Economics Set 1

If resources are combined efficiently in production, then the society A) is producing at the most-desirable point on the production possibility frontier. B) is producing at a point on the production possibility frontier but not necessarily at the most-desirable point. C) is producing at a point outside the production possibility frontier. D) is experiencing economic growth.

A) is producing at the most-desirable point on the production possibility frontier.

Production inefficiency occurs A) only when an economy produces underneath its production possibility frontier. B) only when an economy produces at the wrong point on the production possibility frontier. C) either when an economy produces underneath the production possibility frontier or when the economy is producing the wrong combination of goods on the production possibility frontier. D) only when the economy produces outside the production possibility frontier.

A) only when an economy produces underneath its production possibility frontier.

The production possibility frontier is used to illustrate the concept of A) the laissez-faire economy. B) opportunity costs. C) equilibrium. D) aggregate demand.

B) opportunity costs.

Consider two countries, Japan and Malaysia. Japan devotes a smaller portion of its production to capital. All other things equal, which of the following statements is most likely true? 1 point A) Japan is a poorer country than Malaysia. B) Japan will move up its production possibility curve faster than Malaysia. C) Malaysia is producing inside its production possibility frontier, whereas Japan is producing at a point on its production possibility frontier. D) Malaysia's production possibility frontier will shift up and out farther and faster than Japan's.

D) Malaysia's production possibility frontier will shift up and out farther and faster than Japan's.

The production possibility frontier is a graph that shows A) all the combinations of goods and services that are consumed over time if all of society's resources are used efficiently. B) the amount of goods and services consumed at various average price levels. C) the rate at which an economy's output will grow over time if all resources are used efficiently. D) all the combinations of goods and services that can be produced if all of society's resources are used efficiently.

D) all the combinations of goods and services that can be produced if all of society's resources are used efficiently.

Someone has a comparative advantage in producing a good if she can produce that good A) in greater quantities. B) at a lower opportunity cost. C) using more capital and less labor. D) using more labor and less capital.

D) using more labor and less capital.

If there are two variables that are negatively related, they will always be represented by: a) a line or curve that slope downwards b) a line that is straight c) a horizontal line d) a line or curve that slope upward

a) a line or curve that slope downwards

If there are two variables that are positively related: a) as one goes up in value, the other must go up in value too. b) as one goes up in value, the other must go down in value c) there can never be a trade-off between the two variables d) one variable is always the reciprocal of the other.

a) as one goes up in value, the other must go up in value too.

Which of the following transactions takes place in the markets for the factors of production in the circular-flow diagram? a. Dylan receives a salary for his work as a financial analyst for an investment firm. b. Kristin buys two business suits to wear to her job as a Chief Information Officer. c. Jim receives clean water in his home in exchange for paying his water bill. d. Caroline owns a nail salon and receives payments from her clients for her services.

a. Dylan receives a salary for his work as a financial analyst for an investment firm.

Which of the following is correct concerning opportunity cost? a. Except to the extent that you pay more for them, opportunity costs should not include the cost of things you would have purchased anyway. b. To compute opportunity costs, you should subtract benefits from costs. c. Opportunity costs and the idea of trade-offs are not closely related. d. Rational people should compare various options without considering opportunity costs.

a. Except to the extent that you pay more for them, opportunity costs should not include the cost of things you would have purchased anyway.

Which of the following is not an example of the opportunity cost of going to school? a. The money a student could have earned by working if he had not gone to college. b. The nap a student could have enjoyed if he had not attended class. c. The party a student could have enjoyed if he had not stayed in to study for his exam. d. The money a student spends on rent for his apartment while attending school.

a. The money a student could have earned by working if he had not gone to college.

Your professor loves her work, teaching economics. She has been offered other positions in the corporate world that would increase her income by 25 percent, but she has decided to continue working as a professor. Her decision would not change unless the marginal a. cost of teaching increased. b. benefit of teaching increased. c. cost of a corporate job increased. d. benefit of a corporate job decreased.

a. cost of teaching increased.

Economists use the word equality to describe a situation in which: a. each member of society has the same income. b. each member of society has access to abundant quantities of goods and services, regardless of his or her income. c. society is getting the maximum benefits from its scarce resources. d. society's resources are used efficiently.

a. each member of society has the same income.

According to the circular flow diagram, if Suzy is a worker who delivers flowers for Happy Day Flower Company, she participates a. in the markets for factors of production exchanging labor for income. b. in the markets for factors of production exchanging flowers for revenue. c. in the markets for goods and services exchanging flowers for wages, rent, and profit. d. in the markets for goods and services exchanging labor for income.

a. in the markets for factors of production exchanging labor for income.

Economics deals primarily with the concept of: a. scarcity. b. money. c. poverty. d. banking.

a. scarcity.

The study of the factors determining the price of gasoline relative to the price of other fuels would be primarily a concern of which of the following?: a) Macroeconomics b) Microeconomics d) Forecasting d) None of the above

b) Microeconomics

The most obvious benefit of specialization and trade is that they allow us to a. work more hours per week than we otherwise would be able to work. b. consume more goods than we otherwise would be able to consume. c. spend more money on goods that are beneficial to society, and less money on goods that are harmful to society. d. consume more goods by forcing people in other countries to consume fewer goods.

b. consume more goods than we otherwise would be able to consume.

Which of the following is a correct statement about production possibilities frontiers? a. An economy can produce only on the production possibilities frontier. b. An economy can produce at any point inside or outside a production possibilities frontier. c. An economy can produce at any point on or inside the production possibilities frontier, but not outside the frontier. d. An economy can produce at any point inside the production possibilities frontier, but not on or outside the frontier.

c. An economy can produce at any point on or inside the production possibilities frontier, but not outside the frontier.

Absolute advantage is found by comparing different producers' a. opportunity costs. b. payments to land, labor, and capital. c. input requirements per unit of output. d. locational and logistical circumstances.

c. input requirements per unit of output.

The production possibilities frontier provides an illustration of the principle that a. trade can make everyone better off. b. governments can sometimes improve market outcomes. c. people face trade-offs. d. people respond to incentives.

c. people face trade-offs.

Resources are: a. scarce for households but plentiful for economies. b. plentiful for households but scarce for economies. c. scarce for households and scarce for economies. d. plentiful for households and plentiful for economies.

c. scarce for households and scarce for economies.

Melody decides to spend three hours working overtime rather than going to the park with her friends. She earns $20 per hour for overtime work. Her opportunity cost of working is a. the $60 she earns working. b. the $60 minus the enjoyment she would have received from going to the park. c. the enjoyment she would have received had she gone to the park. d. nothing, since she would have received less than $60 worth of enjoyment from going to the park.

c. the enjoyment she would have received had she gone to the park.

Diminishing Marginal Utility is: a) The decrease in satisfaction gained from consuming additional units of a good b) The utility gained from a one-unit increase in the consumption of a good c) The decrease in the cost of consuming a good after a certain amount of units of the good are consumed d) A curve, which indicates the relationship between the amount of goods consumed, and the price of the good

d) A curve, which indicates the relationship between the amount of goods consumed, and the price of the good

Which of the following is NOT a factor of production? a) Land b) Capital c) Labor d) Money

d) Money

Suppose Susan can wash three windows per hour or she can iron six shirts per hour. Paul can wash two windows per hour or he can iron five shirts per hour. a. Susan has an absolute advantage over Paul in washing windows. b. Susan has a comparative advantage over Paul in washing windows. c. Paul has a comparative advantage over Susan in ironing shirts. d. All of the above are correct.

d. All of the above are correct.

According to the circular flow diagram, if Denny is the owner of a landscaping business and he just received $50 for mowing Mrs. Pendleton's lawn, a. the $50 represents a cost of production for Denny's firm. b. the $50 represents wages, rent, and profit to Denny's firm. c. Denny acts as a firm who interacted in the markets for factors of production with Mrs. Pendleton. d. Denny acts as a firm who interacted in the markets for goods and services with Mrs. Pendleton.

d. Denny acts as a firm who interacted in the markets for goods and services with Mrs. Pendleton.

If Korea is capable of producing either shoes or soccer balls or some combination of the two, then a. Korea should specialize in the product in which it has an absolute advantage. b. it would be impossible for Korea to have an absolute advantage over another country in both products. c. it would be difficult for Korea to benefit from trade with another country if Korea is efficient in the production of both goods. d. Korea's opportunity cost of shoes is the inverse of its opportunity cost of soccer balls.

d. Korea's opportunity cost of shoes is the inverse of its opportunity cost of soccer balls.

Efficiency means that a. society is conserving resources in order to save them for the future. b. society's goods and services are distributed equally among society's members. c. society's goods and services are distributed fairly, though not necessarily equally, among society's members. d. society is getting the maximum benefits from its scarce resources.

d. society is getting the maximum benefits from its scarce resources.