Econ Quiz 1 study set

"If you hadn't gone to dinner with your friends, you would have stayed home and "surfed" the Internet." It follows that a. surfing the Internet is the opportunity cost of having dinner with your friends. b. the price of having dinner with your friends is more than the price you would have had to pay to surf the Internet. c. the opportunity cost of having dinner with your friends is lower than the opportunity cost of surfing the Internet. d. it is less costly to surf the Internet than to have dinner with your friends.

A

15. Which of the following is a microeconomics topic? a. the study of how prices are determined in the computer industry b. the study of unemployment in the economy c. the study of how changes in the nation's money supply affect the nation's output d. a and c e. b and c

A

58. In 2009, the federal government created a program called Cash for Clunkers whereby consumers could trade in a less efficient car for a more efficient car and receive a higher value than they would have otherwise. How would an economist understand the decision that consumers faced? a. Consumers would compare the marginal benefits to the marginal costs of replacing their car, and this program made sure that marginal benefits would exceed marginal costs. b. Consumers would compare the marginal benefits to the marginal costs of replacing their car, and this program made sure that marginal costs would exceed marginal benefits. c. The Cash for Clunkers program increased the opportunity cost of replacing a car. d. The Cash for Clunkers program served as a negative incentive to replacing a fuel-inefficient car. e. The Cash for Clunkers program served as an indirect incentive to replacing a fuel-inefficient car.

A

74. As income rises as a result of consumption rising, income and consumption are variables that are: a. inversely related. b. directly related. c. independent of each other. d. smoothly related. e. none of the above

A

According to economists, competition exists because of a. scarcity. c. money. b. capitalism. d. unintended effects.

A

If people want more cars than there are cars available, then a. cars are scarce. b. there is a surplus of cars. c. there is a decreased supply of cars. d. none of the above

A

In a growing number of cities, stores are required either not to make available plastic or paper bags or to do so only for an additional fee. What kind of incentive is this fee? a. a direct incentive b. an indirect incentive c. a neutral incentive d. a complementary incentive e. an unintended incentive

A

It usually takes less time to buy a six-pack of 7-Up, a loaf of bread, and a half-gallon of ice cream at a small convenience store (such as a 7-Eleven) than at a large, full-service grocery store. Which of the following persons is most likely to buy these items at a convenience store? a. a person with high opportunity cost of time b. a person with low opportunity cost of time c. a person who is out of work d. There is not enough information to answer the question.

A

Prior to attending college, Darius is offered a lucrative four-year contract as an actor in a daytime soap opera for $100,000 a year. Assuming that acting and attending college are Darius' preferred alternatives and that he must choose between the two, his cost of attending college after receiving the offer a. increases. b. decreases. c. stays the same. d. increases or stays the same depending on whether he accepts the offer.

A

Saudi Arabia has a comparative advantage in producing oil because it: a. has specialized in the production of oil given its natural resources. b. has forced other countries not to sell their oil. c. has specialized in the production of all goods. d. forces the use of oil for the production of all electricity. e. benefits from the heavy use of oil for transportation.

A

The U.S. federal government offers homeowners a tax deduction for their home loan interest payments. This reduction in taxes serves as a(n) ________ to buy a house. a. direct incentive b. indirect incentive c. neutral incentive d. complementary incentive e. unintended incentive

A

The government controls for many indirect incentives in safety net social programs by: a. limiting payment to a specified time period. b. providing only a partial payment. c. allowing individuals to apply to only a certain number of safety net social programs. d. requiring individuals to repay the benefits they received. e. establishing income limits for those who apply for safety net social programs.

A

The study of an economy's price level is explicitly a part of a. macroeconomics. b. microeconomics. c. positive economics. d. normative economics.

A

There is no such thing as a free lunch is a saying that expresses the idea that a. opportunity costs are incurred whenever a choice is made. b. we are using our resources efficiently. c. food is very expensive these because of inflation.

A

This is an example brought up in class. Here are three things you could do if you do not attend your next-door neighbor's barbecue: watch television with some friends (you value this at $8), read a good novel (you value this at $4), or go in to work (you could earn $6 during the barbecue). The opportunity cost of going to your neighbor's barbecue is a. $6, because this is the only alternative of the three where you actually receive a monetary payment. b. $4, because this is the lowest valued alternative forfeited. c. $8, because this is the highest valued alternative forfeited. d. $18, because this is the total dollar sum of the alternatives forfeited.

A

What does it mean if a person makes a "decision at the margin"? a. The person compares additional benefits and additional costs when deciding what to do. b. The person weighs the good against the bad and then decides what to do. c. The person is more likely to say yes than to say no. d. The person compares marginal benefits and total costs and then decides what to do. e. The person makes a decision based on a condition.

A

Which of the following is a normative macroeconomics statement? a. The central bank should increase the nation's money supply. b. The increase in the nation's money supply helped push the nation's unemployment rate down in the short run. c. Ford Motor Company's new advertising campaign ended up hurting General Motors' sales. d. The local government ought to spend more on recreational facilities.

A

Scarcity is defined as the condition in which a. both wants and resources are limited. b. wants are finite and resources infinite. c. both wants and resources are infinite. d. wants are infinite and resources finite.

D

Which of the following is true? a. Oil is considered to be the resource land. b. A person working for a company is considered to be the resource capital. c. A machine in a factory is considered to be the resource land. d. A person with the particular talent for organizing the resources of land, labor and capital to produce goods, seek new business opportunities and develop new ways of doing things is considered to be the resource labor. e. a and d

A

Which of the following would NOT be considered a macroeconomic topic? a. the reasons for a decline in the price of crude oil. b. the cause of a downturn in the economy. c. the effect of the government budget deficit on inflation. d. the causes of inflation and unemployment.

A

Which of the following is a positive macroeconomics statement? a. The central bank should increase the nation's money supply. b. The increase in the nation's money supply helped push the nation's unemployment rate down in the short run. c. Ford Motor Company's new advertising campaign ended up hurting General Motors' sales. d. The local government ought to spend more on recreational facilities.

B

Which of the following is not one of the categories of resources? a. labor b. government c. capital d. entrepreneurship

B

20. The latest Blink 182 CD is available for $16.99. Is this price a rationing device? a. No, stores will sell the CD to anyone having the required number of dollars. b. Yes, many will not buy the CD because they are unwilling to sacrifice other things $16.99 will buy. c. No, for price to be a rationing device, it must be so high that only one unit of the item is sold. d. Yes, since that is a reasonable price.

B

22. Economists believe that people's wants are a. finite. b. infinite. c. irrational. d. unimportant because needs are more important than wants.

B

23. Suppose the federal government steps up its program of highway repair and renovation. Millions of people see tangible benefits from this. Economists remind us that those same people eventually must pay higher taxes to fund the highway project, which points out the __________ the project. a. resources used in b. opportunity cost of c. marginal benefits of d. rationing device used in

B

75.. The coordinates of point 1 are 50 units of X and 40 units of Y. The coordinates of point 2 are 60 units of X and 45 units of Y. The slope of the line between points 1 and 2 is a. + 2.00 b. + 0.50 c. - 0.25 d. - 0.50

B

A person has a comparative advantage in the production of a good when she or he can produce the product at a(n) ________ opportunity cost compared to another person. a. higher b. lower c. equal d. diminishing e. increasing

B

Comparative advantage emerges because of the presence of: a. trade. b. differing opportunity costs. c. marginal benefits equaling marginal costs. d. scarcity. e. incentives.

B

Economics is defined as a. science of efficiency. b. science of scarcity. c. study of markets. d. study of human activity.

B

In most societies, dollar price acts as the main rationing device. If dollar price weren't the main rationing device, would there still be a need for some rationing device to take its place? a. No, because with dollar price there would be no scarcity, although shortages would still exist. b. Yes, because there is a need for a rationing device as long as scarcity exists. c. Yes, because there is a need for a rationing device as long as the world's population is so large. d. No, because dollar price creates scarcity and without money price scarcity wouldn't exist. e. none of the above

B

Many people buy one newspaper per day, but rarely do they buy two of the same newspapers on the same day. What is the economic justification for this behavior? a. The marginal benefit of the purchasing the second newspaper exceeds the marginal cost of purchasing that paper. c. The marginal benefit of the purchasing the second newspaper equals the marginal cost of purchasing that paper. b. The marginal cost of the purchasing the second newspaper exceeds the marginal benefit of purchasing that paper. d. none of the above is an appropriate economic justification for this behavior.

B

Opportunity cost is the __________ alternative forfeited when a choice is made. a. least-valued b. most highly-valued c. most convenient d. most recently considered

B

The branch of economics that studies the decisions of individuals and firms is called a. macroeconomics. b. microeconomics. c. microeconomics and macroeconomics. d. positive economics. e. normative economics.

B

The opportunity cost of attending college is a. the money one spends on college tuition, books, and so forth. b. the highest valued alternative one forfeits to attend college. c. the least valued alternative one forfeits to attend college. d. equal to the salary one will earn when one graduates from college.

B

When economists speak of scarcity, they are referring to the a. condition in which society is not employing all its resources in an efficient way. b. condition in which people's wants outstrip the limited resources available to satisfy those wants. c. economic condition that exists in only very poor countries of the world. d. condition in which society produces too many frivolous goods and not enough socially desirable goods.

B

What creates comparative advantage? a. lower costs b. higher opportunity costs c. specialization d. scarcity e. population growth

C

Which of the following statements is false? To an economist, the resource a. land includes natural resources such as minerals, forests, water and unimproved land. b. capital consists of unproduced goods that can be turned into produced goods. c. labor consists of the physical and mental talents people contribute to the production process. d. entrepreneurship refers to a particular talent that some people have for organizing the resources of land, labor, and capital to produce goods, seek new business opportunities, and develop new ways of doing things. e. b and c

B

What is the indirect incentive in the unemployment insurance program? a. Workers get paid when they are laid off. b. Workers face an incentive to find a new job as quickly as possible. c. Workers face no incentive to find a new job until the insurance runs out. d. Workers are paid only a portion of their wages by the unemployment insurance program. e. Workers on unemployment insurance are given training opportunities.

C

35. How is scarcity related to competition? a. Competition is an effect of scarcity. b. Scarcity is an effect of competition. c. Both scarcity and competition are effects of a rationing device. d. Both scarcity and competition are effects of opportunity cost. e. Scarcity produces disutility and competition produces utility.

C

44. Which of the following statements is false? a. Capital consists of produced goods that can be used as inputs for further production. b. The terms resources, inputs, and factors of production are synonyms. c. Labor consists of the physical, but not mental, talents of people who contribute to the production process. d. Entrepreneurship is one of the four categories of resources. e. Land includes natural resources, such as minerals, forests, water, and unimproved land.

C

A person goes into a store and buys a computer for $2,210. In this case, price is acting as a a. resource. b. good. c. rationing device. d. capital instrument e. factor of production

C

Amy's opportunity cost of going to the movies is a. the price of the ticket. b. zero, if she has a free pass. c. the price of the ticket plus the value to Amy of what she would have chosen to do with her time had she not chosen to go to the movies. d. both b and c

C

An example of a direct negative incentive is: a. providing a commission for sales. b. awarding a promotion for hard work. c. threatening to fire those who do not perform well. d. providing an orientation for new employees. e. providing generous benefits and pay for employees.

C

Frank is 19 years old and is an actor in a soap opera, "One Life to Ruin." He earns $100,000 a year. Cassandra is also 19 years old and works in a local clothing store. She earns $9 an hour. Which of the two persons is more likely to attend college and for what reason? a. Cassandra, because she is smarter. b. Frank, because he has higher opportunity costs of attending college than Cassandra. c. Cassandra, because she has lower opportunity costs of attending college than Frank. d. Frank, because he earns a higher income than Cassandra.

C

Produced goods used as inputs for the production of other goods comprise the resource known as a. natural resources. b. services. c. capital. d. entrepreneurship.

C

Some years ago, chemists at 3M Corporation were trying to create a super-strong glue. Somehow they got their molecules twisted and came up with one of the weakest glues ever made. But, rather than pouring it down the drain, they tried coating some paper with it. Voila! The "Post-It Note" was born. In this case, 3M was acting as a. a utility. b. a rationer. c. an entrepreneur. d. an abstraction.

C

The condition in an economy that makes a "rationing device" a necessity is the fact that a. the economy is organized around free markets. b. the economy is centrally planned by the government. c. scarcity exists. d. there are fewer types of goods than there are people in the economy.

C

The cost of building a new interstate highway system is reported to be high at $25 billion. Does it necessarily follow that the interstate highway is not worth building? a. Yes, because it is better to spend $25 billion on ending poverty than on building another interstate highway system. b. No, because building a new interstate highway system promotes economic growth, which helps everyone. c. No, because the benefits of building a new interstate highway system may be greater than $25 billion. d. Yes, because the benefits of building a new interstate highway system may be greater than $25 billion.

C

The question of U.S. budget deficits and their impact on the U.S. economy is dealt with in the study of a. microeconomics. b. managerial economics. c. macroeconomics. d. consumer economics.

C

Which of the following is a positive microeconomics statement? a. The central bank should increase the nation's money supply. b. The increase in the nation's money supply helped push the nation's unemployment rate down in the short run. c. Ford Motor Company's new advertising campaign ended up hurting General Motors's sales. d. The local government ought to spend more on recreational activities.

C

Why do societies need rationing devices? a. Because people have too many needs and not enough wants. b. Because price exists. c. Because scarcity exists. d. Because people have opportunity costs.

C

You are thinking about going on a trip to Florida and willing to pay $3,000 for the trip. You actual pay $500 for the airplane ticket to Florida, you forgo $600 in wages from your job so you can take the trip to Florida, and $1,500 for food, hotel room, and other expenses, like renting a car, etc. Based on these figures, would you go ahead and take the trip to Florida? a. Not sure. b. No, because the costs exceeds the benefits of taking the trip to Florida. c. Yes, because the benefits exceeds the costs of taking the trip to Florida. d. Who Cares?! I rather see the Yankees beat the Red Sox in a baseball on the Yes Cable TV Network than answer this question!! J

C

The higher the opportunity cost of attending college, a. the more likely an individual will go to college. b. the more economics classes an individual will take at college. c. the fewer economics classes an individual will take at college. d. the less likely an individual will go to college.

D

Public buildings in the United States are required to be accessible to the disabled and, as a result, almost all have an elevator. What would be an example of a positive direct incentive for those who can to use stairs? a. Using the stairs will make it seem that you care about your health and that you aren't lazy. b. Using the stairs will increase the risk of tripping and falling. c. Using the stairs will take more time than taking the elevator and will increase the risk of missing an important meeting. d. Using the stairs will give you some exercise and make you healthier. e. Using the stairs will put elevator repair professionals out of work.

D

Saying "the marginal costs are greater than the marginal benefits" is the same as saying a. the average costs are greater than the average benefits. b. the total costs are greater than the average benefits. c. the benefits are greater than the costs. d. the additional costs are greater than the additional benefits. e. the costs minus the benefits equal the net costs.

D

The physical and mental talents people bring to production processes comprise the resource called a. entrepreneurship. b. natural resources. c. capital. d. labor.

D

12. Minerals, animals, water and forests are all considered to be the resource known as a. capital b. entrepreneurship c. labor d. land e. none of the above

D

30. Something that provides disutility is called a a. good. b. want. c. need. d. bad. e. none of the above

D

65. If the government wanted to give people a negative direct incentive not to save money, what would be the appropriate policy? a. providing individuals a subsidy to save their money b. providing funding for an advertising campaign encouraging people to spend more money c. informing individuals that saving money causes people not to spend money, which will cause them to lose their jobs d. imposing a tax on individuals for saving their money e. informing consumers about all that they could buy with their money with the hope that they spend more

D

A good provides __________ and a bad provides __________. a. utility; satisfaction b. disutility; utility c. dissatisfaction; satisfaction d. utility; disutility e. satisfaction; utility

D

According to economists, why does a highly talented young person, such as basketball player LeBron James, often choose not to attend college? a. The opportunity cost of attending college would be very high for such a person because he has the opportunity to earn a very high salary in his field of expertise. b. The costs of attending college are likely to exceed the benefits for such a talented person, so he decides not to attend college. c. The benefits of attending college are unlikely to exceed the costs for such a talented person so he is making an irrational decision. d. a and b

D

In an interview an economist states, "The budget deficit should be of greater concern to the federal government." We can explicitly put this statement in the category of a. Microeconomics. b. Macroeconomics. c. positive economics. d. normative economics.

D

Microeconomics is the branch of economics that deals with a. highly aggregated markets or the entire economy. b. the production side of the economy, exclusively. c. the buying side of the economy, exclusively. d. human behavior and choices as they relate to relatively small units-an individual, a firm, an industry.

D

How are changes in opportunity cost predicted to affect behavior? a. The lower the opportunity cost of doing X, the less likely X will be done. b. The higher the opportunity cost of doing X, the less likely X will be done. c. The lower the opportunity cost of doing X, the more likely X will be done. d. a and c e. b and c

E

Indirect incentives create: a. positive consequences. b. negative consequences. c. indirect consequences. d. direct consequences. e. unintended consequences.

E

The __________ the opportunity cost of doing something, the __________ likely a person will do that something. a. lower; less b. lower; more c. higher; more d. higher; less e. b and d

E

Which of the following is a positive economic statement? a. We should raise the minimum wage in order to provide a decent wage for more people. b. The increase in the nation's money supply helped push the nation's unemployment rate down in the short run. c. The budget deficit has been declining in recent years. d. The local government ought to spend more on recreational facilities. e. b and c

E

Which of the following is a possible rationing device? a. price b. first-come-first-served c. brute force d. a and b e. a, b, and c

E

Which of the following items would an economist consider to be a good? a. leisure time b. jeans c. pizzas d. cars e. all of the above

E

Which of the following statements is false? a. Microeconomics is the branch of economics that deals with human behavior and choices as they relate to relatively small units-an individual, a firm, an industry, and a single market. b. Macroeconomics is the branch of economics that deals with human behavior and choices as they relate to highly aggregate markets. c. Positive economics attempts to determine what is. d. Normative economics addresses what should be. e. none of the above

E