Econ quiz 1

Bill Bonecrusher graduates from college with a choice of playing professional football at $2 million a year or coaching for $50,000 a year. He decides to play football, but eight years later he quits football to make movies for $3 million a year. His opportunity cost at graduation was ________ and eight years later was ________. $2 million; $2 million $50,000; $50,000 $50,000; $2 million $2 million; $3 million

$50,000; $2 million

Which of the following is NOT a factor of production? an apartment building a university professor mineral resources 100 shares of Microsoft stock

100 shares of Microsoft stock

Which of the following would not cause an outward shift in the production possibilities frontier? An increase in the capital stock A decrease in unemployment An improvement in technology An increase in the size of the labor force All of these would shift the production possibilities frontier.

A decrease in unemployment

Which of the following are scarce resources? Top soil Lumber Wind Time All of the above are scarce resources.

All of the above are scarce resources.

A graph shows that as fees to use ATM machines increase, people use them less frequently. The graph of this relationship would show a negative relationship. an inverse relationship. a direct relationship. Both answers A and B are correct.

Both answers A and B are correct.

All economics questions and problems arise because A)the rich take too much and don't leave enough for the poor. B)political parties always disagree. C)we produce inefficiently. D)people don't work hard enough. E)human wants exceed resources available.

E)human wants exceed resources available.

Shelley's grandmother gave her a sweater for her birthday, but Shelley wanted a DVD. This implies that Shelley's grandmother is not acting out of self-interest because she knows that Shelley really wanted a DVD. it is in Shelley's self-interest to refuse to wear the sweater. Shelley's grandmother is acting out of self-interest because she wanted to give Shelley something useful. Shelley should exchange the sweater for a DVD.

Shelley's grandmother is acting out of self-interest because she wanted to give Shelley something useful.

Consider the case of a teacher who tells students that those who miss more than three classes for any reason will automatically receive a lower grade. Students who miss more than three classes are irrational. The instructor is introducing an added cost for students who miss class. The instructor is introducing an added benefit for students who miss class. The teacher is assuming that students are irrational, and she must force them to attend class.

The instructor is introducing an added cost for students who miss class.

Which of the following is a positive economic statement? Unemployment is a more serious problem than inflation. Economic considerations are less relevant than ethical issues in deciding national policy. The rate of unemployment of young African-Americans exceeds that of white Americans. No individual should live in poverty.

The rate of unemployment of young African-Americans exceeds that of white Americans.

Which of the following is NOT a factor of production? the wages paid to workers. the management skill of a small business owner. the water used to cool a nuclear power plant. the effort of farmers raising cattle.

The wages paid to workers.

Sara looks into her closet and discovers a pair of like-new shoes she no longer wears because they give her blisters. From the economist's perspective, was Sara behaving rationally when she bought those shoes? Yes, as long as Sara didn't intentionally purchase blister-causing shoes. No. If any of a person's decisions have poor results, that person is irrational. It's not clear because psychology, not economics, deals with the rationality assumption. No. The rationality assumption states that rational people never make mistakes.

Yes, as long as Sara didn't intentionally purchase blister-causing shoes.

For Bill Gates, a founder of Microsoft, scarcity is not a concern because he has many employees working for his company. no longer a concern but was a concern when he was a college student. not a concern because he has so much money. a concern because time is a limited resource. a concern because there are a limited number of computer customers.

a concern because time is a limited resource.

The Great Depression of the 1930s with a large number of workers and factories unemployed would be represented in a production possibilities frontier graph by a point inside the frontier. an intercept on either the vertical or the horizontal axis. a point on the frontier. a point outside the frontier.

a point inside the frontier.

The problem of "scarcity" A)applies only to the poor. B)can be solved if people worked longer hours. C)Is faced by individuals but not whole societies. D)affects all people. E)is a problem mainly for poor nations and poor people.

affects all people.

Points within the PPF are all unattainable and have full employment of resources. unattainable and have some unemployment of resources. attainable and production efficient. attainable and have full employment of resources. attainable and have some unemployment of resource

attainable and have some unemployment of resource

Fred and Ann both decide to see the same movie when they are given free movie tickets. We know that both bear an opportunity cost since they could have done other things instead of see the movie. neither bears an opportunity cost because the tickets were free. the cost of going to the movie is greater for the one who had more choices to do other things. both bear the same opportunity cost since they are doing the same thing.

both bear an opportunity cost since they could have done other things instead of see the movie.

Self-interest is measured entirely based on an individual's income, whether earned from labor or inherited. relates strictly to material well-being, such as a person's stock of wealth at a point in time. is inconsistent with economic analysis, which suggests that self-interest is irrational. can involve any action that makes a person feel better off, such as charitable contributions.

can involve any action that makes a person feel better off, such as charitable contributions.

Which of the following is a microeconomic concern? consumer behavior the rate of economic growth in the United States national output of the United States the current unemployment rate in the United States

consumer behavior

Normative economic statements contain value judgments. are usually irrational. violate the law of ceteris paribus. are easily testable.

contain value judgments.

A country produces health care and education and is producing at a point on its production possibilities frontier. To produce more health care, the country must increase its production of both health care and education. decrease its production of education. use unemployed resources to produce health care. increase its production of education. shift its PPF outward.

decrease its production of education.

Economists assume people behave rationally, which means that people never make a mistake. always understand the consequences of their decisions. have the necessary information to always make correct decisions. do not intentionally make decisions that make themselves worse off.

do not intentionally make decisions that make themselves worse off.

One topic of study for a microeconomist would be the causes of aggregate unemployment. effects of a gasoline price increase on consumer behavior. causes of inflation. effects of an increase in government spending on overall economic activity.

effects of a gasoline price increase on consumer behavior.

An example of economic capital is equipment that can be used to produce a car. workers digging a trench with shovels and pickaxes. ocean waves used to generate electricity. the knowledge to program in C++. forests used for logging.

equipment that can be used to produce a car.

Microeconomics is the study of the effect that money has in the economic system. how rising prices affect the level of employment in the economy. how individuals and firms make decisions. the behavior of the economy as a whole.

how individuals and firms make decisions.

A relationship between two variables in which one variable increases at the same time as the other decreases is called direct. constant. nonlinear. inverse.

inverse.

Positive economics always gives an optimistic spin to economic news. is concerned with the economic policies that should be implemented. was not used by nineteenth century economists. is objective.

is objective.

Copper falls into which factor of production category? entrepreneurship capital labor land

land

What are the four categories into which factors of production are grouped? land, labor, capital, and entrepreneurship profit, wages, rent, and interest capital, human capital, land, and labor entrepreneurship, profit, labor, and wages

land, labor, capital, and entrepreneurship

A friend wants to learn how the unemployment rate is calculated and how inflation is measured. He asks you which economics course to take and you advise him to enroll in either micro- or macroeconomics. They both concentrate equally on those issues. macroeconomics. microeconomics. financial accounting because economics doesn't address those topics in its courses.

macroeconomics.

Factors of production include all of the following EXCEPT ________. entrepreneurship money machines made in past years an wheat field that is not irrigated

money

When an economist uses the term "land" , this means rural. acreage. natural resources. crops. topsoil.

natural resources.

Jim purchased a PC for home use to play games and surf the Internet. The PC would be considered to be human capital. physical capital. labor. land. not a resource.

not a resource.

The concept of opportunity cost exists because of shortages. the value of services is hard to determine. of scarcity. goods have different prices.

of scarcity.

The value of the best alternative sacrificed to obtain something you want is referred to as explicit cost. marginal cost. sunk cost. opportunity cost.

opportunity cost.

For the Jones household it has been estimated that for every ten degrees increase in the outdoor temperature the consumption of ice tea increases by 5 glasses. What type of relationship exists between temperature change and the consumption of ice tea? negative relationship no relationship maximum relationship positive relationship

positive relationship

Economists assume that people are motivated by altruism. rational self-interest. benevolence. greed.

rational self-interest.

A negative slope represents a direct relationship, such as snow fall and car accidents. represents an inverse relationship, such as beers consumed and test score. indicates that there is no relationship between two variables, such as women's wages and likelihood of sunshine. means that the line crosses below the x-axis.

represents an inverse relationship, such as beers consumed and test score.

A reason the production possibilities frontier exists is unemployment. scarcity of resources and unlimited technology. scarcity of resources. unlimited resources and technology. people's unlimited wants.

scarcity of resources.

Economic models are used to exactly replicate reality. determine the thoughts of individuals. predict all possible outcomes of a study. simplify reality to predict outcomes.

simplify reality to predict outcomes.

Economics studies only how businesses make a profit. has no relevance to the personal lives of individuals. studies only the problems of unemployment and inflation. studies only the overall national economy and not small individual parts of the economy. studies how people make choices to cope with scarcity

studies how people make choices to cope with scarcity.

A microeconomist would study all of the following issues EXCEPT the most efficient means for General Motors to produce an automobile. the effect of a change in income taxes on the nation's rate of unemployment. the impact of a change in consumer income on the sales of corn. the impact of a snowstorm on the sales of snow shovels.

the effect of a change in income taxes on the nation's rate of unemployment.

Labor includes labor by those who earn a wage but not a salary. labor by those who do not have a college degree. the entire pool of physical and mental talents available to produce goods and services. manual labor and mental effort exerted by those without a college degree. manual labor only.

the entire pool of physical and mental talents available to produce goods and services.

The opportunity cost of attending college might best be described as the highest-valued alternative use of the student's time. the money that must be paid in order to attend college. the value that the student attaches to not working. the lowest-valued alternative use of the student's time.

the highest-valued alternative use of the student's time.

A direct relationship occurs when the two variables have no identifiable relationship with each other. the two variables being compared change in opposite directions, or when one goes up the other goes down. the two variables being compared change in the same direction, or when one goes up the other also goes up. a change in one of the variables causes a change in the other variable in any direction.

the two variables being compared change in the same direction, or when one goes up the other also goes up.

Samia has decided that with the two hours in between classes she can do one of 3 things. She has ranked her choices, from highest to lowest as, (1) chat with her friends, (2) study economics or (3) take a nap. The opportunity cost of chatting with her friends is the value of studying economics, the next best use of time. the value of chatting with her friends. the combined value of studying economics and taking a nap. zero since she does not pay her friends to talk to her.

the value of studying economics, the next best use of time.

Suppose you have four choicesgo to a movie, read a book, watch television, or go to a concert. You choose to go to a movie. The opportunity cost of the movie is the value of the concert that you didn't attend. the value of the book not read. the value of the television program not watched. the value of the activity that you would have selected if you hadn't gone to the movie.

the value of the activity that you would have selected if you hadn't gone to the movie.

Production points beyond the production possibilities frontier are unattainable. attainable but are production inefficient. attainable but have unemployed resources. attainable and desirable. None of the above answers is correct.

unattainable.

During a period of time with high unemployment, a country can increase the production of one good or service only by increasing its production possibilities frontier. and must increase the production of something else. but must decrease the production of something else. by using resources in the production process twice. without decreasing the production of something else.

without decreasing the production of something else.

A politician's statement that "to encourage economic growth, taxes should be cut," would be a statement of mercantilist economic philosophy. would be an example of a positive statement. would be an example of a microeconomic statement. would be an example of a normative statement.

would be an example of a normative statement.