Econ 102 Exam 1
The study of economics A) arises from the fact that our wants exceed available resources. B) deals mainly with microeconomics. C) focuses mainly on individual consumers. D) recognizes that scarcity does not affect rich nations.
A) arises from the fact that our wants exceed available resources.
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 ________. A) decreases; increases B) decreases; decreases C) increases; increases D) increases; decreases
A) decreases; increases
A key factor that leads to economic growth is A) human capital accumulation. B) avoiding the opportunity cost of investment. C) increasing current consumption. D) Both answers A and B are correct.
A) human capital accumulation.
In the figure above, an increase in the quantity of oil supplied but NOT an increase in the supply of oil is shown by a movement from A) point a to point e. B) point a to point b. C) point a to point c. D) point a to point d.
A) point a to point e.
The rights of an owner to use and exchange property are A) property rights. B) money rights. C) socialist rights. D) capitalist rights.
A) property rights.
Wages for workers producing iPods and similar products will rise next year. Walkman Watch asks you to predict the effect of this change in next year's market for iPods. You predict that the major effect will be that the A) supply curve for an iPod will shift leftward. B) supply curve for an iPod will shift rightward. C) demand curve for an iPod will shift leftward. D) demand curve for an iPod will shift rightward
A) supply curve for an iPod will shift leftward.
An opportunity cost of economic growth is A) the decrease in production of consumption goods in the present time period. B) essentially zero because economic growth leads to such large gains in the long run. C) decreased by the creation of capital goods rather than consumption goods. D) so high that places such as Hong Kong have had to do without it.
A) the decrease in production of consumption goods in the present time period.
The statement that ________ is a positive statement. A) the price of sugar in the United States is higher than the price in Australia B) the price of gasoline is too high C) more students should study economics D) too many people in the United States have no health care insurance
A) the price of sugar in the United States is higher than the price in Australia
Which of the following are TRUE regarding "positive" statements? I. They describe what "ought to be." II. They describe what is believed about how the world appears. III. They can be tested as to their accuracy. A) I and II B) II and III C) I and III D) I, II and III
B) II and III
The figure above shows supply curves for soft drinks. Suppose the economy is at point a. A movement to point d would be the result of A) an increase in technology. B) an increase in the relative price of a soft drink. C) an increase in the number of soft drink suppliers. D) a decrease in the relative price of a soft drink.
B) an increase in the relative price of a soft drink.
According to the figure above, the opportunity cost of producing another computer is A) higher at A. B) higher at B. C) different at most points along the frontier but equal at points A and B because they are equally distant from the axes. D) the same at every point along the frontier.
B) higher at B.
Moving from one point on the production possibilities frontier to another ________. A) involves a tradeoff but does not incur an opportunity cost B) involves a tradeoff and incurs an opportunity cost C) involves an opportunity cost but no tradeoff D) involves no tradeoff but it does incur an opportunity cost
B) involves a tradeoff and incurs an opportunity cost
Which of the following does NOT help organize trade? A) markets B) the production possibilities frontier C) property rights D) None of the above because all these answers given help organize trade.
B) the production possibilities frontier
You observe that in the market for coffee that both the equilibrium price of coffee and the equilibrium quantity have increased. You predict that the demand for coffee A) has not changed but that the supply of coffee has decreased. B) has increased less than supply of coffee has decreased. C) has increased with no change in the supply of coffee. D) has increased but it is not as large as the increase in supply
C) has increased with no change in the supply of coffee.
Agnes can produce either 1 unit of X or 1 unit of Y in an hour, while Brenda can produce either 2 units of X or 4 units of Y in an hour. There can be gains from exchange A) if Agnes specializes in the production of Y and Brenda specializes in the production of X. B) only if Brenda becomes faster at producing X or Y. C) if Agnes specializes in the production of X and Brenda specializes in the production of Y. D) only if Agnes becomes faster at producing X.
C) if Agnes specializes in the production of X and Brenda specializes in the production of Y.
An increase in the number of fast-food restaurants A) increases the demand for fast-food meals. B) increases the demand for substitutes for fast-food meals. C) increases the supply of fast-food meals. D) raises the price of fast-food meals.
C) increases the supply of fast-food meals.
A decrease in the demand for beef because of concerns over cholesterol results in A) an offsetting increase in the demand for beef if the price of beef falls. B) higher beef prices. C) lower beef prices. D) an increase in the supply of beef.
C) lower beef prices.
In the figure above, a decrease in the quantity of oil supplied but NOT a decrease in the supply of oil is shown by a movement from A) point a to point e. B) point a to point b. C) point a to point c. D) point a to point d.
C) point a to point c.
One of the opportunity costs of economic growth is A) technological change. B) capital accumulation. C) reduced current consumption. D) the gain in future consumption.
C) reduced current consumption.
An increase in the nation's capital stock will A) cause a movement along the PPF upward and leftward. B) move the nation from producing within the PPF to producing at a point closer to the PPF. C) shift the PPF outward. D) cause a movement along the PPF downward and rightward.
C) shift the PPF outward.
The price of a bag of corn chips is $3, and the price of a bottle of soda is $1. What is the relative price of a bag of corn chips? A) 1/3 bottle of soda per bag of corn chips B) 33¢ C) $3 D) 3 bottles of soda per bag of corn chips
D) 3 bottles of soda per bag of corn chips
Making a choice at the margin means ________. A) letting someone else choose for you B) making a choice by comparing the total benefit and the total cost C) waiting until the last minute to make a choice D) deciding to do a little bit more or a little bit less of an activity
D) deciding to do a little bit more or a little bit less of an activity
The figure above shows the demand for fruit snacks. Which movement reflects how consumers would react to an increase in the price of a fruit snack that is expected to occur in the future? A) from point a to point e B) from point a to point b C) from point a to point c D) from point a to point d
D) from point a to point d
Intellectual property A) is protected by common law rather than by written laws. B) belongs to everyone with the necessary human capital to use it. C) is protected by people's sense of decency rather than by written laws. D) is often protected by copyrights and patents.
D) is often protected by copyrights and patents.
In the figure above, what can be said about point B? A) It can be attained only if some resources are left unused. B) It can be reached only after economic growth occurs. C) It represents all resources being devoted to the production of apples. D) It represents all resources being devoted to the production of oranges.
B) It can be reached only after economic growth occurs.
Which of the following is a positive statement? A) A minimum wage of $7.50 per hour is a shame for a rich country like the United States. B) Our planet is warming because of an increased carbon dioxide buildup in the atmosphere. C) Both these statements are positive. D) Neither of these statements is positive.
B) Our planet is warming because of an increased carbon dioxide buildup in the atmosphere.
Twenty years ago a stove cost $300 and a refrigerator cost $1,500. Today a stove costs $600, while a refrigerator costs $1,800. Which of the following statements is TRUE? A) The relative price of a refrigerator has increased. B) The relative price of a stove has increased. C) The money price of a refrigerator has fallen. D) The relative price of stoves and refrigerators has not changed.
B) The relative price of a stove has increased.
The marginal benefit is the A) additional gain from one more unit of an activity minus the additional cost from one more unit of the activity. B) additional gain from one more unit of an activity. C) loss of the highest-valued alternative. D) additional cost from one more unit of an activity.
B) additional gain from one more unit of an activity.
If the marginal cost of an activity exceeds the marginal benefit, then A) the forgone alternatives' costs must be increased. B) an alternative action will be selected. C) the person must concentrate on the activity's total benefits. D) the activity will occur because the high marginal cost means it must be highly valued.
B) an alternative action will be selected.
The income earned by the people who sell the services of the factor of production ________ is called ________. A) entrepreneurship; wages B) capital; interest C) land; profit D) capital; rent
B) capital; interest
The law of demand concludes that a rise in the price of a golf ball ________ the quantity demanded and ________. A) increases; shifts the demand curve for golf balls rightward B) decreases; creates a movement up along the demand curve for golf balls C) increases; creates a movement down along the demand curve for golf balls D) decreases; shifts the demand curve for golf balls leftward
B) decreases; creates a movement up along the demand curve for golf balls
In the figure above, moving from production at point d to production at point a requires A) technological change. B) decreasing the output of consumer goods in order to boost the output of capital goods. C) a decrease in unemployment. D) both capital accumulation and a decrease in unemployment.
B) decreasing the output of consumer goods in order to boost the output of capital goods.
The economic resource that organizes the use of other economic resources is called A) capital. B) entrepreneurship. C) labor. D) land.
B) entrepreneurship.
The fact that people with higher incomes get to consume more goods and services addresses the ________ part of one of the two big economic questions. A) "where" B) "how" C) "for whom" D) "when"
C) "for whom"
An art museum decides to offer tours by having visitors listen to cassette tapes rather than have tour guides. The museum is answering the ________ part of one of the two big economic questions. A) "why" B) "scarcity" C) "how" D) "what"
C) "how"
Point Production of grain (tons) Production of cars (cars) A 0 30 B 2 28 C 4 24 D 6 18 E 8 10 F 10 0 The table above lists six points on the production possibilities frontier for grain and cars. What is the opportunity cost of producing the 26th car? A) 2 tons of grain per car B) 4 tons of grain per car C) 0.5 tons of grain per car D) 0.25 tons of grain per car
C) 0.5 tons of grain per car
Suppose that in an hour Joe can prepare 10 sandwiches or 5 pizzas. The opportunity cost of Joe producing one sandwich is A) 2 pizzas. B) 1 pizza. C) 1/2 pizza. D) 5 pizzas.
C) 1/2 pizza.
According to the diagram in the figure above, an allocatively efficient use of resources requires that production and consumption of gasoline be A) 3 million gallons of gasoline per month. B) 4 million gallons of gasoline per month. C) 2 million gallons of gasoline per month. D) 1 million gallons of gasoline per month.
C) 2 million gallons of gasoline per month.
The figure above shows the production possibilities frontiers for four nations that have identical production possibilities frontiers in the present. The one that will grow most rapidly in the future is most likely to be producing at point A) A. B) B. C) C. D) D.
C) C.
What happens to the demand for Xbox games if the price of an Xbox falls? A) The demand for Xbox games remains unchanged. B) The demand for Xbox games decreases because the price of a complement falls. C) The demand for Xbox games increases because the price of a complement falls. D) The demand for Xbox games decreases because the price of a substitute falls.
C) The demand for Xbox games increases because the price of a complement falls.
Which of the following describes comparative advantage? A) Firm A can produce a good at a cost of $3 and Firm B can produce the good at a cost of $4. B) Jane can type 50 words per minute and Joe can type 60 words per minute. C) To produce a bushel of wheat Farmer John must give up 2 bushels of corn whereas Farmer Ben must give up 3 bushels of corn. D) Company A can produce 4 boxes of cereal in a day whereas Company B can produce 5 boxes of cereal in a day
C) To produce a bushel of wheat Farmer John must give up 2 bushels of corn whereas Farmer Ben must give up 3 bushels of corn.
One of the largest categories of exports from the United States is now pop culture: movies, music, TV programming, and videos. A direct conclusion from this information is that, compared to other countries, the United States has A) higher wages for producers of pop culture. B) lower wages for producers of pop culture. C) a comparative advantage in producing pop culture. D) an absolute advantage in producing pop culture
C) a comparative advantage in producing pop culture.
Joe likes to sleep late in the mornings and play tennis in the afternoons. The opportunity cost of Joe attending his morning class for one hour is A) nothing because he is paying for his class. B) both the tennis given up and the sleep given up. C) an hour of sleep given up. D) an hour of tennis given up.
C) an hour of sleep given up.
The relative price of a good is A) equal to the money price of a good. B) what you get paid for babysitting your cousin. C) an opportunity cost. D) equal to the price of that good divided by the quantity demanded of the good.
C) an opportunity cost.
Economic growth comes from ________. A) producing more goods than people want to consume B) capital accumulation and the avoidance of opportunity cost C) capital accumulation and technological advance D) people willing to increase their skills in which case, economic growth is free
C) capital accumulation and technological advance
A recession occurs and people's incomes decrease. Knowing that an iPad is a normal good, you predict that the demand for an iPad A) increases. B) remains unchanged. C) decreases. D) might increase or decrease.
C) decreases.
Human resources that perform the functions of organizing, managing, and assembling the other resources are called A) venture capital. B) physical capital. C) entrepreneurship. D) productive capital.
C) entrepreneurship.
Which of the following lists has variables that all shift a good's demand curve? A) price of the good, preferences, prices of substitution goods, income B) expectation of future price, price of the good, number of buyers, income C) income, preferences, number of buyers, price of complementary good D) Both answers A and B are correct.
C) income, preferences, number of buyers, price of complementary good
Refer to the above figure. Mario is self-sufficient and so is Mia. Each produces 6 dishes of pasta and 4 pizzas. Mario and Mia decide to specialize and trade. After they have specialized and traded, compared to the initial situation, Mia's opportunity cost of pasta has ________ and Mario's opportunity cost of a pizza has ________. A) decreased, decreased B) increased, decreased C) increased, increased D) decreased, increased
C) increased, increased
As a country that has a bowed-out production possibilities frontier produces more of one good, the opportunity cost of a unit of that good ________. A) decreases B) might increase or decrease C) increases D) remains the same
C) increases
If the United States can increase its production of automobiles without decreasing its production of any other good, the United States must have been producing at a point A) beyond its PPF. B) on its PPF. C) inside its PPF. D) None of the above is correct because increasing the production of one good without decreasing the production of another good is impossible.
C) inside its PPF.
The study of the decisions of individual units in the economy is known as A) macroeconomics. B) the study of incentives. C) microeconomics. D) ceteris paribus study.
C) microeconomics.
If the money price of wheat increases and no other prices change, the A) demand for wheat increases. B) relative price of wheat falls. C) opportunity cost of wheat rises. D) relative price of wheat is unaffected.
C) opportunity cost of wheat rises.
In the figure above, point D is A) not production efficient and point B is production efficient. B) less production efficient than point C. C) production efficient and point A is not production efficient. D) production efficient and point B is not production efficient.
C) production efficient and point A is not production efficient.
Apples are a normal good, so if the price of an apple increases from 50¢ to 60¢, the quantity of apples demanded decrease because of A) the income effect only. B) the substitution effect only. C) the substitution and income effects. D) a change in income.
C) the substitution and income effects.
Markets A) facilitate trade. B) coordinate price information between buyers and sellers. C) allow traders to enjoy gains from trade. D) All of the above answers are correct.
D) All of the above answers are correct.
Which of the following is a positive statement? A) My economics class should last for two terms because it is my favorite class. B) The government must lower the price of a pizza so that more students can afford to buy it. C) The best level of taxation is zero percent because then people get to keep everything they earn. D) An increase in tuition means fewer students will apply to college.
D) An increase in tuition means fewer students will apply to college.
Agnes can produce either 1 unit of X or 1 unit of Y in an hour, while Brenda can produce either 2 units of X or 4 units of Y in an hour. A) Brenda cannot gain from trade. B) Brenda has a comparative advantage in the production of X. C) Agnes has a comparative advantage in the production of Y. D) Brenda has an absolute advantage in the production of X and Y.
D) Brenda has an absolute advantage in the production of X and Y.
A normative statement is A) one that does not use marginal concepts. B) always true. C) about what is. D) about what ought to be.
D) about what ought to be.
An inducement to take a particular action is called A) the marginal cost. B) opportunity cost. C) the marginal benefit. D) an incentive.
D) an incentive.
The figure above illustrates that if this country wishes to have F2 - F1 additional food by moving from point A to point B, it will A) have to find additional workers, because the country already is operating on its production possibilities frontier. B) require that all the unemployed resources in the country be put to work. C) be unable to do so until additional technological progress is made. D) have to sacrifice C1 - C2 clothing in order to free the resources necessary to produce the additional food.
D) have to sacrifice C1 - C2 clothing in order to free the resources necessary to produce the additional food.
Marginal cost A) decreases as more is produced. B) decreases as marginal benefits decrease. C) remains constant as more is produced. D) increases as more is produced.
D) increases as more is produced.
A normal good is a good for which demand A) decreases when population increases. B) decreases when income increases. C) increases when population increases. D) increases when income increases
D) increases when income increases
Macroeconomics differs from microeconomics in that A) microeconomics looks at the economy as a whole. B) macroeconomics studies the decisions of individuals. C) macroeconomics studies the behavior of government while microeconomics looks at private corporations. D) macroeconomics focuses on the national economy and the global economy.
D) macroeconomics focuses on the national economy and the global economy.
A store remains open from 8 a.m. to 4 p.m. each weekday. The store owner is deciding whether to stay open an extra hour each evening. The owner's marginal benefit A) is the benefit the owner receives from staying open from 8 a.m. to 4 pm. B) is the benefit the owner receives from staying open from 8 a.m. to 5 pm. C) depends on the revenues the owner makes during the day. D) must be greater than or equal to the owner's marginal cost if the owner decides to stay open
D) must be greater than or equal to the owner's marginal cost if the owner decides to stay open
Which of the following is TRUE regarding marginal benefit? I) The marginal benefit curve shows the benefit firms receive by producing another unit of a good. II) Marginal benefit increases as more of a good is consumed. A) I and II B) I only C) II only D) neither I nor II
D) neither I nor II
Suppose that a typical German factory can produce 20 cameras or 1 computer in an hour, and that a typical American factory can produce 10 cameras or one computer in an hour. If Germany produces one less computer and switches resources to cameras, and the United States produces one more computer and takes resources out of cameras, then the net change in camera production in both countries taken together is A) 0. B) minus 10 cameras. C) plus 20 cameras. D) plus 10 cameras.
D) plus 10 cameras.
The opportunity cost of good A in terms of good B is equal to the A) ratio of the money price of good B to the money price of good A. B) money price of good A minus the money price of good B. C) money price of good B minus the money price of good A. D) ratio of the money price of good A to the money price of good B.
D) ratio of the money price of good A to the money price of good B.
Macroeconomic topics include A) studying the determination of wages and production costs in the software industry. B) the impact of government regulation of markets. C) studying what factors influence the price and quantity of automobiles. D) total, nationwide employment.
D) total, nationwide employment.
The branch of economics that deals with the analysis of the whole economy is called A) microeconomics. B) metroanalysis. C) marginal analysis. D) macroeconomics.
D) macroeconomics.
Which of the following is NOT a factor of production? A) 100 shares of Microsoft stock B) mineral resources C) a university professor D) an apartment building
A) 100 shares of Microsoft stock
The above figures show the market for oranges. Which figure(s) shows the effect of an increase in the price of bananas, a substitute (in consumption) for oranges? A) Figure A B) Figure C C) Figure D D) Figure A and C
A) Figure A
If the quantity supplied exceeds the quantity demanded, then there is A) a surplus and the price is above the equilibrium price. B) a shortage and the price is below the equilibrium price. C) a surplus and the price is below the equilibrium price. D) a shortage and the price is above the equilibrium price.
A) a surplus and the price is above the equilibrium price
At a price of $10 in the above figure, there is A) a surplus of 400 units. B) a shortage of 400 units. C) a surplus of 200 units. D) a shortage of 200 units.
A) a surplus of 400 units.
Marginal cost is the A) cost of an increase in an activity. B) cost of an activity minus the benefits of the activity. C) total cost of an activity. D) cost of all forgone alternatives.
A) cost of an increase in an activity.
You notice that the price and quantity of wheat both decrease. This observation can be the result of the A) demand curve for wheat shifting leftward. B) demand curve for wheat shifting rightward. C) supply curve of wheat shifting rightward. D) supply curve of wheat shifting leftward.
A) demand curve for wheat shifting leftward.
Marginal benefit curves slope A) downward, but not because of increasing opportunity cost. B) downward because of increasing opportunity cost. C) upward because of increasing opportunity cost. D) upward, but not because of increasing opportunity cost.
A) downward, but not because of increasing opportunity cost.
You observe that in the market for coffee that both the equilibrium price of coffee and the equilibrium quantity have decreased. You predict that the demand for coffee A) has decreased with no change in the supply of coffee. B) has decreased but it is not as large as the decrease in supply. C) has decreased less than supply of coffee has increased. D) has not changed but that the supply of coffee has increased.
A) has decreased with no change in the supply of coffee.
The existence of a shortage A) pushes the price up. B) is impossible in a market economy. C) pushes the price down. D) means resources are being allocated efficiently.
A) pushes the price up.
As the price of a pound of peanuts falls, the A) quantity of peanuts supplied decreases. B) supply of peanuts decreases. C) quantity of peanuts supplied increases. D) supply of peanuts increases.
A) quantity of peanuts supplied decreases.
Television sets (millions per year) Willingness to pay (computers per television set) 1 2.5 2 2.0 3 1.5 4 1.0 5 0.5 In the table above, the marginal benefit of the 4 millionth television set is A) 0.25 computers per television set. B) 1.0 computer per television set. C) negative 0.5 computers per television set. D) 0.5 computers per television set.
B) 1.0 computer per television set.
Price (dollars per pound) Quantity supplied (pounds) Quantity demanded (pounds) 3 1 7 4 2 5 5 4 4 6 5 2 7 6 1 The above table shows the demand schedule and supply schedule for chocolate chip cookies. What is the equilibrium quantity and equilibrium price for chocolate chip cookies? A) 2 pounds, $6.00 per pound B) 4 pounds, $5.00 per pound C) 7 pounds, $3.00 per pound D) 2 pounds, $3.00 per pound
B) 4 pounds, $5.00 per pound
The equilibrium price is the price at which the quantity A) demanded equals the quantity sold. B) demanded equals the quantity supplied. C) sold equals the quantity bought. D) supplied equals the quantity bought.
B) demanded equals the quantity supplied.
Doctors find that one aspirin per day reduces the risk of heart attacks. Demand for aspirin will A) increase, so that equilibrium price will decrease and equilibrium quantity will increase. B) increase, so that equilibrium price and equilibrium quantity will increase. C) decrease, so that equilibrium price and equilibrium quantity will increase. D) increase, but the new equilibrium price and quantity are indeterminate.
B) increase, so that equilibrium price and equilibrium quantity will increase.
In a market, at the equilibrium price A) buyers are paying the minimum price they are willing to pay for any amount of output and sellers are charging the maximum price they are willing to charge for any amount of production. B) neither buyers nor sellers can do business at a better price. C) buyers are willing to pay a higher price, but sellers do not ask for a higher price. D) None of the above is true.
B) neither buyers nor sellers can do business at a better price.
The quantity supplied of a good or service is the amount that A) producers wish they could sell at a higher price. B) producers plan to sell during a given time period at a given price. C) people are willing to buy during a given time period at a given price. D) is actually bought during a given time period at a given price.
B) producers plan to sell during a given time period at a given price.
If both the demand and supply decrease, the equilibrium quantity ______________ and the equilibrium price _____________. A) decreases; rises B) increases; falls C) decreases; might rise, fall, or not change D) increases; might rise, fall, or not change
C) decreases; might rise, fall, or not change
When there is a surplus in the market, the quantity sold is A) greater than the quantity bought. B) less than the quantity demanded. C) equal to the quantity demanded. D) equal to the quantity supplied.
C) equal to the quantity demanded.
The figure above shows the demand for fruit snacks. Which movement reflects a decrease in population? A) from point a to point e B) from point a to point b C) from point a to point c D) from point a to point d
C) from point a to point c
In the figure, the equilibrium price is initially $3 per bushel of wheat. If buyers come to expect that the price of a bushel of wheat will rise in the future, but sellers do not, the current equilibrium price will A) fall. B) not change. C) rise. D) Perhaps rise, fall, or stay the same, depending on whether there are more demanders or suppliers in the market.
C) rise.
If a producer can use resources to produce either good A or good B, then A and B are A) complements in production. B) substitutes in consumption. C) substitutes in production. D) complements in consumption.
C) substitutes in production.
When the price of a pizza decreases from $14 to $12 A) the income effect means that the demand for pizza will not change. B) the income effect means people buy less pizza. C) the income effect points out that the total purchasing power of people who buy pizza increases. D) None of the above answers is correc
C) the income effect points out that the total purchasing power of people who buy pizza increases.
A rise in the price of a good causes producers to supply more of the good. This statement illustrates A) the law of demand. B) the nature of an inferior good. C) the law of supply. D) a change in supply.
C) the law of supply.
At a price of $4 in the above figure A) there is a surplus of 200 units. B) the quantity supplied is 400 units. C) there is a shortage of 200 units. D) the equilibrium quantity is 400 units.
C) there is a shortage of 200 units.
The above figures show the market for hamburger meat. Which figure shows the effect when more farmers decide to raise cows that are processed into hamburger meat? A) Figure A B) Figure B C) Figure C D) Figure D
D) Figure D
The above figures show the market for oranges. Which figure shows the effect of great growing conditions that produce an aboveaverage sized crop? A) Figure A B) Figure B C) Figure C D) Figure D
D) Figure D
Which of the following always lowers the equilibrium price? A) an increase in demand combined with a decrease in supply B) an increase in both demand and supply C) a decrease in both demand and supply D) a decrease in demand combined with an increase in supply
D) a decrease in demand combined with an increase in supply
In 2015, the price of peanuts was rising, which led peanut butter buyers to expect the price of peanut butter would rise in the future. Consequently, in the current market for peanut butter there was ________ which resulted in ________ in the price of peanut butter and ________ in the quantity of peanut butter. A) a decrease in supply of peanut butter; an increase; a decrease B) a decrease in demand for peanut butter; a decrease; a decrease C) an increase in supply of peanut butter; a decrease; an increase D) an increase in demand for peanut butter; an increase; an increase
D) an increase in demand for peanut butter; an increase; an increase
An increase in the demand for computers and a decrease in the number of sellers of computers will definitely ________. A) increase the number of computers bought B) increase the price of a computer and the number of computers bought C) not change the price of a computer and increase the number of computers bought D) increase the price of a computer
D) increase the price of a computer
If both the demand and supply increase, the equilibrium quantity ________ and the equilibrium price ________. A) decreases; rises B) increases; falls C) decreases; might rise, fall, or not change D) increases; might rise, fall, or not change
D) increases; might rise, fall, or not change
In the above figure, if the price is $8 then there is a A) shortage of 200. B) surplus of 100. C) shortage of 100. D) surplus of 200.
D) surplus of 200.
An incentive A) could be a penalty but could not be a reward. B) is the opposite of a tradeoff. C) could be a reward but could not be a penalty. D) could be either a reward or a penalty.
D) could be either a reward or a penalty.
If the price of a candy bar is $1 and the price of a fast food meal is $5, then the A) relative price of a candy bar is 5 fast food meals per candy bar. B) money price of a candy bar is 1/5 of a fast food meal per candy bar. C) money price of a fast food meal is 1/5 of a candy bar per fast food meal. D) relative price of a fast food meal is 5 candy bars per fast food meal.
D) relative price of a fast food meal is 5 candy bars per fast food meal.
After you graduate, you have decided to accept a position working at the Bureau of Labor Statistics for $45,000.00 a year. The two other offers you received were working for Wal-Mart for $38,000 and working for Ernst and Young consulting for $42,000. Of these two offers, you would have preferred the job at Ernst and Young. What is the opportunity cost of accepting the position at the Bureau of Labor Statistics? A) the $38,000 you would have been paid working for Wal-Mart B) the $45,000 you are paid for working at the Bureau of Labor Statistics C) the $42,000 you would have been paid working for Ernst and Young and the $38,000 you would have been paid working for WalMart D) the $42,000 you would have been paid working for Ernst and Young
D) the $42,000 you would have been paid working for Ernst and Young
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 all previously hired workers. B) the total amount paid to all the workers, both the new one and the previously hired workers. C) the additional revenue created by having an additional worker minus the cost of hiring the worker. D) total amount paid to only the new worker.
D) total amount paid to only the new worker.
Agnes can produce either 1 unit of X or 1 unit of Y in an hour, while Brenda can produce either 2 units of X or 4 units of Y in an hour. The opportunity cost of producing a unit of Y is A) 1 unit of X per unit of Y for Agnes and 1/2 unit of X per unit of Y for Brenda. B) 1 hour for Agnes and 2 hours for Brenda. C) 1 hour for Agnes and 1/2 hour for Brenda. D) 1 unit of X per unit of Y for Agnes and 2 units of X per unit of Y for Brenda
A) 1 unit of X per unit of Y for Agnes and 1/2 unit of X per unit of Y for Brenda.
In the above figure, at point a what is the opportunity cost of producing one more audio tape? A) 1 video tape per audio tape B) 14 video tapes per audio tape C) 2 video tapes per audio tape D) There is no opportunity cost.
A) 1 video tape per audio tape
In the figure above, the marginal cost of the second computer is A) 3 television sets per computer. B) 2 television sets per computer. C) 5 television sets per computer. D) 30 television sets per computer.
A) 3 television sets per computer.
Camel rides (per day) Marginal benefit (tubes of sunscreen) Marginal cost (tubes of sunscreen) 1 20 11 2 18 12 3 16 13 4 14 14 5 12 15 6 10 16 Leisure Land produces only sunscreen and camel rides. The table shows the marginal benefit and marginal cost schedules for sunscreen and camel rides. The allocatively efficient number of camel rides is ________. A) 4 rides per day B) 6 rides per day because that is the maximum number of rides C) 2 rides per day D) 1 ride per day because the marginal benefit exceeds the marginal cost by as much as possible
A) 4 rides per day
Misty has the option of purchasing one of three products: Brand A, Brand B, or Brand C. Each costs ten dollars. If she decides that Brand A meets her needs best, then the opportunity cost of this decision is A) Brand B or Brand C, depending on which is considered the highest-value alternative forgone. B) Brand B plus Brand C. C) Brand A. D) twenty dollars
A) Brand B or Brand C, depending on which is considered the highest-value alternative forgone.
Which of the following is a normative statement? A) States should require all motorcycle riders to wear helmets to reduce the number of riders killed. B) An increase in tax rates means people work fewer hours. C) Taking extra vitamin C prevents catching a cold. D) Studying more hours leads to an increase in your GPA.
A) States should require all motorcycle riders to wear helmets to reduce the number of riders killed.
Which of the following is a normative statement? A) The government's cuts in welfare spending impose an unfair hardship on the poor. B) Next year's inflation rate will be under 4 percent. C) Consumers will buy more gasoline over the Christmas holiday even if the price of gas is 10 cents higher than it was during the Thanksgiving holiday. D) The current butter surplus is the result of federal policies.
A) The government's cuts in welfare spending impose an unfair hardship on the poor.
Which of the following is a normative statement? 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) The main reason why the United States has a trade deficit with China is because China's trade practices are unfair.
Missouri can produce 10,000 tons of pecans per year or 5,000 tons of pears per year. Washington can produce 12,000 tons of pecans per year or 48,000 tons of pears per year. Which of the following statements is TRUE? A) Washington has an absolute advantage in the production of both pecans and pears. B) Washington has a comparative advantage in producing pecans and Missouri has a comparative advantage in producing pears. C) Washington has a comparative advantage in the production of both pecans and pears. D) Both answers A and C are correct.
A) Washington has an absolute advantage in the production of both pecans and pears.
Which of the following is a macroeconomic issue? A) how federal government budget deficits affect interest rates B) how a rise in the price of sugar affects the market for sodas C) the cause of a decline in the price of peanut butter D) what determines the amount a firm will produce
A) how federal government budget deficits affect interest rates
In broad terms the difference between microeconomics and macroeconomics is that A) microeconomics studies decisions of individual people and firms and macroeconomics studies the entire national economy. B) macroeconomics studies the effects of government regulation and taxes on the price of individual goods and services whereas microeconomics does not. C) microeconomics studies the effects of government taxes on the national unemployment rate. D) they use different sets of tools and ideas.
A) microeconomics studies decisions of individual people and firms and macroeconomics studies the entire national economy.
The social arrangement that gives John Grisham, the writer of best-selling novels, the ownership of his novels is A) property rights. B) dynamic comparative advantage. C) a market. D) absolute advantage.
A) property rights.
The PPF shifts if A) the resources available to the nation change. B) the prices of the goods and services produced rise. C) the unemployment rate falls. D) people decide they want more of one good and less of another.
A) the resources available to the nation change.
The night before a midterm exam, you decide to go to the movies instead of studying for the exam. You score 60 percent on your exam. If you had studied the night before, you'd have scored 70 percent. What was the opportunity cost of your evening at the movies? A) 60 percent B) 10 percent off your grade C) zero D) 70 percent
B) 10 percent off your grade
Point Production chocolate bars Production cans of cola A 0 100 B 10 90 C 20 70 D 30 40 E 40 0 The above table shows production points on Sweet-Tooth Land's production possibilities frontier. Which of the following is an example of a point that is inefficient? A) 32 chocolate bars and 40 cans of cola B) 38 chocolate bars and 0 cans of cola C) 0 chocolate bars and 100 cans of cola D) 20 chocolate bars and 80 cans of cola
B) 38 chocolate bars and 0 cans of cola
Quantity (pizzas per day) Marginal benefit (cans per day) Marginal cost (cans per day) 10 26 14 20 24 16 30 22 18 40 20 20 50 18 22 60 16 24 70 14 26 The table above shows the marginal benefit from pizza and the marginal cost of pizza in cans of soda forgone. The allocatively efficient quantity of pizza is ________ pizzas per day. A) 10 B) 40 C) more than 70 D) 70
B) 40
Which of the following best defines capital as a factor of production? A) Financial assets used by businesses. B) Instruments, machines, and buildings used in production. C) The gifts of nature that businesses use to produce goods and services. D) The knowledge and skills that people obtain from education and use in production of goods and services
B) Instruments, machines, and buildings used in production.
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 A) exchange, but only Brandon will gain from the exchange. B) gain from exchange if Brandon specializes in planting and Christopher specializes in plowing. C) exchange, but only Christopher will gain from the exchange. D) gain from exchange if Brandon specializes in plowing and Christopher specializes in planting.
B) gain from exchange if Brandon specializes in planting and Christopher specializes in plowing.
Resource use is allocatively efficient if the A) total cost of what the resource produces is less than the total benefit of what is produced. B) marginal cost of what the resource produces is equal to the marginal benefit of what is produced. C) total cost of what the resource produces is equal to the total benefit of what is produced. D) marginal benefit of what the resource produces has diminished to zero.
B) marginal cost of what the resource produces is equal to the marginal benefit of what is produced.
When the government hires people to serve in the army, these people are no longer available to do other work. This choice illustrates the concept of A) a social interest/private interest conflict. B) opportunity cost. C) an incentive. D) marginal benefit
B) opportunity cost.
Entrepreneurs do all of the following EXCEPT A) come up with new ideas about what and how to produce. B) own all the other resources used in the production process. C) organize labor, land, and capital. D) bear risk from business decisions.
B) own all the other resources used in the production process.
If the price of a hot dog is $2 and the price of a hamburger is $4, then the A) money price of a hamburger is 2 hot dogs per hamburger. B) relative price of a hot dog is 1/2 of a hamburger per hot dog. C) relative price of a hamburger is 1/2 of a hot dog per hamburger. D) money price of a hot dog is 2 hamburgers per hot dog.
B) relative price of a hot dog is 1/2 of a hamburger per hot dog.
Suppose the price of a football is $20.00 and the price of a basketball is $10.00. The ________ of a football is ________. A) opportunity cost; $20.00 B) relative price; 2 basketballs per football C) relative price; 1/2 basketball per football D) opportunity cost; $10.00
B) relative price; 2 basketballs per football
The fact that wants cannot be fully satisfied with available resources reflects the definition of A) the what tradeoff. B) scarcity. C) for whom to produce. D) the big tradeoff.
B) scarcity
After Hurricane Katrina devastated parts of Mississippi and New Orleans in 2005, we can be sure that the production possibilities frontier for that area temporarily A) became steeper. B) shifted inward, toward the origin. C) shifted outward, away from the origin. D) became flatter.
B) shifted inward, toward the origin.
A relative price is A) also called the money price. B) the ratio of one price to another price. C) the number of dollars that must be given up in exchange for the good. D) not an opportunity cost.
B) the ratio of one price to another price.
When a country decides to produce fewer bombers and more public housing projects, it is answering the ________ part of one of the two big economic questions. A) "defense" B) "how" C) "for whom" D) "what"
D) "what"
When a farmer decides to raise hogs instead of cattle, the farmer is answering the ________ part of one of the two big economic questions. A) "how" B) "for whom" C) "why" D) "what"
D) "what"
Point Production of X Production of Y A 0 40 B 3 36 C 6 28 D 9 16 E 12 0 The above table shows production combinations on a country's production possibilities frontier. Which of the following is an example of a point that is unattainable? A) 0 units of good X and 40 units of good Y B) 6 units of good X and 28 units of good Y C) 3 units of good X and 35 units of good Y D) 10 units of good X and 16 units of good Y
D) 10 units of good X and 16 units of good Y
Jed had an exam score of 50 percentage points. There is an extra credit assignment that Jed can complete that will raise his exam score by 20 percentage points. Jed has determined that the extra credit assignment will take 10 hours of his time. Jed will complete the assignment if he values the A) 70 percentage points more than the 10 hours of his time. B) 10 hours of his time more than the 70 percentage points. C) 10 hours of his time more than the 20 percentage points. D) 20 percentage points more than the 10 hours of his time.
D) 20 percentage points more than the 10 hours of his time.
