Micro test 1

Which of the following would cause a decrease in the quantity demanded for eyeglasses? Assuming eyeglasses and contact lenses are substitute goods, and eyeglasses are a normal good. a. An increase in the price of eyeglasses b. An increase in the price of contact lenses c. A decrease in the cost of producing eyeglasses d. A decrease in income

a. An increase in the price of eyeglasses

Which of the following concepts is NOT illustrated by the production possibilities frontier? a. Equity b. Opportunity Cost c. Trade offs d. Efficiency

a. Equity

Suppose that the federal reserve bank announces that it will be making a change to a key interest rate to decrease the money supply. This is likely because a. The federal reserve bank is worried about inflation b. The federal reserve bank is worried about unemployment c. The federal reserve bank is hoping to increase the demand for goods and services d. The federal reserve bank is worried that the economy is growing too slowly

a. The federal reserve bank is worried about inflation

Suppose the number of buyers in a market increases and a technological advancement occurs also. What would we expect to happen in the market? a. Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous. b. Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous. c. Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous. d. Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous.

b. Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.

In a market economy, economic activity is guided by: a. The government b. Prices c. Central planners d. Corporations

b. Prices

Which of the following events would cause a movement upward and to the right along the supply curve for mangos? a. There is an advance in technology that reduces the cost of producing mangos. b. The price of mangos rises. c. The number of sellers of mangos increases. d. The price of fertilizer decreases, and fertilizer is an input in the production of mangos.

b. The price of mangos rises.

If a surplus exists in a market, then we know that the actual price is a. above the equilibrium price, and quantity demanded is greater than quantity supplied. b. above the equilibrium price, and quantity supplied is greater than quantity demanded. c. below the equilibrium price, and quantity supplied is greater than quantity demanded. d. below the equilibrium price, and quantity demanded is greater than quantity supplied.

b. above the equilibrium price, and quantity supplied is greater than quantity demanded.

David produces hair clips and earrings. Rebecca also produces hair clips and earrings, but David is better at producing both goods. In this case, trade could a. benefit neither David nor Rebecca b. benefit both David and Rebecca. c. benefit David, but not Rebecca. d. benefit Rebecca, but not David.

b. benefit both David and Rebecca

Assume that Mayar and Micheal can switch between producing mixers and producing toasters at a constant rate.​ Amount Produced in 40 Hours mixers toasters Mayar 5 8 Micheal 2 4 The opportunity cost of 1 mixer for Mayar is a. 0.625 toasters. b. 2 toasters c. 1.6 toasters. d. 0.5 toasters

c. 1.6 toasters.

Price (Dollars per unit) Quantity Demanded (Units) Bert Ernie Grover Oscar 0.00 20 16 6 8 0.50 18 12 4 6 1.00 14 10 2 5 1.50 12 8 0 4 2.00 6 6 0 2 2.50 0 4 0 0 If these are the only four buyers in the market, then the market quantity demanded at a price of $1 is a. 4 units. b. 7.75 units. c. 31 units. d. 14 units.

c. 31 units.

In the circular flow diagram a. Firms are sellers in the factors of production market and the market for goods and services b. Firms are buyers in the market for goods and services c. Households are sellers in the factors of production market d. Spending on goods and services flow from firms to households

c. Households are sellers in the factors of production market

Russell spends in our studying instead of playing tennis. The opportunity cost of him studying is: a. The improvement in his grades from studying minus the enjoyment of playing tennis b. Enjoyment of playing tennis minus the improvement in his grades from studying c. The enjoyment and exercise he would receive if he had played tennis d. Zero. Since Russell chose to study rather than to play tennis the value of studying must have been greater than the value of playing tennis

c. The enjoyment and exercise he would receive if he had played tennis

What would happen to the equilibrium price and quantity of lattés if the cost of producing steamed milk, which is used to make lattés, rises? a. The equilibrium price would decrease, and the equilibrium quantity would increase. b. Both the equilibrium price and quantity would decrease. c. The equilibrium price would increase, and the equilibrium quantity would decrease. d. Both the equilibrium price and quantity would increase.

c. The equilibrium price would increase, and the equilibrium quantity would decrease.

If muffins and bagels are substitutes, a higher price for bagels would result in a. a decrease in the demand for muffins. b. a decrease in the demand for bagels. c. an increase in the demand for muffins. d. an increase in the demand for bagels.

c. an increase in the demand for muffins.

Soup is an inferior good if the demand a. for soup falls when the price of a substitute for soup rises. b. for soup rises when the price of soup falls c. for soup falls when income rises. d. curve for soup slopes upward.

c. for soup falls when income rises.

An economy's production of two goods is efficient if a. the opportunity cost of producing more of one good is zero. b. the goods are produced using only some of society's available resources. c. it is impossible to produce more of one good without producing less of the other. d. all members of society consume equal portions of the goods.

c. it is impossible to produce more of one good without producing less of the other.

Generally, when the price of tea falls, people buy less coffee. This suggests that tea and coffee are: a. normal goods. b. inferior goods. c. substitutes for each other. d. complementary goods for each other but the impact on equilibrium quantity would be ambiguous.

c. substitutes for each other.

When a country has a comparative advantage in producing a certain good, a. the country should import that good. b. the country should produce just enough of that good for its own consumption. c. then specializing in the production of that good and trading for other goods could allow that country to consume at a point beyond its production possibilities frontier. d. the country's opportunity cost of that good is high relative to other countries' opportunity costs of that same good.

c. then specializing in the production of that good and trading for other goods could allow that country to consume at a point beyond its production possibilities frontier.

A production possibilities frontier can shift outward if a. the economy abandons inefficient production methods in favor of efficient production methods. b. resources are shifted from the production of one good to the production of the other good. c. there is a technological improvement. d. None of the above

c. there is a technological improvement.

It is possible for an economy to increase its production of both goods if the economy a. Moves downward and to the right along its PPF and the frontier is bowed outward. b. Moves upward and to the left along its PPF and the frontier is bowed outward. c. Moves in either direction along its production possibilities frontier and the frontier is a straight line. d. Moves from a situation of inefficient production to a situation of efficient production.

d. Moves from a situation of inefficient production to a situation of efficient production.

In the circular-flow diagram, which of the following do firms NOT do? a. Hire workers b. Produce goods and services c. Use factors of production to produce output d. Sell factors of production

d. Sell factors of production

Economist make assumptions a. To diminish the chance of wrong answers b. Because all scientists make assumptions c. To make certain all possible variables are included d. To make the world easier to understand

d. To make the world easier to understand

Which of the following is an example of a normative, as opposed a to positive, statement? a. A law requiring the federal government to balance its budget would increase economic growth. b. A decrease in the minimum wage would decrease unemployment. c. An increase in the cigarette tax would cause a decrease in the number of smokers. d. Universal healthcare would be good for U.S. citizens.

d. Universal healthcare would be good for U.S. citizens.

Sue drinks three sodas during a particular day. The marginal benefit she enjoys from drinking third soda a. Can be thought of as the total benefits soon enjoys by drinking three sodas minus the total benefit she would've enjoyed by drinking just two sodas b. Determine Sue's willingness to pay for the third soda c. Is likely to continue to fall as soon drinks more and more soda d. a, b, and c are all correct

d. a, b, and c are all correct

A circular-flow diagram is a model that a. incorporates all aspects of the real economy. b. helps to explain how consumers and the c. government interact with one another. d. helps to explain how the economy is organized. e. explains how countries trade with each other.

d. helps to explain how the economy is organized.

When a production possibilities frontier is bowed outward, the opportunity cost of producing an additional unit of a good _________ as more of the good is produced. a. cannot be determined b. decreases c. remains constant d. increases

d. increases

Two goods are complements when a decrease in the price of one good: a. decreases the quantity demanded of the other good. b. decreases the demand for the other good. c. does not impact the other good d. increases the demand for the other good.

d. increases the demand for the other good.