Micro Econ Exam 1

competition means that a. a product can be purchased at a number of different prices b. there is more than one seller in a market c. there are independently acting buyers and sellers in each market d. sellers can manipulate market price by causing production scarcities

c. there are independently acting buyers and sellers in each market

Explain how (if at all) each of the following events affects the location of a country's production -a new technique improves the efficiency of extracting copper from ore: a. no change b. curve shifts outward c. curve shifts inward

b. curve shifts outward

Explain how (if at all) each of the following events affects the location of a country's production possibilities curve: -the quality of education increase a. no change b. curve shifts outward c. curve shifts inward

b. curve shifts outward

assume that a consumer spends a given budget on only two goods and that the prices of the two goods are constant. The budget line in this case would a. be a curved bell-shaped graph b. definitely be a straight downward-sloping line c. possibly be a straight upward-sloping line d. be a curved graph bowed outward

b. definitely be a straight downward-sloping line

Explain the typical shapes of the marginal benefit and marginal cost curves -the marginal benefit curve is ............ sloping a. upward b. downward

b. downward

"Creative destruction" in a market system is brought about by a. striking workers b. entrepreneurship c. money-based trade d. regulation by the government

b. entrepreneurship

Because economic resources are used to produce goods and services, they are called a. resources of products b. factors of production or input c. inputs or production d. factors of production or product

b. factors of production or input

11 units at which MC = $4 and MB = $3: a. more b. fewer c. current number

b. fewer

5 units at which MB<MC: a. more b. fewer c. current number

b. fewer

If current output is such that marginal cost exceeds marginal benefit, should more or fewer resources be allocated to this product? a. more b. fewer

b. fewer

With these curves, the optimal allocation of resources to a particular product will occur when... a. MB=MC b. MB<MC c. MB>MC

a. MB=MC

why is entrepreneurial ability distinct from labor even though both are considered a category of economic resource? a. because entrepreneurial ability is directly engaged in production b. because entrepreneurial ability is not directly engaged in production

b. because Entreprenurial ability is not directly engaged in production

which of the following is associated with macroeconomics? a. an empirical investigation of the general price level and unemployment rates since 1990 b. a study of the trend of pecan prices since the second world war c. an examination of the incomes of professional athletes d. a case study of pricing and production in the textbook industry

a. an empirical investigation of the general price level and unemployment rates since 1990

in a market system, employees and suppliers a. are usually shielded from risk, but at the cost of not sharing in the profits of the firm b. bear as much risk as firm owners but don't get to share in the profits c. are usually shielded from risk and share in the profits of the firm d. are generally subject to as much as firm owners but get to share in the profits

a. are usually shielded from risk, but at the cost of not sharing in the profits of the firm

self-interest helps achieve society's economic goals because a. as consumers and producers exercise their freedom to act in their own self-interest, markets will produce the desired goods at the lowest possible cost b. consumers know which goods can be produced at the lowest cost c. consumers and producers both operate based on society's economic goals d. producers know which goods consumers want the most

a. as consumers and producers exercise their freedom to act in their own self-interest, markets will produce the desired goods at the lowest possible cost

Starbucks should continue to add stores in a city a. as long as the marginal benefit of opening a new location does not fall below the marginal cost b. until all remaining competing coffee stores have left the market c. as long as the marginal cost of opening a new location does not fall below the marginal benefit d. as long as the gap between marginal benefits and marginal cost is growing

a. as long as the marginal benefit of opening a new location does not fall below the marginal cost

Why might a company use barter rather than money to make a trade? a. barter can enable two firms to trade when their cash flows are limited b. barter trade is generally more efficient than money-based trade c. money is efficient only for large transactions, so barter is preferred for smaller transactions d. money requires a coincidence of wants; barter is more direct

a. barter can enable two firms to trade when their cash flows are limited

a Venezuelan-style economic collapse would be less likely in a mixed economy like the US a. corruption is less likely when economic power is more diffused b. inflation is always low in a mixed economy c. mixed economies like the US usually have a more equal distribution of income d. private industry has strong financial incentives to produce efficiently

a. corruption is less likely when economic power is more diffused d. private industry has strong financial incentives to produce efficiently

"if you compare a list of today's most powerful and profitable companies with a similar list from 30 years ago, you will see lots of new entries" a. creative destruction b. invisible hand

a. creative destruction

which of the following is not a key element of the scientific method a. designing data b. formulating explanations c. testing explanations d. determining the validity of explanations

a. designing data

Barter requires that you a. find a person who has what you want and a person who needs what you have to offer b. know the market value of all the goods and services that you want and have to offer c. are a member of an established barter network d. live in an area where there are people with diverse talents and a market with diverse products

a. find a person who has what you want and a person who needs what you have to offer

in a command economy, scarce goods are allocated by a. an elected planning board based on the board's long-term priorities b. a government-appointed planning board based on the board's long-term priorities c. an elected planning board based on the board's preferences d. a government-appointed planning board based on the board's preferences

b. a government-appointed planning board based on the board's long-term priorities

the meaning of the phrase "invisible hand" is that a. market prices coordinate the economy by rationing resources and output by providing incentives to produce the goods and services most desired by society b. since buyers and sellers do not usually transact in person, the transactions are invisible c. no one person or firm actually sets the price of the product d. market prices are not always known to buyers and sellers

a. market prices coordinate the economy by rationing resources and output by providing incentives to produce the goods and services most desired by society

in a market system, scarce goods are allocated by a. market prices that are determined by consumers and producers acting in their own self-interest b. fixed prices that are determined by consumers and producers acting in the public interest c. market prices that are determined by consumers and producers acting in the public interest d. estimated prices that are determined by consumers and producers acting in their own self-interest

a. market prices that are determined by consumers and producers acting in their own self-interest

A U.S. software firm laid off 15 workers last month and transferred the work to India a. micro b. macro

a. micro

An unexpected freeze in central Florida reduced the citrus crop and caused the price of oranges to rise. a. micro b. macro

a. micro

3,000 units at which MC=$10 and MB=$13 a. more b. fewer c. current number

a. more

82 units at which MC < MB: a. more b. fewer c. current number

a. more

which of the following is not a consequence of government subsidized flood insurance? a. more people will choose to live and work on higher ground b. taxpayers will have to help pay for the rebuilding of flooded properties c. more people will choose to live in areas susceptible to flooding d. it makes actual risks of flooding look artificially low

a. more people will choose to live and work on higher ground

economic resources are the: a. natural, human, and manufactured inputs used to produce goods and services b. technological, human, and manufactured inputs used to produce goods and services c. natural, human, and financial inputs used to produce goods and services d. natural, technological, and manufactured inputs used to produce goods and services

a. natural, human, and manufactured inputs used to produce goods and services

Explain how (if at all) each of the following events affects the location of a country's production -the number of unemployed workers increases: a. no change b. curve shifts outward c. curve shifts inward

a. no change

money is not considered a capital resource in economics because money is a. not productive b. productive

a. not productive

in the circular flow model a. resource market provide for the exchange of labor and product markets provide for the exchange of goods and services b. goods markets provides for the transfer of money and labor markets provide for the transfer of inputs c. resource markets provide for the goods and services and product markets provide for the exchange of labor d. labor markets provide for the transfer of money and goods markets provide for the transfer of inputs

a. resource market provide for the exchange of labor and product markets provide for the exchange of goods and services

the emergence of self-driving cars is an example of "creative destruction" because a. self-driving cars will likely replace most cars that require drivers b. the firms that produce cars today will likely be the main producers of self-driving cars c. self-driving cars will be less expensive to build than current cars d. it shows that the automobile industry is becoming more efficient

a. self-driving cars will likely replace most cars that require drivers

which of the following best describes the "invisible hand" concept? a. self-interest in a market system will automatically promote the public interest as well b. the market system works best when resources are free to move from one use to another c. the problem of scarcity can best be overcome in a system of mixed capitalism d. ample regulation of business by the government will maximize the publics best interests

a. self-interest in a market system will automatically promote the public interest as well

Laissez-faire capitalism limits the government's economic functions to the following except a. setting prices of individual goods and services b. protecting private property rights c. establishing a legal environment to enforce contracts among individuals d. preventing individuals and firms from coercing others

a. setting prices of individual goods and services

which of the following is a correct statement a. because economics is primarily concerned with questions of "ought" it is a branch of applied ethics and not scientific b. although they are generalizations, economic laws are useful because they allow us to predict and therefore influence or adjust to events c. economic concepts or laws that are valid during recessions are necessarily valid during prosperity d. economists use the scientific method. therefore, economic laws are as quantitatively precise as the laws of physics or chemistry

b. although they are generalizations, economic laws are useful because they allow us to predict and therefore influence or adjust to events

which of the following represents a normative economic statement? a. the government ought to lower taxes so people have more money b. higher taxes will lower spending c. the government will have a larger deficit if unemployment benefits are extended d. the unemployment rate is higher than it was last year

a. the government ought to lower taxes so people have more money

which of the following represents a positive economic statement? a. the unemployment rate is 4.8 percent b. taxes should not be increased since that will lower spending c. the unemployment rate is too high d. the government should extend unemployment benefits

a. the unemployment rate is 4.8 percent

when an economy relies on specialization a. trade enables individuals to obtain the goods in which they do not have specialization b. trade is established according to the value of the specialized product c. centralized coordination is needed to ensure that everyone obtains the goods they need d. there will be more efficiency in production, but there will be disruptions in the distribution of goods

a. trade enables individuals to obtain the goods in which they do not have specialization

Explain the typical shapes of the marginal benefit and marginal cost curves -the marginal cost curve is.......... sloping a. upward b. downward

a. upward

in a market system, the allocation of scarce goods involves the consideration of a. what must be sacrificed in using a resource for its next best use b. the dollar cost of any good or service c. the time required to pursue an economic activity d. identifying the possibility of professional development

a. what must be sacrificed in using a resource for its next best use

the market system is an economic system that a. emphasizes the government's power to control markets and direct economic activity b. gives private individuals the right to own resources used in production c. produces more capital goods than consumer goods d. produces more consumer goods than capital goods

b. gives private individuals the right to own resources used in production

in a market system, if firms in an industry persistently earn total revenues that are less than total costs, then that industry will a. experience entry of new firms b. have some firms go out of business c. get government protection from failure d. attract more resources toward it

b. have some firms go out of business

there is such a wide variety of desired goods and services in a market system because a. producers determine what to produce b. individual wants are diverse c. there is always a need to produce something new and improved d. consumers change their minds frequently

b. individual wants are diverse

what roles do entrepreneurs play in the economy? a. makes routine pricing decisions b. innovates c. purchase capital d. creates market demand e. takes risks f. makes decisions

b. innovates e. takes risks f. makes decisions

"Each day, central planners in the old Soviet Union were tasked with setting 27 million prices-correctly" a. creative destruction b. invisible hand

b. invisible hand

"it is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest" a. creative destruction b. invisible hand

b. invisible hand

"managers in the old soviet union often sacrificed product quality and variety because they were being awarded bonuses for quantitative, not qualitive targets" a. creative destruction b. invisible hand

b. invisible hand

the economizing problem is one of deciding how to make the best use of a. unlimited resources to satisfy limited wants b. limited resources to satisfy virtually unlimited wants c. limited resources to satisfy limited wants d. virtually unlimited resources to satisfy virtually unlimited wants

b. limited resources to satisfy virtually unlimited wants

the unemployment rate in the United States was 3.7 percent in December 2018 a. micro b. macro

b. macro

Which of the following is not considered by economists to be an economic resource? a. factory workers b. money c. a forest d. computers at a retail store

b. money

economics involves marginal analysis because a. marginal costs always exceed marginal benefits b. most decisions involve changes from the present situation c. much economic behavior is irrational d. marginal benefits always exceed marginal costs

b. most decisions involve changes from the present situation

The next best thing that must be forgone in order to produce one more unit of a given product a. economics b. opportunity cost c. marginal analysis d. utility

b. opportunity cost

The fact that the major indicator of enterprise success in the Soviet Union and Pre-form China was the quantity of output implied that a. product mix met consumer needs b. product quality was neglected c. production costs were minimized d. technological advance was too rapid

b. product quality was neglected

households and businesses are a. sellers in the product and resource markets respectively b. sellers in the resource and product markets respectively c. both buyers in the resource market d. both sellers in the resource market

b. sellers in the resource and product markets respectively

a student will decide to attend class when a. the marginal cost is low b. the marginal benefit of attending exceeds the marginal cost of attending c. the marginal benefit is positive d. there is an attendance

b. the marginal benefit of attending exceeds the marginal cost of attending

the major "success indicator" for business managers in command economies like the Soviet Union and China in the past was a. product quality and variety b. the quantity or volume of production c. the amount of profits a producer makes d. morale of workers in a firm

b. the quantity or volume of production

consider the following statement "competition is the disciplinarian of the market economy" this statement is a. false, because when consumers realize there is competition, they are driven to demand more goods and services b. true, because when producers face competition, they are driven to provide goods and services at the lowest possible cost c. true, because when consumers realize there is competition, they are driven to demand more goods and services d. false, because when producers face competition, they are driven to provide more goods and services, and costs will rise

b. true, because when producers face competition, they are driven to provide goods and services at the lowest possible cost

In a market system, a firm's employees are typically shielded from business risk by a. the social security program b. wage contracts c. profit-sharing agreements d. paid vacation leaves

b. wage contracts

suppose that you are given a $100 budget at work that can be spent on two items: staplers and pens. if staplers cost $10 each and pens cost $2.50 each, then the opportunity cost of purchasing one stapler is a. 5 pens b. zero pens c. 4 pens d. 10 pens

c. 4 pens

an economic system in which money is not used as a medium of exchange is a a. mixed economy b. market economy c. barter economy d. planned economy

c. barter economy

in the simple circular flow model a. households are sellers of final products b. households are buyers of resources c. businesses are sellers of final products d. there are real flows of goods, services, resources, but not money flows

c. businesses are sellers of final products

43,277 units at which MC = $99 and MB = $99 a. more b. fewer c. current number

c. current number

Explain how (if at all) each of the following events affects the location of a country's production -a devastating earthquake destroys numerous production facilities a. no change b. curve shifts outward c. curve shifts inward

c. curve shifts inward

in a market system, the task of assessing and managing the business risk of a firm is taken on by the firm's a. customers b. labor c. entrepreneurs d. capital suppliers

c. entrepreneurs

which of the following is assumed to be most limited in scope under a market system? a. self-interest b. entrepreneurship c. government d. specialization

c. government

the main function of the entrepreneur is to a. create market demand b. make routine pricing decisions c. innovate d. purchase capital

c. innovate

An economic hypothesis a. has the same meaning as an economic principle or economic law b. is usually a normative statement c. is a possible explanation of cause and effect d. is a stronger generalization than an economic law

c. is a possible explanation of cause and effect

Price ceilings during a hyperinflation are problematic because a. many government officials will become corrupt b. the excess money supply makes prices too high c. many producers will go out of business because the costs of production will soon exceed the legal selling price d. consumers don't like the goods that producers are offering for sale

c. many producers will go out of business because the costs of production will soon exceed the legal selling price

the market system depends on private property and the protection of property rights to a. ensure that those people who own property use it wisely b. make sure that there are adequate safeguards against theft c. provide an incentive to maintain the property and allow for the orderly transfer of property ownership d. establish the cost for the administration and orderly transfer of property

c. provide an incentive to maintain the property and allow for the orderly transfer of property ownership

Suppose that, on the basis of a nation's production possibilities curve, an economy must sacrifice 10,000 pizzas domestically to get the 1 additional industrial robot it desires, but that it can get the robot from another country in exchange for 9,000 pizzas. Now consider the following statement: "Through international specialization and trade, a nation can reduce its opportunity cost of obtaining goods and thus 'move outside its production possibilities curve.'" Which of the following explains the relationship between the situation described and the statement? a. specialization and trade have the same effect as having more and better products or discovering improved production techniques b. international specialization means directing domestic products to the output that a nation is highly efficient at purchasing c. specialization and trade have the same effect as having more and better resources or discovering improved production techniques d. the input gains from greater international specialization and trade are equivalent of economic growth

c. specialization and trade have the same effect as having more and better resources or discovering improved production techniques

the term "division of labor" means that workers a. identify the products than can be produced so that they can take advantage of their individual abilities and skills b. develop the skills needed to complete a job c. specialize in tasks that the advantage of their individual abilities and skills d. share the labor needed to complete a job

c. specialize in tasks that the advantage of their individual abilities and skills

What is a major opportunity cost of going to college on a full-time basis? a. the cost-of-living expenses to attend college b. the greater income will be earned from having a degree c. the forgone income that would have been earned working a full-time job d. the cost of transportation to college instead of a job

c. the forgone income that would have been earned working a full-time job

which one of the following is a normative economic statement? a. the unemployment rate fell for the fourth straight month, reflecting the effects from stronger economic growth in the second quarter b. consumer prices as rising at a faster rate than in past months, indicating a renewal of inflationary pressures on the economy c. the worsening balance of trade must be corrected if this nation is to remain competitive in the world economy d. to help balance the federal budget, congress increased the tax on gasoline to its highest level in the past 10 years

c. the worsening balance of trade must be corrected if this nation is to remain competitive in the world economy

Specialization and international trade allow a nation to a. have an upward-sloping production possibilities curve b. consume a lot of goods without having to produce any output c. produce a combination of goods that is beyond (or outside) its production possibilities d. consume a combination of goods that is beyond (or outside) its production possibilities

d. consume a combination of goods that is beyond (or outside) its production possibilities

what is produced is ultimately determined by a. producers, because they determine what to produce b. consumers, because they participate in marketing surveys c. producers, because they are driven by profits d. consumers, because if the goods offered are not what consumers want, consumers will not buy them.

d. consumers, because if the goods offered are not what consumers want, consumers will not buy them.

"because the outputs of many industries are the inputs to other industries, the failure of any single industry to fulfil the output quantities specified in the central plan caused a chain reaction of adverse repercussions on production." This quotation best identifies a. resource overcommitment problem under communism b. self-sufficiency dilemma under communism c. incentive problem under central planning d. coordination problem under central planning

d. coordination problem under central planning

in a market system, resources will move away from an industry when a. profits of firms in other industries are falling b. the production of output in the industry is rising c. profits of firms in the industry are rising d. demand for the industry's product is decreasing

d. demand for the industry's product is decreasing

The scientific method is the technique used by economists to determine a. the way in which consumers relate to each other b. the price of a product c. the size of the government d. economic principles

d. economic principles

Cuba is a command economy that suffered a decline in economic growth because of a cut in the aid provided by the former Soviet Union when the latter collapsed. As consequence, Cuba a. experienced an outward shift of its production possibilities curve b. moved from one point to another along its existing production possibilities curve c. went to a point inside its production possibilities curve d. experienced an inward shift of its production possibilities curve

d. experienced an inward shift of its production possibilities curve

A positive statement is one that a. focuses on the best course of action and its based-on value judgments b. is derived by deduction c. is derived by induction d. focuses on facts, descriptions, and theoretical relationships

d. focuses on facts, descriptions, and theoretical relationships

Suppose a city block was going to be used for a parking lot. The opportunity cost would be a. greater in a small city because the alternative uses of the city block are more valuable b. lower in a small city because the alternative uses of the city block are more varied c. lower in New York city because the alternative uses of the city block are more varied d. greater in New York city because the alternative uses of the city block are more valuable

d. greater in New York city because the alternative uses of the city block are more valuable

an advantage of using capital in the production process is that it a. replaces labor b. is more expensive than labor c. improves efficiency, reduces output, and provides for growth d. improves efficiency, increases output, and provides for growth

d. improves efficiency, increases output, and provides for growth

Economists classify resources as a. labor, land, human capital, and entrepreneurs b. labor, resources, real capital, and entrepreneurs c. labor, land, financial capital, and entrepreneurs d. labor, land, real capital, and entrepreneurs

d. labor, land, real capital, and entrepreneurs.

which of the following statements pertains most directly to macroeconomics a. decline in the price of soybeans caused farmer Wanek to plant more wheat b. because the minimum wage was raised, Mrs. Olsen decided to enter the labor force c. the pumpkin center state bank increased its interest rate on consumer loans by 1 percentage point d. national income grew by 2.7 percent

d. national income grew by 2.7 percent

The use of money a. establishes the value of goods and services b. provides a common value that makes it easier to barter c. provides a common value that makes buying and selling transactions simpler as long as there is a single currency in use d. provides a common value that makes buying and selling transactions simpler than would be the case with barter

d. provides a common value that makes buying and selling transactions simpler than would be the case with barter

the economic function of profits and losses is to a. tell government which industries need to be subsidized b. eliminate small firms and reduce competition c. bring about a more equal distribution of income d. signal that resources should be reallocated

d. signal that resources should be reallocated

Some large hardware stores such as Home Depot boast of carrying as many as 20,000 different products in each store. This volume of goods is the result of a. the choice of consumers regarding what to purchase to satisfy their wants and the choice of producers regarding what to produce to satisfy their wants b. the purchasing agents at Home Depot who have determined what goods producers have available c. the purchasing agents at Home Depot who have determined what goods consumers want d. the choice of consumers regarding what to purchase to satisfy their wants and the choice of producers regarding what to produce to maximize profits

d. the choice of consumers regarding what to purchase to satisfy their wants and the choice of producers regarding what to produce to maximize profits

which of the following is considered a firm's "factor of production"? a. U.S. Treasury bonds owned by the firm b. money or cash balances of the firm c. the firm's shares of common stock d. the office building occupied by the firm

d. the office building occupied by the firm

in a competitive market economy, firms select the least-cost production technique because a. "dollar voting" by consumers mandates such a choice b. this will prevent new firms from entering the industry c. such choices will result in full employment of available resources d. to do so will maximize the firms' profits

d. to do so will maximize the firms' profits

Consider the following statement "the market system is a profit-and-loss system." This statement is a. true, because consumers only purchase what they want, producers will earn profits b. false, because the market system does much more than provide profits and losses c. false, because consumers purchase only what they want, producers will earn profits d. true,because producer decisions are motivated by the attempt to earn profits

d. true, because producer decisions are motivated by the attempt to earn profits

which of the following is one of the five fundamental questions? a. how much should society save? b. which government agency should decide on output amounts? c. should these products be free to the public? d. who will get the output?

d. who will get the output?