econ exam

Refer to the graph below. How many roadsters are produced at the point where BMW produces 800 SUVs?

0

Refer to the graph below. What is the opportunity cost of moving from point B to point C?

150 aircraft carriers

Consider the table below. What is country A's opportunity cost of producing 1 unit of clothing?

2 units of food

Refer to the graph below. What is the opportunity cost of moving from point B to point C?

200 roadsters

Refer to the graph below. Which of the following combinations of pies and cakes is unattainable given existing resources?

4 cakes and 7 pies

Refer to the graph below. What is the opportunity cost of producing 400 aircraft carriers?

600 automobiles

Which of the following questions could be answered using economics?

All of the above are economic questions.

In the circular-flow diagram, which arrow shows the flow of goods and services?

B

Fill in the blanks. In a simple circular-flow model, there are flows of .

Both (a) and (b) are correct.\

Which country should specialize in the production of chips?

Country A

Refer to the graphs below. Each graph represents one country. Which country has a comparative advantage in the production of shirts?

Country B

Refer to the graph below. Based on the relationship between average total cost and marginal cost, which of the curves below appears to be average total cost?

Curve 2

According to Adam Smith, which of the following is necessary for the proper functioning of the market system?

For markets to work, people must be free to pursue their self-interest.

Which of the following is an example of a positive question?

If the college increased tuition, would class sizes decline?

According to Adam Smith, which of the following is true?

Individuals usually act in a rational, self-interested way.

Refer to the graph below. As you move from point A to point B and then to point C on this graph, what happens to the marginal opportunity cost?

It increases.

Fill in the blank:is the study of how households and businesses make choices, how they interact in markets, and how the government influences their choices.

Microeconomics

Which of the following best describes the characteristics of models used in economics?

Models are simplifications of reality that include only essential elements and exclude less relevant details.

Which of the following statements best defines scarcity?

Scarcity is a situation in which unlimited wants exceed the limited resources available to fulfill those wants.

Which of the following questions can be answered using normative economic reasoning?

Should a college cut tuition to stimulate enrollments?

What happens if a country produces a combination of goods that efficiently uses all of the resources available in the economy?

The country is operating on its production possibilities frontier.

Refer to the graph below. What does the term "increasing marginal opportunity cost" mean in this graph?

There is a higher opportunity cost of producing either aircraft carriers or automobiles, so long as the quantity produced of that good is increasing.

If the number of people in a publishing company does not go up or down with the quantity of books it publishes, then how should we categorize the salaries and benefits paid to these employees?

They are part of fixed cost.

Which of the following is not among the fundamental economic questions that every society must solve?

What goods and services will be exchanged?

In what type of economy does the government decide how economic resources will be allocated?

a centrally planned economy

When you think of an arrangement or institution that brings buyers and sellers of a good or service together, what are you thinking of?

a market

What type of assessment is one in which a person's values and political views form part of that assessment?

a normative assessment

What type of statement would "A minimum wage actually reduces employment" be considered?

a positive statement

What types of economies require that answers be given to the following questions: what goods and services will be produced, how will the goods and services be produced, and who will receive the goods and services produced?

all of the above

Which of the following would create economic growth; that is, shift the production possibilities frontier outward?

all of the above

What is the role of an entrepreneur?

all of the above.

Which of the following is achieved when a good or service is produced up to the point where the marginal benefit to consumers is equal to the marginal cost of producing it?

allocative efficiency

What is the name given to the practical application of an invention?

an innovation

What is the name given to the development of a new good or a new process for making a good?

an invention

Fill in the blanks. In economics, as well as in life, optimal decisions are made.

at the margin

Refer to the graph below. In moving along the curve from point A to point B, which of the following is more likely to occur?

diminishing returns

In a free market system, which of the following groups brings together the factors of production— labor, capital, and natural resources—in order to produce goods and services?

entrepreneurs

Which of the following terms best refers to a fair distribution of economic benefits?

equity

In which markets are factors of production, such as labor, capital, natural resources, and entrepreneurial ability traded?

factor markets

If a country has a comparative advantage in the production of a good, then that country

has a lower opportunity cost in the production of that good.

Which of the following comprises the two key groups of participants in the circular flow of income?

households and firms

Which of the following is true? i.Total cost = fixed cost + variable cost ii.Total cost = explicit costs + implicit costs iii.Economic cost = accounting cost + implicit costs

i, ii, and iii

What is the outcome of enforcing contracts and property rights in a market system?

increased economic activity

Which of the following covers the study of topics such as inflation and unemployment?

macroeconomics

Which of the following is the best classification for the economies of the United States, Canada, Japan, and Western Europe?

mixed economies

Refer to the graph below. Which of the following best represents the situation in which BMW must face a trade-off between producing SUVs and producing roadsters?

moving from B to C

What type of economic analysis is concerned with the way things ought to be?

normative analysis

Which of the following is not an essential component of an economic model?

normative statements

Refer to the graph below. The graph shows the data from Solved Problem 2-1. What is the opportunity cost of switching from Choice D to Choice E?

one cake

What is the name given to the highest-valued alternative that must be given up to engage in any activity?

opportunity cost

What is the stock of computers, factory buildings, and machine tools used to produce goods better known as?

physical capital

Which of the following involves an estimation of the benefits and costs of a particular action?

positive analysis

According to Adam Smith, which of the following is the instrument the invisible hand uses to direct economic activity?

price

Absolute advantage is the ability of an individual, firm, or country to

produce more of a good or service than competitors using the same amount of resources.

Which of the following refers to markets where goods such as computers or services such as medical treatment are offered?

product markets

What does an economy achieve by producing a good or service at the least possible cost?

productive efficiency

The principle of increasing marginal opportunity cost states that the more resources devoted to any activity, the ______ the payoff to devoting additional resources to that activity.

smaller

Generally speaking, for a market system to work, individuals must

take risks and act in rational, self-interested ways.

The processes a firm uses to turn inputs into outputs of goods and services is.

technology

Refer to the graph below. In this problem, what is the opportunity cost of producing five cakes?

ten pies

Human capital is

the accumulated training and skills that workers possess.

Refer to the graphs below. Which graph best represents the concept of economic growth?

the graph on the left

Refer to the graphs below. Which graph represents the concept of economic growth?

the graph on the left

Refer to the graphs below. Which graph better represents an improvement only in the technology used to make automobiles?

the graph on the right

A production possibilities frontier will be linear instead of bowed out if

the opportunity cost of producing more of either of the two goods is constant.

What is the purpose of an economic hypothesis?

to establish a causal relationship

Which of the following terms summarizes the situation in which a buyer and a seller exchange a product in a market and, as a result, both are made better off by the transaction?

voluntary exchange+