Haubner Econ Quiz

The relationship between quantity supplied and price is _____ and the relationship between quantity demanded and price is _____. A. direct, inverse B. inverse, direct C. inverse, inverse D. direct, direct

A. Direct, inverse

Joe sold gold coins for $1000 that he bought a year ago for $1000. He says, "At least I didn't lose any money on my financial investment." His economist friend points out that in effect he did lose money, because he could have received a 3 percent return on the $1000 if he had bought a bank certificate of deposit instead of the coins. The economist's analysis in this case incorporates the idea of: A. opportunity costs B. marginal benefits that exceed marginal costs. C. imperfect information. D. normative economics.

A. Opportunity Costs

A nation's production possibilities curve is bowed out from the origin because: A. resources are not equally efficient in producing every good. B. the originator of the idea drew it this way and modern economists follow this convention. C. resources are scarce. D. wants are virtually unlimited.

A. Resources are not equally efficient in producing every good

In deciding whether to study for an economics quiz or go to a movie, one is confronted by the idea(s) of: A. scarcity and opportunity costs. B. money and real capital. C. complementary economic goals. D. full production.

A. Scarcity and opportunity costs

Macroeconomics approaches the study of economics from the viewpoint of: A. the entire economy. B. governmental units. C. the operation of specific product and resource markets. D. individual firms.

A. The Entire Economy

Two major virtues of the market system are that it: A. allocates resources efficiently and allows economic freedom. B. results in an equitable personal distribution of income and always maintains full employment. C. results in price level stability and a fair personal distribution of income. D. eliminates discrimination and minimizes environmental pollution.

A. allocates resources efficiently and allows economic freedom.

DVD players and DVDs are: A. complementary goods. B. substitute goods. C. independent goods. D. inferior goods.

A. complementary goods.

In the circular flow model: A. households sell resources to firms. B. households receive income through the product market. C. households spend income in the resource market. D. businesses neither buy nor sell resources.

A. households sell resources to firms.

The law of supply indicates that: A. producers will offer more of a product at high prices than they will at low prices. B. the product supply curve is downsloping. C. consumers will purchase less of a good at high prices than they will at low prices. D. producers will offer more of a product at low prices than they will at high prices.

A. producers will offer more of a product at high prices than they will at low prices.

Other things equal, if the price of a key resource used to produce product X falls, the: A. product supply curve of X will shift to the right. B. product demand curve of X will shift to the right. C. product supply curve of X will shift to the left. D. product demand curve of X will shift to the right.

A. product supply curve of X will shift to the right.

The location of the product supply curve depends on: A. production technology. B. the number of buyers in the market. C. the tastes of buyers. D. the location of the demand curve.

A. production technology.

An increase in product price will cause: A. quantity demanded to decrease. B. quantity supplied to decrease. C. quantity demanded to increase. D. the supply curve to shift to the right.

A. quantity demanded to decrease.

In presenting the idea of a demand curve economists presume that the most important variable in determining the quantity demanded is: A. the price of the product itself. B. consumer income. C. the prices of related goods. D. consumer tastes.

A. the price of the product itself.

The production possibilities curve shows: A. the various combinations of two goods that can be produced when society employs all of its scarce resources. B. the minimum outputs of two goods that will sustain a society. C. the various combinations of two goods that can be produced when some resources are unemployed. D. the ideal, but unattainable, combinations of two goods that would maximize consumer satisfactions.

A. the various combinations of two goods that can be produced when society employs all of its scarce resources.

Microeconomics is concerned with: A. the aggregate or total levels of income, employment, and output. B. a detailed examination of specific economic units that make up the economic system. C. positive economics, but not normative economics. D. the establishing of an overall view of the operation of the economic system.

B. A Detailed Examination of specific economic units that make up the economic system

If the production possibilities curve is a straight line: A. the two products will sell at the same market prices. B. economic resources are perfectly substitutable between the production of the two products. C. the two products are equally important to consumers. D. equal quantities of the two products will be produced at each possible point on the curve.

B. Economic resources are perfectly substitutable between the production of the two products.

The four factors of production are: A. land, labor, capital, and money B. land, labor, capital, and entrepreneurial ability C. labor, capital, technology, and entrepreneurial ability D. labor, capital, entrepreneurial ability, and money

B. Land, Labor, Capital, and Entrepreneurship

Economics may best be defined as the: A. interaction between macro and micro considerations. B. social science concerned with how individuals, institutions, and society make optimal choices under conditions of scarcity. C. empirical testing of value judgments through the use of logic. D. use of policy to refute facts and hypotheses.

B. Social science concerned with how individuals, institutions, and society make optimal choices under conditions of scarcity.

Which of the following would not shift the demand curve for beef? A. a widely publicized study that indicates beef increases one's cholesterol B. a reduction in the price of cattle feed C. an effective advertising campaign by pork producers D. a change in the incomes of beef consumers

B. a reduction in the price of cattle feed

Which of the following is a distinguishing feature of a command system? A. private ownership of all capital. B. central planning. C. heavy reliance on markets. D. wide-spread dispersion of economic power.

B. central planning

A government subsidy to the producers of a product: A. reduces product supply. B. increases product supply. C. reduces product demand. D. increases product demand.

B. increases product supply.

if there is a shortage of product X: A. fewer resources will be allocated to the production of this good. B. the price of the product will rise. C. the price of the product will decline. D. the supply curve will shift to the left and the demand curve to the right, eliminating the shortage.

B. the price of the product will rise.

In a market economy the distribution of output will be determined primarily by: A. consumer needs and preferences. B. the quantities and prices of the resources that households supply. C. government regulations that provide a minimum income for all. D. a social consensus as to what distribution of income is most equitable.

B. the quantities and prices of the resources that households supply.

The production possibilities curve illustrates the basic principle that: A. the production of more of any one good will in time require smaller and smaller sacrifices of other goods. B. an economy will automatically obtain full employment of its resources. C. if all the resources of an economy are in use, more of one good can be produced only if less of another good is produced. D. an economy's capacity to produce increases in proportion to its population size.

C. If all the resources of an economy are in use, more of one good can be produced only if less of another good is produced

Assume an economy is operating at some point on its production possibilities curve, which shows civilian and military goods. If the output of military goods is increased, the output of civilian goods: A. will remain unchanged. B. may be either increased or decreased. C. must be decreased. D. must also be increased.

C. Must be decreased

The term "ceteris paribus" means: A. that if event A precedes event B, A has caused B. B. that economics deals with facts, not values. C. other things equal. D. prosperity inevitably follows recession.

C. Other Things Equal

The demand curve shows the relationship between: A. money income and quantity demanded. B. price and production costs. C. price and quantity demanded. D. consumer tastes and the quantity demanded.

C. Price and quantity demanded

Which of the following will not cause the demand for product K to change? A. a change in the price of close-substitute product J B. an increase in consumer incomes C. a change in the price of K D. a change in consumer tastes

C. a change in the price of K

In drawing a production possibilities curve we hold constant: A. the money supply. B. the consumer price index. C. both technology and resource supplies. D. resource supplies only.

C. both technology and resource supplies.

Innovation lagged in the centrally planned economies because: A. there was too much domestic business competition. B. there was too much competition from foreign firms. C. enterprises resisted innovation in fear that their production targets would be raised. D. exports had to equal imports for the plan to work.

C. enterprises resisted innovation in fear that their production targets would be raised.

Which of the following is not a characteristic of the market system? A. private property. B. freedom of enterprise. C. government ownership of the major industries. D. competition in product and resource markets.

C. government ownership of the major industries.

The simple circular flow model shows that: A. households are on the buying side of both product and resource markets. B. businesses are on the selling side of both product and resource markets. C. households are on the selling side of the resource market and on the buying side of the product market. D. businesses are on the buying side of the product market and on the selling side of the resource market.

C. households are on the selling side of the resource market and on the buying side of the product market.

In the resource market: A. businesses borrow financial capital from households. B. businesses sell services to households. C. households sell resources to businesses. D. firms sell raw materials to households.

C. households sell resources to businesses.

Consumer sovereignty refers to the: A. fact that resource prices are higher than product prices in capitalistic economies. B. idea that the pursuit of self-interest is in the public interest. C. idea that the decisions of producers and resource suppliers with respect to the kinds and amounts of goods produced must be appropriate to consumer demands. D. fact that a Federal agency exists to protect consumers from harmful and defective products.

C. idea that the decisions of producers and resource suppliers with respect to the kinds and amounts of goods produced must be appropriate to consumer demands.

A market is in equilibrium: A. provided there is no surplus of the product. B. at all prices above that shown by the intersection of the supply and demand curves. C. if the amount producers want to sell is equal to the amount consumers want to buy. D. whenever the demand curve is downsloping and the supply curve is upsloping.

C. if the amount producers want to sell is equal to the amount consumers want to buy.

If the demand and supply curves for product X are stable, a government-mandated increase in the price of X will: A. increase the supply of X and decrease the demand for X. B. increase the demand for X and decrease the supply of X. C. increase the quantity supplied and decrease the quantity demanded of X. D. decrease the quantity supplied of X and increase the quantity demanded of X.

C. increase the quantity supplied and decrease the quantity demanded of X.

In terms of the circular flow diagram, households make expenditures in the _____ market and receive income through the _____ market. A. product; financial B. resource; product C. product; resource d. D. capital; product

C. product; resource d.

If the price of product L increases, the demand curve for close-substitute product J will: A. shift downward toward the horizontal axis. B. shift to the left. C. shift to the right. D. remain unchanged.

C. shift to the right.

When the price of a product increases, a consumer is able to buy less of it with a given money income. This describes: A. the cost effect. B. the inflationary effect. C. the income effect. D. the substitution effect.

C. the income effect.

A production possibilities curve shows: A. that resources are unlimited. B. that people prefer one of the goods more than the other. C. the maximum amounts of two goods that can be produced assuming the full use of available resources. D. combinations of capital and labor necessary to produce specific levels of output.

C. the maximum amounts of two goods that can be produced assuming the full use of available resources.

When the price of a product rises, consumers shift their purchases to other products whose prices are now relatively lower. This statement describes: A. an inferior good. B. the rationing function of prices. C. the substitution effect. D. the income effect.

C. the substitution effect.

Which of the following is a distinguishing feature of a market system? A. public ownership of all capital. B. central planning. C. wide-spread private ownership of capital. D. a circular flow of goods, resources, and money.

C. wide-spread private ownership of capital

In the past few years, the demand for donuts has greatly increased. This increase in demand might best be explained by: A. an increase in the cost of making donuts. B. an increase in the price of coffee. C. consumers expecting donut prices to fall. D. a change in buyer tastes.

D. a change in buyer tastes.

25. The failure of Soviet central planning was reflected in: A. a declining growth rate. B. poor quality goods. C. the failure to provide promised consumer goods. D. all of these.

D. all of these.

The demand curve for a product might shift as the result of a change in: A. consumer tastes. B. consumer incomes. C. the prices of related goods. D. all of these.

D. all of these.

A firm's supply curve is upsloping because: A. the expansion of production necessitates the use of qualitatively inferior inputs. B. mass production economies are associated with larger levels of output. C. consumers envision a positive relationship between price and quality. D. beyond some point the production costs of additional units of output will rise.

D. beyond some point the production costs of additional units of output will rise.

An economist for a bicycle company predicts that, other things equal, a rise in consumer incomes will increase the demand for bicycles. This prediction is based on the assumption that: A. there are many goods that are substitutes for bicycles. B. there are many goods that are complementary to bicycles. C. there are few goods that are substitutes for bicycles. D. bicycles are normal goods.

D. bicycles are normal goods.

If X is a normal good, a rise in money income will shift the: A. supply curve for X to the left. B. supply curve for X to the right. C. demand curve for X to the left. D. demand curve for X to the right.

D. demand curve for X to the right.

An inferior good is: A. one whose demand curve will shift rightward as incomes rise. B. one whose price and quantity demanded vary directly. C. one which has not been approved by the Federal Food and Drug Administration. D. not accurately defined by any of the above statements.

D. not accurately defined by any of the above statements.

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

D. some firms leaving an industry.