ECO 1&2

43. In the circular-flow model

firms supply ______ to households through product markets. a. Goods and services b. Products c. Labor, capital, natural resources, and entrepreneurial ability d. Resources e. Wages, interest, rent, and profit

35. Which of the following points in Exhibit 2-2 is unattainable

given the quantity of resources and level of technology? a. F b. H c. I d. E

22. Division of labor increases productivity because a. Tasks can be assigned according to individual tastes and abilities b. Workers who repeatedly perform the same tasks become bored c. Each worker must learn each of the numerous tasks in the total production process d. Specialization of labor allows for the introduction of cheaper

less sophisticated production techniques e. Managers can force workers to produce goods that are valued more highly than the costs of producing them

Exhibit 2-3 36. In Exhibit 2-3

what is the opportunity cost of moving from point c to point b? a. 3 units of food b. 22 units of education c. 1 unit of food d. 12 units of education e. 62 units of education

26. Adam Smith's term

"the invisible hand", refers to a. The hidden role of government in setting regulations that govern trading in markets b. The most capable entrepreneurs in the economy c. Market forces d. The unseen work of the financial markets that facilitates trade e. The role of technological change and random events in the economy

27. When faced with a choice

a person assesses alternatives as long as the expected marginal ______ of gathering more information about the person's opinions ______ the expected marginal ______. a. Benefit, is less than, cost b. Cost, exceeds, benefit c. Benefit, exceeds, cost d. Benefit, is greater than, benefit e. Cost, is greater than, benefit

12. Because resources are scarce

a. Opportunity costs are zero b. People must make choices among alternatives c. All human wants and desires can be satisfied d. Resource prices are fixed e. Commodities are free

10. Economists classify all of the following as capital

except one. Which one is not capital? a. A $20 bill in a firm's petty cash drawer b. The building where our economics class meets c. A plumber's wrench d. A railroad car e. A factory

6. Which of the four types of economic decision makers in the U.S. economy plays the largest role? a. U.S. firms and government because they produce the products that households consume b. U.S. households because they supply goods to the product markets and are demanders in resource markets c. Foreign households

firms, and government because they greatly outnumber those of the U.S. d. U.S. firms and government because they create employment for domestic households and produce goods and services e. U.S. households, as buyers in product markets and sellers in resource markets

44. In the circular-flow model

households supply ______ to firms through resource markets a. Labor, capital, natural resources, and entrepreneurial ability b. Play a very minor role in the economy c. Products d. Wages, interest, rent, and profit e. Goods and services

9. In a circular-flow model

households supply all of the following except a. Labor b. Goods and services c. Capital d. Entrepreneurial ability e. Natural resources

13. Which of the following are the four categories of resources? a. Human effort

human capital, money, and natural resources b. Labor, physical capital, money, and entrepreneurial ability c. Labor, entrepreneurial ability, capital, and money d. Labor, entrepreneurial ability, capital, and natural resources e. Human effort, money, entrepreneurial ability, and natural resources

32. In Exhibit 2-2

if all the economy's resources are used efficiently to produce good A, then the economy is at point a. H b. E c. D d. I e. C

Exhibit 2-2 31. In Exhibit 2-2

if all the economy's resources are used efficiently to produce good B, then the economy is at point a. G b. B c. H d. I e. E

34. In Exhibit 2-2

if resources are used fully and efficiently, then the economy can produce at point(s) a. F b. H, D, or E c. A, B, or C d. D or E e. G, H, or I

38. In Exhibit 2-4

if society moves from point c to point d, society a. Gains 100 socks b. Loses 30 mufflers c. Is worse off after the change in production d. Is not operating efficiently e. Experiences some unemployment of resources

15. To say that people make marginal decisions means that a. They usually wait until the last minute before making a decision to buy b. They weigh the additional costs and additional benefits of various activities before they make a decision c. Most people just barely get by on the incomes they earn and live from day to day on the very edge of subsistence d. Given a choice

most people would prefer to make their own decisions concerning the things that affect their lives e. They consider the total cost and benefit of various activities before they make a purchase

39. A resource is something that a. Is always available free of cost b. Is used to produce goods and services c. Must be produced by a firm d. Exists in unlimited quantities e. Is provided by nature

not produced by society

17. Which of the following is an example of a normative statement? a. Incomes increase when national production increases. b. Women should earn the same income as men. c. When the price of a good rises

people will buy more of it. d. The more time you spend studying, the higher your economics test scores will be. e. The more time you spend studying for chemistry, the higher your economics test scores will be.

45. In the circular-flow model

the flow from firms to product markets is: a. Goods and services b. Products c. Labor, capital, natural resources, and entrepreneurial ability d. Resources e. Wages, interest, rent, and profit

Exhibit 2-4 37. In Exhibit 2-4

the opportunity cost of moving from point b to point d is a. 30 mufflers b. 50 mufflers c. 100 socks d. 150 socks e. 250 socks

4. Which of the following is an example of a positive statement? a. Workers with families should be paid at least the minimum wage. b. If crime rates were reduced

the world would be a better place in which to live. c. Marginal tax rates should be reduced for individuals in the highest tax brackets. d. An increase in the price of gasoline will cause a reduction in the amount purchased. e. Corrupt politicians ought to be voted out of office.

30. Adam Smith believe that people's pursuit of their own self-interests a. Tended to promote the general welfare b. Required the government's "invisible hand" to keep the economy running smoothly c. Might cause aggregate demand to be greater than aggregate supply d. Would increase the wealth of a nation

which was the quantity of gold and silver it owned e. Would decrease the wealth of a nation, which was its ability to produce goods and services