microeconomics Test

Where does the graph of the following line cross the vertical intercept: y = -2x + -6?

-6

Which of the following statements most likely lies within the realm of macroeconomics?

Due to an economic recession, manufacturing firms began implementing layoffs of their workforces.

_____________ - a term referring to the fact that for many goods, as the level of production increases, the average cost of producing each individual unit declines.

Economies of scale

Marginal thinking is best demonstrated by:

choosing to spend one more hour studying economics because you think the improvement in your score on the next quiz will be worth the sacrifice of time.

Economic models like the _____________________ are not physical models, but instead are diagrams or graphs or even mathematical equations that represent economic patterns or theories.

circular flow diagram

When __________________, a firm will supply a higher quantity at any given price for its output, and the supply curve will shift to the right.

costs of production fall

The law of ____________________________ explains why people and societies rarely make all-or-nothing choices.

diminishing marginal utility

A supply curve is a graphical illustration of the relationship between price, shown on the vertical axis, and ____________, shown on the horizontal axis.

quantity supplied

"If I didn't have class tonight, I would save the $4 campus parking fee and spend four hours at work where I earn $10 per hour." The opportunity cost of attending class this evening is:

$44

In the circular flow diagram model

(both a and b are correct ) // businesses receive revenues from households in exchange for providing goods and services and use those revenues to buy inputs from households. // households receive income from businesses in exchange for providing inputs and use that income to buy goods and services from businesses.

The graph of a straight line contains two points, A and B. At point A on the line, x equals 2 and y equals 5. At point B on the line, x equals 8 and y equals 3. What is the slope of this line? (Round your answer to 2 decimal places.)

-0.33

The leader of a federal political party made the following campaign promise: "My administration will increase national defense without requiring sacrifices elsewhere in the economy." The promise can be kept if:

-the economy moves along the production possibilities in the direction of a greater quantity of defense. // the economy moves from a point inside the production possibilities curve toward a point on the production possibilities curve. // either b) or c) occurs, but not as a result of a).

A student has only a few hours to prepare for two different exams this afternoon. The table below shows alternative possible exam scores with three alternative uses of the student's time. The opportunity cost of scoring a 94 on the economics exam rather than a 77 is:

15 points on the history exam.

Suppose that the market demand for cell phone service is given by the following equation: Qd = 335 - 3P where Qd is the quantity of lines per month that people in the local area would be willing to purchase at a monthly price of P dollars. What is the quantity demanded at a price of 31 dollars per month?

242

Suppose that the market supply of car washes in the local area is given by the following equation: Qs = 281 + 2P where Qs is the quantity washes per day that sellers in the local area would be willing to provide at a price of P dollars. What is the quantity supplied at a price of 6 dollars?

293

Suppose the demand for gourmet personal pan pizzas is given by the following equation: Qd = 12 - 1P where Qd is the amount of pizzas consumers want to buy (i.e., quantity demanded), and P is the price of pizzas. Suppose the supply of gourmet personal pan pizzas is: Qs = 3 + 2P where Qs is the amount of pizzas producers will supply (i.e., quantity supplied). Finally, suppose that the gourmet personal pan pizza market operates where quantity demanded equals quantity supplied (i.e., equilibrium). What is the equilibrium market price of gourmet personal pan pizzas? (Round your answer to 2 decimal places.)

3

What is the slope of the following linear equation: y = 5x + 1?

5

A student has only a few hours to prepare for two different exams tomorrow morning. The table below shows alternative possible exam outcomes with three alternative uses of the student's time. The opportunity cost of scoring an 84 on the history exam rather than 76 is:

7 points on the economics exam

Suppose your job pays $8.64 per hour. Your boss has been impressed with your productivity on the job and offers you a $0.75 per hour raise. What is the percentage change (or growth rate) of your wage? (Round your answer to 2 decimal places.)

8.68

Along the production possibilities frontier shown below, the most efficient point of production depicted is:

All points on the production possibilities frontier are equally efficient.

Which of the following statements most likely lies within the realm of microeconomics?

An increase in labor costs will increase the additional cost of producing another bus.

Andy views beer and pizza as complements to one another. If the price of pizza decreases, economists would expect:

Andy's demand for beer to increase.

Why is there scarcity?

Because our unlimited wants exceed our limited resources

Which of the following best characterizes the circular flow of income?

Businesses buy resources from households, and households use their income from the sale of resources to buy goods and services from businesses.

In which of the following countries will the national government have the greatest influence with respect to the nation's economy?

Cuba

In countries like _____________ the command economy predominates.

Cuba and North Korea

If an increase in the price of Good X causes a decrease in the demand for Good Y, we can conclude that:

Goods X and Y are complement goods.

Interpret the following statement: "An increase in the price of wheat will encourage farmers to increase the quantity of wheat supplied to the market."

The statement is correct.

Which of the following best denotes the reason for the existence of substantial black markets?

a command economy

Which of the following would most likely shift the production possibilities curve inward?

a decrease in the average number of hours worked per week as the labor force chooses to enjoy more leisure time

Which of the following is most likely a topic of discussion in macroeconomics?

a decrease in the unemployment rate

After widespread press reports about the dangers of contracting "mad cow disease" by consuming beef from Canada, the likely economic effect on the U.S. demand curve for beef from Canada is:

a shift of the demand curve for beef to the left.

Which of the following lies primarily within the realm of macroeconomics?

a study of how tax cuts stimulate aggregate production

Any given demand or supply curve is based on the ceteris paribus assumption that ___________________.

all else is held equal

The term "ceteris paribus" means that:

all variables except those specified are constant.

The choice on a production possibilities set that is socially preferred, or the choice on an individual's budget constraint that is personally preferred, will display _____________________.

allocative efficiency

Macroeconomics primarily examines:

broad issues such as national output, employment and inflation.

The slope of the _________________ is determined by the relative price of the two goods, which is calculated by taking the price of one good and dividing it by the price of the other good.

budget constraint

In a market-oriented economy, the amount of a good that is produced is primarily decided by the interaction of:

buyers and sellers.

The nature of demand indicates that as the price of a good increases:

buyers desire to purchase less of it.

Specialization:

can lead to an increase in overall production.

Regardless of whether you are looking through the microeconomics microscope or the macroeconomics telescope, the fundamental subject material of the interconnected __________ doesn't change.

economy

Which of the following is generally accepted as a valid criticism of the production of useful goods and services?

environmental pollution

The ____________ is the quantity where quantity demanded and quantity supplied are equal at a certain price.

equilibrium quantity

If the price is below the equilibrium level, then the quantity demanded will exceed the quantity supplied. This is known as ___________________

excess demand

The circular flow diagram of economic activity is a model of the:

flow of goods, services, and payments between households and firms.

In a command economy, the __________ either makes most economic decisions itself or at least strongly influences how the decisions are made.

government

The two main tools of macroeconomic policy include monetary policy, and fiscal policy, which involves __________ spending.

government

Which of the following best describes a fiscal policy tool?

government spending

The demand schedule for a good:

indicates the quantities that will be purchased at alternative market prices.

Which of the following best describes a monetary policy tool?

interest rates

The opportunity cost of an action:

is a subjective valuation that can be determined only by the individual who chooses the action.

Macroeconomics:

is concerned with the expansion and contraction of the overall economy.

Scarcity implies that:

it is impossible to completely fulfill the unlimited human desire for goods and services with the limited resources available.

In the ____________, households work and receive payment from firms.

labor market

Economists refer to the relationship that a higher price leads to a lower quantity demanded as the _____________.

law of demand

Economists refer to this pattern, the ___________________________________, which means that as a person receives more of a good, the additional or marginal utility from each additional unit of the good declines.

law of diminishing marginal utility

When nations desire a healthy macroeconomy, they typically focus on three goals, one of these being:

low inflation

Most choices involve _________________, which involves comparing the benefits and costs of choosing a little more or a little less of a good.

marginal analysis

Most real-world choices aren't about getting all of one thing or another, instead, most choices involve _________________, which involves comparing the benefits and costs of choosing a little more or a little less of a good.

marginal analysis

As a person receives more of a good, the _______________ from each additional unit of the good declines.

marginal utility

In a _______________________, most economic decisions about what to produce, how to produce it, and for whom to produce it are made by buyers and sellers.

market-oriented economy

The marginal benefit of a slice of pizza is the:

maximum amount that a consumer is willing to pay for the slice.

The concept of slope is very useful in economics because it

measures the relationship between two variables.

The basic difference between macroeconomics and microeconomics is:

microeconomics concentrates on the behaviour of individual consumers and firms while macroeconomics focuses on the performance of the entire economy.

The basic difference between macroeconomics and microeconomics is that:

microeconomics is concerned with the trees (individual markets) while macroeconomics is concerned with the forest (aggregate markets).

Philosophers draw a distinction between positive statements, which describe the world as it is, and ___________________s, which describe how the world should be.

normative statement

Attending college is a case where the ________________ exceeds the monetary cost.

opportunity cost

In many cases, it is reasonable to refer to the ________________ as the price.

opportunity cost

The model that economists use for illustrating the process of individual choice in a situation of scarcity is the budget constraint, sometimes also called the _______________, a diagram which shows what choices are possible.

opportunity set

The downward slope of the demand curve again illustrates the pattern that as _____________ rises, _________________ decreases.

price, quantity demanded

A demand curve shows the relationship between price and _________________ on a graph.

quantity demanded

_________________ refers to the total number of units that are purchased at that price.

quantity demanded

At Point A in the production possibilities graph shown below, the economy:

s not using its resources efficiently.

The lesson of __________ is to forget about the money that's irretrievably gone and instead to focus on the marginal costs and benefits of future options.

sunk costs

A drought decreases the supply of agricultural products, which means that at any given price a lower quantity will be supplied; conversely, especially good weather would shift the __________________ .

supply curve to the right

Gomer decides to spend an hour playing basketball rather than studying. His opportunity cost is:

the benefit to his grades from studying for an hour

When the economy moves from Point A to Point B in the diagram below:

the economy increases production of both clothing and food.// the economy operates at its productive capacity once it reaches Point B.// the economy begins using its resources efficiently to produce both food and clothing.

In a discussion of economics, which of the following would exert the most influence on an individual firm's decision to hire workers?

the macroeconomy

As depicted in _________________________________, it is necessary to give up some of one good to gain more of the other good.

the production possibilities frontier

Macroeconomic topics do not usually include:

the profit maximizing decisions of an individual manufacturer.

The circular flow diagram of Macroeconomic topics do not usually include:

the profit maximizing decisions of an individual manufacturer.

If new manufacturers enter the computer industry, then (ceteris paribus)

the supply curve shifts to the right.

According to the law of supply:

there is a direct relationship between price and the quantity supplied.

When quantity demanded decreases in response to a change in price:

there is a movement up along the demand curve.

A positive slope means that

two variables are positively related, as one increases so does the other.

Scarcity exists because of:

unlimited wants and limited resources.

In deciding how many hours to work, Beulah will make a choice that maximizes her _______; that is, she will choose according to her preferences for leisure time and income.

utility

The general pattern that consumption of the first few units of any good tends to bring a higher level of _______ to a person than consumption of later units is a common pattern.

utility

A negative slope means that

when x increases, y decreases.