Exam 1 Quiz Questions

Bob, the owner of a deli in his town, needs to purchase something that economists would label as "capital" to help him produce sandwiches. Which of the following is an example of capital? -An additional worker -A meat slicer to cut ham for sandwiches -A new idea that automates the making of sandwiches -Ham for the sandwiches

-A meat slicer to cut ham for sandwiches

Samantha needs to purchase something that economists would label as "labor" to help her produce court documents for her law firm. Which of the following is an example of labor? -A stenography machine to type courtroom proceedings -The ability to see that organizing courtroom documents is an unfilled market need -Filing cabinets to store the typed courtroom documents -A stenographer who can type courtroom proceedings

-A stenographer who can type courtroom proceedings

Which of the following can best be characterized as a subject of microeconomics? -An examination of an economy's price level -An examination of a country's economic growth -An examination of consumer behavior -An examination of monetary policy

-An examination of consumer behavior

Which of the following can best be characterized as a subject of microeconomics? -An examination of an economy's overall level of production -An examination of inflation -An examination of a country's imports and exports -An examination of how much of a particular good gets produced

-An examination of how much of a particular good gets produced

Which of the following can best be characterized as a subject of macroeconomics? -An examination of where goods come from -An examination of inflation -An examination of how much of a particular good gets produced -An examination of consumer behavior

-An examination of inflation

Which of the following can best be characterized as a subject of macroeconomics? -An examination of how a change in demand or supply impacts the price of a good -An examination of the production of a good -An examination of specialization -An examination of monetary policy

-An examination of monetary policy

Which of the following scenarios most accurately reflects the concept of scarcity? -The steak Henry did not buy because he is a vegetarian. -Brett is a farmer with an open field on which he can plant either soybeans or corn. -Johnny purchased a skinny vanilla latte from Starbucks. -Terry received a paycheck of $1,000 for helping build a house this week.

-Brett is a farmer with an open field on which he can plant either soybeans or corn.

The tools and machines used to produce a good or service are what type of market resource? -Land -Labor -Entrepreneurial ability -Capital

-Capital

Which of the following is most likely to decrease the demand for Mango Jarritos, a popular Mexican soft drink? -Concerns over the empty calories soft drinks contain cause more people to drink mineral water. -The health benefits of mangoes become widely known. -More people visit Mexico and embrace its cuisine. -The birth rate in the southern United States and Mexico increases.

-Concerns over the empty calories soft drinks contain cause more people to drink mineral water.

Maurice needs to purchase something that economists would label as "land" to help him produce cloth to sell to the fashion industry. Which of the following is an example of land? -A factory in which to produce fabric -The ability to organize a factory to meet the demand for fabric -New workers trained to run an industrial loom -Cotton to be woven into fabric

-Cotton to be woven into fabric

Which of the following best explains why people eventually stop eating when they dine at an "All You Can Eat" buffet? -Substitution effect -Income effect -Diminishing marginal utility -Increasing marginal cost

-Diminishing marginal utility

The ability to see a market need and to organize inputs to meet that need is what type of market resource? -Labor -Capital -Entrepreneurial ability -Land

-Entrepreneurial ability

Executives at an advertising agency want to increase the demand for the energy drink it promotes. What advice should they give the producer? -Sell the drink for a lower price -Hire a prominent athlete to demonstrate the benefits of the drink -Announce a future decrease in the price of the drink -Sell the drink for a higher price

-Hire a prominent athlete to demonstrate the benefits of the drink

The fish in the ocean are what type of market resource? -Labor -Entrepreneurial ability -Land -Capital

-Land

Which of the following transactions would take place in the resource market? -Jerry goes to a sporting goods store and purchases a dozen golf balls before meeting some friends at the golf course. -George visits his favorite barbershop and gets a new haircut. -Sally gets an airline ticket from an online travel website for her trip to the beach. -Lyndsay worked 40 hours this week as a cashier at the local hardware store.

-Lyndsay worked 40 hours this week as a cashier at the local hardware store.

Which of the following scenarios is an example of a person interacting outside of a market? -Mark places his comic book collection up for sale on eBay. -Young buys fresh radishes at the local farmers' market. -Melissa votes for her favorite performer at a local talent show. -Isabella agrees to fix Miguel's sink if Miguel paints Isabella's porch.

-Melissa votes for her favorite performer at a local talent show.

Which of the following is something that markets cannot do? -Make buyers and sellers better off -Determine the equilibrium quantity of a good or service -Provide unlimited goods and services -Determine the equilibrium price of a good or service

-Provide unlimited goods and services

Which of the following best describes the opportunity cost of attending a free concert at the local coffee shop? -The coffee you buy while attending the concert -The amount of money a ticket would have cost if it were not free -Hanging out with your friends at the coffee shop during the concert -The chance to play the latest video game with your roommate while you were at the concert

-The chance to play the latest video game with your roommate while you were at the concert

Identify which of the following scenarios is likely to shift the demand for wheat bread to the right. -The population of Arizona grows by 20%. -A drought in Kansas makes people believe that the price of wheat bread will increase in a couple of months. -People learn that certain bread additives may be bad for their health. -As people become more health conscious, they discover the benefits of whole wheat as a part of their diet.

-The population of Arizona grows by 20%. -A drought in Kansas makes people believe that the price of wheat bread will increase in a couple of months. -As people become more health conscious, they discover the benefits of whole wheat as a part of their diet.

Economic reasoning is based on the premise that: -only economic decisions or actions have a cost associated with them. -only non-economic decisions or actions have a cost associated with them. -all decisions or actions have a cost associated with them. -all decisions or actions are costless.

-all decisions or actions have a cost associated with them.

A market price: -is any price at which buyers desire to purchase a good or service. -is a price dictated by a government agency before trading can begin. -is any price at which sellers desire to sell their good or service. -is a price at which buyers and sellers agree to exchange money for a good or service.

-is a price at which buyers and sellers agree to exchange money for a good or service.

Markets can: -make buyers and sellers better off. -force buyers to buy things they do not want to buy. -provide unlimited goods and services. -force producers to make things they do not want to make.

-make buyers and sellers better off.

Managers at a local home improvement store see that new home sales in their area have increased. They order more refrigerators for their store. They likely do this because they assume that: -new homes and refrigerators are complements. -new homes and refrigerators are substitutes. -refrigerators are inferior goods. -refrigerators are normal goods.

-new homes and refrigerators are complements.

Pam sees that the price of bananas has risen in the grocery store. All else equal, she decides to buy more tangerines than she normally purchases. From the information given, you might conclude that: -tangerines are an inferior good. -tangerines and bananas are substitutes. -bananas are a luxury good. -tangerines and bananas are complements.

-tangerines and bananas are substitutes.

Marcus budgets $120 a week for groceries. When the price of all food goes up by 10% he buys less salmon. This can best be explained by: -diminishing marginal utility. -the substitution effect. -a change in income. -the income effect.

-the income effect.

The opportunity cost of an action is always equal to: -the next-best alternative for the resources used to undertake the action. -the time you give up to undertake the action. -the money you give up to undertake the action. -the things you could have done instead of the action you chose to undertake.

-the next-best alternative for the resources used to undertake the action.

Juan likes both hot dogs and burritos. All else equal, when the price of hot dogs rises, he buys more burritos. This can best be explained by: -increasing marginal cost. -diminishing marginal utility. -the income effect. -the substitution effect.

-the substitution effect.

On average, about 3,500 new mobile homes are sold every month at an average price of $40,000. In 2013 average income in the United States rose and, all else equal, mobile home sales decreased. From the information given, it is reasonable to conclude that mobile homes:

Are inferior goods

Everyone's individual demand for a particular good or service can be represented by the same demand curve.

False

Tastes and preferences generally do not change for goods or services in markets.

False

______ examines economies on a large scale, while ______ examines economic activity on a relatively small scale.

Macroeconomics, microeconomics

People do not always purchase all of the things they want.

True

Consider each of the following scenarios and determine whether it is an example of the income effect, the substitution effect, or diminishing marginal utility. a. Sasha likes to treat herself to a small latte each afternoon. On Wednesdays, when the coffee shop decreases the price of lattes, Sasha buys a large latte instead. b. The price of chicken nuggets rises from $3 to $3.50 for a box of six. The price of hamburgers stays the same. Mateo used to eat chicken nuggets three times a week. All else equal, he now eats them twice a week. c. Jack offers Victoria a plate of a dozen chicken wings. Victoria enjoys the first wing the best, the second wing a little bit less, and by the seventh wing, she has had enough and chooses not to eat the remaining five wings.

a. Income effect b. Substitution effect c. Diminishing marginal utility

For each situation below, state whether it is an example of the income effect changing quantity demanded or an example of a change in income shifting demand. a. The mean income in Detroit rises and people purchase more homes. b. The price of frozen pizza decreases, making frozen pizza more popular among college students. c. A recession forces many people out of work and more people purchase ramen noodles than before. d. An increase in the price of game consoles decreases sales, as fewer people can afford them.

a. change in income shifting demand b. income effect changing quantity demanded c. change in income shifting demand d. income effect changing quantity demanded

a. In the circular flow model, households provide inputs to firms in the _______ and receive _____ from firms. b. In the circular flow model, firms receive ____ from households when households purchase goods and services in the _______ .

resource market, income expenditures, product market