Econ Final Study Guide

When movie rentals were $2.95 Sara rented 10 movies a month. the price of a rental increased by 50 cents and Sara decided to rent 2 fewer movies a month. when the price increased by one more dollar Sarah decided to cut the number of rentals in half. what is her quantity demanded by month at the current price A) 5 B) 1 C) 4 D) 2

C) 4

Which of the following events could cause the demand curve for sports magazines to shift to the right A) the publisher cuts the price of an issue from $3.95 to $2.50 B) the price of an issue of a popular computer computer game magazines rises from $2.95 to $3.95 C) A star basketball player interests thousands of people in professional sports for the first time D) a local library buys a subscription to the sports magazine for its reading room

C) A star basketball player interests thousands of people in professional sports for the first time

When supply increases and demand stays the same A) EP stays the same B) EP is not affected C) EP falls D) EP rises

C) EP falls

When demand increases and supply stays the same A) EQ is not affected B) EQ stays the same C) EQ rises D) EQ falls

C) EQ rises

Collectives in the Soviet Union were inefficient producers of agricultural products. why? A) the farms were too small to produce substantial crops B) Most farmers were poor and had to pay for their own equipment, seeds, and fertilizer out of their own pockets C) Farm workers had guaranteed incomes, so they had few incentives to produce more or better crops D) soviet central planners ignored the farms in favor of factories producing consumer goods

C) Farm workers had guaranteed incomes, so they had few incentives to produce more or better crops

All of the following can increase supply EXCEPT A) an increase in productivity B) a decrease in taxes or increase in subsidies C) a decrease in the cost of inputs D) fewer sellers in the marketplace

D) fewer sellers in the marketplace

What are inferior goods A) goods that are not well produced B) goods that no one wants to buy C) goods for which the demand rises when income falls D) goods for which the demand falls when income rises

D) goods for which the demand falls when income rises

The board of directors and the officers of a corporation make decisions that have a major impact on the corporation's earnings, which may result in profits and losses. in either case, the corporation's stockholders will hold management accountable for the company's performances. Under what circumstances might stockholders be displeased with a corporation's performance A) if the company's stocks are bought on the stock exchange B) if the company's stocks are sold on the stock exchange C) if the company's stocks increase in value on the stock exchange D) if the company's stock lose value on the stock exchange

D) if the company's stock lose value on the stock exchange

Supply schedule

a chart that lists how much of a good or service a supplier will offer at various prices

Market Supply Schedule

a chart that lists how much of a good or service all suppliers will offer at various prices

work ethic

a commitment to the value of work

household

a person or group of people living in a single residence

The supply of a product normally decreases if A) the price of the product increases B) more producers enter the market C) the cost of inputs goes down D) taxes on the product increase

D) taxes on the product increase

search costs

the financial and opportunity costs that consumers pay when searching for a good or service

Production possibilities curve

a graph used by economists to analyze the choices and trade-offs that people make . shows alternative ways to use an economy's resources

demand curve

a graphic representation of a demand schedule

business franchise

a semi-independent business that pays fees to a parent company in return for the exclusive right to sell a certain product or service in a given area

safety net

a set of government programs that protect people who face unfavorable economic conditions

mediation

a settlement technique in which a neutral person, the mediator, meets with each side to try and find a solution that both sides will accept

arbitration

a settlement technique in which a neutral third party listens to both sides and then imposes a decision that is legally binding for both the company and the union.

public good

a shared good or service for which it would be inefficient or impractical to make consumers pay individually and to exclude those who did not pay

shortage

a situation in which consumers want more of a good or service than producers are willing to make available at a particular price

market failure

a situation in which the free market, operating on its own, does not distribute resources efficiently

supply shock

a sudden shortage of a good

rationing

a system of allocating scarce goods and services using criteria other than price

market demand schedule

a table that lists the quantities demanded of a good at various prices by all consumers in the market

demand schedule

a table that lists the quantity of a good that a person will purchase at various prices in a market

excise tax

a tax on the production or sale of a good

Screening Effect

a theory that suggests that the completion of college signals to employers that a job applicant is intelligent and hard-working

limited liability corporations

a type of business with limited liability for the owners, with the advantage of not paying corporate income tax

service cooperative

a type of cooperative that provides a service rather than a good

closely held corporation

a type of corporation that issues stock to only a few people, who are often family members

publicly held corporation

a type of corporation that sells stock on the open market

Derived Demand

a type of demand that is set by the demand for another good or service

limited liability partnership

a type of partnership in which all partners are limited partners

general partnership

a type of partnership in which all partners share equally in both responsibility and liability

limited partnership

a type of partnership in which only one partner is required to be a general partner, while other partners have limited responsibilities

Adam Smith

father of modern economics, wrote wealth of nations, and came up with the term for specialization

Economic Growth

finding new or inventing new resources, or technological advances to help us with what he have

Thinking at the Margin

from an economist's point of view when you decide how much more or less to do. often includes cost/benefit analysis, marginal cost and benefit

substitutes

goods that are used in place of one another

welfare

government aid to the poor

regulation

government intervention in a market that affects the production of a good.

Law of increasing costs

how economists explain the increasingly expensive trade offs. as we shift from making one item to another, more and more resources are necessary to increase production of the second item.

Physical Capital

human-made objects used to create other goods and services.

zoning laws

laws in a city or town that designate certain areas, or zones, for residential and business use

public disclosure laws

laws requiring companies to provide information to consumers about their products and services

Shortage

not the same as scarcity, occurs when consumers want more of a good than producers as willing to make available at a particular price. may be temporary or long term.

private property

property that is owned by individuals or companies, not by the government or the people as a whole

Land

refers to all natural resources used to produce goods and services. any materials found in nature. ex: oil, iron, coal, water, and forrests

Capital

refers to any human-made resource that is used to produce other goods and services. divided into physical and human

free contract

the principle that people may decide what agreements they want to enter into

voluntary exchange

the principle that people may decide what, when, and how they want to buy and sell

collective bargaining

the process in which union and company management meet to negotiate a new labor contract

innovation

the process of bringing new methods, products, or ideas into use

privatization

the process of selling businesses or services operated by the government to individual investors, and then allowing them to compete in the marketplace

inventory

the quantity of goods that a firm has on hand

Productivity of Labor

the quantity of output produced by a unit of labor

Guns or Butter

used by economists and politicians to describe one of the common choices facing governments: the choice between spending money on military or domestic needs

standard of living

level of economic prosperity

SPLOST

specialized local option sales tax

Liability

the legal obligation to pay debts

complements

two goods that are bought and used together

Guest Workers

workers that are allowed to live and work in the United States only temporarily

calculating change in price

(org price - new price) / org price

percent change in quantity demanded

(org quant demanded - new quant demanded) / org quant demanded

An entrepreneur knits sweaters for sale. the entrepreneur has fixed costs of $100. when he makes 10 sweaters in one month, he must spend $15 on wool. to make eleven sweaters in one month, he must spend $17 on wool. if he has no other costs, what is the marginal cost of the eleventh sweater. A) $2 B) $117 C) $1 D) $17

A) $2

When demand increases and supply stays the same A) EP rises B) EP stays the same C) EP is not affected D) EP falls

A) EP rises

When supply increases and demand stays the same A) EQ rises B) EQ is not affected C) EQ falls D) EQ stays the same

A) EQ rises

The ultimate source of the region's wealth is Washington's unparalleled human capital. the population is the best educated of any large metro's in the United States; about 1/2 the region's adults hold bachelor's degrees, and nearly 1/4 have graduate degrees Which statement can be inferred from the excerpt A) Having college or graduate degrees has contributed to the wealth of many adults in Washington D.C. B) Washington D.C. has the best colleges and universities in the nation C) in order to become wealthy an individual must have a graduate degree D) to get a government job a person must have an abundance of human capital

A) Having college or graduate degrees has contributed to the wealth of many adults in Washington D.C.

Julia plans to become a sole proprietor who upholsters furniture in her home. Which statement about Julia's plan is true? A) Julia will have to obtain a business license if required by law to do so B) Julia will have to obtain a site permit for her business C) Julia will not have to pay income tax, because she is the sole receiver of profit D) Julia will have limited liability for any losses she incurs because she is working from home

A) Julia will have to obtain a business license if required by law to do so

Which of the following is a function of households in the market economy A) They supply firms with the factors of production B) They supply firms with goods and services C) They send land, labor, and capital to firms through the product market D) They send money to firms through the factor market

A) They supply firms with the factors of production

A shift in the demand curve means which of the following A) a change in demand at every price B) a rise in prices C) a decrease in both price and quantity demanded D) a change in consumer income

A) a change in demand at every price

If a sole proprietor's expenses exceeded his income, what would be the result for the sole proprietor A) a loss B) a small profit C) a large profit D) a large tax bill

A) a loss

What could cause a production possibilities curve to move down and to the left A) a nation loses land after being defeated in a war B) a baby boom 20 years ago resulted in a large number of young adults in the population today C) an increase in the use of computer technology speeds up production D) thousands of investors from overseas invest money in a nation's economy

A) a nation loses land after being defeated in a war

Which of the following is NOT shown on a production possibilities frontier A) all of the goods and services and economy has the ability to produce B) the efficiency of an economy C) whether an economy has grown or shrunk D) the opportunity cost of a decision to produce more of one good or service

A) all of the goods and services and economy has the ability to produce

Which of the following would most likely cause the demand for Coke Zero to increase A) an increase in the price of pepsi zero B) a decrease in income C) a decrease in the price of barley used to make pabst blue ribbon D) an increase in the price of pretzels and peanuts usually eaten with beet

A) an increase in the price of pepsi zero

If instant grits are a substitute for instant oatmeal an increase in the price of instant grits would result it A) an increase in the sales of instant oatmeal B) a decrease in the price of instant oatmeal C) a decrease in the sales of instant oatmeal D) an increase in the sales of instant grits

A) an increase in the sales of instant oatmeal

A demand curve gives the relationship between price and quantity demanded, other things constant. these other things are all of the following except A) consumer preferences B) income C) the price of the commodity D) the price of substitute goods

A) consumer preferences

What kind of table lists the quantity of a good that a person will buy at different prices A) demand schedule B) demand curve C) market demand schedule D) market demand curve

A) demand schedule

How did the existence of the baby boom generation change demand in the United States A) demand was raised for different goods with each age the baby boomers reached B) after they reached the teenage years, the baby boomers were integrated into the society and no longer affected demand C) people were poorer because they had so many children so demand was lowered D) the baby boomers did not raise demand until they became adults when they had their own money to spend

A) demand was raised for different goods with each age the baby boomers reached

How would you describe an economy that uses its resources to make the greatest possible number of goods and services A) efficient B) using opportunity cost well C) globally aware D) underutilized

A) efficient

What determines how a change in prices will affect total revenue for a company A) elasticity of demand B) the company's pricing policy C) values of elasticity D) the consumers' income

A) elasticity of demand

Replacing human capital with physical capital is a way for A) employer to cut costs B) employers to raise wage rates C) workers to avoid layoffs D) workers to increase their wages

A) employer to cut costs

In a competitive market the adjustment process moves toward market A) equilibrium B) surplus C) shortage D) model

A) equilibrium

Rent payments would be counted as A) fixed cost B) total cost C) variable cost D) marginal cost

A) fixed cost

The government of a country must make a decision between spending money on a hospital or spending the same amount on border security. what kind of decision is this A) guns or butter B) decision at the margin C) global trade-off D) production efficiency decision

A) guns or butter

The government of a country must make a decision between increasing military spending and subsidizing wheat farmers. this kind of decision is a A) guns or butter issue B) decision at the margin C) global trade-off D) basic economic decision

A) guns or butter issue

How is the current demand for a good related to its future price A) if the price is expected to drop current demand will fall B) if the price is expected to drop current demand will rise C) if the price is expected to rise current demand will fall D) current demand is not related to future price

A) if the price is expected to drop current demand will fall

If there is a shortage in a market the price is likely to A) increase B) decrease C) remain the same D) fluctuate

A) increase

Which of the following best describes the U.S. free enterprise system A) individual or corporate ownership of capital goods B) very heavy government regulation of businesses C) government provision of free services to those in need D) free trade, with markets open without restriction to foreign goods

A) individual or corporate ownership of capital goods

All of the following are examples of variable costs except A) interest payments on bonds B) hourly wage labor C) electricity D) raw materials

A) interest payments on bonds

Ceteris paribus or "all other things held constant" is an assumption that has which of the following effects on a demand schedule A) it takes only price into consideration B) it considers the effects of all possible changes on demand C) it is accurate no matter what changes occur D) it is accurate only at one price level

A) it takes only price into consideration

Demand for move rentals is highly elastic. a video store that raises the price of a rental will A) lose revenue B) gain revenue C) possibly gain or lose revenue D) see no change in revenue

A) lose revenue

What incentive motivates a manufacturer to sell a product A) making profits on sales B) putting others out of business C) pleasing the consumer D) popularity of the product

A) making profits on sales

You are an entrepreneur with an innovative idea for a new business. In which kind of economy would you have the most opportunity to try to achieve success A) market economy B) command economy C) traditional economy D) economy of scale

A) market economy

When market price is above EP A) market price will fall B) market price will rise C) EP will rise D) EP will fall

A) market price will fall

When market price is below EP A) market price will rise B) EP will fall C) market price will fall D) EP will rise

A) market price will rise

The civil rights act of 1964 prohibits employment discrimination based on race, color, religion, sex, or national origin. In combination with the graph shown, what additional information would help someone determine whether this law has had an effect on wage descrimination A) median income data from 1964 for the groups shown in the graph, in constant 2009 dollars B) the median income for workers in different occupations in 2009 in constant 2009 dollars C) the median income for workers in different occupations in 1964, in constant 2009 dollars D) the unemployment rate for all of these groups in 1964 and in 2009

A) median income data from 1964 for the groups shown in the graph, in constant 2009 dollars

In response to rising car traffic, demand for bicycles has increased. the new equilibrium point will show A) more bicycles sold but at a higher price B) fewer bicycles sold but at a higher price C) more bicycles sold but at a lower price D) fewer bicycles sold but at a higher price

A) more bicycles sold but at a higher price

Which of the following statements is accurate based on this graph A) nearly 90 percent of sole proprietorships earned less than $100,000 per year B) nearly 90% of sole proprietorships earned less than $50,000 per year C) nearly 70% of sole proprietorships earned from $10,000 to $25,000 per year D) nearly 30% of sole proprietorships earned from $50,000 to $500,000 per year

A) nearly 90 percent of sole proprietorships earned less than $100,000 per year

What is a KEY reason that an entrepreneur might choose to establish a corporation rather than a partnership or a sole proprietorship A) no personal liability B) limited start-up costs C) equal sharing of profits D) ability to pass the business on to children

A) no personal liability

The lack of which of the following represents scarcity A) orange juice because the trucks carrying it are on strike B) enough workers to finish 2 jobs because there's a limited supply of workers C) enough workers to work at night because the pay is too low D) grapefruit juice because very few people want to buy it

A) orange juice because the trucks carrying it are on strike

Rent control is a type of A) price ceiling B) price floor C) rationing D) surplus

A) price ceiling

In a market economy a high price is a signal for A) producers to produce more and buyers to buy less B) producers to produce less and buyers to buy less C) producers to produce more and buyers to buy more D) producers to produce less and buyers to buy more

A) producers to produce more and buyers to buy less

In a market economy a high price is a signal for A) producers to supply more and consumers to buy less B) producers to supply less and consumers to buy more C) government to intervene to protect consumers D) producers to supply less and consumers to buy less

A) producers to supply more and consumers to buy less

If the supply of a good is inelastic A) producers will not changes their quantity supplied much if the market price doubled B) a small increase in price will lead producers to sharply increase their quantity supplied C) producers will increase their quantities supplied in response to sharp drops in the market price D) producers have diminishing marginal returns of labor

A) producers will not changes their quantity supplied much if the market price doubled

The opportunity cost of a decision can be examined by using a A) production possibilities graph B) factors of production chart C) global trade-off grid D) graph of increasing costs

A) production possibilities graph

The price ceiling that was used to control the price of housing in NYC and other cities was called which of the following A) rent control B) rent abatement C) housing control D) equilibrium price

A) rent control

What incentive does a parent company have for providing training and support to a franchise owners A) royalties might increase because a better-trained franchise owner will make more money B) royalties might decrease because a better-trained franchise owner will make more money C) standard fees might increase because a better-trained franchise owner will make more money D) standard fees might decrease because a better-trained franchise owner will make more money

A) royalties might increase because a better-trained franchise owner will make more money

The physical capital used by a worker to make furniture would include A) saws and drills B) wood and glue C) hard work and time D) a workshop and money

A) saws and drills

Jasmine is willing to buy 40 pencils at 25 cents each. when the price is ten cents each she is willing to buy 100 pencils. which of the following statements could be true about Jasmine's demand for pencils A) she will buy 80 pencils at 15 cents each B) she will buy 20 pencils at 20 cents each C) she will buy 100 pencils at 5 cents each D) none of these are true

A) she will buy 80 pencils at 15 cents each

All other things held constant a decrease in bus, train, and airplane fares will A) shift the demand curve for automobiles to the left B) cause a movement along the demand curve for automobiles C) shift the demand curve for automobiles to the right D) have no impact on the demand curve for automobiles

A) shift the demand curve for automobiles to the left

Which of the following was a result of the increased prices of gasoline and petroleum-related products in early 1974 A) the demand for small cars expanded B) the incentive to use more oil for heating increased C) tourism in south florida increased relative to 1973 D) the demand for used cadillacs and lincoln continentals increased

A) the demand for small cars expanded

The law of increasing costs means that when an economy increases the production of one item A) the opportunity cost goes up B) the actual cost of making the item goes down C) the actual cost goes up but the opportunity cost goes down D) the production costs will increase also

A) the opportunity cost goes up

Which of the following is true about the structure of a corporation A) the stockholders elect the board of directors who appoint a chief executive officer B) the employees elect the board of directors who appoint the chief executive officer of the corporation C) the chief executive officer appoints the board of directors who make key decisions by majority vote D) the employees elect managers who oversee the general operation of the corporation

A) the stockholders elect the board of directors who appoint a chief executive officer

When producers offer fewer products for sale at each and every price A) the supply curve has shifted to the left B) the price per unit decreases C) they expect subsidies D) the supply curve has shifted to the right

A) the supply curve has shifted to the left

The demand curve for a commodity indicates the maximum amount the consumer would be willing to pay for each unit. What will be the effect of an increase in the price the consumer must pay for a certain quantity he is presently demanding A) there will be a decrease in the quantity demanded B) the entire demand curve will shift to the right C) there will be no effect, since the maximum amount the consumer would be willing to pay stays the same D) the consumer's demand will decrease

A) there will be a decrease in the quantity demanded

Economists think of prices as a system because A) they help buyers and sellers allocate resources between markets B) they convey information to other countries C) they convey information to the government D) they make rationing necessary at times

A) they help buyers and sellers allocate resources between markets

What factor has the greatest influence on elasticity and inelasticity of supply A) time B) labor C) profit D) financing

A) time

Why might a government interfere in a market economy by setting prices A) to achieve the goals of equity and security B) to insure an entrepreneur's profits C) to distort market outcomes D) to allow the price system to transmit accurate information

A) to achieve the goals of equity and security

Why did the U.S. government use rationing for some foods and consumer goods during WW2 A) to guarantee each civilian a minimum standard of living in wartime B) to keep sellers from raising prices on necessary goods C) because the English government had also decided on rationing D) to earn more money to support the military

A) to guarantee each civilian a minimum standard of living in wartime

What is the function of an economic system A) to make sure all people have equal access to goods B) to produce and distribute goods and services C) to give all producers the same access to consumers D) to make sure people are paid for their labor

A) to make sure all people have equal access to goods

Why does even a free market economy need some government intervention A) to provide for things that the marketplace does not address B) to ensure that the government has the freedom to tax as necessary C) to make sure that the government can fulfill its need for military personnel D) so that the government has some control over factor resources

A) to provide for things that the marketplace does not address

What are the two things that a command economy fails to provide consumers A) variety of goods and responsive prices B) jobs and private property C) equity and consumer choice D) incentives and income

A) variety of goods and responsive prices

Which of the following in a situation that makes the market behave inefficiently A) when consumers do not have enough information to make good choices B) when producers have the power to find out exactly what to produce C) when both consumers and producers are fully informed about a product D) when the market is in perfect competition and prices are high

A) when consumers do not have enough information to make good choices

Which of the following is the kind of decision that can be made the margin A) whether or not to hire new workers B) whether or not to go on vacation C) whether or not to build an extra room on a house D) whether or not to have a dog or cat as a pet

A) whether or not to hire new workers

In the absence of government intervention, the pricing system would ration gasoline to those individuals and firms A) who were willing to pay the highest price B) who had the highest income C) who lived the farthest from their place of work D) who owned automobiles that used the most gas

A) who were willing to pay the highest price

patent

a government license that gives the inventor of a new product the exclusive right to produce and sell it

What term best describes demand with an elasticity of less than 1 A) unitary elastic B) inelastic C) low D) elastic

B) inelastic

A shoe factory has an elasticity of supply of 0.5 as the price of shoes rises from $50 to $75. If the factory produced 100,000 shoes at a market price of $50, how many will be produced at the new price A) 400,000 B) 200,000 C) 125,000 D) 75,000

B) 200,000

In what way does the government behave like a household in a mixed economy A) It transfers money to both households and firms B) It purchases goods and services from firms C) It sells land, labor, and capital firms D) It pays taxes to firms

B) It purchases goods and services from firms

Multinationals benefit consumers and workers by providing jobs and products around the world. often the jobs they provide help people in poorer nations enjoy better living standards Which of the following counterarguments to the statement above is true A) Multinationals don't benefit poorer nations because multinationals don't have to pay taxes in the countries in which they operate B) Multinationals often provide jobs with low wages and poor working conditions in the countries in which they operate C) Multinationals don't sell their products in the same countries in which they hire workers D) multinationals typically use old-fashioned technology in poorer countries

B) Multinationals often provide jobs with low wages and poor working conditions in the countries in which they operate

What can cause a production possibilities curve to move to the right A) thousands of people move out of the country B) a new invention lowers the cost of production C) an epidemic kills thousands of young men and women D) the population is growing increasingly old

B) a new invention lowers the cost of production

What does it mean when the demand for a product is inelastic A) people will not buy any of the product when the price goes up B) a price increase does not have significant impact on buying habits C) customers are sensitive to the price of a product D) there are very few satisfactory substitutes for the produc

B) a price increase does not have significant impact on buying habits

Which of the following would shift the supply curve of beef A) an effective advertising campaign by pork producers B) a reduction in the price of cattle feed (input cost) C) a change in the incomes of beef consumers D) a widely publicized study that indicates beef increases one's cholesteral levels

B) a reduction in the price of cattle feed (input cost)

Which of the following is the best example of the law of supply A) a milling company builds a new factory to process flour to export B) a sandwich shop increases the number of sandwiches they supply every day when the price is increased C) A catering company buys a new dishwasher to make their work easier D) a food producer increases they number of acres of wheat he grows to supply a milling company

B) a sandwich shop increases the number of sandwiches they supply every day when the price is increased

The federal minimum wage law demonstrates A) market equilibrium B) a societal choice for economic equity over effeciency C) the function of equilibrium price in a competitive market D) government intervention to ensure equilibrium price

B) a societal choice for economic equity over effeciency

Price floors that are artificially high are likely to create A) a price floor B) a surplus C) an equilibrium D) a shortage

B) a surplus

Human capital includes A) the salary paid to an accountant B) a taxi driver's knowledge of city streets C) the machinery used to weave cloth D) the equipment used by a doctor to cure a patient

B) a taxi driver's knowledge of city streets

Why are all goods and services scarce A) some goods cost more than others B) all resources are scarce C) somethings are needs and others are wants D) some people want to have more goods than others

B) all resources are scarce

Which of the following would cause the price of wheat to rise A) a decrease in the costs of producing corn, a substitute for wheat B) an increase in the price of soybeans, a substitute for wheat C) a decrease in the price of fertilizer D) a diet craze among americans that decreases their demand for bread products

B) an increase in the price of soybeans, a substitute for wheat

A demand schedule is determined by the wishes of the A) sellers B) buyers C) neither D) both

B) buyers

About 2/3 of the private rental housing in NYC is subject to rent control. the rent control price is usually below market equilibrium price. economic theory suggests that this rent control price would A) increase landlord's profits B) cause many rental units to be abandoned or poorly kept C) result in a surplus of rental units in the near future D) reduce housing discrimination against minorities

B) cause many rental units to be abandoned or poorly kept

What is the struggle among various producers for the consumer's business called A) socialism B) competition C) incentive D) self-regulation

B) competition

Some businesses are not organized to maximize profits. Instead their goals are to work for the good of all their members or to work for the good of society in general. what types of businesses is this passage describing A) franchises and multinationals B) cooperatives and nonprofits C) general and limited partnerships D) horizontal and vertical mergers

B) cooperatives and nonprofits

One example of thinking at the margin is A) determining whether it is better to spend your savings on a new CD player or on a TV B) deciding whether the benefit of working 2 extra hours per day is worth the sacrifice of study time C) putting all of your money in a savings account because the interest rates are so high D) deciding to buy a new car you don't really like because it is significantly less expensive than the one you want

B) deciding whether the benefit of working 2 extra hours per day is worth the sacrifice of study time

Alex receives a raise at work and continues to work the same number of hours each week, his demand for $3 t-shirts which he considers an inferior good will A) increase B) decrease C) stay the same D) have no relation to his income

B) decrease

If there is a surplus in a market the price is likely to A) increase B) decrease C) remain the same D) fluctuate

B) decrease

When a consumer is able and willing to buy a good or service he or she creates which of the following A) consumption B) demand C) elasticity D) allocation

B) demand

Which of the following is a reason for employers to hire more temporary workers instead of permanent workers A) employers know that statistics show that most people prefer temporary employment B) employers can cut costs because temporary workers typically receive fewer benefits C) Employers don't have to pay social security and medicare taxes for temporary workers D) employers can pay temporary workers less than the federal minimum wage

B) employers can cut costs because temporary workers typically receive fewer benefits

The resources used to make all goods and services are the A) production possibilities B) factors of production C) production trade-offs D) opportunity costs

B) factors of production

Will, a sprinter on the track team, has inelastic demand for sports drinks. the local store has raised the price of a sports drink from $1.00 to $1.50. which of the following could describe will's response to the price change A) he bought 15 bottles a month at $1 and 20 at $1.50 B) he bought 10 bottles a month at $1 and 8 at $1.50 C) he bought 15 bottles a month at $1 and 5 at $1.50 D) he bought 10 bottles a month at $1 and 5 at $1.50

B) he bought 10 bottles a month at $1 and 8 at $1.50

Which of these events could permenantly shift a individual's demand curve for umbrellas to the right A) he buys a car so he no longer needs to walk to and wait at a bus stop every morning to get to work B) he moves from a desert community to a rainy city by the ocean C) the price of umbrellas decreases signifcantly as inexpensive umbrellas are imported from China D) weather forecasters predict that a major hurricane will hit his city the following week

B) he moves from a desert community to a rainy city by the ocean

Why did communist governments use a command economic system for many years A) as a way to avoid the expense and difficulties of a free market B) in an attempt to create a society in which everyone was equal C) to limit the costs of production of many goods D) as a method of keeping the consumer from getting what he or she wanted

B) in an attempt to create a society in which everyone was equal

Why might these people structure their business as a limited liability partnership rather than a limited partnership A) in order to focus on providing primary care to lower-income patients B) in order to limit personal responsibility if one of them is sued C) in order to allow them to hire a manager to run the business D) in order to encourage investors to buy stock in the business

B) in order to limit personal responsibility if one of them is sued

The theory of competitive pricing A) is an imperfect model of market performance B) is a set of ideal conditions and outcomes C) is ineffective when large swings in price occurs D) demonstrates the need for subsidies and price ceilings

B) is a set of ideal conditions and outcomes

When the selling price of a good goes up, what is the relationship to the quantity supplied A) the cost of production goes down B) it becomes practical to produce more goods C) the profit made on each item goes down D) there is no relationship between the two

B) it becomes practical to produce more goods

When prices rise, which of the following happens to income A) it goes down B) it buys less C) it rises to meet prices D) it is used to buy different things

B) it buys less

What happens to quantity supplied when price is lowered A) it cannot be determined B) it falls C) it stays the same D) it rises

B) it falls

What is an important advantage of a free market A) it does not change unless the government changes it B) it offers a wide variety of goods and services C) it is easy to regulate D) it protects the less fortunate

B) it offers a wide variety of goods and services

Shania and Nick own a convenience store together. They share equal responsibility and liability for their business, and each person received 50% of the profits. what kind of business organization is it? A) sole proprietorship B) partnership C) cooperative D) nonprofit

B) partnership

What is a factory building an example of A) human capital B) physical capital C) an economic trade-off D) technology

B) physical capital

If the market price is set above the equilibrium price, there will be a tendency for price to fall, causing A) quant demanded to fall and quant supplied to rise B) quant demanded to rise and quant supplied to fall C) both quant demanded and quant supplied to fall D) both quant demanded and quant supplied to rise

B) quant demanded to rise and quant supplied to fall

The pricing system corrects a shortage by A) lowering the price and profits of firms causing the shortage B) raising the price and producer profits C) lowering product price but increasing producer profits D) raising product price but lowering producer profits

B) raising the price and producer profits

What is it called when the government uses some tool other than money to allocate goods A) supply management B) rationing C) disequilibrium D) resource allocation

B) rationing

Which of the following is a fixed cost for a store A) advertising B) rent C) inventory D) short-term workers

B) rent

A leftward shift of a product supply curve might be caused by A) an increase in consumer's income B) some firms leaving the industry C) a decline in the prices of needed inputs D) an improvement in the relevant technique of production

B) some firms leaving the industry

What do sellers do if they expect the price of goods they have for sale to increase dramatically in the near future A) sell the goods now and try to invest the money instead of resupplying B) store the goods until the price rises C) sell the goods now but try to get the higher price for them D) store the goods indefinitely regardless of when the price rises

B) store the goods until the price rises

Which of the following is an example of government influence on supply A) marginal costs B) subsidies C) market supply curve D) law of supply

B) subsidies

What is a company's total revenue A) the price of a company's goods B) the amount a company receives for selling its goods C) the amount of goods a company can expect to sell D) the amount of profit a company can expect to make

B) the amount a company receives for selling its goods

Corporate shares were offered for sale to the public for the first time yesterday. According to the company's founders, they hope to use the funds raised in this initial public offering to invest in building several new factories. Based on the excerpt from a news story, which statement is true A) the corporation is raising money by selling bonds B) the corporation is raising money by selling stocks C) the corporation is raising money building new factories D) the corporation is raising money by becoming a closely-held corporation

B) the corporation is raising money by selling stocks

The community of Desertville traditionally produces a large number of tires and a small amount of kiwi fruit . Kiwis are becoming increasingly popular, and Desertville has decided to expand kiwi cultivation a decrease tire manufacturing. according to the law of increasing costs A) the cost of producing tires will decrease while the cost of producing kiwis will increase B) the cost of producing wikis will increase C) the cost of producing tires will decrease D) the cost of producing kiwis will decrease while the cost of producing tires will increase

B) the cost of producing wikis will increase

At the council meeting last night, the Drover Company demanded that the town enforce its private property laws. Last year, the company built a bridge across Snake stream to make it easier for employees tor reach its offices. "The bridge." company owner Celia Drover said "is private." She went on to complain that many nonemployees have been using the bridge, rather than drive seven miles south to cross the stream on a state-owned bridge. Which of the following best describes the use of the private bridge by the public A) the efficient allocation of resources B) the free-rider problem C) positive externalities D) negative externalities

B) the free-rider problem

What determines the price and quantity produced of most goods A) the consumer's perception of necessity B) the interaction of supply and demand C) the availability of substitutes for the goods D) the quality of the goods that are produced

B) the interaction of supply and demand

The theory of production deals with the relationship between the factors of production and A) fixed costs B) the output of goods and services C) the cost of raw materials D) the cost of marginal returns

B) the output of goods and services

Which of the following is an example of lower production costs brought about by the use of technology A) the delivery costs of gasoline to the consumer by diesel trucks B) the use of e-mail to replace slower surface mail C) the making of breads and pastries in local shops rather than large bakeries D) the importing of fresh vegetables from South America rather than using canned vegetables

B) the use of e-mail to replace slower surface mail

If the government sets the price of a commodity below the market equilibrium price, then: A) there will be a surplus of the commodity, which will remain until the controls are removed B) there will be a shortage of the commodity at the below-equilibrium price C) sellers will compete by improving quality of the product D) the government will have to buy the excess quant supplied at that price

B) there will be a shortage of the commodity at the below-equilibrium price

Which of the following characteristics do corporations share with many nonprofits A) they are driven by a quest for profits B) they may use lobbyists to influence lawmakers C) they pay income taxes D) they invest all profits in the organization

B) they may use lobbyists to influence lawmakers

copyright

a government license that grants an author exclusive rights to publish and sell creative works

Subsidy

a government payment that supports a business or market

What is one way in which the economy of North Korea differs from the economy of Mexico A) North Korea's economy is far more reliant on free markets than Mexico's economy is B) Mexico's economy is far more reliant on central planning than North Korea's economy is C) Mexico's government is less involved in the economy than North Korea's government is D) North Korea's government is less involved in the economy than Mexico's government is

C) Mexico's government is less involved in the economy than North Korea's government is

How do socialism and communism differ when it comes to government systems A) Socialism is authoritarian, while communism can be democratic B) Socialism has centralized planning, while communism relies on market forces C) Socialism can be democratic, while communism is authoritarian D) Socialism allows private property, while communism outlaws it

C) Socialism can be democratic, while communism is authoritarian

Why do U.S. economic policies seek to achieve the goal of maximum employment A) High employment is a signal to producers to lower prices on goods and services B) The constitution guarantees a job to Americans who are willing and able to work C) When more people work, the economy is more productive and the standard of living rises D) the more people who are employed, the more secure the financial markets will be

C) When more people work, the economy is more productive and the standard of living rises

Which of the following is a "Guns or butter" decision A) a man must decide whether to install an alarm system in his house or buy new furniture for the living room B) A woman has to decide whether to replace her old car with a new sports car or a family sedan C) a country must decide whether to use its steel to build new fighter jets or new sports cars D) a school has to decide whether to build a new gym or renovate the auditorium

C) a country must decide whether to use its steel to build new fighter jets or new sports cars

Which statement is true for both mediation and arbitration A) a neutral third party imposes a decision that both sides must accept B) a neutral third party meets with both sides to help find an acceptable solution C) a neutral third party listens to arguments from both sides D) a neutral third party casts a deciding vote that determines the outcome

C) a neutral third party listens to arguments from both sides

Which of the following is an example of scarcity rather than a shortage A) a popular toy is sold out during the busy holiday season B) You have spent your last penny and payday is a week away C) a person wants an endless supply of everything but cannot have it D) Gasoline was rationed in America during WW2

C) a person wants an endless supply of everything but cannot have it

What kind of changes would be expected in the demand of a country that has a growing population A) a rise in the demand for recreation B) a shift in the demand for high-quality food C) a rise in the demand for shelter D) a lowering in the demand for automobiles

C) a rise in the demand for shelter

Which of the following is an example of a good with an inelastic supply A) toothbrushes B) beanbags C) apples D) hats

C) apples

Any resources that are made by humans and used to create other goods and services are called A) services B) production C) capital D) labor

C) capital

In a free-enterprise economy, the presumed harmony between individual and public interest depends on A) careful planning and coordination of economic activity B) a strong desire for profit maximization C) competitive markets and the absence of significant spillover or external effects to fall D) the social desire of the private businessmen to supply the goods that the consumers desire at reasonable prices

C) competitive markets and the absence of significant spillover or external effects to fall

You bought 2 new CDs with the last $30 in your checking account, and your next payday is on Monday. what is the opportunity cost of these CDs A) the difference between the cost to produce the CDs and the price you paid for them B) $30 C) dinner and a movie with your friends this Saturday night D) knowing you are the first of your friends to have these CDs

C) dinner and a movie with your friends this Saturday night

Which of the following is NOT characteristic of a centrally planned economy A) the central government owns all land and capital B) the central government makes all economic decisions C) each collective or factory set its own goals D) each person is assigned a job

C) each collective or factory set its own goals

All of the following are characteristics of allocation by rationing EXCEPT A) lack of fairness B) high administrative costs C) effeciency D) diminished incentive for workers

C) effeciency

Elena is looking for an apartment. which of the following is an example of her search costs A) elena must pay the first and last months' rent before she can move into a new apartment B) elena pays movers $400 to help her transfer belongings to the new apartment C) elena misses two days of work at the supermarket to visit several different apartments available for rent D) elena pays $300 to stay at a hotel for four nights before the apartment is ready

C) elena misses two days of work at the supermarket to visit several different apartments available for rent

Prices perform the allocation function well because the do all of the following except A) provide neutralists favoring neither the producer or consumer B) provide flexibility, absorbing unexpected shocks C) enable the government to use rationing D) provide ways for consumers to make decisions

C) enable the government to use rationing

All of the following are stages of production EXCEPT A) increasing returns B) diminishing returns C) equaling returns D) negative returns

C) equaling returns

What happens when wages are set above the equilibrium level by law A) firms tend to try to break the law and hire people at the equilibrium level B) firms employ more workers than they would at the equilibrium wage C) firms employ fewer workers than they would at the equilibrium wage D) firms hire more workers but for fewer hours than they would at the equilibrium wage

C) firms employ fewer workers than they would at the equilibrium wage

Total cost is the sum of A) all variable costs B) fixed costs and overhead C) fixed and variable costs

C) fixed and variable costs

Supply curve

a graph of the quantity supplied of a good or service at various prices

An example of a shortage is limited amounts of A) water available for irrigating a crop because it is used for other crops B) labor available because the workers have other jobs C) food available because the trucks carrying it are on strike D) food available because few people want to buy it

C) food available because the trucks carrying it are on strike

What can a decision-making grid do A) tell you the right course of action B) show you every possible consequence of your decision C) help you determine some of the opportunity costs for your decision D) show you every possible benefit of your decision

C) help you determine some of the opportunity costs for your decision

What were the main goals of the early labor movement in the United States A) equal pay for managers and laborers B) a full-time job for everyone wanting work C) higher wages, shorter hours, and a safer workplace D) automatic annual increases in worker pay and benefits

C) higher wages, shorter hours, and a safer workplace

Which product is likely to have the most elastic supply A) automobiles B) ships C) ice cream cones D) dishwashing machines

C) ice cream cones

Which of the following is a potential disadvantage for a sole proprietor A) if he does not sell enough meals to make a profit, stockholders might withdraw their investment B) if he decides to retire, he will have to find someone else to take over as the owner before he can quit the business C) if a customer accuses him of serving spoiled food and sues him, he is solely responsible for any debts or damages incurred D) if he wants to buy a second food truck, he will have to find a partner to operate that truck

C) if a customer accuses him of serving spoiled food and sues him, he is solely responsible for any debts or damages incurred

How is future price related to current demand A) if the price is expected to rise current demand will drop B) if the price is expected to fall current demand will rise C) if the price is expected to rise current demand will rise D) future price is not related to current demand

C) if the price is expected to rise current demand will rise

"If FrootLoops were taxed, the price of frootloops would rise. Consequently, the demanded for frootloops would fall, causing price to fall to the original level. therefore the tax would not be effective . this statement A) is essentially correct B) is incorrect-after the demand falls, the price would fall, but to some level higher than the original level C) is incorrect-demand and quantity are confused D) is incorrect- the tax would be effective even if price fell to the original level, since the demand for frootloops drops.

C) is incorrect-demand and quantity are confused

When the selling price of a good goes up, what is the relationship to the quantity supplied A) there is no relationship between the 2 B) the profit made on each item goes down C) it becomes practical to produce more goods D) the cost of production goes down

C) it becomes practical to produce more goods

Why can a labor strike be an effective tool for union workers trying to make a company accept its demands A) it keeps the collective bargaining process from ending B) it provides a mediation process C) it can slow or stop production and thus profits giving company owners an incentive to resolve the issue D) it can help both sides avoid an arbitration ruling

C) it can slow or stop production and thus profits giving company owners an incentive to resolve the issue

What happens to quantity demanded when price is raised A) it rises B) it cannot be determined C) it falls D) it stays the same

C) it falls

What happens to quantity supplied when price is increased A) it stays the same B) it cannot be determined if it rises, falls, or stays the same C) it rises D) it falls

C) it rises

Cost-Benefit analysis decision making that compares the extra benefits to the extra costs of an action is called A) marginal costs B) marginal output C) marginal analysis D) marginal revenue

C) marginal analysis

What kind of system is the United States economy based on A) cause and effect B) centralized C) market D) production

C) market

When quantity demanded is less than quantity supplied A) market price is not affected B) market price will stay the same C) market price will fall D) market price will rise

C) market price will fall

When quantity demanded is greater than quantity supplied A) market price will stay the same B) market price will fall C) market price will rise D) market price is not affected

C) market price will rise

How could the Chinese economy by characterized A) free market B) centrally planned C) mixed, but on the side of centrally planned D) mixed, but on the side of free market

C) mixed, but on the side of centrally planned

Technological process has reduced the cost of manufacturing MP3 players. If demand is unchanged A) more MP3 players will be sold at a higher price B) fewer MP3 players will be sold at a higher price C) more MP3 players will be sold at a lower price D) fewer MP3 players will be sold at a higher price

C) more MP3 players will be sold at a lower price

Which of the following goods would likely to be bought in the same quantity even if prices doubled A) shoes B) telephones C) pencils D) computers

C) pencils

Which of the following is not a reason why prices effectively perform the allocation function A) competitive markets find their own prices without interference B) prices favor neither the producer nor the consumer C) prices remain surprisingly stable despite unexpected events D) prices are easily understood

C) prices remain surprisingly stable despite unexpected events

What happens to a market in equilibrium when there is an increase in supply A) excess supply means that producers will make less of the good B) quant demanded will exceed quant supplied so price will drop C) quant supplied will exceed quant demanded so the price will drop D) undersupply means that the good will become very expensive

C) quant supplied will exceed quant demanded so the price will drop

Which of these is most likely to lead directly to a black market A) a supply shock B) a price floor C) rationing D) equilibrium

C) rationing

Which of the following is an example of a price ceiling A) minimum wage B) free lunch program C) rent control D) government subsidies

C) rent control

Which of the following makes someone an entrepreneur A) earning a lot of money as a computer programmer B) becoming a highly paid dancer' C) running a service that hires people to install sprinkler systems in lawns D) inventing and selling the rights to manufacture a computer game

C) running a service that hires people to install sprinkler systems in lawns

The purpose of a production possibilities graph is to A) enable a country to mobilize to win a war B) keep an economy from having nonproductive workers C) show alternative ways to use an economy's resources D) make it possible to increase an economy's input

C) show alternative ways to use an economy's resources

What strategy of modern manufacturing is Adam Smith referring to in this statement " To take an example, therefore, from a very trifling manufacture ..... the trade of the pin-maker...... One man draws out the wire, another straightens it, a third cuts it, a fourth points it, a fifth grinds it a the top for receiving the head; to make the head requires 2 or 3 distinct operations, to put it on is a peculiar business, to whiten the pins is another; .... the important business of making a pin is, in this manner, divided into about 18 distinct operations." - Adam Smith. The Wealth of Nations A) automation B) innovation C) specialization D) industrialization

C) specialization

State and local ballot referendums allow American citizens to A) create government economic policies B) enact government spending proposals C) support the government goal of economic freedom D) support the government goal of financial security.

C) support the government goal of economic freedom

A country's production possibilities increase because the available workers become more skilled at using a computer. this is an example of growth caused by A) global resources B) physical capital C) technology D) production opportunity

C) technology

A nation's automakers install new robotic machinery to build cars. Now, cars only take a day to make and the factories can produce many more cars than before. this is an example of growth caused by A) land and natural resources B) human capital C) technology D) production possibility curves

C) technology

When the price of a good is fixed below the market equilibrium price we would expect all of the following to result except A) the amt of the good demanded would increase B) the amt of the good supplied would decline in the short run C) the incentive to expand the future supply would increase D) an excess demand would be present

C) the incentive to expand the future supply would increase

Production possibilities frontiers curve when they are charted on a graph because they show A) the underutilization of resources B) the maximum output of goods and services C) the increasing costs resulting in increasingly less output D) the technological level of the economy's productivity

C) the increasing costs resulting in increasingly less output

"Government regulations impose an enormous burned on large and small businesses in America, discourage productivity, and contribute substantially to our current economic woes." -President Ronald Reagan, January 22, 1981 What would President Reagan's economic policy most likely be concerning regulations A) to propose many new regulations B) to encourage private regulation of businesses C) to cut back on the number of regulations D) to preserve the existing level of government regulations

C) to cut back on the number of regulations

An efficient economy is one that A) has very few people who do not work for a living B) makes the best use of all its goods and services C) use its resources to make the most goods and services D) makes the least costly use of its resources

C) use its resources to make the most goods and services

What is a basic principle of the law of demand A) the higher the price the more people will want the good B) everyone has a limited income that they will spend C) when a good's price is lower people will buy more of it D) services are areas of interest in the same way goods are

C) when a good's price is lower people will buy more of it

Which group is counted in the labor force A) discouraged workers B) active military personnel C) workers without jobs who are seeking employment D) retired workers

C) workers without jobs who are seeking employment

Market Supply Curve

a graph of the total quantity supplied of a good or service by all suppliers at various prices

Prices enable a market economy to adjust to unexpected events by A) maintaining consumption and production at stable levels B) government rationing C) ensuring that producers always earn profits D) adjusting consumption and production

D) adjusting consumption and production

The theory of competitive pricing represents A) a model by which to measure the performance of other less competitive markets B) an important theory in economics C) a set of ideal conditions and outcomes D) All the above

D) All the above

Which of the following is not a key economic question A) What goods and services should be produced B) How should these goods and services be produced C) Who consumes these goods and services D) How should it be ensured that goods and services paid for

D) How should it be ensured that goods and services paid for

Why has the United States space program been operated as a public good A) Private enterprise does not have the technical skill needed to build the rockets that carry astronauts to space B) The profit inby a fcentive for a private company to establish and run its own space program is too great C) The inability of the American space program to land an astronaut on Mars is an example of market failure D) It is impractical to exclude nonpayers from enjoying the scientific and technological benefits of the space program

D) It is impractical to exclude nonpayers from enjoying the scientific and technological benefits of the space program

All of the following can change the market supply curve EXCEPT A) the numbers of sellers offering the product B) the expectations that prices are about to increase C) the cost of labor D) a change in the demand for the product

D) a change in the demand for the product

What shows the quantities of products demanded at each price by all consumers in a market A) an elasticity and consumption lsit B) a schedule of consumer prices C) a market pricing list D) a market demand schedule

D) a market demand schedule

The price of wheat rose sharply because (a) the drought reduced the yield per acre, (b) millers sought to stockpile wheat to protect themselves from future price increases that would occur if the drought were to continue. The quotation says A) a shift in the demand curve and a movement along the supply curve B) a shift in the supply curve and a movement along the demand curve C) an increase in both demand and supply D) a reduction in supply and short run increase in demand

D) a reduction in supply and short run increase in demand

Which type of business organization might offer low-interest loans to its members A)a business association B) a trade association C) a consumer cooperative D) a service cooperative

D) a service cooperative

Price ceilings that artificially low are likely to create A) a price floor B) a surplus C) an equilibrium D) a shortage

D) a shortage

One example of an entrepreneur is A) a writer who is hired by a film studio to adapt a novel into a screenplay B) a lawyer in a high-profile law firm that specializes in business law C) an Olympic ice skater who later decides to join a professional ice show D) an artist who runs a business painting murals in office buildings and restaurants

D) an artist who runs a business painting murals in office buildings and restaurants

Which of these events would indicate a movement along the supply curve for batteries A) a new law requires battery manufacturers to spend more money on environmentally-sound trash disposal B) a new trade agreement enables stores to import foreign batteries C) workers at a major battery factory go on strike and stop production D) batter manufacturers raise the price of 8 AA batteries from $3.50 to $3.95 a set

D) batter manufacturers raise the price of 8 AA batteries from $3.50 to $3.95 a set

Suppose a firm that makes appliances merges with a company that produces running shoes, and it later also buys a dairy. what is this combination called A) franchise B) horizontal merger C) cooperative D) conglomerate

D) conglomerate

A baker calculates that by spending $16 on labor and materials, she can bake 10 cakes a day. $24 will allow her to bake 12 cakes, while spending $36 on labor and materials produces 14 cakes. in terms of capital and labor A) increasing marginal returns B) negative marginal returns C) constant marginal returns D) decreasing marginal returns

D) decreasing marginal returns

Why do fads often lead to shortages, at least in the short term A) buyers and sellers are unable to agree on a price for the good B) laws prevent stores from responding to excess demand in time to prevent a shortage C) manufacturers charge extremely high prices for the goods that stores are unwilling to pay D) demand increases so quickly and unexpectedly that time is needed for the quant supplied and price to increase to reach a new equilibrium point

D) demand increases so quickly and unexpectedly that time is needed for the quant supplied and price to increase to reach a new equilibrium point

Complete the following sentence: At the most profitable level of production, a firm's marginal cost will be__________ the market price A) greater than B) set by C) less than D) equal to

D) equal to

The level of profit-maximizing output is reached when marginal cost is A) less than marginal revenue B) 1/2 of marginal revenue C) 2x marginal revenue D) equal to marginal revenue

D) equal to marginal revenue

Which of the following lists would an economist consider to be land A) factories, office buildings, assembly lines, workers B) farm fields, tractors, pesticides, fertilizers C) dams, bridges, rock quarries, and oil wells D) iron ore, natural gas, fertile soil, water

D) iron ore, natural gas, fertile soil, water

Ivers paint founded in 1999, is a corporation that manufactures paint supply products. On Friday, officials announced that the company would merge with the Kildare Paint Supply Store, a partnership started in 1995 by the Kildare brothers. "This merger will benefit consumers because Ivers will be able to oeprate more efficiently and offer our products at a lower price at the Kildare Pain Supply Store," said a representative from Ivers paint. Based on the excerpt from a news story, which statement best describes the merger of Ivers paint and Kildare Paint Supply A) It is a conglomerate merger because one company is involved in the manufacturing and the other in selling B) it is a partnership merger because one of the companies is a merger C) It is a horizontal merger because both companies are involved in the paint supply business D) it is a vertical merger because the two companies are involved in different stages of the supply business

D) it is a vertical merger because the two companies are involved in different stages of the supply business

Which of the following is a good that might not be bought when prices rise A) complement B) substitute C) inferior good D) luxury

D) luxury

What is meant by the phrase "markets talk" A) market changes are written about in newspapers and magazines B) government officials base decisions on the stock market C) business people rely on good communication to conduct business D) markets reflect the thoughts and feelings of buyers and sellers

D) markets reflect the thoughts and feelings of buyers and sellers

Cooperatives are based on several principles, which include voluntary and open membership, democratic control of the organization by its members, and sharing of contributions and benefits by members. What does democratic control likely mean in this context A) members can engage in political discussions B) members are free to open their own business C) members belong to the democratic party D) members make decisions by voting

D) members make decisions by voting

What is the name of the smallest amount that can legally be paid to most workers for an hour of work A) equilibrium price B) supply cost C) price floor D) minimum wage

D) minimum wage

All of the following are characteristics of rationing except A) rationing is often viewed as unfair B) rationing creates high administrative costs C) rationing decreases the incentive to work D) rationing provides an efficient link between producers and consumers

D) rationing provides an efficient link between producers and consumers

Which of these is an example of a good with elastic supply A) large hand-made rugs B) plums C) passenger airplanes D) sandwiches

D) sandwiches

Increased government regulations can cause the supply curve to A) shift right B) cause a surplus C) move along the curve D) shift left

D) shift left

If a competitive market is at equilibrium and if there is a sudden increase in demand then a temporary A) surplus will occur and price will increase B) shortage will occur and the price will fall C) surplus will occur and the price will fall D) shortage will occur and the price will increase

D) shortage will occur and the price will increase

Which of the following receives government subsidies that are in place to protect the population rather than for economic reasons A) a national car company in India B) national airlines in Western Europe C) tobacco growers in the United States D) small farmers in France

D) small farmers in France

What is an example of a variable cost in a major league baseball franchise A) manager's salary B) ticket-takers' salaries C) stadium rent D) stadium maintenance

D) stadium maintenance

Because of unreasonably cold weather, the supply of oranges has substantially decreased. this statement indicates that A) the prices of oranges will fall B) the equilibrium quantity of oranges will rise C) the demand for oranges will necessarily rise D) the amount of oranges available for sale at various prices has declined ( the EQ of oranges)

D) the amount of oranges available for sale at various prices has declined ( the EQ of oranges)

A company that makes baseball caps is underutilizing its resources, what does this mean A) the company is running more efficiently than its competitors B) the company is paying its employees less than it should be C) the company is making caps when it could be making t-shirts instead D) the company is producing fewer caps than it could be

D) the company is producing fewer caps than it could be

Why is the demand for labor called a derived demand A) the supply of labor is derived from the demand for labor B) the demand for labor is derived from the supply of labor C) the demand for a product or service is derived from a demand for workers who can supply that product or service D) the demand for labor is based on a demand for a product or service that workers can supply

D) the demand for labor is based on a demand for a product or service that workers can supply

What is the product market A) the market in which payments are received for selling products to consumers B) the market in which income is received for supplying land, labor, or capital C) the market in which firms purchase the factors of production from households D) the market in which households purchase the goods and services that firms produce

D) the market in which households purchase the goods and services that firms produce

A shortage will develop when A) the quant supplied of a good is greater than the quant demanded of that good B) the equilibrium quant supplied is lower than the actual quant supplied C) the government provides subsidies to producers D) the market price is below equilibrium price

D) the market price is below equilibrium price

What does a production possibilities frontier show A) scarce and less scarce resources B) global trade-offs and costs of doing business C) an economy that is producing but not at the maximum D) the maximum amount that an economy can produce

D) the maximum amount that an economy can produce

What is the opportunity cost of a decision A) the series of alternative decisions that could have been made B) the best possible way the question could have been decided C) the different ways that a different person might have made the decision D) the most desirable alternative given up for the decision

D) the most desirable alternative given up for the decision

If the price of tickets to the world famous band howie and the blowpops were below the competitive equilibrium price A) the quantity supplied would be greater than the quantity demanded B) the demand for howie and the blowpops tickets must be elastic C) there would be no transactions between buyers and sellers of the tickets D) the number of persons seeking to obtain tickets would be greater than the number of available tickets to the concert

D) the number of persons seeking to obtain tickets would be greater than the number of available tickets to the concert

What does unitary elastic demand mean A) the elasticity of demand is mathematically determined B) the elasticity of demand is different at each unit on the price range C) the demand is inelastic at a low price but becomes elastic as the price rises D) the percentage of change in quantity demanded is exactly equal to the percentage change in price

D) the percentage of change in quantity demanded is exactly equal to the percentage change in price

Government has the power to place restrictions on the use of business and individual property. What restriction does this excerpt from the 5th amendment directly address "No person shall be ..... deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation." -Amendment to the Constitution of the United States A) the power to regulate how property is used B) the power to limit certain kinds of property to zones C) the power to take property through eminent domain D) the power to take property without due process of law

D) the power to take property without due process of law

The price of movie tickets in a town has risen from $7 to $9. what is the most likely effect of the change in price A) the demand curve for movie tickets will move right B) the quantity demanded of movie tickets will increase C) the demand curve for movie tickets will move left D) the quantity demanded of movie tickets will decrease

D) the quantity demanded of movie tickets will decrease

At a given price a surplus occurs when A) the quantity demanded is more than the quantity supplied B) the quantity demanded is the same as the quantity supplied C) the quantity supplied is less than the quantity demanded D) the quantity supplied is greater than the quant demanded

D) the quantity supplied is greater than the quant demanded

The law of supply states that A) the quantity supplied varies irregularly with its price B) the quantity supplied varies inversely with its price C) the quantity demanded varies inversely with its price D) the quantity supplied varies directly with its price

D) the quantity supplied varies directly with its price

What is the effect of import restrictions on prices A) they cause prices to drop B) they usually do not have any lasting effects C) they often cause prices to rise steeply and then drop D) they cause prices to rise

D) they cause prices to rise

"Whether we're talking about roads or bridges or mass transit, whether we're talking about canals and waterways, sewage, and water facilities, whether we're talking about broadband, or we're talking about the grid to transmit electricity, whether we're talking about schools, an investment in infrastructure that serves the needs of our children and their education, ....... these infrastructure investments offer our nation job-creating opportunities to reinvigorate the American economy." -Nancy Pelosi, Speaker of the House, Press Release, March 11, 2008 Government-built infrastructure is a public good. Which of the following BEST paraphrases the intent of this press release by a government official A) to inform people about the various types of infrastructure B) to warn people that the nation's infrastructure needs to be repaired C) to alert people to the large investment needed to repair infrastructure D) to persuade people that the benefits of repairing infrastructure outweigh costs

D) to persuade people that the benefits of repairing infrastructure outweigh costs

All of the following are decisions that can be made at the margin EXCEPT A) whether to grow beans or corn on a large farm B) whether or not to hire 100 more workers C) whether to leave early in the morning or late in the day for a trip D) whether or not to go on vacation

D) whether or not to go on vacation

bond

a formal contract issued by a corporation or other entity that includes a promise to repay borrowed money with interest at fixed intervals

inferior goods

a good that consumers demand less of when their income increases

normal goods

a good that consumers demand more of when their income increases

OSHA

Occupational Safety and Health Administration. can make laws and enforce them

conglomerate

a business combination merging more than three businesses that produce unrelated products or services

cooperative

a business organization owned and operated by a group of individuals for their shared benefit

Sole proprietorship

a business owned and managed by a single individual

stock

a certificate of ownership in a corporation

fixed cost

a cost that does not change no matter how much of a good or service is produced. ex: salaries, rent, property taxes, machinery repairs

Variable cost

a cost that rises or falls depending on the quantity produced. ex: raw materials, electricity and heating bills, and hourly workers

Variable

a factor, or factors that can change

multinational corporation

a large corporation that produces and sells its goods and services in more than one country

ceteris paribus

a latin phrase that means "all other things held constant"

corporation

a legal entity, or being, owned by individual stockholders, each of whom has limited liability for the firm's debts

certificate of incorporation

a license to form a corporation issued by a state government

black market

a market in which goods are sold illegally, without regard for government controls on price or quantity

price ceiling

a maximum price that can be legally charged for a good or service

Elasticity of supply

a measure of the way quantity supplied reacts to a change in price

elasticity of demand

a measure of the way quantity supplied reacts to a change in price, or how drastically buyers will cut back or increase their demand for a good when the price rises, or falls respectively.

Right-to-work laws

a measure that bans mandatory union membership

price floor

a minimum price for a good or service

minimum wage

a minimum price that an employer can pay a worker for an hour of labor

business association

a nonprofit group organized to promote the collective business interests of an area or a group of similar businesses

trade association

a nonprofit organization that promotes the interests of a particular industry

professional organization

a nonprofit organization that works to improve the image, working conditions, and skill levels of people in particular occupations

articles of partnership

a partnership agreement that spells out each partner's rights and responsibilities

economic transition

a period of change in which a nation moves from one economic system to another

business cycle

a period of macroeconomic expansion, or growth, followed by a period of contraction, or decline

communism

a political system in which the government owns and controls all resources and means of production and makes all economic decisions

rent control

a price ceiling placed on apartment rent

interest group

a private organization that tries to persuade public officials to act in ways that benefit its members

referendum

a proposed law submitted directly to the public

socialism

a range of economic and political systems based on the belief that wealth should be distributed evenly throughout a society

consumer cooperative

a retail outlet owned and operated by consumers that sells merchandise to members at reduced prices

Services

actions or activities that one person performs for another. examples are medical care, and hair cuts. part of how people satisfy their needs.

Labor Force

all nonmilitary people who are employed or unemployed

producer cooperative

an agricultural marketing cooperative that helps members sell their products

externality

an economic side effect of a good or service that generates benefits or costs to someone other than the person deciding how much to produce or consume

free market economy

an economic system in which decisions on the three key economic questions are based on voluntary exchange in markets

centrally planned economy

an economic system in which the government makes all decisions on the three key economic questions

traditional economy

an economic system that relies on habit, custom, or ritual to decide the three basic economic questions

poverty threshold

an income level below that which is needed to support families or households

self-interest

an individual's own personal gain

nonprofit organization

an institution that functions much like a business but does not operate for the purpose of making a profit

Labor union

an organization of workers that tries to improve working conditions, wages, and benefits for its members

firm

an organization that uses resources to produce a product or service, which it then sells

Strike

an organized work stoppage intended to force an employer to address union demands.

glass ceiling

an unofficial barrier that sometimes prevents some women and minorities from advancing to the top rank of organizations dominated by men

command economy

another name for a centrally planned economy

market

any arrangement that allows buyers and sellers to exchange things

Underutilization

any point inside the production possibilities frontier. the use of fewer resources that the economy is capable of using

Disequilibrium

any price or quantity not at equilibrium; when quantity supplied is not equal to quantity demanded in a market

business license

authorization to operate a business issued by a local government

partnership

business organization owned by two or more persons who agree on a specific division of responsibilities and profits

Goods

physical objects that someone produces, such as food, clothing, or video games. part of how people satisfy their wants and needs

intellectual property

creations, such as books, songs, or symbols, that consist of ideas rather than physical objects

authoritarian

describes a form of government that limits individual freedoms and requires strict obedience from its citizens

elastic

describes demand that is very sensitive to a change in price

unitary elastic

describes demand whose elasticity is exactly equal to one

inelastic

describes the demand that is not very sensitive to price changes

mixed economy

economic system that has some market-based elements and some level of government involvement

non-price determinants

factors other than price that can affect demand for a particular good or service, such as income, consumer expectations, population, demographics, and consumer tastes and advertising

patriotism

love of one's country

Fringe benefits

payments to employees other than wages or salary

Entrepreneurs

people who decide how to combine resources to create new goods and services. anyone who opens a business large or small. develop ideas, start businesses, and can create industries. first task is to assemble the factors of production.

elasticity formula

percent change in quant demanded/' percent change in price

private property rights

the principle that people have the right to control their possessions and use them as they wish

Law of supply

producers offer more of a good or service as its price increases and less as the price decreases

Consumer goods

products created for direct consumption

Capital goods

products that are used to create consumer goods

Income Statement

revenue-expenses=net income

law of demand

says consumers will buy more of a good when its price is lower and less when its price is higher

obsolescence

situation in which older products and processes become out-of-date

blue-collar workers

someone who performs manual labor, often in a manufacturing job, and who earns an hourly wage

Lobyist

someone who works for or is hired by a special interest group to persuade law makers to benefit their special interests

white-collar workers

someone who works in a professional or clerical job and who usually earns a weekly salary

free rider

someone who would not be willing to pay for a certain good or service but who would get the benefits of it anyway if it were provided as a public good

Need

something essential for survival, such as food or medicine

Want

something that we desire but that is not necessary for survival, such as video games or stylish haircuts

Contingent Employment

temporary and part-time jobs that are given to workers instead of full-time or permanent jobs

Trade-Off

the act of giving up one benefit in order to gain another great benefit. often involve things that can be measured, or unmeasurable things

marginal revenue

the additional income from selling one more unit of a good or service

Quantity supplied

the amount of a good or service that a producer is willing and able to supply at a specific price

Supply

the amount of a good or service that is available

profit

the amount of money a business receives in excess of its expenses

factor market

the arena of exchange in which firms purchase the factors of production from households

product market

the arena of exchange in which households purchase goods and services from firms

infrastructure

the basic facilities that are necessary for a society to function and grow

income effect

the change in consumption that results in response to changes in price

Marginal Product of Labor

the change in output that results from hiring one additional unit of labor

horizontal merger

the combination of two or more firms competing in the same market with the same good or service

specialization

the concentration of the productive efforts of individuals and businesses on a limited number of activities

public interest

the concerns of society as a whole

operating cost

the cost of operating a facility, such as a factory or store

marginal cost

the cost of producing one more unit of a good or service

Cost/Benefit Analysis

the decision-making process of decision-makers comparing the opportunity costs and benefits, what will they sacrifice and gain

demand

the desire to own something and the ability to pay for it

barter

the direct exchange of one set of goods or services for another

laissez faire

the doctrine that government generally should not intervene in the marketplace

Labor

the effort people devote to tasks for which they are paid. ex: medical care people provide, instruction in a classroom, and assembly

Marginal Benefit

the extra benefit of adding the same unit. as long as the marginal benefit exceeds the marginal cost, it pays to add more units

Marginal Cost

the extra cost of adding one unit, whether it be an extra hour or building another house

Scarcity

the fact that limited amounts of goods and services are available to meet unlimited want. forces people to make choices. unavoidable. always exists.

Constant Opportunity Cost

the factors needed to create the 2 products are exactly the same

Adam Smith

the first modern economist, whose book The Wealth of Nations describes how free markets function and self-regulate. In addition to economics, Smith published works on moral philosophy. His economic ideas have influenced many countries around the world, including the United States.

incentive

the hope of reward or fear of penalty that encourages a person to behave in a certain way

profit motive

the incentive that drives individuals and business owners to improve their material well-being

factor payment

the income people receive in return for supplying factors of production

Human Capital

the knowledge and skills a worker gains through education and experience.

diminishing marginal returns

the level of production in which the marginal product of labor decreases as the number of workers increases

increasing marginal returns

the level of production in which the marginal product of labor increases as the number of worker increases

Production Possibilities frontier

the line that shows combinations of the production of both shoes and watermelons. any spot on the line represents a point which capeland is using all of its resources to produce a maximum combination

vertical merger

the merger of two or more firms involved in different stages of producing the same good or service

assets

the money and other valuables belonging to an individual or business

Opportunity Cost

the most desirable alternative somebody gives up as the result of a decision.

Offshoring

the movement of some of a company's operations, or resources of production, to another country

legal equality

the principle that everyone has the same legal rights

business organization

the ownership structure of a company or firm

private sector

the part of the economy that involves the transactions of individuals and businesses

public sector

the part of the economy that involves the transactions of the government

Equilibrium

the point at which the demand for a product or service is equal to the supply of that product or service

dividends

the portion of corporate profits paid out to stockholders

consumer sovereignty

the power of consumers to decide what gets produced

Outsourcing

the practice of contracting with another company to do a specific job that would otherwise be done by a company's own workers

Featherbedding

the practice of negotiating labor contracts that keep unnecessary workers on the company's payroll

open opportunity

the principle that anyone can compete in the marketplace

Factors of Production

the resources used to make all goods and services. 4 main factors are land, labor, capital, and entrepreneurial activity.

eminent domain

the right of a government to take private property for public use

royalties

the share of earnings given by a franchisee as payment to the franchiser

demographics

the statistical characteristics of populations and population segments, especially when used to identify consumer markets

economic system

the structure of methods and principles that a society uses to produce and distribute goods and services

competition

the struggle among producers for the dollars of consumers

macroeconomics

the study of economic behavior and decision-making in a nation's whole economy

microeconomics

the study of economic behavior and decision-making in small units, such as households and firms

Economics

the study of how people seek to satisfy their needs and wants by making choices. both as individuals and in groups.

total cost

the sum of fixed costs and variable costs

Learning Effect

the theory that education increases efficiency of production and thus results in higher wages

total revenue

the total amount of money a company receives by selling goods or services

gross domestic product (GDP)

the total value of all final goods and services produced in a country in a given year

Efficiency

the use of resources such a way as to maximize the output of goods and services. a production possibilities frontier represents an economy working at its most efficient level

Equilibrium wage

the wage rate, or price of labor services, that is set when the supply of workers meets the demand for workers in the labor market

average cost

total cost divided by quantity produced

substitution effect

when a consumer reacts to a rise in the price of one good by consuming less of that good and more of a substitute good

the law of increasing opportunity cost

when all resources are being used, an increase in the production of one good will increase the cost of the other

surplus

when quantity supplied is more than quantity demanded

negative marginal returns

when the addition of a unit of labor actually reduces the total output

Glass ceiling

when we can see the job but cannot get the job because of discrimination

Professional labor

work that requires advanced skills and education. ex: managers, teachers, bankers, doctors, actors, professional athletes, and computer programmers.

Semi-skilled labor

work that requires minimal specialized skills and education. ex: lifeguards, word processors, short-order cooks, and many construction and factory workers.

Unskilled labor

work that requires no specialized skills, education, or training. ex: dishwashers, messengers, janitors, and many farmworkers

Skilled labor

work that requires specialized skills and training. ex: auto mechanics, bank tellers, plumbers, firefighters, chefs, and carpenters