Exam 1 Microeconomics 1110
The total revenue curve (TR) for the local pizza parlor slopes upward to the right indicating a _ 1 _ relationship between the quantity of pizza slices sold per day and total revenue. The slope of this TR curve is _2_ which means selling 100 more pizza slices per day adds $ _ 3_ to total revenue. If 400 slices of pizza are sold per day, TR is equal to $ _4_ To generate total revenue of $1,500 per day, the pizza parlor must sell _5_ slices of pizzas per day.
1. Direct/ positive 2. 3.0 3. 300 4. 1200.0 5. 500.0
An [blank1 ]is the way society is organized to address the problem of scarcity. Economic aggregates such as gross domestic product and the unemployment rate are measures studied in a [blank2 ] course. The value of the best alternative use of a resource is its [blank3]. Assuming that what is true for the parts must also be true for the whole may lead to the fallacy of [blank4] Assuming that because event B follows event A, event A must cause event B may lead to the fallacy of [blank5 ] The behavior of buyers and sellers in markets and the pricing decisions of firms are a focus of [blank6 ] Letting the economy work on its own without interference from government is a [blank7 ]approach to economic situations. The interaction of households and firms in product and resource markets is illustrated by the [blank8] model. The value of exports exceeds the value of imports when a country has a trade [blank9 ] When a business buys new machines or builds a new office building, it making an investment in [blank10]
1. Economic system 2. Macroeconomics 3. Opportunity cost 4. Composition 5. False cause 6. Microeconomics 7. Laissez-faire 8. Circular flow 9. Surplus 10. Capital
Supply decreases or shifts to the left. A binding price [blank1 ] set at $3.50 per gallon results in a market surplus of [blank2 ] gallons of gasoline according to the graph. A binding price [blank3 ] set at $2.50 per gallon results in a market shortage of [blank4 ]gallons of gasoline according to the graph.
1. Floor 2. 4000.00 3. Ceiling 4. 6000.00
Fill in the blanks Combination E is attainable but _1_ . Combination A, B, C, D are _2_ and _3_. Combination F is _4_ given current resources and technology. This PPF reflects the law of _5_ opportunity cost.
1. Inefficient 2. Attainable/Possible 3. Efficient 4. Unattainable 5. Increasing
Households _ 1_factors of production in resource markets. Households _2_ final goods and services in product markets. Firms _ 3_factors of production in resource markets. Firms _ 4_ final goods and services in product markets.
1. Supply 2. Demand 3. Demand 4. Supply
Fill in the Blanks If price is $14 per pizza, there will be a market _ 1_. If price is $12 per pizza, there will be a market _2_ If price is $8 per pizza, there will be a market _3_
1. Surplus 2. Surplus 3. Shortage
Which of the following would lead to a decrease in the demand for coffee, ceteris paribus? A decrease in the price of tea, a substitute for coffee An increase in the price of coffee A decrease in the number of firms selling coffee A decrease in the price of coffee
A decrease in the price of tea, a substitute for coffee
Which of the following statement is CORRECT about the model? A. A model should be as simple as possible to solve the specific problem B. A model should have 100% realism to represent reality
A. A model should be as simple as possible to solve the specific problem
Suppose that the Council of Economic Advisers tells the President that "the unemployment rate is 4 percent." The President responds, "That rate is still too high." The President's statement is A. Normative B. Positive
A. Normative
You should continue to do something until
A. marginal benefits is equal to marginal cost B. marginal benefits is bigger than marginal cost C. Total benefits is equal total costs
According to this production possibilities schedule: a 10 coconuts must be given up to gain 30 bananas. b 30 bananas must be given up to gain 10 coconuts. c the opportunity cost of coconuts in terms of bananas is constant. d All of the above are true according to the Production Possibilities Schedule.
All of the above are true according to the Production Possibilities Schedule.
Which group has the lowest unemployment rate since 2002 based on the Bureau of Labor Statistics unemployment data?
Asian
According to this production possibilities schedule, the opportunity cost of moving from combination A to combination B is: a 60 bananas. b 30 bananas. c 0 coconuts. d 10 coconuts.
B 30 bananas
In the circular flow model, ______ is the supplier of goods and services in the product market and ______ is the consumer of the goods and services in the product market. A. Household, firm B. Firm, household
B. Firm, household
Which of the following is the best example of physical capital used to produce a textbook? A. the expertise and writing ability of the author B. The printing press C. the ink used in the printing press D. The property on which the publisher's office is located
B. The printing press
Which of the following would be studied in macroeconomics? A. iWatch 7 price dropped upon the introduction of next generation iWatch B. a local bank's increase in the interest rate offered on savings deposits C. U.S. GDP increases with economy recovery from Covid-19 Pandemic D. Dr. Z decides to buy a new house
C. U.S. GDP increases with economy
Economics is the study of choice under conditions of A. Supply B. Demand C. Opportunity D. Scarcity
D. Scarcity
Sam, an American citizen, prepares meals for his family at home. Ellen, a Canadian citizen, commutes to the U.S. to help prepare meals at a restaurant in Idaho. Whose value of services preparing meals is included in U.S. GDP?
Ellen's but not Sam's
Demand decreases or shifts to the left.
Equilibrium price and quantity both decrease.
Supply decreases or shifts to the left.
Equilibrium price increases and equilibrium quantity decreases
Opportunity cost only includes the money that we pay out. True/ False
False
Production is more efficient at points on the upper left portion of the PPF than at points on the lower right portion of the PPF. True/ False
False
The full employment goal means to reduce the unemployment rate to 0. True/ False
False
Which of the following statements regarding GDP is correct?
GDP includes factory production, but not any harm that may be inflicted on the environment.
When box office receipts are corrected for inflation, the most popular movie of all time is
Gone with the Wind
Capitalist economies are characterized by all of the following except: a incentives for exchange. b government ownership of capital. c decentralized decision-making. d private ownership of the factors of production.
Government ownership of capital
Which group has the highest labor force participation rate since 2002 based on the Bureau of Labor Statistics labor force participation rate data?
Hispanic or Latino
A Mexican oil field service company works on oil rigs in the U.S. The value of the company's services produced by Mexican citizens and the equipment they own is included in
Mexican GNP and U.S. GDP.
Which type of PPF curve shows the increasing opportunity cost? Linear PPF Non-Linear (Bowed-out) PPF
Non-Linear (Bowed-out) PPF
Tatiana is waiting to be recalled to a job from which she was laid off. Ivan was fired but has not looked for work during the last two months. Who does the Bureau of Labor Statistics count as "unemployed"?
Tatiana but not Ivan
Which of the following statements about the production possibilities model is NOT true? a A straight-line PPF illustrates constant opportunity cost. b The PPF shifts out to the right when an economy goes from inefficient use of resources to efficient use resources. c An increase in the amount of resources and improvements in production technology lead to economic growth and the PPF shifts out to the right. d Points on a PPF represent combinations of two outputs
The PPF shifts out to the right when an economy goes from inefficient use of resources to efficient use resources.
All points on and inside a PPF represent combinations of two outputs that are attainable and efficient.
The above statement is false.
In the Production Possibilities Model, economic growth is illustrated by moving from a point inside a PPF to a point on a PPF.
The above statement is false.
Movements from point to point along the PPF indicate changes in the technology used in production.
The above statement is false.
A bowed-out PPF indicates increasing opportunity cost.
The above statement is true.
A straight-line PPF indicates constant opportunity cost.
The above statement is true.
Combinations of outputs on the PPF represent the maximum amount the economy can produce, ceteris paribus.
The above statement is true.
Points outside a PPF are unattainable, ceteris paribus.
The above statement is true.
Consumers expect the price of hand sanitizer to increase in the future.
The current demand for hand sanitizer increases or shifts to the right.
The price of tea (a substitute for coffee) decreases.
The demand for coffee decreases or shifts to the left.
Consumer income decreases as a result of a recession
The demand for inferior goods increases or shifts to the right.
Supply increases or shifts to the right.
The equilibrium price decreases and the equilibrium quantity increases
The CPI is a measure. of the overall cost of
The goods and services produced by a typical consumer
The cost of manufacturing automobiles increases.
The supply of automobiles decreases or shifts to the left.
Technological improvements reduce the cost of assembling cell phones.
The supply of cell phones increases or shifts to the right.
The number of fast-food restaurants located near campus increases.
The supply of eating establishments increases or shifts to the right.
If an economy is operating at a point on its PPF, the resources available to use in production are fully employed. True/ False
True
Room and board fees should NOT be counted as opportunity cost of attending college. True/ False
True
The Production Possibilities Model assumes that the amount of resources available to use in production is fixed.
True
Any point inside a production possibilities frontier represents: potential economic growth. efficient use of resources. a desirable combination of two outputs. Unemployed resources
Unemployed resources
Based on the World Bank data, which country has the largest GDP recently?
United States
If all available resources and technology are used to produce hats, then it is possible to produce of a maximum of ______hats. If all available resources and technology are used to produce scarves, then it is possible to produce a maximum of ______scarves. a 12; 6 b 12; 0 c 6; 12 d 6; 0
a 12; 6
A binding price floor in this market might be set at: a P3, which results in a market surplus equal to the distance from Q1 to Q3. b P3, which results in a makret surplus equal to the distance from Q1 to Q2. c P1, which results in a market shortage equal to the distance from Q1 to Q3. d P1, which results in a market shortage equal to the distance from Q1 to Q2.
a P3, which results in a market surplus equal to the distance from Q1 to Q3.
The supply of organic milk will increase as a result of:
a a decrease in the price of organic feed for organic milk cows.
If the graph below represents the supply of smart phones, an increase in the price of smart phones is illustrated by: a a movement along S1 from point A to point B. b a movement along S1 from point B to point A. c a shift from point C on S2 to point B on S1. d a shift from point B on S1 to point C on S2.
a a movement along S1 from point A to point B.
Government control over resources is most limited in: a capitalist economic systems. b socialist economic systems. c planned economic systems. d command economic systems.
a capitalist economic systems.
The _____ assumption allows economists to focus on the relationship between two specific variables. a ceteris paribus b opportunity cost c positive d normative
a ceteris paribus
Government control of resources and centralized decision-making are characteristics of: a command economies. b capitalist economies. c laissez-faire economies. d free market economies.
a command economies.
The role of an economic system is to: a coordinate the decisions of economic agents under conditions of scarcity. b identify the mix of outputs that yield the maximum opportunity cost for society. c find the least-cost production method for all types of outputs. d enable economic agents to equate satisfaction, or utility, with profit.
a coordinate the decisions of economic agents under conditions of scarcity.
Macroeconomics focuses on: a how the economy can achieve the goals of full employment, price stability, and economic growth. b why business firms pursue maximum profit instead of maximum revenue. c how business firms can achieve the goal of profit maximization. d why consumers tend to reduce quantity demanded in response to price increases.
a how the economy can achieve the goals of full employment, price stability, and economic growth.
Assume generic goods are inferior goods. A decrease in consumer income will cause the demand for generic goods to ________, and the equilibrium price of generic goods will _______, ceteris paribus. a increase; increase b increase; decrease c decrease; decrease d decrease; increase
a increase; increase
The combination of 3 school buses and 10 refrigerators: a is unattainable given current resources and technology. b represents an inefficient use of resources. c is an optimal way of using current resources and technology. d fully employs the resources and technology available.
a is unattainable given current resources and technology.
The U.S. economy is a: a mixed economy because it has elements of both a planned and a market system. b laissez-faire economy because individuals can do whatever they please with their privately owned resources. c communist economy because it allows for community property. d socialist economy because government controls most of the factors of production.
a mixed economy because it has elements of both a planned and a market system.
According to this production possibilities schedule, producing a combination of 30 bananas and 30 coconuts is: a not possible given the resources and technology currently available for producing bananas and coconuts. b attainable but is an inefficient use of resources. c shown as a point on the PPF if the information in the table is converted to a graph. d only one of many possible combinations of bananas and coconuts
a not possible given the resources and technology currently available for producing bananas and coconuts.
If a decrease in price leads to a decrease in quantity supplied and an increase in price leads to an increase in quantity supplied: a price and quantity supplied are directly (positively) related. b price and supply are directly (positively) related. c price and quantity supplied are inversely (negatively) related. d price and supply are inversely (negatively) related.
a price and quantity supplied are directly (positively) related.
Assume a decrease in the price of jean jackets leads to an increase in the quantity demanded of jean jackets. Ceteris paribus, the graph of the relationship between the price and quantity demanded of jean jackets: a slopes downward to the right, illustrating an inverse relationship. b slopes downward to the right, illustrating a direct relationship. c slopes upward to the right, illustrating an inverse relationship. d slopes upward to the right, illustrating a direct relationship.
a slopes downward to the right, illustrating an inverse relationship.
For the relationship in the graph, total income is: a the independent variable and household spending is the dependent variable. b the dependent variable and household spending is the independent variable. c unrelated to household spending. d an exogenous variable, or shift factor.
a the independent variable and household spending is the dependent variable.
A movement from point B on Line 2 to point C on Line 2 occurs when: a the value of the independent variable, X, increases. b the value of the independent variable, Y, decreases. c a variable other than X or Y that has a positive impact on the relationship increases. d a variable other than X or Y that has positive impact on the relationship decreases.
a the value of the independent variable, X, increases.
Based on the BEA Data, percentage change of U.S. real GDP in 2022, Q1 shows
a -1.6% change, indicating an economic slowdown during the period
For an inferior good, an increase in consumer income leads to: a a decrease in demand and a decrease in equilibrium price. b a decrease in demand and an increase in equilibrium quantity. c an increase in demand and an increase in both equilibrium price and quantity. d an increase in demand and a decrease in equilibrium quantity.
a decrease in demand and a decrease in equilibrium price.
The economy represented by this graph is using resources and technology efficiently when it produces at: a point A, B, or C. b point D. c point D or E. d any point on or inside the PPF.
a- point A, B, or C
Macroeconomics studies the: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a. reasons why a nation's total output changes over time. b. reasons for job losses in a specific industry. c. decisions and behaviors of individuals and businesses. d. normative aspects of the economy while microeconomics focuses on the positive aspects of the economy.
a. reasons why a nation's total output changes over time.
If basketball for recreation becomes more popular at the same time that the cost of producing basketballs increases, supply and demand analysis predicts that: a the equilibirum price of basketballs will increase but the equilibrium quantity of basketballs might increase, decrease, or stay the same. b the equilibrium quantity of basketballs will increase but the equilibrium price of basketballs might increase, decrease, or stay the same. c the equilibrium price of basketballs will increase, but the equilibrium quantity of basketballs will decrease. d the equilibrium quantity of basketballs will increase, but the equilibrium price of basketballs will decrease.
a. the equilibrium price of basketballs will increase but the equilibrium quantity of basketballs might increase, decrease, or stay the same.
The demand for potato chips will increase in response to all of the following except: a a decrease in consumer income, if potato chips are inferior goods. b a decrease in the price of chip dip, a complement for potato chips. c an increase in the price of corn chips, a substitute for potato chips. d an increase in the number of firms producing potato chips.
an increase in the number of firms producing potato chips
All of the following statements are true EXCEPT: a according to the law of demand, a decrease in the price of beef leads to an increase in the quantity demanded of beef, ceteris paribus. b an upward-sloping supply curve illustrates that an increase in price leads to a decrease in quantity supplied. c a decrease in supply leads to an increase in equilibrium price and a decrease in equilibrium quantity, ceteris paribus. d the demand curve for a product models the willingness and ability of people to purchase the product.
an upward-sloping supply curve illustrates that an increase in price leads to a decrease in quantity supplied.
If the demand for baseball cards rises and the supply curve does not shift, then the price will rise and quantity will fall and quantity will fall and quantity will rise will fall and quantity will rise
and quantity will rise
When monthly total income is $4,000, the graph below predicts that monthly household spending will be equal to: 500. b $4,100. c $5,000. d Monthly household spending cannot be predicted from the graph.
b $4,100.
When the market for red roses is in equilibrium: a 300 dozen roses will be exchanged (bought and sold) at any price between $20 and $40 per dozen. b 300 dozen roses will be exchanged (bought and sold) at a price of $30 per dozen. c the supply of roses is equal to the demand for roses at a price of $30. d Both B and C are correct.
b 300 dozen roses will be exchanged (bought and sold) at a price of $30 per dozen.
Which of the following will NOT lead to an increase in the supply of automobiles, ceteris paribus? a A decrease in the cost of materials used to produce automobiles b A decrease in the price of gasoline used to operate automobiles c A decrease in the wages paid to automobile factory workers d An increase in the number of automobile manufacturers
b A decrease in the price of gasoline used to operate automobiles
The equation of the line graphed below is: a C = 500 + 900(Y). b C = 500 + 0.9(Y). c Y = 500 - 0.9(Y). d Y = 1,000 + 1(Y)
b C = 500 + 0.9(Y).
An example of a positive macroeconomic statement is: a People tend to buy more chicken when the price of beef increases. b The largest source of revenue for the U.S. federal government is the income tax. c Large corporations have profit margins that are too high. d No one should be unemployed in an advanced economy.
b The largest source of revenue for the U.S. federal government is the income tax.
The demand for ebooks will increase in response to all of the following EXCEPT: a an increase in consumer income, if ebooks are normal goods. b a decrease in the price of ebooks. c a decrease in the price of ereaders, a complement for ebooks. d an increase in the price of paper books, a substitute for ebooks.
b a decrease in the price of ebooks.
Ceteris paribus, an increase in the price of cereal leads to: a a decrease in the demand for cereal. b a decrease in the quantity demanded of cereal. c an increase in the supply of cereal. d both B and C are correct.
b a decrease in the quantity demanded of cereal.
Ceteris paribus, a market price below equilibrium price leads to: a a market surplus and a decrease in market price. b a market shortage and an increase in market price. c a market surplus and an increase in market price. d a market shortage and a decrease in market price.
b a market shortage and an increase in market price.
If the graph below represents the demand for tickets to broadway musicals, a decrease in the price of a ticket to a broadway musical is illustrated by: a a movement along D1 from point B to point A. b a movement along D1 from point A to point B. c a shift from point A on D1 to point C on D2. d a shift from point C on D2 to point B on D1.
b a movement along D1 from point A to point B.
A shift of the economy's production possibilities frontier (PPF) from PPF1 to PPF2 would occur as a result of: a a more efficient use of existing resources. b an increase in resources or improved technology. c a reduction in the economy's current rate of unemployment. d an increase in current consumption.
b an increase in resources or improved technology.
Ceteris paribus, an increase in the technology used to produce computers leads to: a an increase in the price of computers. b an increase in the supply of computers. c an increase in the demand for computers. d an increase in the cost of producing computers.
b an increase in the supply of computers.
For the economy depicted in this graph, economic growth is shown by: a a movement down along the PPF from point A to point B to point C. b an outward shift of the PPF toward point E. c a movement from point D to point A, B, or C. d a flattening of the PPF to a straight line.
b an outward shift of the PPF toward point E.
When there is an increase in both the number of buyers and the number of sellers in a market: a demand shifts right and supply shifts left, so equilibrium quantity will increase and equilibrium price will decrease. b demand shifts right and supply shifts right, so equilibrium quantity will increase but the change in equilibrium price cannot be determined from the information given. c supply shifts right and demand shifts left, so equilibrium price will decrease and equilibrium quantity will decrease. d supply shifts left and demand shifts left, so equilibrium price will increase but the change in equilibrium quantity cannot be determined from the information given.
b demand shifts right and supply shifts right, so equilibrium quantity will increase but the change in equilibrium price cannot be determined from the information given.
Rachel quit her job as a computer programmer for a large corporation to begin her own computer repair business in her garage. To do this, she took $10,000 out of her retirement fund and hired Ross on an hourly basis. As a factor of production, Ross is best classified as: a land. b labor. c capital. d an entrepreneur.
b labor.
If PPF1 represents an economy's current production possibilities, then all of the following are true EXCEPT: a resources and technology are fully employed and production is efficient at point C. b moving from point D inside PPF1 to point B on PPF1 illustrates economic growth. c for this economy to move from producing at point C on PPF1 to point E on PPF2 requires an increase in the resources and/or technology used to produce both consumer goods and capital goods. d the opportunity cost of increasing the production of capital goods is an increasing amount of consumer goods.
b moving from point D inside PPF1 to point B on PPF1 illustrates economic growth.
When government establishes a legal minimum price for a specific good or service, it is setting a(n) _________; when government establishes a legal maximum price for a specific good or service, it is setting a(n) _________ a price ceiling; price floor b price floor; price ceiling c equilibrium price; efficient price d efficient price; equilibrium price
b price floor; price ceiling
When resources are not freely available in amounts sufficient to satisfy all desired uses for them: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a the forces of supply and demand must be relied on to answer the questions of what output to produce, how to produce it, and who gets to consume it. b scarcity exists and decisions must be made about how to allocate limited resources among competing uses. c government is required to identify what areas of the economy are most deserving and direct resources and outputs to those areas. d an economy is not able to operate at full employment.
b scarcity exists and decisions must be made about how to allocate limited resources among competing uses.
Based on the information in the graph, a price of $4 per pumpkin will lead to a: a shortage of 200 pumpkins. b surplus of 200 pumpkins. c shortage of 100 pumpkins. d surplus of 100 pumpkins.
b surplus of 200 pumpkins.
Opportunity cost is: a not relevant for macroeconomic decisions but is the main consideration in microeconomic decisions. b the value of the best alternative that must be given up when a choice is made. c maximized when the benefits of an activity outweigh the costs of an activity. d higher for labor resources than for capital resources.
b the value of the best alternative that must be given up when a choice is made.
Which of the following is a positive statement? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a. Parking on campus should be free to all students and faculty. b. Tuition and fees at many universities have risen over time. c. College should be free for all potential students. d. Tuition and fees at elite institutions are too high.
b. Tuition and fees at many universities have risen over time.
An introductory course in microeconomics is likely to study: a. the impact of an increase in federal government spending on households and businesses in the U.S. b. the effect of a new technology on the equilibrium price of cell phones. c. how government responds to a national emergency. d. the effect of a new technology on the growth rate of output for the country.
b. the effect of a new technology on the equilibrium price of cell phones.
The equilibrium price of a pumpkin in the market depicted in the graph is: $3 because no pumpkin buyers will pay a price above $3 per pumpkin. b $3 because no pumpkin sellers will accept a price below $3 dollars per pumpkin. c $3 because the quantity supplied of pumpkins is equal to the quantity demanded of pumpkins at that price. d $4 if pumpkin sellers prefer to charge a higher price.
c $3 because the quantity supplied of pumpkins is equal to the quantity demanded of pumpkins at that price.
According to the graph, a $1,000 increase in monthly total income leads to a: $1,000 increase in monthly household spending so the slope of the function is 1. b $1,000 increase in monthly household spending so the slope of the function is -0.1. c $900 increase in monthly household spending so the slope of the function is .9. d $900 increase in monthly household spending to the slope of the function is 1.
c $900 increase in monthly household spending so the slope of the function is .9.
The opportunity cost of moving from combination C to combination D is ___ refrigerators, while the opportunity cost of moving from combination D to combination E is ___ refrigerators. a 2; 4 b 4; 6 c 6; 8 d 8; 0
c 6; 8
Which of the following events is likely to cause a decrease in the supply of orange juice, ceteris paribus? a A medical report stating that drinking 4 ounces of orange juice per day reduces the risk of cancer b A decrease in the price of orange juice c A prolonged period of freezing temperatures in orange growing states that kills part of the orange crop d A increase in the number of trees planted in orange groves
c A prolonged period of freezing temperatures in orange growing states that kills part of the orange crop
Assuming this economy's production possibilities frontier is PPF2, production is inefficient at point(s): a A only. b B, C, and D only. c A, B, C, and D. d E, F, and G.
c A, B, C, and D.
Which of the following will cause a decrease in the demand for batteries? a An increase in the price of batteries b An increase in consumer income, assuming batteries are a normal good c An increase in the price of digital cameras, a complement for batteries d An increase in number of buyers of batteries
c An increase in the price of digital cameras, a complement for batteries
Which statement below is false? Scarcity forces all societies to decide how best to use available resources. b Capitalism requires private ownership of inputs and outputs. c Government directs resources to their highest valued use in a market economy. d Planned, or command, economies rely heavily on government direction of production and central planning.
c Government directs resources to their highest valued use in a market economy.
A binding price ceiling in this market might be set at: a P3, which results in a market surplus equal to the distance from Q1 to Q3. b P3, which results in a market surplus equal to the distance from Q1 to Q2. c P1, which results in a market shortage equal to the distance from Q1 to Q3. d P1, which results in a market shortage equal to the distance from Q1 to Q2.
c P1, which results in a market shortage equal to the distance from Q1 to Q3.
Graphing a Production Possibilities Frontier assumes all of the following except: a a fixed amount of resources. b production is efficient. c a changing level of technology. d resources are fully employed.
c a changing level of technology.
For a normal good, a decrease in consumer income leads to: a a decrease in demand and an increase in equilibrium price. b an increase in demand and a decrease in equilibrium quantity. c a decrease in demand and a decrease in both equilibrium price and equilibrium quantity. d an increase in demand and an increase in both equilibrium price and equilibrium quantity.
c a decrease in demand and a decrease in both equilibrium price and equilibrium quantity.
If the graph below represents the demand for tickets to broadway musicals, an increase in the popularity of broadway musicals is illustrated by: a a movement along D1 from point B to point A. b a movement along D1 from point A to point B. c a shift from point A on D1 to point C on D2. d a shift from point C on D2 to point B on D1.
c a shift from point A on D1 to point C on D2.
Line 1 shifts right to Line 2 when: the value of the independent variable, X, increases. b the value of the independent variable, Y, decreases. c a variable other than X or Y that has a positive impact on the relationship changes. d a variable other than X or Y that has negative impact on the relationship changes.
c a variable other than X or Y that has a positive impact on the relationship
Most demand curves slope downward to the right indicating that price and quantity demanded: a are directly (positively) related. b are unrelated. c are inversely (negatively) related. d move in the same direction.
c are inversely (negatively) related.
A good economic theory or model: a is too complex to be presented in an introductory economics course. b assumes all other things remain constant so it cannot be easily manipulated. c explains how variables are related. d incorporate as many variables as possible.
c explains how variables are related.
A market price of $20 per dozen of roses will lead to a: a shortage of 200 dozens of red roses. b surplus of 200 dozens of red roses. c shortage of 100 dozens of red roses. d surplus of 100 dozes of red roses.
c shortage of 100 dozens of red roses.
A Production Possibilities Frontier: a simplifies the real world by assuming scarcity does not exist. b provides insight as to why some consumers prefer one of the outputs over the other output. c shows the maximum amount of two outputs that can be produced in a given time period, ceteris paribus. d illustrates the difference between the fallacy of false cause and the fallacy of division.
c shows the maximum amount of two outputs that can be produced in a given time period, ceteris paribus.
A production possibilities frontier for two outputs is drawn assuming that: a opportunity cost is fixed, but the quantity and quality of resources change. b both outputs use the same quantity of each resource, but not the same technology. c the amount of resources currently available for production is fixed. d the technology available can only be applied to producing one of the outputs.
c the amount of resources currently available for production is fixed.
Employees in the defense industry have greater job security and higher pay when the country is engaged in major military conflicts, therefore it is good for the country to be involved in military conflicts is an example of: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a the fallacy of false cause. b the post hoc fallacy. c the fallacy of composition. d the fallacy of division.
c the fallacy of composition.
Points on a production possibilities frontier imply that: a resources are producing outputs that benefit all members of society. b resources are inefficiently allocated or unemployed. c the maximum amount of output is being produced, given the available resources and technology. d the economy is not capable of future economic growth.
c the maximum amount of output is being produced, given the available resources and technology.
Suppose you are offered a coupon for a free dinner at a local restaurant, tip and drink included, if you attend a presentation for prospective renters at a new apartment complex in town. If you attend the presentation, then: a the opportunity cost of using the coupon for the dinner is zero because the dinner is free. b the opportunity cost of using the coupon for the dinner is higher for people who do not really plan to rent an apartment than for people who do plan to rent an apartment. c the opportunity cost of using the coupon for the dinner is the best alternative use of the time you spent at the dinner and presentation. d the opportunity cost of using the coupon for the dinner is the same for all presentation attendees because the dinner is free.
c the opportunity cost of using the coupon for the dinner is the best alternative use of the time you spent at the dinner and presentation.
After a price floor is established above the equilibrium price in the market for strawberries: a the quantity of strawberries farmers are willing to make available for sale decreases. b the quantity of strawberries consumers are willing and able to buy increases. c the quantity of strawberries actually bought and sold (exchanged) decreases. d the quantity of strawberries actually bought and sold (exchanged) increases.
c the quantity of strawberries actually bought and sold (exchanged) decreases.
Oil prices have surged and the average price jumped to $109 in May 2022. As a result, industries where inputs were oil- and gas-centric saw massive increases in production costs and were forced to raise prices to keep up. We called this type of inflation as:
cost-push inflation
A manufacturing worker who lost his job due to the severe economic downturn during the COVID-19 pandemic is considered to be: frictional unemployed structural unemployed employed cyclical unemployed
cyclical unemployed
Which of the following events would cause the demand for tennis balls to increase? a A decrease in the price of tennis balls b An increase in number of sellers of tennis balls c A decrease in the popularity of tennis d A decrease in the price of tennis racquets, a complement for tennis balls
d A decrease in the price of tennis racquets, a complement for tennis balls
Which of the following would lead to an increase in the supply of coffee, ceteris paribus? a A decrease in the price of coffee b An increase in the price of coffee c An increase in the price of tea, a substitute for coffee d An increase in the number of firms selling coffee
d An increase in the number of firms selling coffee
Which of the following is not a macroeconomic policy goal of a market economy? a Full employment b Price stability c Economic growth d Constant exchange rates
d Constant exchange rates
Which of the following statements is NOT true with respect to the economic factors of production? a Capital includes machines and factories used in production. b Land includes all natural resources used in production. c Labor is the physical and mental talents of people applied to production. d Entrepreneurship is the mental talents people apply to working for a new corporation.
d Entrepreneurship is the mental talents people apply to working for a new corporation.
Which of the following describes how a market moves toward equilibrium when the market price is above the equilibrium price, ceteris paribus? a Price increases, demand decreases, and supply increases b Price decreases, demand increases, and supply decreases c Price increases, quantity demanded increases, and quantity supplied decreases d Price decreases, quantity demanded increases, and quantity supplied decreases
d Price decreases, quantity demanded increases, and quantity supplied decreases
The basic economic questions that must be addressed by society include: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a what outputs should be produced? b how should outputs be produced? c who gets to consume the outputs produced? d Scarcity forces society to address all of the above economic questions.
d Scarcity forces society to address all of the above economic questions.
The primary difference between a change in supply and a change in the quantity supplied is: a both a change in quantity supplied and a change in supply are shifts in the supply curve, only in different directions. b both a change in quantity supplied and a change in supply are movements along the supply curve, only in different directions. c a change in supply is caused by a change in the price of the good itself, and a change in quantity supplied is caused by a change in a non-price determinant of supply. d a change in quantity supplied is caused by a change in the price of the good itself, and a change in supply is caused by a change in a non-price determinant of supply.
d a change in quantity supplied is caused by a change in the price of the good itself, and a change in supply is caused by a change in a non-price determinant of supply.
The graph of a negative, or inverse, relationship between two variables is a: a a horizontal line. b a vertical line. c a line that slopes upward to the right. d a line that slopes downward to the right.
d a line that slopes downward to the right.
If the graph below represents the supply of smart phones, a decrease in the cost of producing smart phones is illustrated by: a a movement along S1 from point A to point B. b a movement along S1 from point B to point A. c a shift from point C on S2 to point B on S1. d a shift from point B on S1 to point C on S2.
d a shift from point B on S1 to point C on S2.
Rachel quit her job as a computer programmer for a large corporation to begin her own computer repair business in her garage. To do this, she took $10,000 out of her retirement fund and hired Ross on an hourly basis. As a factor of production, Rachel is best classified as: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a land. b labor. c capital. d an entrepreneur.
d an entrepreneur.
For a normal good, an increase in consumer income leads to: a a decrease in demand and an increase in equilibrium price. b an increase in demand and a decrease in equilibrium quantity. c a decrease in demand and a decrease in both equilibrium price and quantity. d an increase in demand and an increase in both equilibrium price and equilibrium quantity.
d an increase in demand and an increase in both equilibrium price and equilibrium quantity.
The shift from PPF1 to PPF2 might come about due to: a an increase in the technology used to produce both dining sets and laptop computers. b an increase in the technology used to produce laptops but not dining sets. c an increase in the resources used to produce both laptops and dining sets. d an increase in the resources used to produce dining sets.
d an increase in the technology used to produce laptops but not dining sets.
The PPF that results from plotting the points for this production possibilities schedule: a is a straight line, indicating constant opportunity cost. b is a straight line, indicating increasing opportunity cost. c bows outward, indicating constant opportunity cost. d bows outward, indicating increasing opportunity cost.
d bows outward, indicating increasing opportunity cost.
If the number of people seeking to purchase new homes in the area increases at the same time that the prices of lumber and other homebuilding materials increase, then supply and demand analysis predicts that the : a equilibrium price and the equilibrium quantity of new homes will increase. b equilibrium quantity of new homes will increase but the change in equilibrium price cannot be determined from the information given. c equilibrium price and the equilibrium quantity of new homes will decrease. d equilibrium price of new homes will increase but the change in equilibrium quantity cannot be determined from the information given.
d equilibrium price of new homes will increase but the change in equilibrium quantity cannot be determined from the information given.
The assumption that because the economy is better off as a result of international trade, all firms in the economy must also be better off as a result of international trade is an example of the: a ceteris paribus assumption. b fallacy of composition. c fallacy of false cause. d fallacy of division.
d fallacy of division.
In a market economy: a households are suppliers in resource markets and demanders in input markets. b households are demanders in resource markets and suppliers in product markets. c firms are suppliers in resources markets and demanders in product markets. d firms are suppliers in product markets and demanders in resource markets.
d firms are suppliers in product markets and demanders in resource markets.
In the circular flow of economic activity: a firms supply final goods and services to resource (input) markets in exchange for sales revenue. b firms supply factors of production to resource (input) markets in exchange for income. c households supply final goods and services to resource (input) markets in exchange for income. d households supply factors of production to resource (input) markets in exchange for income.
d households supply factors of production to resource (input) markets in exchange for income.
Government is taking a _____ approach to an economic problem when it takes no action and relies market forces to automatically fix the problem. a socialist b communist c discretionary d laissez-faire
d laissez-faire
The law of demand states that: a price is the only variable that can cause consumers to purchase more or less. b consumers do not buy more or less when price changes. c price and demand are inversely (negatively) related, ceteris paribus. d price and quantity demanded are inversely (negatively) related, ceteris paribus.
d price and quantity demanded are inversely (negatively) related, ceteris paribus.
In a capitalist market economy, economic activity is mainly guided by: a the government. b corporations. c central planners. d self-interest.
d self-interest.
The shift from PPF1 to PPF2 implies all of the following EXCEPT: a the maximum amount of dining sets that can be produced did not change. b the maximum amount of laptop computers that can be produced increased. c the maximum amount of both outputs that can be consumed increased. d the maximum amount of dining sets that can be produced increased.
d the maximum amount of dining sets that can be produced increased.
If PPF2 represents this economy's production possibilities, the combination of civilian goods and military goods that is best, or optimal, for society is combination: a E because this economy prefers civilian goods. b G because this economy prefers military goods. c all combinations on PPF2 make society equally well-off so there is not a "best" combination. d the production possibilities model does not identify which combination is optimal for society; it identifies the combinations that are possible.
d the production possibilities model does not identify which combination is optimal for society; it identifies the combinations that are possible.
The graph of a relationship between two variables, X and Y, shifts when: a the value of X or Y, which are endogenous variables, changes. b the value of X or Y, which are exogenous variables, changes. c the value of an endogenous variable, something other than X or Y, changes. d the value of an exogenous variable, something other than X or Y, changes.
d the value of an exogenous variable, something other than X or Y, changes.
If the equation of a line is Y = 10 + 3X, then all of the following are true except: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a X and Y are positively related. b the slope is 3 and the Y intercept is 10. c the graph of the equation is a line that slopes upward to the right. d when X is equal to 3, Y is equal to 1.
d when X is equal to 3, Y is equal to 1.
Suppose Dallas Maverick Luka Doncic scored a total of 280 points in his first 10 games. If Luka scored 50 points in his 11th game, then: a.Luka averaged 28 points per game for his first 10 games. b. Luka's margin of 50 points in his 11th game is greater than his average of 28 points so his average points per game will increase. c. Luka averaged 30 points per game for the 11 games. d. All of the above are true regarding Luka's average points per game.
d. All of the above are true regarding Luka's average points per game.
Economics is: a. primarily concerned with the way governments determine how resources are created. b. the study of how to increase profits earned by firms. c. the study of how to avoid opportunity costs. d. primarily concerned with how choices are made and the consequences of those choices.
d. primarily concerned with how choices are made and the consequences of those choices.
Which of the following examples of household spending is categorized as investment rather than consumption?
expenditures on new housing
Sarah argues that free trade must be bad for the economy because people might lose jobs due to foreign competition.
fallacy of composition
Leslie argues that each industry must benefit from technological advances because technological advances contribute to economic growth in a country.
fallacy of division
Sales of ice cream increased and then the crime rate increased so eating ice cream must lead to criminal behavior.
fallacy of false cause
Market economies are characterized by all of the following except: a profit motive for entrepreneurs. incentives for exchange. government ownership of capital. decentralized decision-making.
government ownership of capital.
Most economic systems: a have one mechanism that decides what to produce and who gets to consume the output produced. b have many mechanisms that address the problem of scarcity. c are either pure capitalist or pure socialist. d are controlled by government for the benefit of all citizens.
have many mechanisms that address the problem of scarcity.
This PPF indicates that the opportunity cost of military goods in terms of consumer goods: a fluctuates. b is decreasing. c is constant. d is increasing.
is increasing
The interaction of individuals in markets directs production and consumption decisions
market economy
The U.S economy
mixed economy
In 2022 Q1, U.S. net exports were
negative and about 4.8% of GDP indicating a trade deficit of U.S.
To get the real GDP, we use
nominal GDP divided by GDP deflator, then times 100
Raising taxes on corporations and wealthy individuals is the best way to balance the federal budget.
normative macroeconomic
Parking on college campuses should be free for students enrolled in college.
normative microeconomic
Government directs many production and consumption decisions
planned economy
The unemployment rate increases when the economy is in a recession.
positive macroeconomic
People are likely to buy more new cars if the price of new cars fall substantially.
positive microeconomic
The law of demand says that the customer is always right price and quantity demanded are inversely related price and quantity demanded are positively related
price and quantity demanded are inversely related
Private ownership of all factors of production
pure capitalist economy
In the market for used cars, a shortage of used cars would, ceteris paribus: a put downward pressure on the price of used cars. b put upward pressure on the price of used cars. c increase the demand for used cars. d decrease the demand for used cars.
put upward pressure on the price of used cars
According to the law of demand, when price increases, ______ decreases. supply quantity supplied quantity demanded demand
quantity demanded
The ongoing Ukraine - Russia war triggered global wheat the oil crisis and created a _____ in food and energy which lead a(an) _______ in the price of food and energy. surplus, increase shortage, increase shortage, decrease surplus, decrease
shortage, increase
Quinn has job offers in New York and Dallas. The New York job would pay $100,000 per year, and the Dallas job would pay $80,000 per year. Suppose there is no tax on the income and regional CPI for NY is 140 and for Dallas is 90. If Quinn only cares about maximizing her purchasing power, she should choose
take the Dallas job
Demand increases or shifts to the right.
the equilibrium price and quantity both increase.
If the demand for chewing gum increases, ceteris paribus: a the supply of chewing gum must also increase. b the equilibrium price and equilibrium quantity of chewing gum will both increase. c the equilibrium price of chewing gum will increase leading the quantity supplied of chewing gum to decrease. d the equilibrium price of chewing gum will decrease if chewing gum is an inferior good.
the equilibrium price and quantity of chewing gum will both increase.
Suppose there is an increase in the number of buyers of cars and an increase in the cost of manufacturing cars. The basic graphing model of supply and demand predicts: the equilibrium price of cars will decrease, but the impact on the equilibrium quantity of cars cannot be determined without additional information the equilibrium price of cars will increase, but the impact on the equilibrium quantity of cars cannot be determined without additional information the equilibrium quantity of cars will increase, but the impact on the equilibrium price of cars cannot be determined without additional information the equilibrium quantity of cars will decrease, but the impact on the equilibrium price of cars cannot be determined without additional information.
the equilibrium price of cars will increase, but the impact on the equilibrium quantity of cars cannot be determined without additional information
If cotton clothing becomes more popular at the same time that the supply of cotton decreases, then basic supply and demand analysis predicts that: the equilibrium price of cotton clothing will increase but the change in the equilibrium quantity of cotton clothing cannot be determined from the information given. b both the equilibrium price and quantity of cotton clothing will increase. c the equilibrium price of cotton clothing will increase and the equilibrium quantity of cotton clothing will decrease. d the equilibrium quantity of cotton clothing will increase but the change in the equilibrium price of cotton clothing cannot be determined from the information given.
the equilibrium price of cotton clothing will increase but the change in the equilibrium quantity of cotton clothing cannot be determined from the information given.
The slope of a PPF curve represents the opportunity cost of producing 1 unit of good on the vertical axis in terms of good on the horizontal axis the maximum combination of producing both goods the maximum production of good on the horizontal axis the opportunity cost of producing 1 unit of good on the horizontal axis in terms of good on the vertical axis
the opportunity cost of producing 1 unit of good on the horizontal axis in terms of good on the vertical axis
The opportunity cost to Lottie of taking an hour walk instead of taking an hour nap is:
the value of the nap that Lottie gives up to take the walk.
The law of supply indicates that: a price and quantity supplied are directly (positively) related. b price and supply are directly (positively) related. c supply and demand are directly (positively) related. d supply and demand are inversely (negatively) related.
when prices fall, the quantity supplied falls.
The opportunity cost of 1 hat is ______, and the opportunity cost of 1 scarf is ______.
½ scarf; 2 hats
