econ

A market where no single buyer or seller can influence the price is a: -factor market. -competitive market. -buyer's market. -seller's market.

competitive market.

Sabrina has gone out to lunch three times this week. She has some extra money, so she decides to go out to lunch a fourth time. Which economic principle does this statement BEST represent? - The true cost of something is its opportunity cost. - There are gains from trade. - Choices are necessary because resources are scarce. - "How much" is a decision at the margin.

"How much" is a decision at the margin.

You decide whether to eat one more slice of cheesecake based on how hungry you feel. Which economic principle does this statement BEST represent? - The true cost of something is its opportunity cost. - "How much" is a decision at the margin. - Choices are necessary because resources are scarce. - People respond to incentives, exploiting opportunities to make themselves better off.

"How much" is a decision at the margin.

(Scenario: The United States and Germany) Use Scenario: The United States and Germany. If Germany produces 300 tons of aluminum, how many tons of barley can it produce? Scenario: The United States and Germany Two countries, the United States and Germany, produce two goods, barley (B) and aluminum (A). Each has a linear production possibility frontier in both goods. If the United States spends all of its available resources to produce barley, it can produce 500 tons of barley and no aluminum. If it uses all of its resources to produce aluminum, it can produce 250 tons of aluminum and no barley. If Germany spends all of its available resources producing barley, it can produce 400 tons of barley, and if it spends all of its resources on the production of aluminum, it can produce 400 tons of aluminum. -300 -200 -400 -100

100

(Figure: Speedboats and Pomegranates I) Use Figure: Speedboats and Pomegranates I. The figure shows the production possibility frontiers for two countries that produce only pomegranates and speedboats. The axes of the two graphs are measured in equivalent units. The United States is operating at point M, and Belarus is operating at point N. The opportunity cost of producing an additional ton of pomegranates would be greater in: -neither; the opportunity cost would be the same in both countries. -United States -Belarus. -There is not enough information to answer the question.

Belarus.

The demand curve for meals at a local Chick-fil-A will shift to the left if: -Chick-fil-A offers a free sandwich to people who sign up for their new rewards app. -the price of gasoline falls in the area. -the price of a meal at Chick-fil-A rises. -incomes increase, and Chick-fil-A meals are a normal good.

Chick-fil-A offers a free sandwich to people who sign up for their new rewards app.

Which of the following statements describes efficiency? I. A situation in which producers make the highest profits possible. II. A situation in which we cannot produce more of one good without producing less of another good. III. A situation in which we produce the goods and services that people value most highly. -I and II -I, II, and III -I only -II and III

II and III

Suppose everyone in a small town decided to save more and spend less. How will this affect an economy? (In macroeconomics, this is called the paradox of thrift.) - It will increase the overall level of income, since other groups will spend more. -It will cause the prices of many goods to increase. -It will have no impact, since a small town makes up a small portion of an economy. -It will decrease the overall level of income, since one person's spending is someone else's income.

It will decrease the overall level of income, since one person's spending is someone else's income.

Romulus and Remus each consume 2 loaves of bread at the current price. If Romulus values each loaf of bread less than Remus values each loaf of bread, then: -Romulus's willingness to pay for the last loaf of bread is greater than Remus's. -Remus's consumer surplus is greater than Romulus's. -Remus's willingness to pay for the last of bread is greater than Romulus's. -Romulus's consumer surplus is greater than Remus's.

Remus's consumer surplus is greater than Romulus's.

The circular-flow diagram ignores a number of real-world complications in the interest of simplicity. Which of the following factors is ignored? -That many sales that firms make are not to households but to other firms. -The role of the market for goods and services in the circular flow. -The money flows to factors of production. -The flows of money between participants.

That many sales that firms make are not to households but to other firms.

Specialization in production was the starting point for Adam Smith in: - Das Kapital. - Free to Choose. - The Wealth of Nations. - The General Theory.

The Wealth of Nations.

Suppose Pennsylvania produces only steel and barley, with fixed amounts of land, labor, and capital resources. Which scenario BEST sets the stage for economic growth? -The unemployment rate in Pennsylvania rises from 5% to 6%. -The United States imports more and more low-cost steel from Canada. -The percentage of Pennsylvania residents with a university degree rises from 15% to 23%. -The state experiences a devastating drought.

The percentage of Pennsylvania residents with a university degree rises from 15% to 23%.

When the Chicago city manager receives complaints that the municipal courts are not fully accessible to individuals with disabilities, she responds that the $1 million improvement needed to address the problem will not happen because "that money could be spent building lavatory space for people with disabilities." Which economic principle does this statement BEST represent? -When markets don't achieve efficiency, government intervention can improve society's welfare. -"How much" is a decision at the margin. -The true cost of something is its opportunity cost. -Markets move toward equilibrium.

The true cost of something is its opportunity cost.

When the economy experiences shortfalls or excesses of spending, government policies can be used to address the imbalances. Which statement does NOT address such imbalances, realized during the coronavirus pandemic? -The government reduced taxes to help workers. -There is fear of recession and uncertainty about the future in a post COVID-19 reality. -Congress passes a $4 trillion relief package for workers and businesses affected by the coronavirus pandemic. -The federal government provided cash payments to workers unemployed due to pandemic.

There is fear of recession and uncertainty about the future in a post COVID-19 reality.

The price of good X falls and the demand for good Y decreases. We can conclude that: -X and Y are complements. -X and Y are substitutes. -X and Y are substitutes in production. -X is a normal good.

X and Y are substitutes.

Saying that an unemployment rate of 8% is too high is: -an example of absolute advantage. -a positive statement. -a normative statement. -the circular-flow model.

a normative statement.

Which of the following factors is key to a well-functioning market? -greater government involvement to maximize efficiency -a right of individuals and firms to use and dispose of their private property as they see fit -a reduced role for government in market activities -outcomes that are equitable for both consumers and producers

a right of individuals and firms to use and dispose of their private property as they see fit

In a situation in which there are technological improvements, we generally see: -a shift in the production possibility frontier inward. -a transition to increased unemployment. -the production possibility frontier unchanged. -a shift in the production possibility frontier outward.

a shift in the production possibility frontier outward.

An increase in price and an ambiguous change in quantity are MOST likely caused by: -a shift to the left of the demand curve and no shift of the supply curve. -a shift to the left of the supply curve and a shift to the right of the demand curve. -a shift to the left of the supply curve and no shift of the demand curve. -a shift to the right of the supply curve and a shift to the left in demand.

a shift to the left of the supply curve and a shift to the right of the demand curve.

Which factor is MOST likely to shift the supply curve for milk to the left? -new dairy farms entering the market -a decrease in the price of feed given to dairy cows -a tax on each gallon of milk produced -an increase in household income, milk being a normal good

a tax on each gallon of milk produced

Given that people usually exploit opportunities to make themselves better off, which of the following policies is MOST likely to reduce road congestion in Los Angeles (the worst traffic city in America)? -a limited number of free parking passes for the first 100 who arrive prior to 6 A.M. -a toll road that requires each car to pay a congestion fee to enter the city center -an increase in the price of bus fare to and from the city -allowing electric cars to ride in the reserved bus lanes

a toll road that requires each car to pay a congestion fee to enter the city center

If an economy is efficient: - all opportunities to make people better off without making other people worse off have been exploited. - prices are the lowest they can possibly be. - all goods are produced at their maximum price and quality. -resources are still available to produce specific consumer goods that are more desirable.

all opportunities to make people better off without making other people worse off have been exploited.

(Figure: Comparative Advantage) Use Figure: Comparative Advantage. Canada has an absolute advantage in producing: -apples only. -neither apples nor cheese. -both apples and cheese. -cheese only.

apples only.

(Figure: Dreamliners and Small Jets) Use Figure: Dreamliners and Small Jets. On this figure, points A, B, E, and F indicate: -increasing opportunity costs for dreamliners but decreasing opportunity costs for small jets. -that society wants small jets more than it wants dreamliners. -combinations of dreamliners and small jets that society can produce, using all of its factors efficiently. -constant opportunity costs for dreamliners and increasing opportunity costs for small jets.

combinations of dreamliners and small jets that society can produce, using all of its factors efficiently.

A trade-off involves weighing -costs and benefits. -external costs. -social costs. -opportunity costs.

costs and benefits.

If a demand curve is downward sloping, a decrease in supply with no change in demand will lead to a(n) _____ in the equilibrium quantity and a(n) _____ in the equilibrium price. -decrease; increase -decrease; decrease -increase; decrease -increase; increase

decrease; increase

The law of demand states that, other things equal, as the price: -increases, the quantity demanded will increase. -decreases, the demand curve will shift to the right. -decreases, the demand curve will shift to the left. -decreases, the quantity demanded will increase.

decreases, the quantity demanded will increase.

An economy has achieved _____ if it has not passed up any opportunities to make some people better off without making others worse off. -utility -efficiency -a global maximum -equity

efficiency

If the price of a good exceeds the competitive equilibrium price, then: -firms produce more than the efficient quantity. -producers sell more than the competitive quantity. -consumers purchase more than the competitive quantity. -firms produce less than the efficient quantity.

firms produce more than the efficient quantity.

Economic signals: -never provide adequate information to consumers. -guide decision makers in their transactions in the marketplace. -lead to the creation of property rights. -affect consumers' willingness to pay.

guide decision makers in their transactions in the marketplace.

If Isabella drives to a Kansas City, 120 miles from Manhattan, Kansas (home of Kansas State University) to do her back-to-school shopping, this will: - help the city because people from small towns usually buy things that people in big cities don't want. - hurt Isabella's community because Isabella's spending will be income for people in the large city. - hurt the city because Isabella will take the goods that she purchases back home to her small town. - help Isabella's community because Isabella's shopping in the big city leaves more goods for the other small-town residents to buy.

hurt Isabella's community because Isabella's spending will be income for people in the large city.

An economic model: -is a simplified version of reality used to understand real-world economic conditions. -allows nothing to change in the economic situation that is being described. -often leads to faulty conclusions because of the "all things equal" assumption. -is useful in explaining past, present, and future economic outcomes.

is a simplified version of reality used to understand real-world economic conditions.

Trade can be beneficial to an economy because: -it eliminates unemployment. - it results in a more inefficient use of resources overall. -it enables more goods and services to be obtained at a lower opportunity cost. -it prevents specialization in activities in which countries have a comparative advantage.

it enables more goods and services to be obtained at a lower opportunity cost.

A decrease in efficiency means that an economy has: - decreased the incentives of its citizens to follow their own self-interest. - decreased the equity of its distribution of goods and services. - made more people worse off without making others better off. - reduced its opportunity costs.

made more people worse off without making others better off.

If a market is in equilibrium: -the equilibrium will persist unless the government intervenes. -it must be because the government has intervened in the market. -there are opportunities for some people to make themselves better off. -no individual will be better off doing something different.

no individual will be better off doing something different.

When a market is in equilibrium, and there is no outside intervention to change the equilibrium price: -some mutually beneficial trades may be missed. -no mutually beneficial trades are missed. -total surplus is minimized. -the marginal benefit to consumers is greater than the marginal cost to producers.

no mutually beneficial trades are missed.

(Table: Production of Zucchini and Eggplant in Nutley Township) Use Table: Production of Zucchini and Eggplant in Nutley Township. This table shows the production possibility frontier for Nutley Township. Suppose Nutley Township produces 15 bushels of zucchini and 45 bushels of eggplant; this combination is: -allocatively efficient. -productively efficient. -both allocatively and productively efficient. -neither productively nor allocatively efficient.

productively efficient.

Which of the following is a microeconomic topic? -what the government will do to address unemployment -reasons why inflation is rising -reasons why a consumer buys more cheese -the effect of the budget deficit on the rate of interest

reasons why a consumer buys more cheese

Which of the following topics would be studied in macroeconomics? -the effects of a tax reduction on the profits of Home Depot -changes in airline travelers' vacation plans due to changes in the prices of airline tickets -recessions -unemployment among workers displaced as more firms move to cloud-based applications

recessions

(Figure: Cell Phones and Automobiles) Use Figure: Cell Phones and Automobiles. Technological improvements will likely: -leave the production possibility frontier unchanged. -shift the production possibility frontier outward to PPF2. -shift the production possibility frontier inward to PPF1. -lead to increased unemployment.

shift the production possibility frontier outward to PPF2.

The total producer surplus in the California cheese market is the: -sum of the individual producer surpluses in this market. -total cost of selling cheese in California. -total revenue of the cheese producers in California. -sum of all prices paid multiplied by the number of pounds of cheese sold.

sum of the individual producer surpluses in this market.

(Scenario: The United States and Germany) Use Scenario: The United States and Germany. Given this information, the country that has the absolute advantage in barley is _____, and the country that has the absolute advantage in aluminum is _____. Scenario: The United States and Germany Two countries, the United States and Germany, produce two goods, barley (B) and aluminum (A). Each has a linear production possibility frontier in both goods. If the United States spends all of its available resources to produce barley, it can produce 500 tons of barley and no aluminum. If it uses all of its resources to produce aluminum, it can produce 250 tons of aluminum and no barley. If Germany spends all of its available resources producing barley, it can produce 400 tons of barley, and if it spends all of its resources on the production of aluminum, it can produce 400 tons of aluminum. -Germany; the United States -Germany; Germany -the United States; the United States -the United States; Germany

the United States; Germany

An increase in the price of strawberries causes strawberry jam producers and consumers to expect that the price of strawberry jam will rise in the future. In the market for strawberry jam, both the equilibrium price and the equilibrium quantity increase. It must be the case that: -the demand for strawberry jam increased by more than the supply of strawberry jam increased. -the supply of strawberry jam decreased by more than the demand for strawberry jam decreased. -the supply of strawberry jam decreased by more than the demand for strawberry jam increased. -the demand for strawberry jam increased by more than the supply of strawberry jam decreased

the demand for strawberry jam increased by more than the supply of strawberry jam decreased

A sushi chef prepares a California roll for a customer. Which of the following factors is physical capital? - the sushi chef - the skills the sushi chef has acquired that enables him to perform this feat - the ingredients used to prepare the dish - the knife use to cut the sushi

the knife use to cut the sushi

A shift of the demand curve for fried chicken would NOT be caused by a change in: -income. -the price of fried chicken. -the price of pizza. -the popularity of fried chicken.

the price of fried chicken.

Aminah has a calculus exam tomorrow. However, a free lecture by one of her favorite authors is taking place this evening. Aminah decides to attend the lecture instead of studying for her exam. Aminah's opportunity cost of attending the lecture is: -the time spent listening to the lecture. -the transportation and time cost of getting to the lecture itself plus the reduction in her calculus exam grade as a result of not studying tonight. -the time spent getting to the lecture. -not relevant, since no money is involved.

the transportation and time cost of getting to the lecture itself plus the reduction in her calculus exam grade as a result of not studying tonight.

Suppose one parent picks up their child from day care, while the other parent stays home to make dinner. This is an example of the principle that: -markets usually lead to efficiency. -there are gains from trade. -markets move toward equilibrium. -government policies can change spending.

there are gains from trade.

Market equilibrium occurs when: -quantity demanded equals quantity supplied. -the market clears. -there is no incentive for prices to change in the market, quantity demanded equals quantity supplied, and the market clears. -there is no incentive for prices to change.

there is no incentive for prices to change in the market, quantity demanded equals quantity supplied, and the market clears.

Economists may disagree about policies because they: -disagree for the sake of discussion. -approach issues using the same sets of values. -use different economic models. -only consider issues in positive economics and not normative economics.

use different economic models.

(Figure: Apple Cider and Soybeans) Use Figure: Apple Cider and Soybeans. If this economy is producing at point A and wants to produce at point B, it must: -trade with another country. -use its existing resources more efficiently, as opportunity costs are zero. -decrease production. -increase its resources.

use its existing resources more efficiently, as opportunity costs are zero.

A normative statement is a statement regarding: -the normalizing assumptions of an economic model. -what should be. -what is. -the forecast of a model.

what should be.

You can spend $300 on either a pair of new Air Jordan sneakers or a new skateboard. If you choose to buy the Air Jordans, the opportunity cost is: -$300. -your enjoyment of the new skateboard. -both the $300 and your enjoyment of the new skateboard. -impossible to determine.

your enjoyment of the new skateboard.