ECON Test 1

Macroeconomics approaches the study of economics from the viewpoint of ____________.

The entire economy.

Ted and Fred are the owners of a gas station. They invested $150,000 each and pay an employee named Lawrence $35,000 per year. This year revenues are $900,000, while costs are $940,000. Who is legally responsible for bearing the $40,000 loss? -Lawrence -Ted -Ted and Fred -Lawrence, Ted, and Fred

-Ted and Fred.

Which of the following represents a normative economic statement? -The unemployment rate is higher than it was last year. -The government will have a larger deficit if unemployment benefits are extended. -Higher taxes will lower spending. -The government ought to lower taxes so people have more money.

-The government ought to lower taxes so people have more money.

Which of the following represents a positive economic statement? -Taxes should not be increased since that will lower spending. -The unemployment rate is too high. -The unemployment rate is 4.8 percent. -The government should extend unemployment benefits.

-The unemployment rate is 4.8 percent.

Because of increasing opportunity costs, the production possibilities curve...

...is bowed out from (or concave to) the origin.

If economic resources are perfectly interchangeable between the two products shown on a production possibilities graph,...

...the production possibilities curve would be a straight line.

Indicate whether the following statement applies to microeconomics or macroeconomics: The consumer price index rose by 0.2 percent from August 2014 to August 2015:

Macroeconomics

Indicate whether the following statement applies to microeconomics or macroeconomics: U.S. output, adjusted for inflation, increased by 2.4 percent in 2014:

Macroeconomics

Indicate whether the following statement applies to microeconomics or macroeconomics: The unemployment rate in the United States was 5.1 percent in September 2015:

Macroeconomics

Indicate whether the following statement applies to microeconomics or macroeconomics: Last week Wells Fargo Bank lowered its interest rate on business loans by one-half of 1 percentage point:

Microeconomics

Indicate whether the following statement applies to microeconomics or macroeconomics: A U.S. software firm discharged 15 workers last month and transferred the work to India:

Microeconomics

Indicate whether the following statement applies to microeconomics or macroeconomics: An unexpected freeze in central Florida reduced the citrus crop and caused the price of oranges to rise:

Microeconomics

a. Specify the typical shapes of marginal-benefit and marginal-cost curves. The marginal benefit curve is (upward or downward?) sloping. The marginal cost curve is (upward or downward?) sloping. b. With these curves, the optimal allocation of resources to a particular product will occur when (what formula?)MB = MC. c. If current output is such that marginal cost exceeds marginal benefit, should more or fewer resources be allocated to this product? (More or Fewer?)

a. downward, upward b. MB=MC c. fewer