chapter 1 and 2 econ final

The optimal allocation of resources is found: A)where MB = MC. B)at every point along a production possibilities curve. C)where the marginal benefit is at its greatest. D)where the marginal cost is at its lowest.

A

Which of the following statements is correct? A)The value of the independent variable is determined by the value of the dependent variable. B)The value of the dependent variable is determined by the value of the independent variable. C)The dependent variable designates the "cause" and the independent variable the "effect." D)Dependent variables graph as upsloping lines; independent variables graph as downsloping lines.

B

Economists: A)always put the independent variable on the horizontal axis and the dependent variable on the vertical axis. B)always put the dependent variable on the horizontal axis and the independent variable on the vertical axis. C)are somewhat arbitrary in assigning independent and dependent variables to the horizontal and vertical axes. D)measure the slope of a line differently than do mathematicians.

C

Positive statements are expressions of value judgments. True False

False

Specialization in production is important primarily because it: A)results in greater total output. B)allows society to avoid the coincidence-of-wants problem. C)allows society to trade by barter. D)allows society to have fewer capital goods.

a

Firms are motivated to minimize production costs because: A)it is the most environmentally friendly way to produce goods. B)least-cost production techniques use the smallest total quantity of resources. C)competitive pressures in the market will drive out higher-cost producers. D)the government provides tax credits and subsidies to low-cost producers.

c

Because economic generalizations are simplifications from reality, they are impractical and useless. True False

false

Choices entail marginal costs because resources are scarce. True False

true

The coordination problem in the centrally planned economies refers to the idea that: A)planners had to direct required inputs to each enterprise. B)the price level and the level of employment were inversely related. C)the immediate effect of more investment was less consumption. D)exports had to be equal to imports for a central plan to work.

A

Macroeconomics can best be described as the: A)analysis of how a consumer tries to spend income. B)study of the large aggregates of the economy or the economy as a whole. C)analysis of how firms attempt to maximize their profits. D)study of how supply and demand determine prices in individual markets.

B

The "coincidence of wants" problem associated with barter refers to the fact that: A)for exchange to occur, each seller must have a product that some buyer wants. B)money must be used as a medium of exchange or trade will never occur. C)specialization is restricted by the size or scope of a market. D)buyers in resource markets and sellers in product markets can never engage in exchange.

a

The slope of a line parallel to the horizontal axis is: zero. one. infinite. one-half.

a

Broadly defined, competition involves: A)private property and freedom of expression. B)independently acting buyers and sellers and freedom to enter or leave markets. C)increasing opportunity costs and diminishing marginal utility. D)capital goods and division of labor.

b

The output of MP3 players should be: A)reduced if marginal benefits exceed marginal costs. B)reduced if marginal costs exceed marginal benefits. C)increased if marginal costs exceed marginal benefits. D)reduced to zero if their unit costs exceed the unit costs of alternative products.

b

The presence of market failures implies that: A)money is not an effective tool for exchange in a market system. B)there is an active role for government, even in a market system. C)individuals and firms should strive to be self-sufficient rather than specialize. D)command systems are superior to market systems in the allocation of resources.

b

Which of the following is associated with macroeconomics? A)An examination of the incomes of Harvard Business School graduates. B)An empirical investigation of the general price level and unemployment rates since 1990. C)A study of the trend of pecan prices since the Second World War. D)A case study of pricing and production in the textbook industry.

b

Consumer sovereignty" refers to the: fact that resource prices are higher than product prices in capitalistic economies. A)idea that the pursuit of self-interest is in the public interest. B)idea that the decisions of producers must ultimately conform to consumer demands. C)fact that a federal agency exists to protect consumers from harmful and defective products.

c

Private property: A)discourages cooperation because people don't want to part with what they own. B)discourages innovation, as people are often afraid to risk losing their own property. C)encourages owners to maintain or improve their property so as to preserve or enhance value. D)does everything indicated by the other answers.

c

The process of producing and accumulating capital goods is called: A)money capital. B)depreciation. C)investment. D)consumption.

c

Which of the following is a distinguishing feature of laissez-faire capitalism? A)Public ownership of all capital. B)Central planning. C)Minimal government intervention. D)A circular flow of goods, resources, and money.

c

Which of the following is a positive statement? A)A humidity level of 90 percent is too high. B)It is too hot to run outside when the temperature exceeds 80 degrees. C)The temperature is 92 degrees today. D)Summer evenings are nice when it cools off to around 70 degrees.

c

(Consider This) Since World War II: A)North Korea's command economy has significantly outperformed South Korea's market economy. B)South Korea's command economy has significantly outperformed North Korea's market economy. C)North Korea's market economy has significantly outperformed South Korea's command economy. D)South Korea's market economy has significantly outperformed North Korea's command economy.

d

Examples of command economies are: A)the United States and Japan. B)Sweden and Norway. C)Mexico and Brazil. D)Cuba and North Korea.

d