Econ Final
The transition from a planned to a market-oriented economy:
requires that property rights be redefined to allow private ownership.
Which of the following statements can NOT be made about production in the long run?
Total cost is greater than zero at a zero level of output.
Which of the following is NOT a feature used to distinguish among the four market models
Whether the firms in the market are proprietorships, partnerships, or corporations.
Which of the following is NOT a characteristic of a monopolistic market?
Widespread product differentiation is found in the market.
When developing a demand schedule, nonprice factors such as buyer taste are held constant because
a demand schedule focuses on how a product's price influences the amount buyers would purchase.
Which of the following is an example of an economic theory?
An explanation as to why raising the price of a product would cause people to buy less of that product.
You are given the following price-quantity information: ($10 and 180 units), ($15 and 150 units), ($20 and 120 units). This information would graph as:
a downward-sloping line and conform to the Law of Demand
Full employment occurs when the unemployment rate falls to:
a level that includes only the frictionally unemployed.
a shift of a production possibilities curve to the right.
rents, wages, interest, and profits.
Creative destruction benefits an economy because:
replacing old technology with new technology increases efficiency
John passes up an offer for a job paying $50,000 a year and, instead, starts his own business. His new business brings in $160,000 in sales during the first year, and his total costs for items such as materials, labor, equipment, shipping, and insurance come to $65,000.
$45,000.
John passes up an offer for a job paying $50,000 a year and, instead, starts his own business. His new business brings in $160,000 in sales during the first year, and his total costs for items such as materials, labor, equipment, shipping, and insurance come to $65,000.
$50,000.
The table below shows the marginal cost, in utility points, to an individual from running. What is the total cost of running four miles?
110 points
According to this production possibilities table, the opportunity cost of going from 120 to 160 million units of consumer goods is:
16 million units of capital goods.
Which of the following would cause an increase in the supply of automobiles?
A decrease in the cost of steel.
Which of the following statements relating to collective choice is true?
A low voter turnout may result when the marginal cost of voting exceeds its marginal benefit for a large number of individuals.
Which of the following statements about inflation is true?
A major flood that destroys an important crop could cause cost-push inflation
Which of the following is an example of a positive externality?
A person paints her house, which increases the value of her neighbor's house
Which of the following statements about oligopoly markets is true?
All of the above.
Which of the following is NOT found in a purely competitive market?
Barriers to entry.
Brian quit his job at a local restaurant to return to school full-time. Rachel was laid off after her employer purchased a computer that eliminated her job.
Brian is no longer in the labor force and Rachel is structurally unemployed.
Which of the following statements describing a market economy is FALSE?
Households only buy and businesses only sell.
Which of the following was NOT an objective of the New Deal?
Lowering agricultural prices, so people could afford to eat.
Which of the following is NOT a characteristic of the purely competitive market model?
Products are differentiated.
Which of the following is true?
Profit = Revenue - Costs.
Which of the following statements best describes the relationship among scarcity, economic decisions, and economic systems?
Scarcity imposes basic economic decisions on a society that are made through the type of economic system it chooses.
Which of the following statements about price elasticity is FALSE?
The demand for a necessity should be more price elastic than the demand for a luxury
Which of the following would cause the demand curve for a product to shift to the right today?
The expectation that the product will be unavailable in the future.
Firm A is concerned about the reactions of buyers to the price it sets for its product. Firm B is concerned about the reactions of buyers and its few rivals to the price it sets for its product. Firm C has no control over the price at which its product is sold. Firms A, B, and C are, respectively:
a monopolistic competitor, an oligopolist, and a pure competitor.
Economic growth can be illustrated by:
a shift of a production possibilities curve to the right.
If producers in this market charged a price of $2, there would be:
a shortage of 300 units
Diminishing marginal utility is the decrease in:
additional satisfaction when consuming additional units of a good or service
To maximize satisfaction from purchasing several different goods and services, expenditures must be allocated in a way that:
adds the most utility for the purchaser's money.
You would expect a society with a traditional economy to have most of its economic activity directed towards
agriculture.
The long run differs from the short run in that
all of the above
The expected reaction to a shortage is:
all of the above.
Inflation is undesirable because it leads to:
all of these answers are correct.
Equity as defined in a market system requires that every person receive:
an amount of goods and services based on their contribution to production.
The definition of the boundaries of a market can be extremely important in court cases involving
antitrust laws
To maximize economic well-being, a person should:
balance the benefits and costs of different courses of action and select the one that adds most to satisfaction.
The purpose of a price ceiling is to keep the actual price charged in a market:
below an equilibrium price that is considered too high, and shortages may develop.
The main determinants of the boundaries of a market are whether:
buyers view the sellers' products as close substitutes for one another, and whether sellers compete for buyers in the same geographic area
Planning failure occurs when:
centralized decision making produces a problem for society or fails to achieve society's goals.
Incorrect When a firm's long-run average total cost does not change as output increases, it is experiencing
constant returns to scale.
John passes up an offer for a job paying $50,000 a year and, instead, starts his own business. His new business brings in $160,000 in sales during the first year, and his total costs for items such as materials, labor, equipment, shipping, and insurance come to $65,000.
continue this business because he is earning an economic profit.
The disappearance of cassette tape recordings is best explained by:
creative destruction caused by the development of compact discs and mp3 players.
A decrease in the demand for cameras using conventional film caused by the development of digital cameras is an example of:
creative destruction.
Cyclical and structural unemployment differ in that:
cyclically unemployed persons have the possibility of regaining their jobs, while structurally unemployed persons have no possibility of regaining their jobs.
if the price of a good or service decreases and all nonprice factors are held constant, the quantity supplied will
decrease
If there were a decrease in the market demand for a product with no change in market supply, the equilibrium price would:
decrease and the equilibrium quantity decrease
A production possibilities table or graph shows:
different amounts of two goods that an economy can produce at full employment with resources and technology held constant.
Over the long run, a monopolistically competitive seller will:
earn only a normal profit and not operate at the lowest point on its long-run average total cost curve.
In the short run, all factors of production are:
either fixed or variable.
The factor of production that organizes economic activity and bears the risk of success or failure in a business venture is:
entrepreneurship.
The "shutdown loss" for a firm is:
equal to total fixed cost.
GDP measures the value of all:
finished goods and services produced in one year.
A business incurs:
fixed costs in the short run but not the long run.
In economics, scarcity refers to the fact that there are not enough:
goods and services to completely satisfy everyone's wants and needs.
A socialist system
has collective ownership of many factors of production and attempts to equalize the distribution of income.
A general partner in a partnership:
has unlimited liability for the business' debts.
The acquisition of General Motors by Ford Motor Company would be an example of a:
horizontal merger.
Given that Q = 300 - 60P, where Q is quantity and P is price:
if P = $2, then Q = 180 and if P = $5, then Q = 0.
According to the invisible hand doctrine:
in a system of free and open competition, it is in producers' best interests to provide buyers with what they want, which best serves the interests of society
If there were an increase in the market demand for a product with no change in market supply, the equilibrium price would:
increase and the equilibrium quantity increase.
Microeconomics is the study of:
individual decision-making units, such as households and business firms.
Microeconomics, unlike macroeconomics, focuses on:
individual households and businesses, and how they make decisions.
According to public choice theory:
individuals try to maximize their own well-being when making collective choices.
Price elasticity of demand:
is a measure of buyers' sensitivities to a change in the price of a product
n the long run, a firm in monopolistic competition will:
just break even with a normal profit.
In economics, it is usually assumed that the fundamental objective of a business firm is to maximize
profit or minimize loss
The invisible hand doctrine is most closely associated with
laissez-faire capitalism.
If an action by an individual has a negative external effect, the level of activity that maximizes society's net benefit is:
less than the level that maximizes the individual's net benefit.
o maximize its profit or minimize its loss by producing, a firm should operate where:
marginal revenue equals marginal cost.
When a market system causes a problem or cannot achieve a goal set by society there is:
market failure
Mutual interdependence refers to the:
market situation where there are so few sellers that each must weigh the reactions of its rivals to its policies.
Beginning in the mid-1980s, the Soviet Union, China, and other planned economies:
moved toward greater use of free markets and individual decision making.
Sellers incur losses over the long run in:
none of the market structures.
You would expect a monopolist to engage in:
nonprice competition aimed at making people more aware of the product itself.
According to the circular flow model, money flows from households to businesses, and resources flow from households to businesses in:
output markets and input markets, respectively.
The rule for maximizing satisfaction from purchasing goods and services is:
practiced by buyers in the real world.
A usury law on interest rates is an example of a:
price ceiling.
If supply increases and demand falls, then equilibrium:
price will decrease, but the effect on equilibrium quantity will depend on the magnitudes of the shifts in supply and demand.
An economy experiences inflation when:
prices are increasing.
If a firm sells 10,000 units of output at a price of $100 each, and has costs of $800,000 its:
profit equals $200,000.
In the short run, total cost increases:
slowly at first because a few variable factors can increase output significantly when they are combined with a given amount of fixed factors.
A monopolistically competitive seller has:
some control over the price of its product because of product differentiation.
If sellers in a purely competitive market are operating at a loss, then over the long run:
some sellers will leave the market and the remaining firms will eventually break even.
If producers in this market charged a price of $6, there would be a:
surplus of 200 units.
Short-run costs behave as they do because of:
the Law of Diminishing Returns.
According to the Law of Diminishing Returns, as additional units of a variable factor are added to a fixed factor, beyond some point:
the additional product from each additional unit of the variable factor decreases
A production possibilities curve shows:
the different amounts of two goods that an economy can produce when it is at full employment with fixed resources and technology.
Public choice is the study of:
the economic motives and attitudes of voters and public officials in collective decision making.
Marginal utility diminishes after a certain point due to:
the fulfilling of the need or desire for the good or service as additional units are consumed.
A firm can vary the amounts of all of its factors of production in:
the long run but not the short run.
Macroeconomics is the study of:
the operation of the economy as a whole, and economic topics such as total output, employment, and inflation.
A direct relationship occurs when two variables move in:
the same direction, and graph as an upward-sloping line.
Econometrics is:
the use of the statistical techniques to determine the relationship between economic variables.
The three major macroeconomic problems are:
unemployment, falling production, and inflation.
The basic problem that gives rise to the study of economics is the need to:
use scarce resources to satisfy people's unlimited material wants and needs
An externality exists:
when something I do affects the well-being of persons or things that are not involved in my action.