Econ Exam Review
Refer to Table 2-2. What is the opportunity cost to footville of increasing the production of shoes from 400 to 600
300
Arturo's opportunity cost of one burrito is
4/3 tacos and Dina's opportunity cost of one burrito is 2 tacos
refer to Figure 2-3, if this economy devotes all its resources to the production of dryers, then it will produce
80 dryers and 0 washers
Which of the following is correct?
A horizontal line has a zero slope, and a vertical line has an infinite slope.
Which of these actives will most likely impose an external cost
A postal worker smokes a cigarette in a crowded break room
Which of the following firms is likely to have the greatest market power?
A utility company
which of the following firms is likely to have the greatest market power?
A utility company
efficient production is represented by which point
A, B
It is not possible for this economy to produce at point
C
Eva wants to create a graph containing the prices of concert tickets and the corresponding quantities of concert tickets demanded by customers. She should use a
Coordinate system
In the circular-flow diagram, which of the following items flows from households to firms through the markets for goods and services
Dollars spent on goods and services
When the government implements such as progressive income tax rates, which of the following is likely to occur?
Equality is increased and efficiency is decreased
The terms equality and efficiency are similar in that they both refer to benefits to society. However they are different in that?
Equality refers to uniform distribution of those benefits and efficiency refers to maximizing benefits from scare resources
Henry can make a bird house in 3 hours and he can make a bird feeder in 1 hour. The opportunity cost to Henry of making a bird house is 1/3 bird feeder.
False
If one producer has the absolute advantage in the production of all goods, then that same producer will have the comparative advantage in the production of all goods as well.
False
in an economy consisting of two people producing two goods, it is possible for one person to have the absolute advantage and the comparative advantage in both goods
False
If lowa's opportunity cost of corn is lower is than oklahoma's opportunity cost of corn then
Iwo has a comparative advantage in the production of corn
The term used to describe a situation in which markets do not allocate resources efficiently is
Market Failure
Consider two individuals — Marquis and Serena — each of whom would like to wear sweaters and eat tasty food. The gains from trade between Marquis and Serena are most obvious in which of the following cases?
Marqui's skill are such that he can produce only sweaters, and serena's skills are such that she can produce only tasty food
Which of the following statements exemplifies a principle of individual decision-making?
The cost of something is what you give up to get it
Suppose an economy produces two goods, food and machines. This economy always operates on its production possibilities frontier. Last year, it produced 1,000 units of food and 47 machines. This year experienced a technological advance in its machine-making industry. as a result, this year the society wants to produce 1,050 units of food and 47 machines. Which of the following statements is correct
The technological advance reduced the amount of resources needed to produce 47 machines, so these resources could be used to produce more food
which is the most accurate about statement
Trade can make everyone nation better off
which of the following is an example of a capital input
a computer
When society requires that firms reduce pollution, there is
a tradeoff because of reduced incomes to the firms owners and workers
.Which of the following transactions does not take place in the market for factors of production in the circular flow diagram?
a woman buys corn for dinner
duties of the council of economic advisers include
advising the president and writing the annul economic report of the president
trade
allows specialization, which reduces costs.
if the government were to intervene in a market economy and fix the price of visiting a healthcare provider below the market price, then we would expect, relative to the market outcome
an increase in the number of visits people want to make an decrease in the number of visits health care providers want to provide
Suppose your management professor has been offered a cooperate job with a 30 percent pay increase. he has decided to take the job. For him, the marginal
benefit of leaving was greater than marginal cost
The outer loop of the circular-flow diagram represents the flow of dollars in the economy. Which of the following is not measured in dollars and therefore does not appear on the outer loop?
capital
Positive statements are
claims about how the world is
coal is considered to be a nonrenewable energy source. Which of the following statements is correct
coal is a scare resource
you are considering staying in college another semester so that you can complete a major in economics. In deciding whether or not to stay you should
compare the cost of staying one more semester to the benefits of staying one more semester
Your professor loves her work teaching economics she has been offered other positions in the corporate world that would increase your income by 25%, but she has decided to continue working as a professor her decision would not change unless the marginal
cost of teaching increased
Your professor loves her work, teaching economics. She has been offered other positions in the corporate world that would increase her income by 25 percent, but she has decided to continue working as a professor. Her decision would not change unless the marginal
cost of teaching increased
The art in scientific thinking -- whether in chemistry, economics, or biology -- is
deciding which assumptions to make
Analysis of data on workers and those looking for work is conducted by economists at the
department of labor
Economics sometimes gives conflicting advice because
economists have different values and scientific judgemnts
which of the following is true about efficiency?
efficiency refers to the size of the economic pie; equality refers to how the pie is divided
in the market economy, who makes the decisions that guide most economic activity
firms and households
economists make assumptions to
focus their thinking on the essence of the problem at hand
instead of conducting laboratory experiments to generate data to their theories economists often
gather data from historical episodes f economic change
Instead of conducting laboratory experiments to generate data to test their theories, economists often
gather data from historical episodes of economic change
If an externality is present in a market, economic efficiency may be enhanced by?
government intervention
a circular-flow diagram is a model that
helps to explain how the economy is organized.
which of the following observations was made famous by Adam Smith in his book The wealth of Nations
households and firms interacting in markets are Guided by the Invisible Hand that leads them to desirable Market outcomes
The "Invisible hand" refers to?
how the decisions of households and firms lead to desirable market outcomes
Suppose that in Brazil total annual output is worth $600 million and people work 30 million hours. In Peru total annual output is worth $800 million and people work 50 million hours. Productivity is higher
in Brazil. Most variation in the standard of living across countries is due to differences in productivity.
Suppose the United States has a comparative advantage over Mexico in producing pork. The principle of comparative advantage asserts that:
in order to consume beyond its PPF, the United States should in produce more pork than what it requires and export some of it to mexico
which of the following statements is correct about the roles of economists
in trying to explain the world, economists are scientists; in trying to improve the world, they are policy advisers
in a particular country in 1998, the average worker needed to work 25 hours to produce 40 units of output. in the same country in 2008, the average worker needed to work 40 hours to produce 68 units. in that country, the productivity of the average worker
increased by 6.25 percent between 1998 and 2008
an increase in the overall level of prices in an economy is referred to as?
inflation
suppose the government taxes the wealthy at a higher rate than it taxes the poor and then develops programs to redistribute the tax revenue from the wealthy to the poor. This redistribution of wealth
is more equal but less efficient for society
an economy's production of two goods is efficient if
it is impossible to produce more of one good without producing less of the other
In the circular flow diagram,
labor flows from households to firms
circular flow diagram
labor flows from households to firms
which of the following statements about models is correct
models assume away irrelevant details
In the circular-flow diagram, which of the following is not a factor of production?
money
which of the following conclusions should not be drawn from observing this graph
no other factors besides the frequency of services affect the number of passengers
chole's College raises the cost of raises room and board per semester. This increases Chloe 's opportunity cost of attending college
only if the amount she would have to pay for room and board if she didn't attend college rose by less than the increase in the amount her college charges. An increase in opportunity cost reduces chloe's incentive to attend college
The point where both x and y are zero is known as the
origin
Where can an economy not produce
outside its production possibilities frontier
production possibilities frontier provides an illustration of the principle that
people face trade-offs
Candice is planning her activities for a hot summer day. She would like to go to the local swimming pool and see the latest blockbuster movie, but because she can only get tickets to the movie for the same time that the pool is open she can only choose one activity. This illustrates the basic principle that
people face tradeoffs
While pollution regulations yield the benefit of a cleaner environment and the improved health that comes with it, the regulations come at the cost of reducing the incomes of the regulated firms' owners, workers, and customers. This statement illustrates the principle that
people face tradeoffs
When the government redistributes income from the wealthy to the poor,
people work less and produce fewer goods and services
Refer to figure 2-4, Graph (A). Production is
possible at points J, K, L, and M, but efficient only at points J, L, and M.
Refer to Figure 2-4, Graph (a) and Graph (b). Which of the following is not a result of the shift of the economy's production possibilities frontier from graph A to graph b
production of one donut and four cups becomes efficient
Efficiency
refers to how much a society can produce with its resources. Equality refers to how evenly the benefits from using resources are distributed among members of society
fundamentally, economic deals with
scarcity
In a market economy, economic activity is guided by
self-interest and prices
in a market economy, economic activity is guided by
self-interest and prices
As a student, Jordyn spends 40 hours per week writing term papers and completing homework assignments. On one axis of her production possibilities frontier is measured the number of term papers written per week. On the other axis is measured the number of homework assignments completed per week. Jordyn's production possibilities frontier is a straight line if
she can switch between writing term papers and completing homework assignments at a constant rate.
Which of the following industries has a marginal cost that is close to zero
software
which of the following industries has a marginal cost that is close to zero
software
A rational decisionmaker?
takes an action only if the marginal benefit of that action exceeds the marginal cost of that action
prior to the collapse of communism, communist countries worked on the premise
the actions of government central planners
Suppose your management professor has been offered a corporate job with a 30 percent pay increase. He has decided to take the job. For him, the marginal
the benefit of leaving was greater than the marginal cost
You have driven 800 miles on a vacation and then you notice that you are only 15 miles from an attraction you hadn't know about, but would really like to see. In computing the opportunity cost of visiting this attraction you had not planned to visit, you should include...
the cost of driving the next 15 miles, but not the cost of driving the first 800 miles
People are willing to pay more for a diamond than for a bottle of water because
the marginal benefit if an extra diamond far exceeds the marginal benefit of an extra bottle of water
Acme Home Builders, Inc., has built 24 houses so far this year at a total cost to the company of $4.80 million. If the company builds a 25th house, its total cost will increase to $5.05 million. Which of the following statements is correct?
the marginal cost of the 25th house if it is build will equal 250,000
taking cause and effect into account, which of the following interpretations would be most reasonable regarding the relationship between coffee and hours without sleep
the more coffee a person drinks per day, the more time he can go without sleep
suppose a nation is currently producing a point inside its production possibilities frontier we know that
the nation is not using all available resources or is using inferior technology or both
The bowed-outward shape of the production possibilities frontier can be explained by the fact that
the opportunity cost of one good in terms of the other depends on how much of each good the economy is producing
Marginal benefit Sabrina gets from purchasing a third pair of gloves is
the total benefit she gets from purchasing three pairs of glove minus the total benefit she gets from purchasing two pairs of gloves
Timothy decides to spend four hours playing video games rather than attending his classes. His opportunity cost of playing games is
the value of knowledge he would have received had he attended his classes
Elena's aunt gave her $100 for her birthday with the condition that Elena buys herself something. In deciding how to spend the money, Elena narrows her options down to four choices: Option A, Option B, Option C, and Option D. Each option costs $100. Finally, she decides on Option B. The opportunity cost of this decision is
the value to Elena of the option she would have chosen had option B not been available
In the ordered pair (20, 30), 20 is the
the x-coordinate and the horizontal location of the point
When two variables have a positive correlation,
they tend to move in the same direction
suppose the cost of flying a 100-seat plane for airline is $50,000 and there are 10 empty seats on a flight the marginal cost of flying a passenger is
this cannot be determined from the information given
Which of the following do economics not generally regard as a legitimate eason for the government to intervene in a market
to protect an industry from foreign competition
what's is the most accurate statement about trade?
trade can make every nation better off
Assumptions can simplify the complex world and make it easier to understand
true
Economists devise theories, collect data, and then analyze these data in an attempt to verify or refute their theories.
true
Good assumptions simplify a problem without substantially affecting the answer.
true
The u.s. can gain from trade with germany even if it takes u.s workers fewer hours to produce every good than it takes german workers
true
Refer to figure 2-4, graph (a). the movement from point M to point K could be caused by
unemployment
which of the following is not an example of a group responding to an incentive
universities offer fewer online classes when they generate more revenue at the same cost than traditional classes
Economics is the study of how society manages its
unlimited wants and limited resources
In the simple circular-flow diagram, the flow of money from the firms to the markets for factors of production is called
wages. rent, and profit
