ECON 120 FINAL

Assume that in the short run a firm that produces 100 units of output has average total cost of $200 and average variable cost of $150. The firm's total fixed cost is A. $50. B. $15,000 C. $20,000 D. $5,000.

D. $5,000.

Which of the following is an example of a monopolistically competitive industry? A. The restaurant industry B. The fashion industry C. The toothpaste industry D. All of the above are examples of monopolistically competitive industries.

D. All of the above are examples of monopolistically competitive industries.

Why are there only a few dominant firms in an oligopolistic industry? A. Because horizontal and vertical integration result in reduced competition from fewer rivals. B. Because there are very high barriers to entry, such as a large minimum efficient scale, patent or license requirement, or access to a key resource or material input. C. Because even if barriers to entry are overcome, new firms to the market face the very costly challenge to acquire and build market share when dominant firms have strong brand loyalty and big advertising expenditures. D. All of the above.

D. All of the above.

Gardening World is a manufacturer of gardening soil. Assume that the market for gardening soil is perfectly competitive and the market price of a five-pound bag of soil is $10. Which of the following statements is true? A. To maximize profit, Gardening World would produce the number of bags at which its marginal cost of production is $10. B. Gardening World's marginal revenue is $10 per bag. C. Gardening World cannot earn higher revenue by selling their soil for $11 per bag. D. All of the statements above are true.

D. All of the statements above are true.

In competing with rivals, oligopolistic firms tend to use A. price wars because they increase the profits of firms involved through market growth. B. collusion because it is an effective way to increase market share if members of the cartel know there are credible threats of punishment for cheaters. C. price cuts because they do not increase production costs like advertising. D. non-price competition because it is less easily duplicated and has larger and longer-lasting impact on profits than price cuts.

D. non-price competition because it is less easily duplicated and has larger and longer-lasting impact on profits than price cuts.

Which of the following characterizes carbon emissions (pollution)? A. club good B. private good C. common resource D. public good

D. public good

A study of public transit systems in American cities revealed that in the long run, revenues generally decline after substantial fare increases. This would suggest that A. the demand for public transit is price inelastic. B. there are not many good substitutes for public transit systems in urban areas. C. public transit service deteriorates in the long run as price rises. D. the demand for public transit is price elastic.

D. the demand for public transit is price elastic.

Suppose that you receive a $2,000 tax refund that you deposit into your checking account. If the required reserve ratio is 5%, by how much does the bank's required reserves increase after this deposit is made? A. $2,000 B. $200 C. $1,900 D. $100

D. $100

Which of the following is a function of money? A. Unit of account B. Store of value C. Medium of exchange D. All of the above are functions of money

D. All of the above are functions of money

What is the purpose of making assumptions in economic modeling? A. To make the model as realistic as possible. B. To increase the predictive power of the model. C. To increase the accuracy of economic models. D. To simplify reality and isolate specific events for analysis.

D. To simplify reality and isolate specific events for analysis.

If the price of hot dogs increases, which of the following statements is(are) true? i. the demand for hot dog buns will decrease.ii. the demand for hot dog buns will increase.iii. the demand for hot dogs will decrease.iv. the demand for hot dogs will increase. A. i and iii B. ii and iv C. iv only D. i only

D. i only

Inflation and the value of money are A. more related during a negative output gap than during a positive output gap. B. positively related. C. more related during a positive output gap than during a negative output gap. D. inversely related.

D. inversely related.

Population 500 Number employed 300 Number unemployed 50 According to the table above, if 50 discouraged workers suddenly decide to start actively seeking employment again, what will be the unemployment rate of this economy? A. 25% B. 33.3% C. 0% D. 28.6%

A. 25%

Accounting profits are A. greater than economic profits because accounting profits do not account for opportunity costs. B. smaller than economic profits because accounting profits do not account for implicit costs. C. greater than economic profits because accounting profits do not account for explicit costs. D. equal to economic profits because accounting costs include all opportunity costs.

A. greater than economic profits because accounting profits do not account for opportunity costs.

Which of the following describes an automatic stabilizer? As real GDP decreases, A. income tax revenues decrease and transfer payments through social welfare programs increase. B. income tax revenues increase and transfer payments through social welfare programs decrease. C. income tax revenues and transfer payments through social welfare programs both decrease. D. income tax revenues and transfer payments through social welfare programs both increase.

A. income tax revenues decrease and transfer payments through social welfare programs increase.

As incomes fell during the COVID-19 pandemic due to widespread job loss, ceteris paribus, the price elasticity of demand for restaurant dining likely A. increased. B. decreased. C. stayed the same. D. is indeterminate.

A. increased.

The Waikiki Shell is an outdoor, open-air concert venue surrounded by a park and a residential area. If a band is giving a concert at the Shell, the concert is A. non-excludable and eventually becomes rival. B. excludable and purely rival. C. excludable and purely non-rival. D. non-excludable and purely non-rival.

A. non-excludable and eventually becomes rival.

Suppose that you receive a $2,000 tax refund that you deposit into your checking account. If the required reserve ratio is 5%, how much does your bank have available to lend after this deposit is made? A. $1,900 B. $1,800 C. $100 D. $200

A. $1,900

Suppose that you receive a $2,000 tax refund that you deposit into your checking account. If the required reserve ratio is 5%, what is the money multiplier? A. 20 B. 0.20 C. 0.02 D. 2.0

A. 20 Feedback:The bank is required to hold 5% the $2,000 deposit as reserves. Required reserves = r x deposits = (0.05 x $2,000) = $100The remaining $1,900 (of the $2,000 deposit) becomes excess reserves, which can be made into new loans. The money multiplier is 1/r = 1/0.05 = 20.

Which of the following is NOT a characteristic of a market economy? A. Government ownership of resources B. Competition C. Economic freedom D. Self-interest motivation

A. Government ownership of resources

Suppose a cafe's daily total fixed cost is $100, its variable cost is $1 per cup of coffee, and it sells an average of 200 cups of coffee per day at an average price of $4 per cup. On a typical day, the firm's total accounting profit is A. $800 B. $500 C. $200 D. $600

B. $500

Based on the figure above (with output in thousands of units), this firm would maximize its total profit at A. 5,250 units B. 3,500 units. C. 2,500 units. D. 2,000 units.

B. 3,500 units.

Which of the following statements is true? A. The law of diminishing marginal productivity applies in both the short run and the long run. B. At least one resource is fixed in the short run, but all resources are variable in the long run. C. Fixed costs are larger in the long run than than they are in the short run. D. All of the statements above are true.

B. At least one resource is fixed in the short run, but all resources are variable in the long run.

Based on the payoff matrix below, what is the Nash equilibrium without collusion in this simultaneous game? A. Only Coca-Cola will advertise. B. Both companies will advertise. C. Neither company will advertise. D. Only Pepsi will advertise.

B. Both companies will advertise.

In which of the following industries is a natural monopoly MOST likely to exist? A. Whale watching boat tours B. Freight (barge) shipping (think of the boats that carry the Matson containers) C. Sunset dinner cruises D. Tuna fishing

B. Freight (barge) shipping (think of the boats that carry the Matson containers)

Which of the following statements is FALSE? A. Monopolists charge a price that exceeds the marginal cost of production. B. Monopolists always earn positive economic profit; perfectly competitive firms may earn normal profit or incur losses. C. A monopolist produces less output than would be produced by a perfectly competitive industry. D. Monopolists are price setters; perfectly competitive firms are price takers.

B. Monopolists always earn positive economic profit; perfectly competitive firms may earn normal profit or incur losses.

Recall Lufa Farms and Biopak, two companies built on circular economy business models. Which of the following statements is false? A. For their businesses, social benefit from consumption is greater than the private benefit from consumption. B. Their services are overproduced/overconsumed. C. Their services are non-rival. D. Their business models create positive externalities

B. Their services are overproduced/overconsumed.

Think about the expenditure categories of GDP. If consumption expenditures rise by $300 billion and imports increase by $300 billion, then, ceteris paribus, GDP A. increases by $300 billion. B. does not change. C. increases by $600 billion. D. decreases by $300 billion.

B. does not change.

A natural monopoly arises in an industry where a firm A. has low barriers to entry. B. has very large fixed costs. C. faces a perfectly elastic demand curve. D. has very high variable costs.

B. has very large fixed costs.

Assume that there is no price leader in an oligopoly. If one firm increases its price, the most likely reaction of the other firms will be to A. improve the quality of their product in order to increase market share and revenue. B. leave their price unchanged in order to increase market share and revenue. C. increase their price in order to increase market share and revenue. D. decrease their price in order to increase market share and revenue.

B. leave their price unchanged in order to increase market share and revenue.

In the circular flow model, the factors of production are A. purchased by households. B. owned by households. C. owned by businesses. D. traded in the market for goods and services.

B. owned by households.

If the government uses money from the Social Security fund to finance its current budget deficit, then A. external public debt increases. B. public debt is unchanged. C. public debt decreases. D. internal public debt increases.

B. public debt is unchanged.

Given our current production and consumption trends, humanity is on track to use the equivalent of ___ earth's resources by 2050. A. 3.5 B. 3 C. 4.5 D. 1.5

B. 3

What is the opportunity cost of spending the entire weekend doing homework and studying for classes? A. Rest and relaxation B. It depends on the individual C. Spending time with family or friends D. Shifts that could have been picked up at work

B. It depends on the individual

Economics is the study of A. how people earn money to satisfy their unlimited wants. B. how people make decisions to allocate scarce resources given unlimited wants. C. the forces of demand and supply and how they direct the flow of goods in the economy. D. businesses models designed to maximize profit.

B. how people make decisions to allocate scarce resources given unlimited wants.

Firms in monopolistically competitive firms are most likely to A. perfectly price discriminate. B. first-degree price discriminate. C. imperfectly price discriminate. D. not price discriminate.

C. imperfectly price discriminate.

When a sub sandwich shop adds a second, third, and fourth worker on a particular shift, increasing marginal productivity of labor would arise because A. previously idle fixed resources become employed. B. workers specialize as more labor is added. C. the production process can be organized in a more efficient way. D. all of the above.

C. the production process can be organized in a more efficient way.

Based on observations of economic systems in practice, which most closely achieves the goals of a circular economy? A. Market system B. Planned economic system C. Ahupua'a system D. Mixed economic system

C. Ahupua'a system

Consider the externality generated by the market for 20-oz plastic beverage bottles (e.g., soda or water sold in vending machines or grocery stores). Which of the following statements is true for this market? A. The private cost of production exceeds the social cost of production. B. The social cost of production exceeds the private cost of production. C. The social benefit from consumption exceeds the private benefit from consumption. D. The social cost of production equals the private cost of production.

B. The social cost of production exceeds the private cost of production.

Production function data for an average 10-minute period between 4:00pm and 6:00pm at a small grocery store is provided in the table below. #checked workers: 1 2 3 4 5 6 7 8 #customers served: 4 9 16 26 34 39 41 23 When do diminishing returns set in? A. With the addition of the 7th worker B. With the addition of the 5th worker C. With the addition of the 6th worker D. With the addition of the 8th worker

B. With the addition of the 5th worker

All of the following are potential solutions to achieve the socially optimal outcome in the event of a negative externality EXCEPT A. a ban imposed on the good that imposes an external cost. B. a subsidy given to producers of the good that imposes an external cost. C. the imposition of a tax on the good that imposes an external cost. D. a production standard applied to the good that imposes an external cost.

B. a subsidy given to producers of the good that imposes an external cost.

Which of the following is an example of an externality? i. The bar in a hotel lobby has karaoke at 10:00pm every nite which can be heard from guests rooms .ii. Kailee opens a New York-style pizzeria whose popularity puts the existing pizza shop around the corner out of business. iii. Sydney opens a cafe, but is unable to earn enough revenue to cover her costs so she shuts down 10 months later. iv. Activity from the construction of the new high-rise being built in Kaka'ako creates daily traffic down the street. A. ii and iii B. i and iv C. i, ii, and iv D. i, ii, iii, and iv

B. i and iv

A European designed a way for parents to reduce their child's clothing waste up to 80%. They provide a subscription-based service offering high-quality clothing for their child's first few years of life. Customers receive their first package just before their child is due to be born. As the child (quickly) outgrows the clothes, new packages arrive with larger clothes sizes. Parents return the smaller items, which are professionally washed and undergo a rigorous quality control process before being sent to a new customer. This business engages in A. resource recovery. B. offering a product as a service. C. regenerating natural systems. D. production using circular supplies.

B. offering a product as a service.

Which of the following is considered economic capital at a coffee shop? A. Coffee beans B. Espresso machine C. Profits from coffee sales D. All of the above

B. Espresso machine

Suppose that Kai's neighborhood has recently experienced a string of robberies and attempted break-ins. Kai fears that her house may be targeted as well, so she installed four security cameras with monitoring service around her house. Although the cameras and service cost her $800 for the first year, she values her family's safety. Based on the information provided, which of the following statements is true? A. Kai made a rational decision that was not in self-interest. B. Kai made a rational decision in self-interest. C. Kai made an irrational decision in self-interest. D. Kai made an irrational decision that was not in self-interest.

B. Kai made a rational decision in self-interest.

If the shocks from the news articles in Question 5 and Question 7 happened simultaneously, what would be the impact on the equilibrium in the market for plant-based meat? A. Decrease in equilibrium price and ambiguous impact on equilibrium quantity B. Ambiguous impact on equilibrium price and increase in equilibrium quantity C. Ambiguous impact on equilibrium price and decrease in equilibrium quantity D. Increase in equilibrium price and ambiguous impact on equilibrium quantity

C. Ambiguous impact on equilibrium price and decrease in equilibrium quantity

What is the impact of the change in price regulation in the Oregon rental housing market based on the article below, ceteris paribus? A. An increase in the rental housing surplus B. A decrease in the rental housing surplus C. An increase in the rental housing shortage D. A decrease in the rental housing shortage

C. An increase in the rental housing shortage

Which of the following is a long-run decision for Morning Brew Cafe? A. Partnering with Bite Squad to offer food delivery B. Hiring two additional kitchen staff C. Expansion to include outdoor seating D. Extending hours to include dinner service

C. Expansion to include outdoor seating

Suppose that when the price of Good A increases by 10 percent, the quantity of Good B demanded increases by 5 percent. It can be inferred that A. Goods A and B are substitute goods. B. Goods A and B are inferior goods. C. Goods A and B are complementary goods. D. Goods A and B are normal goods.

C. Goods A and B are complementary goods.

Which market is least likely to produce a positive externality? A. Education B. Renewable energy C. Manufacturing D. High-speed internet

C. Manufacturing

Based on the headline below, ceteris paribus, what will be the immediate impact in the market for beef in New Zealand starting in 2025, when their carbon reduction program is expanded? A. Negative demand shock B. Positive demand shock C. Negative supply shock D. Positive supply shock

C. Negative supply shock

Which of the following characterizes "market failure" in the market for gasoline? A. At the current market price of gasoline, the quantity demanded exceeds the quantity supplied, creating a shortage. B. As electric cars become more popular and are increasingly available from all manufacturers, some gas stations go out of business due to the decline in business. C. The socially optimal quantity of gasoline is lower than the equilibrium quantity produced by the market. D. All of the above characterize market failure in the market for gasoline.

C. The socially optimal quantity of gasoline is lower than the equilibrium quantity produced by the market.

Which of the following items is likely to have the LOWEST price elasticity of demand? A. Pizza B. Movie tickets C. Toothpaste D. Electricity

C. Toothpaste

The price elasticity of demand measures A. consumers' responsiveness to a change in their income. B. price responsiveness to a change in consumers' preferences. C. consumers' responsiveness to a change in price. D. consumers' responsiveness to a change in their preferences.

C. consumers' responsiveness to a change in price.

As more and more Mexican restaurants open in a town, ceteris paribus, A. demand for Mexican food becomes less price elastic. B. demand for Mexican food becomes perfectly inelastic. C. demand for Mexican food becomes more price elastic. D. it becomes more difficult to measure price elasticity of demand for Mexican food.

C. demand for Mexican food becomes more price elastic.

A non-excludable good is a good A. that allows for simultaneous consumption by multiple individuals. B. produced by only one firm without any competition. C. from which even non-payers can benefit. D. whose production would result in wasted resources.

C. from which even non-payers can benefit.

If a 5 percent fall in the price of a product causes the quantity demanded of the product to increase by 10 percent, demand for that product is A. perfectly price elastic. B. price inelastic. C. price elastic. D. perfectly price inelastic.

C. price elastic.

Ceteris paribus, the smaller the share of income spent on a good, A. the higher the price elasticity of demand. B. the lower the price elasticity of supply. C. the lower the price elasticity of demand. D. the higher the price elasticity of supply.

C. the lower the price elasticity of demand.

In the short run, as firms hire more and more labor, diminishing marginal productivity of labor eventually sets in because A. the workers hired first are the most skilled and most talented. B. the firm's production technology becomes inefficient. C. workers have fixed plant size to work in and physical capital to work with. D. workers eventually slack off on the job when there are other employees available to complete their work.

C. workers have fixed plant size to work in and physical capital to work with.

For parent of two toddler children, the cross elasticity of demand between peanut butter and jelly would likely have which of the following values? A. ɛXY = + 0.25 B. ɛXY = - 0.25 C. ɛXY = - 3.5 D. ɛXY = + 3.5

C. ɛXY = - 3.5

According to the research cited in the video, businesses that have implemented principles of circular economy into their models or practices have experienced ______ better performance compared to those have not. A. 130 percent B. 20-30 percent C. 30-40 percent D. 3-4 percent

C. 30-40 percent

Which of the following statements is FALSE about an ahupua'a? A. Ahupua'a were geographic, political, social, and resource boundaries. B. Each ahupua'a was largely self-sufficient. C. Ahupua'a were divided into equal sizes to ensure equal distribution of resources. D. Each ahupua'a had some native forests to produce water, some midlands to grow crops, and some coastal areas for protein production.

C. Ahupua'a were divided into equal sizes to ensure equal distribution of resources.

Based on the PPC model, what does it mean for an economy to be at a point of production that is inefficient? A. Resources are being used to produce goods that consumers aren't willing to buy. B. Resources are highly specialized and can't be easily reallocated to other industries. C. Some available resources are not being used to their maximum potential. D. Resources are becoming increasingly scarce, so their costs are rising.

C. Some available resources are not being used to their maximum potential.

Which of the following is a normative statement? A. The Honolulu rail project is under federal investigation for funds mismanagement. B. The Honolulu rail project is over-budget. C. The Honolulu rail project is a waste of taxpayer dollars. D. Upon completion, the Honolulu rail project will reduce freeway congestion by 20% during peak traffic times.

C. The Honolulu rail project is a waste of taxpayer dollars.

Cascading is an example of A. a closed-loop system. B. a design strategy to regenerate the natural economy. C. all of the above. D. a design strategy to approach zero-waste.

C. all of the above

A farm using a hydroponics system to grow its crops demonstrates a A. sharing platform business model. B. resource recovery business model. C. circular supplies business model. D. product-as-a-service business model.

C. circular supplies business model.

A "true north" version of capitalism ( market system) provides the prosperity, growth, and economic development we strive for today without A. government intervention B. greed and selfishness C. social injustices and environmental degradation D. All of the Above

C. social injustices and environmental degradation

The exchange of goods and services in a sharing economy is facilitated by A. entrepreneurs who develop new business ideas. B. social media. C. technology and peer-to-peer applications. D. government-subsidized infrastructure.

C. technology and peer-to-peer applications.

An outward shift of an economy's PPC indicates that A. the economy's unemployment rate has decreased. B. the average individual in the economy now earns more income. C. the economy's production capacity has increased. D. all of the above have occurred.

C. the economy's production capacity has increased.

Which of the following BEST characterizes the goal of a circular economy? A. To minimize fossil fuel emissions by transitioning to cleaner, renewable sources for all production, transportation, and manufacturing activities. B. To transition toward more equitable access to goods and services that have regenerative impact on natural systems. C. To design out waste to extract maximum value from resources and regenerate natural systems. D. To design out waste to divert as much as possible from landfills and instead become food for another process.

C.To design out waste to extract maximum value from resources and regenerate natural systems.

Consider the market for electric vehicles (EVs). Which of the following statements is true? A. Social benefit from consumption > private benefit from consumption B. Social benefit from consumption < private benefit from consumption C. Social cost of production < private cost of production D. Social benefit from consumption = private benefit from consumption

A. Social benefit from consumption > private benefit from consumption

Which of the following events were likely the biggest factors driving the trend in the market price for solar energy over the past few years? i. Increase in number of buyers ii. Advancement of technology iii. Change in consumer preferences toward sustainable practices iv. Decrease in resource prices A. ii and iv B. ii and iii C. i and iii D. i and ii

A. ii and iv

Because sea level rise mitigation strategies (like oyster beds and rain gardens) are ________, allowing for people to simultaneously benefit from them without reducing benefit to any one individual, these projects would be ________ if they were provided by profit-seeking firms. A. non-rival........underproduced B. non-rival........overproduced C. non-excludable........overproduced D. non-excludable........underproduced

A. non-rival........underproduced

Which of the following is NOT true about a circular economy? A. Businesses will have less profit opportunity, as consumers will purchase fewer products that will last longer. B. Many business will transition from product manufacturers to service providers. C. Innovation and redesign are necessary in every industry to reduce waste and help regenerate natural systems. D. Technology will play an integral role that guides production and remanufacturing systems, and that connects buyers and sellers.

A. Businesses will have less profit opportunity, as consumers will purchase fewer products that will last longer.

Goods in a market economy A. are produced efficiently and at lowest cost, but only with regard to the current time period, as self-interest drives up the future costs of resources and goods. B. are distributed to all individuals, as producers are responsive to all consumers. C. are produced based on what the government thinks people should have. D. are produced inefficiently, as the goals of producers do not align with the goals of consumers.

A. are produced efficiently and at lowest cost, but only with regard to the current time period, as self-interest drives up the future costs of resources and goods.

A discouraged worker is considered by the Bureau of Labor Statistics as A. "not in the labor force" because he or she recently stopped actively looking for a job. B. "marginally attached to the labor force" because he or she doesn't really want a job. C. unemployed. D. a worker who is dissatisfied with his or her current job.

A. "not in the labor force" because he or she recently stopped actively looking for a job.

Suppose you have a 30-year mortgage at a fixed rate of 7 percent. At the time you signed, your lender's analysts anticipate inflation of 2 percent over the 30-year life of your loan. At the end of your loan, the actual inflation rate was 4 percent. What was the real interest rate earned by your lender? A. 3 percent B. 5 percent C. 4 percent D. 2 percent

A. 3 percent

Which of the following is an example of second-degree price discrimination? A. A bakery charging $1 per doughnut or $10 for 1 dozen of the same doughnut. B. A 2019 Lexus SUV selling for $12,000 to the highest bidder at the police seizure auction. C. Costco charging a $50 membership fee in order to shop at their stores. D. The Hilton Hawaiian Village in Waikīkī charging a discounted room rate to kama'āina with a resident ID and a higher room rate to visitors from outside Hawai'i.

A. A bakery charging $1 per doughnut or $10 for 1 dozen of the same doughnut.

Which of the following is an example of third-degree price discrimination? A. An airline charging business passengers in coach and vacation passengers in coach different prices. B. An eBay seller accepting a lower bid from one buyer and a higher bid from another buyer for two identical items. C. An airline charging a passenger in coach a lower price than they charge a passenger in first class. D. A publisher charging a higher price for the print version of the textbook and a lower price for the e-book.

A. An airline charging business passengers in coach and vacation passengers in coach different prices.

Which of the following is an example of vertical integration? A. Carnegie Steel company's acquisition of iron ore mines and cargo ships. B. United Airlines and Continental Airlines merger to become United Continental Holdings. C. Yahoo's acquisition of AOL to better compete against Google and Microsoft D. Disney Entertainment's acquisition of sports channel ESPN.

A. Carnegie Steel company's acquisition of iron ore mines and cargo ships.

Which of the following is NOT an example of an oligopolistic industry? A. High-end fashion & apparel industry B. Car manufacturing industry C. Social media industry D. Oil drilling industry

A. High-end fashion & apparel industry

Which of the following is true for a firm in a perfectly competitive industry? A. It can choose the quantity of output it produces, but not its price. B. It can choose its price, but not the quantity of output it produces. C. It can choose neither its price nor the quantity of output it produces. D. It can choose both its price and the quantity of output it produces.

A. It can choose the quantity of output it produces, but not its price.

All of the following are factors that contribute to an economy's growth EXCEPT A. an increase in its money supply. B. a growing labor force. C. physical capital accumulation. D. technological advancement.

A. an increase in its money supply.

A headline states: "Growth slows as the economy slumps." This condition is most likely to produce what type of unemployment? A. cyclical B. frictional C. seasonal D. structural

A. cyclical

Suppose that the Hawai'i State Legislature votes to allocate $20 million to repair roads while traffic is reduced during the COVID-19 crisis. This would be an example of A. discretionary fiscal policy. B. automatic fiscal policy. C. Classical economic policy. D. contractionary fiscal policy.

A. discretionary fiscal policy.

Income elasticity of demand is likely positive for all of the following goods EXCEPT A. frozen pizza. B. Uber rides. C. toilet paper. D. desktop computers.

A. frozen pizza.

You own a company that produces #2 pencils. If your firm experiences an increase in production cost due to a natural disaster that damaged your manufacturing plant, A. if you want to stay in business, once you are able to rebuild and restart operations, you will likely need to suffer a temporary loss and cannot raise the price of your pencils to cover the increased fixed cost you incurred. B. then the market supply of #2 pencils would decrease because your firm's production stopped, causing an increase in the equilibrium price of pencils. C. you would exit the industry immediately. D. once you are able to rebuild and restart operations, you can easily pass on the increase in your production cost to consumers by increasing the price of your product.

A. if you want to stay in business, once you are able to rebuild and restart operations, you will likely need to suffer a temporary loss and cannot raise the price of your pencils to cover the increased fixed cost you incurred.

Mark and Clay make fishing lures. With their current production process, they produce 500 lures per week for an average total cost of $2.47. If economies of scale exist for their business, this implies that A. increasing production to 1,000 lures per week would result in an average total cost of $1.99. B. they can expand their production capacity without incurring any additional fixed costs. C. $2.47 is the minimum average total cost they will be able to achieve in the long run. D. increasing production to 1,000 lures per week would result in an average total cost of $2.99.

A. increasing production to 1,000 lures per week would result in an average total cost of $1.99.

A monopolistically competitive firm earns _______ profit in the long run because _______. A. normal.....there are low barriers to entry into the market. B. normal.....firms can differentiate their product. C. higher-than-normal.....firms have some price-setting power. D. higher-than-normal.....firms can differentiate their product.

A. normal.....there are low barriers to entry into the market.

Suppose the price per dozen glazed doughnuts is $5. If it costs Kevin $8.50 per dozen to produce, of which his average fixed cost is $3.00, then Kevin should A. shut down immediately. B. increase his scale of operation. C. continue to produce in the short run but exit the industry in the long run. D. exit the industry immediately.

A. shut down immediately.

The national debt is A. the sum of all previous budget deficits minus the sum of all previous budget surpluses of the federal government. B. the sum of all previous expenditures of the federal government. C. the sum of all government bonds sold to foreigners. D. the sum of all funds borrowed from government organizations.

A. the sum of all previous budget deficits minus the sum of all previous budget surpluses of the federal government.

Classical economic theory is most applicable A. when the economy is near full-employment. B. when the economy is growing at a constant rate. C. when the economy is in a deep recessionary gap. D. at positive output gaps.

A. when the economy is near full-employment.

Consider the purple-highlighted section of the article below: Which of the following most accurately describes the impact on the market for plant-based meat? Which of the following most accurately describes the impact on the market for plant-based meat? A. Positive demand shock due to changing consumer preferences B. Positive supply shock due to decreased production cost C. Positive demand shock due to price changes in the markets for related goods D. Positive supply shock due to technological advancement

A. Positive demand shock due to changing consumer preferences

Which of the following is NOT a determinant of demand for Subway sandwiches at KCC? A. The price of bread B. The price of hamburgers at the cafeteria C. Students' hourly pay D. Student enrollment

A. The price of bread

The largest expenditure share of the CPI basket is A. housing. B. transportation, including gasoline. C. education. D. energy and utilities.

A. housing.

A nation has a population of 260 million people. Of these, 60 million are retired, in the military, in institutions, or under 16 years old. There are 188 million who are employed and 12 million who are unemployed. What is the unemployment rate? A. 4.6 percent B. 6 percent C. 6.3 percent D. 9.3 percent

B. 6 percent

Which of the following statements about business cycles is true? A. Economies spend majority of time at full employment, correcting for output gaps when necessary. B. Economies spend majority of time in an output gap, striving to restore full employment. C. The most successful economies are those that have figured out how to permanently remain in a positive output gap. D. The most successful economies are those that have figured out how to avoid negative output gaps.

B. Economies spend majority of time in an output gap, striving to restore full employment.

King Street Pet Hospital has 7 veterinarians on staff. They have a need for vet technicians, who support the veterinarians in a way similar to the support a nurse's aid provides a physician. Based on their 10 years in operation, they find that diminishing marginal productivity sets in when they hire the 10th vet technician. Which of the following statements best characterizes this situation? A. After hiring the 9th vet technician, all of the most qualified vet technicians are already employed. So the 10th hire is less skilled and/or experienced than the first 9, resulting in decreased marginal productivity. B. Hiring the 10th vet technician results in idle time among the vet technician staff, with insufficient tasks and fixed resources for them to work with. C. Given their profits, King Street Pet Hospital can only afford to pay 9 vet technicians the industry average salary or higher, and hiring the 10th requires them to pay below the industry average.

B. Hiring the 10th vet technician results in idle time among the vet technician staff, with insufficient tasks and fixed resources for them to work

A recession is defined as A. a rise in the unemployment rate. B. a fall in real GDP that lasts six months or longer. C. slowed growth of real GDP. D. a rise in the natural rate of unemployment.

B. a fall in real GDP that lasts six months or longer.

All of these groups are considered losers when unanticipated inflation occurs EXCEPT A. workers. B. borrowers. C. holders of cash. D. lenders.

B. borrowers.

Max, the owner of a boba (bubble tea) shop, is considering scaling his business by opening a second location on the other side of town. This long-run decision would produce economies of scale for Max's business A. only if Max can split his time equally across the two locations. B. if the company's increased production capacity causes its average total cost per boba drink to fall. C. as long as consumers' preferences don't change. D. only if Max hires additional workers who are more skilled and customer service-oriented than his current workers.

B. if the company's increased production capacity causes its average total cost per boba drink to fall.

All of the following are costs of inflation EXCEPT A. uncertainty and confusion. B. arbitrary reallocation of wealth between lenders and borrowers. C. increased income taxes. D. loss of purchasing power.

C. increased income taxes.

GDP includes output produced ________ but does not include output produced ________. A. outside the United States by U.S. citizens.....inside the United States by foreign citizens B. inside the United States by foreign citizens.....outside the United States by U.S. citizens C. outside the United States by U.S. citizens.....inside the United States by U.S. citizens D. inside the United States by U.S. citizens.....inside the United States by foreign citizens

B. inside the United States by foreign citizens.....outside the United States by U.S. citizens

If a monopolist engages in price discrimination, A. total social welfare will decrease. B. it will charge a higher price to consumers whose demand is relatively price inelastic and a lower price to consumers whose demand is relatively price elastic. C. it will produce less total output than it would without price discriminating. D. all of the above will result.

B. it will charge a higher price to consumers whose demand is relatively price inelastic and a lower price to consumers whose demand is relatively price elastic.

Individual firms selling in a perfectly competitive market are price takers because each producer has a A. substantial fraction of total market share for a differentiated good. B. negligible fraction of total market share for a homogeneous good. C. negligible fraction of total market share for a differentiated good. D. substantial fraction of total market share for a homogeneous good.

B. negligible fraction of total market share for a homogeneous good.

A monopolistically competitive industry is like a purely competitive industry in that A. individual firms in both industries face a horizontal demand curve. B. neither industry has significant barriers to entry. C. non-price competition is a feature in both industries. D. each firm produces a homogeneous product.

B. neither industry has significant barriers to entry.

An economy has historically grown at a rate of 2.25%. Currently, this economy is growing at a rate of 3%, and the unemployment rate is low by historical standards. The economy is expected to continue to grow in the near future, and analysts are concerned that inflation may increase. This economy is most likely at a _____________ and in the _____________ stage of the business cycle. A. negative output gap.....expansion B. positive output gap.....expansion C. negative output gap.....contraction D. positive output gap.....contraction

B. positive output gap.....expansion

Rosco's Tacos competes with eight other Mexican restaurants in the same part of town. If two of competitors exit the market, then the demand curve facing Rosco's will A. shift to the right and become relatively more elastic. B. shift to the right and become relatively less elastic. C. shift to the left and become relatively more elastic. D. shift to the left and become relatively less elastic.

B. shift to the right and become relatively less elastic.

In an oligopoly, firms A. don't prioritize cost minimization. B. strategize based on how they think their rivals will behave and respond to their own actions. C. have minimal price setting power because of the high degree of competition from their few rivals. D. collude with other producers to learn about their strategies and maximize joint profit.

B. strategize based on how they think their rivals will behave and respond to their own actions.

Suppose the economy is currently at a negative output gap. A Keynesian economist would advise A. the government to buy private firms so government-owned enterprises can expand and increase real GDP. B. the government to increase spending on public infrastructure and social programs to help offset the decline in spending by households and firms. C. households and firms to increase their private spending. D. that nothing be done to allow the economy to self-correct in the most efficient way possible.

B. the government to increase spending on public infrastructure and social programs to help offset the decline in spending by households and firms.

In the aggregate, gross domestic product is an economic performance indicator that represents all of the following EXCEPT A. the total size of the domestic labor force. B. the total amount of income paid within the economy. C. the total amount of expenditure made within the economy. D. the value of total production within an economy.

B. the total amount of income paid within the economy.

Automatic stabilizers are often more effective than discretionary fiscal policy because A. they are designed to impact the largest businesses that employ the most individuals. B. they happen more timely and are necessarily directed toward the individuals who need assistance the most. C. they won't contribute to the national debt. D. they are implemented based on economic theory.

B. they happen more timely and are necessarily directed toward the individuals who need assistance the most.

If two countries are identical in every way except that there is significant air and water pollution in one country and relatively little pollution in the other, then, ceteris paribus, the level of GDP A. will be higher in the country with relatively less pollution. B. will be the same in both countries. C. will be higher in the country with the smaller population. D. will be higher in the country with relatively more pollution.

B. will be the same in both countries.

According to the BLS, an individual who is unemployed [Select all that apply] A. has worked in the past 12 months. B. is actively looking for a job. C. does not have a job. D. is available to work.

B. C. D.

____ unemployment includes workers who voluntarily quit their jobs to search for better positions or compensation packages, or who get fired from their current jobs. A. structural B. cyclical C. seasonal D. frictional

D. frictional

Which of the following statements best demonstrates "symbiosis"? A. In a market economic system, there is a symbiosis between the government and producers. B. In the ahupua'a system, there was a symbiosis between humans and all elements of nature. C. In a planned economic system, there is a symbiosis between producers and consumers. D. In a market economic system, there is a symbiosis between the government and consumers.

B. In the ahupua'a system, there was a symbiosis between humans and all elements of nature.

Which sequence describes the long-run adjustment process in perfectly competitive market when firms are earning positive short-run economic profit? A. Existing firms exit, market supply decreases, equilibrium price rises B. New firms enter, market supply increases, equilibrium price falls C. New firms enter, market supply increases, equilibrium price rises D. New firms enter, equilibrium price falls, market supply decreases

B. New firms enter, market supply increases, equilibrium price falls

What is liquidity? A. The ease with which money can be withdrawn from a checking account B. The ease with which something can be used in transactions for the purchase of goods and services C. The rate at which individuals deposit and withdraw money from their checking accounts D. The fluidity of money flowing into and out of the banking system

B. The ease with which something can be used in transactions for the purchase of goods and services

Transitioning from a linear to a circular economy will require all of the following EXCEPT A. a change in consumer mindset. B. government ownership of key productive resources to coordinate their usage. C. new business models and practices. D. redesign of products and supply chains

B. government ownership of key productive resources to coordinate their usage

Which of the following statements about monopolistically competitive industries is true? A. There are relatively few monopolistically competitive industries. B. Firms that compete in monopolistically competitive industries are desirable targets for investors looking to buy equity (ownership share) in a business. C. Firms that compete in monopolistically competitive industries are not desirable targets for investors looking to buy equity (ownership share) in a business. D. Monopolistically competitive industries are desirable for entrepreneurs.

C. Firms that compete in monopolistically competitive industries are not desirable targets for investors looking to buy equity (ownership share) in a business.

When Charlie worked full time, he paid a cleaning service to have his house cleaned twice a month. Now that he is retired, he pays his grandson $20 to come over twice a month to help him with his cleaning. As a result, A. GDP remains the same because the productive activity continues to take place. B. GDP rises because now two people engage in the productive activity. C. GDP falls even though the productive activity continues to take place. D. GDP falls because there was a decrease in productive activity.

C. GDP falls even though the productive activity continues to take place.

Which of the following statements about measures of the money supply is FALSE? A. The 3 measures of the money supply are M0, M1, and M2. B. M2 includes the least liquid types of money. C. M1 is the monetary base. D. Banks' reserve deposits are part of M0.

C. M1 is the monetary base.

Rank the elasticity of the demand curve facing a firm in each market type from HIGHEST to LOWEST: A. Monopoly (unregulated) Oligopoly Monopolistic competition Perfect competition B. Oligopoly Monopoly Monopolistic competition Perfect competition C. Perfect competition Monopolistic competition Oligopoly Monopoly (unregulated) D. Monopolistic competition Perfect competition Oligopoly Monopoly

C. Perfect competition Monopolistic competition Oligopoly Monopoly (unregulated)

Based on the figure above, the profit-maximizing (unregulated) monopolist will produce quantity ____ and charge price ____. A. Q1.....P1 B. Q3.....P2 C. Q2.....P2 D. Q3.....P3

C. Q2.....P2

After completing her Ph.D. in physics, Kailee actively searched for a university research job for 7 months after graduation. However, she did not get selected by any of the universities where she interviewed. Now, she tutors high school physics students for 20 hours per week. Which of the following statements is true? A. The Bureau of Labor Statistics classifies Kailee as marginally attached to the labor force. B. The Bureau of Labor Statistics classifies Kailee as part-time for economic reasons. C. The Bureau of Labor Statistics classifies Kailee as employed, despite the underemployment of her human capital. D. The Bureau of Labor Statistics classifies Kailee as a discouraged worker, since she could not find employment in her specialization.

C. The Bureau of Labor Statistics classifies Kailee as employed, despite the underemployment of her human capital.

In the collusion model of oligopoly behavior, A. one producer sets prices and the other producers follow its lead. B. the government will intervene and punish any member who cheats by deviating from the cartel agreement. C. all producers jointly act as a single firm, restricting output through imposition of production quotas and maximizing group revenue. D. all firms in the industry are members of the cartel.

C. all producers jointly act as a single firm, restricting output through imposition of production quotas and maximizing group revenue.

At full-employment, there is no A. frictional unemployment. B. structural unemployment. C. cyclical unemployment. D. seasonal unemployment.

C. cyclical unemployment.

A monopolist's marginal revenue curve is ___________, while the marginal revenue curve for a firm in a perfectly competitive market is ___________. A. perfectly elastic.....downward-sloping B. downward-sloping.....perfectly inelastic C. downward-sloping.....perfectly elastic D. perfectly inelastic.....downward-sloping

C. downward-sloping.....perfectly elastic

If the economy is in a recession and prices are relatively stable, then the fiscal policy or policies that would most likely stabilize the business cycle is/are A. decreased government spending or increased taxation, or a combination of the two actions. B. increased government spending or increased taxation, or a combination of the two actions. C. increased government spending or decreased taxation, or a combination of the two actions. D. decreased government spending or decreased taxation, or a combination of the two actions.

C. increased government spending or decreased taxation, or a combination of the two actions.

The crowding-out effect suggests that A. increases in consumption are always at the expense of saving. B. an increase in taxes will reduce consumption, saving and investment. C. increases in government spending may raise the interest rate and thereby reduce private consumption and investment. D. increases in government spending will close a recessionary gap.

C. increases in government spending may raise the interest rate and thereby reduce private consumption and investment.

Netflix service is A. rival and excludable. B. rival and non-excludable. C. non-rival and excludable. D. non-rival and non-excludable.

C. non-rival and excludable.

The consumer price index measures the value of the basket of goods A. necessary to live above poverty level. B. purchased by firms. C. purchased by the typical urban family. D. purchased by two-income households.

C. purchased by the typical urban family.

If firms in a monopolistically competitive market earn negative economic profit in the short run, it can be expected that A. consumer preferences will change once firms invest in product redevelopment to increase market share. B. firms will strategically lower their prices in hopes of increasing their market share over their rivals. C. some existing firms will exit the industry in the long run, resulting in smaller losses and remaining firms earning normal profit. D. all firms will exit the industry in the short run.

C. some existing firms will exit the industry in the long run, resulting in smaller losses and remaining firms earning normal profit.

Kevin has lost his job in an automobile plant because of the use of robots for welding on the assembly line. Kevin plans to go to technical school to learn how to program software code. The type of unemployment Kevin is faced with is A. seasonal. B. frictional. C. structural. D. cyclical.

C. structural.

What is money? A. Any item that a person would accept in exchange for other goods and services. B. Any item that has intrinsic value and for which people have demand. C. Any item that is widely accepted for the purpose of exchange and for the payment of debts. D. Any item whose value is supported by the quantity of a valuable metal held by the central bank.

C. Any item that is widely accepted for the purpose of exchange and for the payment of debts.

Planned economies have failed because they A. have relatively few political allies. B. they allocate too much of their resources to military and defense systems. C. lack the information and incentives necessary to use their limited resources efficiently, and often the care to do so. D. resulted in the death of labor resources due to famine.

C. lack the information and incentives necessary to use their limited resources efficiently, and often the care to do so.

In a market system, the primary concern of business owners and entrepreneurs is A. ensuring efficient use of all resources. B. ensuring equitable access to the goods and services produced. C. profit maximization. D. imposing minimal costs on the community and the environment.

C. profit maximization.

Beyond the early stage, as a recession worsens, ceteris paribus, the number of discouraged workers __________ and the number of unemployed people ___________. A. increases.....increases B. decreases.....decreases C. decreases.....increases D. As a recession worsens, ceteris paribus, the number of discouraged workers __________ and the number of unemployed people ___________.

D. As a recession worsens, ceteris paribus, the number of discouraged workers __________ and the number of unemployed people ___________. Feedback: As more jobs are destroyed during the recession (through business closure) and without new jobs created (businesses are not expanding), people who are unemployed and those who are newly laid off from work are not able to find work elsewhere. They may try to apply for jobs, but will likely be unsuccessful. As the average unemployment spell gets longer, more workers become discouraged and stop looking for work. After 4 weeks of no job search, the individual drops out of the labor force because he or she is no longer considered unemployed once active job search stops. The number of discouraged workers increases, who are NOT in the labor force and are now marginally attached workers. However, the number of unemployed individuals decreases, not because they found jobs, but because they stopped looking for a job. This is an example of a "bad" decrease in unemployment. These individuals who want jobs still don't have one. Although they are not reflected in the standard unemployment rate (U3), they represent underutilized resources available for production.

Which of the following is FALSE about structural unemployment? A. It often necessitates extensive retraining, additional education, or geographic relocation. B. It can be caused by advancements in technology. C. It is usually associated with extended periods of unemployment. D. It occurs as a result of the time it takes to match a worker's skills with the skills necessary for employment in vacant jobs.

D. It occurs as a result of the time it takes to match a worker's skills with the skills necessary for employment in vacant jobs.

Which of the following is true about monopolies? A. Monopolies often pursue innovation and technological advancement at a faster rate than firms in competitive markets. B. A typical monopoly would result in increased social welfare compared to competitive markets. C. Monopolies overproduce their output relative to the socially optimal quantity. D. Price exceeds marginal revenue for a monopolist.

D. Price exceeds marginal revenue for a monopolist.

Which of the following is an example of a final (finished) good? A. Milk purchased by a cafe B. Lumber purchased by a general contractor C. Corn purchased by a cattle farmer D. Shoes purchased by a teacher

D. Shoes purchased by a teacher

Which of the following would be considered an investment purchase in calculating GDP? A. The purchase of newly-issued shares of stock in Snapchat when the company goes public. B. Google's $64 billion of cash reserves ("cash on hand") C. The purchase of government bonds for your retirement fund D. The construction of the new Amazon headquarters.

D. The construction of the new Amazon headquarters.

Which statement about monopolistic competition is FALSE? A. The firm faces a downward-sloping marginal revenue curve. B. To maximize profit, the firm will produce the quantity at which marginal revenue equals marginal cost. C. The firm can earn positive, negative, or zero economic profit in the short run. D. The firm faces a horizontal demand curve.

D. The firm faces a horizontal demand curve.

A monopolistically competitive firm is currently producing at an output level where average total cost is $4.50, price is $4.00, marginal revenue is $2.50, and marginal cost is $2.50. Which of the following statements is true about the firm's short-run performance? A. The firm is at the short-run break-even point of production. B. The firm has achieved production efficiency in the short run. C. The firm is generating positive profit in the short run. D. The firm is suffering a loss in the short run.

D. The firm is suffering a loss in the short run.

Think about a company that continues to expand its scale of operation. For example, consider Starbucks. Its headquarters is in Seattle, Washington, but they operate 30,600 stores worldwide (as of September 2019). As the company continues to scale its operation, diseconomies of scale would arise due to A. diminishing marginal productivity of labor. B. a lack of human capital and entrepreneurial talent within the firm. C. higher resource and material costs due to supplying an increasing number of locations. D. additional layers of management to decentralize decision-making, as well as organizational and communication challenges.

D. additional layers of management to decentralize decision-making, as well as organizational and communication challenges.

Expansionary fiscal policy is best implemented when A. there are many underemployed resources in the economy. B. the government is able to identify and target underemployed resources. C. the source of the recession and decline in spending is a decrease in demand. D. all of the above.

D. all of the above.

Monopolies that are allowed to exist are regulated by the government via A. average cost-pricing. B. imposition of price ceilings. C. a commission of appointed or elected individuals from the general public. D. all of the above.

D. all of the above.

In the price leader model of oligopoly, when the price leader increases its price, A. it does so in order to cover rising production costs. B. the other firms often copy the price increase, as their production costs have also increased. C. the other firms can leave their price unchanged or drop their prices to increase their marketshare, but any gains are not typically long-lasting. D. all of the statements above are true.

D. all of the statements above are true.

The collusion model of oligopoly behavior works best when A. cartel members have different production methods and production costs. B. the smaller the cartel's collective market share. C. there are low barriers to entry into the market. D. cartel members produce a homogeneous product.

D. cartel members produce a homogeneous product.

Suppose the price per bushel of corn is $2.25. If corn costs Zoe $2.50 per bushel to produce, of which his average fixed cost is $0.75, then Zoe should A. shut down immediately and exit the industry in the long run. B. increase his scale of production. C. exit the industry immediately. D. continue to produce in the short run but exit the industry in the long run.

D. continue to produce in the short run but exit the industry in the long run.

If the unemployment rate is greater than the natural rate of unemployment, then real GDP A. is equal to potential GDP. B. exceeds potential GDP. C. is at a trough of the business cycle. D. is less than potential GDP.

D. is less than potential GDP.

Think about the macroeconomic indicators discussed in this topic and what purposes they are used for. One key reason why economists track investment purchases is because A. it helps households decide which stocks to purchase. B. it is correlated with government investment. C. it helps to predict income inequalities. D. it is a good predictor of future GDP.

D. it is a good predictor of future GDP.

If the economy is at a recessionary gap, A. members of Congress who believe in Keynesian economics would push to let the automatic stabilizers counter the business cycle. B. all members of Congress would push for a discretionary policy response to counter the business cycle. C. members of Congress who believe in Classical economics would push for a discretionary fiscal policy response to counter the business cycle. D. members of Congress who believe in Keynesian economics would push for a discretionary fiscal policy response to counter the business cycle.

D. members of Congress who believe in Keynesian economics would push for a discretionary fiscal policy response to counter the business cycle.

All of the following are challenges to fiscal policy EXCEPT A. implementation lag. B. recognition lag. C. effectiveness lag. D. monetary lag.

D. monetary lag.

The main reason why firms in a perfectly competitive market earn zero economic profit in the long run is because A. market forces equally distribute consumers among all the firms in the market. B. all firms produce completely identical products. C. all firms have negligible market share. D. of easy entry into and exit from the market in response to short-run profits, which affects the market price.

D. of easy entry into and exit from the market in response to short-run profits, which affects the market price.

According to Keynesian theory, the economy is not always self-correcting and may require government intervention because A. there is no one to coordinate price changes in a market system. B. certain firms pursing their own self-interest counteract the economy's attempt to self-correct. C. households usually wait for the government to take corrective action. D. prices - particularly wages - are sometimes slow to adjust, and government spending may be needed when private spending is insufficient.

D. prices - particularly wages - are sometimes slow to adjust, and government spending may be needed when private spending is insufficient.

Which of the following is NOT a characteristic of a perfectly competitive market? A. There are low barriers to entering or exiting from the market B. There are many producers in the market C. Individual buyers and individual sellers have no impact on the price D. Firms differentiate their product to stand apart from the competition

D. Firms differentiate their product to stand apart from the competition

The M2 measure of the money supply includes

Everything included in M1:Cash held outside of banksChecking depositsTravelers' checks (although not typically listed) Savings deposits Small time deposits Money market mutual funds

Consider two productive activities in Hawai'i's agricultural sector depicted in the PPC below: the production of cucumbers (green vegetable) and the production of (chicken) eggs. If the pandemic and increased concern about Hawai'i's dependence on imported food cause increased preference and demand for locally-produced agriculture, what will be the impact on the PPC? A. B. C. D.

:D Feedback: The PPC (production possibilities curve) is a model of production. It demonstrates the levels of output an entity is capable of producing given their existing resources and technology. It does not reflect consumers' preferences or demand, which are determined by other factors (not resource and technology availability). The fact that consumers want to purchase more locally-produced agriculture does not imply that the agriculture industry will be able to produce at increased capacity. There has to be a willingness of existing farmers to expand their scale of production, and a willingness of new farmers to enter the market. While the former might be incentivized if an increased demand is observed, the latter is highly unlikely if individuals are not willing to become farmers and earn their income solely from farming activity.

Consider two productive activities in Hawai'i's agricultural sector depicted in the PPC below: the production of cucumbers (green vegetable) and the production of (chicken) eggs. If more land currently zoned for agriculture is reallocated for development (housing, commercial space, etc.), what is the impact on the PPC? A. B. C. D.

A Feedback: Chickens (that lay eggs) are raised and vegetables (cucumbers) are grown on farms, which are located on agricultural lands. If more of this land is reallocated for development, this necessarily means that there is less land available for raising animals and growing crops. Because this key resource is less available, ceteris paribus, the production capacity of each agricultural product will fall, causing the PPC to shift in on both axes.

Which of the following statements about the ahupua'a system is FALSE? A. In order to conserve resources, the ahupua'a system allowed for the bare minimum production of goods so that people had only what they needed for their basic biologic needs. B. People and chiefs did not own resources in the ahupua'a system, as they perceived themselves as stewards of the natural world, not an authority to own and personally benefit from it. C. The signaling for efficient resource use in an ahupua'a system came from both the kapu system and individual observation of nature, both of which were rooted in a a familial relationship with responsibility to the natural world. D. Goods that were produced in an ahupua'a system were for distributed to everyone, regardless of their role in society.

A. In order to conserve resources, the ahupua'a system allowed for the bare minimum production of goods so that people had only what they needed for their basic biologic needs.

What is an economic system? A. The method by which a country coordinates the allocation of resources and the distribution of goods. B. The set of laws and social structure in a country that govern producer and consumer behavior. C. The set of economic theories and beliefs about a country's best allocation of resources. D. The political system within the country that determines how goods are distributed.

A. The method by which a country coordinates the allocation of resources and the distribution of goods.

Recall Vince and Gabbi Wenke, the Hawai'i Kai couple we read about in the Civil Beat article who closed their business and started a home garden during the pandemic and now trade their surplus with others in exchange for grocery items. Which of the following reflects an inverse relationship? A. The productivity of their garden and their perceived food insecurity B. The size of their garden and the number of exchanges they make C. The number of exchanges they make and their grocery bill savings D. Their labor input into expanding and maintaining their garden and amount of their harvest

A. The productivity of their garden and their perceived food insecurity

Which of the following is a positive statement? A. The tourism industry directly contributes to the household income of majority of families in Hawai'i. B. A transition away from tourism and the development of alternative industries will take too long. C. Hawai'i's economy is overly dependent on the tourism industry. D. Families in Hawai'i can't survive without the tourism industry at pre-pandemic levels.

A. The tourism industry directly contributes to the household income of majority of families in Hawai'i.

How is the invisible hand demonstrated in a market? A. Through pressure on the price to adjust in response to imbalances in the market that reflect inefficient resource allocation B. Through government intervention designed to eliminate inefficient resource allocation resulting in shortages and surpluses C. Through the creation of shortages or surpluses in the market triggered by shocks to the market D. Through government intervention designed to protect consumers or producers of necessity goods

A. Through pressure on the price to adjust in response to imbalances in the market that reflect inefficient resource allocation

Sharing, reuse, repair, and refurbishment are more optimal design strategies in a circular economy than recycling because A. all the above. B. recycling requires more resource input. C. recycling is usually more costly. D. recycling requires the disassembly of goods to their basic elements.

A. all the above.

Western worldview reinforces ________, while indigenous worldview is ________. A. individualism.....collective. B. the present.....futuristic. C. collectivism.....individual D. property....productivity

A. individualism.....collective.

The goal of each ahupua'a was to A. maximize abundance of the land while ensuring all people and nature thrived. B. produce enough food to have excess to trade with neighboring ahupua'a. C. to accumulate as many necessity goods as possible as a display of wealth. D. produce the maximum amount of goods for the chiefs and royalty.

A. maximize abundance of the land while ensuring all people and nature thrived.

Upon graduation from college, you start a new job with an annual salary of $65,000. With this increase above your current hourly wage rate, your demand for peanut butter and jelly sandwiches decreases and your demand for Spam increases. It can be inferred that A. peanut butter and jelly sandwiches are an inferior good and Spam is a normal good for you. B. peanut butter and jelly sandwiches are a normal good and Spam is an inferior good for you. C. peanut butter and jelly sandwiches and Spam are normal goods for you. D. peanut butter and jelly sandwiches and Spam are inferior goods for you.

A. peanut butter and jelly sandwiches are an inferior good and Spam is a normal good for you.

Market economies rely on ________ to direct the allocation of resources. A. the invisible hand B. the government C. luck D. economists

A. the invisible hand

Justin owns a commercial property that he has leased to a clothing boutique owner for $4,100 per month the past 2 years. Justin is launching his own business which he will open in the space occupied by the boutique. Based on his estimates for the first six months of operation, he will generate monthly revenue of $12,000 and incur utilities of $850 per month. His insurance premium costs $300 per month, his equipment lease costs $2,200 per month, and his monthly material cost is $1,700. What is Justin's estimated economic profit? A. $9,150 B. $2,850 C. $5,050 D. $6,950

B. $2,850

Suppose a cafe's daily total fixed cost is $100, its variable cost is $1 per cup of coffee, and it sells an average of 200 cups of coffee per day at an average price of $4 per cup. If the cafe is closed today due to a water main break on the street outside, the cafe's total accounting profit today will be A. - $300 B. - $100 C. $100 D. $200

B. - $100

A grocery store announced a discount on locally-made honey that would be half off the regular price. They then observed sales increase by 200%. The store can conclude that the price elasticity of demand for locally-made honey is A. - 0.25 B. - 4 C. - 0.4 D. - 40

B. - 4

If Cary's price elasticity of demand for daily vitamins is 0, this implies that A. Cary does not perceive daily vitamins to be a necessity. B. Cary's consumption of daily vitamins is unresponsive to price. C. Cary does not buy vitamins. D. In Cary's perspective, daily vitamins are not worth the market price.

B. Cary's consumption of daily vitamins is unresponsive to price.

What impact does this shock cause on the equilibrium in the market for plant-based meat? A. Increase in equilibrium quantity and increase in equilibrium price of plant-based meat B. Increase in equilibrium quantity and decrease in equilibrium price of plant-based meat C. Decrease in equilibrium quantity and increase in equilibrium price of plant-based meat D. Decrease in equilibrium quantity and decrease in equilibrium price of plant-based meat

B. Increase in equilibrium quantity and decrease in equilibrium price of plant-based meat

Which of the following correctly characterizes the approach to most negative externalities that warrant government intervention? A. Consider only market-based policies, since command and control policies are never politically viable. B. Lead with market-based policies, but when they are not sufficiently effective, transition to command and control policies. C. Consider only command and control policies, since market-based policies never incentivize sufficient reduction of the externality. D. Lead with command and control policies, but when they are not sufficiently effective, transition to market-based policies.

B. Lead with market-based policies, but when they are not sufficiently effective, transition to command and control policies.

Suppose Hawai'i's legislature wants to address the inability of many Hawai'i families to qualify for home loans given Hawai'i's housing market prices: If the legislature wants to ensure that the market price for housing decreases without creating or exacerbating any imbalances in the market, what kind of policy could they implement? A. A binding price floor in the housing market B. Policies that support a positive supply shock in the housing market C. Policies that support a positive demand shock in the housing market D. A binding price ceiling in the housing market

B. Policies that support a positive supply shock in the housing market

Which of the following most likely has the HIGHEST price elasticity of demand? A. Mobile phone service B. Private college education C. Medical care D. Toilet paper

B. Private college education

What does it mean for a firm to earn normal profit? A. The firm does not generate enough revenue to cover its employees' wages, its utilities, its loans from the bank and its other fixed costs, and should thus shut down. B. The firm earns positive accounting profit that covers implicit costs, keeping investors just satisfied so that they don't seek other investment opportunities. C. Investors have incentive to pursue other opportunities that earn a higher rate of return on their investment. D. The entrepreneur who started the company will want to shut it down and return to his/her previous job, as the current business is not worth his/her time and effort.

B. The firm earns positive accounting profit that covers implicit costs, keeping investors just satisfied so that they don't seek other investment opportunities.

Suppose you own a sushi restaurant. Every week, your executive chef goes to the Honolulu Fish Auction to purchase the fish served in your restaurant. But recently, instead of adding the inedible scraps leftover after processing the fish to your restaurant's trash , your operations manager has arranged with a local start-up to collect these scraps that it uses to produce animal feed it sells to local farmers. Which of the following statements is true? A. This is an example of a sharing platform, because the fish resource is being shared by both the restaurant and the animal feed producer. B. This is an example of a closed-loop system, because the supply chain was redesigned to extract value from waste by transforming it into a usable input to production. C. This is NOT an example of a closed-loop system, because the fish resource leaves the original supply chain to be used in the production of a secondary good. D. This is an example of recycling, because the fish is broken down into its basic components and transformed into a new product.

B. This is an example of a closed-loop system, because the supply chain was redesigned to extract value from waste by transforming it into a usable input to production.

In a linear economy, profit and economic prosperity are coupled with (inherently linked to) A. remanufacturing and leasing an increase quantity of products B. producing and selling an increasing quantity of products C. producing and selling longer-lasting products D. producing and leasing an increasing quantity of products

B. producing and selling an increasing quantity of products

Based on the experiences of planned economies, A. producers are responsive to consumers' needs and wants in order to maximize profit. B. the government determines how all resources are allocated for different productive activities. C. resources are used to their maximum potential. D. all people have the goods and services that are needed for them to thrive.

B. the government determines how all resources are allocated for different productive activities.

If price elasticity of demand is 0.1, then for every 10% increase in price, there is a ____ decrease in quantity demanded. A. 0.1% B. 100% C. 10% D. 1%

D. 1%

Consider two productive activities in Hawai'i's agricultural sector depicted in the PPC below: the production of cucumbers (green vegetable) and the production of (chicken) eggs. If there is a technological advancement in soil quality monitoring for crop health, ceteris paribus, how would the PPC above be affected? A. B. C. D.

D. Feedback: A technological advancement in soil quality monitoring would increase efficiency of growing crops in soil. Farmers would know where best to plant certain crops based on nutrient quality, and would be better equipped to maintain soil health, both activities that will increase the yield per plant. This would increase production capacity of growing crops such as cucumbers, demonstrated by an outward expansion along that axis. However, the development of this technology has no impact on the production of eggs, so that axis remains unchanged.

All of the following happen in the market for electric vehicles as a result of the event in the article below, ceteris paribus, EXCEPT: A. Increase in equilibrium quantity B. Positive supply shock C. Surplus D. Positive demand shock

D. Positive demand shock

Which of the following statements about price regulations is FALSE? A. Both types of price regulations result in an inefficient allocation of resources. B. The government typically only imposes a price floor or a price ceiling in markets for necessity goods. C. A binding price ceiling must be imposed below the equilibrium price in the market. D. Price floors are designed to protect consumers by keeping prices artificially lower than the equilibrium price.

D. Price floors are designed to protect consumers by keeping prices artificially lower than the equilibrium price.

In which of the following situations is the Coase Theorem most likely to apply? A. An underground fuel storage tank leaks into the city's main aquifer, a natural storage of ground water that supplies all freshwater for residents in the city. B. Clearing of native ecosystems to establish more grain crop plantations to feed livestock C. A coal plant located near a residential area emits sulfur dioxide and nitrogen oxide, both of which exacerbate or trigger respiratory illness. D. The customers of a popular grocery store park haphazardly on the neighboring residential street when the store parking lot is full.

D. The customers of a popular grocery store park haphazardly on the neighboring residential street when the store parking lot is full.

You are the manager for a restaurant and based on your data analysis, you find that the price elasticity of demand for your most popular dish is less than one. To increase your restaurant's total revenue, you should A. increase the supply of the dish. B. hold the price of the dish constant. C. decrease the price of the dish. D. increase the price of the dish.

D. increase the price of the dish.

The public health benefits from vaccines are A. excludable and non-rival. B. non-excludable and rival. C. excludable and rival. D. non-excludable and non-rival.

D. non-excludable and non-rival.

When the ahupua'a system was present in Hawai'i, A. Hawaiians were 85% self-sufficient. B. Hawaiians were 15% self-sufficient. C. Hawaiians were 75% self-sufficient. D. Hawaiians were 100% self-sufficient.

D. Hawaiians were 100% self-sufficient.

What is the impact on the market for plant-based meat resulting from the shock in Question 5 above? A. Decrease in equilibrium quantity and increase in equilibrium price of plant-based meat B. Increase in equilibrium quantity and decrease in equilibrium price of plant-based meat C. Decrease in equilibrium quantity and decrease in equilibrium price of plant-based meat D. Increase in equilibrium quantity and increase in equilibrium price of plant-based meat

D. Increase in equilibrium quantity and increase in equilibrium price of plant-based meat

Suppose Starbucks expands its Farmer Support Center, which was established in countries like Costa Rica, Colombia, and Tanzania to provide coffee farmers with resources and expertise. What kind of shock is this most likely to cause in the market for Starbucks coffee? A. Negative supply shock B. Positive demand shock C. Negative demand shock D. Positive supply shock

D. Positive supply shock

Opportunity cost is A. the highest-valued forgone alternative sacrificed when a decision is made. B. measured in terms of what is given up. C. reflects a necessary tradeoff given limited resources. D. all of the above.

D. all of the above.

Market economies A. are promoted as the economic system resulting in the most efficient use of resources, but actually result in waste due to the linear economic design and a lack of futures-oriented decision-making. B. hinge on the pursuit of self-interested as the primary incentive in most decision-making processes. C. produce goods and services valued most by consumers. D. are characterized by all of the above.

D. are characterized by all of the above.

In its authentic application, the term "sustainable" development A. entails the elimination of many jobs in the economy and a subsequent reduction income. B. requires stopping the extraction of new resources. C. implies minimal ownership of many things we are accustomed to owning today. D. embodies valuing the welfare of future generations as much as our own

D. embodies valuing the welfare of future generations as much as our own

The reclamation of water diverted from a city's wastewater system to be used for irrigation is an example of A. sharing platform B. circular supplies C. product as a service D. resource recovery

D. resource recovery