Microeconomics final review

false

TRUE OR FALSE: A producer's "marginal product" and "total product" are generally the same amount.

D. Socialist economies tend to offer extensive government services but have high tax rates.

How is the principle of "There's no Such Thing as Free Lunch" Illustrated in a socialist economy? A. Socialist economies tend to collapse when they become too large. B. The marketplaces in a socialist economy are free for anyone to enter. C. Socialist policies offer advantages to the wealthy at the expense of those less well-off. D. Socialist economies tend to offer extensive government services but have high tax rates.

command economy

In a _____________, questions of what. how, and for whom to produce are answered by the government.

C. a fixed factor of production

In the short run, the amount of capital available for manufacturing is an example of which of these? A. a marginal product B. a diminishing return C. a fixed factor of production D. a variable factor of production

D. a variable factor of production

Labor in a factory is an example of which of these? A. a marginal product B. a diminishing return C. a fixed factor of production D. a variable factor of production

1 B 2 A 3 C 4 C 5 D

MATCHING: 1. Computers used to produce magazine articles 2. the South's rainy season 3. a third-grade teacher 4. the manager of a car repair shop 5. developer of a new smartphone app A) land B) capital C) labor D) entrepreneurs

b) its slope goes up when the diagram is read from left to right

Which of these is the best description of a normal supply curve?a) its slope is completely horizontal b) its slope goes up when the diagram is read from left to right c) its slope goes up when the diagram is read from right to left d) its slope is mostly horizontal, with occasional vertical fluctuations

D. the desire, ability, and willingness to buy a product

What are the characteristics of demand? A. the desire and ability to buy a product B. the ability and willingness to buy a product C. the willingness and desire to buy a product D. the desire, ability, and willingness to buy a product

C. total expenditures

What test do economists use to measure elasticity? A. utility B. revenue C. total expenditures D. demands

B. Economic growth

When a nation's total output increases over time, the nation is experiencing: A. A decrease in gross domestic product B. Economic growth C. Economic interdependence D. An expansion of the possibilities curve

a) trade-offs

When deciding how to use resources, you need to evaluate the costs and benefits of each choice to decide which meets your criteria. These are called... a) trade-offs b) opportunities c) resource frontiers d) priorities

C. during a phase of increasing marginal returns

When is a firm's rate of hiring likely to be highest? A. during a phase of negative marginal returns B. during a phase of uncertain marginal returns C. during a phase of increasing marginal returns D. during a phase of decreasing marginal returns

B. decreases

When the price of something increases, the quantity demanded ------- A. increases B. decreases C. remains unchanged D. reverses

utility and scarcity

Which helps determine something's value?

C. apps

Which is a likely complement to a tablet computer? A. DVDs B. movie tickets C. apps D. pencils

d) entrepreneurs

Which of the factors of production involves taking risks and combining resources to produce a good or service? a) land b) capital c) labor d) entrepreneurs

C. the nationalization of major industries in Hugo Chavez's Venezuela

Which of the following describes a move away from capitalism? A. Sweden's 1980s cutback on social programs B. the transformation of the former Soviet Union to today's Russia C. the nationalization of major industries in Hugo Chavez's Venezuela D. economic reforms following the Great Depression in the United States

D. The risk associated with producing a new item

Which of the following descriptions best explains the meaning of opportunity cost? A. The initial cost of starting a new business B. The cost of business failure C. The cost of choosing one alternative over another D. The risk associated with producing a new item

A. It sustains a high degree of uncertainty.

Which of the following is a disadvantage of a market economy? A. It sustains a high degree of uncertainty. B. It restricts personal freedom. C. It discourages creativity and new ideas for doing things. D. It does not allocate resources as efficiently as other types of economies.

A. the substitution effect

Which of the following replaces a costly item with a less costly one? A. the substitution effect B. the income effect C. change in demand D. consumer taste

C. Everyone knows exactly what their function is.

Which of the following states an advantage of a traditional economy? A. Property rights are based on tradition. B. Creativity and original thought are rewarded. C. Everyone knows exactly what their function is. D. There's no bureaucracy to interfere with organizing the economy.

A. a classless society in which everyone works for the common good

Which of the statements best describes the communist ideal? A. a classless society in which everyone works for the common good B. a classless society in which workers are motivated by financial incentives C. a society in which the working class is motivated by incentives to produce goods D. a society in which a small ruling class administers resources for the common good

d) they are an incentive for producers to buy less

Which of these best describes the influence of high prices on the behavior of producers? a) they encourage producers to modify their supply schedules b) they have no significant overall effect on producer behavior c) they are an incentive for producers to produce more d) they are an incentive for producers to buy less

C. the effect of an increase in work hours on total output

Which of these can be illustrated with a production function? A. the effect of consumer demand on total output B. the effect of factory reorganization on total input C. the effect of an increase in work hours on total output D. the effect of capital and wage adjustments on total output

B. hiring and firing workers

Which of these could a firm accomplish during a short-run production period? A. relocation of factories B. hiring and firing workers C. purchase and development of land D. development of new manufacturing technology

A. There are more mixed economies in the world than any other kind.

Which of these is an accurate statement about mixed economies today? A. There are more mixed economies in the world than any other kind. B. Very few economies today can be accurately described as "mixed." C. Mixed economies exist mostly in nations with communist governments. D. Most nations that once had a mixed economy have evolved into command economies.

B. delivery charges for output

Which of these is an example of a fixed cost? A. labor B. delivery charges for output C. depreciation of capital goods D. charges for a factory's electrical use

C. state and local property taxes

Which of these is an example of a variable cost? A. raw materials B. interest fees on bonds C. state and local property taxes D. payment on leased properties

True

TRUE OR FALSE: Scarcity is an economic problem with which all societies are faces

C. command and socialist economies

10. What kind of economy offers unformiy in wages regardless of individual productivity? A. all economies B. traditional economies C. command and socialist economies D. market and free-enterprise economies

subsidy

A ___________ is a payment to an individual, business, or other group to encourage or protect a certain type of economic activity

A. movement along the demand curve

A change in quantity demanded is represented by: A. movement along the demand curve B. a shift of the demand curve C. substitution D. complements

d) demand is elastic

An economist performs a total expenditures test and finds that a change in price and a change in revenue move in opposite directions and concludes that the test shows __________ a) demand is unit elastic b) there's not enough demand c) demand is inelastic d) demand is elastic

diminishing marginal utility.

As people use more and more of a product, they encounter_________

false; change "add" to compare

TRUE OR FALSE To estimate elasticity, add the direction of the change in total revenue, or total expenditures

scarcities.

FILL IN THE BLANK Societies embrace various economic systems to deal with the fundamental problems of ___________

market economy

In a _____________, questions of what, how, and for whom to produce are answered by buying and selling activity of individuals.

A. Gross domestic product

The most comprehensive measure of a nation's wealth is provided by its. A. Gross domestic product B. TINSTAAFL rating C. Product possibilities curve D. Capital Goods

A. Explaining how people deal with scarcity

The study of economics involves. A. Explaining how people deal with scarcity B. Studying how things are made, bought, sold, and used C. Explaining how incomes are earned and how jobs are created D. All of the above

traditional

The way in which the 19th century Inuit divided the "spoils of the hunt" demonstrates the functioning of a ___________ economy.

true

There is always some degree of government involvement in a mixed economy.

C. It may lose track of its break-even point

What risk does a firm take by neglecting to do periodic marginal analyses? A. It may lose track of its fixed costs B. It may lose track of its total revenue C. It may lose track of its break-even point D. It may lose track of its profit-maximizing quantity of output.

C. change in price

What's the main clause of a change in quantity demanded? A. substitution B. changed in revenue C. change in price D. complements

D. an increase in price increases demand

What's the relationship between income and demand? A. a decrease in income increases demand B. a decrease in price decreases income C. and increase in price increases income D. an increase in price increases demand

B. Cost-benefit analysis

When a business needs to decide whether a certain action is worth the cost, the most helpful analysis would be a(n). A. Production possibility curve B. Cost-benefit analysis C. Economic model D. Needs assessment

D. because it reflects the desire, ability, and willingness of consumers

Why is a demand curve downward sloping? A. because quantity demanded increases as price decreases B. because of the natural elasticity of the market C. because it shows how increases incentives causes demand D. because it reflects the desire, ability, and willingness of consumers

C. because it has been demonstrated repeatedly

Why is the Law of Demand called a "law"? A. because it is legally required B. because there are no exceptions to it C. because it had been demonstrated repeatedly D. because it is an economic term

socialism

____________ can be described as a more liberal version of a command economy.

supply

_________________ refers to the amount of a product offered for sale at all possible prices in a market

False

TRUE OR FALSE: In all societies, the government decides what to produce.

True

TRUE OR FALSE: Japan, with an aging population, has had difficulty replacing people with machines.

true

TRUE OR FALSE: Mixed economies can evolve when societies with different kinds of economics interact

True

TRUE OR FALSE: People's needs are limited.

true

TRUE OR FALSE: Changes to variable and fixed input are easiest during a long-run production period.

true

TRUE OR FALSE: The stages of production are distinguished by their marginal products

true

TRUE OR FALSE: The stages of production measure the effects of workforce size on marginal product.

false

TRUE OR FALSE: The third stage of production is distinguished by an increase in output.

inversely

The Law of Demand states that the quantity demanded of a product varies _________

A. Productivity

The efficient use of scarce resources leads to an increase in. A. Productivity B. Investment Scarcity D. Capital

quantities demanded

The market demand curve shows that the _________ by everyone who is interested in purchasing a product at all possible prices.

D. direction, direction

To estimate the elasticity, compare the ___________ of a price to the _____________ of the change in total revenue? A. amount, amount B. amount, direction C. direction, amount D. direction, direction

a nondurable good

A can of soup is an example of:

durable good

A car is an example of a:

C. data

A demand schedule is best described as _________ A. a graph B. an incentive C. data D. reverses

market

A graph that shows the quantities supplied at each and every possible price in the _________ is called a supply curve

B. diminishing marginal utility

A hungry man is willing to pay a high price for food. After he is no longer hungry, he is not willing to pay the same high price. Which of the following best defines this example? A. a complement B. diminishing marginal utility C. unit elasticity D. the substitution effect

C. Accumulation of all tangible products

A nation's wealth is determined by its. A. Accumulation of all tangible and intangible resources B. Natural resources C. Accumulation of all tangible products D. Product possibilities frontier

all tangible goods

A nations wealth is made up of:

C. inverse

Charges in quantity demanded and changes in price have a(n) __________ relationship? A. indirect B. positive C. inverse D. neutral

False

Communist countries like North Korea and Cuba are examples of mixed economies

D. additional

Consider the term marginal utility. Which word is the best synonym for marginal A. useful B. satisfactory C. borderline D. additional

d) responsibilities

Consumers are expected to read the full information about a product before making a purchase. This is an example of a consumer's... a) opportunities b) rights c) habits d) responsibilities

c) they drive decisions about what to produce

Consumers are powerful because... a) they have more rights than corporations b) they help decide a business's opportunity cost c) they drive decisions about what to produce d) their interests force producers to behave ethically

D. Scarcity

Consumers waiting in long lines for a new product is an example of: A. Consumerism B. Consumer rights C. Consumer responsibilities D. Scarcity

ability

FILL IN THE BLANK: Demand is the desire, _________ and willingness to ability and willingness to buy a product. buy a product.

a) a product with many adequate substitutes

For which product is demand likely to be most elastic? a) a product with many adequate substitutes b) it is impossible to tell c) a product with no substitutes d) a product with inadequate substitutes

true

TRUE OR FALSE Demand is unit elastic when a given change in price causes a proportional change in quantity demanded

1 G 2 I 3 E 4 J 5 A 6 C 7 D 8 B 9 H 10 F

MATCHING: 1. each worker learns one task very well 2. quality of life 3. represents the range of production possibilities 4. where all the factors of production are bought and sold 5. a fundamental problem in every society 6. measures a country's output and economic health 7. manufactured goods needed to produce other goods and services. 8. food is an example of one. 9. reliance on others to produce goods and services we need. 10. movement that promoted the rights of buyers. A. Scarcity B. Nondurable goods C. Gross domestic product D. Capital good E. Production possibilities curve F. Consumerism G. Specialization H. Economic interdependence I. Standard of living J. Factor market

1 B 2 D 3 A 4 E 5 C

MATCHING: 1. movement along the demand curve showing that a different quantity is purchased in response to a change in price 2. portion of a change in quantity demand caused by a change in a consumer's income when the price of a product changes 3. different amounts demanded at every price, causing the demand curve to shift to the left from the right. 4. products related in such a way that an increase in the price of one reduces the demand for both 5. products related in such a way that an increase in the price of one reduces the demand for both A. change in demand B. change in quantity demanded C. substitutes D. income effect E. complements

1 A 2 B 3 C 4 D 5 E

MATCHING: 1. the mean price of a unit of output 2. average price of a unit sold times the quantity sold 3. additional revenue generated from the sale of a single unit 4. level of production needed for a firm to recover its costs 5. additional expense of producing one additional unit A. average revenue B. total revenue C. marginal revenue D. breakeven point E. marginal cost

false

Mixed economies work to the degree that they embrace democracy

quantity

Movement along the supply curve measures a change in ____________ supplied

A. a changed price

On a demand curve, movement along the curve, as opposed to a shift in the entire curve, is a result of ________ A. a changed price B. an increase in demand C. a decrease in demand D. a change in demand

b) the value of the next best alternative

Opportunity cost refers to... a) the dollar amount attached to a good or service b) the value of the next best alternative c) the cost of not expanding production d) the cost of labor when production is expanded or changed

C. average revenue

Over which of these does a producer have the most direct control? A. fixed cost B. variable cost C. average revenue D. marginal revenue

false; change "delayed" to substituted

TRUE OR FALSE The sole determinate of elasticity is the answer to this question: Can the purchase be delayed?

False

TRUE OR FALSE: Both goods and services are counted as wealth.

B. High value of a nonessential item and the low value of an essential item

Paradox of value refers to the: A. High value of an essential item and the low value of a nonessential item B. High value of a nonessential item and the low value of an essential item C. Contradiction of what consumers want and what they need D. Contradiction between gross domestic product and market value

incentives

Prices as motivating influence or _________ that causes an individual to take action.

c) because other vegetables are available

Prices for common vegetables tend to be elastic. Why? a) because vegetables cannot be substituted b) because vegetables are inexpensive c) because other vegetables are available d) because consumers must eat

increases

Quantity supplied increases when the price ____________

true

Socialist economies include aspects of both command and free enterprise systems

What, how, and for whom?

Societies are faced with which three basic questions?

true

TRUE OR FALSE Demand elasticity is the extent to which a change in price causes a change in the quantity demanded

false; change "relatively smaller" to relatively larger

TRUE OR FALSE Demand is elastic when a given change in price causes a relatively smaller change in quantity demanded

d) a change in quantity supplied takes place only when there is a change in price

Which of these is true of both an individual supply curve and a market supply curve? a) a change in quantity supplied takes place only when the price remains constant b) a change in quantity supplied takes place when a change in demand is projected c) a change in quantity supplied takes place when a change in demand occurs d) a change in quantity supplied takes place only when there is a change in price

d) as part of the cost of production

Which of these names the way in which producers regard taxes?a) as an entry in their supply schedule b) as an encouragement to productivity c) as an investment in technology d) as part of the cost of production

d) a leftward shift of that item's supply curve

Which of these results from the repeal of an item's subsidies? a) a rightward shift of that item's supply curve b) an increase in reliance upon government regulation c) a decrease in the price of that item d) a leftward shift of that item's supply curve

A. produce less of that item

Which of these would an item's producer be most likely to do if total revenue on that item began to drop? A. produce less of that item B. produce more of that item C. raise the price of that item D. lower the price of that item

D. Nothing stops the government from producing things that people don't need or want.

Which statement describes a disadvantage of a command economy? A. Items tend to be produced solely for the sake of profit. B. It cannot "change direction" easily if the need arises to do so. C. It does little to help the less advantaged obtain the goods and services they need. D. Nothing stops the government from producing things that people don't need or want.

d) unit elastic

Which term refers to a changing price that causes a proportional change in total revenue? a) inelastic b) total expenditures c) elastic d) unit elastic

D. variable costs and total costs

Which terms describe costs that are incurred regardless of a firm's rate of production? A. fixed costs and overhead B. fixed costs and total costs C. variable costs and overhead D. variable costs and total costs

D. It identifies all possible combinations of goods and services an economy can produce

Which type of the following statements best describe the purpose of the production possibilities curve? A. It predicts the future production of a nation B. It identifies trends in production C. It shows which products are most profitable D. It identifies all possible combinations of goods and services an economy can produce

c. workers

Who did Karl Marx believe would be the beneficiaries of socialism? A. property owners b. the government c. workers d. capitalism

A. Its citizens objected to the nation's high rate of taxation.

Why did Sweden move from socialism to a more mixed economy in the 1980s? A. Its citizens objected to the nation's high rate of taxation. B. Its citizens demanded that elements of communism be adopted. C. Its government decided that welfare and health benefits were no longer needed. D. It's government decided that opening the country's petroleum industry would boost the economy.