Econ Chapters 1-4

Ceteris paribus means: A) allowing all other things to change. B) making value judgments. C) all other things unchanged. D) differentiating between macroeconomics and microeconomics.

all other things unchanged.

The process through which an economy's production possibilities curve is shifted outward is: A) comparative advantage. B) economic growth. C) full employment. D) specialization.

economic growth.

A person who seeks to earn profits by finding ways to organize factors of production is called a(n): A) foreman B) finance capitalist. C) entrepreneur. D) manager.

entrepreneur.

The relationship between the price of a good and the quantity people are willing and able to purchase is: A) supply. B) demand. C) equilibrium. D) disequilibrium.

demand.

In enforcing the legal system, the government in a market capitalist economy acts to: A) enforce contracts. B) enforce property rights. C) discourage fraud. D) do all of the above.

do all of the above.

The set of acquired skills and abilities that workers bring to the production of goods and services is: A) money. B) wealth. C) human capital. D) natural ability.

human capital.

Resources from nature that can be used to produce other goods and services are called: A) money. B) natural resources. C) labor. D) capital.

natural resources.

Health care is a(n): A) abnormal good. B) superior good. C) normal good. D) good where higher incomes lead to less spending.

normal good.

Statements that make value judgments are: A) pecuniary. B) positive. C) nominal. D) normative.

normative.

A hypothesis is an assertion that can be: A) proven to be false. B) proven to be true. C) proven to be true or false. D) tested only in the normative sense.

proven to be false.

Anything whose value can change is a: A) variable. B) constant. C) hypothesis. D) all of the above.

variable.

The fundamental economic questions that every economic system must answer are: A) what, how, and for whom. B) what, why, and for whom. C) when, why, and for whom. D) how, when, and how much.

what, how, and for whom.

(Exhibit: Demand and Supply of Gasoline) When the supply curve shifted from the initial equilibrium to the new intersection of supply and demand at a price of ________ and quantity of 400, this could have resulted from ________. A) $1.50; an increase in consumers' income B) $1.50; an improvement in refining technology C) $2.00; an increase in the number of buyers D) A and B are true

$1.50; an improvement in refining technology

(Exhibit: Demand and Supply of Gasoline) The initial price and quantity (at intersection of S1 and D) in equilibrium are: A) $2.00 and 450 gallons. B) $1.50 and 400 gallons. C) $2.00 and 200 gallons. D) $2.50 and 300 gallons.

$2.50 and 300 gallons.

(Exhibit: Demand and Supply of Gasoline) Given the initial equilibrium of S1 and D, any price lower than _____________ will create pressure for the price to ________. A) $2.00; fall B) $2.50; rise C) $3.00; rise D) none of the above are true

$2.50; rise

. In 2015, the percentage of total output the United States devoted to health care was about ________ percent. A) 2 B) 6 C) 10 D) 18

18

(Exhibit: Production Possibilities Schedule 1) If the economy produces 10 units of capital goods per period, it also can produce at most _______ unit(s) of consumer goods per period. A) 5 B) 4 C) 3 D) 2

4

In 1960, the percentage of total output the United States devoted to health care was about ________ percent. A) 2 B) 5 C) 10 D) 13

5

(Exhibit: Production Possibilities Schedule 1) The opportunity cost of producing the fourth unit of consumer goods is ___ __ units of capital goods. A) 2 B) 4 C) 6 D) 8

8

. In the market for health care: A) there has been no effect of the presence of third-party payers. B) the effect of third-party payers decreases the price that consumers pay. C) providers are encouraged to supply a greater quantity than they would without third-party payers. D) B and C are true.

B and C are true.

During the Great Depression: A) By 1933, 25 percent of the nation's workers had lost their jobs. B) output reached its lowest level in 1929. C) the production possibilities curve shifted sharply inward, which explains the drop in output, jobs, and overall prosperity. D) firms increased output but used fewer workers

By 1933, 25 percent of the nation's workers had lost their jobs.

In the 1960s the dominant maker of mainframe computers was: A) IBM. B) Apple Computer. C) Compaq. D) GM.

IBM.

(Exhibit: Rent Controls) If rent controls are imposed, they will most likely be set at either _______ or _______. A) Rent0; Rent1 B) Rent1; Rent3 C) Rent3; Rent4 D) All of the above are equally likely rent control levels.

Rent0; Rent1

(Exhibit: Rent Controls) Without rent controls, the equilibrium rent is _______ and the equilibrium quantity is _______. A) Rent2; Q1 B) Rent1; Q1 C) Rent2; Q2 D) Rent3; Q3

Rent2; Q2

Economics is a: A)Social science that deals with making choices among alternatives B)Natural science that concerns itself with allocating relativity scarce resources among alternative ends C)Science that has no theories or models based on the the scientific method D)Humanities course that mainly concerns itself with limited wants verses unlimited resources

Social science that deals with making choices among alternatives

The basic concern of economics is to: A)Keep business firms from losing money B)Prove that capitalism is better than socialism C)Study the choices people make D)Use unlimited resources resources to produce goods and services to satisfy limited wants

Study the choices people make

(Exhibit: Demand and Supply of Gasoline) What might cause the supply curve to shift from S2 back to the initial supply curve S1? A) The Organization of Petroleum Exporting Countries (OPEC) restricts the production of crude oil. B) The Organization of Petroleum Exporting Countries (OPEC) increases the production of crude oil. C) Americans want to buy more gas. D) Technology in the refinement of gasoline greatly improves.

The Organization of Petroleum Exporting Countries (OPEC) restricts the production of crude oil.

Which of the following would lead to an increase in the demand for health care? A) Physicians' productivity increases. B) Medicare subsidies are lowered. C) The average population age increases. D) Subsidies for Medicare are reduced.

The average population age increases.

If a demand curve shifts to the left, then: A) the equilibrium price would go up and the equilibrium quantity would go down. B) the equilibrium price would go down and the equilibrium quantity would go up. C) a lower equilibrium price and quantity would result. D) a higher equilibrium price and quantity would result.

a lower equilibrium price and quantity would result.

The primary emphasis in macroeconomics is on: A) how firms set prices. B) aggregates in the economy. C) marginal analysis and normative economics. D) international trade and environmental economics.

aggregates in the economy.

During the Great Depression: A) agriculture was hit particularly hard. B) prices received by farmers rose by nearly 2/3 between 1930 and 1933. C) farm legislation in the 1930s sought to reduce the number of farms and farm income. D) all of the above are true.

agriculture was hit particularly hard.

Improvements in technology provide benefits to: A) consumers, through lower prices. B) workers, although some jobs may be eliminated. C) firms, through lower production costs. D) all of the above.

all of the above.

Positive statements: A) imply value judgments must be made. B) are factual and can be tested. C) deal with what ought to be. D) are dealt with primarily in microeconomics.

are factual and can be tested.

The law of increasing opportunity cost says that: A) opportunity costs of production always tend to increase. B) increases in wages cause increases in the opportunity costs of production. C) as output increases for one good on its production possibilities curve, the opportunity cost of additional units of the other good will be greater and greater. D) along a production possibilities curve, as output increases in the production of one good, the opportunity costs of additional units of the other good will be less and less.

as output increases for one good on its production possibilities curve, the opportunity cost of additional units of the other good will be greater and greater.

A choice made _______ is a choice whether to do a little more or a little less of something. A) at the front end B) in the beginning C) at the margin D) all of the above.

at the margin

(Exhibit: Demand and Supply of Gasoline) Given the equilibrium after a change in supply from S1 to S2: A) at the old price of $2.50, there will be pressure for the price to fall. B) the new price will be $2.00. C) the new quantity will be 400. D) all of the above are true.

at the old price of $2.50, there will be pressure for the price to fall.

For a factor of production to be called capital it must: A) be produced. B) occur in the natural environment. C) be a part of human skill. D) be a result of a stock issue.

be produced.

(Exhibit: Demand and Supply of Gasoline) A factor that may have changed supply from S1 to S2 is: A) better technology in the production of gasoline. B) increased demand. C) lower labor productivity. D) increased prices of substitutes for gasoline.

better technology in the production of gasoline.

(Exhibit: Guns and Butter) This production possibilities curve is: A) linear and because of the constant cost and B) bowed in toward the origin because of increasing opportunity costs. C) bowed in toward the origin because of constant cost of guns and butter. D) bowed out from the origin because of increasing opportunity costs.

bowed out from the origin because of increasing opportunity costs.

(Exhibit: Guns and Butter) The combination of guns and butter at point H: A) can be obtained, but would cost too much. B) cannot be attained given the level of technology and the factors of production available. C) has no meaning since it does not relate to the preferences of consumers. D) Is attainable but would increase unemployment.

cannot be attained given the level of technology and the factors of production

The three broad types of factors of production are: A) capital, labor, and natural resources. B) money, profit, and interest. C) stocks, bonds, and financial assets. D) technology, human capital, and comparative advantage.

capital, labor, and natural resources.

Something whose value does not change is a: A) variable. B) constant. C) hypothesis. D) all of the above.

constant.

The bulk of the nation's output is produced by: A) partnerships. B) proprietorships. C) corporations. D) none of the above.

corporations.

. The principle stating that, for virtually all goods and services, there is a negative relationship between price and quantity demanded, all other things unchanged, is the law of: A) supply. B) demand. C) scarcity. D) increasing opportunity costs.

demand.

Between 1930 and 1933, the prices received by farmers tended to: A) fluctuate up and down about equally. B) decrease. C) remain constant. D) increase.

decrease.

A negative relationship between the quantity demanded and price is called the law of ______. A) demand B) diminishing marginal returns C) market clearing D) supply

demand

(Exhibit: Guns and Butter) Points A, B, E, and F: A) indicate combinations of guns and butter that society can produce using all of its factors efficiently. B) show that the opportunity cost of more guns increases, but that of more butter decreases as more of each good is produced.. C) indicate that society wants butter more than guns. D) indicate constant costs for guns and increasing costs for butter.

indicate combinations of guns and butter that society can produce using all of its factors efficiently.

Technology is: A) knowledge that can be applied to the production of goods and services. B) generally unlimited in modern economies. C) a graphical illustration of the alternative combinations of goods and services an economy can produce. D) the resources the economy has available to produce goods and services.

knowledge that can be applied to the production of goods and services.

The factors of production are: A) money, labor, natural resources, and capital. B) technology, human capital, and natural resources. C) money, capital, and natural resources. D) labor, capital, and natural resources.

labor, capital, and natural resources.

A theory that has won virtually universal acceptance is a: A) model. B) hypothesis. C) law. D) variable.

law.

Making choices that are expected to achieve the highest possible value for some objective is termed: A) maximizing. B) minimizing. C) sanitizing. D) satisfying.

maximizing.

The branch of economics that examines the choices of consumers and firms is: A) positive economics. B) normative economics. C) macroeconomics. D) microeconomics.

microeconomics.

A simplified representation of a particular problem is a: A) model. B) constant. C) hypothesis. D) law.

model.

Scarcity in economics means: A) not having sufficient resources to produce all the goods and services we want. B) the wants of people are limited. C) there must be poor people in rich countries. D) economists are clearly not doing their jobs.

not having sufficient resources to produce all the goods and services we want.

A key theme fundamental to all of economics is: A) there are limited wants. B) we are a rich country but are simply not aware of it. C) people have unlimited wants facing limited means to satisfy them. D) there are unlimited resources.

people have unlimited wants facing limited means to satisfy them.

A maximum price set below the equilibrium price is a: A) demand price. B) supply price. C) price floor. D) price ceiling.

price ceiling.

A minimum price set above the equilibrium price is a: A) demand price. B) supply price. C) price floor. D) price ceiling.

price floor.

A price that the government guarantees farmers will receive for a particular crop is a(n): A) price ceiling. B) price support. C) deficiency price. D) export price.

price support.

The key signals that send messages to buyers and sellers to buy or not to buy or to sell or not to sell are, all other things unchanged: A) prices. B) preferences. C) government mandates. D) expectations.

prices.

In the personal computer industry, the reason for the fall in prices and the increase in quantity after 1980 was: A) mainly a function of resource prices. B) primarily due to technological change and an increase in the number of sellers. C) a result of a dramatic decrease in U.S. wages. D) a result of a dramatic decrease in foreign wages

primarily due to technological change and an increase in the number of sellers.

How a supply curve is sloped and located is affected by: A) consumer preferences. B) resource prices. C) the number of consumers. D) all of the above.

resource prices.

According to the textbook, much of the discussion about the health-care "problem" in the United States has focused on: A) the inability of doctors to provide adequate health-care services. B) rising spending for health care. C) the shortage of adequate space in hospitals. D) the surplus of nurses.

rising spending for health care.

A firm owned by one individual is called a: A) corporation. B) partnership. C) sole proprietorship. D) none of the above.

sole proprietorship.

Most firms in the United States today are: A) sole proprietorships and partnerships. B) owned by government. C) corporations. D) owned by shareholders.

sole proprietorships and partnerships.

(Exhibit: Rent Controls) If rent controls are set at Rent0: A) the shortage of rental units is Q2 to Q0. B) some renters would be willing to pay a price as high as Rent4 for Q0 units. C) no one would have to pay a higher actual price than Rent0 nor would anyone be willing to do so. D) there would be a shortage of rental units, but it is impossible to tell how large the shortage is based on the information provided.

some renters would be willing to pay a price as high as Rent4 for Q0 units.

A supply curve that is upward sloping means that: A) demand is being ignored. B) consumers will buy less at lower prices. C) suppliers will want to sell more at higher prices. D) suppliers will want to sell less at higher prices.

suppliers will want to sell more at higher prices.

A curve that shows the relationship between the price and quantity supplied during a particular period, all other things unchanged, is the: A) price curve. B) supply curve. C) quantity function. D) production possibilities curve.

supply curve.

In the textbook, the prices of the factors of production, returns from alternative activities, technology, seller expectations regarding future prices, and the number of sellers are called: A) demand shifters. B) supply prices. C) market realities. D) supply shifters.

supply shifters.

When economists study the behavior of sellers, they are studying: A) supply. B) the role of government. C) demand. D) accounting.

supply.

Knowledge that can be applied to the production of goods and services is: A) natural resources. B) specialization. C) technology. D) comparative advantage

technology.

Reaching the incorrect conclusion that one event causes another because the events tend to occur together is called: A) the scientific method. B) the economic way of thinking. C) making choices at the margin. D) the fallacy of false cause.

the fallacy of false cause.

(Exhibit: The Demand for music downloads) A decrease in the price of CDs (a substitute) would result in a change illustrated by: A) the move from f to g in Figure (a). B) the move from h to i in Figure (b). C) the move from j to k in Figure (c). D) the move from l to m in Figure (d).

the move from f to g in Figure (a).

(Exhibit: The Demand for music downloads) A decrease in the price of iPods and other similar devices would result in a change illustrated by:

the move from h to i in Figure (b).

A decrease in the fee charged for music downloads would result in a change illustrated by:

the move from j to k in Figure (c).

The slope and location of the demand curve depend on: A) the number of buyers. B) production costs. C) the number of producers. D) all of the above.

the number of producers.

Factors of production are: A) the resources the economy has available to produce goods and services. B) generally unlimited in modern economies. C) always employed in modern economies. D) the knowledge that can be applied to the production of goods and services.

the resources the economy has available to produce goods and services.

Human capital is: A) the set of acquired skills and abilities that workers bring to the production of goods and services. B) the financial wealth the economy has available to produce goods and services. C) the ability to produce one of two goods at relatively lower cost. D) a factor of production only if it occurs naturally.

the set of acquired skills and abilities that workers bring to the production of goods and services.

Opportunity cost is: A) zero for the use of a free combo meal offer. B) the dollar payment for a product. C) the benefit derived from a product. D) the value of the best alternative forgone in making any choice.

the value of the best alternative forgone in making any choice.

A hypothesis that has been tested extensively without being rejected and has won widespread acceptance is a: A) model. B) constant. C) variable. D) theory.

theory.

An arrangement in which consumers choose their health-care services while other institutions pay a share of the cost of those services is called a(n) ________ payer system. A) provider fees B) insurance premiums C) third-party D) catastrophic insurance

third-party