ECON 245- quizes 1-3 so far

Which of the following is correct? -All of the above are correct. -Because economists believe that people pursue their best interests, they are not interested in how people interact. -The word economy comes from the Greek word for "rational thinker." -Economists study the management of scarce resources.

Economists study the management of scarce resources.

If Iowa's opportunity cost of corn is lower than Oklahoma's opportunity cost of corn, then -Oklahoma should produce just enough corn to satisfy its own residents' demands. -Iowa has a comparative advantage in the production of corn. -Iowa has an absolute advantage in the production of corn. -Iowa should import corn from Oklahoma.

Iowa has a comparative advantage in the production of corn.

Sometimes economists disagree because their values differ. Which of the following instances best reflects this source of disagreement? -One economist believes that when income taxes are cut, people will increase their spending; another economist believes that when income taxes are cut, people will increase their saving. -One economist believes the North American Free Trade Agreement (NAFTA) has led to a loss of American jobs; another economist disputes this claim. -One economist believes that, prior to the Civil War, slavery contributed to economic growth in the South; another economist believes that slavery held back the South's economic growth. -One economist advises against increases in sales taxes because she thinks such increases are unfair to low-income people; another economist disputes the idea that increases in sales taxes are unfair to low-income people.

One economist advises against increases in sales taxes because she thinks such increases are unfair to low-income people; another economist disputes the idea that increases in sales taxes are unfair to low-income people.

If the government were to intervene and set a wage for unskilled labor above the market wage, then we would expect, relative to the market outcome, -None of the above is correct. -a decrease in the number of unskilled jobs available. -an increase in the number of unskilled jobs available. -a decrease in the number of workers wanting unskilled jobs.

a decrease in the number of unskilled jobs available

A society allocates its scarce resources to various uses. These scarce resources include -All of the above are correct. -land. -machines. -people.

all of the above are correct

Which of the following could reduce economic efficiency? -All of the above are correct -laws that encourage lawsuits -policies that impose significant restrictions on international trade -policies that redistribute income

all of the above are correct

Suppose the U.S. and Japan both produce airplanes and televisions and the U.S. has a comparative advantage in the production of airplanes while Japan has a comparative advantage in the production of televisions. If the U.S. exports airplanes to Japan and imports televisions from Japan, -all individuals in both countries will be better off. -both countries, as a whole, will be worse off. -Correct! both countries, as a whole, will be better off. -all individuals in both countries will be worse off.

both countries, as a whole, will be worse off.

A friend of yours asks you why market prices are better than government-determined prices. Because you understand economic principles, you say that market-determined prices are better because they generally reflect -both the value of a good to society and the cost of making it. -neither the value of a good to society nor the cost of making it. -the value of a good to society, but not the cost of making it. -the cost of making a good to society, but not its value.

both the value of a good to society and the cost of making it.

In economics, capital refers to -the money households use to purchase firms' output. -stocks and bonds. -buildings and machines used in the production process. -the finances necessary for firms to produce their products.

buildings and machines used in the production process.

Economists speaking like policy advisers make -positive statements. -claims about how the world is. -claims about how the world should be. -descriptive statements.

claims about how the world should be

In a particular country in 1998, the average worker needed to work 40 hours to produce 100 units of output. In that same country in 2008, the average worker needed to work 36 hours to produce 72 units of output. In that country, the productivity of the average worker -decreased between 1998 and 2008, so we would expect inflation to have decreased accordingly. -increased between 1998 and 2008, so we would expect the standard of living to have increased accordingly. -increased between 1998 and 2008, so we would expect inflation to have increased accordingly. -decreased between 1998 and 2008, so we would expect the standard of living to have decreased accordingly.

decreased between 1998 and 2008, so we would expect the standard of living to have decreased accordingly.

Market failure can be caused by -externalities and market power. -low consumer demand. -equilibrium prices. -high prices and foreign competition.

externalities and market power

If US workers can produce everything in less time than Mexican workers, it is not possible for the US to gain from trade with Mexico. true or false

false

In one month, Moira can knit 2 sweaters or 4 scarves. In one month, Tori can knit 1 sweater or 3 scarves. Moira's opportunity cost of knitting scarves is lower than Tori's opportunity cost of knitting scarves. true or false

false

Inflation measures the increase in the quantity of goods and services produced from each hour of a worker's time. True or False

false

The goal of President Obama's stimulus package and increased government spending following the deep economic downturn in 2008 and 2009 was to reduce inflation. True or False

false

The invisible hand ensures that economic prosperity is distributed equally. True or False

false

With careful planning, we can usually get something that we like without having to give up something else that we like. True or False

false

Zora can produce 4 quilts in a week and she can produce 1 corporate website in a week. Lou can produce 9 quilts in a week and he can produce 2 corporate websites in a week. Zora has the comparative advantage in quilts and the absolute advantage in neither good, while Lou has the comparative advantage in corporate websites and the absolute advantage in both goods. true or false

false

A variety of fuels can be used to generate electricity. Considering only the availability of the fuel and not the cost of converting it into electricity, which of the following fuels is most scarce? ​solar energy ​fossil fuel ​hydro-power ​wind power

fossil fuel

By definition, imports are -limits placed on the quantity of goods leaving a country. -goods in which a country has an absolute advantage. -people who work in foreign countries. -goods produced abroad and sold domestically.

goods produced abroad and sold domestically

The basic principles of economics suggest that -All of the above are correct. -markets are seldom if ever, a good way to organize economic activity. -government should become involved in markets when trade between countries is involved. -government should become involved in markets when those markets fail to produce efficient or fair outcomes.

government should become involved in markets when those markets fail to produce efficient or fair outcomes

Which of the following is an important cause of inflation in an economy? -increases in productivity in the economy -lack of property rights in the economy -the influence of positive externalities on the economy -growth in the quantity of money in the economy

growth in the quantity of money in the economy

Economists at the Department of Justice -track the behavior of the nation's money supply. -help enforce the nation's antitrust laws. -prepare the federal budget. -advise Congress on economic matters.

help enforce the nations antitrust laws

Just like models constructed in other areas of science, economic models -avoid the use of diagrams and equations. -incorporate assumptions that contradict reality. -incorporate all details of the real world. -complicate reality.

incorporate assumptions that contradict reality

In the early 1980s, U.S. economic policy was directed toward reducing inflation. What would you have expected to observe during this short period of time? -Inflation fell and unemployment fell. -Inflation and unemployment were both unaffected. -Inflation fell and unemployment was unchanged. -Inflation fell and unemployment increased.

inflation fell and unemployment increased

President Truman once said he wanted to find a one-armed economist because when he asked his economists for advice, they always answered, "On the one hand, ... On the other hand, ..." Truman's observation that economists' advice is not always straightforward -is rooted in the principle that people face tradeoffs. -More than one of the above is correct. -indicates that economists recognize that there are opportunity costs associated with policy decisions. -confirms that economists are not suited to be presidential advisers.

more than one of the above is correct

Nick and Rosa are farmers. Each one owns a 12-acre plot of land. The following table shows the amount of corn and rye each farmer can produce per year on a given acre. Each farmer chooses whether to devote all acres to producing corn or rye or to produce corn on some of the land and rye on the rest. corn rye nick 20 4 rosa 28 7

nick - corn rye 20x12=240 4x12=48 rosa corn rye 28x12=336 12x7=84 you then graph this and can clearly see that rosas demand line is higher that nicks which mean she can produce more corn and rye in a 12 acre plot that nick nicks opportunity cost of producing 1 bushel of rye =20/4= 5 bushels of rye rosas opportunity cost of producing 1 bushel of rye - 28/7= 4 bushels of corn because nick has a higher opportunity cost of producing rye than rosa, rosa has a comparative advantage in production of rye and nick has a comparative advantage in the production of corn

Which of the following is not subject to scarcity?​ ​steel ​water none of the above ​diamonds

none of the above

"Ensuring that Social Security is financially sound for future generations is an important use of taxpayer dollars" is an example of a -positive economic statement. -statement made by an economist working as a scientist. -judgment based on evaluation of evidence, not values. -normative economic statement.

normative economic statement

What are normative statements?

normative statements derive from an opinion or a point of view - Example of a normative statement- we ought to do more to help the poor

Economists believe that production possibilities frontiers -always have a bowed shape. -often have a bowed shape. -never have a bowed shape. -rarely have a bowed shape.

often have a bowed shape

When economists are trying to help improve the world, they are -in the realm of positive economics rather than normative economics. -scientists. -policy advisers. -in the realm of macroeconomics rather than microeconomics.

policy advisers

The difference between economists speaking as scientists or policy advisers boil down to the difference between -positive statements and normative statements. -true statements and false statements. -specific statements and general statements. -assumptions and theories.

positive statements and normative statements

Market power refers to the -power of the government to regulate a market. -power of a single person or small group to influence market prices. -importance of a certain market in relation to the overall economy. -ability of a person or small group to successfully market new products.

power of a single person or small group to influence market prices

A professor spends 10 hours per day giving lectures and writing papers. For the professor, a graph that shows his various possible mixes of output (lectures given per day and papers written per day) is called his -production possibilities frontier. -consumption possibilities frontier. -line of tastes. -trade-off curve.

production possibilities frontier

The fact that different countries experience different standards of living is largely explained by differences in those countries' -productivity levels. -locations. -None of the above is correct. Economists are puzzled by differences in standards of living around the world. -populations.

productivity levels

The overriding reason why households and societies face many decisions is that -goods and services are not scarce. -resources are scarce. -incomes fluctuate with business cycles. -people, by nature, tend to disagree.

resources are scarce

Resources are -scarce for households and scarce for economies. -plentiful for households and plentiful for economies. -plentiful for households but scarce for economies. -scarce for households but plentiful for economies.

scarce for households and scarce for economies

Suppose the United States has a comparative advantage over Mexico in producing pork. The principle of comparative advantage asserts that -the United States should refrain altogether from producing pork and import all of what it requires from Mexico. -the United States should produce more pork than what it requires and export some of it to Mexico. -the United States should produce a moderate quantity of pork and import the remainder of what it requires from Mexico. -Mexico has nothing to gain from importing United States pork.

the United States should produce more pork than what it requires and export some of it to Mexico.

In most societies, resources are allocated by -a small number of central planners. -those firms that use resources to provide goods and services. -the combined actions of millions of households and firms. -a single central planner.

the combined actions of millions of households and firms

Which of the following would likely be studied by a microeconomist rather than a macroeconomist? -the effect of foreign direct investment on economic growth -the effect of a war on government spending -the effect of a sales tax on the cigarette industry -the effect of an investment tax credit on the economy's capital stock

the effect of a sales tax on the cigarette industry

During the 1990s, the United Kingdom experienced low levels of inflation while Turkey experienced high levels of inflation. A likely explanation of these facts is that -the United Kingdom has a better education system than Turkey. -the rate of growth of the quantity of money was slower in the United Kingdom than in Turkey. -there are more instances of market power in Turkey than in the United Kingdom. -workers in Turkey are more productive than workers in the United Kingdom.

the rate of growth of the quantity of money was slower in the United Kingdom than in Turkey

During the 1990s, the United Kingdom experienced low levels of inflation while Turkey experienced high levels of inflation. A likely explanation of these facts is that -the United Kingdom has a better education system than Turkey. -the rate of growth of the quantity of money was slower in the United Kingdom than in Turkey. -there are more instances of market power in Turkey than in the United Kingdom. -workers in Turkey are more productive than workers in the United Kingdom.

the rate of growth of the quantity of money was slower in the United Kingdom than in Turkey.

When two countries trade with one another, it is most likely because -some people involved in the trade do not understand that one of the two countries will become worse-off because of the trade. -the wealthy people in each of the two countries are able to benefit, through trade, by taking advantage of other people who are poor. -the opportunity costs of producing various goods are identical for the two countries. -the two countries wish to take advantage of the principle of comparative advantage.

the two countries wish to take advantage of the principle of comparative advantage.

An outcome is said to be efficient if an economy is getting all it can from the scarce resources it has available. True or False

true

If new government regulations designed to protect wetlands remove very productive farmland from production, then the production possibilities frontier will shift inward.

true

In economics, graphs serve two purposes: they offer a way to visually express ideas, and they provide a way of finding and interpreting patterns when analyzing economic data. true or false

true

International trade can make some individuals within a country worse off, even as it makes the country as a whole better off. true or false

true

Suppose Hank and Tony can both produce corn. If Hank's opportunity cost of producing a bushel of corn is 2 bushels of soybeans and Tony's opportunity cost of producing a bushel of corn is 3 bushels of soybeans, then Hank has the comparative advantage in the production of corn. true or false

true

The cost of an action is measured in terms of foregone opportunities. True or False

true

The Council of Economic Advisers -was created in 1946 and consists of three members and a staff of several dozen economists. -was created in 1776 and consists of thirty members and a staff of a dozen economists. -was created in 1946 and consists of thirty members and a staff of a dozen economists. -was created in 1776 and consists of three members and a staff of several dozen economists.

was created in 1946 and consists of three members and a staff of several dozen economists.

The opportunity cost of an item is -always less than the dollar value of the item. -always greater than the cost of producing the item. -the number of hours that one must work in order to buy one unit of the item. -what you give up to get that item.

what you give up to get that item

evaluating normative statements involve values as well as facts true or false

true

Barb and Jim run a business that sets up and tests computers. Assume that Barb and Jim can switch between setting up and testing computers at a constant rate. The following table applies. ​ ​ Minutes Needed toNumber of Computers Set Up or Tested in a 40-Hour Week Set Up 1 Computer Test 1 Computer Computers Set UpComputers Tested Barb48?5040 Jim30408060 ​ Refer to Table 3-12. Which of the following points would not be on Barb's production possibilities frontier, based on a 40-hour week? -(0 computers set up, 40 computers tested) -(30 computers set up, 16 computers tested) -(8 computers set up, 32 computers tested) -(25 computers set up, 20 computers tested)

-(8 computers set up, 32 computers tested)

What are the ten principles of economics?

1. People face trade-offs 2. The cost of something is what you give up to get it 3. Rational people think at the margin 4. People respond to incentives 5. Trade can make everyone better off 6. Markets are usually a good way to organize economic activity 7. Governments can sometimes improve market outcomes 8. A country's standard of living depends on its ability to produce goods and services 9. Prices rise when the government prints too much money 10. Society faces a short-run trade-off between inflation and unemployment

The business cycle refers to fluctuations in economic activity such as employment and production. True or False

true