Macro final exam

#14 Holding all else constant, if people eat out more at expensive restaurants when they earn more, then expensive restaurant meals are\n\n\nAnswers:\na. goods with a congestion-effect.\nb. inferior goods.\nc. normal goods.\n d. goods with a network-effect.

https://images.cram.com/images/upload-flashcard/95/55/76/36955576_m.jpeg C. normal goods. https://images.cram.com/images/upload-flashcard/95/55/78/36955578_m.jpeg

The cost-benefit principle states that a decision should be pursued only if the\n\n\nSelected Answers:\n\n\nAnswers: \na. costs are negative.\nb. benefits are greater than the costs.\nc. benefits are positive.\nd. costs are greater than the benefits.

B. benefits are greater than the costs.

.

EXAM #3 EXAM #3

Exam 1:

https://images.cram.com/images/upload-flashcard/95/53/29/36955329_m.png

#15 (Figure: Market for Luxury Vehicles) Which graph shows what will happen in the market for luxury vehicles if a recession is imminent?​\n\n\nAnswers:\na. Graph A\nb. Graph D\nc. Graph C\nd. Graph B

a. Graph A https://images.cram.com/images/upload-flashcard/95/56/85/36955685_m.jpeg

#11 To maximize production, people should\n\n\nAnswers:\na. focus on the task in which they have a comparative advantage.\n\n\nb. focus on the task in which they have an absolute advantage.\n\n\nc. learn all the skills so that they can perform any task needed.\n\n\nd. focus on improving their weakest skills.

a. focus on the task in which they have a comparative advantage.

#31 Government-provided financial funding to households to compensate for bad outcomes such as unemployment, illness, disability, or outliving your savings is known as a:\n\n\nAnswers:\na. social insurance system.\nb. disaster relief program.\nc. progressive tax system.\nd. social safety net.

a. social insurance system.

#18 Barlow and Rusia own a nail salon. A manicure takes Barlow 60 minutes to complete and takes Rusia 45 minutes to complete. Completing a pedicure takes Barlow 45 minutes and takes Rusia 30 minutes. Who has a comparative advantage in pedicures?\n\n\nAnswers:\na. Rusia because she is faster.\n\n\nb. Rusia because she has a lower opportunity cost.\n\n\nc. Barlow because he has a lower opportunity cost.\n\n\nd. Barlow because he is faster.

b. Rusia because she has a lower opportunity cost.

#20 Which of the following is a source of comparative advantage?\n\n\nAnswers:\na. low trade costs\nb. abundant inputs\nc. low tariff rates\nd. global supply chains

b. abundant inputs

#2 The concept of equity focuses on:\n\n\nAnswers:\na. profit.\nb. fairness.\nc. efficiency.\nd. the level of economic surplus.

b. fairness.

#27 When quantity demanded exceeds quantity supplied, _____ exists.\n\n\nAnswers:\na. fixed demand\nb. a surplus\nc. a shortage\nd. equilibrium

c. a shortage

#15 The person who has an absolute advantage in a task\n\n\nAnswers:\na. can perform the task at a higher opportunity cost than anyone else.\n\n\nb. is the person who should do the task.\n\n\nc. is the one who is best at the task.\n\n\nd. can perform the task at a lower opportunity cost than anyone else.

c. is the one who is best at the task.

#17 (Figure: Market for Apple Computers) Dell and Apple are competitors in the computer market. Which graph illustrates the effect of a rise in the price of Dell computers on the demand for Apple computers?​\n\n\nAnswers:\na. Graph C\nb. Graph A\nc. Graph B\nd. Graph D

d. Graph D

#4 On a market graph, producer surplus is the area that is:\n\n\nAnswers:\na. below the demand curve.\nb. above the demand curve.\nc. above the demand curve and below the supply curve.\nd. above the supply curve and below the price.

d. above the supply curve and below the price.

#19 A trade cost is:\n\n\nAnswers:\na. the price of a good that is bought or sold abroad.\n\n\nb. the difference in price between a good that is bought or sold abroad rather than domestically.\n\n\nc. the cost associated with producing a good that is bought or sold abroad.\n\n\nd. an extra cost incurred as a result of buying or selling a good abroad rather than domestically.

d. an extra cost incurred as a result of buying or selling a good abroad rather than domestically.

#16 Comparative advantage explains why people\n\n\nAnswers:\na. work at the job they love the most.\nb. try to gain a wide range of skills.\nc. lack focus in their production decisions.\nd. specialize and trade.

d. specialize and trade.

#11 Diminishing marginal benefit:\n\n\nAnswers:\n\n\na. is when consumers do not follow the rational rule.\n\n\nb. is not important in determining a consumer's purchase decision.\n\n\nc. is when buying an additional item yields a smaller marginal benefit than the previous item.\n\n\nd. is when buying an additional item yields a larger marginal benefit than the previous item.

https://images.cram.com/images/upload-flashcard/95/53/62/36955362_m.jpeg C. is when buying an additional item yields a smaller marginal benefit than the previous item.

#25 A market is a\n\n\nAnswers:\na. a place where governments decide what is sold.\nb. setting that brings together potential buyers and sellers.\nc. set of demand curves for a product.\nd. set of supply curves for a product.

#25\n\n\nB. setting that brings together potential buyers and sellers.

#26 An equilibrium price is a price where the\n\n\nAnswers:\na. quantity demanded no longer changes.\n\n\nb. quantity supplied equals the quantity demanded.\n\n\nc. amount that buyers are willing to buy is equal to the amount that buyers are able to buy.\n\n\nd. demand curve is identical to the supply curve.

#26\n\n\nB. quantity supplied equals the quantity demanded.

\n\n#18 What is quantity supplied?\n\n\nAnswers:\n\n\na. It is the amount of an item that a buyer is willing to buy at a particular price.\n\n\nb. It is the amount of an item that a seller is willing to sell at a particular price.\n\n\nc. It is a graph that plots the quantities of an item that a seller plans to sell at different prices.\n\n\nd. It is a graph that plots how much a seller produces at different points in time.

A. It is the amount of an item that a buyer is willing to buy at a particular price.

#13 (Figure: Graph) Refer to the graph to answer the question. In the graph, the movement from point M to point Q represents\n\n\nAnswers:\na. an increase in demand.\nb. an increase in quantity demanded.\nc. a decrease in quantity demanded.\nd. a decrease in demand.

A. an increase in demand.

Sunk costs are costs that: \n\n\nAnswers:\n\n\na. are incurred in the past and cannot be reversed.\nb. are part of the opportunity costs of a decision.\nc. are potential costs associated with a particular decision.\nd. should be considered in any decision.

A. are incurred in the past and cannot be reversed.

#6 The principle that your best choice depends on your other choices, the choices others make, developments in other markets, and expectations about the future is known as the _____ principle.\n\n\nAnswers:\na. interdependence\nb. opportunity cost\nc. marginal\nd. cost-benefit

A. interdependence

#10 The law of demand refers to\n\n\nAnswers:\n\n\na. the inverse relationship between price and quantity demanded.\n\n\nb. the positive relationship between price and quantity demanded.\n\n\nc. the inverse relationship between price and quantity supplied.\n\n\nd. the positive relationship between price and quantity supplied.

A. the inverse relationship between price and quantity demanded.

Which principle tells you that the true cost of something is the next best alternative you have to give up to get it?\n\n\n\nAnswers:\na. The marginal principle.\nb. The interdependence principle.\nc. The opportunity cost principle.\nd. The cost-benefit principle.

C. The opportunity cost principle.

#19 The law of supply refers to\n\n\nAnswers:\na. the inverse relationship between price and quantity demanded.\n\n\nb. the inverse relationship between price and quantity supplied.\n\n\nc. the positive relationship between price and quantity supplied.\n\n\nd. the positive relationship between price and quantity demanded.

C. the positive relationship between price and quantity supplied.

#17 When a manager uses comparative advantage to assign tasks in a workplace, then each\n\n\nAnswers:\na. worker learns how to do all tasks to increase flexibility in assignments.\n\n\nb. task is assigned to the worker with the lowest opportunity cost for performing the task.\n\n\nc. worker is assigned to the tasks for which he or she has the highest aptitude and efficiency.\n\n\nd. task is assigned to the worker who is best at doing the task.

b. task is assigned to the worker with the lowest opportunity cost for performing the task.

#32 In 2011, Japan suffered a major earthquake and tsunami. Honda parts that were sourced from Japan could no longer be produced, which caused Honda to cut its production of cars. Which graph shows the effect of this shortfall?\n\n\nAnswers:\na. Graph C\nb. Graph B\nc. Graph D\nd. Graph A

https://images.cram.com/images/upload-flashcard/95/58/60/36955860_m.jpeg a. Graph C https://images.cram.com/images/upload-flashcard/95/58/59/36955859_m.jpeg

# 22 Due to a decline in demand and popularity, Ford Motor Company is planning to phase out traditional sedans such as 'Fusion' and 'Taurus' to focus on SUVs and trucks. Ford's sedans and trucks/SUVs are\n\n\nAnswers:\na. complements-in-production.\nb. substitutes-in-production.\nc. products that do not follow the law of supply.\nd. inputs in production.

#22\n\n\nA. complements-in-production.b. substitutes-in-production.

#23 If the price of jet fuel rises, the\n\n\nAnswers:\na. quantity supplied of jet fuel increases.\nb. supply of jet fuel increases.\nc. supply of jet fuel decreases.\nd. supply of airline flights increases.

#23\n\n\nA. quantity supplied of jet fuel increases.

The __________ suggests, decisions about quantities are best made incrementally.\n\n\nAnswers:\na. opportunity cost principle\nb. marginal principle\nc. cost-benefit principle\nd. interdependence principle

B. marginal principle

#30 Which of the following is a social insurance program in the United States?\n\n\nAnswers:\n\n\na. Social Security\nb. housing assistance\nc. Medicaid\nd. earned income tax credit

a. Social Security

#9 Market failure occurs when market forces lead to:\n\n\nAnswers:\na. an inefficient outcome.\nb. high price.\nc. high quantity.\nd. a marginal benefit that is equal to marginal cost.

a. an inefficient outcome.

#3 In a market graph, consumer surplus is the area:\n\n\nAnswers:\na. above the price.\nb. above the price and below the demand curve.\nc. below the demand curve.\nd. between the demand curve and the supply curve.

b. above the price and below the demand curve.

#33 Shifts in demand\n\n\nAnswers:\n\n\na. always lead to increases in equilibrium price.\n\n\nb. lead to price and quantity to move in the same direction.\n\n\nc. always lead to increases in equilibrium quantity.\n\n\nd. lead to price and quantity to move in opposite directions.

b. lead to price and quantity to move in the same direction.

#1 Analysis based on value judgments is called _____ analysis.\n\n\nAnswers:\n\n\na. positive\nb. normative\nc. subjectivity-based\nd. valuative

b. normative

#8 A market's deadweight loss is calculated as:\n\n\nAnswers:\na. the loss to consumers when a product malfunctions or fails to meet expectations.\n\n\nb. the economic surplus at the efficient quantity minus the economic surplus at the actual quantity.\n\n\nc. the economic loss that a firm has when it is not producing its profit-maximizing output. \n\n\nd. the price at equilibrium minus the price at actual quantity.

b. the economic surplus at the efficient quantity minus the economic surplus at the actual quantity.

#20 (Figure: Graph) In the graph, the movement from point E to point F represents.\n\n\nAnswers:\n\n\na. an increase in quantity supplied.\n\n\nb. an increase in supply.\n\n\nc. a decrease in supply.\n\n\nd. a decrease in quantity supplied.

https://images.cram.com/images/upload-flashcard/95/57/31/36955731_m.jpeg #20\n\n\n D. a decrease in quantity supplied.

#29 What is social insurance?\n\n\nAnswers:\n\n\na.It is the cash-assistance, goods, and services provided by the government to better the lives of those at the bottom of the income distribution.\n\n\nb. It is the government assignment of jobs to individuals based on household need and employee education and skills.\n\n\nc.It is government-provided financial funding to households to compensate for bad outcomes such as unemployment, illness, disability, or outliving their savings.\n\n\nd. It is a system where those with more income tend to pay a higher share of their income in taxes than those with lower incomes.

c. It is government-provided financial funding to households to compensate for bad outcomes such as unemployment, illness, disability, or outliving their savings.

#26 A tariff is a:\n\n\nAnswers:\n\n\na. limit on the quantity of a good that can be imported.\nb. tax on exported products.\nc. tax on imported products.\nd. limit on the quantity of a good that can be exported.

c. tax on imported products.

#32 Intergenerational mobility is the extent to which:\n\n\nAnswers:\na. children own more personal transportation vehicles (such as cars and motorcycles) than their parents did.\n\n\nb. the income of children in a given family varies across the children.\n\n\nc. the economic status of children is independent of the economic status of their parents.\n\n\nd. the geographic dispersion of families occurs as children pursue economic opportunities.

c. the economic status of children is independent of the economic status of their parents.

#21 Figure: Market for Drones) If companies frequently start using drones to deliver products, which graph shows the effect this will have on the market for drones.​\n\n\nAnswers:\na. Graph A\nb. Graph B\nc. Graph D\nd. Graph C

https://images.cram.com/images/upload-flashcard/95/57/54/36955754_m.jpeg a. Graph A

#12 (Figure: Graph) Refer to the graph to answer the question.\nThe movement from point M to point N represents:\n\n\nAnswers:\na. a decrease in demand.\n\n\nb. a decrease in quantity demanded.\n\n\nc. an increase in quantity demanded.\n\n\nd. an increase in demand.

https://images.cram.com/images/upload-flashcard/95/54/47/36955447_m.jpeg C. an increase in quantity demanded.

#24 (Figure: Market for Coffee) A coffee shop opens next to an existing coffee shop. Which of the following graphs shows the effect of this new coffee shop on the market supply curve for coffee in this area?​\n\n\nAnswers:\na. Graph D\nb. Graph B\nc. Graph C\nd. Graph A

https://images.cram.com/images/upload-flashcard/95/58/15/36955815_m.jpeg #24\n\n\n\n\nD. Graph A https://images.cram.com/images/upload-flashcard/95/58/21/36955821_m.jpeg

#31 A major technological advancement occurs in transportation technology, which leads to faster and more efficient train systems. Which graph depicts the effect on the supply of train rides?\n\n\nAnswers:\na. Graph D\nb. Graph B\nc. Graph A\nd. Graph C

https://images.cram.com/images/upload-flashcard/95/58/46/36955846_m.jpeg a. Graph D