Econ test 1

If a surplus exists in a market we know that the actual price is a. above equilibrium price and quantity supplied is greater than quantity demanded. b. above equilibrium price and quantity demanded is greater than quantity supplied. c. below equilibrium price and quantity demanded is greater than quantity supplied. d. below equilibrium price and quantity supplied is greater than quantity demanded.

a. above equilibrium price and quantity supplied is greater than quantity demanded.

Productivity is defined as a. the amount of output produced from each hour of a worker's time. b. the number of hours of work required to produce a given amount of goods and services. c. the amount of labor which can be saved by replacing workers with machines. d. the actual amount of effort workers put into an hour of working time.

a. the amount of output produced from each hour of a worker's time.

Which of the following statements is correct? a. Buyers determine supply and sellers determine demand. b. Buyers determine demand and sellers determine supply. c. Buyers and sellers as one group determine supply, but only buyers determine demand. d. Buyers and sellers as one group determine demand, but only sellers determine supply.

b. Buyers determine demand and sellers determine supply.

The production possibilities frontier is a. a map which shows the margin of cultivation for a country the frontier beyond which agriculture is unprofitable. b. a graph that shows the various combinations of output the economy can possibly produce given the available resources and technology. c. a graph which shows the various combinations of resources that can be used to produce a given level of output. d. a map which shows areas of the world in which capitalist production is now possible.

b. a graph that shows the various combinations of output the economy can possibly produce given the available resources and technology.

Which of the following is likely to result in a shift in the supply curve for dresses? a. an increase in consumer prices b. a reduction in tariffs that allows manufacturers to import cotton cloth at cheaper prices than before c. an increase in dress prices d. higher prices for skirts, pants, and blouses

b. a reduction in tariffs that allows manufacturers to import cotton cloth at cheaper prices than before

Total output in an economy increases when each person specializes because a. there is less competition for the same resources. b. each person spends more time producing that product in which he or she has a comparative advantage. c. a wider variety of products will be produced within each country due to specialization. d. government necessarily plays a larger role in the economy due to specialization.

b. each person spends more time producing that product in which he or she has a comparative advantage.

Which of the following pairs are examples of substitutes? a. popcorn and Pepsi b. hamburgers and pizza c. boats and fishing tackle d. basketballs and sneakers e. none of the above

b. hamburgers and pizza

In a circular-flow diagram, a. taxes flow from households to firms, and transfer payments flow from firms to households. b. income payments flow from firms to households, and sales revenue flows from households to firms. c. resources flow from firms to households, and goods and services flow from households to firms. d. inputs and outputs flow in the same direction as the flow of dollars, from firms to households.

b. income payments flow from firms to households, and sales revenue flows from households to firms.

At an equilibrium price, a. quantity demanded is greater than quantity supplied b. quantity demanded equals quantity supplied c. quantity demanded is less than quantity supplied d. any of the above is possible

b. quantity demanded equals quantity supplied

As a result of a successful attempt by government to cut the economic pie into more equal slices, a. the pie gets larger, and there will be more pie overall. b. the pie gets smaller, and there will be less pie overall. c. it increases the reward for working hard, resulting in people producing more goods and services. d. those who earn more income pay less in taxes.

b. the pie gets smaller, and there will be less pie overall.

Suppose a gardener produces both green beans and corn in her garden. If she must give up 14 bushels of corn to get 5 bushels of green beans, then her opportunity cost of 1 bushel of green beans is a. 0.36 bushel of corn. b. 2.4 bushels of corn. c. 2.8 bushels of corn. d. 70 bushels of corn.

c. 2.8 bushels of corn.

Nancy likes pasta today more than she did yesterday. This fact leads us to conclude that a. Nancy must now consider pasta a luxury. b. Nancy must have experienced an increase in her income. c. Nancy is now willing to pay more than before for pasta at each relevant price of pasta. d. the supply of pasta must have increased and stimulated Nancy's enhanced taste for pasta.

c. Nancy is now willing to pay more than before for pasta at each relevant price of pasta.

Mallory decides to spend three hours working overtime rather than watching a video with her friends. She earns $8 an hour. Her opportunity cost of working is a. the $24 she earns working. b. the $24 minus the enjoyment she would have received from watching the video. c. the enjoyment she would have received had she watched the video. d. nothing, since she would have received less than $24 of enjoyment from the video.

c. the enjoyment she would have received had she watched the video.

In economics, the cost of something is a. the dollar amount of obtaining it. b. always measured in units of time given up to get it. c. what you give up to get it. d. often impossible to quantify, even in principle.

c. what you give up to get it.

Assume that Greece has a comparative advantage in fish and Germany has a comparative advantage in cars. Also assume that Germany has an absolute advantage in both fish and cars. If these two countries specialize and trade so as to maximize the benefits of specialization and trade, a. the two countries' combined output of both goods will be higher than it would be in the absence of trade. b. Greece will produce more fish than it would produce in the absence of trade. c. Germany will produce more cars than it would produce in the absence of trade. d. All of the above are correct.

d. All of the above are correct.

In a market economy, supply and demand are important because they a. play a critical role in the allocation of the economy's scarce resources. b. determine how much of each good gets produced. c. can be used to predict the impact on the economy of various events and policies. d. All of the above are correct.

d. All of the above are correct.

Which of these statements about economic models is correct? a. For economists, economic models provide insights about the world. b. Economic models are built with assumptions. c. Economic models are often composed of equations and diagrams. d. All of the above are correct.

d. All of the above are correct.

Economic models a. cannot be useful if they are based on false assumptions. b. were once thought to be useful, but that is no longer true. c. must incorporate all aspects of the economy if those models are to be useful. d. can be useful, even if they are not particularly realistic.

d. can be useful, even if they are not particularly realistic.

Which of the following words and phrases best captures the notion of equity or equality? a. minimum waste b. maximum benefit c. sameness d. fairness

d. fairness

Factors of production include a. prices and outputs b. only nonproduced inputs c. natural resources, labor, and the market system d. natural resources, labor, and capital goods

d. natural resources, labor, and capital goods