MicroEcon-Chap 1

Economic systems differ from one another based on who own the factors of production and: How much resources are available in the economy and where they are located Who make decisions regarding what to produce and how it is produced What kinds of products are produced in the economy and how plentiful they are How big the population is, and the makeup of the population

Who make decisions regarding what to produce and how it is produced

In a linear equation relating income and consumption, you know that the intercept is $1,000 and the slope of the line is .4. If income is $20,000, then consumption is: $8,000 $9,000 $10,000 $11,000

$9,000

Suppose that a consumer purchases just two goods, X and Y. The slope of the budget line would indicate the: rev: 03_22_2016_QC_CS-46249 Opportunity cost of good Y in terms of good X given up for each unit of Y Opportunity cost of good X in terms of good Y given up for each unit of Y Maximum quantity of good Y that the consumer could buy with a given budget Maximum quantity of good X that the consumer could buy with a given budget

Opportunity cost of good Y in terms of good X given up for each unit of Y

In a command economy like the old Soviet Union, one is able to improve one's lot and get ahead in society largely through: Entrepreneurship and risk-taking Innovation and profits Participating in the political hierarchy Getting high prices for one's products and resources

Participating in the political hierarchy

Suppose there are two economies, Alpha and Beta, which have the same production possibilities curves. If Beta devotes more resources to produce capital goods than consumer goods as compared to Alpha, then in the future: Alpha will experience greater economic growth than Beta Beta will experience greater economic growth than Alpha Alpha will not be able to achieve full employment or productive efficiency Beta will not be able to achieve full employment or productive efficiency

Beta will experience greater economic growth than Alpha

Refer to the following table which shows the quantities of corn demanded at various levels of corn price (hypothetical data). Which curve in the graph shown above best represents the data in the table? A B C D

C

Economists have difficulty applying the scientific method because: Economics has a short history The scientific method does not really apply to economics People are the focus of economics, and their behavior is highly predictable Controlled laboratory experiments in economics are often not feasible

Controlled laboratory experiments in economics are often not feasible

The question below are based on the following four sets of data-pairs: (1) A and B, (2) C and D, (3) E and F, and (4) G and H. In each set, the independent variable is in the left column and the dependent variable is in the right column. Which of the four sets of data pairs shows an inverse relationship between the independent and dependent variable? 1 and 3 2 and 3 3 and 4 2 and 4

1 and 3

The following graph is the production possibilities curve of a nation: Refer to the above graph. The total opportunity cost of nine drill presses is: 1 unit of bread 1 unit of drill presses 3 units of bread 10 units of drill presses

3 units of bread

Suppose a firm can produce 70 units of a product, Zenia, by combining labor, land, capital, and entrepreneurial ability, as in the four alternative techniques shown in the table below. Assume further that the firm can hire labor at $3 per unit, land at $3 per unit, capital at $6 per unit, and entrepreneurship at $9 per unit. Refer to the above table. If the price of labor declines from $3 to $2 per unit, then what is the least costly way of producing Zenias? A B C D

B

From an economic perspective, when a student decides to go to the movies instead of studying for a test, it indicates that in the student's thinking the marginal: Benefit of studying is greater than the marginal cost of studying Cost of going to the movies is less than the marginal benefit of going to the movies Benefit of studying are greater than the marginal benefit of going to the movies Cost of going to the movies is greater than the marginal cost of studying

Cost of going to the movies is less than the marginal benefit of going to the movies

In a market system, as one industry expands while another contracts, resources will flow: Away from the expanding industry towards the contracting one From one industry due to the changes in resource prices paid by firms Towards the industry where the product demand is declining Because resource allocation will have to equalize between the two industries

From one industry due to the changes in resource prices paid by firms

The Heritage Foundation in 2012 ranked which of the following economies to have among the highest economic freedom? The United States Germany Argentina Hong Kong

Hong Kong

Which of the following statements regarding people's wants is true? Over time, people's wants tend to be stable and constant As people consume more products, their wants will be reduced Intangible serves, like tangible goods, may satisfy people's wants People's wants do not include their basic needs

Intangible serves, like tangible goods, may satisfy people's wants

A nation can produce two products: tanks and autos. The table below is the nation's production possibilities: Given the production possibilities schedule above, a combination of 3 tanks and 350 autos: Illustrates the tradeoff between tanks and autos Is attainable but entails some unemployment or inefficient use of society's resources Cannot be produced by society, given its current resources and production technology Is not attainable because this combination is not listed in the schedule

Is attainable but entails some unemployment or inefficient use of society's resources

Which of the following statements about the right to private ownership is false? It enables individuals to obtain, use, and dispose of land and capital resources as they see fit It encourages investment and innovation, and thus fosters economic growth It extends to intangibles such as pieces of music and computer programs It weakens the incentive to maintain the property that one already owns

It weakens the incentive to maintain the property that one already owns

Anything that is generally acceptable in trading for goods and services is a: Medium of exchange Capital good Store of value Token money

Medium of exchange

Which of the following best describes the "invisible hand" concept? Ample regulation of business by the government will maximize the public's best interests The market system works best when resources are free to move from one use to another The problem of scarcity can best be overcome in a system of mixed capitalism Self-interest in a market system will automatically promote the public interest as well

Self-interest in a market system will automatically promote the public interest as wellHon

The term consumer sovereignty means that: Government is responsible for protecting consumers' interests What is produced is ultimately determined by what consumers buy There are no limits on what consumers may buy in a market system Producers have strong control over what consumers buy

What is produced is ultimately determined by what consumers buy

Which situation would most likely cause a nation's production possibilities curve to shift inward? An increase in unemployment An increase in the amount of imports An increase in the number of skilled immigrant workers The destruction caused by bombing and warfare in a losing military conflict

The destruction caused by bombing and warfare in a losing military conflict

In a market system, which of the following is a major benefit of making the firm's owners and investors exclusively shoulder the business risk? Those who deeply dislike business risk will not have anything to do with the business This allows firms to more easily attract labor and other suppliers of inputs This reduces the business risk in the economy It makes it easier for the government to monitor and manage the business risk

This allows firms to more easily attract labor and other suppliers of inputs

Insurance companies facilitate the transfer of risk from: Those who have a low-risk tolerance to those with high risk-tolerance Those who have a high-risk tolerance to those with low risk-tolerance The insurance companies' owners to the insurance-policy holders Insurance policyholders to the bankers who lend money to the companies

Those who have a low-risk tolerance to those with high risk-tolerance

Capitalism gets its name from the fact that capital resources are mostly: Owned by the state or government Given the highest priority in the economy's income distribution Treated as private property In the form of money and financial resources

Treated as private property