MACRO exam one

which of the following is a positive economic statement? a. everyone should live at the same standard of living b. if the price of gasoline rises, a smaller quantity of it will be bought c. the government should close income tax loopholes d. U.S. firms should not be allowed to outsource production of goods and services

B

Every society faces economic trade offs. This means a. some people live better than others do b. not everyone can have enough goods to survive c. producing more of one good means less of another good can be produced d. societys output cannot be made available to all

C

scarcity is central to the study of economics because it implies that a. economic agents are rational b. society must make decisions at the margin c. wants are unlimited d. every choice involves opportunity cost

D

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

Opportunity Cost

. A decrease in the demand for chocolate with no change in supply will create a ________ of chocolate at today's price, but gradually the price will ________. a. surplus; fall b. shortage; fall c. surplus; rise d. shortage; rise

a

. A marginal change is a small incremental adjustment to an existing plan of action. a. True b. False

a

. What definition best describes complements and substitute goods? a. Substitutes are goods typically used in place of one another. Complements are goods that are typically used together. b. Substitutes goods are inputs. Complements goods are outputs. c. Substitutes goods and complements goods are the same. d. Substitutes goods are subject to the law of demand and complements goods are not.

a

. Which of the following best defines normal and inferior goods? a. A normal good is a good whose demand increases when income increases and an inferior good is a good whose demand decreases when income increases. b. A normal good doesn't have substitutes. An inferior good only involves complements. c. Both normal and inferior goods are the same. d. None of the above.

a

. Which of the following defines economics? Economics is the social science that studies ___________. a. the choices made to cope with scarcity, how incentives influence those choices, and how the choices are coordinated. b. how money is created and used. c. the inevitable conflict between self-interest and the social interest. d. the best way of eliminating scarcity.

a

. Which of the following is not a shifter of the demand curve? a. Price of inputs b. Income c. Number of buyers d. Tastes

a

27. If the price of prime rib falls, the income effect due to the price change will cause a. an increase in the demand for prime rib b. an increase in the demand for flank steak, a substitute for prime rib c. an increase in the quantity of prime rib demanded. d. an increase in the quantity of prime rib supplied.

a

A minimum wage set above the market equilibrium wage rate.... a. increases unemployment and decreases employment b. raises the wage rate of those employed and increases the supply of jobs c. decreases unemployment and raises the wage rate of those employed d. increases both employment and the quantity of labor supplied

a

An individual deciding how to allocate her limited time is dealing with both scarcity and trade-offs. a. True b. False

a

Dave and Caroline produce sweaters and socks. If Dave's opportunity cost of 1 sweater is 3 socks and Caroline's opportunity cost is 1 sweater is 4 socks, then a. Dave has a comparative advantage b. Caroline has a comparative advantage c. Dave has a absolute advantage d. Dave has both a comparative and an absolute advantage

a

Economists believe that an activity should be continued up to the point where a. the marginal benefit from the activity is equal to the marginal cost. b. the marginal benefit from the activity is greater than the marginal cost. c. the marginal benefit from the activity is less than the marginal cost. d. the marginal benefit from the activity plus the marginal cost equals zero.

a

Many Americans are selling their used cars and buying new fuel-efficient hybrids. Other things remaining the same, in the market for used cars, ________ and in the market for hybrids ________. a. supply increases and the price falls; demand increases and the price rises b. demand decreases and the price rises; supply increases and the price falls c. both demand and supply decrease and the price might rise, fall, or not change; demand increases and the price rises d. demand decreases, supply increases, and the price falls; supply increases and the price falls

a

Societies organize their economies in two main ways to answer the three questions of what, how, and who. A society can have a ________ economy in which the government decides how economic resources will be allocated. Or a society can have a ________ economy in which the decisions of households and firms interacting in markets allocate economic resources. a. centrally planned; Market b. mixed; market c. mixed; mixed d. market; mixed

a

Which of the following BEST describes macroeconomics? a. It analyzes the aggregate effects on the national economy of the choices made by individuals, firms, and governments. b. It studies the choices that individuals and businesses make when coping with scarcity. c. It examines how the choices that individuals affect governments. d. It is not a social science because its predictions cannot be tested.

a

Which of the following is a positive statement? a. Competition among cell phone providers across the borders of Canada, Mexico, and the United States has driven roaming rates down. b. Bill Gates ought to spend more helping to eradicate malaria in Africa. c. You will get the most out of college life if you play a sport once a week. d. We should stop using corn to make ethanol because it is raising the cost of food.

a

? shows the relationship between the price of a product and the quantity of the product demanded

a demand curve

. If the price of propane-fueled gas grills was to decrease, then a. the demand for propane would decrease. b. the demand for propane would increase. c. the quantity of propane demanded would increase. d. the quantity of propane demanded would decrease.

b

. Ken and Traci are two woodworkers who both make tables and chairs. In one month and with the same of labor, Ken can make 3 tables or 18 chairs, a. Ken has an absolute advantage b. Traci has an absolute advantage in the production of both goods. c. Traci has a comparative advantage in chairs. d. Both have the absolute advantage in making both goods.

b

. Which of the following would cause an increase in the equilibrium price and decrease in the equilibrium quantity of watermelon? a. a decrease in demand and an increase in supply b. a decrease in supply c. an increase in demand and an increase in supply greater than the increase in demand d. an increase in demand and an increase in supply

b

31. Farmers can plant either corn or soybeans in their fields. Which of the following would cause the supply of soybeans to increase? a. an increase in the price of soybeans b. a decrease in the price of corn c. an increase in the demand for corn d. an increase in the price of soybean seeds

b

A price floor influences the outcome of a market if it is a. set below the equilibrium price b. set above the equilibrium price c. an incentive for buyers to increase demand for the good d. an incentive for sellers to decrease supply of the good

b

An. ________ is represented by a rightward shift of the demand curve while an. ________ is represented by a movement along a given demand curve. a. increase in demand; decrease in demand b. increase in demand; increase in quantity demanded c. decrease in demand; decrease in quantity demanded d. increase in quantity demanded; increase in demand

b

If a nonbinding price ceiling is imposed on a market, then the a. quantity sold in the market will decrease. b. quantity sold in the market will stay the same. c. price in the market will increase. d. price in the market will decrease

b

If the United States lifts the embargo on Cuban products, what will happen in the U.S. market for Cuban cigars? a. The supply curve will shift to the left. b. The supply curve will shift to the right. c. The demand curve will shift to the right. d. The demand curve will shift to the left

b

The law of demand implies, holding everything else constant, that as the price of yogurt a. increases, the demand for yogurt will increase. b. increases, the quantity of yogurt demanded will decrease. c. decreases, the quantity of yogurt demanded will decrease. d. decreases, the demand for yogurt will increase.

b

When floods wiped out the banana crop in Central America, the equilibrium price of bananas ________ and the equilibrium quantity of bananas ________. a. rose; increased b. rose; decreased c. fell; increased d. fell; decreased

b

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

(question 23 on study guide) Refer to Figure below. If the product represented is an inferior good, a decrease in income would be represented by a movement from a. A to B b. B to A. c. D1 to D2. d. D2 to D1.

c

Candice is planning her activities for a hot summer day. She would like to go to the local swimming pool and see the latest blockbuster movie, but because she can only get tickets to the movie for the same time that the pool is open she can only choose one activity. This illustrates the basic principle that a. people respond to incentives. b. rational people think at the margin c. people face tradeoffs. d. improvements in efficiency sometimes come at the expense of equality.

c

Central planning refers to a. markets guiding economic activity. Today many countries that had this system have abandoned it. b. markets guiding economic activity. Today many countries that did not have this system have implemented it. c. government guiding economic activity. Today many countries that had this system have abandoned it. d. government guiding economic activity. Today many countries that did not have this system have implemented it

c

FarmCo is a producer of peanut. Other things remaining the same, a fall in the price of peanuts will ________ by FarmCo. a. increase the supply of peanuts b. decrease the supply of peanut butter c. decrease the quantity supplied of peanuts d. decrease the supply of peanuts

c

In recent years, the demand for orange juice in the United States has fallen and the supply of orange juice has also fallen, with the decrease in supply being larger than the decrease in demand. In this situation, the equilibrium price of orange juice will have ________ and the equilibrium quantity of orange juice will have ________. a. decreased; increased b. decreased; decreased c. increased; decreased d. increased; increased

c

Which of the following is a positive statement? a. Bill Gates ought to spend more helping to eradicate malaria in Africa. b. We should stop using corn to make ethanol because it is raising the cost of food. c. Competition among cell phone providers across the borders of Canada, Mexico, and the United States has driven roaming rates down. d. You will get the most out of college life if you play a sport once a week.

c

Which of the following is a positive statement? a. We should stop using corn to make ethanol because it is raising the cost of food. b. You will get the most out of college life if you play a sport once a week. c. Competition among cell phone providers across the borders of Canada, Mexico, and the United States has driven roaming rates down. d. Bill Gates ought to spend more helping to eradicate malaria in Africa.

c

GOVERNMENT guiding economic activity. today many countries that had this system have abandoned it

central planning

economics is the study of the ? people make to attain their goals, given their ? resources

choices ; scarce

the difference between the highest price a consumer is willing to pay for a good or service and the actual price the consumer pays

consumer surplus

(22 on study guide) Refer to Figure below. An increase in the price of a substitute would be represented by a movement from a. A to B b. A to B c. B to A. d. D1 to D2. e. D2 to D1.

d

. Electric car manufacturers want to sell more electric cars at a higher price. Which of the following events would have this effect? a. technological advancement in the production of electric car batteries. b. an increase in the number of manufacturers of electric cars. c. a decrease in the price of lithium, which is used in electric car batteries. d. an increase in the price of gasoline.

d

25. Suppose that when the price of hamburgers increases, the Ruiz family increases their purchases of hot dogs. To the Ruiz family a. hamburgers and hot dogs are complements. b. hamburgers and hot dogs are inferior goods. c. hamburgers and hot dogs are normal goods. d. hamburgers and hot dogs are substitutes.

d

An increase in the demand for peanuts due to changes in consumer tastes, accompanied by an increase in the supply of peanuts as a result of favorable growing conditions, will result in a. an increase in the equilibrium quantity of peanuts and no change in the equilibrium price. b. an increase in the equilibrium price of peanuts and no change in the equilibrium quantity. c. an increase in the equilibrium price of peanuts; the equilibrium quantity may increase or decrease. d. an increase in the equilibrium quantity of peanuts; the equilibrium price may increase or decrease.

d

How is the burden of a tax divided? a. When the tax is levied on the sellers, the sellers bear a higher proportion of the b. When the tax is levied on the buyers, the buyers bear a higher proportion of the tax burden. c. 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. d. Regardless of whether the tax is levied on the buyers or the sellers, the buyers and sellers bear some proportion of the tax burden.

d

If a tax of $1 a can is imposed on the buyers of sugary drinks, the demand for sugary drinks ______ and the price that buyers pay ______. a. doesn't change; doesn't change. b. doesn't change; rises by $1 a can. c. decreases; rises by more than $1 a can d. decreases; rises by less than $1 a can

d

The law of demand refers to how a. demand changes when the prices of substitutes and complements change. b. demand changes when people's incomes change. c. the quantity demanded changes when the demand for the good changes. d. the quantity demanded changes when the price of the good changes.

d

The opportunity cost of obtaining more of one good is shown on the production possibilities frontier as the a. market price of the additional amount produced b. price minus the cost of production c. number of dollars that must be spent to produce it d. amount of the other good that must be given up

d

The phrase "demand has increased" means that a. a demand curve has shifted to the left. b. there has been an upward movement along a demand curve. c. there has been a downward movement along a demand curve. d. a demand curve has shifted to the right.

d

Which of the following does NOT increase the supply of personal computers, that is, does NOT shift the supply curve of personal computers? a. an advance in the technology used to produce personal computers b. an increase in the number of firms producing personal computer c. a fall in the cost of the components used to assemble personal computers d. a rise in the price of a personal computer

d

Which of the following increases the demand for a good or service? a. a fall in the price of the good or service b. the inputs used in the production of the good or service c. a rise in the price of the good or service d. a rise in the price of a substitute good or service

d

(21 on study guide) Refer to Figure below. An increase in the price of a complement would be represented by a movement from a. no movement b. A to B c. B to A. d. D1 to D2. e. D2 to D1.

e

the social science that studies the choices made to cope with scarcity, how incentives influence those choices, and how the choices are coordinated

economics

in a market economy, who makes the decisions that guide most economic activity?

firms and households

it analyzes the aggregate effects on the national economy of the choices made by individuals, firms, and governments

macroeconomics

an additional or extra

marginal

With given technology and no growth, this economy cannot produce at which points?

question 20

Which of the following would most likely have caused the production possibilities frontier to shift outward from A to B?

question 21

Refer to Figure 6-1.

question 28 - 29

unlimited wants exceed the limited resources available

scarcity

a price floor influences the outcome of a market if it is

set above the equilibrium price (good thing bc quantity supplied will be more than quantity demanded)

question 34- 35

study

question 29 - 30

study it

Refer to Figure 2-4. Inefficient production is represented by which point(s)?

study question 19

when the price of a good rises, consumers buy a smaller quantity because of the ? effect and the ?effect

substitution and income

who, in a modern mixed economy, decides what goods and services will be produced with the scarce resources available in that economy?

the government, consumers, and producers

the highest valued alternative that must be given up to engage in an acitivity

trade off