MACRO ECON EXAM 1

The term "market" in economics refers to a) a group of buyers and sellers of a product and the arrangement by which they come together to trade. b) an organization which sells goods and services. c) a place where money changes hands. d) a legal institution where exchange can take place.

a) a group of buyers and sellers of a product and the arrangement by which they come together to trade.

Suppose that when the price of orange juice decreases, I increase my purchases of Good X. To me, a) orange juice and Good X are complements. b) orange juice is a normal good and Good X is an inferior good. c) orange juice and Good X are substitutes. d) orange juice and Good X are normal goods.

a) orange juice and Good X are complements.

Economics promotes which of the following as the way to make the best decision? a) Continue an activity as long as you do not have to pay for it. b) Continue an activity up to the point where its marginal benefit equals its marginal cost. c) Continue an activity until you cannot afford to pursue it. d) Continue an activity until it is no longer enjoyable.

b) Continue an activity up to the point where its marginal benefit equals its marginal cost.

In economics, the term "free market" refers to a market where no sales tax is imposed on products sold. a) True b) False

b) False

Technological advancements have led to lower prices and an increase in the sale of Blu-ray DVD players. How does this affect the market for Blu-ray DVDs? a) The supply curve for Blu-ray DVDs shifts to the right. b) The demand curve for Blu-ray DVDs shifts to the right. c) The supply curve for Blu-ray DVDs shifts to the left. d) The demand curve for Blu-ray DVDs shifts to the left.

b) The demand curve for Blu-ray DVDs shifts to the right.

Which of the following would shift the supply curve for bottled water to the left? a) an increase in the price of soda b) a decrease in the number of firms that produce bottled water c) an increase in consumer income (assuming that all bottled waters are normal goods) d) a decrease in the price of an input used to produce bottled water

b) a decrease in the number of firms that produce bottled water

If an increase in income leads to a decrease in the demand for margarine, then margarine must be a) a necessity. b) an inferior good. c) a substitute good. d) a normal good.

b) an inferior good.

Economists assume that rational people a) only weigh the benefits and costs of the most desirable alternative actions. b) respond to economic incentives. c) undertake activities that benefit others and hurt themselves. d) never use all available information as they act to achieve their goals.

b) respond to economic incentives.

Economic growth is represented on a production possibilities frontier model by the production possibility frontier a) becoming flatter. b) shifting outward. c) becoming steeper. d) shifting inward.

b) shifting outward.

Suppose when the price of laptops falls, consumers buy more laptops. This implies that a) there is a positive relationship between laptop prices and quantities purchased by consumers. b) there is a negative relationship between laptop prices and quantities purchased by consumers. c) there is a one-to-one relationship between laptop prices and quantities purchased by consumers. d) there is a direct relationship between laptop prices and quantities purchased by consumers.

b) there is a negative relationship between laptop prices and quantities purchased by consumers.

Which of the following could likely cause both the equilibrium price and equilibrium quantity of cigars to increase? a) unusually good weather that results in a bumper crop of cigar tobacco b) a drought that sharply reduces tobacco output c) an increase in consumer income d) a decrease in the price of cigarettes (a substitute good)

c) an increase in consumer income

If printed textbooks and e-texts are considered substitutes, then, other things equal, an increase in the price of e-texts will a) decrease the quantity demanded of printed textbooks. b) increase the quantity demanded of e-texts. c) increase the demand for printed textbooks. d) decrease the demand for e-texts.

c) increase the demand for printed textbooks.

Opportunity cost is defined as a) the monetary expense associated with an activity. b) the benefit of an activity. c) the highest valued alternative that must be given up to engage in an activity. d) the total value of all alternatives that must be given up to engage in an activity.

c) the highest valued alternative that must be given up to engage in an activity.

The production possibilities frontier shows a) what an equitable distribution of products among citizens would be. b) what people want firms to produce in a particular time period. c) the maximum attainable combinations of two products that may be produced in a particular time period with available resources. d) the various products that can be produced now and in the future.

c) the maximum attainable combinations of two products that may be produced in a particular time period with available resources

Which of the following is a macroeconomics question? a) What factors determine the price of iPhones? b) What determines the wages and benefits of flight attendants? c) How is the production quantity of digital cameras determined? d) What determines the unemployment rate?

d) What determines the unemployment rate?

A movement along the demand curve for toothpaste would be caused by a) a change in population. b) a change in consumer income. c) a change in the price of toothbrushes. d) a change in the price of toothpaste.

d) a change in the price of toothpaste.