ECON QUESTIONS
Human capital refers to A) the accumulated skills and training workers have. B) the machines workers have to work with. C) the wealth people have. D) the money people have.
A
The processes used to produce goods and services describes A) technology. B) capital. C) entrepreneurship. D) innovation.
A
In economics, the practical application of an invention is known as A) technology. B) physical capital. C) innovation. D) entrepreneurship. 1.6
C
Which of the following is an example of a "how much" decision? A) You plan on going to Las Vegas for your birthday and are deciding if you should fly or drive. B) Humberto has taken a second job to earn money to buy a Harley-Davidson SuperLow Sportster. C) Octavia is debating whether to buy a pair of Jimmy Choo shoes or Steve Madden boots. D) Diana is trying to decide if she should open her pet shop on Sundays.
D
________ occurs when economic benefits are distributed fairly. A) Allocative efficiency B) Equality C) Productive efficiency D) Equity
D
Which of the following generates allocative efficiency in a market economy? A) national government intervention B) equity C) voluntary exchange between buyers and sellers D) United Nations rules for competition
C
In economics, the total amount received for selling a good or service is referred to as A) profit. B) capital gains. C) factor payments. D) revenue.
D
When every good or service is produced up to the point where the last unit provides a marginal benefit to society equal to the marginal cost of producing it, ________ occurs. A) productive efficiency B) efficient central planning C) equity D) allocative efficiency
D
Economics is the study of the ________ people make to attain their goals, given their ________ resources. Correct A) choices; scarce B) income; available C) decisions; household D) purchases; unlimited
A
If a graph has a line that shows the quantity of flat-screen televisions sold in the last five years, it is known as A) a demand curve for outsourcing. B) a time-series graph. C) a supply curve of outsourcing. D) a pie chart.
B
Human capital refers to A) the machines workers have to work with. B) the wealth people have. C) the accumulated skills and training workers have. D) the money people have.
C
Fast food restaurants produce a range of menu items such as hamburgers, chicken sandwiches, salads, and french fries. What fundamental economic question are they addressing by offering this range of items? A) Who to produce the menu items for? B) Why produce a variety of menu items? C) How to produce goods that consumers want? D) What to produce?
D
Opportunity cost is defined as A) the total value of all alternatives that must be given up to engage in an activity. B) the benefit of an activity. C) the monetary expense associated with an activity. D) the highest valued alternative that must be given up to engage in an activity.
D
Article Summary In an August 2013 speech from the Lincoln Memorial, President Obama was expected to emphasize that increased economic equality is needed to improve racial equality. Economic gaps based on race have endured for 50 years, with the differences in unemployment rates between blacks and whites remaining virtually unchanged and the gap in wealth actually increasing. "If you look at 50 years after the 1960s civil rights movement, the most stubborn and persistent challenge when it comes to the nation's racial challenge remains in the areas of economics and wealth," said Marc Morial, president of the National Urban League. Source: Zachary A. Goldfarb, "For Obama, 50 years after historic march, economic equality the path to racial justice," Washington Post, August 17, 2013. Refer to the Article Summary. The article mentions increased economic equality is needed in terms of wealth. How would a more equal distribution of wealth differ from a more equitable distribution of wealth? A) A more equal distribution of wealth is a more even distribution, and a more equitable distribution of wealth is a more fair distribution. B) They both mean the same thing, which is a more fair distribution of wealth. C) They both mean the same thing, which is a more even distribution of wealth. D) A more equal distribution of wealth is a more fair distribution, and a more equitable distribution of wealth is a more even distribution.
A
Cassie's Quilts alters, reconstructs and restores heirloom quilts. Cassie has just spent $800 purchasing, cleaning and reconstructing an antique quilt which she expects to sell for $1,500 once she is finished. After having spent $800, Cassie discovers that she would need some special period fabric that would cost her $200 in material and time in order to complete the task. Alternatively, she can sell the quilt "as is" now for $900. What should she do? A) She should purchase the period fabric, complete the task and then sell the quilt. B) She should cut her losses and sell the quilt now. C) She should not do anymore work on the quilt because she has already spent too much time on it and has not been paid for that time. D) It does not matter what she does; she is going to take a loss on her project.
A
In economics, the total amount received for selling a good or service is referred to as A) revenue. B) factor payments. C) profit. D) capital gains.
A
Suppose a cigar manufacturer currently sells 1,500 cigars per week and makes a profit of $3,000 per week. The plant foreman observes, "Although the last 500 cell cigars we produced and sold increased our revenue by $7,500 and our costs by $7,000, we are only making an overall profit of $3,000 per week so I think we need to cut back on production. Refer to Scenario 1-1. Had the firm not produced and sold the last 500 cigars, would its profit be higher or lower, and if so by how much? A) Its profit will be $500 lower. B) Its profit will be $1,000 higher. C) Its profit will be $1,500 lower. D) Its profit will be $500 higher.
A
Ted quits his $60,000-a-year job to be a stay-at-home dad. What is the opportunity cost of his decision? A) at least $60,000 B) depends on the "going rate" for stay-at-home dads C) the value he attributes to the joy of parenting D) 0 since he will no longer be earning a salary
A
The Farm Factory, a booth at the local Farmer's Market, sells fresh eggs for $1.50 per dozen and fresh milk for $2.50 per gallon. What is the opportunity cost of buying a dozen eggs? A) 3/5 of a gallon of milk B) $1.50 C) 1 2/3 gallons of milk D) $2.50 Question 16
A
The cost incurred from the production of an additional unit of a product A) is a marginal cost to the firm. B) must be zero for a firm to be efficient. C) is called a loss. D) is called opportunity cost.
A
Which of the following is counted as "capital" in economics? A) the machines workers have to work with B) the accumulated skills and training workers have C) the money people have D) the wealth people have
A
Which of the following statements is true about revenue? A) Revenue is the total amount received for selling a good or service. B) A firm's revenue will increase as its costs increase. C) Revenue is calculated by dividing the price per unit by the number of units sold. D) The terms "revenue" and "profit" can be used interchangeably.
A
Who receives the goods and services produced in the United States depends largely on A) how income is distributed. B) how the goods and services are produced. C) government redistribution. D) what goods and services are produced.
A
According to census figures and the Congressional Budget Office, the number of people ________ is projected to increase and the number of people ________ is projected to decrease by the year 2020. A) who are uninsured; age 65 and older B) age 65 and older; who are uninsured C) who are insured; age 65 and older D) who are uninsured; who are insured
B
Dr. Goldfinger decides to invest in companies which he believes can "improve the productivity and efficiency" of health care services. What would Dr. Goldfinger need to do to try to achieve allocative efficiency? A) invest in companies that fairly distribute their products and services B) invest in companies that produce goods and services based on consumer preferences C) invest in companies that produce goods and services at the lowest possible cost D) invest in companies that produce up to the point where the marginal cost of the last unit produced is zero Question 15
B
How can the influence of a third variable be shown on a two-dimensional graph? A) by super-imposing the third variable on the two-dimensional graph B) by allowing the position of the relationship line or curve to shift on the graph C) by allowing the relationship to be nonlinear D) by drawing a third axis coming out of the two axes
B
In economics, the practical application of an invention is known as A) physical capital. B) innovation. C) entrepreneurship. D) technology.
B
Mrs. Lovejoy decides to invest in companies which she believes can produce its goods at the lowest possible cost. Mrs. Lovejoy is investing in companies that are A) always going to be profitable. B) productively efficient. C) both productively and allocatively efficient. D) allocatively efficient.
B
Productive efficiency is achieved when firms produce goods and services A) most desired by society. B) at the lowest cost. C) of the highest quality. D) at the highest profit margin.
B
Scenario 1-1 Suppose a t-shirt manufacturer currently sells 5,000 t-shirts per week and makes a profit of $10,000 per week. A manager at the plant observes, "Although the last 400 t-shirts we produced and sold increased our revenue by $4,000 and our costs by $4,800, we are still making an overall profit of $10,000 per week so I think we're on the right track. We are producing the optimal number of t-shirts." Refer to Scenario 1-1. Had the firm not produced and sold the last 400 t-shirts, would its profit be higher or lower, and if so by how much? A) Its profit will be $800 lower. B) Its profit will be $800 higher. C) Its profit will be $4,800 higher. D) Its profit will be $4,000 lower
B
Which of the following contributes to the efficiency of markets? A) Markets are able to bring about an equitable distribution of goods and services. B) Markets promote competition and voluntary exchange. C) Governments play an active role in the day-to-day operations of markets. D) Markets promote equal standards of living.
B
Which of the following contributes to the efficiency of markets? A) Markets are able to bring about an equitable distribution of goods and services. B) Markets promote competition and voluntary exchange. C) Markets promote equal standards of living. D) Governments play an active role in the day-to-day operations of markets.
B
Which of the following is an example of an activity undertaken by an entrepreneur? A) being appointed to the U.S. Supreme Court B) starting your own snow cone business C) being promoted to the position of Chief of Police D) choosing the color scheme for your renovated kitchen
B
Which of the following is motivated by an equity concern? A) In November 2003, the Federal Communications Commission implemented the "local number portability" rule which gives cell phone customers the option of keeping their number when they switch carriers within the same geographic region. B) Some U.S. colleges have cut back on merit scholarships since these programs siphon money from need-based programs, thus harming lower-income students with greater financial need. C) Following the removal of subsidies in urban water use, household demand for water decreased quite significantly in Bogor, Indonesia. D) The United States protects intellectual property rights, allowing inventors to prevent others from using their inventions without payment.
B
As recently as 2000, ________ percent of doctors were in private practice and by 2013, ________ percent of doctors were in private practice. A) over 80; less than 15 B) only 20; more than 70 C) nearly 60; less than 40 D) about 50; about 50
C
Competition among sellers generates A) scarcity. B) equity. C) productive efficiency. D) allocative efficiency.
C
Scarcity refers to the situation in which A) unlimited resources exceed limited wants. B) a nation's poverty level increases faster than its population. C) unlimited wants exceed limited resources. D) a country's population is larger than its resource base.
C
What is the "reverse causality" problem in determining cause and effect? A) It is a problem that occurs when one observes that a change in variable X caused a change in variable Y which caused a change in variable Z and concludes that a change in variable X caused a change in variable Z. B) It is a problem that arises when two variables are inter-connected so that a change in variable X causes a change in variable Y, and a change in variable Y causes a change in variable X. C) It is a problem that occurs when one concludes that a change in variable X caused a change in variable Y when in actual fact, it is a change in variable Y that caused a change in variable X. D)
C
Which of the following statements is true? A) A straight line has a slope of one. B) An inverse relationship has a positive slope value. C) A curved line has slope values that change at every point. D) A direct relationship has a negative slope value.
C
Your roommate, Serafina, a psychology major, said, "The problem with economics is that it assumes that consumers and firms always make the correct decision. But we know that everyone's human, and we all make mistakes." Do you agree with her comment? A) Yes, I agree with her. Economic theory should allow for irrational behavior so that we can have more reliable predictions. B) I disagree with her. If we cannot assume that decisions are correct, then we will not be able to examine the moral implications of these decisions. C) I disagree with her. Economics does not study correct or incorrect behaviors but rather it assumes that economic agents behave rationally, meaning they make the best decisions given their knowledge of the costs and benefits. D) Yes, I agree with her. One cannot make predictions about economic behavior because in reality people make incorrect choices in many situations. Question 5
C
Dr. Goldfinger decides to invest in companies which he believes can "improve the productivity and efficiency" of health care services. How can Dr. Goldfinger strive to achieve this productive efficiency? A) by investing in companies that produce goods and services based on consumer preferences B) by investing in companies that produce up to the point where the marginal benefit of the last unit produced is equal to the marginal cost of producing it C) by investing in companies that fairly distribute their products and services D) by investing in companies that produce goods and services at the lowest possible cost
D
Dr. Goldfinger decides to invest in companies which he believes can "improve the productivity and efficiency" of health care services. What would Dr. Goldfinger need to do to try to achieve allocative efficiency? A) invest in companies that produce goods and services at the lowest possible cost B) invest in companies that produce up to the point where the marginal cost of the last unit produced is zero C) invest in companies that fairly distribute their products and services D) invest in companies that produce goods and services based on consumer preferences
D
In economics, the total amount received for selling a good or service is referred to as A) profit. B) factor payments. C) capital gains. D) revenue.
D
Lionel's Lawn Care is a company that maintains residential yards. Lionel's cost for his standard package of mowing, edging, and trimming is $15, and he charges $25 for this service. For a total price of $40, Lionel will also trim shrubs, a service that adds an additional $10 to the total cost of the standard package. What is Lionel's marginal cost of adding the shrub-trimming service to the standard package? A) $40 B) $25 C) $15 D) $10
D
The Farm Factory, a booth at the local Farmer's Market, sells fresh eggs for $1.50 per dozen and fresh milk for $2.50 per gallon. What is the opportunity cost of buying a gallon of milk? A) $2.50 B) $1.50 C) 3/5 of a dozen eggs D) 1 2/3 dozen eggs
D
What is the "reverse causality" problem in determining cause and effect? A) It is a problem that occurs when one concludes that a change in variable X caused a change in variable Y when in actual fact, it is a change in variable Z that caused a change in variable Y. B) It is a problem that arises when two variables are inter-connected so that a change in variable X causes a change in variable Y, and a change in variable Y causes a change in variable X. C) It is a problem that occurs when one observes that a change in variable X caused a change in variable Y which caused a change in variable Z and concludes that a change in variable X caused a change in variable Z. D) It is a problem that occurs when one concludes that a change in variable X caused a change in variable Y when in actual fact, it is a change in variable Y that caused a change in variable X.
D
Which of the following is motivated by an efficiency concern? A) As part of an economic stimulus package, each taxpayer received a $3,000 tax rebate check. B) In 2009, the Obama administration increased unemployment benefits. C) Some U.S. colleges have cut back on merit scholarships since these programs siphon money from need-based programs, thus harming lower-income students with greater financial need. D) Following a six-month drought, a city banned homeowners from watering their lawns in an effort to conserve water.
D
Zane's Vanes is a service that restores old weather vanes. Zane has just spent $125 purchasing a 1920s era weather vane which he expects to restore and sell for $500 once the work is completed. After having spent $125, Zane realizes that he will need to spend an additional $200 on materials to complete the restoration. Alternatively, he can sell the weather vane without restoring it for $200. What should he do? A) He should sell the weather vane now to make the most profit. B) It does not matter what he does; he is going to take a loss on the project. C) He should sell the weather vane back to the party he purchased it from and cut his losses. D) He should finish the restoration and then sell the weather vane.
D
An office supply store sells a ream of printer paper at a fixed price of $4.50. Which of the following is a term used by economists to describe the money received from the sale of an additional ream of paper? A) gross earnings B) pure profit C) net benefit D) marginal costs E) marginal revenue
E
Allocative efficiency is achieved when A) firms produce the goods and services that consumers value most. Incorrect Response In economics, the practical application of an invention is known as A) physical capital. Correct Answer B) innovation. C) entrepreneurship. Incorrect Response D) technology.B) firms produce goods and services at the lowest cost. D) there are no shortages or surpluses in the market.
InovTIOH
The cost incurred from the production of an additional unit of a product A) is a marginal cost to the firm. B) must be zero for a firm to be efficient. C) is called a loss. D) is called opportunity cost.
a
Dr. Goldfinger decides to invest in companies which he believes can "improve the productivity and efficiency" of health care services. What would Dr. Goldfinger need to do to try to achieve allocative efficiency? A) invest in companies that fairly distribute their products and services B) invest in companies that produce goods and services based on consumer preferences C) invest in companies that produce goods and services at the lowest possible cost D) invest in companies that produce up to the point where the marginal cost of the last unit produced is zero
b
In economics, the practical application of an invention is known as A) physical capital. B) innovation. C) entrepreneurship. D) technology.
b
Which of the following contributes to the efficiency of markets? A) Markets are able to bring about an equitable distribution of goods and services. B) Markets promote competition and voluntary exchange. C) Markets promote equal standards of living. D) Governments play an active role in the day-to-day operations of markets.
b
In economics, the total amount received for selling a good or service is referred to as A) profit. B) factor payments. C) capital gains. D) revenue.
d
When every good or service is produced up to the point where the last unit provides a marginal benefit to society equal to the marginal cost of producing it, ________ occurs. Response A) productive efficiency B) efficient central planning C) equity D) allocative efficiency
d