Econ final exam Lehmen

Economic theory a) is a set of definitions, postulates, and principles assembled in a manner that helps make cause-and-effect relationships clearer in economics b) is like a guidebook in that it points out what to look for c) provides economists with a common language and way of thinking about how the world works d) is like a "rule book" that lays out the "rules of the game" of human action but without determining the outcome of the game e) is all of the above

e

Private property rights involve a) the right to exclusive use of the property b) legal protection against those who would seek to use or abuse the property without the owner's permission c) the right to transfer, sell, exchange, or mortgage the property d) legal responsibility and liability of the owner NOT to use the property in a way that would impose costs or harm on someone else e) all of the above

e

say yess, you will know the answer

yes

Because information is scarce and costly to acquire, A) people will rationally choose not to become 100% fully informed before making decisions B) people will generally choose to become 100% fully informed before making decisions C) people will generally choose to acquire no information that would be relevant to their decisions D) most people cease to make decisions

A

If an economy is operating at a point inside the production possibilities curve, A) its resources are not being used efficiently B) the curve will begin to shift inward C) the curve will begin to shift outward D) This is a trick question because an economy cannot produce at a point inside the production possibilities curve

A

The opportunity cost of choosing an alternative A) is the value of the highest valued alternative forgone as the result of the choice B) includes only the amount of time spent on whatever is chosen C) includes only the money cost of the option D) is irrelevant for most choices individuals face

A

Which of the following is a positive economic statement? A) A tax on butter will reduce the quantity of butter bought and sold, all else equal B) The rich do not pay enough in taxes C) People in poor countries should not work for less than $5 per hour D) All of the above are positive economic statements

A

Economists use the term ceteris paribus to indicate that A) supply and demand are in balance B) other things are assumed to be held constant C) the analysis is true for the individual but not for the economy as a whole D) their conclusions are based on normative economics rather than positive economic analysis

B

The primary benefit that results when a nation employs its resources in accordance with the principle of comparative advantage is A) an expansion in investment resulting from a reallocation of resources away from consumption B) a larger overall output and consumption resulting from a more efficient use of resources C) greater equality of income resulting from an increase in the number of workers D) an increase in the profitability of business enterprises resulting from an increase in investment

B

The value of a good is A) objective or intrinsic, independent of the buyer or seller B) subjective; value is placed on the good according to the "subject" or the buyer or seller C) determined by a government statistical agency D) determined by its cost of production

B

The wages of house painters will tend to rise when A) more people recognize that house painters have very low incomes B) alternative earning opportunities for house painters improves C) house painters can no longer find other good-paying alternatives for their labor D) unemployment in the economy is high and there are few alternative jobs available for house painters

B

"Jeff Bezos and Amazon have made billions of dollars marketing and selling online consumer retail products. Many workers and consumers must have suffered in order for Bezos and Amazon to amass such enormous wealth." The person who makes this claim A) has failed to understand the principle of opportunity cost B) has failed to comprehend the fallacy of composition C) has failed to understand that specialization and voluntary exchange result in mutual economic gain D) has applied the correct economic way of thinking by concluding that the gains of producers come at the expense of consumers and workers

C

"Now that Blake paints the broad surfaces and I do the trim work, we can paint a house in three-fourths the time that it took for each of us to do both." This statement most clearly reflects A) the importance of secondary effects B) the fallacy of composition C) the division of labor and the law of comparative advantage D) behavior inconsistent with economizing

C

The difference between microeconomics and macroeconomics is that A) microeconomics involves mathematical relationships, and macroeconomics is predominantly a verbal analysis B) microeconomics deals with the principle of scarcity, and macroeconomics deals with the problem of poverty C) microeconomics deals with narrowly defined economic units, and macroeconomics focuses on highly aggregated economic markets D) microeconomics is normative, and macroeconomics is positive

C

Which of the following is a positive economic statement? A) Government control of rent is a fair way to help poor people afford housing B) Government control of rental housing keeps landlords from charging too much rent C) Government price controls on rent decreases the number of new apartments constructed D) Government control of rent is a social injustice

C

agree on a price of $20 for the exchange. Which of the following best describes who gains and who loses from the trade? A) If the dress originally costs more than $20, Amanda gains and Hillary loses B) If the dress originally costs less than $20, Hillary gains and Amanda loses C) Both parties expect to gain from this transaction D) If Hillary gains from the transaction, Amanda must lose an equal amount, or vice versa

C

Because of a late night out with friends, Alyssa decided to sleep in rather than attend her 7:50 a.m. economics class. According to economic analysis, her choice was A) irrational, because economic analysis suggests you should always attend classes that you have already paid for B) irrational, because oversleeping is not in Alyssa's self-interest C) rational only if Alyssa has not missed any other classes during the current semester D) rational if Alyssa values the additional sleep more highly than the extra benefit she expects to receive from attending the class

D

Economists are generally opposed to tariffs or other restrictions on imported goods because of the negative secondary effects they create that more than offset the benefits to employment in the domestic industry. Which of the following could be considered a secondary effect of these trade restrictions? A) The price to consumers of the good in question will be higher as a result of the restriction, all else equal, meaning consumers will realize less consumer surplus and thereby be worse off B) If consumers must spend more money to purchase the good, there will be employment losses in other domestic industries as consumers cut back on their spending on other things, ceteris paribus C) Because there is a link between a country's imports and its exports, less imports from other countries will result in lower domestic employment in export industries (a.k.a. the "Lerner symmetry theorem") D) all of the above

D

In a voluntary exchange, if the seller of a product gains, A) the buyer will generally lose an amount greater than the gain to the seller B) the buyer must lose an amount equal to what the seller gains C) someone else must lose an equal amount D) the buyer must also gain; mutual gain provides the foundation for exchange

D

Legislation to protect red-cockaded woodpeckers by making their trees off limits to loggers created incentives that resulted in the widespread cutting and premature harvesting of trees in which these woodpeckers were most likely to nest. This is an example of which of the following pitfalls in economics? A) Correlation is not causation B) The fallacy of composition C) The zero-sum fallacy D) Good intentions do not always lead to desirable outcomes; the problem of secondary effects

D

The difference between positive economic statements and normative economic statements is that A) positive statements are based on opinion while normative statements are based on facts B) positive statements are true and normative statements are often false C) positive statements are often false and normative statements are true D) positive statements are based on facts and are testable, while normative statements are based on opinion and are not testable E) both B and D

D

Which of the following is a positive economic statement? A) Too much government spending is the biggest problem facing the U.S. economy B) Creating jobs is the most serious problem facing the U.S. economy C) Raising taxes provides additional revenue that should be used to finance health care D) If tax rates at all levels of government exceed 50 percent of national income, job creation will decline, all else consta

D

Which of the following will most likely occur under an economic system of clearly defined and enforced private property rights? A) Resource owners will fail to conserve vital resources, even if they expect their supply to be highly limited in the future B) Resource owners will ignore the wishes of others, including others who would like to use the resource that is privately owned C) Resource owners will fail to consider the wishes of potential future buyers when they decide how to employ privately owned resources D) Resource owners will gain by discovering and employing their resources in ways that are highly valued by others

D

Which of the following could be considered to be a secondary effect (unintended consequence) caused by making drugs such as marijuana, cocaine, heroin and meth illegal? A) The higher black-market prices that result from making drugs illegal results in more property theft by users who could not otherwise afford the drugs B) The usage of scarce police and law enforcement resources to enforce drug laws leads to less enforcement (and thus a higher amount) of other crimes C) Without the ability to use the legal system (courts of law) to enforce contracts in these underground markets, violence between buyers and sellers often results when one party to a drug deal does not live up to their end of the bargain, thus the amount of violence in society often increases by making drugs illegal D) When supplying the demand for a product that has been decreed illegal by the government, the supplier has no incentive to refrain from other illegal and equally punishable behaviors, thus increasing overall crime by making drugs illegal E) All of the above would be considered valid and important secondary effects of making drugs illegal

E

The curve that shows the relationship between the price of a good and the quantity that producers are willing to sell at each price is the a) supply curve b) demand curve c) production possibilities curve d) consumption possibilities curve

a

A rational decision maker takes an action if, and only if a) the marginal benefit of the action exceeds the marginal cost of the action b) the marginal cost of the action exceeds the marginal benefit of the action c) the marginal cost of the action is zero d) the opportunity cost of the action is zero

a

All else equal, producers are willing to offer greater quantities for sale at higher prices because a) at higher selling prices the producers have the incentive to bear the increasing opportunity cost of attracting scarce resources from alternative uses b) they will decrease their profits by expanding production at higher prices c) the government orders them to do so d) lower prices attract new firms, which have higher costs of production e) at higher selling prices the producers will necessarily hire superior-quality, higher-priced resources as production expands, causing production costs to rise

a

Because the height of the demand curve measures the marginal value of the good to consumers, the fact that a demand curve slopes downward to the right illustrates that a) as more of a product is consumed, consumers will value additional units less b) as more of a product is consumed, consumers will value additional units more c) the value of additional units of the good is unrelated to the amount consumed d) the cost of production for a good generally rises as more of it is produced

a

Economic choice and competitive behavior both are the result of a) scarcity b) poverty c) public ownership of resources d) private ownership of resources e) all of the above

a

If consumer purchases of a good are highly sensitive to the price of the good, this is illustrated by a a) demand curve that is relatively flat (more horizontal slope) b) demand curve that is relatively steep (more vertical slope) c) supply curve that is relatively flat (more horizontal slope) d) supply curve that is relatively steep (more vertical slope)

a

If consumer purchases of a good are not very sensitive to the price of the good, economists say the demand for the good is relatively a) price inelastic b) price elastic c) inverse d) income elastic

a

In economics the term "utility" refers to a) the subjective benefit or satisfaction a person expects to receive from a choice or course of action b) the number of possible uses for a scarce resource c) the fact that human desire for goods is unlimited while the resources available to meet those desires is limited d) the highest valued alternative that must be sacrificed when a choice is made

a

In economics, the term that refers to the time, effort, and other resources needed to search out, negotiate, and consummate an exchange is a) transaction costs b) specialization costs c) pecuniary costs d) comparative costs

a

Of the following goods, which is the most likely to be quite price inelastic? a) gasoline b) Chevrolet automobiles c) fresh tomatoes d) provolone cheese

a

The basic difference between macroeconomics and microeconomics is that a) macroeconomics is concerned with the forest (aggregate markets), while microeconomics is concerned with the individual trees (subcomponents) b) macroeconomics is concerned with policy decisions, while microeconomics applies only to theory microeconomics is concerned with the forest (aggregate markets), while c)macroeconomics is concerned with the trees (subcomponents) opportunity cost is applicable to d)macroeconomics, and the fallacy of composition relates to microeconomics

a

The economic way of thinking suggests that if the government imposed a $1,000 tax on owners of red automobiles, ceteris paribus a) fewer red automobiles would be produced and sold b) more red automobiles would be produced and sold c) there would be no change in the number of red automobiles produced and sold d) red automobiles would cease to existed altogether

a

When economists say the demand for a product has increased, they mean that the a) demand curve for the product has shifted to the right b) price of the product has fallen, and consequently, consumers are buying more of it c) cost of producing the product has risen d) amount of the product that consumers are willing to purchase at various prices has decreased

a

Which of the following does the law of demand specifically imply? a) If the product price increases, quantity demanded will decrease, all else equal b) If consumer income increases, quantity demanded will increase, ceteris paribus c) If the product price increases, quantity demanded will increase, all else equal d) If consumer income increases, quantity demanded will decrease, ceteris paribus e) If demand increases, supply must decrease, all else equal

a

Which of the following is a positive economic statement? a) An increase in the minimum wage will reduce employment of low-skill workers b) The minimum wage should be increased to $18/hour c) Social justice will be served by increasing the minimum wage d) Thoughtful people oppose an increase in the minimum wage

a

Your professor enjoys his work, teaching economics. He has been offered other positions in the corporate world that would increase his monetary income by as much as 25 percent, but he has decided to continue working as a professor. His decision to continue teaching rather than taking other positions would not change unless a) the marginal cost of teaching increased above the marginal benefit b) the marginal benefit of teaching increased above the marginal cost c) the marginal cost of teaching decreased d) the marginal benefit of a corporate job decreased

a

"A reduction in gasoline prices caused the demand for gasoline to increase. The lower gas prices also led to an increase in demand for larger cars and SUVs, causing their prices to rise." These statements a) are essentially correct b) contain one error; the lower gasoline prices would cause an increase in the quantity demanded of gasoline, not an increase in demand c) contain one error; the lower gasoline prices would increase the quantity demanded of larger cars and SUVs, not the demand d) contain two errors; the lower gasoline prices would cause the quantity of gasoline demanded (rather than the demand) to increase, and the lower gasoline price would cause an increase in quantity demanded (rather than the demand) for larger cars and SUVs

b

Adam Smith believed that if people were free to pursue their own interests, a) less would be produced than if altruism were the guiding principle b) public interest would be served quite well by voluntary self-interested trading c) they would generally apply their talents to unproductive activities that would generate little value to society d) they would have little incentive to undertake productive activities

b

Adam Smith's "invisible hand" principle indicates that competitive markets can help promote the efficient use of resources and the broader general welfare of society a) only if buyers and sellers really care, personally, about economic efficiency b) even when each market participant cares only about their own self interest rather than about the overall efficiency of resource use c) even if business firms fail to produce goods efficiently d) if, and only if, businesses recognize their social obligation to keep costs low and use resources wisely

b

All else constant, how will consumers generally react to an increase in the price of butter? a) They will purchase a larger quantity of butter b) They will substitute other goods like margarine in place of the more expensive butter c) They will reduce their purchases of substitute goods like margarine d) They will continue purchasing the same quantity of butter at the higher price

b

Given freedom of movement for both goods and input resources, if Florida producers choose to specialize in oranges and Georgia producers choose to specialize in peaches, then it would be reasonable to conclude that a) the opportunity cost of growing oranges is higher in Florida than in Georgia b) the Georgia economy has a comparative advantage in producing peaches and the Florida economy has a comparative advantage in producing oranges c) the Florida economy has a comparative advantage in producing peaches and the Georgia economy has a comparative advantage in producing oranges d) total output will be expanded when the Georgia economy allocates more resources to producing oranges and the Florida economy allocates more resources to producing peaches

b

Goods are scarce because a) of greed; if human beings were not so selfish, goods would not be scarce b) the desire for goods is far greater than their availability from nature c) of competition; if people were not so competitive, it would be possible to satisfy people's desire for material goods through communal sharing d) of private property; if things were not owned privately, scarcity could be eliminated by communal living arrangements

b

If a good is scarce, a) there will be persistent shortages of it if the good is rationed by market price signals b) the good will have a price in a market setting c) there will be enough of the good freely available from nature to satisfy the human desire for it d) all of the above

b

If cable TV and streaming TV services are substitutes, then all else equal a) an increase in the price of cable TV will decrease the demand for streaming TV services b) an increase in the price of cable TV will increase the demand for streaming TV services c) an increase in the price of cable TV will have no effect on the demand for streaming TV services d) an increase in the price of cable TV will shift the demand curve for streaming TV services to the left

b

If consumer purchases of a good are highly sensitive to the price of the good, economists say the demand for the good is relatively a) price inelastic b) price elastic c) inverse d) income elastic

b

If consumer purchases of a good are not very sensitive to the price of the good, this is illustrated by a a) demand curve that is relatively flat (more horizontal slope) b) demand curve that is relatively steep (more vertical slope) c) supply curve that is relatively flat (more horizontal slope) d) supply curve that is relatively steep (more vertical slope)

b

In economics, human-made resources such as tools, equipment, and structures that are used to produce other goods and services are referred to as a) final consumer goods b) physical capital goods c) marginal goods d) infrastructures

b

James enjoys the feeling of wind in his hair enough to ride his motorcycle without a helmet, even though he fully realizes the greater potential for injury it creates by not wearing one in the uncertain event he is in an accident. To an economist, James is a) making an irrational choice b) making a rational choice c) not fully considering the personal costs and benefits of his decision d) not responding to the incentives he faces

b

People are willing to pay more for a diamond than for a bottle of water because a) the marginal cost of producing an extra diamond far exceeds the marginal cost of producing an extra bottle of water b) the marginal benefit of an extra diamond far exceeds the marginal benefit of an extra bottle of water c) producers of diamonds have a much greater ability to manipulate diamond prices than producers of water have to manipulate water prices d) water prices are held artificially low by governments, since water is necessary for life

b

Refer to the table below to answer the following question. Buyers Willingness to PayMike$50.00Sandy$30.00Jonathan$20.00Haley$10.00 If the table represents the willingness to pay of four buyers, and the price of the good is $24, then who would be willing to purchase the good? a) Mike b) Mike and Sandy c) Mike, Sandy, and Jonathan d) Mike, Sandy, Jonathan, and Haley

b

Suppose Katie, Kendra, and Kristen each purchase a particular type of smartphone device at a price of exactly $600. Katie's willingness to pay was $700, Kendra's willingness to pay was $640, and Kristen's willingness to pay was $605. Total consumer surplus for all three individuals is a) $150 b) $145 c) $125 d) $105

b

The curve that shows the relationship between the price of a good and the quantity that consumers are willing to purchase at each price is the a) supply curve b) demand curve c) production possibilities curve d) consumption possibilities curve

b

The difference between the amount consumers would be willing to pay and the amount they actually pay for a good is called a) price elasticity of demand b) consumer surplus c) the substitution effect d) income elasticity of demand

b

The price elasticity of demand for a good or service is determined primarily by the a) size of the consumer surplus b) availability of close substitutes for the good or service c) incomes of consumers d) availability of complementary goods and services

b

To say that people make marginal decisions, or that they "make decisions at the margin," means that a) they usually wait until the last minute before making a decision to buy b) they weigh the additional costs and additional benefits of various activities before they make a decision c) most people just barely get by on the incomes they earn, living from day to day on the very edge of subsistence d) they consider the total costs and total benefits of various activities before they make a purchase

b

Use the figure below to answer the following question. If the economy moves from point A (30 of each) to point D( 60 toothbrushes 10 toasters) , the opportunity cost is a) 10 toasters b) 20 toasters c) 30 toasters d) 30 toothbrushes

b

Use the figure below to answer the following question. If the economy moves from point C(300 Ban 100 Balls) to point B( 200 ban, 150 balls) , then which of the following statements is correct? a) The economy benefited from a technological advance in the production of baseballs b) The opportunity cost of each additional baseball is 2 bananas c) opportunity cost of each additional banana is 2 baseballs d) The move involves no opportunity cost; it simply reflects the desires of the economy's citizens

b

Use the figure below to answer the following question. Which of the following is true of the figure above a) If the economy operates at point A, it is impossible to produce more of both food and clothing b) If the economy operates at point B, it is impossible to increase the output of clothing without giving up some food production c) If the economy operates at point A, resources are being used efficiently d) If the economy operates at point B, resources are being used inefficiently

b

Use the figure below to answer the following question. (a is inside curve) In the figure above, point A is a) unattainable b) inefficient c) efficient d) preferable to point B

b

When market prices act as the rationing criterion under scarcity, individuals have a strong incentive to a) ignore the wishes of others when making decisions about how to use their resources b) provide valued services to others in exchange for income in the form of wages, salary, profits, rent, or interest c) avoid exchanges because in every exchange there will be one person who gains and another who loses d) substitute promises for the consistent delivery of a quality product e) avoid market trade and attempt to become self-sufficient

b

When property rights are clearly defined and enforced, private owners will a) use their property for selfish ends because they have little or no incentive to consider the desires of others b) develop and direct their property toward uses that others value highly because the market will generally reward them for doing so c) have little or no incentive to take care of their property or conserve it for future use or ownership by someone else d) be unable to derive personal gain if they are sensitive to the desires of others when deciding how to use their property

b

Which of the following is often referred to as the basic postulate of economics? a) Individuals act only out of selfish motives b) Incentives matter: individuals respond in predictable ways to changes in personal costs and benefits c) The accuracy of the assumptions is the best test of an economic theory d) The value of a good is objective; it is equal to the cost of producing the good

b

Which one of the following statements is most clearly inconsistent with the economic way of thinking? a) "If you give a person a fish, you feed them for a day; if you teach them to fish, you feed them for lifetime." b) "If the government provides a good free to citizens, then the opportunity cost of the good is zero." c) "If you derive the exact same satisfaction from a hamburger as a chicken sandwich, then it makes sense to have the cheaper alternative for lunch." d) "When it is cheaper to have someone else mow your lawn than to mow it yourself, hiring someone else to do the job for you is consistent with economizing behavior."

b

"The money and resources currently being devoted to preventing and treating the spread of various strands of the coronavirus reduces the quantity of other goods that we are able to supply." This statement most clearly illustrates which of the following concepts? a) the fallacy of composition b) the idea that correlation is not causation c) the concepts of scarcity and opportunity cost d)the difference between positive and normative economics

c

A cold spell in Florida severely reduced the orange crop, and as a result, California oranges commanded a higher price. Which of the following statements best explains this situation and these events? a) The supply of Florida oranges fell, causing the supply of California oranges to increase as well as their price b) The supply of Florida oranges fell, causing the supply of California oranges to decrease and their price to increase c) The supply of Florida oranges fell due to the freeze, causing their price to increase and the demand for California oranges (a substitute) to increase d) The demand for Florida oranges was reduced by the freeze, causing an increase in the demand for California oranges at a higher price

c

According to Adam Smith, individual self-interest a) is a powerful force for economic progress when individuals are wisely directed by a strong central government b) is a major factor in restraining the economic progress of humankind c) is a powerful force for economic progress when it is directed by competitive markets d) could be either a positive or negative force for economic progress, depending on the moral influences of political leaders

c

Assume the demand curve for cookies is downward sloping. If the price of a bag of cookies falls from $4.50 to $3.75 per dozen, then ceteris paribus a) the demand for cookies will fall b) the demand for cookies will rise c) a larger quantity of cookies will be demanded d) a smaller quantity of cookies will be demanded

c

Ceteris paribus, an increase in the price of a good will cause the a) quantity demanded of the good to increase b) quantity supplied of the good to decrease c) consumer surplus derived from the good to decrease d) supply of the good to decrease

c

Economics is primarily the study of a) why people like to make money b) the management of a business c) the choices people make as the result of scarcity d) how to make money in the stock market

c

If Harry only pays $25,000 to purchase a new car even though he would have been willing to pay as much as $35,000 for the car, this indicates that a) Harry is an irrational consumer b) The seller must have earned a $10,000 profit on the sale of the car c) Harry realized $10,000 of consumer surplus from the purchase of the car d) The seller received $10,000 worth of producer surplus on the transaction

c

In a market economy, a) a larger income for one person necessarily means a smaller income for another b) the government answers all the basic economic questions through central planning of the economy c) a larger income for one person means it is highly likely that others also benefit d) economic output shrinks as we discover technologically advanced ways of doing things

c

Middlemen are generally individuals or firms who a) add to the buyer's expense without performing a useful function b) add to the seller's cost without performing a useful function c) provide valued services that reduce the cost of transactions and help achieve additional gains from trade d) act as a middle person between the top management of a business firm and the hourly employees who actually produce the goods and services

c

Refer to the table below to answer the following question. BuyerWillingness to PayMike$50.00Sandy$30.00Jonathan$20.00Haley$10.00 If the table represents the willingness to pay of four buyers, and the price of the good is $15, then who would be willing to purchase the good? a) Mike b) Mike and Sandy c) Mike, Sandy, and Jonathan d) Mike, Sandy, Jonathan, and Haley

c

The city governments of many large metropolitan areas have experimented with purchasing electric scooters to leave around town for everyone's use. Anyone who needs a scooter can rent one by paying a nominal fee with a debit card, and they are not allowed to lock up the scooters or take them home, but rather must leave them available and/or connected to a charger for someone else to use. Economic theory predicts that a) people will take better care of these commonly owned scooters than they do their own personal scooters b) people will generally take equally as good care of these commonly owned scooters as they do their own personal scooters C) people will NOT generally take as good care of these commonly owned scooters as they do their own personal scooters d) because large city governments have a lot of extra money, these communal scooters will be better maintained and last longer than the ones owned privately by city commuters who tend to have little money

c

The economic way of thinking is a) a set of historical generalizations that indicates which specific goods should be produced at different times b) a body of statistical data that indicates how an economy should be organized and run c) a set of basic concepts that helps one understand human choices and actions under scarcity constraints d) a set of highly abstract theories that provides persons skilled in statistics with the information necessary to tell others what choices they should make

c

The economizing problem is essentially one of deciding how to make the best use of a) limited resources to satisfy limited wants b) unlimited resources to satisfy limited wants c) limited resources to satisfy virtually unlimited wants d) unlimited resources to satisfy virtually unlimited wants

c

The expression, "There's no such thing as a free lunch," implies that a) everyone has to pay for their own lunch b) the person consuming a good must always be the one who pays for it c) opportunity costs are necessarily incurred when resources are used to produce goods and services d) no one has time for a good lunch anymore

c

The law of demand refers to the a) decrease in price that can be expected as more units of a product are demanded b) increase in price that results from an increase in demand for a good of limited supply c) inverse relationship between the price of a good and the quantity demanded d) increase in the quantity of a good available when its price increases

c

The number of people willing to buy tickets to the Super Bowl is frequently much greater than the number of tickets (and seats) available. All else equal, this is evidence that the original box-office price of Super Bowl tickets is a) above the equilibrium price b) equal to the equilibrium price since the number of tickets bought equals the number sold c) below the equilibrium price d) higher than the equilibrium price when the demand is inelastic but lower when the demand is elastic

c

The opportunity cost of an action is a) the monetary payment the action required b) the total time spent by all parties in carrying out the action c) the value of the best opportunity that must be sacrificed in order to take the action d) the cost of all alternative actions that could have been taken, added together

c

Under a system of private property rights, and given typical human life-spans, could a 60-year-old owner of a tree farm benefit by planting and caring for a crop of Douglas firs, most of which will not be ready to cut for another 50 years into the future? a) No, because the tree farmer will be dead before the crop will be ready for harvest b) No, because the value of the tree farmer's land will decline since the Douglas firs will take the land out of production for the next 50 years c) Yes, the tree farmer will benefit because, as long as the wood from Douglas firs is valued in the marketplace, this action will increase the value of the land if and when the farmer (or his heirs) decide to sell it d) Yes, but only if the project is subsidized by the government or private conservation groups who wish to preserve the trees

c

Use the figure below to answer the following question.( A is high on cunsumption, B is in the middle, C is high on investment) Points A, B, and C in the figure above indicate consumption and investment for three different economies. Other things constant, which of these three economies is likely to grow more rapidly in the future? a) economy A b) economy B c) economy C d) They would all be expected to grow at the same rate

c

Use the following figure to answer the question below. Which of the following would most likely cause the production possibilities curve for breadfruit and fish to shift outward from AA to BB? a) a decrease in the labor force of the country b) a sudden change in consumer preferences for more fish and less breadfruit c) a major technological advance in all industries in this economy d) a decrease in the capital stock

c

When the production possibilities curve is bowed out, this indicates that resources are a) equally well-suited to production of both goods (constant returns) b) not being used efficiently c) not equally suited to the production of both goods (increasing marginal costs) d) available in larger and larger quantities as more of one good is produced

c

Economic analysis assumes that a) individuals act only out of selfish motives b) although individuals are at times selfish and at times unselfish, only their selfish actions may be predicted c) people are basically humanitarian and altruistic, and their actions are, therefore, impossible to predict d) changes in the personal benefits and costs associated with a choice will exert a predictable influence on human behavior

d

For the typical college student, taking an introductory course in economics should a) turn the student into an economist b) teach the student solutions to all social problems c) teach the student all the answers to the most complex social questions d) help the student learn to rationally analyze and systematically think about social problems e) all of the above

d

Harold, a delivery man, washes and irons his own shirts. Sarah, his boss, sends her clothes to a laundry. Which is the most plausible economic explanation for this difference? a) Harold must enjoy washing and ironing more than Sarah b) Harold must be better at washing and ironing than Sarah c) The opportunity cost of washing and ironing is greater for Harold than for Sarah d) Sarah has a higher opportunity cost than Harold in terms of the time spent washing and ironing her clothes

d

Suppose that vegetarian and environmental lobby groups run large advertising campaigns that are successful in substantially lowering the consumption of beef. As a result of the substantially lower desire for beef, we would expect a) the price of beef to fall, all else equal b) the profitability of being a cattle rancher to fall, all else equal c) a long-run reduction in the number and size of cattle herds, the number of cows, and the amount of land used for cattle ranching, ceteris paribus d) all of the above

d

The law of comparative advantage states that a) a group of people will reduce their output when each good or service is supplied by the low-opportunity-cost producer b) trading partners lose when they can acquire a good through trade cheaper than they can produce it c) trade is most effective when people trade only among those within their own nation d) a group of people can increase their output when each good or service is supplied by the low-opportunity-cost producer

d

The production possibilities curve illustrates the basic principle that a) an economy's capacity to produce is unrelated to its population b) if all the resources of an economy are being used efficiently, more of one good can be produced only if more of another good is produced c) an economy will automatically move toward a point at which all of its resources are being used inefficiently d) if all the resources of an economy are being used efficiently, more of one good can be produced only if less of another good is produced

d

Use the figure below to answer the following question. If the economy moves from point A( 0 ban 200 balls) to point C( 300 ban 100 balls) , then a) the output of baseballs would increase by 300 b) the economy could produce 200 baseballs and also 300 bananas c) the opportunity cost of each additional baseball is 3 bananas d) the opportunity cost of each additional banana is 1/3 of a baseball

d

Use the figure below to answer the following question. The opportunity cost of obtaining 10 additional toasters by moving from point B (inside graph) to point A is a) 10 toothbrushes b) 20 toothbrushes c) 30 toothbrushes d) zero, since the economy at point B is not fully employed and therefore has the additional resources to produce 10 additional toasters without tradeoffs

d

Use the figure below to answer the following question. The opportunity cost of obtaining 15 additional toasters by moving from point D( 60 TB 10 T) to point C ( 25 T 50 TB) (outside graph) is a) 10 toothbrushes b) 20 toothbrushes c) 30 toothbrushes d) none of the above; the economy cannot move to point C given the current state of technology

d

What do economists mean when they state that a good is "scarce"? a) There is a shortage or insufficient supply of the good at the existing price b) It is impossible to expand the availability of the good beyond the current amount c) People will want to buy more of the good regardless of the price of the good d) The amount of the good that people would like exceeds the supply freely available from nature

d

When deciding whether to buy a second car, the economic way of thinking indicates that the purchaser should compare a) the sum of the benefits expected from two cars with the total cost of both b) the additional benefits expected from a second car with the cost of the two cars c) the dollar cost of the two cars with the potential income that the cars will generate d) the additional benefits of the second car with the additional cost of the second car

d

Which of the following attributes of voluntary trade explain why it is so important for economic prosperity? a) Trade moves goods from people who value them less to people who value them more b) Trade makes it possible to produce a larger output as a result of gains from the division of labor and specialization c) Trade makes it possible to produce a larger output as a result of lower per-unit costs that often accompany large-scale production d) all of the above

d