Econ 1202 midterms

_____________ occurs when production is in accordance with consumer preferences

Allocative efficiency

Absolute advantage is the ability of an individual, a firm, or a country to A. consume more goods or services than others at lower costs. B. produce more of a good or a service than competitors using the same amount of resources C. produce a good or service at a lower opportunity cost than other producers D. reach a higher production possibilities frontier by lowering opportunity costs

B

Economists use the word marginal to mean an extra or additional benefit or cost of a decision. An optimal decision occurs when A. marginal cost is zero B. marginal benefit equals marginal cost C. marginal benefit is maximized D. marginal benefit is greater than marginal cost

B

Scarcity is central to the study of economics because it implies that A. wants are unlimited B. every choice involves an opportunity cost C. Society must make decisions at the margin D. Economic agents are rational

B

Under the Affordable Care Act, low-income people receive subsides to help them pay for health insurance. These subsidies decline as income increases, which may result in some low-income workers supplying fewer hours to keep their income form increasing and their subsidies from dealing. This outcome is an example of which key economic idea? A. Optimal decisions are made at the margin B. people respond to economic incentives C. voluntary exchange D. Scarcity

B

Economists believe that an activity should be continued up to the point where A. the marginal benefit from the activity plus the marginal cost equals zero B. the marginal benefit from the activity is less than the marginal cost C. the marginal benefit from the activity is greater than the marginal cost D. the marginal benefit from the activity is equal to the marginal cost

D

Economists assume that the only reason people take the actions they do is in response to economic incentives A. True B. False

B. False

If a country has a comparative advantage in the production of a good, then that country A. also has an absolute advantage in the production of that good B. should allow another country to specialize in the production of that good C. has a lower opportunity cost in the production of that good D. All of the above are true

C

If a market system functions well, which of the following is necessary for the enforcement of contracts and property rights? A. powerful political connections B. actions by government to prevent the exercise of certain property rights C. An independent court system D. All of the above

C

Property rights are A. the rights individuals or films have to the exclusive use of their property, excluding the right to buy or sell it B. the rights government has to the exclusive use of all property, including the right to buy or sell it C. the rights individuals or films have to the exclusive use of their property, including the rights to buy or sell it D. the rights individuals or firms have to the exclusive use of their property within individuals culturally defined norms which are inconsistent in each area of the United States

C

Suppose your expenses for this term are as follows: tuition: $9,000, room and board: $1,500, books and other educational supplies: $1,000. Further, during the term, you can only work part - time and earn $3,000 instead of you full - time salary of $8,000. What is the opportunity cost of going to college this term, assuming that your room and board expenses would be the same even if you did not go to college? A. $10,000 B. $13,000 C. $15,000 D. $18,000

C

What is the outcome of enforcing contracts and property rights in a market system? A. decreased economic activity B. no effect on economic activity C. increased economic activity D. an unpredictable but definite effect on economic activity

C

The distinction between a normal and an inferior good is A. normal goods are used together while inferior goods are used for the same purposes B. when income increases, demand for a normal good decreases while demand for an inferior good increases C. normal goods are used for the same purposes while inferior goods are used together D. when income increases, dead for a normal good increases while demand for an inferior good falls

D

Trade - offs force society to make choices, particularly when answering the following three fundamental questions: A. One, what goods and services will be produced domestically? Two, how will the goods and services be produced? Three, is the distributions of goods and services fair? B. One, what goods and services will be produced? Two, how will the goods and services be produced? Three, is the distribution of goods and services far? C. One, what goods services will be produced in foreign countries? Two, who will produce the goods and services? Three, who will receive the goods and services produced? D. One, what goods and services will be produced? Two, how will the goods and services be produced? Three, who will receive the goods and services produced?

D

Which of the following best describes scarcity? A. Wants cannot be fulfilled and thus all goods must be rationed B. Markets cannot properly allocate resources C. Prices of goods are very high D. Unlimited wants exceed the limited resources available

D

Which of the following events would create economic growth, that is shift the production possibilities frontier outward? A. An increase in the available labor B. An increase in the available natural resources C. An increase in technology that affects the production of both goods D. All the above

D

______________ occurs when a good or a service is produced at the lowest possible cost

Productive efficiency

A market is a group of ___________ of a good or service and the institution or arrangement by which they come together to trade.

buyers and sellers

Germany has a market economy. As such, German's economy (relative to centrally planned economies) tends to result in A. productive efficiency and allocative efficiency but not necessarily equity B. allocative efficiency but not necessarily productive efficiency or equity C. equity but not necessarily productive efficiency or allocative efficiency D. Allocative effciency and equity but not necessarily productive efficiency E. productive efficiency but not necessarily allocative efficiency or equity

A

In the Wall Street Journal article entitled "More Americans Go Abroad for their MBA," it was reported that an increased number of U.S. students are applying to European MBA programs A. reflecting the higher opportunity cost of attending U.S. MBA programs B. because they European MBA programs are better than the U.S. equivalent C. because many european MBA programs are two year programs and thus better suited for U.S. students D. reflecting the lower opportunity cost of attending U.S. MBA programs

A

Opportunity cost A. the highest valued alternative that must be given up to engage in an activity B. the idea that because of scarcity, producing more of one good or service means producing less of another good or service C. when unlimited wants exceed the limited resources available to fulfill those wants D. when consumers and firms use all available information as they act to achieve their goals

A

What do economists mean by the word "marginal"? A. extra or additional B. Small C. First D. Unimportant

A