D
36) The idea of comparative advantage implies that people or countries A) should specialize in the production of goods. B) can consume at a point outside their production possibilities frontier. C) can gain from trading. D) all of the above
D
38) Which of the following is a positive statement? A) The distribution of income is fair. B) Corporations should be more socially responsible. C) The government ought to provide health care to everyone. D) People buy more of a good or service when its price falls.
D
4) An ice cream cone costs $1.50. A can of soda costs $0.75. The relative price of an ice cream cone is A) $1.50, the opportunity cost of a can of soda. B) $0.75, the opportunity cost of a can of soda. C) 1/2 can of soda per ice cream cone, the opportunity cost of an ice cream cone. D) 2 cans of soda per ice cream cone, the opportunity cost of an ice cream cone.
D
4) Point C on the production possibilities frontier in the above diagram illustrates A) all goods and services that are desired but cannot be produced due to scarce resources. B) a production point that has underutilization of resources C) a combination of goods and services that cannot be produced efficiently D) a point that achieves production efficiency.
D
40) Based on the above figure, which of the following is true? A) At a price of $8, quantity demanded is less than quantity supplied. B) At a price of $6, quantity demanded is equal to quantity supplied. C) At a price of $4, quantity demanded is greater than quantity supplied. D) All of the above answers are correct.
D
42) Beef is a normal good and people's incomes fall. At the same time a bumper corn crop reduces the cost of feeding steers. These changes result in A) an increase in the equilibrium quantity of beef. B) an increase in the equilibrium quantity of beef if the shift in the demand curve is larger than the shift in the supply curve. C) no change in the equilibrium quantity of beef. D) an increase in the equilibrium quantity of beef if the shift in the demand curve is smaller than the shift in the supply curve
D
44) During the last decade, the price of a computer fell every year and the quantity sold increased every year. This experience suggests that the A) "law of supply" was definitely contradicted. B) "law of demand" was definitely contradicted. C) demand curve shifted rightward. D) supply curve shifted rightward.
D
6) Economists point out that scarcity confronts A) neither the poor nor the rich. B) the rich but not the poor. C) the poor but not the rich. D) both the poor and the rich.
D
8) The price of a bag of corn chips is $3, and the price of a bottle of soda is $1. What is the relative price of a bottle of soda? A) 3 bags of corn chips per bottle of soda B) 33¢ C) $3 D) 1/3 bag of corn chips per bottle of soda
D