econ final
There is a shortage of every good that is scarce. true false
false
As population declines, scarcity eventually disappears. True False
false
Which of the following is a macroeconomic question? A) What determines the minimum wage? B) What determines the production of video game consoles? C) What factors determine the price of Oreo cookies? D) What determines the salaries of college professors?
A) What determines the minimum wage?
Which of the following describes a characteristic of a perfectly competitive market? A) There are many buyers but few sellers. B) There are many sellers but few buyers. C) There are many buyers and sellers. D) Equilibrium is achieved when demand for the product sold in the market equals the supply.
C
Refer to Figure below. Which country has a comparative advantage in the production of coconuts? 2.9 A) Guatemala B) They have equal productive abilities. C) Costa Rica D) neither country
a
Refer to Table above. The value added by the automobile dealer equals A) $7,000. B) $15,000. C) $18,000. D) $25,000.
a
Monique buys a new television for $795. She receives consumer surplus of $355 from the purchase. How much does Monique value her television? A) $355 B) $440 C) $795 D) $1150
d
An increase in quantity supplied is represented by a rightward shift of the supply curve. True False
false
A surplus is defined as the situation that exists when the quantity of a good supplied is 3eater than the quantity demanded. True False
true
Refer to Figure below. What is the opportunity cost of one dozen roses? 2.2 A) 0.4 dozen orchids B) 2.5 dozen orchids C) 7.25 dozen orchids D) 16 dozen orchids
A) 0.4 dozen orchids
11) The Farm Factory, a booth at the local Farmer's Market, sells fresh eggs for $1.50 per dozen and fresh milk for $2.50 per gallon. What is the opportunity cost of buying a gallon of milk? A) 1 2/3 dozen eggs B) 3/5 of a dozen eggs C) $2.50 D) $1.50
A) 1 2/3 dozen eggs
Hours Open Total Revenue (dollars) 1 $40 2 65 3 80 4 90 5 95 6 98 Table 1 Julius runs a small tailor shop in the city of Bloomfield. He is debating whether he should extend his hours of operation. Julius figures that his sales revenue will depend on the number of additional hours the tailor shop is open as shown in the table above. He would have to hire a worker for those hours at a wage rate of $18 per hour. 6) Refer to Table 1. Using marginal analysis, how many hours should Julius extend his shop's hours of operations? A) 2 hours B) 3 hours C) 4 hours D) 5 hours E) 6 hours
A) 2 hours
Which of the following is a normative economic statement? A) Tobacco products should be banned in all public spaces. B) The increase in tobacco taxes has caused an increase in the price of cigarettes. C) Better awareness of health risks has decreased tobacco use. D) A reduction in tobacco subsidies has caused the price of tobacco to increase.
A) Tobacco products should be banned in all public spaces.
When every good or service is produced up to the point where the last unit provides a marginal benefit to society equal to the marginal cost of producing it, ________ occurs. A) allocative efficiency B) productive efficiency C) equity D) efficient central planning
A) allocative efficiency
Voluntary exchange increases economic efficiency A) because neither the buyer nor the seller would agree to a trade unless they both benefit. B) because voluntary exchange only takes place with government permission. C) because it is free and consequently does not cost anything. D) because it allows wealthy individuals to act altruistically and give to the poor.
A) because neither the buyer nor the seller would agree to a trade unless they both benefit.
4) Refer to Figure above. If Vidalia chooses to produce 80 dozen roses, how many orchids can it produce to maximize production? A) 24 dozen orchids B) 48 dozen orchids C) 60 dozen orchids D) 74 dozen orchids
B) 48 dozen orchids
Marginal cost is the ________ associated with a particular increase in an activity. A) total cost B) additional cost C) opportunity cost D) forgone cost
B) additional cost
12) Which of the following is part of an economic model? A) preferences of economic agents B) data C) norms D) opinions
B) data
In a market economy, those who are willing and able to buy what is produced A) receive what the government allows them to receive. B) receive the most of what is produced. C) receive no more than everyone else in the market. D) solely determine what is produced.
B) receive the most of what is produced.
The circular flow model demonstrates A) the role of the government in overseeing the market system. B) the roles played by households and firms in the market system. C) how shortages and surpluses are eliminated in a market. D) how demand and supply for goods and services are brought into equilibrium.
B) the roles played by households and firms in the market system.
Lionel's Lawn Care is a company that maintains residential yards. Lionel's cost for his standard package of mowing, edging, and trimming is $15, and he charges $25 for this service. For a total price of $40, Lionel will also trim shrubs, a service that adds an additional $10 to the total cost of the standard package. What is Lionel's marginal cost of adding the shrub-trimming service to the standard package? A) $10 B) $15 C) $25 C) $25 D) $40
C) $25
Refer to Figure below. ________ is (are) unattainable with current resources. 2.1 A) Point A B) Point B C) Point C D) Points A and C
C) Point C
Every society faces economic trade-offs. This means A) some people live better than others do. B) not everyone can have enough goods to survive. C) producing more of one good means less of another good can be produced. D) society's output cannot be made available to all.
C) producing more of one good means less of another good can be produced.
The processes used to produce goods and services describes A) innovation. B) entrepreneurship. C) technology. D) capital.
C) technology.
Opportunity cost is defined as A) the benefit of an activity. B) the monetary expense associated with an activity. C) the highest valued alternative that must be given up to engage in an activity. D) the total value of all alternatives that must be given up to engage in an activity.
C) the highest valued alternative that must be given up to engage in an activity.
Published in 1776, ________ was written by Adam Smith. A) "The General Theory of Employment, Interest, and Money" B) "The Communist Manifesto" C) "The Declaration of Economics" D) "An Inquiry into the Nature and Causes of the Wealth of Nations"
D) "An Inquiry into the Nature and Causes of the Wealth of Nations"
Economics promotes which of the following as the way to make the best decision? A) Continue an enjoyable activity as long as you do not have to pay for it. B) Continue an enjoyable activity until it is no longer enjoyable. C) Continue an enjoyable activity until you cannot afford to pursue it. Correct! D) Continue an enjoyable activity up to the point where its marginal benefit equals its marginal cost.
D) Continue an enjoyable activity up to the point where its marginal benefit equals its marginal cost.
) ________ shows that if all resources are fully and efficiently utilized, more of one good can be produced only by producing less of another good. A) Comparative advantage B) Absolute advantage C) The mixed market system D) The production possibilities frontier model
D) The production possibilities frontier model
) One reason some manufacturing companies began moving production to China in the early 2000s was due to lower wages that could be paid to Chinese workers. Moving manufacturing to China to take advantage of lower wages so goods could be produced at a lower cost than if produced in the United States exemplifies which key economic idea? A) People are rational B) People respond to economic incentives. C) Optimal decisions are made at the margin. D) The market system relies on the principle of voluntary exchange.
People respond to economic incentives.
In a two-good, two country world, if one country has an absolute advantage in the production of both goods, it can still benefit by trading with the other country. True False
True
2) In the circular flow model, the value of total income for an economy ________ the value of total production. A) equals B) is greater than C) is less than D) may be greater than or less than
a
6) Refer to Figure below. If the economy is currently producing at point X, what is the opportunity cost of moving to point W? 2.6 A) 3 million tons of steel B) 19 million tons of steel C) 5 million tons of paper D) 9 million tons of paper
a
6.12 Figure above shows the demand and supply curves for the coffee market. The government believes that the equilibrium price is too low and tries to help almond growers by setting a price floor at $7.00. 13) Refer to Figure above. What is the value of consumer surplus after the imposition of the price floor? A) $1,500 B) $2,700 C) 4,500 D) $5,700
a
A black market is a market where buying and selling take place A) at prices that violate government price regulations. B) in non-licensed shops and warehouses. C) after regular office hours. D) on foreign soil.
a
A demand curve shows the relationship between A) the price of a product and the quantity of the product demanded. B) the amount of a product sellers are willing to sell at a particular price and the amount consumers are willing to buy at that price. C) the quantity that consumers are willing and able to buy and the quantity that sellers are willing and able to offer. D) the price of a produce and the demand for the product.
a
Figure above shows the demand and supply curves for the coffee market. The government believes that the equilibrium price is too low and tries to help almond growers by setting a price floor at $7.00. 14) Refer to Figure above. What is the value of the deadweight loss after the imposition of the price floor? A) $600 B) $1,800 C) $2,700 D) $3,300
a
Hurricane Katrina damaged a large portion of oil refining and pipeline capacity in the Gulf coast states. In the market for gasoline A) the supply curve shifted to the left resulting in an increase in the equilibrium price. B) the supply curve shifted to the right resulting in an increase in the equilibrium price. C) the demand curve shifted to the left resulting in a decrease in the equilibrium price. D) the demand curve shifted to the right resulting in an increase in the equilibrium price.
a
If an increase in income leads to a decrease in the demand for salami, then salami is A) an inferior good. B) a neutral good. C) a necessity. D) a normal good.
a
If the GDP deflator is 142, by how much have prices changed since the base year? A) Prices have increased by 42%. B) Prices have increased by 142%. C) Prices have decreased by 4.2%. D) Prices have increased by 58%
a
If the price of smartphones was to increase, then A) the demand for smartphone apps would decrease. B) the demand for smartphone apps would increase. C) the quantity of smartphone apps demanded would increase. D) the quantity of smartphone apps demanded would decrease.
a
Refer to Figure above. In the circular flow diagram, economic agents M represent A) households. B) product markets. C) firms. D) factor markets.
a
Refer to Tableabove. Given the information above, calculate the rate of increase in the price level from 2017 to 2018. A) 8.6% B) 7.9% C) -7.9% D) -8.6
a
Suppose Bob works for Mary as a proofreader. Mary and Bob fall deeply in love, marry, and have eight children. Bob stops working for Mary in order to care for the children. What will be the effect on GDP? A) GDP will decrease. B) GDP will increase. C) GDP will not change. D) GDP may increase or may decrease depending on inflation.
a
The ________ effect of a price change refers to the impact of a change in the price of a good on a consumer's purchasing power. A) income B) substitution C) demographics D) ceteris paribus
a
The area above the market supply curve and below the market price A) is equal to the total amount of producer surplus in a market. B) is equal to the marginal cost of the last unit produced. C) is equal to the total amount of economic surplus in a market. D) is equal to the total cost of production.
a
The willingness of consumers to buy a product at different prices is shown on a A) demand curve. B) supply curve. C) production possibilities frontier. D) marginal cost curve.
a
A sharp increase in the number of medical errors increases the number of lawyers hired to determine medical malpractice settlements. This will A) increase GDP and increase well-being in the economy. B) increase GDP and decrease well-being in the economy. C) decrease GDP and increase well-being in the economy. D) decrease GDP and decrease well-being in the economy.
b
A supply curve shows A) the quantities sold at different prices. B) the marginal cost of producing one more unit of a good or service. C) the marginal benefit from buying one more unit of a good or service. D) the total cost of producing different quantities of a good or service.
b
A(n) ________ is represented by a rightward shift of the demand curve while a(n) ________ is represented by a movement along a given demand curve. A) increase in demand; decrease in demand B) increase in demand; increase in quantity demanded C) decrease in demand; decrease in quantity demanded D) increase in quantity demanded; increase in demand
b
All of the following are examples of spending on goods and services in the circular flow model except A) Amanda purchases a new electric guitar to pursue her hobby seriously. B) Chaitanya buys a new spa pedicure chair for her expanding nail salon business. C) Hernan buys a pizza at Papa C's. D) Lenny buys a new digital camera to take pictures at his son's graduation.
b
An example of a factor of production is A) a car produced by an auto manufacturer. B) a worker hired by an auto manufacturer. C) a loan granted to an auto manufacturer. D) the automobiles exported by an auto manufacturer.
b
If the United States lifts the embargo on Cuban products, what will happen in the U.S. market for Cuban cigars? A) The supply curve will shift to the left. B) The supply curve will shift to the right. C) The demand curve will shift to the right. D) The demand curve will shift to the left.
b
If you can produce more of something than others with the same resources, you have A) a comparative advantage. B) an absolute advantage. C) an efficient production system. D) a free-market economy.
b
Refer to Figure above. At a price of $25, how many units will be sold? A) 400 B) 500 C) 600 D) 800
b
Refer to Table above. Consider the following data on nominal GDP and real GDP (values are in billions of dollars): The base year used in calculating real GDP is A) 2015. B) 2016. C) 2017. D) 2018
b
The minimum wage is an example of A) a subsidy for low-skilled workers. B) a price floor. C) a price ceiling. D) a black market.
b
The output of Mexican citizens who work in Texas would be included in the A) gross domestic product of Mexico. B) gross national product of Mexico. C) gross national product of the United States. D) net national product of the United States.
b
When the marginal benefit equals the marginal cost of the last unit sold in a competitive market, A) the net benefit of consumers is equal to the net benefit of producers. B) an economically efficient level of output is produced. C) producer surplus is equal to consumer surplus. D) total benefit is equal to total cost.
b
An example of an intermediate good would be A) a new car. B) a used car. C) the rims on a new car. D) new rims to replace old rims on a used car.
c
Assume that the hourly price for the services of personal trainers has risen and sales of these services have also risen. One can conclude that A) the law of demand has been violated. B) the number of personal trainers has increased. C) the demand for personal trainers has increased. D) personal trainers are deliberately charging high prices because they provide services for wealthy clients.
c
If in the market for apples the supply has decreased, then A) the supply curve for apples has shifted to the right. B) there has been a movement upwards along the supply curve for apples. C) the supply curve for apples has shifted to the left. D) there has been a movement downwards along the supply curve for apples.
c
Refer to Figure 4-4. The figure above represents the market for iced tea. Assume that this is a competitive market. Which of the following is true? A) If the price of iced tea is $3, the output will be economically efficient but there will be a deadweight loss. B) If the price of iced tea is $3, consumers will purchase more than the economically efficient output. C) Both 10,000 and 30,000 are economically inefficient rates of output. D) If the price of iced tea is $3, producers will sell 30,000 units of iced tea but this output will be economically inefficient.
c
Refer to Figure above. A technological advancement would be represented by a movement from A) A to B. B) B to A. C) S1 to S2. D) S2 to S1.
c
Refer to Figure above. What area represents the decrease in producer surplus when the market price falls from P2 to P1? A) C + E B) A + C + E C) A + B D) B + D
c
Refer to Table above. Consider the data above (in billions of dollars) for an economy: Gross domestic product (in billions of dollars) for this economy equals A) $2,200. B) $2,100 C) $1,600. D) $1,400.
c
Specializing in the production of a good or service in which one has a comparative advantage enables a country to do which of the following? A) never have to engage in trade with other nations B) increase the variety of products that it can produce with a decrease in resources C) consume a combination of goods that lies outside its own production possibilities frontier D) produce a combination of goods that lies outside its own production possibilities frontier
c
The underground economy can be described as A) production of intermediate goods and services. B) economic production that includes mining. C) economic activity that is hidden from the government to avoid taxes or because the activity is illegal. D) production of infrastructure that spurs growth in the rest of the economy.
c
Which of the following is a result of imposing a rent ceiling? A) Some consumer surplus is converted to producer surplus. B) There is an increase in the quantity of apartments supplied. C) There is an increase in the quantity of apartments demanded. D) The marginal benefit of the last apartment rented is less than the marginal cost of supplying it.
c
Which of the following would cause a decrease in the supply of peanut butter? A) a decrease in the price of jelly (assuming that peanut butter and jelly are complements) B) a decrease in the price of peanut butter C) an increase the price of peanuts D) an increase in the technology used to produce peanut butter
c
An increase in the demand for peanuts due to changes in consumer tastes, accompanied by an increase in the supply of peanuts as a result of favorable growing conditions, will result in A) an increase in the equilibrium quantity of peanuts and no change in the equilibrium price. B) an increase in the equilibrium price of peanuts and no change in the equilibrium quantity. C) an increase in the equilibrium price of peanuts; the equilibrium quantity may increase or decrease. D) an increase in the equilibrium quantity of peanuts; the equilibrium price may increase or decrease.
d
An outward shift of a nation's production possibilities frontier can occur due to A) a reduction in unemployment. B) a natural disaster like a hurricane or bad earthquake. C) a change in the amounts of one good desired. D) an increase in the labor force.
d
At a product's equilibrium price A) anyone who needs the product will be able to buy the product, regardless of ability to pay. B) the federal government will provide the product to anyone who cannot afford it. C) not all sellers who are willing to accept the price will find buyers for their products. D) any buyer who is willing and able to pay the price will find a seller for the product.
d
Consumer surplus in a market for a product would be equal to the area under the demand curve if A) producer surplus was equal to zero. B) marginal cost was equal to the market price. C) the product was produced in a perfectly competitive market. D) the market price was zero.
d
Deadweight loss refers to A) the opportunity cost to firms from producing the equilibrium quantity in a competitive market. B) the sum of consumer and producer surplus. C) the loss of economic surplus when the marginal benefit equals the marginal cost of the last unit produced. D) the reduction in economic surplus resulting from not being in competitive equilibrium.
d
If the government implements a binding price ceiling on insulin, this will have all of the following effects on the market for insulin except A) a decrease in economic surplus. B) a decrease in producer surplus. C) an increase in deadweight loss. D) a more efficient equilibrium.
d
If the quantity demanded for a product exceeds the quantity supplied, the market price will rise until A) the quantity demanded equals the quantity supplied. The product will then no longer be scarce. B) quantity demanded equals quantity supplied. The equilibrium price will then be greater than the market price. C) only wealthy consumers will be able to afford the product. D) quantity demanded equals quantity supplied. The market price will then equal the equilibrium price.
d
In Venezuela, the government attempted to control rising food prices by implementing price ceilings in the market. These price ceilings were set ________ the market prices, which resulted in ________ of food. A) above; surpluses B) above; shortages C) below; surpluses D) below; shortages
d
In calculating gross domestic product, the Bureau of Economic Analysis uses the sum of the market value of final goods and services produced. This means that the BEA A) simply counts the total number of goods produced in the market place and then adds them up. B) values goods at their market prices, multiplies them by the quantity produced, and then adds them up. C) simply counts the total number of goods and services produced in the marketplace and then adds them up. D) values goods and services at their market prices, multiplies them by the quantity produced, and then adds them up.
d
Investment, as defined by economists, would include the purchase of a A) corporate bond. B) government bond. C) share of stock in ExxonMobil. D) computer by an accounting firm.
d
Minnie Mickey Hats 40 50 Umbrellas 10 5 10) Refer to Table above. Which of the following statements is true? A) Minnie has a comparative advantage in making both products. B) Mickey has a comparative advantage in making both products. C) Minnie has a comparative advantage in making hats and Mickey in making umbrellas. D) Mickey has a comparative advantage in making hats and Minnie in making umbrellas.
d
Nominal GDP will increase A) only if the price level rises. B) only if the price level falls. C) only if the quantity of final goods and services produced rises. D) if either the price level or the quantity of goods and services produced rises.
d
Published in 1776, ________ was written by Adam Smith. A) "The General Theory of Employment, Interest, and Money" B) "The Communist Manifesto" C) "The Declaration of Economics" D) "An Inquiry into the Nature and Causes of the Wealth of Nations"
d
The purchase by a household in China of a CD produced in the United States is included in U.S. A) consumption expenditures. B) investment expenditures. C) government purchases. D) net exports.
d
If Gladys sells her 2003 Jeep Cherokee for $3,500 in 2018, the sale of her car contributes $3,500 to 2018 GDP. True False
false
If the demand for a product decreases and the supply of the same product increases, the equilibrium quantity will increase. True False
false
In economics, the term "free market" refers to a market where no sales tax is imposed on products sold. True False
false
In market economies, income distribution is always going to be completely equitable. True False
false
Nominal GDP measures the value of all final goods and services at base-year prices. True False
false
Peanut butter and jelly are complements. If the price of peanut butter increases, the demand for jelly will increase. True False
false
Physical capital refers to stocks and bonds. True False
false
Policies based on normative economic ideas tend to increase economic efficiency and improve equity. True False
false
Rent control is an example of a price floor. True False
false
Transfer payments are subtracted from national income to get to personal income. True False
false
n the circular flow model, households supply resources such as labor services in the product market. True False
false
The study of economics arises due to
scarcity.
Consider a country that produces only two goods: pineapples and tractors. Suppose it is possible for this country to increase its production of pineapples without producing fewer tractors. In this case, its current output combination is inefficient. True False
true
If income is unequally distributed in an economy, increases in GDP may not raise well-being in an economy. true false
true
The additional benefit to a consumer from consuming one more unit of a good or service is the marginal benefit. True False
true
The difference between consumer surplus and producer surplus in a market is equal to the deadweight loss. True False
true