ECO 210 Ch.1

Refer to the table. In this competitive market, the price and quantity will settle at: Price Per Unit Qd per Year Qs per Year $5 2,000 0 $10 1,800 300 $15 1,600 600 $20 1,400 900 $25 1,200 1,200 $30 1,000 1,500 Question 17 options: A) $15 and 1,600 units B) $10 and 2,000 units C) $25 and 1,200 units D) $20 and 900 units

C) $25 and 1,200 units

In the market for a particular pair of shoes, Jena is willing to pay $75 for a pair while Jane is willing to pay $85 for a pair. The actual price that each has to pay for a pair of shoes is $65. What is the combined amount of consumer surplus of Jena and Jane? Question 7 options: A) $130 B) $10 C) $30 D) $215

C) $30

When economist say that people act rationally in their self -interest they mean that individuals

look for and pursue oppurtunities to increase their utility

Which of the following would not be classified as an economic resource by economists?

money in a business checking account

"The economic principle that "unemployment rate will tend to increase as the economy moves into a recession" is an example of:

A generalization

Refer to the above diagram for the milk market. In this market, the equilibrium price is ____ and equilibrium quantity is ___. Question 1 options: A) $1.50 per gallon; 28 million gallons B) $1.50 per gallon; 30 million gallons C) $1.00 per gallon; 35 million gallons D) $28 per gallon; 150 million gallons

A) $1.50 per gallon; 28 million gallons

The table below shows the weekly demand for hamburger in a market where there are just three buyers. Refer to the Price Buyer 1 Qd Buyer 2 Qd Buyer 3 Qd $6 7 4 6 $5 9 7 8 $4 15 10 12 $3 21 15 16 table. At a price of $6, the weekly market quantity demanded for hamburger is: Question 5 options: A) 17 B) 23 C) 18 D) 24

A) 17

Which is an example of barter? Question 4 options: A) A person trades a desk for a box of tools B) The purchase of stock on the New York Stock Exchange C) A person buys clothes at a used clothing store D) A gift of tuition money from parents to their children

A) A person trades a desk for a box of tools

If the market price is above the equilibrium price: Question 23 options: A) A surplus will occur and producers will produce less and lower prices B) A shortage will occur and producers will produce more and lower prices C) Producers will make extremely high profits D) A surplus will result and consumers will bid prices up

A) A surplus will occur and producers will produce less and lower prices

When central planners in a command economy end up having a huge surplus of shoes and widespread shortages of bread in their economy, they have failed to attain: Question 28 options: A) Allocative efficiency B) Productive efficiency C) Minimum opportunity costs D) Maximum process and revenues

A) Allocative efficiency

Refer to the graph showing the market for a product. Which of the following could not explain the indicated increase in equilibrium price from P1 to P2? Question 25 options: A) An increase in production costs B) An increase in consumer incomes C) A decrease in the price of a complementary product D) An increase in the price of a substitute product

A) An increase in production costs

Which of the following factors will decrease the current demand for a product? Question options: A) An increase in the current price of a substitute product B) A decrease in the current price of a complementary product C) A decrease in the current price of a substitute product D) An expected increase in the future price of the product

A) An increase in the current price of a substitute product

If many people in a community get flu shots, the whole community benefits including those that did not get flu shots. Therefore, not enough people may decide to get the shots. This is one illustration of: Question 10 options: A) Demand-side market failure B) Supply-side market failure C) Monopoly power due to lack of competition D) The market allocating resources efficiently

A) Demand-side market failure

Assume that the graphs show a competitive market for the product stated in the question. Select the graph that best shows the change in the market specified in the following situation: In the market for leather coats, when leather coats become more fashionable among young consumers. Question 15 options: A) Graph A B) Graph B C) Graph D D) Graph C

A) Graph A

When producers do not have to pay the full cost of producing a product, they tend to: Question 2 options: A) Over-produce the product because of a supply-side market failure B) Under-produce the product because of a demand-side market failure C) Under-produce the product because of a supply-side market failure D) Over-produce the product because of a demand-side market failure

A) Over-produce the product because of a supply-side market failure

In a command system: Question 12 options: A) The government makes production and allocation decisions B) Market traders command what outputs are produced and how they are allocated C) Self-interest motivates and commands each business firm's decisions and actions D) The head of each family decides what to do with the family's resources

A) The government makes production and allocation decisions

If an economy is being "productively efficient," then that means the economy is: Question 11 options: A) Using the least costly production techniques B) Producing the products most wanted by society C) Maximizing the returns to factors of production D) Fully employing all economic resources

A) Using the least costly production techniques

Answer the question on the basis of the data given in the following production possibilities table: Refer to the table. For this economy to produce a total output of 3 units of capital goods and 13 units of consumer goods, it must: Production Possibilities A B C D E F Capital Goods: 5 4 3 2 1 0 Consumer Goods: 0 6 9 12 14 15 Question options: A) achieve economic growth B) use its resources more efficiently than the data in the table now indicates C) allocate its available resources most efficiently than the data in the table now indicates D) achieve the full employment of available resources

A) achieve economic growth

The basic purpose of the other-things-equal assumption is to: Question options: A) allow one to reason about the relationship between variables X and Y without the intrusion of variable Z B) allow one to focus upon macro variables by ignoring micro variables C) allow one to focus upon micro variables by ignoring macro variables D) determine whether X causes Y or vice versa

A) allow one to reason about the relationship between

Assume product A is an input in the production of product B. In turn, product B is a complement to product C. We can expect a decrease in the price of A to: Question options: A) increase the supply of B and increase the demand of C B) decrease the supply of B and increase the demand of C C) decrease the supply of B and decrease the demand of C D) increase the supply of B and decrease the demand of C

A) increase the supply of B and increase the demand of C

What combination of changes would most likely decrease the equilibrium price? Question options: A) when supply decreases and demand decreases B) when demand increases and supply increases C) when demand decreases and supply decreases D) when supply decreases and demand increases

A) when supply decreases and demand decreases

A nation can produce two products: steel and wheat. The table is the nation's production possibilities schedule: Product A B C D E F Steel 0 1 2 3 4 5 Wheat 100 90 75 55 30 0 Refer to the table. The marginal opportunity cost of the third unit of steel is:

A)25 units of wheat B)20 units of wheat C)55 units of wheat D)18.3 units of wheat ANSWER: B

Assume that a consumer has a given budget or income of $12, and that she can buy only two goods, apples or bananas. The price of an apple is $1.50 and the price of a banana is $0.75. Refer to the information given above. If the consumer spent all of her budget on just apples or just bananas, how many apples or bananas maximum would she be able to buy?

A)8 apples or 16 bananas B)12 apples or 8 bananas C)16 apples or 12 bananas D)8 apples or 12 bananas ANSWER: A

Which of the following illustrates a macroeconomic question?

A)Are increasing wage demands by workers contributing to price inflation? B)Will the introduction of a new computer chip change the demand for computers? C)Should the salaries of financial executives be regulated by the government? D)What is the least costly way to produce automobiles and trucks in the United States? ANSWER: A

A nation can produce two products: tanks and autos. The table below is the nation's production possibilities: Refer to the table. PPC Product A B C D E F Tanks 0 1 2 3 4 5 Autos 1000 950 850 650 350 0 According to the production possibilities schedule, a combination of 4 tanks and 650 autos is:

A)Attainable, and involves an efficient use of society's resources B)Not attainable because the nation does not have sufficient resources C)Attainable, but would not be in the best interests of a strong national defense D)Less than (or below) the maximum attainable output combination ANSWER: B

A point inside the production possibilities curve is ____ while a point outside the curve is ____.

A)Attainable; unattainable B)Unattainable; attainable C)Below the maximum possible; the maximum possible D)The maximum possible; below the maximum possible ANSWER: A

The graph above shows the production possibilities curve for an economy producing two goods, X and Y. Which of the points on the graph indicate unemployed resources?

A)B and A only B)E and A only C)B and C only D)D only ANSWER: B

Which of the following is another way of saying "marginal benefits of an action"?

A)Benefits given up, once the action is taken B)Extra benefits resulting from the action C)Benefits accruing to others, as a result of one's action D)Unintended gains from taking the action ANSWER: B

Economics is a social science that studies how individuals, institutions, and society may:

A)Best use resources to maximize satisfaction of economic wants B)Reduce the amount of goods and services they need C)Expand the amount of resources available to them D)Attain a minimum level of production ANSWER: A

Which point or output-combination in the above graph could the nation produce only if it experienced economic growth?

A)Combination C B)Combination F C)Combination E D)Combination G ANSWER: D

The law of increasing opportunity costs states that:

A)Costs of production increase for one good, but costs decrease for the other good B)Increases in the production of one good require larger and larger sacrifices of the other good C)Increases in wages and other resource costs is what the increasing opportunity costs refer to D)Increases in the production of one good make the production of that good and easier ANSWER: B

The purpose of the ceteris paribus assumption used in economic analysis is to:

A)Focus on the effect of a single factor on a certain variable B)Make sure that all relevant factors are considered C)Distinguish macroeconomics from microeconomics D)Avoid making normative statements ANSWER: A

Which of the following is a positive economic statement?

A)Government must maintain the current level of defense spending to keep the nation safe B)The minimum wage should be increased to give people a decent wage C)Americans should buy American products in order to boost the national economy D)Stock prices rose to a new record last month for the fourth month in a row ANSWER: D

A recurring theme in economics is that people:

A)Have limited economic wants and limited resources B)Have unlimited economic wants, but limited resources C)Have unlimited resources, but limited economic wants D)Can increase resources by limiting their economic wants ANSWER: B

A nation can increase its production possibilities by:

A)Improving labor productivity B)Eliminating unemployment C)Shifting resources to produce more consumer goods and less investment goods D)Shifting resources from private goods to public goods ANSWER: A

Which question is an illustration of a macroeconomic question?

A)Is a consumer boycott an effective means of reducing a product's price? B)Is a corporation unresponsive to the demands of its customers? C)How will the government's budget deficit be affected by public infrastructure projects? D)Are oil companies ripping off consumers by charging exorbitantly high prices for gasoline? ANSWER: C

Which of the following exemplifies a microeconomic question?

A)Is the economy experiencing a decline in the rate of inflation? B)Is the aggregate output in the economy greater this year than last year? C)Will a new type of electronic reader or tablet increase the number of buyers? D)What is the current national rate of unemployment? ANSWER: C

Matt observes that "there is a high correlation between educational attainment and the level of income." Jean concurs and adds that "high school graduates should all proceed to college."

A)Matt's statement is normative while Jean's statement is positive B)Both Matt's and Jean's statements are normative C)Matt's statement is positive while Jean's statement is normative D)Both Matt's and Jean's statements are positive ANSWER: C

Mia wants to buy a book. The economic perspective suggests that Mia will buy the book if:

A)She has enough money to pay for the marginal cost of the book B)The marginal benefit of the book is a positive value C)The marginal benefit of the book is greater than its marginal cost D)The marginal cost of the book is greater than its marginal benefit ANSWER: C

The idea in economics that "there is no free lunch" means that:

A)There are opportunity costs involved even in free lunches B)Free lunches used by businesses to attract customers is an inefficient marketing ploy C)The thought of a free lunch is often better than the reality of consuming it D)Businesses would go bankrupt if they offered free lunches ANSWER: A

The opportunity cost of constructing a new public highway is the:

A)Value of other goods and services that are sacrificed in order to construct the new highway B)Value of shorter driving times and distances when the new highway is completed C)Money cost of hiring contractors and construction workers for the new highway D)Expected cost of constructing the new highway in a future year ANSWER: A

Refer to the table. If demand is represented by columns (3) and (1) and supply is represented by columns (3) and (4), equilibrium price and quantity will be: (1) (2) (3) (4) (5) Q Q Q Q Q 50 40 $10 70 80 60 60 9 60 70 80 60 8 50 60 90 70 7 40 50 100 80 6 30 40 Question options: A) $8 and 80 units B) $7 and 30 units C) $9 and 60 units D) $10 and 60 units

A: C) $9 and 60 units.

An economic model is a purposeful simplification of reality, whose function includes:

Analyzing behavior of a typical or average consumer or firm

Charlie is willing to pay $10 for a T-shirt that is priced at $9. If Charlie buys the T-shirt, then his consumer surplus is: Question 1 options: A) $90 B) $1 C) $0.90 D) 19

B) $1

Refer to the graph, which shows the market for bicycles. S1 and D1 are the original supply and demand curves. D2 and D3 and S2 and S3 are possible new demand and supply curves. Starting from the initial equilibrium (point 1), which point on the graph is most likely to be the new equilibrium after the introduction of technological improvements in bicycle production, and successful publicity campaigns by the government on the virtues of bicycling to work? Question 18 options: A) 4 B) 5 C) 6 D) 3

B) 5

The price of pork may increase as a result of: Question 9 options: A) A subsidy to pork producers B) An increase in the cost of producing beef C) A decrease in the cost of feed for pigs D) Decreased advertising of pork

B) An increase in the cost of producing beef

A public good: Question 6 options: A) Generally results in substantial negative externalities B) Can't be provided to one person without making it available to others as well C) Can never be provided by a nongovernmental organization D) Costs essentially nothing to produce and is thus provided by the government at a zero price

B) Can't be provided to one person without making it available to others as well

Assume that the graphs show a competitive market for the product stated in the question. Select the graph that best shows the change in the market specified in the following situation: In the market for houses, when consumers experience a substantial fall in income due to a serious economic recession. Question 29 options: A) Graph A B) Graph B C) Graph C D) Graph D

B) Graph B

A headline reads "Lumber Prices Up Sharply." In a competitive market, this situation would lead to a(n): Question 16 options: A) Increase in the price and quantity of new homes B) Increase in the price of new homes and decrease in quantity C) Decrease in the price of new homes and increase in quantity D) Decrease in the price and quantity of new homes

B) Increase in the price of new homes and decrease in quantity

Which of the following statements about market failure is NOT true: Question 3 options: A) Market failure can result from the number of sellers in a market being too few to ensure competition B) Market failure always results from some government action or policy in a market C) Market failure causes an inefficient allocation of resources, even in a competitive market D) Market failure can come from causes on the demand-side or the supply-side of a market

B) Market failure always results from some government action or policy in a market

All of the following would affect the position of the supply curve for cranberries, except the: Question 10 options: A) Development of a new pest control for cranberries B) Popularity of cranberry drinks C) Price of agricultural land for cranberries D) Cost of fertilizers for cranberry production

B) Popularity of cranberry drinks

It is the custom for paper mills located alongside the Layzee River to discharge waste products into the river. As a result, operators of hydroelectric power-generating plants downstream along the river find that they must clean up the river's waste before it flows through their equipment. If the government intervenes and corrects the externality in the situation described above, we would expect: Question 9 options: A) The output of the paper mills to increase B) Production in the paper mills to decrease C) The price of paper from the mills to decrease D) Production of the hydroelectric power plants to decrease

B) Production in the paper mills to decrease

Which of the following is an example of a market failure? Question 5 options: A) There are not enough tickets available to concerts of extremely popular performers and artists B) Successful public schools provide benefits to the students who attend them, as well as to the community as a whole including those who don't go to those public schools C) Extensive decreases in the prices of electronic equipment resulted in large numbers of bankruptcies in the computer industry D) The price of medical care has risen dramatically as a result of the introduction of sophisticated equipment and procedures.

B) Successful public schools provide benefits to the students who attend them, as well as to the community as a whole including those who don't go to those public schools

Which of the following factors is a "demand shifter" for new houses? Question 8 options: A) Wages for construction workers B) The price of lumber C) The interest rates on mortgage loans D) The price of new houses

B) The interest rates on mortgage loans NOT CORRECT: D) The price of new houses

The idea that the desires of resource suppliers and firms to further their own self-interest will automatically further the public interest is known as: Question options: A) Consumer sovereignty B) The invisible hand C) Derived demand D) Creative destruction

B) The invisible hand

Suppose that a university decides to spend $1 million to upgrade personal computers and scientific equipment for faculty rather than spend $1 million to expand parking for students. This example illustrates: Question options: A) increasing opportunity costs B) opportunity costs C) productive efficiency D) distorted priorities

B) opportunity costs

Refer to the graph, which shows the market for bicycles. S1 and D1 are the original supply and demand curves. D2 and D3 and S2 and S3 are possible new demand and supply curves. Starting from the initial equilibrium (point 1), which point on the graph is most likely to be the new equilibrium after an increase in wages of bicycle workers, and a significant increase in the price of gasoline? Question 26 options: A) 6 B) 5 C) 4 D) 3

C) 4

Which of the following would cause a leftward shift in the supply curve for car washes? Question 24 options: A) An increase in the number of cars in the city B) A decrease in taxes on car washes C) An increase in the price of car washing equipment D) A decrease in the price of water

C) An increase in the price of car washing equipment

An "increase in the quantity supplied" suggests a: Question 7 options: A) Rightward shift of the supply curve B) Leftward shift of the supply curve C) Movement up along the supply curve D) Movement down along the supply curve

C) Movement up along the supply curve

If product Y is an inferior good, a decrease in consumer incomes will: Question 13 options: A) Shift the demand curve for product Y to the left B) Make buyers want to buy less of Product Y C) Shift the demand curve for product Y to the right D) Not affect the sales of product Y

C) Shift the demand curve for product Y to the right

Which of the following is not a determinant of demand for laptop computers? Question 19 options: A) Expectations about the future price of laptop computers B) Income of buyers of laptop computers C) The cost of inputs for producing laptop computers D) The prices of related goods such as software and iPads

C) The cost of inputs for producing laptop computers

Other things being equal, the law of demand suggests that as: Question 14 options: A) The demand for iPads increases, this will cause the price to increase B) The price of iPads decreases, the quantity demanded will decrease C) The price of iPads decreases, the quantity demanded will increase D) Income increases, the quantity of iPads demanded will increase

C) The price of iPads decreases, the quantity demanded will increase

In which of the following statements are the terms "demand" and "quantity demanded" used correctly? Question options: A) When the price of ice cream rose, the demand for both ice cream and ice cream toppings fell B) When the price of ice cream rose, the demand for ice cream fell, and the quantity demanded of ice cream toppings fell C) When the price of ice cream rose, the quantity demanded of ice cream fell, and the demand for ice cream toppings fell D) None of these statements use the terms correctly

C) When the price of ice cream rose, the quantity demanded of ice cream fell, and the demand for ice cream toppings fell

Economic systems differ from one another based on who own the factors of production and: Question 21 options: A) What kinds of products are produced in the economy and how plentiful they are B) How much resources are available in the economy and where they are located C) Who make decisions regarding what to produce and how it is produced D) How big the population is, and the makeup of the population

C) Who make decisions regarding what to produce and how it is produced

A fundamental difference between the command system and laissez-faire capitalism is that, in command systems: Question options: A) scarcity does not exist, whereas it does in laissez-faire capitalism B) money is not used, whereas it is in laissez-faire capitalism C) the division of output is decided by central planning rather than by individuals operating freely through markets D) all economic decisions are made by the government, whereas there is no government in laissez-faire capitalism

C) the division of output is decided by central planning rather than by individuals operating freely through markets

Non excludability describes a condition where: Question options: A) sellers can withhold the benefits of a good from those unwilling to pay for it B) there is no potential for free-riding behavior C) there is no effective way to keep people from using a good once it comes into being D) one person's consumption of a good does not prevent consumption of the good by others

C) there is no effective way to keep people from using a good once it comes into being

ECO 210 Ch.2-3

Chapter 2-3 Book: Macroeconomics; McConnell, Brue, and Flynn. 20th edition

ECO 210 Ch.4

Chapter 4 Book: Macroeconomics; McConnell, Brue, and Flynn. 20th edition

Economists have difficulty applying the scientific method because:

Controlled laboratory experiments in economics are often not feasible

Use the following graph of the demand for coffee: Refer to the diagram of three demand curves for coffee. Which of the following would cause a shift in coffee demand from D1 to D3? Question 6 options: A) A scientific report stating that coffee improves memory B) A decrease in the prices of cream and sugar C) A decrease in the cost of producing coffee D) A decrease in the price of tea

D) A decrease in the price of tea

In a competitive market illustrated by the diagram, a price ceiling of $10 per unit will result in: Question 27 options: A) A surplus of 200 units B) A surplus of 250 units C) A shortage of 250 units D) A shortage of 200 units

D) A shortage of 200 units

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

D) An empirical investigation of the general price level and unemployment rates since 1990

Project Marginal Cost ($B) Marginal Benefit ($B) A 1 2 B 3 3 C 5 7 D 7 8 Assume that a government is considering a new social program and may choose to include in this program any number of four progressively larger projects. The marginal cost and the marginal benefit of each of the four projects are given in the table. Refer to the table above and information (note that the figures are in billions). What project should the government select to achieve the maximum net benefits? Question 4 options: A) B B) A C) D D) C

D) C

Suppose that a more efficient way to produce a good is discovered, thus lowering production costs for the good. This will cause a(n): Question 30 options: A) Decrease in quantity supplied B) Decrease in supply C) Increase in quantity supplied D) Increase in supply

D) Increase in supply

An increase in the price of digital cameras will result in a(n): Question 3 options: A) Shift of the demand curve for digital cameras to the right B) Shift of the demand curve for digital cameras to the left C) Decrease in the demand for digital cameras D) Movement up and to the left along the demand curve for digital cameras

D) Movement up and to the left along the demand curve for digital cameras

Which of the following best describes the "invisible hand" concept? Question 20 options: A) The problem of scarcity can best be overcome in a system of mixed capitalism B) Ample regulation of business by the government will maximize the public's best interests C) The market system works best when resources are free to move from one use to another D) Self-interest in a market system will automatically promote the public interest as well

D) Self-interest in a market system will automatically promote the public interest as well

Laissez-faire capitalism limits the government's economic functions to the following, except: Question 22 options: A) Preventing individuals and firms from coercing others B) Establishing a legal environment to enforce contracts among individuals C) Protecting private property rights D) Setting prices of individual goods and services

D) Setting prices of individual goods and services

Sometimes, public goods whose benefits are less than their costs still get produced because: Question 8 options: A) Of externalities in production B) The marginal benefit is still larger than the marginal cost C) Of market failures D) The benefits accrue to politically powerful government officials and their constituents

D) The benefits accrue to politically powerful government officials and their constituents

(Last Word) Which of the following best illustrates the post hoc, ergo protector hoc fallacy?

I took the day off to go to the beach, and that's why it rained.

Which would cause an increase in the supply curve of cell-phone services? Question 2 options: A) A decrease in the wages of phone-company workers B) An increase in the taxes paid by cell-phone service providers C) A decrease in a subsidy given to cell-phone service providers D) An increase in the price of cell-phone services

NOT CORRECT: C) A decrease in a subsidy given to cell-phone service providers OR D) An increase in the price of cell-phone services

Economic models do not reflect the full complexity of reality, but instead are based on:

Simplifications

The process of observing real-world behavior, developing hypothesis, testing them against facts, then using the results to construct theories is called.

The scientific method

(Last Word) If variables X and Y are positively correlated, this means that:

causation may or may notexist between X and Y.

The process of producing and accumulating capital goods is called

investment.