Macro Exam #1

Which of the following statements about a hypothesis is​ correct? A. A hypothesis is a statement that could in principle turn out to be incorrect. B. To be called a​ hypothesis, a statement must first be shown to be correct. C. A hypothesis will always incorporate a value judgment. D. A hypothesis is another name for a model.

A. A hypothesis is a statement that could in principle turn out to be incorrect.

Which of the following is an example of a​ "how much"​ decision? A. Diana is trying to decide if she should open her pet shop on Sundays. 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. You plan on going to Las Vegas for your birthday and are deciding if you should fly or drive.

A. Diana is trying to decide if she should open her pet shop on Sundays.

In a market​ system, what determines how goods and services will be​ produced? A. Firms determine how goods and services will be produced. B. Consumers determine how goods and services will be produced. C. The government determines how goods and services will be produced. D. ​Consumers, firms, and the government determine together how goods and services will be produced.

A. Firms determine how goods and services will be produced.

According to Adam​ Smith, which of the following is necessary for the proper functioning of the market​ system? A. For markets to​ work, people must be free to pursue their​ self-interest. B. For markets to​ work, the government should help citizens make the right decisions. C. For markets to​ work, people should take into account how their decisions affect society as a whole. D. For markets to​ work, people and the government need to coordinate their decisions.

A. For markets to​ work, people must be free to pursue their​ self-interest.

Which of the following is a positive economic​ statement? A. The minimum wage law causes unemployment. B. The government should subsidize solar power for homeowners. C. The number of work visas should not be limited by the government. D. People should not buy imported fruits and vegetables.

A. The minimum wage law causes unemployment.

The prevalence of​ Alzheimer's dementia is very high among residents living in nursing homes. A student concludes that it is likely that living in a nursing home causes​ Alzheimer's dementia. What is the flaw in the​ student's reasoning? A. The student is drawing a false​ conclusion; he is making the error of reverse causality. B. The student is using an inadequate sample size. C. The student is drawing a false conclusion by making the mistake of omitting critical variables such as the age and gender of the residents. D. The student has failed to take into account other causes of​ Alzheimer's disease.

A. The student is drawing a false​ conclusion; he is making the error of reverse causality.

The basis for trade is comparative​ advantage, not absolute advantage. A. True B. False

A. True

Trademinus offs force society to make choices when answering what three fundamental​ questions? A. What goods and services to​ produce; how will these goods and services be​ produced; and who receives​ them? B. What will be the prices of goods and​ services; how will these goods and services be​ produced; and who will receive​ them? C. How much will be​ saved; what will be​ produced; and how can these goods and services be fairly​ distributed? D. Who gets​ jobs; what wages do workers​ earn; and who owns what​ property?

A. What goods and services to​ produce; how will these goods and services be​ produced; and who receives​ them?

In a market​ system, how does society decide who will receive the goods and services​ produced? A. Who receives the goods and services produced depends largely on how income is distributed. B. Consumers determine who receives the goods and services produced. C. The government determines the goods and services produced. D. Firms determine who receives the goods and services produced.

A. Who receives the goods and services produced depends largely on how income is distributed.

Which of the following is part of an economic​ model? A. data B. norms C. opinions D. preferences of economic agents

A. data

Which of the following would shift a​ nation's production possibilities frontier​ outward? A. discovering a more efficient process to desalinate water B. an increase in the minimum wage C. a decrease in the unemployment rate D. more restrictive immigration policies

A. discovering a more efficient process to desalinate water

The primary purpose of patents and copyrights is to A. encourage the expenditure of funds on research and development to create new products. B. protect domestic firms from foreign competition. C. protect firms from being taken advantage of by competing firms. D. provide owners with large profit forever.

A. encourage the expenditure of funds on research and development to create new products.

What do economists mean by the word​ "marginal"? A. extra or additional B. small C. first D. unimportant

A. extra or additional

The revenue received from the sale of an additional unit of a product A. is a marginal benefit to the firm. B. is called gross sales. C. is called a net gain. D. is called profit.

A. is a marginal benefit to the firm.

The relationship between two variables is positive when​ ________, and the relationship between two variables is negative when​ ________. A. one variable increases and the other​ increases; one variable increases and the other decreases B. one variable decreases and the other​ increases; one variable increases and the other increases C. one variable increases and the other​ increases; one variable decreases and the other decreases D. one variable increases and the other​ decreases; one variable decreases and the other increases

A. one variable increases and the other​ increases; one variable increases and the other decreases

Households A. purchase final goods and services in the product market. B. purchase resources in the product market. C. purchase resources in the factor market. D. purchase final goods and services in the factor market.

A. purchase final goods and services in the product market.

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

A. respond to economic incentives.

The principle of increasing marginal opportunity cost states that the more resources devoted to any​ activity, the​ __________ the payoff to devoting additional resources to that activity. A. smaller B. greater C. more instant D. more proportional

A. smaller

According to the Centers for Disease Control and​ Prevention, ________ in 2013 in which less than 20 percent of the population was considered obese. A. there were no states B. there were more than 25 states C. Colorado was the only state D. there were only 5 states

A. there were no states

Without technological​ advancement, how can a nation achieve economic​ growth? A. through an increase in supplies of factors of production B. by decreasing the size of the labor force C. by producing more high-value goods and fewer low-value goods D. by producing more low-value goods and fewer high-value goods

A. through an increase in supplies of factors of production

In a market​ system, how does society decide what goods and services will be​ produced? A. ​Consumers, firms, and the government determine what goods and services will be produced by the choices they make. B. What goods and services will be produced is determined by a vote of consumers. C. Firms alone determine what goods and services will be produced. D. The government decides what goods and services will be produced.

A. ​Consumers, firms, and the government determine what goods and services will be produced by the choices they make.

As job opportunities for women and the wages those jobs pay have​ increased, the opportunity cost of doing housework has​ ________, so many families have chosen to hire specialists in households​ chores, such as cleaning services and lawn care​ services, because the cost of these specialists is​ ________ than the cost of the wife​ (or husband) performing those chores. A. ​increased; lower B. ​decreased; higher C. ​increased; higher D. ​decreased; lower

A. ​increased; lower

​________ behavioral assumption about humans was that people usually act in a​ rational, self-interested way. A. Karl​ Marx's B. Adam​ Smith's C. Thomas​ Malthus's D. Janet​ Yellen's

B. Adam​ Smith's

When does allocative efficiency​ occur? A. Allocative efficiency occurs when a good or service is produced at the lowest possible cost. B. Allocative efficiency occurs when production is in accordance with consumer preferences. C. Allocative efficiency occurs when an economy no longer relies on voluntary exchange. D. Allocative efficiency occurs when an economy achieves equity.

B. Allocative efficiency occurs when production is in accordance with consumer preferences.

Economists assume that the only reason people take the actions they do is in response to economic incentives. A. True B. False

B. False

If you and your neighbor both grow oranges and grapefruits and you are better than your neighbor at picking both oranges and​ grapefruits, there can be no advantage to you in specializing in growing only one type of fruit and trading with your neighbor for the other. A. True B. False

B. False

Which of the following is a correct statement about a mixed​ economy? A. In a mixed​ economy, the government makes all economic decisions. B. In a mixed​ economy, most economic decisions are made in markets but the government plays a significant role in the allocation of resources. C. In a mixed​ economy, all economic decisions are made in markets. D. In a mixed​ economy, most economic decisions are made by the government but markets plays a significant role in the allocation of resources.

B. In a mixed​ economy, most economic decisions are made in markets but the government plays a significant role in the allocation of resources.

Which of the following contributes to the efficiency of​ markets? A. Governments play an active role in the day-to-day operations of markets. B. Markets promote competition and voluntary exchange. C. Markets are able to bring about an equitable distribution of goods and services. D. Markets promote equal standards of living.

B. Markets promote competition and voluntary exchange.

Which of the following statements about positive analysis is​ correct? A. Positive analysis involves value judgments. B. Positive analysis is concerned with what is. C. Positive analysis can be used to determine whether policies are good or bad. D. Positive analysis is concerned with what ought to be.

B. Positive analysis is concerned with what is. Your answer is correct.

​ ________ is a problem that occurs when someone concludes that a change in variable X caused a change in variable Y​ when, in​ fact, it is a change in variable Y that caused a change in variable X. A. The​ positive-to-negative relationship B. Reverse causality C. Nonlinear slope D. The omitted variable

B. Reverse causality

For each watch that Switzerland​ produces, it gives up the opportunity to make 50 pounds of chocolate. Germany can produce 1 watch for every 100 pounds of chocolate it produces. Which of the following is true about the comparative advantage between the two​ countries? A. Germany has the comparative advantage in watches and chocolate. B. Switzerland has the comparative advantage in watches. C. Switzerland has the comparative advantage in chocolate. D. Germany has the comparative advantage in watches.

B. Switzerland has the comparative advantage in watches.

Which of the following statements about the idea that people are rational is​ correct? A. The idea assumes that consumers and firms take into account the costs of their actions but ignore the benefits. B. The idea assumes that consumers and firms use all available information as they act to achieve their goals. C. The idea assumes that consumers and firms take into account the benefits of their actions but ignore the costs. D. The idea assumes that consumers and firms always make correct decisions.

B. The idea assumes that consumers and firms use all available information as they act to achieve their goals.

How does a market system prevent people from getting as many goods and services as they​ wish? A. The government imposes taxes on those who earn beyond a certain amount of income. B. The market system allocates goods and services to those who are able to pay for those products and therefore income is a limiting factor. C. In a market​ system, firms can charge any price they​ want, thus preventing poor people from getting as many goods and services as they wish. D. Governments interfere with the market mechanism to influence the allocation of goods and services.

B. The market system allocates goods and services to those who are able to pay for those products and therefore income is a limiting factor.

The number of people who have gray hair is very high among residents living in Florida. A student concludes that living in Florida causes hair to turn gray. What is the flaw in this​ student's reasoning? A. The student has failed to take into account other causes of gray hair. B. The student is drawing a false​ conclusion; he is confusing cause and effect. C. The student is drawing a false conclusion by making the mistake of omitting critical variables such as the age and gender of the residents. D. The student is using an inadequate sample size.

B. The student is drawing a false​ conclusion; he is confusing cause and effect.

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. Why produce a variety of menu​ items? B. What to​ produce? C. Who to produce the menu items​ for? D. How to produce goods that consumers​ want?

B. What to​ produce?

Microsoft charges a price of​ $599 for a copy of Windows 7. Is this pricing decision​ rational? A. We cannot assume that this pricing decision was rational because we do not have enough information to make an assumption. B. When we assume the managers at Microsoft have used all available information and have weighed all known benefits and​ costs, we are assuming rationality. C. ​Microsoft's choice cannot be​ rational: the price is clearly more than most people are willing and able to pay. D. ​Microsoft's choice was​ rational: the price will maximize profit.

B. When we assume the managers at Microsoft have used all available information and have weighed all known benefits and​ costs, we are assuming rationality.

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 supply curve of outsourcing. B. a time-series graph. C. a demand curve for outsourcing. D. a pie chart.

B. a time-series graph.

If a market system functions​ well, which of the following is necessary for the enforcement of contracts and property​ rights? A. powerful political connections B. an independent court system C. action by government to prevent the exercise of certain property rights D. All of the above.

B. an independent court system

If a straight line passes through the point x​ = 8 and y​ = 4 and also through the point x​ = 12 and y​ = 6, the slope of this line is A. negative 4 divided by 2. B. one half. C. two. D. negative one half.

B. one half.

Absolute advantage is the ability of an​ individual, a​ firm, or a country to A. reach a higher production possibilities frontier by lowering opportunity costs. B. produce more of a good or service than competitors using the same amount of resources. C. produce a good or service at a lower opportunity cost than other producers. D. consume more goods or services than others at lower costs.

B. produce more of a good or service than competitors using the same amount of resources.

Which of the following are represented by the same flow in the circular flow​ model? A. the flow of income received by households and the flow of tax revenues paid by firms B. the flow of costs and the flow of revenue C. the flow of income earned from the sale of resources and the flow of expenditures on goods and services D. the flow of goods and the flow of factors of production

B. the flow of costs and the flow of revenue

Opportunity cost is defined as A. the benefit of an activity. B. the highest valued alternative that must be given up to engage in an activity. C. the monetary expense associated with an activity. D. the total value of all alternatives that must be given up to engage in an activity.

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

Economists believe that an activity should be continued up to the point where A. the marginal benefit from the activity is less than the marginal cost. B. the marginal benefit from the activity is equal to the marginal cost. C. the marginal benefit from the activity is greater than the marginal cost. D. the marginal benefit from the activity plus the marginal cost equals zero.

B. the marginal benefit from the activity is equal to the marginal cost.

How are the fundamental economic decisions determined in​ Canada? A. The government decides because Canada is a centrally planned economy. B. ​Individuals, firms, and the government interact in a market to make these economic decisions. C. These decisions are made by the​ country's elders who have had much experience in answering these questions. D. The United Nations decides because Canada is a developing economy.

B. ​Individuals, firms, and the government interact in a market to make these economic decisions.

Economics is the study of the​ ________ people make to attain their​ goals, given their​ ________ resources. A. ​purchases; unlimited B. ​choices; scarce C. ​income; available D. ​decisions; household

B. ​choices; scarce

Which of the following statements about an economic variable is​ correct? A. An economic variable must always be a positive number. B. An economic variable must either be the price of a good or service or the quantity of a good or service. C. An economic variable is something measurable that can have different values. D. An economic variable is always measured in dollars.

C. An economic variable is something measurable that can have different values.

Why are models based on​ assumptions? A. Because models are only concerned about questions of​ equity, not question of efficiency. B. Because models are not intended to analyze​ real-world events. C. Because models have to be simplified to be useful. D. Because models are very different from theories.

C. Because models have to be simplified to be useful.

In a simple​ circular-flow model, there are flows of​ _________ and flows of​ _________. A. funds received from the sale of factors of​ production; spending on final goods and services B. factors of​ production; goods and services C. Both​ (a) and​ (b) are correct. D. None of the​ above; there are no flows in the circular flow of income.

C. Both​ (a) and​ (b) are correct.

Which of the following statements about economics as a social science is​ correct? A. Economics is not useful in analyzing the effects of government policy. B. Economics uses normative analysis but not positive analysis. C. Economics studies the actions of individuals. D. Economics considers human behavior only in the context of business.

C. Economics studies the actions of individuals.

Which of the following statements is​ correct? A. A business has multiple​ locations, while a company has only a single location. B. A business is always larger than a firm. C. Economists use the terms​ firm, company, and business interchangeably. D. A company is owned by one​ person, while a firm is owned by more than one person.

C. Economists use the terms​ firm, company, and business interchangeably.

Which of the following is a microeconomics​ question? A. Why do economies experience periods of​ recession? B. Why has growth in the economy slowed down over the past​ decade? C. How will Apple decide on a selling price for the​ iPad? D. Will government intervention lower the unemployment​ rate?

C. How will Apple decide on a selling price for the​ iPad?

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 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. 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 would be​ $1,500 lower. B. Its profit would be​ $500 higher. C. Its profit would be​ $500 lower. D. Its profit would be​ $1,000 higher.

C. Its profit would be​ $500 lower.

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." 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 would be​ $800 lower. B. Its profit would be​ $4,800 higher. C. Its profit would be​ $800 higher. D. Its profit would be​ $4,000 lower.

C. Its profit would be​ $800 higher.

Which of the following statements about microeconomics and macroeconomics is​ correct? A. Microeconomics does not involve the analysis of economic policy. B. Macroeconomics does not involve the analysis of economic policy. C. Macroeconomics is the study of the economy as a whole. D. All economic situations can be categorized as being microeconomics or macroeconomics.

C. Macroeconomics is the study of the economy as a whole.

Which of the following statements about microeconomics and macroeconomics is​ correct? A. All economic situations can be categorized as being microeconomics or macroeconomics. B. Microeconomics does not involve the analysis of economic policy. C. Microeconomics involves the study of how households and firms make choices. D. Macroeconomics does not involve the analysis of economic policy.

C. Microeconomics involves the study of how households and firms make choices.

​Today, which of the following countries has a centrally planned​ economy? A. Canada B. United States C. North Korea D. Germany

C. North Korea

When does productive efficiency​ occur? A. Productive efficiency occurs when an economy no longer relies on voluntary exchange. B. Productive efficiency occurs when production is in accordance with consumer preferences. C. Productive efficiency occurs when a good or service is produced at the lowest possible cost. D. Productive efficiency occurs when an economy achieves equity.

C. Productive efficiency occurs when a good or service is produced at the lowest possible cost.

Which of the following statements is​ correct? A. The relationship between two variables is nonlinear whether it is represented by a straight line or by a curved line. B. The relationship between two variables is linear when it is represented by a curved line and nonlinear when it is represented by a straight line. C. The relationship between two variables is linear when it is represented by a straight line and nonlinear when it is represented by a curved line. D. The relationship between two variables is linear whether it is represented by a straight line or by a curved line.

C. The relationship between two variables is linear when it is represented by a straight line and nonlinear when it is represented by a curved line.

The relationship between sales and revenue is A. a negative relationship. B. an inverse relationship. C. a direct relationship. D. independent.

C. a direct relationship.

When we graph the relationship between two​ variables, we often want to draw conclusions about whether changes in one variable are causing changes in the other variable. Doing​ so, however, can lead to incorrect conclusions. Reasons for drawing incorrect conclusions about cause and effect include A. reverse causality. B. an omitted variable. C. both a and b. D. none of the above.

C. both a and b.

There is often a trademinus off between A. voluntary and involuntary exchanges. B. productive efficiency and allocative efficiency. C. economic efficiency and economic equity. D. limited and unlimited resources.

C. economic efficiency and economic equity.

If a country has a comparative advantage in the production of a​ good, then that country A. should allow another country to specialize in the production of that good. B. also has an absolute advantage in the production of that good. C. has a lower opportunity cost in the production of that good. D. All of the above are true.

C. has a lower opportunity cost in the production of that good.

Which of the following are the two key groups of participants in the circular flow of​ income? A. domestic residents and foreign residents B. government and financial institutions C. households and firms D. savers and borrowers

C. households and firms

Microeconomics is the study of A. the economy as a​ whole, including topics such as​ inflation, unemployment, and economic growth. B. ​"small" (less than​ $100,000) economic transactions in the economy. C. how households and firms make​ choices, how they interact in​ markets, and how the government attempts to influence their choices. D. firms as individual units excluding how these firms interact with one another.

C. how households and firms make​ choices, how they interact in​ markets, and how the government attempts to influence their choices.

According to Adam​ Smith, which of the following is the instrument the invisible hand uses to direct economic​ activity? A. costs B. government regulations C. prices D. financial markets

C. prices

When you purchase a new surfboard you do so in the A. input market. B. factor market. C. product market. D. resource market.

C. product market.

Competition among sellers generates A. scarcity. B. allocative efficiency. C. productive efficiency. D. equity.

C. productive efficiency.

Which of the following contributed to the downfall of the Soviet Union in​ 1991? A. the rapidly increasing standard of living B. the lack of a strong dictator who could coordinate economic activities C. public dissatisfaction with low living standards and political repression D. producing higher-quality goods than were desired by consumers

C. public dissatisfaction with low living standards and political repression

Equity is A. always achieved by the market. B. an exactly equal distribution of income. C. the fair distribution of economic benefits. D. when poorer​ people's income is growing more rapidly than more wealthy​ people's income.

C. the fair distribution of economic benefits.

When the federal government crafts environmental policies that make it less expensive for firms to follow green​ initiatives, A. the policies are likely to be more successful than policies that cost firms​ more, but they do not recognize economic incentives. B. pollution is likely to increase. C. the policies are consistent with economic incentives. D. the policies are futile because where the environment is​ concerned, it has been repeatedly shown that firms do not respond to economic incentives.

C. the policies are consistent with economic incentives.

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 is his marginal benefit if he sells the weather vane without restoring​ it? A. ​$75 B. ​$125 C. ​$200 D. ​$300

C. ​$200

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 benefit if he sells the standard​ package? A. ​$15 B. ​$10 C. ​$25 D. ​$40

C. ​$25

​Trade-offs force society to make​ choices, particularly when answering the following three fundamental​ questions: A. ​One, what goods and services will be produced​ domestically? Two, how will the goods and services be​ produced? Three, is the distribution of goods and services​ fair? B. ​One, what goods and services will be​ produced? Two, how will the goods and services be​ produced? Three, is the distribution of goods and services​ fair? C. ​One, what goods and services will be​ produced? Two, how will the goods and services be​ produced? Three, who will receive the goods and services​ produced? D. ​One, what goods and services will be produced in foreign​ countries? Two, who will produce the goods and​ services? Three, who will receive the goods and services​ produced?

C. ​One, what goods and services will be​ produced? Two, how will the goods and services be​ produced? Three, who will receive the goods and services​ produced?

A free market is a market with​ ________ government restrictions on how a good or service can be produced or sold and with​ ________ government restrictions on how a factor of production can be employed. A. ​many; many B. ​few; many C. ​few; few D. ​many; few

C. ​few; few

Which of the following steps should you follow when using a​ formula? A. Make sure the number you calculate using the formula is economically reasonable. B. Make sure you are using the correct formula for the problem you are solving. C. Make sure you understand the economic concept the formula represents. D. All of the above are steps you should follow when using a formula.

D. All of the above are steps you should follow when using a formula.

What is the role of an​ entrepreneur? A. to operate a business that produces a good or service B. to bring together the factors of production--labor, ​capital, and natural resources C. to take risks D. All of the above.

D. All of the above.

Which of the following events would create economic​ growth, that​ is, shift the production possibilities frontier​ outward? A. An increase in the available natural resources. B. An increase in technology that affects the production of both goods. C. An increase in the available labor. D. All of the above.

D. All of the above.

Which of the following statements is​ correct? A. The word​ "technology" and the word​ "invention" have the same meaning. B. The word​ "technology" and the word​ "innovation" have the same meaning. C. An invention is the practical application of an innovation. D. An innovation is the practical application of an invention.

D. An innovation is the practical application of an invention.

Which of the following statements about normative analysis is​ correct? A. Normative analysis should not involve value judgments. B. Normative analysis measures the costs and benefits of different courses of action. C. Normative analysis is concerned with what is. D. Normative analysis is concerned with what ought to be.

D. Normative analysis is concerned with what ought to be.

​________ shows that if all resources are fully and efficiently​ utilized, more of one good can be produced only by producing less of another good. A. Absolute advantage B. The mixed market system C. Comparative advantage D. The production possibilities frontier model

D. The production possibilities frontier model

Economics is a social science because A. it considers human behaviorlong dash particularly ​decision-making behavior. B. it applies the scientific method to the study of the interactions among individuals. C. it is based on studying the actions of individuals. D. all of the above.

D. all of the above

How are economic resources allocated in a market​ economy? A. by firms acting alone B. by the government C. by consumers acting alone D. by the decisions of households and firms interacting in markets

D. by the decisions of households and firms interacting in markets

What is the outcome of enforcing contracts and property rights in a market​ system? A. an unpredictable but definite effect on economic activity B. decreased economic activity C. no effect on economic activity D. increased economic activity

D. increased economic activity

When Dr. Goldfinger decides on the companies in which he will​ invest, a​ ________ issue is being addressed. A. normative economic B. positive economic C. macroeconomic D. microeconomic

D. microeconomic

Technological progress has made it possible for firms such as Apple and Alivecor to develop small electronic​ devices, including​ smartwatches, smartphones, and products that can be attached to the smartwatches and​ smartphones, to serve consumers who have become more health conscious and wish to monitor various health conditions. These firms are reacting to which of the three key economic​ ideas? A. people are rational B. firms attempt to maximize revenues C. optimal decisions are made at the margin D. people respond to economic incentives

D. people respond to economic incentives

A university must decide if it should stop offering foreign language classes. This decision involves answering the economic question of​ "how to​ produce." True False

False

Any output combination along a production possibility frontier is associated with overused or unattainable resources. True False

False

For a person to have a comparative advantage in producing a​ product, he must be able to produce that product at a higher opportunity cost than his competitors. True False

False

If a country is producing efficiently and is on the production possibilities​ frontier, the only way to produce more of one good is with an advance in technology. True False

False

If it costs Vijay​ $150 to design 5 Web sites and​ $175 to design 6 Web​ sites, then​ $175 is the marginal cost of producing the 6th Web site. True False

False

If the opportunity cost of producing more of one good increases as more of that good is​ produced, then the production method is inefficient. True False

False

When voluntary exchange takes​ place, only one party gains from the exchange. True False

False

A welding machine is an example of a factor of production if it is being used to produce automobiles. True False

True

All economic questions arise from the fact that resources are scarce. True False

True

Examining the conditions that could lead to economic growth is an example of a macroeconomics topic. True False

True

Normative analysis is concerned with​ "what ought to​ be," while positive analysis is concerned with​ "what is." True False

True

On a diagram of a production possibilities​ frontier, opportunity cost is represented by the slope of the production possibilities frontier. True False

True

Suppose the extra cost to a car wash of advertising one additional day each month on a local radio station is​ $175. Then, the car wash should advertize that one additional day each month if doing so brings in additional revenue of​ $175 or more each month. True False

True

​"A decrease in the price of digital cameras will decrease the demand for camera​ film." This statement is an example of a positive economic statement. True False

True

Selling tickets to graduation ceremonies has long been a tradition among students at institutions that limit the number of guests. Suppose your​ classmate, Heidi, purchased two tickets for​ $40 each. Is this transaction economically​ efficient? A. ​No, people should never be allowed to sell items they received for free. B. ​Yes, it was a voluntary exchange that benefited both parties. C. ​Yes, it is efficient only from the perspective of the seller and not from the perspective of the buyer. D. ​No, Heidi paid too much for the tickets.

​B. Yes, it was a voluntary exchange that benefited both parties.