FALL-ECO 120 SURVEY OF ECONOMICS

In the United States, corporations:

Dominate market transactions

Suppose the local government decides to reduce traffic congestion on a bridge by imposing a toll. The toll will be most effective if the price elasticity of demand for the bridge is:

Elastic

Rising marginal costs result from:

Falling marginal physical product.

The main difference to an economist between "short-run" and "long-run" is that:

In the long-run all resources are variable where as in the short-run at least one resource is fixed.

Which of the following countries has the largest GDP?

United States

Total output includes all of the following except:

imports

In Table 5.5, the total cost of 2 units is:

$22

In Figure 5.1, the marginal physical product of the fourth unit of labor is:

6

If one variable increases when the other variable decreases, then the curve is drawn as:

A downward sloping line.

One HEADLINE article states that "A prominent explanation for the rise in youth smoking over the 1990s was a sharp decline in cigarette prices." What is the effect of lower prices in the market for cigarettes?

A movement down the demand curve.

Rent controls are an example of:

A price ceiling

In Table 5.6, the average variable cost of 3 units of output is:

$5

In Figure 3.2, the highest price at which buyers are willing and able to purchase 5 units is:

$50

In Table 5.5, the total variable cost of the first unit is:

$9

In Table 1.1, the opportunity cost of increasing the production of houses from 17 to 21 in terms of missiles per house is:

0.25 of a missile.

U.S. GDP for 2009 was approximately:

15 trillion

Based on Figure 1.2, if a student wants to achieve a grade-point average of 2.0, he or she should study:

An average of 20 hours a week.

Ceteris paribus, the demand curve for a good will shift to the right in response to:

An increase in tastes or preferences for the good.

An investment in human and nonhuman capital will result in:

An increase in the marginal physical product of labor.

Which of the following will cause a leftward shift of the supply curve for electricity?

An increase in the taxes on electricity production.

A price ceiling is:

An upper limit on the price of a good.

Which of the following is not a determinant of demand?

Available technology.

In order to demand a good, the buyer must:

Be both willing and able to pay for it.

Which panel of Figure 3.4 represents the changes in the market for beef when the price of corn (cattle feed) rises and the Surgeon General reports that red meat contributes to coronary disease?

D

Which of the following statements is consistent with central planning?

Government planners play the dominant role in deciding how resources are allocated.

Which of the graphs in Figure 4.1 is most likely to represent a situation in which advertising has increased brand loyalty?

Graph C.

Which of the following ranks the top three components of U.S. consumption correctly from largest to smallest?

Housing, transportation, food.

If quantity demanded rises only slightly following a moderate price cut, then demand is:

Inelastic

When comparing GDP per capita, which list ranks countries correctly from largest to smallest?

Japan, Mexico, Haiti.

In a market economy, the _______ determines who gets the goods and services produced.

Market Mechanism

Investment includes all of the following except:

Money in a retirement fund.

Real GDP is a more accurate measure of economic growth than nominal GDP because:

Nominal GDP can increase due to an increase in production or prices or both.

Productivity measures:

Output per worker

Country A and Country B both recorded an increase in real GDP of 5 percent per year from 1980 to 2009. During this time, the population for Country A grew at 6 percent per year and the population for Country B grew at 4 percent. Which of the following is true during this period?

Per capita GDP decreased for Country A only.

Country D and Country E both recorded an increase in real GDP of 4 percent per year from 1997 to 2007. During this time, the population for Country D grew at 3 percent per year and the population for Country E grew at 2 percent. Which of the following is true during this period?

Per capita GDP increased for both Country D and Country E.

In Figure 4.1, the price elasticity of demand in Graph B is:

Relatively elastic

The demand for such items as salt, sugar and hand soap tend to be:

Relatively inelastic.

Output choices are made necessary within a market because of:

Scarcity of resources.

If the actual market price is held to $10 per unit in Figure 3.3, there will be a:

Shortage of 2 units

In order to measure what a country produces, we:

Summarize the monetary value of output.

Which of the following is not a determinant of demand for a good?

Technological advances.

In general, state and local taxes:

Tend to be regressive.

Which of the following is absolutely necessary for economic growth to occur?

The allocation of some resources to investment rather than consumption.

The best measure of the economic cost of doing your homework is:

The best opportunity you give up when you do your homework.

Scarcity means:

The desire for goods exceeds our capacity to produce them.

Which of the following is true about the factors of production?

The factors plus technology determine the physical limits to production.

Which of the following is least likely to determine individual income in a market economy?

The government

The invisible hand is most consistent with:

The market mechanism without government interference.

Which of the following causes the market demand curve for a good to shift?

The number of buyers in the market.

Total revenue is:

The price of a product times the quantity sold in a given time period.

Capital intensive means:

The production process uses a high ratio of capital to labor inputs.

Per capita GDP will always rise when:

The rate of economic growth exceeds the rate of population growth.

The law of diminishing returns means that:

The total product production function will eventually increase at a decreasing rate.

Economic cost is:

The value of all resources used to produce a good or service.

The slope of a line is:

The vertical distance between the two points, divided by the horizontal distance between the two points.

Government income transfers are not included in the calculation of GDP because:

These payments do not reflect the production of goods and services.

Which of the following is not true about investment goods?

They increase retirement benefits for individuals

Which of the following is not a reason why the U.S. government intervenes in the economy?

To make a profit for the government.

Which of the following is a goal of businesses?

To maximize profits given resource constraints

Which of the following will always increase as output increases?

Total cost

Average total cost is defined as:

Total cost divided by the quantity produced.

Which of the following refers to the satisfaction a consumer receives from the consumption of a good?

Utility.

When World War II ended some resources moved easily from the production of military goods to the production of consumer goods which is referred to in economics as:

factor mobility

Over the last century in the United States there has been an increase in _______ as a percentage of total output.

services

As more labor is hired in the short run, diminishing returns are observed because:

the new workers have less capital and land to work with.

On average, U.S. real GDP has grown roughly _____ percent per year.

three

The amount of utility obtained from the entire consumption of a good is known as:

total utility.

Refer to Figure 3.1. Consider the market for laptop computers. There is a decrease in the price of computer microchips.

B

A monopoly is:

A firm that produces the entire market supply of a particular good or service.

Which of the following contribute to high levels of U.S. production?

Abundant factors of production

Consumer goods:

Account for two-thirds of total U.S. output.

Which of the following individuals is typically associated with a laissez faire economic policy?

Adam Smith

The government has an impact on the HOW to produce question when it does all of the following except:

Follows a policy of laissez faire.

One HEADLINE article reports that the United States spends more on advertising per person than most other countries. A successful advertising campaign should shift the:

Demand curve to the right

Based on Figure 1.2, if a student studies 30 hours per week, he or she will:

Earn a grade-point average of 3.0.

If supply is unchanged, a decrease in the demand for soft drinks will cause equilibrium price to:

Fall and equilibrium quantity to fall.

Which of the following is an example of an externality?

Pollution

According to the law of demand:

Price and quantity demanded are inversely related.

The law of demand states that:

Price and quantity demanded are inversely related.

In the short run, a manufacturer should produce the next unit of output as long as:

Price is greater than marginal cost.

In attempting to answer the WHAT question, a society seeks to:

Produce the optimal mix of output.

Which of the following is included in investment, according to economists?

Production of plant and machinery.

Which of the following statements about production possibilities is true?

Production possibilities are limited for all countries because resources are scarce.

Technological advances contribute to:

Productivity increases.

Suppose your tax is $3,000 if your income is $30,000, and your tax is $12,000 if your income is $100,000. Such a tax structure is:

Progressive

Ceteris paribus, a demand curve shows the:

Quantity of a good consumers are willing and able to purchase at alternative prices.