Econ 202 Hayes Quiz answers & Mid-Term
The term "other things equal" means that A. the associated statement is normative. B. many variables affect the variable under consideration. C. a number of relevant variables are assumed to be constant. D. when variable X increases, so does related variable Y.
a number of relevant variables are assumed to be constant.
A person should consume more of something when its marginal A.benefit exceeds its marginal cost. B. cost exceeds its marginal benefit. C. cost equals its marginal benefit. D. benefit is still better.
a. benefit exceeds its marginal cost
Which of the following is an example of market failure? A. negative externalities B. positive externalities C. public goods D. all of these
all of these
When the percentage change in price is greater than the resulting percentage change in quantity demanded, A. a decrease in price will increase total revenue. B. demand may be either elastic or inelastic. C. an increase in price will increase total revenue. D. demand is elastic.
an increase in price will increase total revenue.
Which of the following will cause a decrease in market equilibrium price and an increase in equilibrium quantity? A. an increase in supply B. an increase in demand C. a decrease in supply D. a decrease in demand
an increase in supply
Which product is most likely to be the most price elastic? A. milk B. housing C. clothing D. automobiles
automobiles
The socially optimal amount of pollution abatement occurs where society's marginal A. benefit of abatement exceeds its marginal cost of abatement by the greatest amount. B. benefit of abatement equals its marginal cost of abatement. C. benefit of abatement is zero. D. cost of abatement is at its maximum.
benefit of abatement equals its marginal cost of abatement.
The demand for a product is inelastic with respect to price if A. consumers are largely unresponsive to a per unit price change. B. the elasticity coefficient is greater than 1. C. a drop in price is accompanied by a decrease in the quantity demanded. D. a drop in price is accompanied by an increase in the quantity demanded.
consumers are largely unresponsive to a per unit price change.
The theory of consumer behavior assumes that A. consumers behave rationally, attempting to maximize their satisfaction. B. consumers have unlimited money incomes. C. consumers do not know how much marginal utility they obtain from successive units of various products. D. marginal utility is constant.
consumers behave rationally, attempting to maximize their satisfaction.
Because successive units of a good produce less and less additional satisfaction, the price must fall to encourage a buyer to purchase more units of the good. This statement is most consistent with which explanation for the law of demand? A. diminishing marginal utility B. the rationing function of prices C. the substitution effect D. the income effect
diminishing marginal utility
An increase in immigration would shift the production possibilities curve to the left. True/False
false
An increase in quantity supplied might be caused by an increase in production costs. True/False
false
If the consumer is willing to pay a price higher than the actual price of a product, then the consumer will not buy the product because the consumer surplus will be negative. True/False
false
If the elasticity coefficient of supply is 0.7, supply is elastic. True/False
false
If the percentage change in quantity demanded is less than the percentage change in price, then demand is said to be elastic. True/False
false
In the price range where demand is elastic, if the seller of the good raises its price, then total revenues will increase. True/False
false
Macroeconomics explains the behavior of individual households and business firms; microeconomics is concerned with the behavior of aggregates or the economy as a whole. True/False
false
Normative statements are expressions of facts. True/False
false
Society's marginal cost of pollution abatement curve slopes upward because of the law of diminishing marginal utility. True/False
false
Surpluses drive market prices up; shortages drive them down. True/False
false
The budget line shows the various incomes that an individual can earn from different jobs. True/False
false
The smaller the number of good substitutes for a product, the greater will be the price elasticity of demand for it. True/False
false
The study of economics is not useful for consumers, because economic analysis focuses only on businesses and the economy. True/False
false
Two goods are considered to be related goods by many buyers: if the price of one increases, buyers buy more of the other. This indicates that the two goods are complements. True/False
false
A price floor means that A. inflation is severe in this particular market. B. sellers are artificially restricting supply to raise price. C. government is imposing a maximum legal price that is typically below the equilibrium price. D. government is imposing a minimum legal price that is typically above the equilibrium price.
government is imposing a minimum legal price that is typically above the equilibrium price.
A perfectly inelastic demand curve A. has a price elasticity coefficient greater than unity. B. has a price elasticity coefficient of unity throughout. C. graphs as a line parallel to the vertical axis. D. graphs as a line parallel to the horizontal axis.
graphs as a line parallel to the vertical axis.
If the price of product X rises, then the resulting decline in the amount purchased will A. necessarily increase the consumer's total utility from his total purchases. B. increase the marginal utility of the last unit consumed of this good. C. increase the total utility from purchases of this good. D. reduce the marginal utility of the last unit consumed of this good.
increase the marginal utility of the last unit consumed of this good.
A government subsidy to the producers of a product a. reduces product supply. B. increases product supply. C. reduces product demand. D. increases product demand.
increases product supply.
Broadly defined, competition involves A. private property and freedom of expression. B. independently acting buyers and sellers and freedom to enter or leave markets. C. increasing opportunity costs and diminishing marginal utility. D. capital goods and division of labor.
independently acting buyers and sellers and freedom to enter or leave markets
A demand curve A. shows the relationship between price and quantity supplied. B. indicates the quantity demanded at each price in a series of prices. C. graphs as an upsloping line. D. shows the relationship between income and spending.
indicates the quantity demanded at each price in a series of prices.
A market A. reflects upsloping demand and downsloping supply curves. B. entails the exchange of goods, but not services. C. is an institution that brings together buyers and sellers. D. always requires face-to-face contact between buyer and seller.
is an institution that brings together buyers and sellers.
The utility of a good or service A. is synonymous with usefulness. B. is the satisfaction or pleasure one gets from consuming it. C. is easy to quantify. D. rarely varies from person to person.
is the satisfaction or pleasure one gets from consuming it.
One reason that the quantity demanded of a good increases when its price falls is that the A. price decline shifts the supply curve to the left. B. lower price shifts the demand curve to the left. C. lower price shifts the demand curve to the right. D. lower price increases the real incomes of buyers, enabling them to buy more.
lower price increases the real incomes of buyers, enabling them to buy more.
The equilibrium price and quantity in a market usually produce allocative efficiency because A. all consumers who want the good are satisfied. B. marginal benefit and marginal cost are equal at that point. C. equilibrium ensures an equitable distribution of output. D. the excess of goods produced at equilibrium guarantees that all will have enough.
marginal benefit and marginal cost are equal at that point.
To maximize utility, a consumer should allocate money income so that the A. elasticity of demand on all products purchased is the same. B. marginal utility obtained from the last dollar spent on each product is the same. C. total utility derived from each product consumed is the same. D. marginal utility of the last unit of each product consumed is the same.
marginal utility obtained from the last dollar spent on each product is the same.
The Latin term "ceteris paribus" means A. that if event A precedes event B, A has caused B. B. that economics deals with facts, not values. C. other things equal. D. prosperity inevitably follows recession.
other things equal
The basic formula for the price elasticity of demand coefficient is A. absolute decline in quantity demanded/absolute increase in price. B. percentage change in quantity demanded/percentage change in price. C. absolute decline in price/absolute increase in quantity demanded. D. percentage change in price/percentage change in quantity demanded.
percentage change in quantity demanded/percentage change in price.
A firm can sell as much as it wants at a constant price. Demand is thus A. perfectly inelastic. B. perfectly elastic. C. relatively inelastic. D. relatively elastic.
perfectly elastic.
Marginal utility can be A. positive, but not negative. B. positive or negative, but not zero. C. positive, negative, or zero. D. decreasing, but not negative.
positive, negative, or zero.
The construction of demand and supply curves assumes that the primary variable influencing decisions to produce and purchase goods is A. price. B. expectations. C. preferences. D. incomes.
price
The law of demand states that, other things equal, A. price and quantity demanded are inversely related. B. the larger the number of buyers in a market, the lower will be product price. C. price and quantity demanded are directly related. D. consumers will buy more of a product at high prices than at low prices.
price and quantity demanded are inversely related
The supply curve shows the relationship between A. price and quantity supplied. B. production costs and the amount demanded. C. total business revenues and quantity supplied. D. physical inputs of resources and the resulting units of output.
price and quantity supplied.
If the supply of a product decreases and the demand for that product simultaneously increases, then equilibrium A. price must rise, but equilibrium quantity may rise, fall, or remain unchanged. B. price must rise and equilibrium quantity must fall. C. price and equilibrium quantity must both increase. D. price and equilibrium quantity must both decline.
price must rise, but equilibrium quantity may rise, fall, or remain unchanged.
Market failure is said to occur whenever A. private markets do not allocate resources in the most economically desirable way. B. prices rise. C. some consumers who want a good do not obtain it because the price is higher than they are willing to pay. D. government intervenes in the functioning of private markets.
private markets do not allocate resources in the most economically desirable way.
The law of supply indicates that, other things equal, A. producers will offer more of a product at high prices than at low prices. B. the product supply curve is downsloping. C. consumers will purchase less of a good at high prices than at low prices. D. producers will offer more of a product at low prices than at high prices.
producers will offer more of a product at high prices than at low prices.
A consumer who has a limited budget will maximize utility or satisfaction when the A. ratios of the marginal utility of each product purchased divided by its price are equal. B. total utility derived from each product purchased is the same. C. marginal utility of each product purchased is the same. D. price of each product purchased is the same.
ratios of the marginal utility of each product purchased divided by its price are equal.
In deciding whether to study for an economics quiz or go to a concert, one is confronted by the idea(s) of A. scarcity and opportunity costs. B. money and real capital. C. complementary economic goals. D. full production.
scarcity and opportunity costs
An improvement in production technology will A. increase equilibrium price. B. shift the supply curve to the left. C. shift the supply curve to the right. D. shift the demand curve to the left.
shift the supply curve to the right.
Other things equal, if the price of a key resource used to produce product X falls, the A. supply curve of product X will shift to the right. B. demand curve of product X will shift to the right. C. supply curve of product X will shift to the left. D. supply curve of product X will not shift.
supply curve of product X will shift to the right.
Supply-side market failures occur when A. supply curves don't reflect consumers' full willingness to pay for a good or service. B. supply curves don't reflect the full cost of producing a good or service. C. government regulates production of a good or service. D. a good or service is not supplied because no one wants it.
supply curves don't reflect the full cost of producing a good or service.
Which of the following defines marginal utility? A. the change in total utility divided by the price of a product B. the maximum amount of satisfaction from consuming a product C. the total satisfaction derived from a certain amount of the product D. the additional satisfaction from consuming one more unit of a product
the additional satisfaction from consuming one more unit of a product
Opportunity costs exist because A. the decision to engage in one activity means forgoing some other activity. B. wants are scarce relative to resources. C. households and businesses make rational decisions. D. most decisions do not involve sacrifices or trade-offs.
the decision to engage in one activity means forgoing some other activity.
Graphically, the market demand curve is A. steeper than any individual demand curve that is part of it. B. greater than the sum of the individual demand curves. C. the horizontal sum of individual demand curves. D. the vertical sum of individual demand curves.
the horizontal sum of individual demand curves.
According to the concept of diminishing marginal utility, consumers will purchase more of a good when the price falls because A. substitutes are relatively more expensive. B. consumers' real income has increased. C. the marginal benefit of additional units of the good now outweigh the marginal cost. D. the good is now perceived as having higher quality.
the marginal benefit of additional units of the good now outweigh the marginal cost.
According to the marginal-cost-marginal-benefit rule, A. only government projects (as opposed to private projects) should be assessed by comparing marginal costs and marginal benefits. B. the optimal project size is the one for which MB = MC. C. the optimal project size is the one for which MB exceeds MC by the greatest amount. D. project managers should attempt to minimize both MB and MC.
the optimal project size is the one for which MB = MC.
In moving along a demand curve, which of the following is not held constant? A. the price of the product itself. B. price expectations C. consumer incomes D. prices of complementary goods
the price of the product itself.
If there is a shortage of product X, and the price is free to change, A. fewer resources will be allocated to the production of this good. B. the price of the product will rise. C. the price of the product will decline. D. the supply curve will shift to the left and the demand curve to the right, eliminating the shortage.
the price of the product will rise.
If there are external benefits associated with the consumption of a good or service, A. the private demand curve will overestimate the true demand curve. B. the private demand curve will underestimate the true demand curve. C. consumers are paying for all these benefits in private markets. D. the market demand curve will be the vertical summation of the individual demand curves.
the private demand curve will underestimate the true demand curve.
At the point where the demand and supply curves for a product intersect, A. the selling price and the buying price need not be equal. B. the market may, or may not, be in equilibrium. C. either a shortage or a surplus of the product might exist, depending on the degree of competition. D. the quantity that consumers want to purchase and the amount producers choose to sell are the same.
the quantity that consumers want to purchase and the amount producers choose to sell are the same.
When the price of a product rises, consumers with a given money income shift their purchases to other products whose prices are now relatively lower. This statement describes A. an inferior good. B. the rationing function of prices. C. the substitution effect. D. the income effect.
the substitution effect.
"Essential" water is cheaper than "nonessential" diamonds because A. new industrial uses for diamonds have been discovered. B. the supply of water is great relative to demand and the supply of diamonds is small relative to demand. C. although the total utility of diamonds is greater, their marginal utility is small. D. the supply of diamonds is great relative to demand and the supply of water is small relative to demand.
the supply of water is great relative to demand and the supply of diamonds is small relative to demand.
Productive efficiency refers to A. the use of the least-cost method of production. B. the production of the product mix most wanted by society. C. the full employment of all available resources. D. production at some point inside of the production possibilities curve.
the use of the least-cost method of production.
The production possibilities curve shows A. the various combinations of two goods that can be produced when society employs all of its scarce resources. B. the minimum outputs of two goods that will sustain a society. C. the various combinations of two goods that can be produced when some resources are unemployed. D. the ideal, but unattainable, combinations of two goods that would maximize consumer satisfaction.
the various combinations of two goods that can be produced when society employs all of its scarce resources.
At the equilibrium price, A. quantity supplied may exceed quantity demanded or vice versa. B. there are no pressures on price to either rise or fall. C. there are forces that cause price to rise. D. there are forces that cause price to fall.
there are no pressures on price to either rise or fall.
When the marginal benefits exceed the marginal costs of producing a product, then allocative efficiency is not achieved in the market. True/False
true
In a free-market economy, a product which entails a positive externality will be A. overproduced. B. underproduced. C. produced at the optimal level. D. provided solely by the government.
underproduced
For which product is the income elasticity of demand most likely to be negative? A. computer software B. used clothing C. apps for iPads D. bread
used clothing
The market system's answer to the fundamental question "What will be produced?" is essentially A. "Goods and services that are profitable." B. "Low-cost goods and services." C. "Goods and services that can be produced using large amounts of capital." D. "Goods and services that possess lasting value."
"Goods and services that are profitable."
The first Pepsi yields Craig 18 units of utility and the second yields him an additional 12 units of utility. His total utility from three Pepsis is 38 units of utility. The marginal utility of the third Pepsi is A. 26 units of utility. B. 6 units of utility. C. 8 units of utility. D. 38 units of utility.
8 units of utility.
Which of the following is the best example of a supply-side market failure? A. No one provides street lights in a town because, once the lights are in operation, people don't have to pay to use them. B. A firm keeps its production costs down by dumping its waste in the nearby river, adversely affecting water quality for residents in the area. C. Government imposes taxes on the production of a socially desirable good. D. Street performers don't get full payment for the value of their output because people watch and enjoy the shows without paying the artist.
A firm keeps its production costs down by dumping its waste in the nearby river, adversely affecting water quality for residents in the area.
Which statement best illustrates the concept of diminishing marginal utility? A. As one consumes more hamburgers per week, one would be willing to pay a higher price for additional hamburgers. B. Some consumers will receive less satisfaction from consuming hamburgers than from consuming fried chicken. C. A typical consumer will receive less satisfaction from consuming the fourth hamburger than from the third hamburger in a week. D. A decrease in the price of hamburgers will cause consumers to buy more hamburgers because they can afford to buy more.
A typical consumer will receive less satisfaction from consuming the fourth hamburger than from the third hamburger in a week.
The negative slope of the production possibilities curve is a graphical way of indicating that A. any economy "can have its cake and eat it too." B. to produce more of one product, we must do with less of another. C. the principle of increasing opportunity costs applies to only parts of the economy. D. consumers buy more when prices are low than when prices are high.
B. to produce more of one product, we must do with less of another
For economists, the word "utility" means A. versatility and flexibility B. rationality C. pleasure or satisfaction D. purposefulness
C. pleasure or satisfaction
A price floor in a competitive market will result in persistent shortages of a product. True/False
False
Although sleeping in on a work day or school day has an opportunity cost, sleeping late on the weekend does not. True/False
False
The consumer demand curve for a product is downsloping because marginal utility is constant when price declines. True/False
False
The demand for cocaine among addicts is relatively elastic. True/False
False
The free-rider problem makes a good highly profitable for a private firm to provide. True/False
False
When a consumer shifts purchases from X to Y, the marginal utility of X falls and the marginal utility of Y rises. True/False
False
What two conditions must hold for a competitive market to produce efficient outcomes? A. Demand curves must reflect all costs of production, and supply curves must reflect consumers' full willingness to pay. B. Supply curves must reflect all costs of production, and demand curves must reflect consumers' full willingness to pay. C. Firms must minimize production costs, and consumers must minimize total expenditures. D. Firms must maximize profits, and consumers must all pay prices equal to their maximum willingness to pay.
Supply curves must reflect all costs of production, and demand curves must reflect consumers' full willingness to pay.
Which of the following is not characteristic of the demand for a commodity that is elastic? A. The relative change in quantity demanded is greater than the relative change in price. B. Buyers are relatively sensitive to price changes. C. Total revenue increases if price is increased. D. The elasticity coefficient is greater than one.
Total revenue increases if price is increased.
Consumers buy more of normal goods as their incomes rise. True/False
True
Cost-benefit analysis is frequently difficult to apply because it is difficult to quantify the full benefits of a public good or service. True/False
True
If demand increases and supply simultaneously decreases, equilibrium price will rise. True/False
True
If price and total revenue are directly related, demand is inelastic. True/False
True
The law of diminishing marginal utility suggests that the total utility that a consumer derives from a product will increase slower and slower as more of the product is consumed. True/False
True
The limited money income of consumers results in a so-called budget constraint. True/False
True
The wants of consumers are expressed in the product market with "dollar votes." True/False
True
Which of the following will not cause the demand for product K to change? A. a change in the price of close-substitute product J B. an increase in incomes of buyers of product K C. a change in the price of product K D. a change in consumer tastes for product K
a change in the price of product K
If two goods are complements, A. they are consumed independently. B. an increase in the price of one will increase the demand for the other. C. a decrease in the price of one will increase the demand for the other. D. they are necessarily inferior goods.
a decrease in the price of one will increase the demand for the other.
Microeconomics is concerned with A. the aggregate or total levels of income, employment, and output. B. a detailed examination of specific economic units that make up the economic system. C. positive economics, but not normative economics. D. establishing an overall view of the operation of the economic system.
a detailed examination of specific economic units that make up the economic system.
Assume that the demand curve for product C is downsloping. If the price of C falls from $2.00 to $1.75, A. a smaller quantity of C will be demanded. B. a larger quantity of C will be demanded. C. the demand for C will increase. D. the demand for C will decrease.
a larger quantity of C will be demanded.
A person should consume more of something when its marginal A. benefit exceeds its marginal cost. B. cost exceeds its marginal benefit. C. cost equals its marginal benefit. D. benefit is still better.
benefit exceeds its marginal cost.
The law of diminishing marginal utility states that A. total utility is maximized when consumers obtain the same amount of utility per unit of each product consumed. B. beyond some point, additional units of a product will yield less and less extra satisfaction to a consumer. C. price must be lowered to induce firms to supply more of a product. D. it will take larger and larger amounts of resources beyond some point to produce successive units of a product.
beyond some point, additional units of a product will yield less and less extra satisfaction to a consumer.
A firm's supply curve is upsloping because A. the expansion of production necessitates the use of qualitatively inferior inputs. B. mass production economies are associated with larger levels of output. C. consumers envision a positive relationship between price and quality. D. beyond some point, the production costs of additional units of output will rise.
beyond some point, the production costs of additional units of output will rise.
The price elasticity of demand coefficient measures A. buyer responsiveness to price changes. B. the extent to which a demand curve shifts as incomes change. C. the slope of the demand curve. D. how far business executives can stretch their fixed costs.
buyer responsiveness to price changes.
A perfectly inelastic demand schedule A. rises upward and to the right but has a constant slope. B. can be represented by a line parallel to the vertical axis. C. cannot be shown on a two-dimensional graph. D. can be represented by a line parallel to the horizontal axis.
can be represented by a line parallel to the vertical axis.
If an economy is operating inside its production possibilities curve for consumer goods and capital goods, it A. can only produce more consumer goods by producing fewer capital goods. B. can only produce more capital goods by producing fewer consumer goods. C. can produce more of both consumer goods and capital goods by using resources that are currently idle. D. must improve its technology to produce more output.
can produce more of both consumer goods and capital goods by using resources that are currently idle
The rationing function of prices refers to the A. tendency of supply and demand to shift in opposite directions. B. fact that ration coupons are needed to alleviate wartime shortages of goods. C. capacity of a competitive market to equalize quantity demanded and quantity supplied. D. ability of the market system to generate an equitable distribution of income.
capacity of a competitive market to equalize quantity demanded and quantity supplied.
There will be a surplus of a product when A. price is below the equilibrium level. B. the supply curve is downward sloping and the demand curve is upward sloping. C. the demand and supply curves fail to intersect. D. consumers want to buy less than producers offer for sale.
consumers want to buy less than producers offer for sale.
With a downsloping demand curve and an upsloping supply curve for a product, a decrease in resource prices will A. increase equilibrium price and quantity. B. decrease equilibrium price and quantity. C. decrease equilibrium price and quantity. D. increase equilibrium price and decrease equilibrium quantity.
decrease equilibrium price and increase equilibrium quantity.
Total revenue falls as the price of a good is raised, if the demand for the good is A. elastic. B. inelastic. C. unitary elastic. D. perfectly elastic.
elastic.
Economic resources are also called A. free gifts of nature. B. consumption goods. C. units of money capital. D. factors of production.
factors of production
A price floor in a competitive market will result in persistent shortages of a product. True/False
false
Price elasticity of demand is generally A. greater in the long run than in the short run. B. greater in the short run than in the long run. C. the same in both the short run and the long run. D. greater for "necessities" than it is for "luxuries."
greater in the long run than in the short run.
An increase in consumer desire for strawberries is most likely to A. increase the number of strawberry pickers needed by farmers. B. reduce the supply of strawberries. C. reduce the number of people willing to pick strawberries. D. reduce the need for strawberry pickers.
increase the number of strawberry pickers needed by farmers.
Which of the following is a distinguishing feature of laissez-faire capitalism? A. public ownership of all capital B. central planning C. minimal government intervention D. a circular flow of goods, resources, and money
minimal government intervention
The two main characteristics of a public good are A. production at constant marginal cost and rising demand. B. nonexcludability and production at rising marginal cost. C. nonrivalry and nonexcludability. D. nonrivalry and large negative externalities.
nonrivalry and nonexcludability.
The demand for most products varies directly with changes in consumer incomes. Such products are known as A. complementary goods. B. competitive goods. C. inferior goods. D. normal goods.
normal goods.
For economists, the word "utility" means A. versatility and flexibility. B. rationality. C. pleasure or satisfaction. D. purposefulness.
pleasure or satisfaction.
The law of demand states that, other things equal, A. price and quantity demanded are inversely related. B. the larger the number of buyers in a market, the lower will be product price. C. price and quantity demanded are directly related. D. consumers will buy more of a product at high prices than at low prices.
price and quantity demanded are inversely related.
If a good that generates negative externalities were priced to take these negative externalities into account, then its A. price would decrease and its quantity would increase. B. quantity would increase, but its price would remain constant. C. price would increase and its quantity would decrease. D. price would increase, but its quantity would remain constant.
price would increase and its quantity would decrease.
The market demand schedule or curve for a product shows the relationship between how much of the product buyers are willing and able to buy and the A. product's price. B. buyers' incomes. C. cost of producing the product. D. available supply of the product.
product's price.
Other things the same, if a price change causes total revenue to change in the opposite direction, demand is A. perfectly inelastic. B. relatively elastic. C. relatively inelastic. D. of unit elasticity.
relatively elastic.
A production possibilities curve illustrates A. scarcity. B. market prices. C. consumer preferences. D. the distribution of income.
scarcity
Economics may best be defined as the A. interaction between macro and micro considerations. B. social science concerned with how individuals, institutions, and society make optimal choices under conditions of scarcity. C. empirical testing of value judgments through the use of logic. D. study of why people are rational.study of why people are rational.
social science concerned with how individuals, institutions, and society make optimal choices under conditions of scarcity.
If the income elasticity of demand for store brand macaroni and cheese is −3.00, this means that A. store brand macaroni and cheese is a substitute for name brand macaroni and cheese. B. store brand macaroni and cheese is a normal good. C. store brand macaroni and cheese is an inferior good. D. more store brand macaroni and cheese will be purchased when its price falls.
store brand macaroni and cheese is an inferior good.
Which of the following is not a determinant of demand for laptop computers? A. income of buyers of laptop computers B. the cost of inputs for producing laptop computers C. the prices of related goods such as software and iPads D. expectations about the future price of laptop computers
the cost of inputs for producing laptop computers
The economizing problem is A. the need to make choices because economic wants exceed economic means. B. how to distribute resources equally among all members of society. C. that people's means often exceed their wants. D. that people do not know how to rationally allocate resources.
the need to make choices because economic wants exceed economic means.
The concept of price elasticity of demand measures A. the slope of the demand curve. B. the number of buyers in a market. C. the extent to which the demand curve shifts as the result of a price decline. D. the sensitivity of consumer purchases to price changes.
the sensitivity of consumer purchases to price changes.
The presence of market failures implies that: A. money is not an effective tool for exchange in a market system. B. there is an active role for government, even in a market system. C. individuals and firms should strive to be self-sufficient rather than specialize. D. command systems are superior to market systems in the allocation of resources.
there is an active role for government, even in a market system.
Non excludability describes a condition where A. one person's consumption of a good does not prevent consumption of the good by others. B. there is no effective way to keep people from using a good once it comes into being. C. sellers can withhold the benefits of a good from those unwilling to pay for it. D. there is no potential for free-riding behavior.
there is no effective way to keep people from using a good once it comes into being.
Which of the following most closely relates to the idea of opportunity costs? A. trade-offs B. economic growth C. technological change D. capitalism
trade-offs
A government tax per unit of output reduces supply. True/False
true
An increase in consumer incomes will cause a decrease in the demand for an inferior good. True/False
true
Choices entail marginal costs because resources are scarce. True/False
true
The greater the ease of shifting resources from product X to product Y in the production process, the greater is the elasticity of supply of product Y. True/False
true
The production possibilities curve shows various combinations of two products that an economy can produce when achieving full employment. True/False
true
Where total utility is at a maximum, marginal utility is A. negative. B. positive and increasing. C. zero. D. positive but decreasing.
zero.