Macro Exam #1

CHECK QUESTION 13 ON STUDY EXAM

Alright I did

4. The use of money for exchange and trade:

B. Fosters more specialization in production

37. Price: QS QD 10 100 295 11 150 275 12 190 250 13 220 220 14 245 180 15 265 135 Refer to the above table. A technological advance lowers production costs such that the quantity supplied increases by 60 units of this product at each price. As a result of this technological change, equilibrium output in this market: A. Decreased by 60 units B. Increased by 60 units C. Increased by 30 units D. Decreased by 30 units

C. Increased by 30 units

18. Which statement is true about supply? A. There is an inverse relationship between price and quantity supplied B. Supply refers to the amount of inventory that sellers have in their warehouses C. As price decreases, producers are willing to put more of the good on the market for sale D. To entice producers to offer more of a good on the market for sale, price must rise

D. To entice producers to offer more of a good on the market for sale, price must rise

8.) The following data show the supply and demand schedules for a product. PPU QDPW QSPW 40 100 15 50 50 20 60 48 25 70 45 30 80 40 40 90 30 46 100 25 50 Refer to the above data. The government now introduces a subsidy payment to producers of $30 per unit. Assuming a purely competitive market for the product, the new equilibrium price will be between: A. $40-$50 B. $50-$60 C. $60-$70 D. $70-$80

B. $50-$60

36. Which of the following will not cause a change in the demand for product A? A. A change in the number of buyers B. A change in the price of A C. A decline in consumer incomes D. A decrease in the price of close-substitute product B

B. A change in the price of A

32. Oftentimes, the socially optimal quantity for a product that imposes external costs on the society is not zero, but something greater than zero. This is because completely eliminating the externality would involve:

B. A much greater marginal cost than marginal benefit

27. Why might a company use barter rather than money to make a trade?

B. Barter can enable two firms to trade when their cash flows are limited

31. Which of the following situations is not an example of market failure:

B. Ben cannot afford to buy a high-end Mercedes Benz luxury car

17. From an economic perspective, when a student decides to go to the movies instead of studying for a test, it indicates that in the student's thinking the marginal: A. Benefit of studying is greater than the marginal cost of studying B. Cost of going to the movies is less than the marginal benefit of going to the movies C. Benefit of studying are greater than the marginal benefit of going to the movies D. Cost of going to the movies is greater than the marginal cost of studying

B. Cost of going to the movies is less than the marginal benefit of going to the movies

24. International specialization and trade: A. Has to be done on a barter system B. Often requires the exchange of currencies C. Does not illustrate the division of labor D. Requires active government regulation

B. Often requires the exchange of currencies

20. At equilibrium in a market for a product, the total revenues received by sellers equal the:

B. Total amount spent by buyers on the product

33. In a free-market economy, a product which entails a positive externality will be: A. Overproduced B. Underproduced C. Produced at the optimal level D. Provided solely by the government

B. Underproduced

7. The market system is an economic system that:

C. Gives private individuals the right to own resources used in production

29. Which of the following statements about self-interest in a market system is false? A. Self-interest usually motivates an individual to deliver something of value to others B. Self-interest of entrepreneurs implies seeking maximum profits or minimum losses C. Self-interest applies only to capitalists and entrepreneurs, not to workers employed by others D. In a market system, consumers are just like firms: self-interest is what motivates them

C. Self-interest applies only to capitalists and entrepreneurs, not to workers employed by others

26. In the U.S. market economy, the government performs the following prominent roles, except: A. Provide public goods and services B. Promote economic stability and growth C. Set prices for most resources D. Modifies the distribution of income

C. Set prices for most resources

30. One implication of the median-voter model is that at any point in time, most voters will: A. Be happy with the amount of government involvement in the economy B. Find government involvement in the economy to be too much C. Find government involvement in the economy to be too little D. Be unhappy with the amount of government involvement in the economy

D. Be unhappy with the amount of government involvement in the economy

2. An increase in the demand for corn is more than offset by an increase in its supply. As a result the equilibrium price will:

D. Decrease and the equilibrium quantity will increase

28. The so-called collective action problem refers to the: A. Problems faced by organizers in setting up a labor union B. Challenges faced by business when they have to deal with a labor union C. Inability of the government to discern the true preferences of everyone in society D. Greater difficulty in organizing and motivating large groups than small ones

D. Greater difficulty in organizing and motivating large groups than small ones

16. By requiring car producers to install emission control devices on cars, the government forces these producers to internalize some of the external costs of auto pollution. This will lead to the equilibrium price of cars:

D. Increasing and the quantity decreasing

14.) Private ownership and property rights in a market system have the following implications, except: A. Individuals are free to take on the financial risks involved in a business B. Trades that take place in the economy are mutually-agreeable transactions among individuals C. Economic agents are allowed to act in their own self-interest D. Large firms are allowed to coerce other firms and individuals

D. Large firms are allowed to coerce other firms and individuals

35. Which of the following would not be emphasized in a capitalist economy? A. Private ownership of capital and other resources B. Competition and decentralized decisions C. Reliance on market forces to coordinate economic activity D. Prevention of owners of capital from exposing this resource to risk

D. Prevention of owners of capital from exposing this resource to risk

21. Laissez-faire capitalism limits the government's economic functions to the following, except: A. Protecting private property rights B. Establishing a legal environment to enforce contracts among individuals C. Preventing individuals and firms from coercing others D. Setting prices of individual goods and services

D. Setting prices of individual goods and services

5.) Suppose that a consumer purchases just two goods, X and Y. The ratio of the price of good X to the price of good Y is the: A. Intercept on the Y axis of the budget line B. Intercept on the X axis of the budget line C. Size of the shift in the budget line D. Slope of the budget line

D. Slope of the budget line

23. Which of the following is considered a firm's "factor of production"? A. Money or cash balances of the firm B. The firm's shares of common stock C. U.S. Treasury bonds owned by the firm D. The office building occupied by the firm

D. The office building occupied by the firm

15. Near an ocean beach, a high-rise building is being constructed that will block the scenic view of the ocean by the residents of a low-rise building. The Coase theorem suggests that this type of dispute between the owners of high-rise and low-rise buildings: A. Can be resolved by the owners themselves through individual bargaining B. Has to be resolved by city government officials C. Can only be resolved by a zoning ordinance restricting high-rise buildings D. Should be resolved by a government fine for the builder of the high-rise

A. Can be resolved by the owners themselves through individual bargaining

19. One key is difference between government activities and private transactions is that: A. Government can enforce involuntary transactions, whereas private transactions are mostly voluntary B. Government can only produce services, whereas private producers can produce both goods and services C. Government does not run any production operations, whereas private firms have the main purpose of running production operations D. Government does not earn revenues from its activities, whereas private firms aim to earn revenues and profits

A. Government can enforce involuntary transactions, whereas private transactions are mostly voluntary

1.) The government may not implement policies intended to redistribute income in which of the following economic systems? A. Laissez-faire capitalism B. Command system C. Mixed economy D. Market system

A. Laissez-faire capitalism

34. When economists speak of "demand" in a particular market, they refer to: A. The whole demand curve or schedule B. One point on the demand curve C. One price-quantity combination on the demand schedule D. How much of an item buyers want to buy at a given price

A. The whole demand curve or schedule