Econ Quizzes

A change in the relative prices of which of the following pairs of goods would likely cause the smallest substitution effect? a. Right shoes and left shoes b. Gasoline from Exxon and gasoline from Shell c. 7-Up and Sprite d. Miller Lite and Coors Ligh

a

Which of the following statements regarding the circular-flow diagram is true? a. The factors of production are owned by households. b. If Alicia works for Apple and receives a paycheck, the transaction takes place in the market for goods and services. c. If Apple sells a computer, the transaction takes place in the market for factors of production. d. The factors of production are owned by firms. e. None of the answer choices are correct.

a

Suppose a country's workers can produce 4 pens per hour or 12 pencils per hour. If there is no trade, ________. a. the opportunity cost of 1 pen is 1/3 of a pencil b. the opportunity cost of 1 pen is 3 pencils c. the opportunity cost of 1 pen is 12 pencils d. the opportunity cost of 1 pen is 4 pencils e. the opportunity cost of 1 pen is 1/4 of a pencil

b

Suppose the world consists of two countries— Canada and Mexico. Furthermore, suppose there are only two goods—food and clothing. Which of the following statements is true? a. If Canada has an absolute advantage in the production of food, then Mexico must have an absolute advantage in the production of clothing. b. If Canada has a comparative advantage in the production of food, then Mexico must have a comparative advantage in the production of clothing. c. If Canada has a comparative advantage in the production of food, it must also have a comparative advantage in the production of clothing. d. If Canada has a comparative advantage in the production of food, Mexico might also have a comparative advantage in the production of food. e. None of the answer choices are correct.

b

Suppose two economists are arguing about policies that deal with unemployment. One economist says, "The government should fight unemployment because it is the greatest social evil." The other economist responds, "That's ridiculous. Inflation is the greatest social evil." These economists ________. a. disagree because they have different scientific judgments b. disagree because they have different values c. really don't disagree at all. It just looks that way d. do none of the answer choices

b

if a competitive firm is producing a level of output where marginal revenue exceeds marginal cost, the firm could increase profits if it _______. a. temporarily shut down b. decreased production c. increased production d. maintained production at the current level

c

A rational person does not act unless ________. a. the action makes money for the person b. the action is ethical c. the action produces marginal costs that exceed marginal benefits d. the action produces marginal benefits that exceed marginal costs e. none of the answer choices are correct

d

If a production function exhibits diminishing marginal product, its slope _______. a. is linear (a straight line) b. becomes steeper as the quantity of the input increases c. could be any of the answer choices d. becomes flatter as the quantity of the input increases

d

Which of the following is true about the consumer's optimum consumption bundle? At the optimum, _______. a. the indifference curve is tangent to the budget constraint b. the slope of the indifference curve equals the slope of the budget constraint c. the relative prices of the two goods equals the marginal rate of substitution d. all of the answer choices are correct

d

Which of the following statements is true? a. A self-sufficient country consumes outside its production possibilities frontier. b. Self-sufficiency is the road to prosperity for most countries. c. Only countries with an absolute advantage in the production of every good should strive to be self-sufficient. d. A self-sufficient country at best can consume on its production possibilities frontier.

d

Which of the following statements is true? a. All costs are fixed in the long run. b. All costs are variable in the short run. c. All costs are fixed in the short run. d. All costs are variable in the long run.

d

Workers in the United States enjoy a high standard of living because ________. a. unions in the United States keep the wage high b. we have protected our industry from foreign competition c. employers in the United States are particularly generous d. workers in the United States are highly productive e. none of the answer choices are correct

d

Apoorva owns a small jewelry factory. She can make 1,000 pieces of jewelry per year and sell them for $100 each. It costs Apoorva $20,000 for the raw materials to produce the 1,000 pieces of jewelry. She has invested $100,000 in her factory and equipment: $50,000 from her savings and $50,000 borrowed at 10 percent (assume that she could have loaned her money out at 10 percent, too). Apoorva can work at a competing jewelry factory for $40,000 per year. The economic profit at Apoorva's jewelry factory is _______. a. $30,000 b. $35,000 c. $70,000 d. $75,000 e. $80,000

a

Because people respond to incentives, we would expect that if the average salary of engineers increases by 50 percent while the average salary of teachers increases by 20 percent, ________. a. students will shift majors from education to engineering b. students will shift majors from engineering to education c. fewer students will attend college d. none of the answer choices are correct

a

Economics is the study of how ________. a. society manages its scarce resources b. to reduce our wants until we are satisfied c. to fully satisfy our unlimited wants d. to avoid having to make trade-offs e. society manages its unlimited resources

a

For a competitive firm, marginal revenue is _______. a. equal to the price of the good sold b. equal to the quantity of the good sold c. average revenue divided by the quantity sold d. total revenue divided by the price

a

High and persistent inflation is caused by ________. a. governments increasing the quantity of money too much b. unions increasing wages too much c. OPEC raising the price of oil too much d. regulations raising the cost of production too much

a

If a nation has a comparative advantage in the production of a good, ________. a. it can produce that good at a lower opportunity cost than its trading partner b. it can produce that good using fewer resources than its trading partner c. it can benefit by restricting imports of that good d. it must be the only country with the ability to produce that good e. none of the answer choices are correct

a

If income and prices were both to double, the budget constraint would _______. a. stay the same b. shift outward in a parallel fashion c. shift inward in a parallel fashion d. rotate outward e. rotate inward

a

If, as the quantity produced increases, a production function first exhibits increasing marginal product and later diminishing marginal product, the corresponding marginal-cost curve will _______. a. be U-shaped b. slope upward c. be flat (horizontal) d. slope downward

a

In the long run, if a very small factory were to expand its scale of operations, it is likely that it would initially experience _______. a. economies of scale b. constant returns to scale c. diseconomies of scale d. an increase in average total costs

a

Suppose two economists are arguing about policies that deal with unemployment. One economist says, "The government could lower unemployment by one percentage point if it would just increase government spending by 50 billion dollars." The other economist responds, "That's ridiculous. If the government spent an additional 50 billion dollars, it would reduce unemployment by only one-tenth of 1 percent, and that effect would only be temporary!" These economists ________. a. disagree because they have different scientific judgments b. disagree because they have different values c. really don't disagree at all. It just looks that way d. do none of the answer choices

a

Suppose we measure the quantity of good X on the horizontal axis and the quantity of good Y on the vertical axis. If indifference curves are bowed inward toward the origin, as we move from having an abundance of good X to having an abundance of good Y, the marginal rate of substitution of good Y for good X (the slope of the indifference curve) _______. a. rises b. falls c. stays the same d. could rise or fall depending on the relative prices of the two goods

a

The consumer's optimal purchase of any two goods is the point where _______. a. the consumer reaches the highest indifference curve subject to remaining on the budget constraint b. the budget constraint crosses the indifference curve c. the consumer has reached the highest indifference curve d. the two highest indifference curves cross

a

Which of the following is most likely to produce scientific evidence about a theory? a. A tenured economist employed at a leading university analyzing the impact of bank regulations on rural lending b. A lawyer employed by Toyota addressing the impact of air bags on passenger safety c. An economist employed by the AFL/CIO doing research on the impact of trade restrictions on workers' wages d. A radio talk show host collecting data on how capital markets respond to taxation

a

Which of the following markets would most closely satisfy the requirements for a competitive market? a. Wheat b. Electricity c. Breakfast cereal d. Soda e. All of the answer choices represent competitive markets.

a

Which of the following statements is not true with regard to the standard properties of indifference curves? a. Indifference curves are bowed outward away from the origin. b. Higher indifference curves are preferred to lower ones. c. Indifference curves do not cross each other. d. Indifference curves are downward sloping.

a

Accounting profit is equal to total revenue minus _______. a. implicit costs b. explicit costs c. the sum of implicit and explicit costs d. marginal costs e. variable costs

b

An increase in the price of beef provides ________. a. information that tells consumers to buy less chicken b. information that tells producers to produce more beef c. no information because prices in a market system are managed by planning boards d. information that tells consumers to buy more beef

b

Economic models are ________. a. usually made of wood and plastic b. built with assumptions c. useless if they are simple d. created to duplicate reality

b

Foreign trade ________. a. makes the members of a country more equal b. allows a country to have a greater variety of products at a lower cost than if it tried to produce everything at home c. allows a country to avoid trade-offs d. is none of the answer choices e. increases the scarcity of resources

b

If a competitive firm doubles its output, its total revenue _______. a. more than doubles b. doubles c. less than doubles d. cannot be determined because the price of the good may rise or fall

b

If a nation has an absolute advantage in the production of a good, ________. a. it can produce that good at a lower opportunity cost than its trading partner b. it can produce that good using fewer resources than its trading partner c. it can benefit by restricting imports of that good d. it will specialize in the production of that good and export it e. none of the answer choices are correct

b

If an increase in a consumer's income causes the consumer to increase their quantity demanded of a good, then the good is a(n) _______. a. inferior good b. normal good c. complementary good d. substitute good

b

If marginal costs equal average total costs, _______. a. average total costs are rising b. average total costs are minimized c. average total costs are maximized d. average total costs are falling

b

If the long-run market supply curve for a good is perfectly elastic, an increase in the demand for that good will, in the long run, cause _______. a. an increase in the price of the good and an increase in the number of firms in the market b. an increase in the number of firms in the market but no increase in the price of the good c. no impact on either the price of the good or the number of firms in the market d. an increase in the price of the good but no increase in the number of firms in the market

b

In making which of the following statements is an economist acting more like a scientist? a. The unemployment rate should be reduced because unemployment robs individuals of their dignity. b. A reduction in unemployment benefits will reduce the unemployment rate. c. The state should increase subsidies to universities because the future of our country depends on education. d. The rate of inflation should be reduced because it robs the elderly of their savings.

b

In the long run, the competitive firm's supply curve is the _______. a. entire marginal-cost curve b. portion of the marginal-cost curve that lies above the average-total-cost curve c. portion of the marginal-cost curve that lies above the average-variable-cost curve d. upward-sloping portion of the average-total-cost curve e. upward-sloping portion of the average-variable-cost curve

b

In the short run, ________. a. an increase in inflation temporarily increases unemployment b. a decrease in inflation temporarily increases unemployment c. inflation and unemployment are unrelated d. the business cycle has been eliminated e. none of the answer choices are correct

b

Poland should ________. a. specialize in wheat production, export wheat, and import computers b. specialize in computers production, export computers, and import wheat c. produce both goods because neither country has a comparative advantage d. produce neither good because it has an absolute disadvantage in the production of both goods

b

Productivity can be increased by ________. a. raising minimum wages b. improving the education of workers c. raising union wages d. restricting trade with foreign countries

b

The efficient scale of production is the quantity of output that minimizes _______. a. marginal cost b. average total cost c. average fixed cost d. average variable cost

b

The scientific method requires that ________. a. scientists use test tubes and have clean labs b. scientists be objective c. scientists use precision equipment d. only incorrect theories are tested e. only correct theories are tested

b

Which of the following situations describes the greatest market power? a. A farmer's impact on the price of corn b. Apple's impact on the price of smartphones c. A student's impact on college tuition d. Mitsubishi's impact on the price of autos

b

Which of the following statements about microeconomics and macroeconomics is not true? a. Microeconomics and macroeconomics cannot be entirely separated. b. The study of very large industries is a topic within macroeconomics. c. Microeconomics is a building block for macroeconomics. d. Macroeconomics is concerned with economy-wide phenomena. Hide Feedback

b

Which of the following statements is normative? a. Printing too much money causes inflation. b. The unemployment rate should be lower. c. Large government deficits cause an economy to grow more slowly. d. People work harder if the wage is higher.

b

Which of the following statements is true about a market economy? a. The strength of a market system is that it tends to distribute resources evenly across the population. b. Market participants act as if guided by an "invisible hand" to produce outcomes that promote general economic well-being. c. With a large enough computer, central planners could guide production more efficiently than markets. d. Taxes help prices communicate costs and benefits to producers and consumers.

b

Which of the following will not shift a country's production possibilities frontier outward? a. An advance in technology b. A reduction in unemployment c. An increase in the labor force d. An increase in the capital stock

b

A big-box retailer, such as Walmart, should close at night if the _______. a. total costs of staying open are greater than the total revenue due to staying open b. total costs of staying open are less than the total revenue due to staying open c. variable costs of staying open are greater than the total revenue due to staying open d. variable costs of staying open are less than the total revenue due to staying open

c

According to the principle of comparative advantage, ________. a. countries should specialize in the production of goods that they enjoy consuming b. countries with a comparative advantage in the production of every good need not specialize c. countries should specialize in the production of goods for which they have a lower opportunity cost of production than their trading partners d. countries should specialize in the production of goods for which they use fewer resources in production than their trading partners

c

Economic growth is depicted by ________. a. a movement from inside the production possibilities frontier toward the frontier b. a shift in the production possibilities frontier inward c. a shift in the production possibilities frontier outward d. a movement along a production possibilities frontier toward consumption goods

c

Economic profit is equal to total revenue minus _______. a. implicit costs b. explicit costs c. the sum of implicit and explicit costs d. marginal costs e. variable costs

c

If consumption when young and when old are both normal goods, an increase in the interest rate _______. a. will always increase the quantity of saving b. will always decrease the quantity of saving c. will increase the quantity of saving if the substitution effect outweighs the income effect d. will increase the quantity of saving if the income effect outweighs the substitution effect

c

In the long run, some firms will exit the market if the price of the good offered for sale is less than _______. a. average revenue b. marginal cost c. average total cost d. marginal revenue

c

In the short run, the competitive firm's supply curve is the _______. a. entire marginal-cost curve b. portion of the marginal-cost curve that lies above the average-total-cost curve c. portion of the marginal-cost curve that lies above the average-variable-cost curve d. upward-sloping portion of the average-total-cost curve e. upward-sloping portion of the average-variable-cost curve

c

Shahina is a tax accountant. She receives $100 per hour doing tax returns. She can type 10,000 characters per hour into spreadsheets. She can hire an assistant who types 2,500 characters per hour into spreadsheets. Which of the following statements is true? a. Shahina should not hire an assistant because the assistant cannot type as fast as she can. b. Shahina should hire the assistant as long as she pays the assistant less than $100 per hour. c. Shahina should hire the assistant as long as she pays the assistant less than $25 per hour. d. None of the answer choices are correct.

c

Suppose a consumer must choose between the consumption of hot dogs and hamburgers. If we measure the quantity of hamburgers on the horizontal axis and the quantity of hot dogs on the vertical axis, and if the price of a hamburger is $10 and the price of a hot dog is $5. Ignoring the minus sign, the slope of the budget constraint is _______. a. 5 b. 10 c. 2 d. 1/2 Hide F

c

Suppose you find $20. If you choose to use the $20 to go to the baseball game, your opportunity cost of going to the game is ________. a. nothing, because you found the money b. $20 (because you could have used the $20 to buy other things) c. $20 (because you could have used the $20 to buy other things) plus the value of your time spent at the game d. $20 (because you could have used the $20 to buy other things) plus the value of your time spent at the game, plus the cost of the dinner you purchased at the game e. none of the answer choices

c

The competitive firm maximizes profit when it produces output up to the point where _______. a. marginal revenue equals average revenue b. price equals average variable cost c. marginal cost equals marginal revenue d. marginal cost equals total revenue

c

The long-run market supply curve _______. a. has the same elasticity as the short-run market supply curve b. is less elastic than the short-run market supply curve c. is more elastic than the short-run market supply curve d. is always perfectly elastic

c

When marginal costs are below average total costs, _______. a. average fixed costs are rising b. average total costs are minimized c. average total costs are falling d. average total costs are rising

c

Which of the following activities is most likely to produce an externality? a. A student sits at home and watches television. b. A student reads a novel for pleasure. c. A student has a party in their dorm room. d. A student eats a sandwich in the student union.

c

Which of the following is not part of the opportunity cost of going on vacation? a. The money you could have made if you had stayed home and worked b. The money you spent on a Broadway show c. The money you spent on food d. The money you spent on airline tickets

c

Which of the following issues is related to microeconomics? a. The impact of technology on economic growth b. The impact of the quantity of money on inflation c. The impact of oil prices on auto production d. The impact of the deficit on saving

c

Which of the following statements about trade is true? a. People that are skilled at all activities cannot benefit from trade. b. Unrestricted international trade benefits every person in a country equally. c. Trade can benefit everyone in society because it allows people to specialize in activities in which they have a comparative advantage. d. Trade can benefit everyone in society because it allows people to specialize in activities in which they have an absolute advantage.

c

Adam Smith coined the phrase "invisible hand" to suggest that ________. a. markets work like an invisible hand which reaches into the pockets of consumers and induces them to spend their income b. we are unable to see how improvements in technology move the economy to higher levels of production c. workers should unite and overthrow the capitalist d. the pursuit of self-interest can promote the good of society as a whole

d

Apoorva owns a small jewelry factory. She can make 1,000 pieces of jewelry per year and sell them for $100 each. It costs Apoorva $20,000 for the raw materials to produce the 1,000 pieces of jewelry. She has invested $100,000 in her factory and equipment: $50,000 from her savings and $50,000 borrowed at 10 percent (assume that she could have loaned her money out at 10 percent, too). Apoorva can work at a competing jewelry factory for $40,000 per year. The accounting profit at Apoorva's jewelry factory is _______. a. $30,000 b. $35,000 c. $70,000 d. $75,000 e. $80,000

d

If a production function exhibits diminishing marginal product, the slope of the corresponding total-cost curve _______. a. is linear (a straight line) b. could be any of the answer choices c. becomes flatter as the quantity of output increases d. becomes steeper as the quantity of output increases

d

If all firms in a market have identical cost structures and if inputs used in the production of the good in that market are readily available, then the long-run market supply curve for that good should be _______. a. downward sloping b. perfectly inelastic c. upward sloping d. perfectly elastic

d

If an increase in a consumer's income causes the consumer to decrease their quantity demanded of a good, then the good is a(n) _______. a. substitute good b. complementary good c. normal good d. inferior good

d

If an input necessary for production is in limited supply so that an expansion of the industry raises costs for all existing firms in the market, then the long-run market supply curve for a good could be _______. a. perfectly elastic b. perfectly inelastic c. downward sloping d. upward sloping

d

If leisure is a normal good, an increase in the wage _______. a. will always increase the quantity of labor supplied b. will always decrease the amount of labor supplied c. will increase the amount of labor supplied if the income effect outweighs the substitution effect d. will increase the amount of labor supplied if the substitution effect outweighs the income effect

d

If there are implicit costs of production, _______. a. economic profit and accounting profit will be equal b. economic profit will always be zero c. economic profit will exceed accounting profit d. accounting profit will exceed economic profit e. accounting profit will always be zero

d

In which of the following cases is the assumption most reasonable? a. To address the impact of money growth on inflation, an economist assumes that money is strictly coins. b. To address the impact of taxes on income distribution, an economist assumes that everyone earns the same income. c. To estimate the speed at which a beach ball falls, a physicist assumes that it falls in a vacuum. d. To address the benefits of international trade, an economist assumes that there are two countries, each producing two goods.

d

Positive statements are ________. a. microeconomic b. macroeconomic c. statements of prescription that involve value judgments d. statements of description that can be tested

d

Raising taxes and increasing welfare payments ________. a. proves that there is such a thing as a free lunch b. does none of the answer choices c. improves efficiency at the expense of equality d. improves equality at the expense of efficiency e. reduces market power

d

Suppose a country's workers can produce 4 pens per hour or 12 pencils per hour. If there is no trade, ________. a. the domestic price of 1 pencil is 1/4 of a pen b. the domestic price of 1 pencil is 3 pens c. the domestic price of 1 pencil is 12 pens d. the domestic price of 1 pencil is 1/3 of a pen e. the domestic price of 1 pencil is 4 pens

d

The limit on the consumption bundles that a consumer can afford is known as _______. a. the marginal rate of substitution b. an indifference curve c. the consumption limit d. the budget constraint

d

The slope at any point on an indifference curve is known as _______. a. the marginal rate of indifference b. the trade-off rate c. the marginal rate of trade-off d. the marginal rate of substitution

d

Which of the following is not a characteristic of a competitive market? a. There are many buyers and sellers in the market. b. The goods offered for sale are largely the same. c. Firms can freely enter or exit the market. d. Firms generate small but positive economic profits in the long run. e. All of the answer choices are characteristics of a competitive market.

d

Which of the following is not a factor of production? a. Land b. Labor c. Capital d. Money e. All of the answer choices are factors of production.

d

Which of the following is not true regarding the outcome of a consumer's optimization process? a. The consumer's indifference curve is tangent to their budget constraint. b. The marginal rate of substitution between goods is equal to the ratio of the prices between goods. c. The consumer has reached his highest indifference curve subject to their budget constraint. d. The consumer is indifferent between any two points on their budget constraint. e. The marginal utility per dollar spent on each good is the same.

d

In long-run equilibrium in a competitive market, firms are operating at _______. a. the minimum of their average-total-cost curves b. the intersection of marginal cost and marginal revenue c. their efficient scale d. zero economic profit e. all of the answer choices

e

Indifference curves for perfect substitutes are _______. a. right angles b. bowed inward toward the origin c. bowed outward away from the origin d. nonexistent e. straight lines

e

Points on the production possibilities frontier are ________. a. inefficient b. unattainable c. none of the answer choices d. normative e. efficient

e

The change in consumption that results when a price change moves the consumer along a given indifference curve is known as the _______. a. inferior effect b. normal effect c. complementary effect d. income effect e. substitution effect

e

Trade-offs are required because wants are unlimited and resources are _______. a. economical b. marginal c. unlimited d. efficient e. scarce

e

Which of the following involve a trade-off? a. Buying a new car b. Going to college c. Watching a football game on Saturday afternoon d. Taking a nap e. All of the answer choices involve trade-offs.

e

Which of the following is a variable cost in the short run? a. Interest payments on borrowed financial capital b. Salaries paid to upper management c. Payment on the lease for factory equipment d. Rent on the factory e. Wages paid to factory labor

e

Which of the following products would be least capable of producing an externality? a. Stereo equipment b. Education c. Inoculations against disease d. Cigarettes e. Food

e

You have spent $1,000 building a snow cone stand based on estimates of sales of $2,000. The snow cone stand is nearly completed, but now you estimate total sales to be only $800. You estimate that you can complete the snow cone stand for another $300. (Assume that snow cones cost you nothing.) Your decision rule should be to complete the snow cone stand as long as the cost to complete the stand is less than ________. a. you should not complete the snow cone stand. b. $300 c. $500 d. $100 e. $800

e