Micro Test 1 Chapters 1&2
The decisions of firms and households are A. controlled by but not totally coordinated by the government. B. coordinated by markets. C. unexplainable by the circular flow model. D. coordinated by but not totally controlled by the government. E. made independently of one another.
Coordinated by markets
Who gets the goods and services that are produced answers the ___ question
For whom
Which of the following is a positive statement? A. An increase in college tuition is not fair to students. B. A recession leads to higher enrollments at universities. C. The school needs more parking for students. D. Parking tickets on campus impose an excessive fee. E. University bookstore prices are too high.
A recession leads to higher enrollments at universities
When you buy a movie ticket, you are buying A. neither a good nor a service B. a service C. a good D. a good and a service
A service
The largest category of state and local government expenditures is A. public welfare. B. highways. C. social security. D. interest on the national debt. E. education.
Education
With more job training and more scholarships to poor American students, which special factor of production is likely to grow faster than in the past? A. human capital B. intellectual capital C. physical capital D. capital E. financial capital
Human capital
The factor of production most people supply is _______, and the income these people earn is _______. A. entrepreneurship; profit B. capital; interest C. capital; a wage D. labor; a wage E. labor; rent
Labor, a wage
Consider the incomes paid to the factors of production. Wages are paid to ____ and interest is paid to ____. A. entrepreneurs; capital B. labor; capital C. entrepreneurs; land D. labor; land E. labor; entrepreneurs
Labor, capital
Which of the following correctly lists the categories of factors of production? A. land, labor, capital, and entrepreneurship B. hardware, software, land, and money C. owners, workers, and consumers D. capital, money, and labor E. machines, buildings, land, and money
Land, labor, capital, and entrepreneurship
Economics is the ______ that studies the choices that individuals, businesses, governments, and entire societies make as they cope with the scarcity and the ____ that influence and reconcile our choices.
Social science, incentives
A circular flow model shows the interrelationship between the ____ markets and the ____ markets. A. business; household B. goods; factor C. household; goods D. household; factor E. expenditure; income
goods; factor
The cost of a oneminus−unit increase in an activity is called the A. sunk cost. B. opportunity benefit. C. marginal cost. D. margin. E. marginal benefit
Marginal Cost
Of the following, the largest source of revenue for the federal government is the A. personal income tax. B. corporation income tax. C. lottery. D. transfers from state and local governments. E. revenue from the sale of public lands.
Personal income tax
Approximately ________ people live in the United States and ________ people live in the world. A. 210 million; 6 billion B. 410 million; 8 billion C. 310 million; 7 billion D. 210 million; 5 billion E. 310 million; 3 billion
310 million, 7 billion
An example of a consumption good and service is _______. A. a golf course B. an oil tanker C. a chocolate chip cookie D. a freeway
A chocolate chip cookie
Which of the following is a consumption good or service? A. A garbage truck because households produce trash when they use goods and services B. A strawberry field because this is where strawberries are produced C. A movie because an individual pays to see the movie and then watches it in the current period D. An ATM because individuals use them in the current period to obtain cash E. A stealth bomber because governments use stealth bombers to produce national defense
A movie because an individual pays to see the movie and then watches it in the current period.
Which of the following is a consumption good or service? A. An airplane because without airplanes we could not travel long distances quickly B. The President of the United States because he serves for a limited term C. A school teacher because a school teacher gives individuals the skills they need to earn a living, which enables them to buy goods and services D. A pack of bubble gum because it is an item bought by an individual and used up in the current period E. An interstate highway because it is used by individuals in the current period whenever they drive on it
A pack of bubble gum because it is an item bought by an individual and used up in the current period
Items that are purchased by individuals for their own enjoyment are called A. capital goods. B. government goods and services. C. consumption goods and services. D. exports of goods and services. E. private goods.
Consumption goods and services
The largest share of total production in the United States is A. exported goods and services. B. capital goods. C. consumption goods and services. D. imported goods and services. E. government goods and services.
Consumption goods and services
Goods produced in the United States and sold in other countries are called A. imports. B. capital account goods. C. capital goods. D. exports. E. foreign goods.
Exports
Expenditure on consumption goods and services flows from ______ through the ______ markets. A. households and governments to firms; goods B. households to firms; goods C. households and governments to firms; factor D. governments to households; goods E. firms to households; factor
Households to firms; goods
When a firm decides to use robots to produce its output its answer the ___ question
How
Economics is the social science that studies A. how people make choices to cope with scarcity. B. whether a nation has enough natural resources. C. the psychology of individuals and businesses. D. the real reasons people buy goods and services. E. how choices made in the social interest could eliminate scarcity.
How people make choices to cope with scarcity
The global distribution of income is unequal because there is an unequal distribution of ______. A. land B. government intervention in economic life C. human capital and physical capital D. abilities E. willingness to work hard
Human capital and physical capital
Income equality has A. not changed in the advanced economies over the past 50 years. B. narrowed within countries but increased across countries. C. increased in developing economies as manufacturing has decreased. D. decreased in the United States as manufacturing has increased. E. increased within countries but has narrowed across countries.
Increased within countries but has narrowed across countries
The marginal cost of an activity ________ as you do more of it. A. changes only if the marginal benefit of the activity does not change B. changes only if the marginal benefit of the activity changes C. increases D. decreases E. doesn't change
Increases
Consider the functional distribution of income. The largest percentage of income paid to the factors of production is paid to _________. A. capital B. entrepreneurship C. labor D. labor and capital, with each receiving about 41 percent of the total income E. land
Labor
In the United States in 2014, the factor of production that earned the largest share of income was ______ and it earned ______ percent of total income. A. capital; 63 B. labour; 37 C. land; 37 D. labor; 63 E. entrepreneurship; 37
Labor, 63
Choose the statement that is a normative statement. A. Life is better in the United States when the House and the President are from the same political party. Your answer is correct.B. Abraham Lincoln was a Republican. C. The Republicans have more seats in Congress than the Democrats. D. Each state is represented by two senators. E. The President is a Democrat.
Life is better in the United States when the House and the President are from the same political party.
The income earned by entrepreneurs is A. a mixture of rent, wages, interest, and profit. B. profit or loss. C. wages. D. interest. E. rent, wages, and interest.
Profit or loss
The flows of the services of the factors of production are _______. A. real flows from households through factor markets to firms B money flows from firms through factor markets to households C. money flows from households through factor markets to firms D. real flows from firms through factor markets to households
Real flows from households through factor markets to firms
Choices that are best for the individuals that make them are choices in pursuit of A. efficiency. B. self interest. C. the social interest. D. equity. E. incentives.
Self interest
Among the United States, Canada, Russia, India, and the United Kingdom, the country with the highest average income per person is A. Canada. B. the United States. C. the United Kingdom. D. India. E. Russia.
The United States
Entrepreneurship, as a factor of production, refers to A. the technology used by firms. B. the value of the firm's stock. C. the human capital accumulated by workers. D. the human resource that organizes labor, land, and capital. E. the capital the firm uses
The human resource that organizes labor, land, and capital
Human capital is _______. A. the money humans have saved B. solely the innate ability we are born with C. machinery that needs human supervision D. any type of machinery, labor, capital, or entrepreneurship E. the knowledge and skill that people obtain from education, on-the-job training, and work experience
The knowledge and skill that people obtain from education, on-the-job training, and work experience.
If Jessie studies economics for two hours instead of going to the movies with her friends, then A. Jesse definitely is making a rational choice. B. Jessie is ignoring a sunk cost. C. the opportunity cost of studying is the missed movie. D. the benefit of studying is the missed movie. E. Jessie is not responding to any incentives.
The opportunity cost of studying is the missed movie
Which of the following is a microeconomic issue? A. The unemployment rate soars in Spain. B. Inflation skyrockets in Russia. C. The Brazilian economy experiences rapid economic growth. D. The price of gasoline increases in the United States this year. Your answer is correct. E. The U.S. government cuts taxes to combat a recession.
The price of gasoline increases in the United States this year.
Choose the statement that is a positive statement. A. The price of oil is falling. Your answer is correct.B. It is good for the U.S. economy when the price of oil falls. C. America needs more gas stations. D. The government should decrease taxes on gasoline. E. The United States should be more self-sufficient in oil production.
The price of oil is falling
Choices that are best for the society as a whole are choices in pursuit of A. answering the 'for whom' question. B. the social interest. C. self interest. D. incentives. E. answering the 'how' question.
The social interest
Economists use the ceteris paribus assumption _______. A. to isolate the factor of interest and investigate its effects in the clearest possible way B. to hold everything constant C. because it isn't possible to do experiments in economics D. because it is impossible to unscramble cause and effect in economics
To isolate the factor of interest and investigate its effects in the clearest possible way.
Economists measure the benefit you get from something by _______. A. the price of it B. what you are willing to give up to get it Your answer is correct.C. how popular it is in the marketplace D. what a business must give up to produce it
What you are willing to give up to get it.
People become entrepreneurs because they _______. The income entrepreneurs earn is called _______. A. are inspired by other entrepreneurs; a wage B. are frustrated in their jobs; a wage C. have a billion-dollar idea; profit D. have a good education; interest E. are frustrated in their jobs; profit
are frustrated in their jobs; profit
The incomes earned by the factors of production are _______. A. real flows from households through factor markets to firms B. money flows from households through factor markets to firms C. real flows from firms through factor markets to households D. money flows from firms through factor markets to households
money flows from firms through factor markets to households
Jurassic World makes a contribution to coping with scarcity because it A. requires expensive sets to be built B. provides actors with a wider job choice C. wins an Oscar D. provides an enjoyable experience that satisfies a want
provides an enjoyable experience that satisfies a want
A positive statement is about
what is
The New York Times reports that cruise lines have been slashing prices and cruise sales are up. It says this surge of interest tells us that despite the uncertain economic climate, people clearly need more fun in their lives and view their vacations as a valuable and necessary part of it. In deciding whether to take a cruise, would you face a tradeoff? You _____ face a tradeoff because _____. A. would; you forgo something else that you might do Your answer is correct.B. would; taking a cruise is a rational choice C. would not; the marginal benefit from a cruise is always less than its marginal cost D. would not; the marginal cost of a cruise is always less than its marginal benefit
would; you forgo something else that you might do
_______ firms are involved in the production of the Dreamliner. _______ of the firms are identified in the figure in the popup. A. 300; Five B. More than 400; Fifteen C. More than 400; Ten D. 300; Fifteen
More than 400, Fifteen
When a firm decides to produce computers rather than bikes, it is answering the ___ question
What
The Latin term "ceteris paribus" means A. "false unless proven true." B. "other things remaining the same." Your answer is correct.C. "what is true of the whole is not necessarily true of the parts." D. "after this, therefore because of this." E. "obviously true."
"Other things remaining the same"
An example of a capital good is ____________. A. a satellite communication system B. a business's profit C. an insurance policy D. a haircut E. a slice of pizza
A satellite communication system
An example of a capital good is a _______. A. shopping mall B. haircut C. smartphone ring tone D. treasury bill
A shopping mall
Which of the following classifications is correct? A. City streets are consumption goods because they wear out with use. B. Stocks are capital goods because when people buy and sell them they make a profit. C. A shopping mall produces retail services and is a capital good. D. The coffee maker in the coffee shop at an airport is a consumption good because people buy the coffee it produces.
A shopping mall produces retail services and is a capital good
Which of the following are capital goods? A. A movie because it can be viewed now and in the future B. An airplane, a garbage truck, and an ATM because businesses use these to produce other goods and services in the future C. An airplane, a garbage truck, and an ATM because all factors of production that are not labor are capital goods D. A movie because all factors of production that are not labor are capital goods E. The President of the United States because he encourages Congress to increase productive resources in the entire country
An airplane, a garbage truck, and an ATM because businesses use these to produce other goods and services in the future.
Which of the following are capital goods? A. A pack of bubble gum because it can be purchased now and consumed in a future period B. An interstate highway and a stealth bomber because governments buy these to increase productive resources to use during future periods to produce other goods and services C. A strawberry field because it is used to produce strawberries D. A school teacher because she helps her students increase their productive resources E. An interstate highway and a stealth bomber because governments buy and use them in the current period
An interstate highway and a stealth bomber because governments buy these to increase productive resources to use during future periods to produce other goods and services.
Capital goods _______. A. include money, stocks, and bonds B. are goods that businesses and governments buy to increase productive resources to use during future periods to produce other goods and services C. are goods that businesses and governments produce D. include the knowledge and skill that people obtain from education, on-the-job training, and work experience
Are goods that businesses and governments buy to increase productive resources to use during future periods to produce other goods and services.
Consumption goods and services _______. A. are items that individuals and governments buy and use up in the current period B. are items that businesses use to produce other goods and services C. include bank accounts owned by individuals and governments D. are items that governments produce as a means of increasing employment
Are items that individuals and governments buy and use up in the current period
One of the following statements is an example of a positive statement. Which one is it? A. California wine production soars B. Every child should have a computer C. We should save more D. Vote Republican
California wine production soars
Which of the following statements is correct? A. Capital earns interest and labor earns wages. B. Entrepreneurship earns interest and capital earns profit. C. Land earns interest and capital earns rent. D. Labor earns wages and entrepreneurship earns bonuses.
Capital earns interest and labor earns wages.
The factor of production _________, and the factor of production _______. A. money earns interest; initiative earns profit B. capital earns rent; entrepreneurship earns wages C. capital earns interest; entrepreneurship receives a profit or incurs a loss D. investment earns interest; capital incurs depreciation
Capital earns interest, entrepreneurshiprecieves a profit or incurs a loss.
The Dreamliner is a _______ good because it is _______. A. capital; produced by more than one firm B. consumption; used by individuals in the current period C. capital; bought by airlines to increase productive resources D. consumption; bought by airlines to increase productive resources
Capital, bought by airlines to increase productive resources.
Which of the following statements about U.S. production is correct? A. Real estate services account for 14.5 percent of the value of total production, larger than any other item of services or goods. B. Construction accounts for a larger percentage of total production than does manufacturing. C. Consumption goods and services represent almost 80 percent of U.S. production by value and that percentage doesn't fluctuate much from year to year. D. The manufacture of goods represents more than 50 percent of total production.
Consumption goods and services represent almost 80 percent of U.S. production by value and that percentage doesn't fluctuate much from year to year.
A normative statement A. can be tested to determine if it is correct. B. depends on someone's values. C. must be tested to determine if it is correct. D. cannot use the word "should." E. says what is currently believed about the way the world operates.
Depends on someone's values
Economics studies choices that arise from one fact. What is that fact?
Everyone faces scarcity.
Payments for labor services flow from ______ through the ______ markets. A. firms to households; goods B. households to firms; factor C. firms and governments to households; factor D. firms to households; factor E. households to firms; goods
Firms to households; factor
Purchases of new national defense equipment flow from ______ through the ______ markets. A. governments to firms; government B. governments to firms; goods C. governments and households to firms; factor D. governments and households to firms; goods E. firms to governments; factor
Governments to firms; goods
The emerging market economies are A. the largest grouping including the nations of China and India. B. the nations with the highest standards of living. C. in transition from stateminus−owned production to free markets. D. the nations that are currently agricultural in nature. E. most of the nations of Western Europe
In transition from state-owned production to free markets
A professor changes the penalty for cheating on exams from getting a 0 on the exam to getting an F in the course. The professor has A. recognized that students don't respond to incentives. B. decreased the marginal benefit of cheating. C. increased the marginal cost of cheating. D. recognized that students don't make rational choices. E. made all the students act in the social interest.
Increased the marginal cost of cheating
In the United States, the productive factor that, as a group, receives the largest fraction of the nation's total income was A. land. B. labor. C. capital. D. entrepreneurship. E. consumption goods and services.
Labor
Scarcity means we must A. make choices. B. work more. C. earn more. D. produce less. E. consume less.
Make choices
You must do your homework but you also want to check your emails.You must do your homework but you also want to check your emails. You think hard about how to allocate the next hour between doing problem sets doing problem sets and reading email reading email. You decide to spend the first 15 minutes studying and the remaining 45 minutes dealing with your emails dealing with your emails. Your decision is an example of _______. A. good time managementgood time management B. making a choice at the margin Your answer is correct.C. making the big tradeoffmaking the big tradeoff D. a marginal incentivea marginal incentive
Making a choice at the margin
In order to determine whether to major in economics, a rational individual compares the ________ of the decision. A. marginal benefit and marginal cost B. normative benefits and positive costs C. opportunity cost and the sunk cost D. selfminus−interest and socialminus−interest E. positive benefits and normative costs
Marginal benefit and marginal cost
What typically happens to benefits as the amount of an activity is increased? A. Marginal benefit remains constant. B. Marginal benefit increases. C. Marginal benefit decreases. D. The marginal benefit changes only if the marginal cost changes. E. Total benefits remain constant
Marginal benefit decreases
Compared to the developing economies, the advanced economies have _______ human capital and _______ physical capital. A. more; less B. less; more C. less; less D. more; more E. the same; the same
More; more
Macroeconomics is the study of A. how ceteris paribus affects causation. B. the actions of individual consumers. C. the actions of individual businesses. D. national or global economies. Your answer is correct. E. the government
National or global economies
Do you think that at some future time, there will be no jobs in the United States and all the jobs will be in developing economies? Why or why not? A. No, because the wages in the developing world will eventually rise above ours and we will then be the producers and exporters of manufactures. B. No, because Americans will be unwilling to buy foreign-produced items. C. Yes, because our costs will become too high. D. Yes, because we'll become so rich that we don't need to work. E. No, because we will always want personal services and entertainment and talented people will always be available to produce these items in the United States.
No, because we will always want personal services and entertainment and talented people will always be available to produce these items in the United States.
Macroeconomics is the study of A. The choices that individuals make B. All aspects of scarcity C. the national economy and the global economy D. Big businesses
The national economy and the global economy.
An example of ceteris paribus is the statement ______. A. To find the effect on the number of workers hired comma let the capital they use increase B. To study the effect of a wage rise on the number of employees comma keep the population constant Your answer is correct. C. To study how cinema ticket prices influence revenue comma assume that the movie wins the best picture award D. To study the effect of a rise in the oil price comma keep all prices constant
To study the effect of a wage rise on the number of employees, keep the population constant
One of the productive resources is capital. Capital includes A. a company's stocks and bonds. B. toys, tminus−shirts, CD players, and pencils. C. money in a savings account at a bank. D. money borrowed from a bank. E. tools, buildings, and machine tools.
Tools, buildings, and machine tools
One of the following statements is an example of a normative statement. Which one is it? A. It is possible to meet all our energy needs with renewable sources B. Nuclear power is cheaper than conventional power C. Vote Democrat D. Exercise controls weight
Vote Democrat
We can't avoid having to make choices because.. A. We can't afford to buy all the things we'd like B. there are too many TV channels C. there is too much available D. There is too much variety C. We keep changing our minds.
We can't afford to buy all the things we'd like.
The New York Times reports that cruise lines have been slashing prices and cruise sales are up. It says this surge of interest tells us that despite the uncertain economic climate, people clearly need more fun in their lives and view their vacations as a valuable and necessary part of it. How would you make a rational choice about taking a cruise? To make a rational choice you would ______. A. compare the marginal benefit from taking the cruise with the marginal cost of the cruise B. consider the length of the cruise and the route it will take C. check with the National Hurricane Center about weather onroute D. chose the ship with the most amenities regardless of the price of the cruise E. chose the cruise line with the cheapest price regardless of its amenities
compare the marginal benefit from taking the cruise with the marginal cost of the cruise
The factor of production _________, and the factor of production _______. A. human capital earns wages; financial capital earns interest B. land earns interest; labor earn profit C. land earns rent; labor earns wages D. human capital earns wages; time earns profit
land ears rent, labor earns wages
A normative statement is about what
ought to be
Your school has decided to increase the intake of new students next year. In reaching its decision, would the school use the "economic way of thinking" and make its decision at the margin? Your school would use the "economic way of thinking" and make its decision at the margin by checking that ____________________.. A. the school's net benefit from an additional student was positive Your answer is correct.B. total revenue from students exceeds the total cost of running the school C. the student's marginal benefit from attending the school exceeds the student's tuition D. the number of classrooms and the number of teachers match
the school's net benefit from an additional student was positive