Econ Test Review 1
Cooks Tacos Enchiladas Bree 12 6 Will 4 16 16 22 The opportunity cost for Will to make an enchilada
0.25
Producer Shirts Pants Dylan 12 9 Justin 4 8 16 17 The opportunity cost for Justin to make a pair of pants is
0.5
The price elasticity of supply for umbrellas is 2. Suppose you're told that following a price increase, quantity supplied increased by 30 percent. What was the percentage change in price that brought this about?
15 percent
Positive analysis is concerned with "what ought to be," while normative analysis is concerned with "what is." T or F
False
John is ready to pay $5 for an extra loaf of bread. Due to an ongoing discount in the store, he gets a loaf for $2. John's consumer surplus from the purchase is ________. a) $3 b) $10 c) $2 d) $2.50
a) $3
Price Sandra David Mary ($/Bottle) Demand(Bottles) Demand(Bottles) Demand (Bottles) $8 2 10 $6 14 15 18 $4 23 24 $2 24 27 28 If the market price of wine is $8/bottle, and the market demand for wine is 19 bottles, David's consumption of wine is: a) 7 bottles. b) 12 bottles. c) 4 bottles. d) 9 bottles.
a) 7 bottles
a budget constraint is a straight line because: a) a consumer faces a fixed price of both goods that do not change with changes in consumption. b) the opportunity cost of buying each of the goods changes along the constraint. c) a consumer has a limited money income. d) the tastes and preferences of the consumer change along the constraint
a) a consumer faces a fixed price of both goods that do not change with changes in consumption
If a decrease in income leads to a decrease in the demand for mac and cheese, then mac and cheese is a) a normal good. b) a neutral good. c) a necessity. d) a complement.
a) a normal good
The substitution effect of a decrease in the price of movie tickets results in a) an increase in the quantity of movie tickets demanded. b) a decrease in the demand for movie tickets. c) an increase in the demand for movie tickets. d) a decrease in the quantity of movie tickets demanded.
a) an increase in the quantity of movie tickets demanded
Adam Smith's Invisible Hand Theorem indicates that competitive markets are efficient because: a) competitive markets ensure efficient amounts of each good, produce that good at least cost, and allocate the good among consumers in the best way possible b) competitive markets ensure efficient amounts of each good and produce that good at least cost c) Competitive markets allocate goods to consumers in the best possible way, ensure least cost production, and use prices to generate the equilibrium. d) Competitive markets ensure production by the least cost sellers, and are generally better than government. e) A and B above
a) competitive markets ensure efficient amounts of each good, produce that good at least cost, and allocate the good among consumers in the best way possible
If smartwatches are considered substitutes for smartphones, the decline in the price of smartwatches would, all else equal, a) decrease the demand for smartphones. b) increase the quantity of smartphones demanded. c) decrease the quantity of smartphones demanded. d) increase the demand for smartphones.
a) decrease the demand for smartphones
The steps needed to evaluate the best way to organize an economy include: a) determining what will be produced, how it will be produced and who gets it, and then evaluating these outcomes b) determining whether an economy provides free choice, and an appropriate role for government c) determining what will be produced, how it will be produced and who gets it, and then limiting the role of government d) limiting central power and making the maximum use of markets e) C and D above
a) determining what will be produced, how it will be produced and who gets it, and then evaluating these outcomes
marginal utility is the a) extra satisfaction received from consuming one more unit of a product b) average satisfaction received from consuming a product c) total satisfaction received from consuming a given number of units of a product d) satisfaction achieved when a consumer has had enough of a product
a) extra satisfaction received from consuming one more unit of a product
Which of the following is a normative economic statement? a)Farmers should not be allowed to grow and sell genetically-modified crops. b) The federal government is considering increasing regulations on the use of fossil fuels to promote the use of wind power. c) Rising corn prices have increased the price of corn-based ethanol. d) With rising home prices and falling mortgage interest rates, the amount of home foreclosures has decreased.
a) farmers should not be allowed to grow and sell genetically modified crops
an item has utility for a consumer if it a) generates enjoyment or satisfaction b) is something everyone else wants c) has a high price d) is scarce
a) generates enjoyment or satisfaction
an omitted variable is a variable that: a) has been left out, and if included, would explain why the variables considered in a study are correlated b) is removed from a study as it can lead to the problem of reverse causality c) is purposely left out as it does not aid an economic analysis d) does not cause other variable in a study to change when it changes
a) has been left out, and if included, would explain why the variable considered in a study are correlated
The demand schedule for a commodity illustrates how the consumption of a commodity changes with changes in: a) its price. b) income. c) tastes and preferences. d) supply.
a) its price
If demand is inelastic, the absolute value of the price elasticity of demand is a) less than one. b) one. c) greater than one. d) greater than the absolute value of the slope of the demand curve.
a) less than one
the extra cost associated with undertaking an activity is called a) marginal cost b) opportunity cost c) net loss d) foregone cost
a) marginal cost
Higher price elasticity of demand means that a consumer's demand is: a) more responsive to price changes. b) less responsive to price changes. c) less responsive to income changes. d) more responsive to income changes.
a) more responsive to price changes
Suppose that some investors have decided that economic and financial uncertainty have made the prospect of investing in domestic stock markets more risky than investing in foreign stock markets, and therefore choose to invest in foreign markets. By using all available information as they act to achieve their goals, these investors are exemplifying the economic idea that a) people are rational b) people respond to economic incentives c) optimal decisions are made at the margin d) equity is more important than efficiency
a) people are rational
Which of the following is a normative economic statement? a) Pharmaceutical manufacturers should not be allowed to patent their products so prescription drugs would be more affordable. b) Rising global demand for coal has led to increases in the price of coal. c) With rising mortgage rates and rising unemployment rates, the number of unsold homes has increased. d) The state of Texas is considering increasing funds for light-rail development to promote the use of public transportation.
a) pharmaceutical manufacturers should not be allowed to patent their products so prescription drugs would be more affordable
if the quantity of tea is measured on the horizontal axis and quantity of coffee is measured on the vertical axis, an increase in the price of coffee will cause the budget constraint to: a) pivot leftward along the vertical axis. b) pivot rightward along the horizontal axis. c) pivot leftward along the horizontal axis. d) pivot rightward along the vertical axis.
a) pivot leftward along the vertical axis
By drawing a demand curve with ________ on the vertical axis and ________ on the horizontal axis, economists assume that the most important determinant of the demand for a good is the ________ of the good a) price; quantity; price b) price; quantity; quantity c) quantity; price; price d) quantity; price; quantity
a) price ; quantity ; price
The percentage change in the quantity demanded of a good due to a percentage change in its price is referred to as the: a) price elasticity of demand. b) consumer surplus. c) shadow price of the good. d) price multiplier.
a) price elasticity of demand
Which of the following are assumptions of economics a) scarcity b) tradeoffs c) opportunity costs d) all of the above e) A and B above
a) scarcity
Which of the following is a positive economic statement? a) Scarcity necessitates that people make trade-offs. b) Foreign workers should not be allowed to work for lower wages than the citizens of a country. c) The government should mandate electric automobiles. d) People should not buy SUVs.
a) scarcity necessitate that people make trade-offs
The market for smartwatches has begun to grow, due in part to the success of the Apple Watch. Following the successful launch of the Apple Watch in 2015, companies such as Samsung, Sony, and LG have all developed products to compete with the Apple Watch. The smartwatches introduced to compete with the Apple Watch would be considered a) substitutes for the Apple Watch. b) normal goods compared to the Apple Watch. c) complements to the Apple Watch. d) inferior goods compared to the Apple Watch
a) substitutes for the Apple watch
Which of the following is a normative economic statement? a) The price of gasoline is too high. b) When the price of gasoline rises, the quantity of gasoline purchased falls. c) When the price of gasoline rises, transportation costs rise. d) The current high price of gasoline is the result of strong worldwide demand.
a) the price of gasoline is too high
A change in all of the following variables will change the market demand for a product except a) the price of the product. b)population and demographics. c) tastes. d) income.
a) the price of the product
The law of demand implies, holding everything else constant, that as the price of bagels increases, a) the quantity of bagels demanded will decrease. b) the demand for bagels will decrease. c) the demand for bagels will increase. d) the quantity of bagels demanded will increase.
a) the quantity of bagels demanded will decrease
Which of the following examples best describes the Law of Demand? a) When the price of bread doubles, John's consumption of bread halves. b) When the price of watches increases, a local manufacturer starts offering more watches for sale. c) When John's income doubles, his telephone bill also doubles. d) When a new anti-tobacco commercial is released, the consumption of tobacco products decreases sharply.
a) when the price of bread doubles, John's consumption of bread halves
Which of the following statements best describes an inferior good? a. An inferior good is a good whose demand decreases with an increase in consumers' income. b. An inferior good is a good that is rationed by the government. c. An inferior good is a good whose quantity supplied always exceeds the quantity demanded. d. An inferior good is a good that is sold at a subsidized price.
a. an inferior good a good whose demand decreases with an increase in consumers income
An outward shift of a nation's production possibilities frontier represents a. economic growth. b. rising prices of the two goods on the production possibilities frontier model. c. a situation in which a country produces more of one good and less of another. d. an impossible situation.
a. economic growth
Which of the following could explain why the demand for table salt is inelastic? a. Households devote a very small portion of their income to salt purchases. b. Salt is a luxury good. c. Salt is a rare commodity. d. Salt is a luxury for high-income consumers but a necessity for low-income consumers.
a. households devote a very small portion of their income to salt purchases
Suppose you are considering buying stock in the stock market, and your objective is to maximize your net worth. Furthermore, your study of the market reveals that the economy will be slowing down over the next several months. Under these conditions, it would be best to purchase stock in companies that produce a. inferior goods. b. price elastic goods. c. luxury goods. d. normal goods.
a. inferior goods
If firms do not increase their quantity supplied when price changes, then supply is a. perfectly inelastic. b. relatively inelastic. c. elastic. d. perfectly elastic.
a. perfectly inelastic
Cooks Tacos Enchiladas Bree 12 6 Will 4 16 16 22 The producer with the least opportunity cost of making a tacos is a. the producer who gives up the fewest enchiladas to make a taco. b. the producer who can make the most enchiladas per taco given up. c. the producer who can make the most tacos. d. the producer who can make the fewest enchiladas. e. the producer who can make the most enchiladas per taco given up AND the producer who can make the most tacos.
a. the producer who gives up the fewest enchiladas to make a taco
Danielle Ocean pays for monthly pool maintenance for her home swimming pool. Last week the owner of the pool service informed Danielle that he will have to raise his monthly service fee because of increases in the price of pool chemicals. How is the market for pool maintenance services affected by this? a. There is a decrease in the supply of pool maintenance services. b. There is a decrease in the quantity of pool maintenance services supplied. c. There is an increase in the supply of pool maintenance services. d. There is a decrease in the demand for pool maintenance services.
a. there is a decrease in the supply of pool maintenance services
in a report made to the U.S. Congress in 2001, the National Academy of Sciences cautioned that if fuel economy encourages the production of smaller and lighter cars, "Some additional traffic fatalities would be expected." This statement suggests that a. there is a tradeoff between safety and fuel economy. b. society should value safety more highly than fuel economy. c. U.S. auto manufacturers are more concerned about producing fuel efficient cars to compete with their Japanese and South Korean rivals than about consumer safety. d. society should value fuel economy more highly than consumer safety because of the long-term environmental benefits generated by less gasoline use.
a. there is a tradeoff between safety and fuel economy
Harvey Rabbitt pays for monthly cable TV service. Last week the cable company informed Harvey that his monthly cable price would go down because the city council has granted approval for three new cable companies to service his area. How is the market for cable TV services affected by this? a. There is an increase in the supply of cable TV service. b. There is a decrease in the demand for cable TV service. c. There is a decrease in the supply of cable TV service. d. There is a decrease in the quantity of cable TV service supplied.
a. there is an increase in the supply of cable tv service
Which of the following items is likely to have the highest income elasticity of demand? a. a vacation home in the Swiss Alps b. a bus ride c. a meal at Taco Bell d. a tank of gasoline
a. vacation home in the swiss alps
If the price elasticity of demand for insulin is equal to zero then the demand curve for insulin is a. vertical. b. curvilinear. c. downward sloping. d. horizontal.
a. vertical
which of the following can be established using economic analysis: a) people should work on teams to produce things because there is more job satisfaction b) products should be made more reliably c) the government should not the entity to choose the amounts of goods and services provided d) none of the above can be established through economic analysis e) all of the above can be established through economic analysis
all of the above can be established through economic analysis
Which of the following is the formula to calculate arc elasticity of demand? a) Arc elasticity of demand = [(Q2 - Q1) / (Q2/2)] / [(P2 - P1) / (P2/2)] b) Arc elasticity of demand = [(Q2 - Q1) / (Q2+ Q1)/2] / [(P2 - P1) / (P2 + P1)/2] c) Arc elasticity of demand =[(Q1 - Q2) / (Q2 + Q1)] / [(P1 - P2) / (P2 + P1)] d) Arc elasticity of demand = [(Q2 + Q1) / (Q2/2)] / [(P2 + P1) / (P2/2)]
b) Arc elasticity of demand = [(Q2 - Q1) / (Q2+ Q1)/2] / [(P2 - P1) / (P2 + P1)/2]
If, in response to an increase in the price of chocolate the quantity of chocolate demanded decreases, economists would describe this as a) a change in consumer income. b) a decrease in quantity demanded. c) a decrease in consumers' taste for chocolate. d) a decrease in demand.
b) a decrease in q.d
a model refers to: a) a perfect replica of reality b) a simplified description, or representation, of reality c) a set of facts established by observation and measurement d) facts, measurements, or statistics that describe the world
b) a simplified description, or representation, of reality
The revenue received from the sale of ______ of a product is a marginal benefit to the firm. a) only profitable units b) an additional unit c) the total number of units d) no units
b) an additional unit
Elvira decreased her consumption of bananas when the price of peanut butter increased. For Elvira, peanut butter and bananas are a) both luxury goods. b) complements in consumption. c) both inferior goods. d) substitutes in consumption.
b) complements in consumption
________ is the difference between the willingness to pay and the price paid for a good. a) producer surplus b) consumer surplus c) sellers profit d) revenue
b) consumer surplus
Assume that the economy is in a recession and consumers are expecting a fall in their income levels. This will cause a(n): a) right shift in the market demand for all goods. b) left shift in the market demand for all goods. c) increase in the total quantity demanded of all goods. d) decrease in the total quantity demanded of all goods.
b) left shift in the market demand for all goods
the best alternative use of a resource is referred to as its: a) market price b) opportunity cost c) sunk cost d) marginal utility
b) opportunity cost
a decrease in the price of either good will cause a consumer's budget constraint to: a) shift leftward b) pivot rightward c) shift rightward d) pivot leftward
b) pivot rightward
Which of the following is a positive economic statement? a) The government should ban the production and sale of incandescent light bulbs. b) Raising the tax on gasoline raises the selling price of gasoline. c) U.S. citizens should only buy products which are produced in the United States. d) The government should revamp its immigration policies.
b) raising the tax on gasoline raises the selling price of gas
economics does not study correct or incorrect behaviors but rather it assumes that economic agents behave ______, meaning they make the best decisions given their knowledge of the costs and benefits. a) selfishly b) rationally c) equitably d) emotionally
b) rationally
Central control of economies a) emerged with governments b) regulated resources like land and water c) emerged when early civilizations came into existence d) was absent when society consisted of just prehistoric clans e) none of the above
b) regulated resources like land and water
If, for a given percentage increase in price, quantity demanded falls by a proportionately smaller percentage, then demand is a) unit elastic. b) relatively inelastic. c) relatively elastic. d) perfectly elastic.
b) relatively inelastic
the restriction that a consumer's total expenditure on goods and services purchased cannot exceed the income available is referred to as a) economizing behavior b) the budget constraint c) maximizing behavior d) the price constraint
b) the budget constraint
In June, buyers of titanium expect that the price of titanium will fall in July. What happens in the titanium market in June, holding everything else constant? a)The demand curve shifts to the right. b) The demand curve shifts to the left. c) The quantity demanded decreases. d) The quantity demanded increases.
b) the demand curve shifts to the left
Which of the following is a normative economic statement? a) When the price of wheat falls, the quantity of wheat purchased rises. b) The price of wheat is too low. c) When the price of wheat falls, the cost of wheat-based products falls. d) The current low price of wheat is the result of increased worldwide supply.
b) the price of wheat is too low
economists assume that rational people do all of the following except: a) use all available info as they act to achieve their goals b) undertake activities that benefit others and hurt themselves c) weigh the benefits and costs of all possible alternative actions d) respond to economic incentives
b) undertake activities that benefit others and hurt themselves
a major question that faced societies 250 years ago was: a) what would happen if you organized more of the economy with guilds b) what would happen if you organized more of the economy with markets c) what would happen if you organized more of the economy with government d) was there enough blueBell? e) A, B, and C above
b) what would happen if you organized more of the economy with markets
Suppose a 4 percent increase in price results in a 2 percent increase in the quantity supplied of a good. Calculate the price elasticity of supply and characterize the product. a. 0.2; The product is inelastic. b. 0.5; The product is inelastic. c. 50%; The product is inelastic. d. 2; The product is elastic.
b. 0.5; the product is inelastic
Last year, the Pottery Palace supplied 8,000 ceramic pots at $40 each. This year, the company supplied the same quantity of ceramic pots at $55 each. Based on this evidence, The Pottery Palace has experienced a. a decrease in the quantity supplied. b. a decrease in supply. c. an increase in the quantity supplied. d. an increase in supply.
b. a decrease in supply
An increase in the price of pineapples will result in a. a decrease in the demand for pineapples. b. a larger quantity of pineapples supplied. c. a smaller quantity of pineapples supplied. d. an increase in the supply of pineapples.
b. a larger quantity of pineapples supplied
Which of the following statements best describes a normal good? a. A normal good is a good that is rationed by the government. b. A normal good is a good whose demand increases with an increase in consumers' income. c. A normal good is a good that is readily available in the market. d. A normal good is a good whose supply increases as its price decreases.
b. a normal good is a good whose demand increases with an increase in consumer's income
Demand for a luxury item, such as a yacht, is likely to be a. both income inelastic and price inelastic. b. both income elastic and price elastic. c. income inelastic and price elastic. d. income elastic and price inelastic.
b. both income elastic and price elastic
The production possibilities frontier model shows that a. a market economy is more efficient in producing goods and services than is a centrally planned economy. b. if all resources are fully and efficiently utilized, more of one good can be produced only by producing less of another good. d. if consumers decide to buy more of a product its price will increase. d. economic growth can only be achieved by free market economies.
b. if all resources are fully and efficiently utilized, more of one good can be produced only by producing less of another good.
Suppose there is no unemployment in the economy and society decides that it wants more of one good. Which of the following statements is true? a. It can increase output without giving up another good. b. It will have to give up production and consumption of some other good. c. It can only achieve this with an advance in technology. d. It can only achieve this with an increase in resource supplies.
b. it will have to give up production and consumption of some other good
A decrease in the price of GPS systems will result in a. an increase in the supply of GPS systems. b.a smaller quantity of GPS systems supplied. c. a decrease in the demand for GPS systems. d. a larger quantity of GPS systems supplied.
b. smaller quantity of GPS systems supplied
Suppose at the going wage rate of $20 per hour, firms can hire as many hours of janitorial services as they desire. If any firm tries to lower the wage rate to $19, it will not be able to hire any janitor. What does this indicate about the supply curve for janitorial services? a. Supply is perfectly inelastic. b. Supply is perfectly elastic. c. Supply is unit-elastic. d. Supply is relatively inelastic.
b. supply is perfectly elastic
Over longer periods of time, increases in oil prices provide firms with incentives to explore and recover oil. What does this indicate about the long-run price elasticity of supply for oil? a. The elasticity coefficient is unstable in the long run because oil supplies may be depleted. b. The elasticity coefficient is likely to be higher in the long run than in the short run. c. The elasticity coefficient is likely to be lower in the long run than in the short run. d. The elasticity coefficient approaches 0 in the long run as supplies are depleted.
b. the elasticity coefficient is likely to be higher in the long run than in the short run
One would speak of a change in the quantity of a good supplied, rather than a change in supply, if a. prices of substitutes in production change. b. the price of the good changes. c. the cost of producing the good changes. d. supplier expectations about future prices change.
b. the price of the good changes.
If, in the market for oranges, the supply has increased then a. the supply curve for oranges has shifted to the left. b. the supply curve for oranges has shifted to the right. c. there has been a movement downwards along the supply curve for oranges. d. there has been a movement upwards along the supply curve for oranges.
b. the supply curve for oranges has shifted to the right
In October 2005, the U.S. Fish and Wildlife Service banned the importation of beluga caviar, the most prized of caviars, from the Caspian Sea. What happened in the market for caviar in the United States? a. The supply curve shifted to the right. b. The supply curve shifted to the left. c. The demand curve shifted to the right. d. The demand curve shifted to the left.
b. the supply curve shifted to the left
If in the market for peaches the supply curve has shifted to the left a. the quantity of peaches supplied has decreased. b. the supply of peaches has decreased. c. the supply of peaches has increased. d. the quantity of peaches supplied has increased.
b. the supply of peaches has decreased
According to a study of the price elasticities of products sold in supermarkets, the price elasticity of demand for toothpaste is estimated at -0.45. Which of the following could explain why the price elasticity of demand for toothpaste is so low? a. The toothpaste industry is highly competitive. b. There are few close substitutes for toothpaste. c. Toothpaste is relatively inexpensive. d. Toothpaste is heavily endorsed by dentists.
b. there are few close substitutes for toothpaste
A change in the slope of a budget constraint indicates: a) a change in the price of either good without a change in the opportunity cost. b) a change in the consumer's income. c) a change in the price of either good that causes a change in the opportunity cost. d) a change in the consumer's tastes and preferences.
c) a change in the price of either good that causes a change in the opportunity cost
Which of the following will lead to a change in the opportunity cost of buying a pen and a pencil? a) A twofold increase in the prices of both pens and pencils b) An increase in the consumer's income c) A twofold increase in the price of pens and a threefold increase in the price of pencils d) A decrease in the consumer's income
c) a twofold increase in the price of pens and a threefold increase in the price of pencils
What is the difference between an "increase in demand" and an "increase in quantity demanded"? a) There is no difference between the two terms; they both refer to a movement downward along a given demand curve. b) An "increase in demand" is represented by a movement along a given demand curve, while an "increase in quantity demanded" is represented by a rightward shift of the demand curve. c) An "increase in demand" is represented by a rightward shift of the demand curve while an "increase in quantity demanded" is represented by a movement along a given demand curve. d) There is no difference between the two terms; they both refer to a shift of the demand curve.
c) an "increase in demand" is represented by a rightward shift of the demand curve while an increase in q.d is represented by movement along a given demand curve
When people invest in a business, those investments a) are efficient if the government backs the investment b) are efficient if they prove to be successful c) are efficient if they are investing their own money d) are often inefficient because they don't work out e) B and C above
c) are efficient if they are investing their own money
If the price of lattes, a normal good you enjoy, falls a) the income effect which causes you to increase your latte consumption outweighs the substitution effect which causes you to reduce your latte consumption, resulting in more lattes purchased. b) the income and substitution effects offset each other but the price effect leads you to buy more lattes. c) both the income and substitution effects lead you to buy more lattes. d) the substitution effect which causes you to increase your latte consumption outweighs the income effect which causes you to reduce your latte consumption, resulting in more lattes purchased.
c) both the income and substitution effects lead you to buy more lattes
If a consumer purchases any combination of goods and services on his ________, he will exhaust his income completely. a) indifference curve b) demand function c) budget constraint d) demand schedule
c) budget constraint
we can derive the market demand curve for gold earrings a) by adding the prices each gold earring consumer is willing to pay for each quantity. b) only if the tastes of all gold earring consumers are similar. c) by adding horizontally the individual demand curves of each gold earring consumer. d) by adding vertically the quantity demanded of each gold earring consumed at each price.
c) by adding horizontally the individual demand curves of each gold earring consumer
Causation occurs when: a) change in one variable does not cause any change in another variable b) two variables tend to move in opposite directions c) change in one variable is the reason for the change in another variable d) 2 variables tend to move in the same direction
c) change in one variable is the reason for the change in another variable
If a 1% change in the price of a good causes a 1% change in the quantity demanded, the good has an elasticity of demand: a) less than 1. b) equal to 0. c) equal to 1. d)greater than 1.
c) equal to 1
Trade a) only emerged in about 1,000 B.C. b) only emerged once markets became established c) has been a feature of nearly all economies d) only came into existence when markets developed e) none of the above
c) has been a feature of nearly all economies
the three fundamental questions that must be answered by any economy include: a) how much to produce, why goods are produced, and who gets the goods b) why to produce particular goods, how to produce them, and who gets them c) how much to produce, how to produce goods, and who gets the goods d) who to produce goods, why to produce them, and who gets them e) why to produce goods, how to produce them, and who gets them
c) how much to produce, how to produce goods, and who gets the goods
which of the following is a positive economic statement? a) the US gov't should increase regulations on the banking industry b) the gov't should implement a national consumption tax. c) if the price of beef falls, a larger quantity of it will be bought d) the standard of living in the US is too low
c) if the price of beef falls, a larger quantity of it will be bought
which of the following is a positive economic statement? a) the standard of living in the US should be higher b) the US gov't should not have bailed out US auto manufacturers c) if the price of iPhones falls, a later quantity of iPhones will be purchased d) the gov't should revamp the health care system
c) if the price of iPhones falls, a later quantity of iPhones will be purchased
When the price of tortilla chips rose by 10 percent, the quantity of tortilla chips sold fell 4 percent. This indicates that the demand for tortilla chips is a) unit elastic. b) elastic. c) inelastic. d) perfectly inelastic.
c) inelastic
economists assume that the goal of consumers is to a) spend all their income b) consumer as much as possible c) make themselves as well off as possible d) do as little work as possible to survive
c) make themselves as well off as possible
the extra cost associated with undertaking an activity is called a) foregone cost b) opportunity cost c) marginal cost d) net loss
c) marginal cost
The video describes the steps in simple arithmetic as proceeding from a) numbers to cardinal numbers to addition to subtraction to division to multiplication b) numbers to addition to subtraction to division to multiplication c) numbers to cardinal numbers to addition to subtraction to multiplication to division d) cardinal numbers to number to addition to multiplication to subtraction to division e) none of the above
c) number to cardinal numbers to addition to subtraction to multiplication to division
the highest valued alternative that must be given up to engage in an activity is the definition of a) marginal cost b) economic equity c) opportunity cost d) marginal benefit
c) opportunity cost
Holding all other personal characteristics-such as age, gender, and income-constant, economists would expect that a) people with health insurance are equally likely to be overweight as people without health insurance b) people with health insurance are less likely to be overweight than people without health insurance c) people with health insurance are more likely to be overweight than people without health insurance d) there is no correlation between having health insurance and being overweight
c) people with health insurance are more likely to be overweight than people without health insurance
If the price of the good measured along the vertical axis increases without a change in the price of the good measured along the horizontal axis, the consumer's budget constraint: a) shifts to the right b) shifts to the left c) pivots leftward w/o change in the intercept on the horizontal axis d) pivots rightward w/o change in the intercept on the horizontal axis
c) pivots leftward w/o change in the intercept on the horizontal axis
Economic models do all of the following except a) make economic ideas explicit and concrete for use by decision makers. b) simplify some aspect of economic life. c) portray reality in all its minute details. d) answer economic questions.
c) portray reality in all its minute details
a budget constraint: a) reflects the desire by consumers to increase their income b) shows the prices that a consumer chooses to pay for products he consumes c) refers to the limited amount of income available to consumers to spend on goods and services d) represents the bundle of consumption that make a consumer equally happy
c) refers to the limited amount of income available to consumers to spend on goods and services
The substitution effect of an increase in the price of peaches is a) the change in the demand for nectarines (a substitute good) that results when peaches become more expensive relative to nectarines, holding constant the effect of the price change on consumer purchasing power. b) the change in the demand for peaches that results when the price of peaches increases. c) the change in the quantity demanded that results from a change in the price of peaches, making peaches more expensive relative to other goods, holding constant the effect of the price change on consumer purchasing power. d) the change in the quantity of peaches demanded that results from the effect of the change in the price of peaches on the consumer's purchasing power.
c) the change in the q.d that results from a change in the price of peaches, making peaches more expensive relative to other goods, holding constant the effect of the price change on consumer purchasing power
By definition, economics is the study of a) how to make money in the stock market b) who to make money in a market economy c) the choices people make to attain their goals, given their scarce resources d) supply and demand
c) the choices people make to attain their goals, given their scarce resources
the principle of opportunity cost is that a) the cost of production varies depending on the opportunity for technological application b) in a market economy, taking advantage of profitable opportunities involves some money cost c) the economic cost of using a factor of production is the alternative use of the factor that is given up d) taking advantage of investment opportunities involves costs
c) the economic cost of using a factor of production is the alternative use of that factor that is given up
assume that an individual spends his income on sweaters and shirts. if the price of a sweater increases: a) the opp. cost of buying sweaters decreases b) the opp. cost of buying shirts increases c) the opp. cost of buying sweaters increases d) there is no change in the opp. cost of consuming either good
c) the opp. cost of buying sweaters increases
the slope of a budget constraint represents: a) the price of the good measured along the vertical axis. b) the price of the good measured along the horizontal axis. c) the opportunity cost of one good in terms of another. d) the money income of the consumer.
c) the opp. cost of one good in terms of another
The Law of Demand states that: a) the quantity demanded of a commodity is the same for all consumers in a perfectly competitive market. b) the demand for a commodity always equals the supply of the commodity. c) the quantity demanded of a commodity varies inversely with the price of the commodity. d) the demand for a commodity is mostly influenced by consumers' income.
c) the q.d of a commodity varies inversely with the price of the commodity
when sellers sell goods in a market they are doing so because a) they are trying to get to the efficient market solution b) they want the economy to function well, so they can contribute to social welfare c) they can make more money selling that good than doing something else d) A and B above e) A and C above
c) they can make more money selling that good than doing something else
When buyers buy goods in a market they are doing so because a) they choose the efficient allocation b) they do not like the other good c) they prefer the good to the other good d) A and B above e) A and C above
c) they prefer the good to the other good
Making optimal decisions "at the margin" requires a) making borderline decisions b) making decisions according to one's whims and fancies c) weighing the costs and benefits of a decision before deciding if it should be pursued d) making consistently irrational decisions
c) weighing the costs and benefits of a decision before deciding if it should be pursued
Cooks Tacos Enchiladas Bree 12 6 Will 4 16 16 22 will has a. a comparative advantage and an absolute advantage in making tacos. b. a comparative advantage but not an absolute advantage in making tacos. c. a comparative advantage and an absolute advantage in making enchiladas. d. a comparative advantage but not an abolute advantage in making enchiladas. e. none of these.
c. a comparative advantage and an absolute advantage in making enchiladas.
Increasing opportunity cost is represented by a ________ production possibilities frontier. a. vertical b. linear c. bowed out d. bowed in
c. bowed out
The price elasticity of supply is equal to a. the value of the slope of the supply curve. b. the percentage change in price divided by the percentage change in quantity supplied. c. the percentage change in quantity supplied divided by the percentage change in price. d. the change in quantity supplied divided by the change in price.
c. the percentage change in quantity supplied divided by the percentage change in price.
If the United States placed an embargo on Swedish products, what would happen in the U.S. market for Swedish furniture? a. The supply curve would shift to the right. b. The demand curve would shift to the left. c. The supply curve would shift to the left. d. The demand curve would shift to the right.
c. the supply curve would shift to the left
The points outside the production possibilities frontier are a. efficient. b. inefficient. c. unattainable. d. attainable.
c. unattainable
Suppose Tinsel Town Videos lowers the price of its movie club membership by 10 percent and as a result, CineArts Videos experienced a 16 percent decline in its movie club membership. What is the value of the cross-price elasticity between the two movie club memberships? a -1.6 b -0.625 c 0.625 d 1.6
d) 1.6
if you have a competitive equilibrium for a two market economy consisting of tacos and enchiladas then a) the market equilibrium quantity of tacos is efficient b) the market equilibrium quantity of enchiladas if efficient c) the sellers of tacos have higher costs than other potential sellers d) A and B above
d) A and B above
Early agricultural societies a) limited the economic choices of many society members b) featured significant central control of land c) featured significant central control of water d) all of the above e) none of the above
d) all of the above
Hunter-gatherer societies allocated resources by a combination of a) individual decisions b) sharing customs c) organized activity d) all of the above e) A and B above
d) all of the above
Using basic assumptions you can determine a) why markets are efficient b) when markets are efficient c) when government intervention helps or hurts economic performance d) all of the above e) A and B above
d) all of the above
Which of the following can be derived from other assumptions about numbers a) subtraction b) multiplication c) division d) all of the above e) B and C above
d) all of the above
the key advantage of market exchange compared to one-one (barter) trade is that: a) markets use money, which is generally better b) barter limits trades because each person must want what the other one has c) markets are more efficient d) all of the above e) A and B above
d) all of the above
economists assume that individuals a) behave in unpredictable ways b) prefer to live in a society that values fairness above all else c) will never take actions to help others d) are rational and respond to incentives
d) are rational and respond to incentives
Economists use the concept of ________ to measure how one economic variable, such as quantity, responds to a change in another economic variable, such as price. a) efficiency b) relativity c) slope d) elasticity
d) elasticity
Which of the following statements is true of the scientific method? a) When a researcher looks at a large data set, she is more likely to jump to the wrong conclusions. b) The larger the size of the data set, the greater the scope of inaccuracy in an analysis. c) Arguments based on a few anecdotes are mostly true. d) Empirical arguments are more credible when they are based on a large data set.
d) empirical arguments are more credible when they are based on a large data set
the opportunity cost of going to an outdoor music festival is a) the cost of the festival ticket only b) the enjoyment you receive from going to the festival c) the value of the time spent at the festival d) equal to the highest value of an alternative use of the time and money spent on the festival e) zero because there are no overhead costs for an outdoor festival
d) equal to the highest value of an alternative use of the time and money spent on the festival
Economists assume that rational behavior is useful in explaining choices people make a) even though people rarely, if ever, behave in a rational manner b) bc individuals act rationally all the time in all circumstances c) bc irrational people do not make economic choices d) even though people may not behave rationally all the time
d) even though people may not behave rationally all the time
Price elasticity of demand measures a) how responsive sales are to changes in the price of a related good. b) how responsive suppliers are to price changes. c) how responsive sales are to a change in buyers' incomes. d) how responsive quantity demanded is to a change in price.
d) how responsive quantity demanded is to a change in price
If the Apple Watch and the Samsung Gear S2 are considered substitutes, then, other things equal, an increase in the price of the Apple Watch will a) increase the quantity demanded for the Apple Watch. b) decrease the demand for the Apple Watch. c) increase the quantity demanded for the Gear S2. d) increase the demand for the Gear S2.
d) increase the demand for the Gear S2
Which of the following is not an economic question: a) do we have enough medical care in the economy? b) should we recycle more? c) should we make hybrids or SUVs? d) is it better for stores to close on Sundays? e) all of the above are economics questions
d) is it better for stores to close on Sundays?
Which of the following goods is likely to have the highest price elasticity of demand? a) Life-saving drugs b) Salt c) Gasoline d) Ketchup
d) ketchup
in economics, the term ____ means "additional" or "extra" a) optimal b) allocative c) equity d) marginal
d) marginal
The demand by all the consumers of a given good or service is the ________ for the good or service. a) scheduled demand b) law of demand c) quantity demanded d) market demand
d) market demand
As the ________ increases, ________. a) price of a good; its quantity demanded increases b) quantity demanded of a good; its price increases c) quantity demanded of a good; its price decreases d) price of a good; its quantity demanded decreases
d) price of a good; its q.d decreases
which of the following describes the substitution effect of a price change? a) the change in demand that results from a change in price, making the good more or less expensive relative to other goods, holding constant the effect of the price change on consumer purchasing power b) The change in quantity demanded of a good that results from the change in the price of a substitute for the good. c) The change in quantity demanded of a good that results from the effect of a change in price on consumer purchasing power, holding everything else constant. d) The change in quantity demanded of a good that results from a change in price, making the good more or less expensive relative to other goods, holding constant the effect of the price change on consumer purchasing power.
d) the change in q.d of a good that results from a change in price, making the good more or less expensive relative to other goods, holding constant the effect of the price change on consumer purchasing power
The income effect of an increase in the price of peaches is a) the change in the quantity of other fruit demanded that results from the impact of the price change on purchasing power, holding all other factors constant. b) the change in the quantity of peaches demanded that results from the price increase, making peaches more expensive than other fruit, holding constant the effect of the price change on consumer purchasing power. c) the change in the demand for peaches as a result of the change in the price of peaches, holding all other factors constant. d) the change in the quantity of peaches demanded that results from the effect of the change in price on consumer purchasing power, holding all other factors constant.
d) the change in the quantity of peaches demanded that results from the effect of the change in price on consumer purchasing power, holding all other factors constant
If the price of a good increases, ________. a) the budget constraint shifts to the left b) the consumer surplus increases c) the budget constraint shifts to the right d)the consumer surplus decreases
d) the consumer surplus decreases
How does the increasing use of MP3 players affect the market for compact discs? a) The supply curve for compact discs shifts to the right. b) The demand curve for compact discs shifts to the right. c) The demand curve for compact discs shifts to the left. d) The supply curve for compact discs shifts to the left.
d) the demand curve for CDs shifts to the left
Tom Searchinger, a senior attorney at the Environmental Defense Fund, observed that generous farm subsidies have encouraged farmers to produce more corn and more wheat. How does this affect the market for fertilizer? a) The supply of fertilizer decreases. b) The demand for fertilizer decreases. c) The supply of fertilizer increases. d) The demand for fertilizer increases.
d) the demand for fertilizer increases
If the demand for a steak is unit elastic, then a) the percentage change in quantity demanded is 100 percent greater than the percentage change in price (in absolute value). b) the percentage change in quantity demanded is 1 percent greater than the percentage change in price. c) quantity demanded does not respond to changes in price. d) the percentage change in quantity demanded is equal to the percentage change in price.
d) the percentage change in q.d is equal to the percentage change in price
If the demand for cell phone service is inelastic, then a) the percentage change in quantity demanded is equal to the percentage change in price. b) the percentage change in quantity demanded is greater than the percentage change in price (in absolute value). c) the quantity demanded does not change in response to changes in price. d) the percentage change in quantity demanded is less than the percentage change in price (in absolute value).
d) the percentage change in q.d is less than the percentage change in price ( in absolute value)
Adam Smith's book, the Wealth of Nations, investigated: a) the factors affecting economic wealth across countries b) the role of wealth played in social well-being c) the role of custom in the economy d) the role of markets in determining economic efficiency e) all of the above
d) the role of markets in determining economic efficiency
If the slope of a demand curve is equal to -0.1 then a) as price increases by 10 percent quantity demanded decreases by 1 percent. b) the demand is elastic at low prices and inelastic at high prices. c) demand is inelastic. d) we don't know whether the demand is elastic or inelastic.
d) we don't know whether the demand is elastic or inelastic
What is the difference between an "increase in supply" and an "increase in quantity supplied"? a. An "increase in supply" means the supply curve has shifted to the right while an "increase in quantity supplied" means at any given price supply has increased. b. There is no difference between the two terms; they both refer to a shift of the supply curve. c. There is no difference between the two terms; they both refer to a movement along a given supply curve. d. An "increase in supply" means the supply curve has shifted to the right while an "increase in quantity supplied" refers to a movement along a given supply curve in response to an increase in price.
d. An "increase in supply" means the supply curve has shifted to the right while an "increase in quantity supplied" refers to a movement along a given supply curve in response to an increase in price.
Producer Shirts Pants Dylan 12 9 Justin 4 8 16 17 Justin has a a. a comparative advantage and an absolute advantage in making shirts. b. a comparative advantage but not an absolute advantage in making shirts. c. a comparative advantage and an absolute advantage in making pants. d. a comparative advantage but not an abolute advantage in making pants. e. none of these.
d. a comparative advantage but not an abolute advantage in making pants.
An increase in the price of off-road vehicles will result in a. a decrease in the supply of off-road vehicles. b. a smaller quantity of off-road vehicles supplied. c. an increase in the demand for off-road vehicles. d. a larger quantity of off-road vehicles supplied.
d. a larger quantity of off-road vehicles supplied
In order to prove that Motrin and Ibuprofen are substitutes, one should measure the ________ and get a ________. a. price elasticity of demand; number greater than 1 (in absolute value) b. price elasticity of demand; number less than 1 (in absolute value) c. cross-price elasticity; negative number d. cross-price elasticity; positive number
d. cross-price elasticity; positive number
a supply schedule a. is a table that shows the relationship between the price of a product and the quantity of the product that producers and consumers are willing to exchange. b. is a curve that shows the relationship between the price of a product and the quantity of the product supplied. c. is the relationship between the supply of a product and the cost of producing the product. d. is a table that shows the relationship between the price of a product and the quantity of the product supplied.
d. is a table that shows the relationship between the price of a product and the quantity of the product supplied.
The supply curve for watches a. is downward sloping. b. shows the supply of watches consumers are willing and able to buy at any given price. c. shows the relationship between the quantity of watches firms are willing and able to supply and the quantity of watches consumers are willing and able to purchase. d. shows the relationship between the price of watches and the quantity of watches supplied.
d. shows the relationship between the price of watches and the quantity of watches supplied
Which of the following are assumptions needed for simple arithmetic a) numbers exist b) multiplication c) addition d) all of the above e) A and C above
e) A and C above
Consider the following statements: a. Car owners purchase more gasoline from a gas station that sells gasoline at a lower price than other rival gas stations in the area. b. Banks do not take steps to increase security since they believe it is less costly to allow some bank robberies than to install expensive security monitoring equipment. c. Firms produce more of a particular DVD when its selling price rises. which of the above statements demonstrates that economic agents respond to incentives? a) a only b) b only c) c only d) a and b e) a, b, and c
e) a, b, and c
Which of the following is NOT an example of central economic control: a) family or clan leaders b) warlords c) dictators d) tribal cheiftains e) all of the above are examples of central control
e) all of the above are examples of central control
All else equal, as the price of a product falls, the quantity supplied increases. T or F
false
If demand is inelastic, the absolute value of the price elasticity coefficient is greater than one. T of F
false
If the absolute value of the price elasticity of demand for gasoline is 0.5, then a 10 percent increase in the price of gasoline leads to a 0.5 percent decrease in the quantity demanded. T or F
false
Suppose at a price of $50, Yoshi's Jazz Bar sells 20 tickets to its nightly jazz performance and at a price of $40, it sells 25 tickets. Based on this information, the demand for Yoshi's jazz performance is elastic. T or F
false
Economics teaches us that people a) fundamentally do not care about others in society b) fundamentally want more goods and that is the best way to behave c) fundamentally want more goods and that is unfortunate, but real d) A and B above
fundamentally want more goods
Scarcity in an economy emerges from a) poor governmental decisions b) too many monopolies and high prices c) limited resources and infinite wants d) all of the above e) A and C above
limited resources and infinite wants
According to the video, is there enough Bluebell? a) yes b) no c) a question that cannot be answered d) a question that can be answered e) not an economic problem
no, and a question that can be answered
In general, a) people should never work in teams because they can make more money by specializing b) we should make more energy efficient cars c) we should recycle more d) all of the above are generally true e) none of the above are generally true
none of the above are generally true
People do not "feel" rich because a) most people are not rich b) people always want more c) marketers and others are constantly bombarding us with new things d) only high income people have enough to cover their real necessities e) A and D above
people always want more
The price elasticity of an upward-sloping supply curve is always positive. greater than one. negative. impossible to determine.
positive
In which of the following way did the video NOT indicate you were rich compared to King George? a) indoor plumbing b) travel c) music d) power e) medical treatment
power
in which of the ways did the video NOT indicate that Americans were rich compared to other societies today: a) housing b) video games c) rap music d) medical care e) country music
rap music
Economics is the study of a) scarcity b) why people have infinite wants c) how to make as much money as possible d) how to generate more resources and limit scarcity e) all of the above
scarcity
"An increase in the price of gasoline will increase the demand for hybrid vehicles." This statement is an example of a positive economic statement. t or f
true
An increase in the quantity of a product supplied is caused by an increase in the price of the product. T or F
true
If the demand for a product is elastic, the quantity demanded changes by a larger percentage than the percentage change in price. T or F
true
Quantity supplied refers to the amount of a good or service that a firm is willing and able to supply at a given price. T or F
true
The income effect explains why there is an inverse relationship between the price of a product and the quantity of the product demanded. T or F
true
