Micro Test 1 Chapters 1&2

The decisions of firms and households are A. controlled by but not totally coordinated by the government. B. coordinated by markets. C. unexplainable by the circular flow model. D. coordinated by but not totally controlled by the government. E. made independently of one another.

Coordinated by markets

Who gets the goods and services that are produced answers the ___ question

For whom

Which of the following is a positive​ statement? A. An increase in college tuition is not fair to students. B. A recession leads to higher enrollments at universities. C. The school needs more parking for students. D. Parking tickets on campus impose an excessive fee. E. University bookstore prices are too high.

A recession leads to higher enrollments at universities

When you buy a movie ticket, you are buying A. neither a good nor a service B. a service C. a good D. a good and a service

A service

The largest category of state and local government expenditures is A. public welfare. B. highways. C. social security. D. interest on the national debt. E. education.

Education

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? A. human capital B. intellectual capital C. physical capital D. capital E. financial capital

Human capital

The factor of production most people supply is​ _______, and the income these people earn is​ _______. A. ​entrepreneurship; profit B. ​capital; interest C. ​capital; a wage D. ​labor; a wage E. ​labor; rent

Labor, a wage

Consider the incomes paid to the factors of production. Wages are paid to​ ____ and interest is paid to​ ____. A. ​entrepreneurs; capital B. ​labor; capital C. ​entrepreneurs; land D. ​labor; land E. ​labor; entrepreneurs

Labor, capital

Which of the following correctly lists the categories of factors of​ production? A. ​land, labor,​ capital, and entrepreneurship B. ​hardware, software,​ land, and money C. ​owners, workers, and consumers D. ​capital, money, and labor E. ​machines, buildings,​ land, and money

Land, labor, capital, and entrepreneurship

Economics is the ______ that studies the choices that individuals, businesses, governments, and entire societies make as they cope with the scarcity and the ____ that influence and reconcile our choices.

Social science, incentives

A circular flow model shows the interrelationship between the​ ____ markets and the​ ____ markets. A. ​business; household B. ​goods; factor C. ​household; goods D. ​household; factor E. ​expenditure; income

goods; factor

The cost of a oneminus−unit increase in an activity is called the A. sunk cost. B. opportunity benefit. C. marginal cost. D. margin. E. marginal benefit

Marginal Cost

Of the​ following, the largest source of revenue for the federal government is the A. personal income tax. B. corporation income tax. C. lottery. D. transfers from state and local governments. E. revenue from the sale of public lands.

Personal income tax

Approximately​ ________ people live in the United States and​ ________ people live in the world. A. 210​ million; 6 billion B. 410​ million; 8 billion C. 310​ million; 7 billion D. 210​ million; 5 billion E. 310​ million; 3 billion

310 million, 7 billion

An example of a consumption good and service is​ _______. A. a golf course B. an oil tanker C. a chocolate chip cookie D. a freeway

A chocolate chip cookie

Which of the following is a consumption good or​ service? A. A garbage truck because households produce trash when they use goods and services B. A strawberry field because this is where strawberries are produced C. A movie because an individual pays to see the movie and then watches it in the current period D. An ATM because individuals use them in the current period to obtain cash E. A stealth bomber because governments use stealth bombers to produce national defense

A movie because an individual pays to see the movie and then watches it in the current period.

Which of the following is a consumption good or​ service? A. An airplane because without airplanes we could not travel long distances quickly B. The President of the United States because he serves for a limited term C. A school teacher because a school teacher gives individuals the skills they need to earn a​ living, which enables them to buy goods and services D. A pack of bubble gum because it is an item bought by an individual and used up in the current period E. An interstate highway because it is used by individuals in the current period whenever they drive on it

A pack of bubble gum because it is an item bought by an individual and used up in the current period

Items that are purchased by individuals for their own enjoyment are called A. capital goods. B. government goods and services. C. consumption goods and services. D. exports of goods and services. E. private goods.

Consumption goods and services

The largest share of total production in the United States is A. exported goods and services. B. capital goods. C. consumption goods and services. D. imported goods and services. E. government goods and services.

Consumption goods and services

Goods produced in the United States and sold in other countries are called A. imports. B. capital account goods. C. capital goods. D. exports. E. foreign goods.

Exports

Expenditure on consumption goods and services flows from​ ______ through the​ ______ markets. A. households and governments to​ firms; goods B. households to​ firms; goods C. households and governments to​ firms; factor D. governments to​ households; goods E. firms to​ households; factor

Households to firms; goods

When a firm decides to use robots to produce its output its answer the ___ question

How

Economics is the social science that studies A. how people make choices to cope with scarcity. B. whether a nation has enough natural resources. C. the psychology of individuals and businesses. D. the real reasons people buy goods and services. E. how choices made in the social interest could eliminate scarcity.

How people make choices to cope with scarcity

The global distribution of income is unequal because there is an unequal distribution of​ ______. A. land B. government intervention in economic life C. human capital and physical capital D. abilities E. willingness to work hard

Human capital and physical capital

Income equality has A. not changed in the advanced economies over the past 50 years. B. narrowed within countries but increased across countries. C. increased in developing economies as manufacturing has decreased. D. decreased in the United States as manufacturing has increased. E. increased within countries but has narrowed across countries.

Increased within countries but has narrowed across countries

The marginal cost of an activity​ ________ as you do more of it. A. changes only if the marginal benefit of the activity does not change B. changes only if the marginal benefit of the activity changes C. increases D. decreases E. ​doesn't change

Increases

Consider the functional distribution of income. The largest percentage of income paid to the factors of production is paid to​ _________. A. capital B. entrepreneurship C. labor D. labor and​ capital, with each receiving about 41 percent of the total income E. land

Labor

In the United States in​ 2014, the factor of production that earned the largest share of income was​ ______ and it earned​ ______ percent of total income. A. ​capital; 63 B. ​labour; 37 C. ​land; 37 D. ​labor; 63 E. ​entrepreneurship; 37

Labor, 63

Choose the statement that is a normative statement. A. Life is better in the United States when the House and the President are from the same political party. Your answer is correct.B. Abraham Lincoln was a Republican. C. The Republicans have more seats in Congress than the Democrats. D. Each state is represented by two senators. E. The President is a Democrat.

Life is better in the United States when the House and the President are from the same political party.

The income earned by entrepreneurs is A. a mixture of​ rent, wages,​ interest, and profit. B. profit or loss. C. wages. D. interest. E. ​rent, wages, and interest.

Profit or loss

The flows of the services of the factors of production are​ _______. A. real flows from households through factor markets to firms B money flows from firms through factor markets to households C. money flows from households through factor markets to firms D. real flows from firms through factor markets to households

Real flows from households through factor markets to firms

Choices that are best for the individuals that make them are choices in pursuit of A. efficiency. B. self interest. C. the social interest. D. equity. E. incentives.

Self interest

Among the United​ States, Canada,​ Russia, India, and the United​ Kingdom, the country with the highest average income per person is A. Canada. B. the United States. C. the United Kingdom. D. India. E. Russia.

The United States

Entrepreneurship, as a factor of​ production, refers to A. the technology used by firms. B. the value of the​ firm's stock. C. the human capital accumulated by workers. D. the human resource that organizes​ labor, land, and capital. E. the capital the firm uses

The human resource that organizes labor, land, and capital

Human capital is​ _______. A. the money humans have saved B. solely the innate ability we are born with C. machinery that needs human supervision D. any type of​ machinery, labor,​ capital, or entrepreneurship E. the knowledge and skill that people obtain from​ education, on-the-job​ training, and work experience

The knowledge and skill that people obtain from education, on-the-job training, and work experience.

If Jessie studies economics for two hours instead of going to the movies with her​ friends, then A. Jesse definitely is making a rational choice. B. Jessie is ignoring a sunk cost. C. the opportunity cost of studying is the missed movie. D. the benefit of studying is the missed movie. E. Jessie is not responding to any incentives.

The opportunity cost of studying is the missed movie

Which of the following is a microeconomic​ issue? A. The unemployment rate soars in Spain. B. Inflation skyrockets in Russia. C. The Brazilian economy experiences rapid economic growth. D. The price of gasoline increases in the United States this year. Your answer is correct. E. The U.S. government cuts taxes to combat a recession.

The price of gasoline increases in the United States this year.

Choose the statement that is a positive statement. A. The price of oil is falling. Your answer is correct.B. It is good for the U.S. economy when the price of oil falls. C. America needs more gas stations. D. The government should decrease taxes on gasoline. E. The United States should be more​ self-sufficient in oil production.

The price of oil is falling

Choices that are best for the society as a whole are choices in pursuit of A. answering the​ 'for whom' question. B. the social interest. C. self interest. D. incentives. E. answering the​ 'how' question.

The social interest

Economists use the ceteris paribus assumption​ _______. A. to isolate the factor of interest and investigate its effects in the clearest possible way B. to hold everything constant C. because it​ isn't possible to do experiments in economics D. because it is impossible to unscramble cause and effect in economics

To isolate the factor of interest and investigate its effects in the clearest possible way.

Economists measure the benefit you get from something by​ _______. A. the price of it B. what you are willing to give up to get it Your answer is correct.C. how popular it is in the marketplace D. what a business must give up to produce it

What you are willing to give up to get it.

People become entrepreneurs because they​ _______. The income entrepreneurs earn is called​ _______. A. are inspired by other​ entrepreneurs; a wage B. are frustrated in their​ jobs; a wage C. have a​ billion-dollar idea; profit D. have a good​ education; interest E. are frustrated in their​ jobs; profit

are frustrated in their jobs; profit

The incomes earned by the factors of production are​ _______. A. real flows from households through factor markets to firms B. money flows from households through factor markets to firms C. real flows from firms through factor markets to households D. money flows from firms through factor markets to households

money flows from firms through factor markets to households

Jurassic World makes a contribution to coping with scarcity because it A. requires expensive sets to be built B. provides actors with a wider job choice C. wins an Oscar D. provides an enjoyable experience that satisfies a want

provides an enjoyable experience that satisfies a want

A positive statement is about

what is

The New York Times reports that cruise lines have been slashing prices and cruise sales are up. It says this surge of interest tells us that despite the uncertain economic​ climate, people clearly need more fun in their lives and view their vacations as a valuable and necessary part of it. In deciding whether to take a​ cruise, would you face a​ tradeoff? You​ _____ face a tradeoff because​ _____. A. ​would; you forgo something else that you might do Your answer is correct.B. ​would; taking a cruise is a rational choice C. would​ not; the marginal benefit from a cruise is always less than its marginal cost D. would​ not; the marginal cost of a cruise is always less than its marginal benefit

​would; you forgo something else that you might do

_______ firms are involved in the production of the Dreamliner.​ _______ of the firms are identified in the figure in the popup. A. ​300; Five B. More than​ 400; Fifteen C. More than​ 400; Ten D. ​300; Fifteen

More than 400, Fifteen

When a firm decides to produce computers rather than bikes, it is answering the ___ question

What

The Latin term ​"ceteris paribus​" means A. ​"false unless proven​ true." B. ​"other things remaining the​ same." Your answer is correct.C. ​"what is true of the whole is not necessarily true of the​ parts." D. ​"after this, therefore because of​ this." E. ​"obviously true."

"Other things remaining the same"

An example of a capital good is​ ____________. A. a satellite communication system B. a​ business's profit C. an insurance policy D. a haircut E. a slice of pizza

A satellite communication system

An example of a capital good is a​ _______. A. shopping mall B. haircut C. smartphone ring tone D. treasury bill

A shopping mall

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

A shopping mall produces retail services and is a capital good

Which of the following are capital​ goods? A. A movie because it can be viewed now and in the future B. An​ airplane, a garbage​ truck, and an ATM because businesses use these to produce other goods and services in the future C. An​ airplane, a garbage​ truck, and an ATM because all factors of production that are not labor are capital goods D. A movie because all factors of production that are not labor are capital goods E. The President of the United States because he encourages Congress to increase productive resources in the entire country

An airplane, a garbage truck, and an ATM because businesses use these to produce other goods and services in the future.

Which of the following are capital​ goods? A. A pack of bubble gum because it can be purchased now and consumed in a future period B. An interstate highway and a stealth bomber because governments buy these to increase productive resources to use during future periods to produce other goods and services C. A strawberry field because it is used to produce strawberries D. A school teacher because she helps her students increase their productive resources E. An interstate highway and a stealth bomber because governments buy and use them in the current period

An interstate highway and a stealth bomber because governments buy these to increase productive resources to use during future periods to produce other goods and services.

Capital goods​ _______. A. include​ money, stocks, and bonds B. are goods that businesses and governments buy to increase productive resources to use during future periods to produce other goods and services C. are goods that businesses and governments produce D. include the knowledge and skill that people obtain from​ education, on-the-job​ training, and work experience

Are goods that businesses and governments buy to increase productive resources to use during future periods to produce other goods and services.

Consumption goods and services​ _______. A. are items that individuals and governments buy and use up in the current period B. are items that businesses use to produce other goods and services C. include bank accounts owned by individuals and governments D. are items that governments produce as a means of increasing employment

Are items that individuals and governments buy and use up in the current period

One of the following statements is an example of a positive statement. Which one is​ it? A. California wine production soars B. Every child should have a computer C. We should save more D. Vote Republican

California wine production soars

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

Capital earns interest and labor earns wages.

The factor of production​ _________, and the factor of production​ _______. A. money earns​ interest; initiative earns profit B. capital earns​ rent; entrepreneurship earns wages C. capital earns​ interest; entrepreneurship receives a profit or incurs a loss D. investment earns​ interest; capital incurs depreciation

Capital earns interest, entrepreneurshiprecieves a profit or incurs a loss.

The Dreamliner is a​ _______ good because it is​ _______. A. ​capital; produced by more than one firm B. ​consumption; used by individuals in the current period C. ​capital; bought by airlines to increase productive resources D. ​consumption; bought by airlines to increase productive resources

Capital, bought by airlines to increase productive resources.

Which of the following statements about U.S. production is​ correct? A. Real estate services account for 14.5 percent of the value of total​ production, larger than any other item of services or goods. B. Construction accounts for a larger percentage of total production than does manufacturing. C. Consumption goods and services represent almost 80 percent of U.S. production by value and that percentage​ doesn't fluctuate much from year to year. D. The manufacture of goods represents more than 50 percent of total production.

Consumption goods and services represent almost 80 percent of U.S. production by value and that percentage doesn't fluctuate much from year to year.

A normative statement A. can be tested to determine if it is correct. B. depends on​ someone's values. C. must be tested to determine if it is correct. D. cannot use the word​ "should." E. says what is currently believed about the way the world operates.

Depends on someone's values

Economics studies choices that arise from one fact. What is that fact?

Everyone faces scarcity.

Payments for labor services flow from​ ______ through the​ ______ markets. A. firms to​ households; goods B. households to​ firms; factor C. firms and governments to​ households; factor D. firms to​ households; factor E. households to​ firms; goods

Firms to households; factor

Purchases of new national defense equipment flow from​ ______ through the​ ______ markets. A. governments to​ firms; government B. governments to​ firms; goods C. governments and households to​ firms; factor D. governments and households to​ firms; goods E. firms to​ governments; factor

Governments to firms; goods

The emerging market economies are A. the largest grouping including the nations of China and India. B. the nations with the highest standards of living. C. in transition from stateminus−owned production to free markets. D. the nations that are currently agricultural in nature. E. most of the nations of Western Europe

In transition from state-owned production to free markets

A professor changes the penalty for cheating on exams from getting a 0 on the exam to getting an F in the course. The professor has A. recognized that students​ don't respond to incentives. B. decreased the marginal benefit of cheating. C. increased the marginal cost of cheating. D. recognized that students​ don't make rational choices. E. made all the students act in the social interest.

Increased the marginal cost of cheating

In the United​ States, the productive factor​ that, as a​ group, receives the largest fraction of the​ nation's total income was A. land. B. labor. C. capital. D. entrepreneurship. E. consumption goods and services.

Labor

Scarcity means we must A. make choices. B. work more. C. earn more. D. produce less. E. consume less.

Make choices

You must do your homework but you also want to check your emails.You must do your homework but you also want to check your emails. You think hard about how to allocate the next hour between doing problem sets doing problem sets and reading email reading email. You decide to spend the first 15 minutes studying and the remaining 45 minutes dealing with your emails dealing with your emails. Your decision is an example of​ _______. A. good time managementgood time management B. making a choice at the margin Your answer is correct.C. making the big tradeoffmaking the big tradeoff D. a marginal incentivea marginal incentive

Making a choice at the margin

In order to determine whether to major in​ economics, a rational individual compares the​ ________ of the decision. A. marginal benefit and marginal cost B. normative benefits and positive costs C. opportunity cost and the sunk cost D. selfminus−interest and socialminus−interest E. positive benefits and normative costs

Marginal benefit and marginal cost

What typically happens to benefits as the amount of an activity is​ increased? A. Marginal benefit remains constant. B. Marginal benefit increases. C. Marginal benefit decreases. D. The marginal benefit changes only if the marginal cost changes. E. Total benefits remain constant

Marginal benefit decreases

Compared to the developing​ economies, the advanced economies have​ _______ human capital and​ _______ physical capital. A. ​more; less B. ​less; more C. ​less; less D. ​more; more E. the​ same; the same

More; more

Macroeconomics is the study of A. how ceteris paribus affects causation. B. the actions of individual consumers. C. the actions of individual businesses. D. national or global economies. Your answer is correct. E. the government

National or global economies

Do you think that at some future​ time, there will be no jobs in the United States and all the jobs will be in developing​ economies? Why or why​ not? A. ​No, because the wages in the developing world will eventually rise above ours and we will then be the producers and exporters of manufactures. B. ​No, because Americans will be unwilling to buy​ foreign-produced items. C. ​Yes, because our costs will become too high. D. ​Yes, because​ we'll become so rich that we​ don't need to work. E. ​No, because we will always want personal services and entertainment and talented people will always be available to produce these items in the United States.

No, because we will always want personal services and entertainment and talented people will always be available to produce these items in the United States.

Macroeconomics is the study of A. The choices that individuals make B. All aspects of scarcity C. the national economy and the global economy D. Big businesses

The national economy and the global economy.

An example of ceteris paribus is the statement​ ______. A. To find the effect on the number of workers hired comma let the capital they use increase B. To study the effect of a wage rise on the number of employees comma keep the population constant Your answer is correct. C. To study how cinema ticket prices influence revenue comma assume that the movie wins the best picture award D. To study the effect of a rise in the oil price comma keep all prices constant

To study the effect of a wage rise on the number of employees, keep the population constant

One of the productive resources is capital. Capital includes A. a​ company's stocks and bonds. B. ​toys, tminus−​shirts, CD​ players, and pencils. C. money in a savings account at a bank. D. money borrowed from a bank. E. ​tools, buildings, and machine tools.

Tools, buildings, and machine tools

One of the following statements is an example of a normative statement. Which one is​ it? A. It is possible to meet all our energy needs with renewable sources B. Nuclear power is cheaper than conventional power C. Vote Democrat D. Exercise controls weight

Vote Democrat

We can't avoid having to make choices because.. A. We can't afford to buy all the things we'd like B. there are too many TV channels C. there is too much available D. There is too much variety C. We keep changing our minds.

We can't afford to buy all the things we'd like.

The New York Times reports that cruise lines have been slashing prices and cruise sales are up. It says this surge of interest tells us that despite the uncertain economic​ climate, people clearly need more fun in their lives and view their vacations as a valuable and necessary part of it. How would you make a rational choice about taking a​ cruise? To make a rational choice you would ​ ______. A. compare the marginal benefit from taking the cruise with the marginal cost of the cruise B. consider the length of the cruise and the route it will take C. check with the National Hurricane Center about weather onroute D. chose the ship with the most amenities regardless of the price of the cruise E. chose the cruise line with the cheapest price regardless of its amenities

compare the marginal benefit from taking the cruise with the marginal cost of the cruise

The factor of production​ _________, and the factor of production​ _______. A. human capital earns​ wages; financial capital earns interest B. land earns​ interest; labor earn profit C. land earns​ rent; labor earns wages D. human capital earns​ wages; time earns profit

land ears rent, labor earns wages

A normative statement is about what

ought to be

Your school has decided to increase the intake of new students next year. In reaching its​ decision, would the school use the​ "economic way of​ thinking" and make its decision at the​ margin? Your school would use the​ "economic way of​ thinking" and make its decision at the margin by checking that ​ ____________________.. A. the​ school's net benefit from an additional student was positive Your answer is correct.B. total revenue from students exceeds the total cost of running the school C. the​ student's marginal benefit from attending the school exceeds the​ student's tuition D. the number of classrooms and the number of teachers match

the​ school's net benefit from an additional student was positive