Economics 104 Chapters 1-5

*See Table 1* In table 1, the opportunity cost of producing a cookie in iowa is a. 8 chilis b. 96 chilis c. the same as Ohio d. less than Ohio

a

*See Table 1* In table 1, the opportunity cost of producing chili in Ohio is a. 1/4 unit of cookies b. 4 units of cookies c. 1/8 unit of cookie d. 8 units of cookies

a

*See Table 1* Refer to table 1. Identify the correct statement a. Ohio should specialize in the production of cookies and trade with Iowa b. Iowa should specialize in the production of cookies and trade with Ohio c. Ohio should specialize in the production of chilies and trade with Iowa d. Both should specialize in the production of chilies

a

Marginal opportunity cost refers to the a. amount of one good or service that must be given up to obtain one additional unit of another good or service b. temporary unemployment created in an economy when resources are transferred from one industry to another. c. additional input cost borne by producers to increase production d. economies of scope realized by firms through efficient allocation of resources

a

People with a college degree earn more income than people without a college degree. In this situation, a. the college degree is the independent variable and income the dependent variable b. the college degree is the dependent variable and income the independent variable c. the independent variable is the people without the college degree and the dependent variable the people with a college degree d. the dependent variable is the people without the college degree and the independent variable the people with a college degree

a

The downward slope of the demand curve is attributed to a. the inverse relationship between price and quantity demanded b. the direct relationship between income and quantity demanded c. the direct relationship between price and quantity demanded d. the inverse relationship between income and quantity demanded

a

The relationship between prices and the corresponding quantities supplied is shown in a a. supply schedule b. demand schedule c. price-earnings ratio d. production schedule

a

The statement "people have unlimited wants" implies that people a. always want more goods/services then they can purchase with their incomes b. always have a desire to hold liquid money c. always strive to be the best they can be d. generally desire for goods and services which they can afford out of their income

a

When will shortage occur in a market a. when the actual price is lower than the equilibrium price b. when the quantity supplied is greater than the equilibrium quantity c. when the quantity that consumers are willing and able to purchase decreases d. when the quantity available at zero price is insufficient to meet demand

a

Which of the following is an example of capital as a factor of production a. products such as machinery and equipment that are used in the production process b. the financial condition of a privately held corporation c. the value of a company's stock on the New York Stock Exchange d. a company's outstanding liabilities

a

A bowed-out production possibilities curve implies that the marginal opportunity cost of producing more of one good is a. decreasing b. increasing c. constant d. zero

b

Financial intermediaries are best described as a. informal institutions that provide funds to the government to manage budget deficits b. institutions that accept deposits and make loans c. institutions that control the money supply in the economy d. institutions that invest in various business ventures

b

In economics, the concept of opportunity cost is a. negated by ensuring that the government has a role in a capitalist society b. defined to be the highest valued alternative that must be forgone when a choice is made c. best illustrated by knowing why consumers choose one good over another d. quantifiable only if you know the real dollar prices of the goods and services you are giving up to consume something

b

The ______ illustrates the money flows that connect the various sectors in the economy a. aggregate demand and aggregate supply diagram b. circular flow diagram c. liquidity preference theory d. income-expenditure diagram

b

The amount of a product that people are willing and able to purchase at a specific price is referred to as the a. demand b. quantity demanded c. purchasing power d. consumption function

b

Which of the following is true of households a. it consists of the employed members of the family b. it can comprise of either related members or unrelated individuals c. it refers to only the owners of rented apartments d. it comprises of a family of at least 4 members

b

According to the circular flow of income, households interact with business firms by a. buying resource services from business firms b. paying wages for the use of labor c. selling goods and services to firms d. receiving payments from firms for use of resource services

d

In its most fundamental sense, economics is the study of a. production and cost b. supply and demand c. scarcity and choice d. specialization and trade

c

Margarine and butter can both be used as a spread on toast. This means that they are a. independent goods b. complementary goods c. substitute goods d. giffen goods

c

The term net exports refers to a. the situation when a country's exports exceed its imports b. the situation when a country's imports exceed its exports c. the difference between the value of exports and the value of imports d. the situation when a nation's currency becomes unbalanced

c

Which of the following would lead to an increase in the demand for golf balls a. an increase in the price of golf clubs b. a decrease in the popularity of golf c. an increase in the number of golfers d. a decrease in the price of golf balls

c

A relationship for which one variable increases in response to an increase in another variable is most accurately called a(n) a. nonlinear relationship b. linear relationship c. inverse or negative relationship d. direct or positive relationship

d

Assume that Ford Motor Company engineers achieve a revolutionary technological breakthrough in the production process of automobiles. Which of the following is expected to take place a. a movement up the existing supply curve for Ford automobiles b. an inward shift of the supply cure for Ford automobiles c. a movement down along an existing supply curve for Ford automobiles d. an outward shift of the supply curve for Ford automobiles

d

For the use of their resources, owners of land receive a. profit b. interest c. wages d. rent

d

Oil found underground in Texas is an example of a. a labor resource b. physical capital c. human capital d. a land resource

d

The production possibilities curve illustrates a. trade-offs facing a society b. that more of one product can be produced only by reducing the quantity of other products that are being produced, assuming that resources are being used efficiently c. the maximum output that can be produced with a limited amount of resources d. all of the above

d

Which of the following best describes a tradeoff? a. an office executive enrolling into a management course to develop her skills b. an investor buying stocks of a start-up company c. a businessman investing a portion of company profits in research and development d. a college student sacrificing a few hours of study time to work at the town diner

d

Which of the following is a valid difference between proprietorships and partnerships a.partnerships require a state charter while proprietorships do not b. partnerships generate lower profits than proprietorships c. partnerships are characterized by unlimited liability, while proprietorships are not d. partnerships consist of two or more partners sharing the responsibility of the firm, while a proprietorship consists of a single individual

d

Which of the following is considered a macroeconomic question a. how can one particular firm maximize profits? b. how does a family allocate income among various available goods and services? c. what factors determine the wage rate in a certain industry? d. how can economic policy fight inflation?

d

Which of the following statements is a defining feature of a corporation a. the owners of a corporation face unlimited liability on debts b. a corporation owns and operates units in foreign countries c. a corporation is created by a verbal agreement d. corporation has a legal identity that is separate from that of it's owners

d

Which of the following will cause a decrease in the demand for steaks at a restaurant a. report by the American Medical Association states that the consumption of steak reduces the risk of cardiovascular disease b. a 50% reduction in the price of steaks c. a double-digit increase in the price of chicken d. a recession leading to a significant fall in the income levels of consumers

d

Which of the following would not cause any kind of outward shift of a nation's production possibilities curve a. technological innovation b. discovery of a new source of energy c. an increase in the size of the labor force d. a flood that renders thousands of acres of farmland unusable

d