Econ MIDTERM

Which of the following areas of study typifies microeconomics as opposed to macroeconomics

the impact of minimum wage laws on employment in the fast food industry

positie statements are

claims about how the world is

Who said, "The whole of science is nothing more than the refinement of everyday thinking"?

Albert Einstein

Positive statements are not

prescriptive

a model can accurately be described as a

simplification of reality

A tax on the buyers of personal computer external hard drives encourages

Buyers to demand a smaller quantity at every price

Suppose sellers of perfume are required to send $1.00 to the government for every bottle of perfume they sell. Further, suppose this tax causes the price paid by buyers of perfume to rise by $0.60 per bottle. Which of the following statements is correct?

The effective price received by sellers is $0.40 per bottle less than it was before the tax

The minimum wage was instituted to ensure workers

a minimally adequate standard of living

the circular flow diagram.... a. represents the flows of inputs, outputs, and dollars. b. is an economic model. c. incorporates two types of decision makers: households and firms. d. all of the above

all of the above

the opportunity cost of obtaining more of one good is shown on the production possibilities frontier as the

amount of the other good that must be given up

The circular flow diagram is an example of

an economic model

Which of the following is correct.... a. All firms consistently enforce minimum wage laws. b. The minimum wage is more often binding for teenagers than for other members of the labor force. c. Studies of the effects of minimum wage typically find that a 10% increase in the minimum wage raises the average wage of teenagers by 10%. d. The drop in teenage employment caused by a 10% increase in the minimum wage is not significant

b. The minimum wage is more often binding for teenagers than for other members of the labor force.

Which of the following is not correct... a. The minimum wage is not binding when the equilibrium wage is above the minimum wage .b. The impact of the minimum wage depends on the skill and experience of the worker. c. The minimum wage is binding for workers with high skills and much experience. d. The economy contains many labor markets for different types of workers.

c. The minimum wage is binding for workers with high skills and much experience.

The production possibilities frontier illustrates.... a. the combination of output that an economy should produce. b. the trade off between efficiency and equality. c. the combination of output that each member of society should consume. d. none of the above

d. none of the above

A tax on the buyers of cereal will increase the price of cereal paid by buyers

decrease the effective price of cereal received by sellers, and decrease the equilibrium quantity of cereal

The design of tax policy is one of the responsibilities of economists who work at the

department of the treasury

If a tax is levied on the buyers of a product, then the supply curve will

not shift

How is the burden of a tax divided? (i) When the tax is levied on the sellers, the sellers bear a higher proportion of the tax burden. (ii) When the tax is levied on the buyers, the buyers bear a higher proportion of the tax burden. (iii) Regardless of whether the tax is levied on the buyers or the sellers, the buyers and sellers bear an equal proportion of the tax burden. (iv) Regardless of whether the tax is levied on the buyers or the sellers, the buyers and sellers bear some proportion of the tax burden. a. (i) and (ii) only b. (iv) only c. (i), (ii), and (iii) only d. (i), (ii), and (iv) only

(iv) Regardless of whether the tax is levied on the buyers or the sellers, the buyers and sellers bear some proportion of the tax burden. b. (iv) only

The US Congress first instituted a minimum wage in

1938

Which of the following is not correct... As policy advisors, economists use their theories to help change the world for the better. b. As scientists, economists develop and test theories to explain the world around them. c. economists have two roles: scientists and policy advisor. d. Economic policies rarely have effects that their architects did not intend or anticipate

Economic policies rarely have effects that their architects did not intend or anticipate

The federal government uses the revenue from the FICA(Federal Insurance Contribution Act) tax to pay for

Social Security and Medicare

Minimum wage laws dictate

a minimum wage that firms may pay workers

Which of the following statements is correct?... a. Government can decide who actually pays tax. b. A tax levied on sellers always will be passed on completely to buyers. c. Who actually pays a tax depends on the price elasticities of supply and demand. d. A tax levied on buyers will never be partially paid by sellers.

c. Who actually pays a tax depends on the price elasticities of supply and demand.

Normative statements are not

descriptive

In building economic models, economists often omit

details

In the circular flow diagram, which of the following items flows from firms to households through the markets for goods and services?

goods and services

If the government removes a tax on a good, then the quantity of the good sold will

increase

If the government removes a binding price ceiling from a market, then the price received by sellers will

increase, and the quantity sold in the market will increase

Economist Joseph Schempeter coined the phrase "creative destruction" to describe the process by which

innovation and entrepreneurial initiative have great power to drive economic growth

An example of a price that changes infrequently is the price of

magazines sold at new stands

Economists at which of the following offices help formulate spending plans and regulatory policies?

office of management and budget

Production is efficient if the economy is producing at a point

on the production possibilities frontier

unemployment would cause the economy to

produce inside its production possibilities frontier

If a price floor is a binding constraint on a market, then

sellers cannot sell all they want to sell at the price floor

When a binding price floor is imposed on a market to benefit sellers,

some sellers benefit, and some sellers are harmed

A macroeconomist — as opposed to a microeconomist — might study

the effect of an increasing inflation rate on national living standards

In the circular flow diagram, in the markets for

the factors of production, households are sellers and firms are buyers.

A certain production possibilities frontier shows production possibilities for two goods, jewelry and clothing. Which of the following concepts cannot be illustrated by this model?

the flow of dollars between sellers of jewelry and clothing and buyers of jewelry and clothing

If a price ceiling is not binding, then

there will be no effect on the market price or quantity sold.

A $2.00 tax levied on the sellers of birdhouses will shift the supply curve

upward by exactly $2.00

factors of production are

used to produce goods and services

The Council of Economic Advisors

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