eco test part 1

24) Microeconomics is the study of topics such as national production and unemployment.

F

25) The tools, instruments, machines, and buildings that people use to produce goods and services are called human capital.

F

As long as the marginal benefit from a good is greater than its marginal cost, an economy is operating efficiently.

F

Each point on the production possibilities frontier achieves allocative efficiency. True/False?

F

10) The term human capital refers to 10) A) entrepreneurship and risk-taking. B) buildings and machinery. C) labor resources used to make capital equipment. D) people's knowledge and skill.

D

19) Making a choice at the margin means 19) A) deciding to do a little bit more or a little bit less of an activity. B) waiting until the last minute to make a choice. C) making a choice by comparing the total benefit and the total cost. D) letting someone else choose for you.

A

21) Which of the following is a positive statement? 21) A) Low rents decrease the amount of housing landlords make available for rent. B) Low rents are good because they make apartments more affordable. C) Owners of apartment buildings ought to be free to charge whatever rent they want. D) Housing costs too much.

A

A lawn service is deciding whether to add an additional employee to its summer crew. The marginal cost of hiring this worker depends on the A) total amount paid to only the new worker. B) total amount paid to all previously hired workers. C) the total amount paid to all the workers, both the new one and the previously hired workers. D) the additional revenue created by having an additional worker minus the cost of hiring the worker.

A

In terms of dollars, the marginal benefit of working five days a week instead of four days a week is A) the wages received for the fifth day of work. B) the wages received for 5 days of work. C) the wages received for 4 days of work. D) None of the above answers is correct.

A

In the United States, Texas ranks number one in the amount of installed megawatts for wind power generation and Florida ranks number one in the number of beach vacations. These facts point out that A) Texas has a comparative advantage in wind power generation. B) Texas definitely has an absolute advantage in wind power generation. C) Florida should produce more wind energy. D) Florida can produce wind energy at a lower opportunity cost than can Texas.

A

On Saturday morning, you rank your choices for activities in the following order: go to the library, work out at the gym, have breakfast with friends, and sleep late. Suppose you decide to go to the library. Your opportunity cost is 13) A) working out at the gym. B) not clear because not enough information is given. C) working out at the gym, having breakfast with friends, and sleeping late. D) zero because you do not have to pay money to use the library.

A

Opportunity cost is best defined as 15) A) the highest-valued alternative that is given up to get something. B) how much money is paid for something. C) how much money is paid for something, taking inflation into account. D) all the alternatives that are given up to get something.

A

Suppose that the United States and Cuba decide to open up trade. If each country specializes in the good in which it has a comparative advantage, ________ will gain from that trade because ________. A) both countries; consumption possibilities in both Cuba and the United States will lie outside their PPFs. B) neither country; their consumption possibilities will not change. C) only the United States; consumption possibilities in Cuba will lie outside its PPF and U.S. consumption possibilities will not change. D) only Cuba; consumption possibilities in Cuba will lie outside its PPF and U.S. consumption possibilities will not change.

A

The below table shows the tons of steel and concrete that can be produced by the United States and France in an hour. From the data in the table A) France has a comparative advantage in the production of concrete. B) the United States has a comparative advantage in the production of concrete. C) France has an absolute advantage in the production of concrete. D) the United States has a comparative advantage in the production of both goods. U.S. production possibilities France's production possibilities Steel 100 25 Concrete 200 100

A

Which of the following is NOT a normative statement? A) People buy more of a good or service when its price falls. B) The distribution of income is fair. C) The government ought to provide health care to everyone. D) Corporations should be more socially responsible.

A

Which of the following is a normative statement? 23) A) The main reason why the United States has a trade deficit with China is because China's trade practices are unfair. B) The United States has a comparative advantage compared to the European Union in the production of wheat. C) Both these statements are normative. D) Neither of these statements is normative.

A

Which of the following questions is a topic that would be studied by microeconomics? 5) A) How will a lower price of digital cameras affect the quantity of cameras sold? B) Will the current budget deficit affect the well-being of the next generation? C) What is the current unemployment rate in the United States? D) Why did production and the number of jobs shrink in 2009?

A

Scarcity is a situation in which ? A) people cannot satisfy all their wants. B) most people can get only bare necessities. C) people can satisfy all their wants. D) some people can get all they want and some cannot.

A.

Which of the following is a microeconomic topic? A) The reasons why Kathy buys less orange juice. B) The reasons for a decline in average prices. C) The reasons why total employment decreases. D) The effect of the government budget deficit on inflation.

A.

20) Suppose that for the past two months, you have studied economics one hour a day. You now decide to study economics two hours a day. For the past two months 20) A) the marginal cost of studying economics must have fallen. B) your marginal benefit from studying economics an hour must have been greater than its marginal cost. C) the opportunity cost of studying economics must have risen. D) your marginal cost of studying economics for an hour must have exceeded its marginal benefit.

B

Factors of production include all of the following EXCEPT ________. 8) A) entrepreneurship B) money C) machines made in past years. D) a wheat field that is not irrigated

B

Harry produces 2 balloon rides and 4 boat rides an hour. Harry could produce more balloon rides but to do so he must produce fewer boat rides. Harry is ________ his production possibilities frontier. A) producing inside B) producing on C) producing outside D) producing either inside or on

B

In part, microeconomics is concerned with 4) A) the Federal Reserve's policy decisions. B) how a business firm decides upon the amount it produces and the price it sets. C) factors that explain changes in the unemployment rate over time. D) changes in the economy's total output of goods and services over long periods of time

B

Suppose Joe can prepare 20 sandwiches or 10 pizzas in an hour and Beth can produce 36 sandwiches or 27 pizzas. The concept of comparative advantage concludes that 44) A) Beth should produce both goods because she can produce more of both goods in an hour than can Joe. B) Beth should produce pizza and Joe should produce sandwiches. C) Beth should produce sandwiches and Joe should produce pizza. D) Beth should produce both goods and Joe should produce sandwiches.

B

The opportunity cost of any action is? A) all the possible alternatives given up. B) the highest-valued alternative given up. C) the benefit from the action minus the cost of the action. D) the dollars the action cost.

B

The president of the United States promises to produce more defense goods without any decreases in the production of other goods. This promise can be valid A) if the United States is producing at a point on its production possibilities frontier. B) if the United States is producing at a point inside its production possibilities frontier. C) if the United States is producing at a point beyond its production possibilities frontier. D) only if the production possibilities frontier shifts rightward.

B

The table below lists six points on the production possibilities frontier for grain and cars. Given this information, which of the following combinations is unattainable? A) 6 tons of grain and 18 cars B) 4 tons of grain and 26 cars C) 2 tons of grain and 27 cars D) 7 tons of grain and 10 cars Point P grain (tons) P cars ( cars A 0 30 B 2 28 C 4 24 D 6 18 E 8 10 F 10 0

B

Today, you attended your 10:00am Economics class. If you hadn't gone to class, you would have gone out to brunch with friends. You had other less preferred options; you could have worked or slept in. Your opportunity cost of going to class is the A) income you gave up. B) lunch you gave up. C) sleep you gave up. D) income, pleasure, and sleep you gave up.

B

a reduction in the amount of unemployment A) shifts the production possibilities frontier outward. B) moves the economy's point of production closer to the production possibilities frontier. C) moves the economy's point of production along the production possibilities frontier. D) moves the economy's point of production further away from the production possibilities

B

Which of the following is NOT an investment in human capital? A) a business student takes a seminar in using a laptop computer B) a student purchases a laptop computer C) a computer science student learns how to repair a laptop computer D) a computer science student takes a course on programming a laptop computer

B.

13) You decide to take a vacation and the trip costs you $2,000. While you are on vacation, you do not go to work where you could have earned $750. In terms of dollars, the opportunity cost of the vacation is A) $2,000. B) $750. C) $2,750. D) $1,250

C

18) If the marginal cost of an activity exceeds the marginal benefit, then 18) A) the person must concentrate on the activity's total benefits. B) the forgone alternatives' costs must be increased. C) an alternative action will be selected. D) the activity will occur because the high marginal cost means it must be highly valued.

C

47) In one day, Brandon can either plow 10 acres or plant 20 acres. In one day, Christopher can either plow 14 acres or plant 14 acres. Which of the following statements about comparative advantage is CORRECT? 47) A) Christopher has a comparative advantage in both plowing and planting. B) Brandon has a comparative advantage only in plowing. C) Brandon has a comparative advantage only in planting. D) Brandon has a comparative advantage in both plowing and planting.

C

48) In one day, Brandon can either plow 10 acres or plant 20 acres. In one day, Christopher can either plow 14 acres or plant 14 acres. Brandon and Christopher can 48) A) exchange, but only Brandon will gain from the exchange. B) exchange, but only Christopher will gain from the exchange. C) gain from exchange if Brandon specializes in planting and Christopher specializes in plowing. D) gain from exchange if Brandon specializes in plowing and Christopher specializes in planting.

C

A person who has an absolute advantage in the production of all goods will 45) A) not be able to gain from specialization and exchange. B) have a production possibilities frontier with a constant slope. C) have a comparative advantage in the production of some goods but not in the production of others. D) also have a comparative advantage in the production of all goods.

C

According to the principle of comparative advantage, if a rich country trades with a poor country, then A) the rich country will benefit and the poor country will lose. B) the rich country will lose and the poor country will benefit. C) both countries will benefit. D) neither of the countries will benefit.

C

At one point along a PPF, 10 pizzas and 7 sandwiches can be produced. At another point along the same PPF, 9 pizzas and 10 sandwiches can be produced. The opportunity cost of a pizza between these points is ________ per pizza. A) 7/10 of a sandwich B) 10/7 of a sandwich C) 3 sandwiches D) 1/3 of a sandwich

C

Because we face scarcity, every choice involves. A) the question "what." B) giving up something for nothing. C) an opportunity cost. D) money.

C

In every economic system, choices must be made because resources are ________ and our wants are ________. 1) A) unlimited; limited B) limited; limited C) limited; unlimited D) unlimited; unlimited

C

John has two hours of free time this evening. He ranked his alternatives, first go to a concert, second go to a movie, third study for an economics exam, and fourth answer his e-mail. What is the opportunity cost of attending the concert for John? A) answering his e-mail B) attending a movie, studying for an economics exam, and answering his e-mail C) attending a movie D) studying for an economics exam

C

Samantha goes to college to become an engineer. This is an example of an 11) A) increase in labor. B) investment in physical capital. C) investment in human capital. D) increase in entrepreneurship

C

Suppose that in an hour Joe can prepare 10 sandwiches or 5 pizzas. The opportunity cost of Joe producing one sandwich is 43) A) 5 pizzas.

C

The statement "Unemployment should be below 6 percent" is 22) A) a positive statement. B) a prediction. C) a normative statement. D) an assumption.

C

Today, Julie attended her 12:30 Economics class. If she hadn't gone to class, Julie would have gone out to lunch with friends. She had other options; she could have worked or slept in. Julie's opportunity cost of going to class is the 14) A) income from working, lunch, and sleep she gave up. B) sleep she gave up. C) lunch she gave up. D) income from working she gave up.

C

When the production possibilities frontier is bowed outwards, the opportunity cost of producing more of one good 33) A) decreases in terms of the amount foregone of the other good. B) remains constant. C) increases in terms of the amount foregone of the other good. D) cannot be determined.

C

Which of the following is a positive statement? A) An unemployment rate of 9 percent is a national disgrace. B) Unemployment is a more important problem than inflation. C) When the national unemployment rate is 9 percent, the unemployment rate for inner-city youth is often close to 40 percent. D) Unemployment and inflation are equally important problems.

C

Which of the following is a positive statement? A) The United States should fight inflation even if it raises unemployment. B) What to do with Social Security is the most important economic issue today. C) A 5 percent increase in income leads to a 3 percent increase in the consumption of orange juice. D) Because they decrease productivity, labor unions should be eliminated.

C

Economics is the study of ? A) the distribution of surplus goods to those in need. B) affluence in a morally bankrupt world. C) the choices we make because of scarcity. D) ways to reduce wants to eliminate the problem of scarcity.

C.

Which of the following is NOT a factor of production? A) vans used by a bakery company for deliveries B) a person developing a production schedule for a new product C) 175 shares of Microsoft stock D) wilderness areas that have yet to be developed

C.

36) A country produces only pencils and erasers. Pencil production is allocatively efficient if the marginal ________ of a pencil equals the marginal ________ of ________. 36) A) cost; benefit; an eraser B) benefit; benefit; an eraser C) cost; cost; an eraser D) benefit; cost; a pencil

D

9) Overtime worked by a JCPenney associate is considered ________ and earns ________. 9) A) labor; profit B) entrepreneurship; profit C) human capital; interest D) labor; wages

D

A benefit from an increase in activity is called the 17) A) economic benefit. B) total benefit. C) opportunity benefit. D) marginal benefit. 18)

D

A person has a comparative advantage in producing a particular good if that person 42) A) has more human capital related to that good than anyone else has. B) has higher productivity in producing it than anyone else has. C) has less desire to consume that good than anyone else has. D) can produce it at lower opportunity cost than anyone else can.

D

Economics is best defined as 3) A) making choices from an unlimited supply of goods and services. B) controlling a budget for a household. C) how people make money and profits in the stock market. D) making choices with unlimited wants but facing a scarcity of resources.

D

Factors of production include 7) A) labor and capital (not land, which is fixed). B) only capital, land, and labor. C) the economic system. D) land, labor, capital and entrepreneurship

D

Increasing opportunity cost while moving along a production possibilities frontier is the result of A) taxes. B) firms' needs to produce profits. C) the fact that it is more difficult to use resources efficiently the more society produces. D) the fact that resources are not equally productive in alternative uses.

D

Marginal benefit curves slope ________ and marginal cost curves slope ________. A) upward; upward B) upward; downward C) downward; downward D) downward; upward

D

Suppose that the government is trying to decide between allocating its resources to build more dams or to build more freeways. In terms of forgone dams, as more freeways are constructed, the marginal benefit of additional freeways ________ and the marginal cost of additional freeways ________. 35) A) increases; decreases B) increases; increases C) decreases; decreases D) decreases; increases

D

The problem of "scarcity" applies 2) A) only in underdeveloped countries because there are few productive resources in these countries. B) only in industrially developed countries because resources are scarce in these countries. C) only in economic systems that are just beginning to develop because specialized resources are scarce. D) to all economic systems, regardless of their level of development.

D

The table below shows the number of pencils or pens that could be produced by Don and Bob in an hour. This schedule shows that A) Don has an absolute advantage in the production of pencils, and Bob has an absolute advantage in the production of pens. B) Bob has an absolute advantage in the production of pencils, and Don has an absolute advantage in the production of pens. C) Don has a comparative advantage in the production of both pencils and pens. D) Bob has a comparative advantage in the production of pencils. Don's production possibilities Bob's production possibilities Pens 10 5 Pencils 20 15

D

Which of the following is a macroeconomic issue? 6) A) the purchasing decisions that an individual consumer makes B) the effect of an increase in the tax on cigarettes on cigarette sales C) the hiring decisions that a business makes D) the effect of increasing the money supply on inflation

D

Economist point out that scarcity confronts.. A) neither the poor nor the rich. B) the poor but not the rich. C) the rich but not the poor. D) both the poor and the rich.

D.

Entrepreneurs do all of the following EXCEPT A) organize labor, land, and capital. B) come up with new ideas about what and how to produce. C) bear risk from business decisions. D) own all the other resources used in the production process.

D.

Which factor of production earns profit? A) Land B) human capital C) money D) entrepreneurship

D.

China's population is about 1.5 billion, while the population of the United States is about 300 million. This fact means that China has much more human capital than the U.S. does. True or false? Explain your answer.

False, because labor(including both skilled and unskilled workers) is not equivalent to human capital (skilled workers)

What is the difference between scarcity and poverty?

Scarcity: our inability to satisfy all of our wants. It applies to both the poor and the rich.studying economics can prevents scarcity Poverty: It applies to the poor only studying economics can improve poverty

A country has a comparative advantage in the production of a good if its opportunity cost is lower compared to another country. True/False.

T

If marginal benefit is greater than marginal cost for the production of cars, to reach the allocative efficient quantity of cars, the production of cars must be increased. True or False?

T

Specialization and trade allow countries to consume beyond their PPFs

T

"If Mexico is currently operating at a point inside its production possibilities frontier, then there are unemployed resources in Mexico." Is this statement true or false? Briefly explain your answer.

True, because points within the production possibilities frontier are attainable, so it's possible

Technological progress makes the production possibilities frontier 40) A) become less linear and more bowed. B) shift outward from the origin. C) become more linear and less bowed. D) shift inward toward the origin.

b