ECON 2010 assignment questions

According to Adam Smith, which of the following is the instrument the invisible hand uses to direct economic activity? A. price B. government regulation C. financial markets D. cost

A. price

Refer to the graph. Which graph represents the concept of economic growth? A. the graph on the left B. the graph on the right C. both graphs D. neither graph

C. both graphs

Which of the following would create economic growth; that is, shift the production possibilities frontier outward? A. an increase in the available labor B. an increase in technology that affects the production of both goods C. an increase in the available natural resources D. all of the above

D. all of the above

What types of economics require that answers be given to the following questions: what goods and services will be produced, how will the goods and services be produced, and who will receive the goods and services produced? A. market economies B. centrally planned economies C. mixed economies D. all of the above

D. all of the above are economies that answer the 3 fundamental questions of economics

Refer to the graphs below. What is point B' on your neighbor's PPF curve? A. point B' is your neighbor's production before trade B. point B' is your neighbor's consumption before trade C. point B' is your neighbor's production after trade D. point B' is your neighbor's consumption after trade

Point B' is your neighbor's consumption after trade

In what type of economy does the government decide how economic resources will be allocated?

a centrally planned economy

Which of the following terms best refers to a fair distribution of economic benefits?

equity

In the circular-flow diagram, which arrow shows the flow of spending by households?

A.

Refer to the graph. Which graph best represents the concept of economic growth? A. the graph on the left B. the graph on the right C. both graphs show growth for at least one good D. neither graph

A. the graph on the left

Refer to the graphs below. Each graph refers to the demand for digital music players. Which of the graphs illustrates the impact of an increase in consumers' tastes for digital music players? A. the graph on the left B. the graph on the right C. both graphs D. neither graph

A. the graph on the left

Refer to the graphs below. Each graph refers to the demand for digital music players. Which of the graphs illustrates the impact of an increase in the expected price of digital music players in the future? A. the graph on the left B. the graph on the right C. both graphs D. neither graph

A. the graph on the left

Refer to the graph below. Which of the following moves illustrates what happens when there is a change in the price of digital music players A. the move from A to B B. the move from A to C C. either the move from A to B from A to C D. none of the above

A. the move from A to B

A production possibilities frontier will be linear instead of bowed out if A. the opportunity cost of producing more of either of the two goods is constant B. the opportunity cost of producing more of either of the two goods is zero C. the opportunity cost of producing either of the two goods always increases D. resources are employed efficiently

A. the opportunity cost of producing more of either of the two goods is constant

The term quantity supplied refers to A. the quantity of a good or service that a firm is willing and able to supply at a given price B. a table that shows the relationship between the price of a product and the quantity of the product supplied C. a curve that shows the relationship between the price of a product and the quantity of the product demanded D. none of the above

A. the quantity of a good or service that a firm is willing and able to supply at a given price.

In the circular- flow diagram, which arrow shows the flow of goods and services?

B

Refer to the graph below. Which of the following best represents the situation in which BMW must face a trade-off between producing SUVs and producing roadsters? A. any point on the graph represents that trade-off B. moving from B to C C. moving from F to B D. moving from C to G

B moving from B to C

Refer to the graph. Each graph represents one country. Which country has a comparative advantage in the production of shirts? A. Country A B. Country B C. neither country D. both countries

B. Country B

In the circular-flow diagram, which arrow shows the flow of factors of production?

C

Refer to the graph below. What is the opportunity cost of moving from point B to point C? A. 200 SUVs B. 400 SUVs C. 200 roadsters D. 400 roadsters

C. 200 roadsters

Refer to the graph. If you have comparative advantage in the production of apples, what point would best represent your production with trade? A. A B. A' C. C D. D

C. C

How will a decrease in the expected future price of Red Bull affect the demand and supply of Red Bull? A. Demand will rise and supply will fall B. Demand will rise and supply will rise C. Demand will fall and supply will rise D. Demand will fall and supply will fall

C. Demand will fall and supply will rise

Suppose that the income in a market increases and a technological advancement also occurs. What would we expect to happen in the market for a normal good? A. The equilibrium price would increase, but the impact on the amount sold in the market would be ambiguous B. The equilibrium price would decrease, but the impact on the amount sold in the market would be ambiguous C. Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous D. Both equilibrium price and equilibrium quantity would increase

C. Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous

In which markets are factors for production, such as labor, capital, natural resources, and entrepreneurial ability traded? A. Product markets B. essential markets C. factor markets D. competitive markets

C. Factor markets

According to Adam Smith, which of the following is necessary for the proper functioning of the market system? A. For markets to work, people should take into account how their decisions affect society as a whole B. For markets to work, government should help citizens make the right decisions C. For markets to work, people must be free to pursue their self-interest D. For markets to work, people and government need to coordinate their decisions.

C. For markets to work, people must be free to pursue their self-interest

Which of the following is not among the fundamental economic questions that every society must solve? A. What goods and services will be produced? B. How ill the goods and serviced be produced? C. What goods and services will be exchanged? D. who will receive the goods and services produce

C. What goods and services will be exchanged ?

Fill in the blanks. In a simple circular-flow model, there are flows of. A. factors of production; goods and services B. funds received from the sale of factors of production; spending on final goods and services C. both (a) and (b) are correct D. none of the above. Actually, there are no flows in the circular flow of income

C. both (a) and (b) are correct

Consider the table below. Which country has a comparative advantage in the production of each good? A. country A has a comparative advantage in the production of both goods B. country B has a comparative advantage in the production of both goods C. country A has a comparative advantage in the production of food; country B has a comparative advantage in the production of clothing D. country B has a comparative advantage in the production of food; country A has a comparative advantage in the production of clothing

C. country A has a comparative advantage in the production of food; Country B has a comparative advantage in the production of clothing

If a country has a comparative advantage in the production of a good, then the country A. also has an absolute advantage in producing that good B. should allow another country to specialize in the production of that good C. has a lower opportunity cost in the production of that good D. all of the above

C. has a lower opportunity cost in the production of that good

Which of the following comprises the two key groups of participants in the circular flow of income? A. product markets and factor markets B. government and the financial sector C. households and firms D. buyers and sellers

C. households and firms

According to Adam Smith, which of the following is true? A. Markets work because producers, aided by government, ensure that neither too many nor too few goods are produced B. Market prices can come to reflect the prices desired by all consumers C. individuals usually act in a rational, self-interested way D. all of the above

C. individuals usually act in a rational, self-interested way

What is the name given to the highest-valued alternative that must be given up to engage in any activity? A. scarcity B. the production possibilities frontier C. opportunity cost D. a trade-off

C. opportunity cost

What are patents and copyrights designed to do ? A. prevent entrepreneurs from earning excessive profits B. eliminate unnecessary duplication whenever it arises C. protect intellectual property rights D. all of the above

C. protect intellectual property rights

Refer to the graph. In this problem, what is the opportunity cost of producing five cakes? A. zero cakes B. zero pies C. ten pies D. There is insufficient information to answer the question

C. ten pies

In the circular-flow diagram, which arrow shows the flow of income paid to the factors of production?

D

Refer to the graph. What is the opportunity cost of moving from point B to point C? A. 200 automobiles B. 400 automobiles C. 50 aircraft carriers D. 150 aircraft carriers

D. 150 aircraft carriers

Refer to the graph. Which of the following combinations of pies and cakes is unattainable given existing resources? A. 2 cakes and 6 pies B. 1 cake and 7 pies C. 0 cakes and 10 pies D. 4 cakes and 7 pies

D. 4 cakes and 7 pies

Refer to the graph. What is the opportunity cost of producing 400 aircraft carriers? A. 200 automobiles B. 50 aircraft carriers C. 200 automobiles D. 600 automobiles

D. 600 automobiles

Which of the following questions could be answered using economics? A. "How are the prices of goods and services determined?" B. "How does pollution affect the economy, and how should government policy deal with these effects?" C. Why do firms engage in international trade, and how do government policies affect international trade?" D. All of the above are economic questions

D. All of the above are economic questions

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

If the college increased tuition, would class sizes decline?

Human capital is

The accumulated training and skills that workers possess

When you think of an arrangement or institution that brings buyers and sellers of a good or service together, what are you thinking of?

a market

What type of assessment is one in which a person's values and political views form part of that assessment?

a normative assessment

What type of statement would "A minimum wage actually reduces employment" be considered?

a positive statement

Which of the following covers the study of topics such as inflation and unemployment?

macroeconomics

"Orasure Makes a Decision" which of the concepts below is most applicable in solving the problem?

marginal analysis

Which of the following is the best classification for the economics of the United States, Canada, Japan, and Wester Europe?

mixed economies

What type of economics analysis is concerned with the way things ought to be?

normative analysis

What is the stock of computers, factory buildings, and machine tolls used to produce goods better known as?

physical capital

Which of the following involves an estimation of the what the benefits and costs of a particular action are?

positive analysis

What does an economy achieve by producing a good or service at the least possible cost?

productive efficiency

Which of the following questions can be answered using normative economic reasoning?

should a college cut tuition to stimulate enrollments?

What is the purpose of an economic hypothesis?

to establish a causal relationship

Which of the following terms summarizes the situation in which a buyer and a seller exchange a product in a market and, as a result, both are made better off by the transaction?

voluntary exchange

Refer to the graph. How many roadsters are produced at the point where BMW produces 800 SUVs? A. 0 B. any amount up to 800 C. exactly 800 D. 400

A. 0

Consider the table below. What is country A's opportunity cost of producing 1 unit of clothing? A. 2 units of food B. 1/2 a unite of food C. 6 units of food D. 2 units of clothing

A. 2 units of food

Refer to the graphs below. Each graph refers to the supply for digital music players. Which of the graphs illustrates that impact of an increase in productivity? A. The graph on the left B. The graph on the right C. both graphs D. neither graph

A. The graph on the left

Refer to the graph below. Along the demand curve, what happens to the quantity demanded as the price falls from $250 to $200 per player? A. the quantity demanded increases from 35 million to 40 million players per month B. the quantity demanded decreases from 40 million to 35 million players per month C. We cannot predict the change in the quantity demanded without the supply curve D. The change in the quantity demanded is not related to a change in price

A. The quantity demanded increases from 35 million to 40 million players per month

What is a normal good? A. a good for which demand increases as income rises B. a good for which demand decreases as income rise C. a good that can be used together with another good D. a good that serves more than one purpose

A. a good for which demand increases as income rises

Refer to the graphs. Which of the following could have caused the outward shift of the curve in the graph on the left side? A. an increase in technology that affects the production of both aircraft carriers and automobiles B. technological change that affects only the aircraft carrier industry C. unemployment in the economy D. a change in the cost of producing automobiles

A. an increase in technology that affects the production of both aircraft carriers and automobiles

If a shortage exists in a market we know that the actual price is A. below equilibrium price and quantity demanded is greater than quantity supplied B. above the equilibrium price and quantity demanded is greater than quantity supplied C. above equilibrium price and quantity supplied is greater than quantity demanded D. below equilibrium price and quantity supplied is greater than quantity demanded

A. below equilibrium price and quantity demanded is greater than quantity supplied

Refer to the graph. Which of the following combinations is unattainable with the current resources available in this economy? A. combination G B. combination F C. combinations A or E D. all of the above. non of the combinations above can be attained with current resources

A. combination G

Refer to the graph. Each graph represents one country. Which country should specialize in the production of chips? A. country A B. country B C. neither country; they both should produce some chips and some shirts D. both countries should specialize in the production of chips

A. country A

The table shows the quantity of two goods that a worker in Country A and a worker in Country B can produce per day. Which country has an absolute advantage in the production of each good? A. country A has an absolute advantage in the production of each good B. country B has an absolute advantage in the production of each good C. Both countries have an absolute advantage in the production of each good D. Neither country has an absolute advantage in the production of each good

A. country A has an absolute advantage in the production of each good

Which of the following would definitely result in a higher price in the market for tennis shoes? A. demand increases and supply decreases B. demand and supply both decrease C. demand decreases and supply increases D. demand and supply both increase

A. demand increases and supply decreases

What is the outcome of enforcing contracts and property right in a market system? A. increased economic activity B. decreased economic activity C. no effect on economic activity D. an unpredictable but definite on economic activity

A. increased economic activity

Refer to the graph. As you move from point A to point B and then to point C on this graph, what happens to the marginal opportunity cost? A. it increases B. it decreases C. it remains constant D. it equals zero

A. it increases

Absolute advantage is the ability of an individual, firm, or country to A. produce more of a good or service than competitors using the same amount of resources B. produce a good or service at a lower opportunity cost than other producers C. consume more goods or services than others at lower costs D. reach a higher production possibilities frontier by lowering opportunity costs

A. produce more of a good or service than competitors using the same amount of resources

Which of the following refers to markets where goods such as computers or services such as medical treatment are offered? A. product markets B. essential markets C. factor markets D. competitive markets

A. product markets

The principal of increasing marginal opportunity cost states that the more resources devoted to any activity, the _______ the payoff to devoting additional resources to that activity. A. smaller B. greater C. proportional D. more instant

A. smaller

What happens if a country produces a combination of goods that efficiently uses all of the resources available in the economy? A. the country is operating on its production possibilities frontier B. the country is maximizing its opportunity cost C. the country has eliminated scarcity D. All of the above occur if a country uses all available resources

A. the country is operating on its production possibilities frontier

Refer to graph below. Each graph refers to the demand for digital music players. Which of the graphs illustrates the impact of an increase in income, assuming that digital music players are a normal good? A. the graph on the left B. the graph on the right C. both graphs D. neither graph

A. the graph on the left

Which of the following is critical to the success of a market system? A. to allow individuals or firms to have exclusive use of their property B. to prevent individuals from buying or selling their property depending on the circumstances C. both (a) and (b) are critical to the success of a market system D. to allow the government to determine the optimal use of private property

A. to allow individuals or firms to have exclusive use of their property

Refer to the graph below. What happens to quantity demanded along this demand curve? A. Quantity demanded increases as the price increases B. Quantity demanded increases as the price decreases C. Quantity demanded may increase or decrease as the price increases D. Quantity demanded is not related to price

B. Quantity demanded increases as the price decreases

When two goods are complements, which of the following is true? A. the two goods can be used for the same purpose B. the two goods are used together C. the demand for each of these goods increases when income rises D. the demand for each of these goods increases as income falls

B. The two goods are used together

Refer to the graph, What does the term "increasing marginal opportunity cost" mean in this graph? A. There is a higher opportunity cost of producing either aircraft carriers or automobiles, so long as the quantity produced of that good is decreasing B. There is a higher opportunity cost of producing either aircraft carriers or automobiles, so long as the quantity produced of that good is increasing C. Increasing the production of aircraft carriers results in higher automobile production costs, such as the costs of labor and capital to build automobiles D. Increasing the production of either aircraft carriers or automobiles crates more opportunities in the economy.

B. There is a higher opportunity cost of producing either aircraft carriers or automobiles, so long as the quantity produced of that good in increasing

Which of the following would not shift the demand curve for a good or service? A. a change in the price of a related B. a change in the price of the good or service C. a change in expectations about the price of the good or service D. a change in income

B. a change in the price of the good or service

If a market system functions well, which of the following is necessary for the enforcement of contracts and property rights? A. powerful political connections B. an independent court system C. action by government to prevent the exercise of certain property rights D. all of the above

B. an independent court system

Refer to the graph. Which of the following combinations is inefficient? A. combination G B. combination F C. combinations A or E D. both F and G

B. combination F

In a free market system, which of the following groups brings together the factors of production-- labor, capital, and natural resources-- in order to produce goods and services? A. the government B. entrepreneurs C. lobbyists D. politicians

B. entrepreneurs

Generally speaking, for a market system to work, individuals must A. be very cautious in their approach to saving and investment B. take risks and act in rational, self-interested ways. C. be able to evaluate and understand all available options D. consult people who have experience

B. take risks and act in rational, self-interested ways

Refer to the graph. Which graph better represents an improvement only in the technology used to make automobiles? A. the graph on the left B. the graph on the right C. both graphs D. neither graph

B. the graph on the right

Refer to the graphs below. Each graph refers to the supply for digital music players. Which of the graphs illustrates the impact of an increase in the price of a substitute in production? A. the graph on the left B. the graph on the right C. both graphs D. neither graph

B. the graph on the right

Refer to the graphs below. Each graph refers to the supply for digital music players. Which of the graphs illustrates the impact of an increase in the price of an input? A. the graph on the left B. the graph on the right C. both graphs D. neither graph

B. the graph on the right

Which of the following is used to explain why consumers buy other goods when the price of a good rises? A. the law of demand B. the substitution effect C. the income effect D. the ceteris paribus condition

B. the substitution effect

Which of the following is the textbook's definition of a supply curve? A. the quantity of a good or service that a firm is willing to supply at a given price B. a table that shows the relationship between the price of a product and the quantity of the product supplied C. a curve that shows the relationship between the price of a product and the quantity of the product supplied D. none of the above

C. a curve that shows the relationship between the price of a product and the quantity of the product supplied

What does the term quantity demanded refer to? A. the total amount of a good or service that a consumer is willing to buy per month B. the quantity of a good or service demanded that corresponds to the quantity supplied C. the quantity of a good or service that a consumer is willing and able to purchase at a given price D. none of the above

C. the quantity of a good or service that a consumer is willing and able to purchase at a given price

If both demand and supply decrease in the market for Red Bull, how will equilibrium be affected? A. Equilibrium price and equilibrium quantity will rise B. Equilibrium price and equilibrium quantity will fall C. Equilibrium price will rise, but the impact on equilibrium quantity is ambiguous D. The impact on equilibrium price will be ambiguous, but the equilibrium quantity will fall

D. The impact on equilibrium price will be ambiguous, but the equilibrium quantity will fall

An early frost in the apple orchards of Washington State would cause A. an increase in the demand for apple juice, increasing equilibrium price B. an increase in the supply of apple juice, decreasing equilibrium price C. a decrease in the demand for apple juice, decreasing equilibrium price D. a decrease in the supply of apple juice, increasing equilibrium price

D. a decrease in the supply of apple juice, increasing equilibrium price

What is the role of an entrepreneur? A. to operate a business that produces a good or service B. to bring together the factors of production-- labor, capital, and natural resources C. to take risks D. all of the above

D. all of the above

Which of the following would result in a decrease in the demand for Red Bull? A. an increase in the price of Red Bull B. an increase in the price of Monster Energy, a substitute for Red Bull C. an increase in income, assuming Red Bull is a normal good D. an increase in the price of pizza, a complement of Red Bull

D. an increase in the price of pizza a complement of Red Bull

Which of the following is not an essential component of an economic model? A. assumptions B. hypotheses C. variables D. normative statements

D. normative statements

Refer to the graph. The graph sows the data from solved problem 2-1. What is the opportunity cost of switching from choice D to choice E? A. two pies B. eight pies C. two cakes D. one cake

D. one cake

Which of the following is the correct definition of a market demand? A. the quantity of a good or service that a consumer is willing to purchase at a given price B. a table showing the relationship between the marginal cost of a product and the quantity of the product demanded C. a curve that shows the relationship between the price of a product and the quantity of the product supplied D. the demand by all the consumers for a given good or service

D. the demand by all the consumers for a given good or service

Fill in the blank: is the study of how households and businesses make choices, how they interact in markets, and how the government influences their choices.

Microeconomics

Which of the following best describes the characteristics of models used in economics?

Models are simplifications of reality that include only essential elements and exclude less relevant details

Which of the following statements best defines scarcity?

Scarcity is a situation in which unlimited wants exceed the limited resources available to fulfill those wants

Which of the following is achieved when a good or service is produced up to the point where the marginal benefit to consumers is equal to the marginal cost of producing it?

allocative efficiency

What is the name given to the practical application of an invention?

an innovation

What is the name given to the development of a new good or a new process for making a good?

an invention

Fill in the blanks. In economics, as well as in life, optimal decisions are made

at the margin