macroeconomics midterm

Trade-offs force society to make choices, particularly when answering the following three fundamental questions: A. One, what goods and services will be produced? Two, how will the goods and services be produced? Three, who will receive the goods and services produced? B. One, what goods and services will be produced in foreign countries? Two, who will produce the goods and services? Three, who will receive the goods and services produced? C. One, what goods and services will be produced? Two, how will the goods and services be produced? Three, is the distribution of goods and services fair? D. One, what goods and services will be produced domestically? Two, how will the goods and services be produced? Three, is the distribution of goods and services fair?

A. One, what goods and services will be produced? Two, how will the goods and services be produced? Three, who will receive the goods and services produced?

Equity is A. the fair distribution of economic benefits. B. when poorer people's income is growing more rapidly than more wealthy people's income. C. always achieved by the market. D. an exactly equal distribution of income.

A. the fair distribution of economic benefits

Opportunity cost is A. the highest valued alternative that must be give up to engage in an activity. B. when unlimited wants exceed the limited resources available to fulfill those wants. C. the idea that because of scarcity, producing more of one good or service means producing less of another good or service. D. when consumers and firms use all available information as they act to achieve their goals.

A. the highest valued alternative that must be give up to engage in an activity.

Buyers rush to purchase stocks in California vineyards following a forecast of a 30 percent decline in this year's grape harvest. What happens in the California wine market as a result of this announcement? a) the demand curve for california wine shifts to the left in anticipation of higher prices in the future b) the demand curve for california wine shifts to the right in anticipation of higher prices in the future c) the supply curve for california wine shifts to the right in anticipation of higher prices in the future d) the supply curve for california wine shifts to the left in anticipation of lower quantities in the future

B) the demand curve for california wine shifts to the right in anticipation of higher prices in the future

Firms choose how to produce the goods and services they sell. In many cases, firms face a tradeoff between using more workers or using more machines. For example, A. a local service station has to choose whether to provide car repair services using more diagnostic computers to support their auto mechanics and fewer tools to support their auto mechanics or more tools to support their auto mechanics and fewer diagnostic computers to support their auto mechanics. B. many times in the past several decades, firms may have chosen between a production method in the United States that uses fewer workers and more machines and a production method in China that uses more workers and fewer machines. C. many times in the past several decades, firms may have chosen between a production method in the United States that uses fewer machines and more workers and a production method in China that uses more machines and fewer workers. D. movie studios have to choose whether to produce animated films using more highly skilled animators to draw them by hand or fewer highly skilled animators and more low-skill animators.

B. many times in the past several decades, firms may have chosen between a production method in the United States that uses fewer workers and more machines and a production method in China that uses more workers and fewer machines.

Suppose the U.S. government encouraged new medical school graduates to take over existing practices from doctors wishing to retire by paying both the new and retiring doctors $100,000. These doctors would be exemplifying the economic idea that A. equity is more important than efficiency. B. people respond to economic incentives. C. people are rational. D. optimal decisions are made at the margin.

B. people respond to economic incentives.

One of the basic facts of life is that people must make choices as they try to attain their goals. This unavoidable fact comes from a reality an economist calls A. rationality. B. scarcity. C. economics. D. the market.

B. scarcity

Microsoft charges a price of $599 for a copy of Windows 7. Is this pricing decision rational? A. We cannot assume that this pricing decision was rational because we do not have enough information to make an assumption. B. Microsoft's choice was rational: the price will maximize profit. C. When we assume the managers at Microsoft have used all available information and have weighed all known benefits and costs, we are assuming rationality. D. Microsoft's choice cannot be rational: the price is clearly more than most people are willing and able to pay.

C. When we assume the managers at Microsoft have used all available information and have weighed all known benefits and costs, we are assuming rationality

Economists use the word marginal to mean an extra or additional benefit or cost of a decision. An optimal decision occurs when A. marginal benefit is greater than marginal cost. B. marginal benefit is maximized. C. marginal benefit equals marginal cost. D. marginal cost is zero

C. marginal benefit equals marginal cost

According to the FBI Bank Crime Statistics, there were nearly 4,000 bank robberies in the United States in 2014. The FBI claims that banks have made themselves easy targets by refusing to install clear acrylic partitions, called bandit barriers, that separate bank tellers from the public. According to a special agent with the FBI, "Bandit barriers are a great deterrent. We've talked to guys who rob banks, and as soon as they see a bandit barrier, they go find another bank." Despite this finding, many banks have been reluctant to install these barriers. Wouldn't banks have a strong incentive to install bandit barriers to deter robberies? Why, then, do so many banks not do so? A. Banks are not rational. B. Banks would not receive any benefits from installing the barriers. C. Banks are not interested in the safety of their customers and employees. D. Banks have no economic incentive to install the barriers.

D. Banks have no economic incentive to install the barriers.

Macroeconomics is A. the study of "large" (greater than $100,000) economic transactions in the economy. B. the study of how households and firms make choices, how they interact in markets, and how the government attempts to influence their choices. C. the study of firms as a group with special emphasis on how these firms interact with one another. D. the study of the economy as a whole, including topics such as inflation, unemployment, and economic growth.

D. the study of the economy as a whole, including topics such as inflation, unemployment, and economic growth.

Economists assume that people are rational in the sense that A. they generally make the correct choices. B. they do not respond to economic incentives. C. they make decisions based on total, rather than marginal, variables. D. they use all available information as they take actions intended to achieve their goals.

D. they use all available information as they take actions intended to achieve their goals.

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

the coffe nook, a small cafe near campus, sells cappuccinos for $3.50 and Russian tea cakes for $2.30 each. what is the opportunity cost of buying a cappuccino? a) 1.4 russian tea cakes b) 0.71 of a russian tea cake c) 1.4 cappuccinos d) 0.71 of cappuccinos

a) 1.4 russian tea cakes

the stogie shop, a cigar store in the mall, sells hand-rolled cigars for $5.50 and machine-made cigars for $8.50 each. what is the opportunity cost of buying a hand-rolled cigar? a) 1.55 machine-made cigar b) 0.65 machine-made cigar c) 0.65 hand-rolled cigar d) 1.55 hand-rolled cigar e) $5.50

b) 0.65 machine-made cigar

Ranchers can raise either cattle or sheep on their land. Which of the following would cause the supply of sheep to increase? a) an increase in the price of sheep b) a decrease in the price of cattle c) an increase in the demand for cattle d) an increase in the price of sheep fed

b) a decrease in the price of cattle

which of the following would cause an UNAMBIGUOUS decrease in the real price of DVD players? a) a shift to the right in the supply curve for DVD players and a shift to the right in the demand curve for DVD players b) a shift to the right in the supply curve for DVD players and a shift to the left in the demand curve for DVD players c) a shift to the left in the supply curve for DVD players and a shift to the right in the demand curve for DVD players d) a shift to the left in the supply curve for DVD players and a shift to the left in the demand curve for DVD players

b) a shift to the right in the supply curve for DVD players and a shift to the left in the demand curve for DVD players

if the marginal cost of producing a television is constant at $200, then a firm should produce this item a) only if the marginal benefit it receives is greater than $200 plus an acceptable profit margin b) as long as the marginal benefit it receives is just equal to or greater than $200 c) as long as its marginal cost does not rise d) until the marginal benefit it receives reaches zero

b) as long as the marginal benefit it receives is just equal or greater than $200

which of the following is a positive economic statement? a) everyone should live at the same standard of living b) if the price of gasoline rises, a smaller quantity of it will be bought c) the government should close income tax loopholes d) U.S. firms should not be allowed to outsource production of goods and services

b) if the price of gasoline rises, a smaller quantity of it will be bought

studies have shown that drinking one glass of red wine per day may help prevent heart disease. assume this is true, and favorable weather has increased the grape harvest of california vineyards. in the market for red wine, these two developments would a) increase demand and decrease supply, resulting in an increase in the equilibrium quantity and decrease in the equilibrium price of red wine b) increase demand and increase supply, resulting in an increase in the equilibrium quantity and an uncertain effect on the equilibrium price of red wine c) increase demand and increase supply, resulting in an increase in the equilibrium price and an uncertain effect on the equilibrium quantity of red wine d) increase demand and increase supply, resulting in an increase in both the equilibrium price and equilibrium quantity of red wine

b) increase demand and increase supply, resulting in an increase in the equilibrium quantity and an uncertain effect on the equilibrium price of red wine

suppose the U. S. government encouraged new teachers to take jobs in under-performing schools by paying the near teachers a $20,000 bonus. these teachers would be 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

b) people respond to economic incentives

if the united states lifts the embargo on cuban products, what will happen in the U.S. market for cuban cigars? a) the supply curve will shift to the left b) the supply curve will shift to the right c) the demand curve will shift to the right d) the demand curve will shift to the left

b) the supply curve will shift to the right

A decrease in the equilibrium quantity for a product will result a) when the quantity demanded for the product exceeds the quantity supplied b) when there is a decrease in supply and a decrease in demand for the product c) when there is an increase in supply and a decrease in demand for the product d) when there is a decrease in demand and an increase in the number of firms producing the product

b) when there is a decrease in supply and a decrease in demand for the product

Bella can produce either a combination of 60 silk roses and 80 silk leaves or a combination of 70 silk roses and 55 silk leaves. If she now produces 60 silk roses and 80 silk leaves, what is the opportunity cost of producing an additional 10 silk roses? a) 2.5 silk leaves b) 10 silk leaves b) 25 silk leaves d) 55 silk leaves

c) 25 silk leaves

If the price of grapefruit rises, the substitution effect due to the price change will cause a) a decrease in the demand for grapefruit b) a decrease in the demand for oranges, a substitute for grapefruit c) a decrease in the quantity of grapefruit demanded d) a decrease in the quantity of grapefruit supplied

c) a decrease in the quantity of grapefruit demanded

If more insurance companies decide to cover part of the price of voluntary laser eye surgery and more doctors decide to enter the field of laser eye surgery, what will happen in the market for laser eye surgery as a result of these two factors? a) demand will increase, but these two factors will not shift supply curve b) supply will increase, but these two factors will not shift the demand curve c) demand and supply will both increase d) demand will increase and supply will decrease

c) demand and supply will both increase

all else equal, the decrease in the price of complementary products for the apple watch, such as sensoria's wearable tech, would a) shift the supply curve for the apple watch to the right b) shift the supply curve for the apple watch to the left c) shift the demand curve for the apple watch to the right d) shift the demand curve for the apple watch to the left

c) shift the demand curve for the apple watch to the right

"Floridians are relieved that the storm produced no fatalities but homeowners face weeks, if not months, of rebuilding. Matters are made worse by the soaring prices of plywood and other building materials that always follow in a hurricane's path. Complaints of profiteering and price gouging have not deterred firms from raising their prices by over 100%." which of the following offers the best explanation for the price increases referred to in the article? a) the hurricane reduced the number of suppliers of building materials b) the hurricane created an artificial shortage of building materials c) the hurricane caused an increase in the demand for building materials d) there was a reduction in supply as firms shipped plywood and other materials to locations not affected by the storm

c) the hurricane caused an increase in the demand for building materials

Societies organize their economies in two main ways to answer the three questions of what, how, and who. A society can have a ____________ economy in which the government decides how economic resources will be allocated. Or a society can have a ____________ economy in which the decisions of households and firms interacting in markets allocate economic resources.

centrally planned, market

which of the following would shift the supply curve for smartphones to the right? a) an increase in the price of a substitute in production b) an increase in consumer income ( assuming that all smartphones are normal goods) c) a decrease in the number of firms that produce smartphones d) a decrease in the price of an input used to produce smartphones

d) a decrease in the price of an input used to produce smartphones

Holding everything else constant, an increase in the price of MP3 players will result in a) a decrease in the quantity of MP3 players supplied b) a decrease in the demand for MP3 players c) an increase in the supply of MP3 players d) a decrease in the quantity of MP3 players demanded

d) a decrease in the quantity of MP3 players demanded

Economics promotes which of the following as the way to make the best decision? a) continue an enjoyable activity as long as you do not have to pay for it b) continue an enjoyable activity until it is no longer enjoyable c) continue an enjoyable activity until you cannot afford to pursue it d) continue an enjoyable activity up to the point where its marginal benefit equals its marginal cost

d) continue an enjoyable activity up to the point where its marginal benefit equals its marginal cost

_____________ occurs when economic benefits are distributed fairly a) productive efficiency b) allocative efficiency c) equality d) equity

d) equity

which of the following contributes to the efficiency of markets? a) governments play an active role in the day-to-day operations of markets b) markets are able to bring about an equitable distribution of goods and services c) markets promote equal standards of living d) markets promote competition and voluntary exchange

d) markets promote competition and voluntary exchange

economists assume that rational people a) never use all available information as they act to achieve their goals b) undertake activities that benefit others and hurt themselves c) only weigh the benefits and costs of the most desirable alternative actions d) respond to economic incentives

d) respond to economic incentives

__________is the study of the choices people make to attain their goals, given their scarce resources.

economics

____________ efficiency occurs when a good or service is produced at the lowest possible cost. ____________ efficiency occurs when production is in accordance with consumer preferences.

productive efficiency, allocative efficiency