MICRO PRACTICE QUESTIONS

If supply goes down....

- price goes down - shift left if complements rises substitute decreases

if supply goes up

-price goes up -shift right complements decreases substitute increases

Which of the following events in the market for cell phones illustrates the law of​ demand? 1. The price of a cell phone falls. 2. Producers announce that cell phone prices will fall next month. 3. The price of a call made from a cell phone falls. 4. The price of a call made from a​ land-line phone increases. 5. The introduction of camera phones makes cell phones more popular.

1. ONLY

You buy a coffee at Starbucks. The government buys some Dell computers. A student works at Kinko. Donald Trump rents a building to Marriot hotels. You pay your income tax.

A money flow from households through goods markets to firms A real flow from firms through goods markets to government A real flow from households through factor markets to firms A real flow from households through factor markets to firms A money flow from households to government

In the circular flow​ model, which of the following items is a real​ flow? A. The flow of labor services from households to firms B. The flow of income from firms to households for the services of the factors of production hired Your answer is not correct.C. The flow of U.S. borrowing from the rest of the world D. The flow of government expenditures to firms for the goods bought

A.

Choose correct statement A. The quantity of labor increases as the adult population increases. B. Human capital is the knowledge and skill that people obtain from​ education, on-the-job​ training, and work experience. C. Labor is the work time and work effort that people devote to producing goods and services. D. The quality of labor depends on how skilled people are.

All of the above

Aqua Springs makes the following four statements about bottled spring water. Which statement best describes the​ firm's quantity supplied in the bottled water​ market?

At a price of​ $1 gallon, we plan to sell​ 2,000 gallons per day.

Jeb makes the following four statements about peanuts. Which statement best describes his quantity demanded in the peanut​ market?

At a price of​ $1 per​ pack, I plan to buy 2 packs of peanuts per week.

Indicate all items in the following list that are not consumption goods and services and explain why. Item a​: A chocolate bar Item b​: A ski lift Item c​: A golf ball Item d​: A shopping mall Item e​: A train Item f​: A golf course

B,D,E,F because they are not items that individuals and government buy and use up in the current period

Which of the following is an example of comparative advantage​? A. The United States produces less textile products and more electronic products. B. Dave makes 4 pizzas giving up 6 jars of milk shakes while Rob makes 2 pizzas giving up 4 jars of milk shakes. C. Michael Jordan is an American basketball player. D. Angela makes better pastries than Sherrie.

B.

Which of the following statements about U.S. production is​ correct? A. Real estate services account for 12.6 percent of the value of total​ production, larger than any other item of services or goods. B. Consumption goods and services represent 85 percent of U.S. production by value and that percentage​ doesn't fluctuate much. .C. Construction accounts for a larger percentage of total production than does manufacturing. D. The manufacture of goods represents more than 50 percent of total production.

B.

Which of the following statements is​ correct? A. Capital earns interest and labor earns wages. .B. Land earns interest and capital earns rent. C. Labor earns wages and entrepreneurship earns bonuses. D. Entrepreneurship earns interest and capital earns profit.

B.

example: Brazil produces ethanol at a lower price (comparative advantage) United States produces more goods and services who gains from this?

Both Brazil and the United States could gain from specialization and trade because the United States would get ethanol at a lower price and Brazil would get other goods and services at a lower price.

Which of the following items is not a factor of​ production? Which of the following items is not a factor of​ production? A. A ski jump in Utah B. An orange grove in Florida C. A bank loan to a farmer This is the correct answer.D. An oil rig in the Gulf of Mexico

C.

The two types of goods and services produced are​ _______.

Consumption goods and services and capital goods

Which of the following classifications is​ correct? A. Stocks are capital goods because when people buy and sell them they make a profit. B. City streets are consumption goods because they wear out with use. C. The coffee maker in the coffee shop at an airport is a consumption good because people buy the coffee it produces. D. A shopping mall produces retail services and is a capital good.

D) a shopping mall produces retail services and is a capital good

Which of the following is an example of entrepreneurship​? A. Honda Civic and Toyota Corolla are the​ best-selling compact cars in North America. B. Industrial output in China is increasing. C. Facebook is a social networking site. D. Sam Walton created the multinational retail corporation brand Walmart in 1962.

D. Sam Walton created the multinational retail corporation brand Walmart in 1962.

How are goods and services produced in the global​ economy?

Emerging economies use more​ capital-intensive technology than do developing economies.

Which of the following events in the market for timber beams illustrates the law of​ supply? 1. The wage rate of sawmill workers rises. 2. The price of sawdust rises. 3. The price of a timber beam rises. 4. The price of a timber beam is expected to rise next year. 5. Environmentalists convince Congress to introduce a new law that reduces the amount of forest that can be cut for timber products. 6. A new technology lowers the cost of producing timber beams.

Event 3 only

Each of the following events occurs​ (one at a​ time) in the market for air travel. A. Airfares tumble comma while long dash distance bus fares don't changeAirfares tumble, while long-distance bus fares don't change. B. The price of jet fuel fallsThe price of jet fuel falls. C. Airlines reduce the number of flights each dayAirlines reduce the number of flights each day. D. People expect airfares to decrease next summerPeople expect airfares to decrease next summer. E. Upper A severe winter in New York induces more people to vacation in FloridaA severe winter in New York induces more people to vacation in Florida. F. With no snow in the Rockies comma fewer people travel to the ski slopesWith no snow in the Rockies, fewer people travel to the ski slopes. G. The price of train travel fallsThe price of train travel falls. H. The price of a pound of air cargo fallsThe price of a pound of air cargo falls.

Event A has no effect on either demand or supply

Which of the following statements describes a change in the quantity supplied and which describes a change in​ supply? I Farms are selling less chicken because the price of turkey has increased. II Farms are selling less chicken because the price of chicken has fallen. III Farms are selling more chicken because the price of chicken has risen. IV Farms are selling more chicken because the cost of chicken feed has fallen.

I and IV are changes in supply and II and III are changes in the quantity supplied.

Which of the following statements by Aqua Springs demonstrates that the​ firm's selling plans obey the law of supply​?

If the price of bottled water falls and all the other influences on our selling plans remain the​ same, we will cut back on production and lay off some workers

Indicate all the items in the following list that are not capital goods and explain why. Item a​: An auto assembly line Item b​: A shopping mall Item c​: A golf ball Item d​: The Atlantic Ocean Item e​: A truck owned by FedEx Item f​: A librarian

Items c​, d​, and f because they are not items that businesses and governments buy to increase productive resources to use over future periods to produce other goods and services.

Indicate all the items in the following list that are not factors of production and explain why. Item a​: Vans used by a baker to deliver bread Item b​:​ 1,000 shares of Amazon.com stock Item c​: Undiscovered oil in the Arctic Ocean Item d​: A bulldozer Item e​: A soda Item f​: The Attorney General

Items ​b, c, and e because they are not productive resources used to produce goods and services long dash—​land, ​labor, capital, or entrepreneurship. ​1,000 shares of Amazon.com stock and a soda are not used to produce goods and services. Undiscovered oil in the Arctic Ocean is not a factor of production because it​ isn't available to produce goods and services until discovered.

goods market.

Markets in which goods and services are bought and sold

factor markets.

Markets in which the services of factors of production are bought and sold

Mary makes 10 pies and 20 cakes a day and her opportunity cost of producing a cake is 2 pies. Tim makes 20 pies and 10 cakes a day and his opportunity cost of producing a cake is 4 pies. If Mary and Tim specialize in the good in which they have a comparative advantage​ ______.

Mary produces only cakes while Tim produces only pies

Which of the following statements describe an inelastic demand​?

Megan did not buy too many hockey tickets even though their price dropped by 10 percent.

So many people in Peru are entrepreneurs because​ _____.

Peru is a poorer country than the United​ States, so Peru has more limited employment opportunities

Inward shift on PPF occurs when:

Production possibilities decrease

Outward shift on PPF when

Production possibilities increase

Which of the following is an example of consumption goods and services​?

Ron bought a Nissan Altima last summer.

Which of the following statements is an example of perfectly elastic demand​?

Sherry is overwhelmed with buyers of her peaches when she lowers their price by a penny a pound compared to other sellers in the​ farmers' market.

Which of the following is an example of capital goods​?

The government will open another public school in the area.

Which of the following statements by Tom demonstrates that his buying plans obey the law of demand​?

The only thing​ that's changed is the price of​ textbooks: they've become more expensive and now​ I'm not buying as many.

Which of the following illustrates goods markets​? Which of the following illustrates factor markets​?

Walmart sells potatoes at​ $2.14 a pound. Ann bought a new condo for​ $200,000.

Which of the following is an example of human​ capital?

Your​ professor's knowledge of the economy

change in demand

a change in the quantity that people plan to buy when any influence on buying plans other than the price of the good changes.

inefficient on ppf

above ppf line

A Clinton Foundation success story is that it loaned​ $23,000 to Rwandan coffee growers to support improvements to coffee washing stations and provided technical support. The source of the success of the coffee growers is​ _______.

an increase in human capital and technological advance -gaining knowledge, on the job experience -gaining technology to improve coffee washing stations

A market is an arrangement that brings​ _____ together and enables them to get information and do business with each other.

buyers and sellers

Which of the following is an example of absolute advantage​? A. Amy is smart and performs well in exams. B. Charlie enjoys skiing while Ryan enjoys hiking. C. Tom does his math homework in 2 hours while Harry takes only 30 minutes to do the same task..D. Nick has an advantage over others in the industry because he knows many software programs.

c.

The production possibilities frontier is the boundary between the combinations of goods and services that​ _____, given the available factors of production and the state of technology.

can be produced and the combinations that cannot be produced

quantity demanded

change in the quantity of a good that people plan to buy that results from a change in the price of the good with all other influences on buying plans remaining the same.

A Job Creation through Entrepreneurship​ Act, debated in the House of Representatives in​ 2009, would award grants to small business​ owners, some of which would be aimed at​ women, Native​ Americans, and veterans. The Act would provide​ $189 million in 2010 and​ $531 million between 2010 and 2014. As a result of this​ Act, you would expect what goods and services are produced in the United States to​ ______, how goods and services are produced in the United States to​ ______, and for whom goods and services are produced in the United States to​ ______.

change to include more goods produced by the targeted​ groups; change to use more technologies common to small​ business; change because small business owners will be receiving more income

A substitute is a good that is​ _____ another​ good, and a complement is a good that is​ _____ another good.

consumed in place​ of; consumed together with

One of the four broad categories of goods and services that we use in economics is​ ______, of which​ ______ is an example. This category accounted for​ ______ percent of total production in 2011.

consumption goods and service, a shirt, 61

Most production in developing economies __________ modern​ capital-intensive technologies. People with skills enjoy __________ incomes while those who are unskilled have __________ incomes.

does not use, rising, falling

total revenue and price change in opposite directions

elastic

A model of the economy that shows a circular flow of​ _____ that result from decision​ makers' choices and the way these choices interact to determine​ _____ goods and services are produced is the circular flow model.

expenditures and​ incomes; what,​ how, and for whom

The functional distribution of income shows the distribution of income among​ ______ and the personal distribution of income shows the distribution of income among​ ______.

factors of production; households

The money flows are​ ______.

factor​ incomes, household and government expenditures on goods and​ services, taxes, and transfers (look at circular chart)

Land is the​ _____ that we use to produce goods and services.

gifts of nature or natural resources

Examples of capital include all of the following except​ _______. A. school buses B. Internet servers C. cruise ships D. Google stock Your answer is correct.E. ATMs

google stock

Purchases of new national defense equipment flow from​ ______ to​ ______ through the​ ______ markets.

governments; firms; goods (look at circular chart)

Consumption expenditure flows from​ ______ to​ ______ through the​ ______ markets.

households, firms, goods (look at circular chart)

With more job training and more scholarships to poor American​ students, which special factor of production is likely to grow faster than in the​ past?

human capital

what do rising wage rates do...

increase cost of production with no change in productivity, manufactured goods decrease

One winter recently, the price of home heating oil increased by 20 percent and the quantity demanded decreased by 2 percent. use the total revenue test to determine whether the demand for home heating oil is elastic or inelastic Total revenue​ ______ because the percentage increase in the price is​ ______ than the percentage decrease in the quantity demanded.

increases; greater

total revenue and price change in same direction

inelastic

An example of a consumption good is​ _______. An example of a consumption service is​ _______. An example of a capital good is​ _______.

ipad cavity filled by your dentist pizza over at local pizzeria

When the price of a good increased by 66 ​percent, the quantity demanded of it decreased 33 percent. Most​ likely, this good​ ______ and ​ ______.

is a necessity, has poor substitutes

Human capital​ _____ that people obtain from​ education, on-the-job​ training, and work experience. ​_____ that have been produced in the past and that businesses now use to produce goods and services is capital.

is the knowledge and​ skill; ​Tools, instruments,​ machines, buildings, and other items

In the United States in​ 2011, the factor of production that earned the largest share of income was​ ______ and it earned​ ______ percent of total income.

labor; 69%

Most Americans earn their income from the services of the factor of production​ ______. The income they earn is called​ ______.

labor; a wage

The factor of production that earns the highest percentage of total U.S. income is​ ______. The income this factor of production earns is called​ ______.

labor; wages (69%)

The four factors of production are​ ______.

land, labor, capital, entrepreneurship

Rent is the income paid for the use of​ _____. Wages are income paid for the services of​ _____. Profit ​(or loss) is the​ _____ earned by an entrepreneur for running a business. Interest is the income paid for the use of​ _____.

land; ​labor; ​income; capital

Food is a __________ percentage of total production in developing countries. _________ is an increasing percentage of total production in developing countries.

large, manufacturing

A movement on the PPF occurs when

more production/job opportunity ex: If some retail workers in the United States are​ re-employed building dams and wind​ farms, _______. When the retail workers are​ re-employed building dams and wind​ farms, more dams and wind farms are produced and fewer retail services are produced. The opportunity cost of the increase in the number of dams and wind farms is the quantity of retail services forgone.

attainable on ppf

on or inside the ppf line

efficient on ppf

on the ppf line

productivity

output per unit of input ex: The cut in labor costs with no change in the wage rate​ ______. increases​ productivity, which increases​ GM's supply of vehicles

unattainable on ppf

outside ppf

The demand for gasoline is more inelastic in the short run than in the long run because in the short run​ _______.

people​ don't quickly change from​ gas-guzzling cars to​ fuel-efficient cars when the price of gasoline rises

A substitute in production is a good that is​ _____ another​ good, and a complement in production is a good that is​ _____ another good.

produced in place​ of; produced together with

A demand schedule is a list of the​ ______ at each different price when all other influences on buying plans remain the same. A demand curve is a graph of​ _____ .

quantities​ demanded; a demand schedule

A supply schedule is a list of the​ ______ at each different price when all other influences on selling plans remain the same. A supply curve is a graph of​ _____ .

quantities​ supplied; a supply schedule

equilibrium price and equilibrium quantity

quantity demanded=quantity supplied

Land earns​ ______, labor earns​ ______, capital earns​ ______, and entrepreneurship earns​ ______.

rent, wages, interest, profit (or loss)

Brazil/USA oranges example "oranges, orange juice cheaper if Brazil entered the market

statement is TRUE Allowing Brazil to enter the US market for oranges would increase the supply of oranges which would lower the price and increase the quantity of oranges demanded Oranges are an input used to produce orange juice so the supply of orange juice would increase, which would lower its price and increase the quantity of orange juice demanded

Quantity supplied>Quantity Demanded

surplus

Economic Growth is defined as the

sustained expansion of production possibilities

The law of market force

that when there is a​ surplus, the price​ falls; and when there is a​ shortage,the price rises.

Money flows

the flows of payments made in exchange for the services of factors of​ production, expenditures on goods and​ services, taxes, and transfers.

Real flows

the flows of the factors of production that go from households through factor markets to firms and of the goods and services that go from firms through goods markets to households.

Read the news​ clip, then answer the following question. If all graduates obtained​ well-paying jobs that use the knowledge they gained in​ college, ______. The Obama administration proposes a new​ rule: Federal aid to​ for-profit colleges will be cut if students in vocational programs graduate without a degree. Millions of​ low-income students are borrowing heavily to attend colleges and too many of them are dropping​ out, and failing to get a job.

the personal distribution of income would be more equal

The demand curve for cell phones shifts rightward when​ ______ and it shifts leftward when​ ______.

the price of a call from a cell phone​ falls, the price of a call from a​ land-line phone​ rises, or cell phones become more​ popular; producers announce that cell phone prices will fall next month

In market​ equilibrium, at the equilibrium price and equilibrium quantity​, ​_____ .

the quantity demanded equals the quantity supplied and equals the quantity bought and sold

Demand is​ _____, when all other influences on buying plans remain the same.

the relationship between the quantity demanded of a good and the price of the good

Supply is​ _____, when all other influences on buying plans remain the same.

the relationship between the quantity supplied of a good and the price of the good

The real flows are​ ______ that flow from households to firms through​ ______ markets and​ ______ that flow from firms to households and governments through​ ______ markets.

the services of factors of​ production; factor; the goods and​ services; goods (look at circular chart)

tradeoff occurs when

we move from a point on the ppf to another point on the ppf

The​ _____ that people devote to produce goods and services is labor.

work​ time, and work effort

Production efficiency is a situation in which the economy is getting all that it can from its resources and​ _____ produce more of one good or service without producing​ _____ of something else.

​cannot; less

Food prices are expected to rise because the supply of corn​ ______ and the demand for corn​ ______. The​ ______ food decreases

​decreases; increases; supply of

Payments for labor services flow from​ ______ to​ ______ through the​ ______ markets.

​firms; households; factor (look at circular chart)

The productive resources that are used to produce goods and services​ - _____ are factors of production.

​land, labor,​ capital, and entrepreneurship

Households are individuals or groups of people​ _____ together. Firms are institutions that organize​ _____ of goods and services.

​living; the production

Capital consists of​ _______.

​tools, instruments,​ machines, buildings, and other items that have been produced in the past and that businesses now use to produce goods and services