Micro midterm chapter 1
An economic ________ is a simplified version of some aspect of economic life used to analyze an economic issue. A. trade-off B. market C. model D. variable
C.
Economists reason that the optimal decision is to continue any activity up to the point where the A. marginal benefit is greater than the marginal cost. B. marginal benefit is zero. C. marginal benefit equals the marginal cost. D. marginal cost is zero.
C.
In a market economy, those who are willing and able to buy what is produced A. solely determine what is produced. B. receive what the government allows them to receive. C. receive the most of what is produced. D. receive no more than everyone else in the market.
C.
The decision about what goods and services will be produced in a market economy is made by A. producers deciding what society wants most. B. workers deciding to produce only what the boss says must be produced. C. consumers and firms choosing which goods and services to buy or produce. D. consumers dictating to firms what they need most. E. lawmakers in the government voting on what will be produced.
C.
The three fundamental questions that any economy must address are A. What will be the prices of goods and services; how will these goods and services be produced; and who will receive them? B. Who gets jobs; what wages do workers earn; and who owns what property? C. What goods and services to produce; how will these goods and services be produced; and who receives them? D. How much will be saved; what will be produced; and how can these goods and services be fairly distributed?
C.
Which of the following is a microeconomics question? A. what determines the average price level and inflation B. what will the level of economic growth be in the entire economy C. what factors determine the price of carrots D. how much will be saved and how much will be produced in the entire economy
C.
The branch of economics which studies the behavior of entire economies is called A. normative economics. B. microeconomics. C. public economics. D. macroeconomics
D.
Which of the following correctly describes the relationship between economic efficiency and economic equity? A. There is no conflict between the two goals. B. They are both automatically achieved in a free market economy. C. They always call for opposite outcomes. D. There is often a trade−off between the two.
D.
Allocative efficiency best explains ________, and productive efficiency best explains ________. A. what will be produced; how something will be produced B. how something will be produced; when something will be produced C. when something will be produced; why something will be produced D. why something will be produced; what will be produced
A.
Consider the following economic agents: a. the government b. consumers c. producers Who, in a centrally planned economy, decides what goods and services will be produced with the scarce resources available in that economy? A. the government B. consumers C. producers D. the government, consumers, and producers E. consumers and producers
A.
Every society faces economic trade−offs. This means A. producing more of one good means less of another good can be produced. B. not everyone can have enough goods to survive. C. society's output cannot be made available to all. D. some people live better than others do.
A.
Opportunity cost is defined as A. the highest valued alternative that must be given up to engage in an activity. B. the total value of all alternatives that must be given up to engage in an activity. C. the monetary expense associated with an activity. D. the benefit of an activity.
A.
Which of the following is a normative economic statement? A. The price of gasoline is too high. B. The current high price of gasoline is the result of strong worldwide demand. C. When the price of gasoline rises, the quantity of gasoline purchased falls. D. When the price of gasoline rises, transportation costs rise.
A.
Which of the following is a positive economic statement? A. The minimum wage law causes unemployment. B. The government should subsidize solar power for homeowners. C. The number of work visas should not be limited by the government. D. People should not buy imported fruits and vegetables.
A.
By definition, economics is the study of A. how to make money in the stock market. B. the choices people make to attain their goals, given their scarce resources. C. how to make money in a market economy. D. supply and demand
B.
Economic models A. magnify the complexity of economic issues in order to provide useful data. B. are simplified versions of reality. C. make no assumptions in order to remain as accurate as possible. D. can not be used to analyze real−world issues.
B.
Economics is the study of the ________ people make to attain their goals, given their ________ resources. A. decisions; household B. choices; scarce C. purchases; unlimited D. income; available
B.
Which of the following is a macroeconomics question? A. What determines the salaries of Wall Street executives? B. What determines the growth rate of gross domestic product? C. How is the production quantity of snowboards determined? D. What factors determine the price of electronic cigarettes?
B.
Which of the following is a macroeconomics question? A. What determines the wage of auto workers? B. What determines the inflation rate? C. What factors determine the price of carrots? D. What determines the production of DVDs?
B.
Which of the following is a problem inherent in centrally planned economies? A. Unemployment is too high. B. Production managers are more concerned with satisfying government's orders than with satisfying consumer wants. C. There are no problems and everyone, including consumers, is satisfied. D. There is too much production of low−cost, high−quality goods and services
B.
Microeconomics is the study of A. the economy as a whole. B. topics such as unemployment, inflation, and economic growth. C. the global economy. D. how households and firms make choices.
D.
Scarcity refers to the situation in which A. a country's population is larger than its resource base. B. a nation's poverty level increases faster than its population. C. unlimited resources exceed limited wants. D. unlimited wants exceed limited resources.
D.
________ increases economic efficiency because it forces firms to produce and sell goods and services as long as the additional benefit to consumers is greater than the additional cost of production. A. Equity B. A centrally planned economy C. Voluntary exchange D. Competition
D.
________ is a situation in which a good or service is produced at the lowest possible cost. A. Allocative efficiency B. Equity C. Optimal marginalism D. Productive efficiency
D.
A grocery store sells a bag of potatoes at a fixed price of $2.30. Which of the following is a term used by economists to describe the money received from the sale of an additional bag of potatoes? A. net benefit B. pure profit C. marginal costs D. gross earnings E. marginal revenue
E.
