Econ. Exam 1

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Which of the following is an example of a positive externality?

Vaccinations

REFER TO THE DIAGRAM BELOW: Points A, B, C, D, and E show

combinations of bicycles and computers that society can produce using the resources efficiently.

Cost-benefit analysis attempts to:

compare the benefits and costs associated with any economic project or activity

REFER TO THE DIAGRAM BELOW: This production possibilities curve is

concave to the origin because of increasing opportunity costs.

REFER TO THE DIAGRAM BELOW: (squared chart) Flow (4) represents

consumption expenditures

Microeconomics

is concerned with individual economic units and specific markets.

REFER TO THE DIAGRAM BELOW: (squared chart) Flow (2) represents

land, labor, capital, and entrepreneurial ability

The four factors of production are

land, labor, capital, and entrepreneurial ability

REFER TO THE DIAGRAM BELOW: (squared chart)...Flow (1) represents

wage, rent, interest, and profits.

The division of labor means that

workers specialize in various production tasks.

REFER TO THE DIAGRAMS BELOW: Which of the diagrams illustrate(s) the effect of a decline in the price of personal computers on the market for software?

A only.

Answer on the basis of the relationships shown in the four figures below: The amount of Y is directly related to the amount of X in

1 day

Answer on the basis of the relationships shown in the four figures below: The amount of Y is inversely related to the amount of X in

3 only

Which of the following is an example of a negative externality?

All answers are negative externalities

Which of the following is a public good?

All solutions are public goods

REFER TO THE DIAGRAM BELOW: A price of $60 in this market will result in

a surplus of 100 units

REFER TO THE DIAGRAMS BELOW: Which of the diagrams illustrate(s) the effect of an increase in automobile worker wages on the two market for automobiles?

D only.

A market

Is an institution that brings together buyers and sellers.

REFER TO THE DIAGRAM BELOW: The combination of computers and bicycles shown by point F

Is attainable, but implies that the economy is not using all its resources

REFER TO THE DIAGRAM BELOW: The consumer surplus would be represented by the area

a

REFER TO THE DIAGRAM BELOW: A price of $20 in this market will result in

a shortage of 100 units

REFER TO THE DIAGRAM BELOW: The producer surplus would be represented by the area

b

REFER TO THE DIAGRAM BELOW: (squared chart) Flow (3) represents

goods and services

A price ceiling means that

government is imposing a legal price that is below the equilibrium price

A price floor means that

government is imposing a minimum legal price that is typically above the equilibrium price.

Which of the following is NOT a characteristic of the market system?

government ownership of the major industries.

The simple circular flow model shows that

households are on the selling side of the resource market and on the buying side of the product market

The main characteristics of a public good are:

nonrivalry and nonexcludability

Market failure is said to occur whenever:

private markets do not allocate resources in the most economically desirable way

The two basic markets shown by the simple circular flow model are

product and resource

The term quantity demanded

refers to the amount of a product that will be purchased at some specific price

REFER TO THE DIAGRAM BELOW: An improvement in technology will

shift the production possibilities curve from PP1 to PP2

Macroeconomics can best be described as the

study of the large aggregates of the economy or the economy as a whole.

Because of the free-rider problem

the market demand for a public good is nonexistent or understated

REFER TO THE DIAGRAM BELOW: The combination of computers and bicycles shown by point G is

unattainable given currently available resources and technology


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