economics

In Venus, the opportunity cost of the first unit

(A) food is two units of clothing

The law of increasing opportunity cost is reflected in the shape of the

(A) production possibilities curve concave to the origin

The table below shows the number of hours needed to produce on bushel of soybeans and one bushel of rice in each of two countries

(A) the US has both the absolute and comparative advantage in producing soybeans

Which of the following problems do all economics systems face

(B) I and IV only - how to allocate scarce resources among unlimited wants - how to decide what to produce, how to produce, and for whom to produce

In which way does a straight-line production possibilities cure differ from a concave production possibilities curve

(B) a straight-line production possibilities curve has a constant opportunity cost

If the country moves from Point C to Point D, future economic growth will

(B) increase

If there is an increase in demand for a good, what will most likely happen to the price and quantity of the good exchanged

(B) increase, increase

When one decision is made, the next best alternative not selected is called

(B) opportunity cost

A rational decision maker will chose to act only if

(B) the marginal benefit of the action is greater than the marginal cost of that action

An increase in the price of gasoline will cause the demand curve for tires to shift in which direction

(B) to the left, because gasoline and tires are compliments

Which of the following statements is correct based on the concept of comparative advantage

(C) Mars should specialize in the production of clothing

Which of the following will not change the demand for oranges

(C) a change in the price of oranges

Which of the following would cause an outward or rightward shift In The production possibilities curve

(C) an increase in capital equipment

5.In an industry that has many competing firms, an increase in demand may be expected to result in: (a) A decrease in production (b) No change in production (c) An increase in production (d) The elimination of inefficient firms.

(C) an increase in production

How might Point E be attained

(C) if improvements in technology occurred in either the computer sector of the farm products sector

Which of the following is most likely to cause the production possibilities curve to shift outward toward Point W

(C) improving the technology for the production of either consumer or capital goods

To be considered scarce, an economic resource must be

(C) limited and desirable, but not free

If the country is currently producing at Point C, it can produce more computers by doing which of the following

(C) moving to Point D

If the country is currently producing at Point C, it can produce more capital goods by moving in the direction of

(C) point D

Which of the following statements about the production possibilities curve is true

(C) the relative position of Points C and D reflected production alternatives rather then relative prices

In Mars, the opportunity cost of obtaining the first two units of food is how many units of clothing

(D) 8

The crucial problem of economics is

(D) allocating scarce productive resources to satisfy unlimited wants

The production possibilities curve of the country would most likely to shift to the right if the country were currently producing at which of the following point

(D) point D

The opportunity cost of producing an additional unit of product J is

(D) the amount of product K that could have been produced with the resources used to make the unit of J

Which of the following would cause a leftward shift of the production possibilities curve

(E) a decrease in working- age population

Which of the following is true if the is true if the production possibilities curve is a curved line concave to the origin

(E) as more of one good is produced, increasing amounts of the other good must be given up

Which of the following items would be considered scarce

(E) education, gold, and time

3.The holder of a corporate bond is: (a) A creditor of the corporation (b) A debtor of the corporation (c) An owner of the corporation (d) An officer of the corporation.

(a) A creditor of the corporation

2. Which one of the following would probably lead to an increase in the demand for bricks? (a) An increase in the price of lumber, which can be used as a substitute for bricks (b) A decrease in the income of potential homebuilders (c) An increase in the wages of bricklayers (d) An increase in the price of bricks.

(a) An increase in the price of lumber, which can be used as a substitute for bricks

8.In a market economy, consumers can have just about anything they want if they: (a) Are willing and able to pay the price (b) Belong to the ruling party (c) Are famous persons (d) Have enough friends.

(a) Are willing and able to pay the price

2.Before modernizing, the Chelsea Video Games Company employed 20 workers and produced 200 games a day. After modernizing, the company laid off 5 workers and is now producing 300 games a day. As a result of modernization, productivity at the Chelsea plant: (a) Doubled (b) Increased by 50 percent (c) Remained the same (d) Declined

(a) Doubled

3.Which one of the following is least likely to result in increased productivity? (a) Efficient use of natural resources (b) Employee training programs (c) Improved machinery (d) Working overtime.

(a) Efficient use of natural resources

5.The best way to increase productivity in a plant is to: (a) Employ all the factors of production more efficiently (b) Keep hiring more workers (c) Keep hiring more plant managers (d) Increase output.

(a) Employ all the factors of production more efficiently

6. Which one of the following statements is true? (a) Every time people buy Microsoft stock, Microsoft receives money for new capital investment. (b) Preferred stock is always better than common stock. (c) The main function of the SEC is to prevent stockholders from losing money on stock purchases. (d) The higher the margin rate, the more difficult it is to buy stocks with borrowed funds.

(a) Every time people buy Microsoft stock, Microsoft receives money for new capital investment.

10.Which one of the following statements is said to be a major advantage of the market system? (a) It is the most efficient of all economic systems. (b) It ensures that natural resources will be preserved. (c) It always provides for essential public goods and services. (d) It provides adequately for the needs of all U.S. citizens.

(a) It is the most efficient of all economic systems.

5. In which type of economic system are consumers most likely to determine what goods will be produced? (a) Market economy (b) Traditional economy (c) Command economy (d) Wartime economy.

(a) Market economy

5. All other things being equal, if consumers are willing to pay more for an item, it is likely that: (a) More of that item will be produced (b) Less of that item will be produced (c) Producers will continue to produce regardless of production costs (d) The price of that item will be reduced.

(a) More of that item will be produced

10.Which one of the following pieces of information is contained in a corporation's income statement? (a) Net income (b) Accounts payable (c) Value of the firm's factory (d) Total liabilities.

(a) Net income

6.Which one of the following is an example of a fixed cost? (a) Rent (b) Electricity to power machinery (c) Commission on sales (d) Raw materials.

(a) Rent

1.Which form of business organization is most numerous in the United States? (a) Sole proprietorships (b) Partnerships (c) Corporations (d) Cooperatives.

(a) Sole proprietorships

2.Which one of the following is the most attractive feature of the sole proprietorship? (a) The ease with which it can be organized (b) Its ability to expand across state borders (c) The ease with which ownership can be transferred (d) Its limited liability.

(a) The ease with which it can be organized

3.The opportunity cost of an increase in the local police force is (a) The government goods or services that people will give up in order for the government to hire additional police (b) The cost of the additional police (c) The cost of training new recruits (d) The amount by which taxes may be increased to pay for the additional police.

(a) The government goods or services that people will give up in order for the government to hire additional police

6.Which one of the following is most influential in causing firms to produce the goods and services that the public wants? (a) The profit motive (b) Competition (c) Consumer sovereignty (d) The needs of the public.

(a) The profit motive

1.Corporations obtain most of the funds that they need for expansion from: (a) The sale of stocks (b) The sale of bonds (c) Short-term borrowing (d) Their undistributed profits.

(a) The sale of stocks

10. In the graph, BB represents: (a) The supply curve (b) The demand curve (c) Equilibrium (d) The market price.

(a) The supply curve

6.The demand for a good is elastic when: (a) Total revenue increases with each decrease in price (b) Total revenue decreases with each decrease in price (c) The demand curve shifts to the right (d) Price changes have no effect on total revenue.

(a) Total revenue increases with each decrease in price

4."An individual's role in the economy is most likely determined at birth, and goods and services are produced according to time-honored methods." Which economic system fits this description? (a) Traditional (b) Command (c) Market (d) Highly specialized.

(a) Traditional

1. "All societies must economize because human wants are unlimited, but resources needed to satisfy these wants are limited." This statement means that society must? (a) Use its resources in such a way that it gets the most out of them (b) Save as much money as possible (c) Keep its budgets balanced (d) Prohibit the use of its resources.

(a) Use its resources in such a way that it gets the most out of them

8. The Kilroy Bicycle Company has fixed annual costs of $100,000 and variable costs of $10 per bicycle. If output is increased from 5,000 to 10,000 bicycles per year, the total cost of producing each bicycle will be reduced from $30 to: (a) $25 (b) $20 (c) $15 (d) $10

(b) $20

4.When described in connection with supply and demand schedules, an increase in demand means that: (a) The price will fall (b) Buyers will take a larger quantity at all prices than before (c) The demand for the product has become more elastic (d) The demand curve slopes downward.

(b) Buyers will take a larger quantity at all prices than before

1.When the supply of a commodity increases while the demand remains the same, the market price will: (a) Rise (b) Fall (c) Stay the same (d) Vary directly with the change in supply.

(b) Fall

7.Which one of the following is true of a limited liability corporation (LLC)? A LLC (a) Is the least expensive kind of business to organize (b) Is not subject to the corporate income tax (c) Is the only form of business organization that offers limited liability (d) Is the only form of business organization that provides unlimited life.

(b) Is not subject to the corporate income tax

1.As a result of our nation's increasing productivity: (a) Most goods are cheaper than they were years ago (b) More goods are available per person than years ago (c) Goods are made better by machine than they were by hand (d) Output per employee per hour has decreased.

(b) More goods are available per person than years ago

4.When the point of diminishing returns is reached as workers are added to a production line: (a) Total revenue will decline (b) Output per employee will decline (c) Total profits will decline (d) The factory should hire more workers.

(b) Output per employee will decline

7.For which one of the following commodities is supply most elastic? (a) Eggs (b) Plastic toys (c) Gold (d) Corn.

(b) Plastic toys

7. Competition and the desire for profits pressure business firms to: (a) Provide inferior services to consumers (b) Provide consumers with the goods and services they want (c) Produce products of poor quality (d) Charge high prices for products and services.

(b) Provide consumers with the goods and services they want

4. In the circular flow of economic activity, we see that businesses: (a) Receive money but no productive services from households (b) Receive money from both government and households (c) Sell more goods to government than to households (d) Receive no money from government.

(b) Receive money from both government and households

4.As a rule, who has voting rights in a corporation? Its (a) Officers (b) Stockholders (c) Board of directors (d) Employees.

(b) Stockholders

8.In the graph, AA represents: (a) The supply curve (b) The demand curve (c) Equilibrium (d) The market price.

(b) The demand curve

3. In an economic system operating under capitalism, the fundamental questions of WHAT, HOW, and WHO are answered by: (a) Tradition (b) The market (c) A government agency (d) Congressional legislation.

(b) The market

3.Which one of the following would not have the same effect as the other three on the amount of beef consumed? (a) A rise in the price of lamb (b) A fall in the price of beef (c) An effective advertising campaign on the part of pork producers (d) An effective advertising campaign on the part of beef producers.

(c) An effective advertising campaign on the part of pork producers

2.The holder of one share of stock in a corporation is: (a) A creditor of the corporation (b) A debtor of the corporation (c) An owner of the corporation (d) An officer of the corporation.

(c) An owner of the corporation

8. Each of the following is an example of currency, except a? (a) Dime (b)$1bill (c) Check for $5 (d) Penny.

(c) Check for $5

2.Which one of the following forces will be most influential in determining the number of pairs of brown as compared to black shoes a manufacturer will produce in a market economy? (a) Government directives (b) Views of production supervisors' spouses (c) Consumer demand (d) Factory workers' preferences.

(c) Consumer demand

10.When he became CEO of General Electric back in 1981, Jack Welch announced that he would prepare GE for the 21st century by selling off or destroying existing operations, and introducing new ones. As a result of those policies, GE grew at annual rate of 23 percent for the next 20 years. Such a program is known as: (c) Creative destruction

(c) Creative destruction

9. Which one of the following is an example of a disadvantage to a company of getting too big? A company (a) Goes out of business because of decreased demand for its product (b) Becomes so large that it has to expand into new quarters (c) Finds that it is spending more on new managers than it is earning in additional profits (d) Is receiving more orders than it can fill.

(c) Finds that it is spending more on new managers than it is earning in additional profits

9. Under what circumstances might peacock feathers be called "money"? (a) If they were very rare (b) If they were all identical in size and shape (c) If everyone accepted them in payment for goods and services (d) If they could be easily divided into equal parts so as to "make change."

(c) If everyone accepted them in payment for goods and services

9.Which one of the following statements is a major criticism of the market system? (a) It rewards inefficiency and waste. (b) It is insensitive to changes in consumer demand. (c) It fails to deal with certain harmful side effects of production. (d) It encourages the overproduction of goods and services that no one really wants.

(c) It fails to deal with certain harmful side effects of production.

5.Stockholders in a large corporation generally do not: (a) Receive a share of the profits (b) Elect the board of directors (c) Manage the everyday affairs of the business (d) Own the business.

(c) Manage the everyday affairs of the business

10. Money provides a "store of value" because it: (a) Can be used to buy valuable goods in stores (b) Is easily carried (c) May be saved for future use (d) Packs a great deal of value into a small volume.

(c) May be saved for future use

9.The Girl Scouts of America is an example of a: (a) Consumer co-op (b) Sole proprietorship (c) Not-for-profit corporation (d) Government-owned corporation.

(c) Not-for-profit corporation

7.In industries with high overhead costs, increasing production tends to lower: (a) Return on investment (b) Total variable costs (c) Overhead cost per unit (d) Total operating costs.

(c) Overhead cost per unit

2. Economists differentiate between goods and services. Which one of the following best illustrates a payment for a service? (a) $1.95 for a hamburger (b) $18.95 for a textbook (c) $15,000 for a new automobile (d) $10 for a haircut.

(d) $10 for a haircut.

1. The greatest degree of economic specialization is most likely to be found in: (a) A traditional agricultural society (b) A frontier farming community (c) A poor rural area in India or Latin America today (d) An industrial society such as that of the United States.

(d) An industrial society such as that of the United States.

7.To "buy on margin" means to: (a) Buy long (b) Buy over the counter (c) Buy stocks in the hope of selling at a profit in the near feature (d) Buy stocks with borrowed funds.

(d) Buy stocks with borrowed funds.

4.Preferred stock is like: (a) A bond in that the dividends must be paid regularly (b) A bond in that the holder of the stock is a creditor of the corporation (c) Common stock in that dividends increase as profits increase (d) Common stock in that there may be times when the board of directors decides to pay no dividends.

(d) Common stock in that there may be times when the board of directors decides to pay no dividends.

8."Double taxation" refers to the fact that: (a) Corporations have to pay both state and federal taxes (b) The part of a corporation's earnings not distributed as dividends is subject to excess profits taxes (c) Corporations pay both income taxes and sales taxes (d) Corporations pay income taxes on their earnings, and the earnings that they distribute as dividends are subject to personal income taxes.

(d) Corporations pay income taxes on their earnings, and the earnings that they distribute as dividends are subject to personal income taxes.

6.Limited liability, unlimited life, and a charter are characteristics of: (a) Sole proprietorships (b) Partnerships (c) All businesses in the United States (d) Corporations.

(d) Corporations.

3.Which one of the following is a disadvantage of most corporations? (a) Limited life (b) Unlimited liability (c) Limited capital (d) Double taxation.

(d) Double taxation.

10.Which one of the following is the best reason for owning a business of one's own? (a) It is the surest way to a profitable future. (b) Entrepreneurship gives one the ability to ignore the competition. (c) Most new businesses are financial successes. (d) Entrepreneurs are their own boss.

(d) Entrepreneurs are their own boss.

7. An economic model: (a) Enables economists to predict economic activity with 100 percent accuracy (b) Is a complex way of looking at an economic problem (c) Can be expressed only with graphs or mathematical formulas (d) Helps economists' understand economic activity and predict changes.

(d) Helps economists' understand economic activity and predict changes.

6. Micro economists study questions such as: (a) What will be the effect of taxes on consumer spending? (b) How will a decrease in the defense budget affect a nation's businesses? (c) How will an increase or decrease in interest rates affect business spending? (d) How will the decisions made by firm X affect consumer demand for the products produced by that firm?

(d) How will the decisions made by firm X affect consumer demand for the products produced by that firm?

9.In the graph, D represents: (a) The supply curve (b) The demand curve (c) The demand schedule (d) The market price.

(d) The market price.

8.When a corporate security is registered with the Securities and Exchange Commission, this means that: (a) The SEC has approved the security as a safe investment (b) Certain financial information has been filed with the SEC (c) The SEC may act as a broker for the corporation (d) The public may inquire of the SEC as to its opinion of the advisability of purchasing the security.

(d) The public may inquire of the SEC as to its opinion of the advisability of purchasing the security.

9.All of the following information is contained in a balance sheet, except (a) Assets (b) Liabilities (c) Net worth (d) Total sales.

(d) Total sales.

5. A Corporation pays a dividend on its common stock: (a) Every year (b) When the interest becomes due (c) Whenever its board of directors votes to do so (d) Whenever it earns a profit.

(d) Whenever it earns a profit.