Chapter 1 Quiz
Which of the following is a macroeconomics question? A. What determines the unemployment rate? B. What factors determine the price of iPhones? C. What determines the wages and benefits of flight attendants? D. How is the production quantity of digital cameras determined?
A. What determines the unemployment rate?
Equity is A. the fair distribution of economic benefits. B. when poorer people's income is growing more rapidly than more wealthy people's income. C. an exactly equal distribution of income. D. always achieved by the market.
A. the fair distribution of economic benefits.
Lydia runs a small nail salon in the town of New Hope. She is debating whether she should extend her hours of operation. Lydia figures that her sales revenue will depend on the number of extra hours the nail salon is open as shown in the table to the right. She would have to hire a worker for those extra hours at a wage rate of $10 per hour. What is Lydia's marginal cost if she decides to stay open for an extra two hours instead of one hour? A. $10 B. $20 C. $25 D. $40 Extra Hours Open/ Total Revenue ($) 1/50 2/75 3/95 4/110 5/120 6/125
A. $10
Lydia runs a small nail salon in the town of New Hope. She is debating whether she should extend her hours of operation. Lydia figures that her sales revenue will depend on the number of extra hours the nail salon is open as shown in the table to the right. She would have to hire a worker for those extra hours at a wage rate of $10 per hour. What is Lydia's marginal benefit if she decides to stay open for an extra two hours instead of one hour? A. $25 B. $50 C. $75 D. $125 Extra Hours Open/ Total Revenue ($) 1/50 2/75 3/95 4/110 5/120 6/125
A. $25
Allison's Auto Art is a company that applies pinstripes to vehicles. Allison's cost for a basic 1-color pinstriping job is $35, and she charges $95 for this service. For a total price of $175, Allison will apply a fancier 3-color pinstripe application to an automobile, a service that adds an additional $40 to the total cost of the package. Should Allison continue to offer the 3-color pinstripe application? A. Yes, but only if she lowers the price of the 1-color application B. Yes, she still makes a profit by selling the 3-color application C. No, her marginal benefit is less than her marginal cost D. More information is needed for Allison to make this decision.
B. Yes, she still makes a profit by selling the 3-color application
Productive efficiency is achieved when A. firms add a low profit margin to the goods and services they produce. B. firms produce goods and services at the lowest cost. C. firms produce the goods and services that consumers value most. D. there are no shortages or surpluses in the market.
B. firms produce goods and services at the lowest cost.
In economics, the term ________ means "additional" or "extra." A. equity B. marginal C. allocative D. optimal
B. marginal
In economics, the term ________ refers to a group of buyers and sellers of a product and the arrangement by which they come together to trade. A. collective B. market C. cooperative D. trade-off
B. market
The branch of economics which studies how households and firms interact in markets is called A. positive economics. B. microeconomics. C. normative economics. D. macroeconomics.
B. microeconomics.
An economic ________ is a simplified version of some aspect of economic life used to analyze an economic issue. A. trade-off B. model C. variable D. market
B. model
Economic models do all of the following except A. answer economic questions. B. portray reality in all its minute details. C. make economic ideas explicit and concrete for use by decision makers. D. simplify some aspect of economic life.
B. portray reality in all its minute details.
By definition, economics is the study of A. how to make money in a market economy. B. the choices people make to attain their goals, given their scarce resources. C. how to make money in the stock market. D. supply and demand.
B. the choices people make to attain their goals, given their scarce resources.
Allison's Auto Art is a company that applies pinstripes to vehicles. Allison's cost for a basic 1-color pinstriping job is $35, and she charges $95 for this service. For a total price of $175, Allison will apply a fancier 3-color pinstripe application to an automobile, a service that adds an additional $40 to the total cost of the package. What is the marginal cost of moving up from the 1-color application to the 3-color application? A. $35 B. $40 C. $80 D. $175
B. $40
Trade-offs force society to make choices, particularly when answering the following three fundamental questions: A. One, what goods and services will be produced in foreign countries? Two, who will produce the goods and services? Three, who will receive the goods and services produced? B. One, what goods and services will be produced? Two, how will the goods and services be produced? Three, who will receive the goods and services produced? C. One, what goods and services will be produced domestically? Two, how will the goods and services be produced? Three, is the distribution of goods and services fair? D. One, what goods and services will be produced? Two, how will the goods and services be produced? Three, is the distribution of goods and services fair?
B. One, what goods and services will be produced? Two, how will the goods and services be produced? Three, who will receive the goods and services produced?
Which of the following is a normative economic statement? A. With falling mortgage rates and falling unemployment rates, the number of new homes being built has increased. B. Falling global demand for pesticides has led to decreases in the price of pesticides. C. Global warming should be at the top of every economic agenda. D. The state of Florida's unemployment rate dropped when several large companies relocated to the Miami area.
C. Global warming should be at the top of every economic agenda.
Which of the following is a positive economic statement? A. States should be able to enact their own marijuana legalization laws. B. The government should defund Obamacare. C. Unemployment insurance payments increase when the unemployment rate rises. D. The inflation rate in the United States is too high.
C. Unemployment insurance payments increase when the unemployment rate rises.
Economists reason that the optimal decision is to continue any activity up to the point where the A. marginal benefit is zero. B. marginal benefit is greater than the marginal cost. C. marginal benefit equals the marginal cost. D. marginal cost is zero.
C. marginal benefit equals the marginal cost.
Suppose the U.S. government encouraged new medical school graduates to take over existing practices from doctors wishing to retire by paying both the new and retiring doctors $100,000. These doctors would be exemplifying the economic idea that: A. people are rational. B. optimal decisions are made at the margin. C. people respond to economic incentives. D. equity is more important than efficiency.
C. people respond to economic incentives.
Which of the following is a normative economic statement? A. With rising home prices and falling mortgage interest rates, the amount of home foreclosures has decreased. B. The federal government is considering increasing regulations on the use of fossil fuels to promote the use of wind power. C. Rising corn prices have increased the price of corn-based ethanol. D. Farmers should not be allowed to grow and sell genetically-modified crops.
D. Farmers should not be allowed to grow and sell genetically-modified crops.
Consider the following economic agents: a. the government b. consumers c. producers Who, in a centrally planned economy, decides what goods and services will be produced with the scarce resources available in that economy? A. consumers B. consumers and producers C. the government, consumers, and producers D. producers
E. the government
