economics midterm 2020
5.In an industry that has many competing firms, an increase in demand may be expected to result in: (a) A decrease in production (b) No change in production (c) An increase in production (d) The elimination of inefficient firms.
(C) an increase in production
5. A Corporation pays a dividend on its common stock: (a) Every year (b) When the interest becomes due (c) Whenever its board of directors votes to do so (d) Whenever it earns a profit.
(C) whenever its board of directors votes to do so
1.Corporations obtain most of the funds that they need for expansion from: (a) The sale of stocks (b) The sale of bonds (c) Short-term borrowing (d) Their undistributed profits.
(D) their undistributed profits
3.Which one of the following is least likely to result in increased productivity? (a) Efficient use of natural resources (b) Employee training programs (c) Improved machinery (d) Working overtime.
(D) working overtime
3.The holder of a corporate bond is: (a) A creditor of the corporation (b) A debtor of the corporation (c) An owner of the corporation (d) An officer of the corporation.
(a) A creditor of the corporation
2. Which one of the following would probably lead to an increase in the demand for bricks? (a) An increase in the price of lumber, which can be used as a substitute for bricks (b) A decrease in the income of potential homebuilders (c) An increase in the wages of bricklayers (d) An increase in the price of bricks.
(a) An increase in the price of lumber, which can be used as a substitute for bricks
8.In a market economy, consumers can have just about anything they want if they: (a) Are willing and able to pay the price (b) Belong to the ruling party (c) Are famous persons (d) Have enough friends.
(a) Are willing and able to pay the price
2.Before modernizing, the Chelsea Video Games Company employed 20 workers and produced 200 games a day. After modernizing, the company laid off 5 workers and is now producing 300 games a day. As a result of modernization, productivity at the Chelsea plant: (a) Doubled (b) Increased by 50 percent (c) Remained the same (d) Declined
(a) Doubled
5.The best way to increase productivity in a plant is to: (a) Employ all the factors of production more efficiently (b) Keep hiring more workers (c) Keep hiring more plant managers (d) Increase output.
(a) Employ all the factors of production more efficiently
10.Which one of the following statements is said to be a major advantage of the market system? (a) It is the most efficient of all economic systems. (b) It ensures that natural resources will be preserved. (c) It always provides for essential public goods and services. (d) It provides adequately for the needs of all U.S. citizens.
(a) It is the most efficient of all economic systems.
5. In which type of economic system are consumers most likely to determine what goods will be produced? (a) Market economy (b) Traditional economy (c) Command economy (d) Wartime economy.
(a) Market economy
5. All other things being equal, if consumers are willing to pay more for an item, it is likely that: (a) More of that item will be produced (b) Less of that item will be produced (c) Producers will continue to produce regardless of production costs (d) The price of that item will be reduced.
(a) More of that item will be produced
10.Which one of the following pieces of information is contained in a corporation's income statement? (a) Net income (b) Accounts payable (c) Value of the firm's factory (d) Total liabilities.
(a) Net income
6.Which one of the following is an example of a fixed cost? (a) Rent (b) Electricity to power machinery (c) Commission on sales (d) Raw materials.
(a) Rent
1.Which form of business organization is most numerous in the United States? (a) Sole proprietorships (b) Partnerships (c) Corporations (d) Cooperatives.
(a) Sole proprietorships
2.Which one of the following is the most attractive feature of the sole proprietorship? (a) The ease with which it can be organized (b) Its ability to expand across state borders (c) The ease with which ownership can be transferred (d) Its limited liability.
(a) The ease with which it can be organized
3.The opportunity cost of an increase in the local police force is (a) The government goods or services that people will give up in order for the government to hire additional police (b) The cost of the additional police (c) The cost of training new recruits (d) The amount by which taxes may be increased to pay for the additional police.
(a) The government goods or services that people will give up in order for the government to hire additional police
6.Which one of the following is most influential in causing firms to produce the goods and services that the public wants? (a) The profit motive (b) Competition (c) Consumer sovereignty (d) The needs of the public.
(a) The profit motive
10. In the graph, BB represents: (a) The supply curve (b) The demand curve (c) Equilibrium (d) The market price.
(a) The supply curve
6.The demand for a good is elastic when: (a) Total revenue increases with each decrease in price (b) Total revenue decreases with each decrease in price (c) The demand curve shifts to the right (d) Price changes have no effect on total revenue.
(a) Total revenue increases with each decrease in price
4."An individual's role in the economy is most likely determined at birth, and goods and services are produced according to time-honored methods." Which economic system fits this description? (a) Traditional (b) Command (c) Market (d) Highly specialized.
(a) Traditional
1. "All societies must economize because human wants are unlimited, but resources needed to satisfy these wants are limited." This statement means that society must? (a) Use its resources in such a way that it gets the most out of them (b) Save as much money as possible (c) Keep its budgets balanced (d) Prohibit the use of its resources.
(a) Use its resources in such a way that it gets the most out of them
8. The Kilroy Bicycle Company has fixed annual costs of $100,000 and variable costs of $10 per bicycle. If output is increased from 5,000 to 10,000 bicycles per year, the total cost of producing each bicycle will be reduced from $30 to: (a) $25 (b) $20 (c) $15 (d) $10
(b) $20
4.When described in connection with supply and demand schedules, an increase in demand means that: (a) The price will fall (b) Buyers will take a larger quantity at all prices than before (c) The demand for the product has become more elastic (d) The demand curve slopes downward.
(b) Buyers will take a larger quantity at all prices than before
8.When a corporate security is registered with the Securities and Exchange Commission, this means that: (a) The SEC has approved the security as a safe investment (b) Certain financial information has been filed with the SEC (c) The SEC may act as a broker for the corporation (d) The public may inquire of the SEC as to its opinion of the advisability of purchasing the security.
(b) Certain financial information has been filed with the SEC
1.When the supply of a commodity increases while the demand remains the same, the market price will: (a) Rise (b) Fall (c) Stay the same (d) Vary directly with the change in supply.
(b) Fall
7.Which one of the following is true of a limited liability corporation (LLC)? A LLC (a) Is the least expensive kind of business to organize (b) Is not subject to the corporate income tax (c) Is the only form of business organization that offers limited liability (d) Is the only form of business organization that provides unlimited life.
(b) Is not subject to the corporate income tax
1.As a result of our nation's increasing productivity: (a) Most goods are cheaper than they were years ago (b) More goods are available per person than years ago (c) Goods are made better by machine than they were by hand (d) Output per employee per hour has decreased.
(b) More goods are available per person than years ago
4.When the point of diminishing returns is reached as workers are added to a production line: (a) Total revenue will decline (b) Output per employee will decline (c) Total profits will decline (d) The factory should hire more workers.
(b) Output per employee will decline
7.For which one of the following commodities is supply most elastic? (a) Eggs (b) Plastic toys (c) Gold (d) Corn.
(b) Plastic toys
7. Competition and the desire for profits pressure business firms to: (a) Provide inferior services to consumers (b) Provide consumers with the goods and services they want (c) Produce products of poor quality (d) Charge high prices for products and services.
(b) Provide consumers with the goods and services they want
4. In the circular flow of economic activity, we see that businesses: (a) Receive money but no productive services from households (b) Receive money from both government and households (c) Sell more goods to government than to households (d) Receive no money from government.
(b) Receive money from both government and households
4.As a rule, who has voting rights in a corporation? Its (a) Officers (b) Stockholders (c) Board of directors (d) Employees.
(b) Stockholders
8.In the graph, AA represents: (a) The supply curve (b) The demand curve (c) Equilibrium (d) The market price.
(b) The demand curve
3. In an economic system operating under capitalism, the fundamental questions of WHAT, HOW, and WHO are answered by: (a) Tradition (b) The market (c) A government agency (d) Congressional legislation.
(b) The market
3.Which one of the following would not have the same effect as the other three on the amount of beef consumed? (a) A rise in the price of lamb (b) A fall in the price of beef (c) An effective advertising campaign on the part of pork producers (d) An effective advertising campaign on the part of beef producers.
(c) An effective advertising campaign on the part of pork producers
2.The holder of one share of stock in a corporation is: (a) A creditor of the corporation (b) A debtor of the corporation (c) An owner of the corporation (d) An officer of the corporation.
(c) An owner of the corporation
8. Each of the following is an example of currency, except a? (a) Dime (b)$1bill (c) Check for $5 (d) Penny.
(c) Check for $5
4.Preferred stock is like: (a) A bond in that the dividends must be paid regularly (b) A bond in that the holder of the stock is a creditor of the corporation (c) Common stock in that dividends increase as profits increase (d) Common stock in that there may be times when the board of directors decides to pay no dividends.
(c) Common stock in that dividends increase as profits increase
2.Which one of the following forces will be most influential in determining the number of pairs of brown as compared to black shoes a manufacturer will produce in a market economy? (a) Government directives (b) Views of production supervisors' spouses (c) Consumer demand (d) Factory workers' preferences.
(c) Consumer demand
10.When he became CEO of General Electric back in 1981, Jack Welch announced that he would prepare GE for the 21st century by selling off or destroying existing operations, and introducing new ones. As a result of those policies, GE grew at annual rate of 23 percent for the next 20 years. Such a program is known as: (a) Research and development (b) Marginal analysis (c) Creative destruction (d) Personnel management.
(c) Creative destruction
9. Which one of the following is an example of a disadvantage to a company of getting too big? A company (a) Goes out of business because of decreased demand for its product (b) Becomes so large that it has to expand into new quarters (c) Finds that it is spending more on new managers than it is earning in additional profits (d) Is receiving more orders than it can fill.
(c) Finds that it is spending more on new managers than it is earning in additional profits
9. Under what circumstances might peacock feathers be called "money"? (a) If they were very rare (b) If they were all identical in size and shape (c) If everyone accepted them in payment for goods and services (d) If they could be easily divided into equal parts so as to "make change."
(c) If everyone accepted them in payment for goods and services
9.Which one of the following statements is a major criticism of the market system? (a) It rewards inefficiency and waste. (b) It is insensitive to changes in consumer demand. (c) It fails to deal with certain harmful side effects of production. (d) It encourages the overproduction of goods and services that no one really wants.
(c) It fails to deal with certain harmful side effects of production.
5.Stockholders in a large corporation generally do not: (a) Receive a share of the profits (b) Elect the board of directors (c) Manage the everyday affairs of the business (d) Own the business.
(c) Manage the everyday affairs of the business
10. Money provides a "store of value" because it: (a) Can be used to buy valuable goods in stores (b) Is easily carried (c) May be saved for future use (d) Packs a great deal of value into a small volume.
(c) May be saved for future use
9.The Girl Scouts of America is an example of a: (a) Consumer co-op (b) Sole proprietorship (c) Not-for-profit corporation (d) Government-owned corporation.
(c) Not-for-profit corporation
7.In industries with high overhead costs, increasing production tends to lower: (a) Return on investment (b) Total variable costs (c) Overhead cost per unit (d) Total operating costs.
(c) Overhead cost per unit
2. Economists differentiate between goods and services. Which one of the following best illustrates a payment for a service? (a) $1.95 for a hamburger (b) $18.95 for a textbook (c) $15,000 for a new automobile (d) $10 for a haircut.
(d) $10 for a haircut.
1. The greatest degree of economic specialization is most likely to be found in: (a) A traditional agricultural society (b) A frontier farming community (c) A poor rural area in India or Latin America today (d) An industrial society such as that of the United States.
(d) An industrial society such as that of the United States.
7.To "buy on margin" means to: (a) Buy long (b) Buy over the counter (c) Buy stocks in the hope of selling at a profit in the near feature (d) Buy stocks with borrowed funds.
(d) Buy stocks with borrowed funds.
8."Double taxation" refers to the fact that: (a) Corporations have to pay both state and federal taxes (b) The part of a corporation's earnings not distributed as dividends is subject to excess profits taxes (c) Corporations pay both income taxes and sales taxes (d) Corporations pay income taxes on their earnings, and the earnings that they distribute as dividends are subject to personal income taxes.
(d) Corporations pay income taxes on their earnings, and the earnings that they distribute as dividends are subject to personal income taxes.
6.Limited liability, unlimited life, and a charter are characteristics of: (a) Sole proprietorships (b) Partnerships (c) All businesses in the United States (d) Corporations.
(d) Corporations.
3.Which one of the following is a disadvantage of most corporations? (a) Limited life (b) Unlimited liability (c) Limited capital (d) Double taxation.
(d) Double taxation.
10.Which one of the following is the best reason for owning a business of one's own? (a) It is the surest way to a profitable future. (b) Entrepreneurship gives one the ability to ignore the competition. (c) Most new businesses are financial successes. (d) Entrepreneurs are their own boss.
(d) Entrepreneurs are their own boss.
7. An economic model: (a) Enables economists to predict economic activity with 100 percent accuracy (b) Is a complex way of looking at an economic problem (c) Can be expressed only with graphs or mathematical formulas (d) Helps economists' understand economic activity and predict changes.
(d) Helps economists' understand economic activity and predict changes.
6. Micro economists study questions such as: (a) What will be the effect of taxes on consumer spending? (b) How will a decrease in the defense budget affect a nation's businesses? (c) How will an increase or decrease in interest rates affect business spending? (d) How will the decisions made by firm X affect consumer demand for the products produced by that firm?
(d) How will the decisions made by firm X affect consumer demand for the products produced by that firm?
6. Which one of the following statements is true? (a) Every time people buy Microsoft stock, Microsoft receives money for new capital investment. (b) Preferred stock is always better than common stock. (c) The main function of the SEC is to prevent stockholders from losing money on stock purchases. (d) The higher the margin rate, the more difficult it is to buy stocks with borrowed funds.
(d) The higher the margin rate, the more difficult it is to buy stocks with borrowed funds.
9.In the graph, D represents: (a) The supply curve (b) The demand curve (c) The demand schedule (d) The market price.
(d) The market price.
9.All of the following information is contained in a balance sheet, except (a) Assets (b) Liabilities (c) Net worth (d) Total sales.
(d) Total sales.
If the price of a good decreases by 3% and total revenue increases, the absolute value of the price elasticity of demand for the good could possibly be A. 1.3 B. 1 C. 0.8 D. 0.2 E. 0
A. 1.3
A marketing survey shows that gate receipts would increase if the price of tickets to a summer rock concert increased, even though the number of tickets sold would fall. What does this imply about the price elasticity of demand for concert tickets? A. Demand is inelastic B. Demand is elastic C. Demand is unity elastic D. Demand is perfectly inelastic E. Demand is perfectly elastic
A. A demand is inelastic
If an excercise tax is imposed on a product, consumer surplus and producer surplus for this good will most likely change in which of the following ways? Consumer surplus Producer surplus A. Decrease. Decrease B. Decrease. Increase C. Decrease Not change D. Not change Increase E. Not change Not change
A. Decrease, Decrease
(Table) In venus, the opportunity cost of the first unit of A. Food is two units of clothing B. Food is eight units of clothing C. Clothing is two units of food D. Clothing is four units of food E. Clothing is eight units of food
A. Food is two units of clothing
Advocates of higher minimum wages for unskilled labor defend their position by arguing that A. Low income workers deserve to earn incomes above the poverty level B. Higher wage boost worker productivity and efficiency C. Higher wages will cause employers to reduce payroll, but the total wages f remaining workers will be higher D. Higher wages induce more workers into the labor market and thus reduce unemployment E. It is more efficient for the private sector to provide a higher wage than for the government to produce transfer payments to low-income workers
A. Low income workers deserve to earn incomes above the poverty level
The law of increasing opportunity cost is reflected in the shape of the A. Production possibilities curve concave to the origin B. Production possibilites curve convex to the origin C. Horizontal production possibilities curve D. Straight line production possibilites curve E. Upward sloping production possibilites curve
A. Production possibilities curve concave to the origin
(Diagram) According to the graph above, which of the following will occur if a legal price ceiling is imposed at price X? A. Shortages will occur B. Surpluses will occur C. Demand will increase D. Q2 will be purchased E. Supply wil decrease
A. Shortages will occur
(Table) Which of the following statements must be true? A. The US has both the absolute and comparative advantage in producing soybeans B. Japan has both the absolute and comparative advantage in producing soybeans C. Japan has both the absolute and comparative advantage in producing rice D. Japan has the absolute advantage in producing soybeans and the comparative advantage in producing rice
A. The US has both the absolute and comparative advantage in producing soybeans
Assume that coal is a normal good. If the price of coal increases and the quantity sold increases, which of the following is consistent with these observations? A. The price of oil, a substitute for coal, increased B. A wage increase was given to coal miners C. New machinery made coal mining more efficient D. Consumers' income fell E. The demand curve is inelastic
A. The price of oil, a substitute for coal, increased
Assume that the demand for apples is downward sloping. If the price of apples falls from $.80 per pound to $.65 per pound, which of the following will occur? A. A smaller quantity of apples will be demanded B. A larger quantity of apples will be demanded C. Demand for apples will decrease D. Demand for apples will increase E. Supply of apples will decrease
B. A larger quantity of apples will be demanded
In which way does a straight-line production possibilities curve differ from concave production possibilities curve? A. A straight line production possibilities curve has a decreasing opportunity cost B. A straight line production possibilities curve has a constant opportunity cost C. A straight line production production possibilities curve has an increasing opportunity cost D. A straight line production possibilities curve does not show opportunity cost E. There is no difference between the two production possibilities curves
B. A straight line production possibilities curve has a constant opportunity cost
Brooke is spending all of her income consuming products X and Y. If MUx/Px = 10 and MUy/Py = 6, what should Brooke do to maximize her satisfaction? A. Buy more X and more Y B. Buy more X and less Y C. Buy less X and less Y D. Buy less X and more Y E. Make no changes
B. Buy more X and Y
Which of the following problems do all economic systems face? I. How to allocate scarce resources among unlimited wants II. How to distribute income equally among all the citizens III. How to decentralize markets IV. How to decide what to produce, how to produce, and for whom to produce A. I only B. I and IV only C. II and III only D. I, II, III, and IV
B. I and IV only
(Diagram) If the country moves from point C to point D, future economic growth will A. Decrease B. Increase C. Not change, but consumer satisfaction will increase D. Not change, but unemployment will increase E. Not change, but inflation will increase
B. Increase
If there is an increase in demand for a good, what will most likely happen to the price and quantity of the good exchanged? Price Quantity A. No chance No change B. Increase Increase C. Increase Decrease D. Decrease Increase E. Decrease Decrease
B. Increase increase
According to the theory of comparative advantage, a goods should be produced where A. It's explicit costs are least B. It's opportunity costs are least C. The cost of real resources used is least D. Production can occur with the greatest increase in employment E. Production can occur with the lowest increase in employment
B. It's opportunity costs are least
When one decision is made, the next best alternative not selected is called A. Economic resource B. Opportunity cost C. Scarcity D. Comparative advantage E. Production
B. Opportunity cost
The substitution effect causes a consumer to buy less of a product when the price increases because the A. Product is now less expensive compared to similar products B. Product is now more expensive compared to similar products C. Consumer's real income has decreased D. Consumer's real income has increased E. Consumers will buy more inferior goods and fewer normal goods
B. Product is now more expensive compared to similar products
A rational decision maker will choose to act only if A. The marginal benefit of the action is greater than the average cost of that action B. The marginal benefit of the action is greater than the marginal cost of that action C. The marginal benefit of the action is ess than the average cost of that action D. The average benefit of the action is less than the average cost of that action E. The average benefit of the action is greater than the marginal cost of that action
B. The marginal benefit of the action is greater than the marginal cost of the action
An increase in the price of gasoline will cause the demand curve for tires to shift in which direction? A. To the left, becuase gasoline and tires are substitutes B. To the left, because gasoline and tires are complements C. To the right, because gasoline and tires are substitutes D. To the right, because gasoline and tires are complements E. To the rights, becuase an increase in the price of gasoline makes consumers poorer and thus not willing to pay as much for tires
B. To the left, because gasoline and tires are complements
Which of the following statements violates the economic concept of matching marginal benefits with marginal costs in test taking? A. "My grade in this course is already an A and the final exam is optional, so I'm not taking the final exam" B. "My grade going into the final exam for math is a B plus. The final exam constitutes half of the course grade, so I'm going to study more for the final in this class than in sold-state genetics where I have a solid A" C. "Most of my grades are B minus, but in fluid dynamics I have an A. I'm going to study only for the final exam in fluid dynamics" D. "If I spend two extra hours a week reading English literature, my scores on standardized tests of verbal skills will improve by 20 percent. Since my verbal skills are average, I'm going to reallocate my time into reading more literature" E. All the statements violate the concept of matching marginal benefits with marginal costs in test taking
C. "Most of my grades are B minus, but in fluid dynamics I have an A. I'm going to study only for the final exam in fluid dynamics"
(Table) In mars, the opportunity cost of obtaining the first two units of food is how many units of clothing? A. 2 B. 3 C. 6 D. 8 E. 12
C. 6
Which of the following will not chage the demand for oranges? A. A a change in consumers' income B. A change in the price of grapefruits, a substitute for oranges C. A change in the price of oranges D. A change in consumers' taste for oranges E. An expectation that the price of oranges will change in the future
C. A change in the price of oranges
Which of the following would cause an outward or rightward shift in the production possibilites curve? A. An increase in unemployment B. An increase in inflation C. An increase in capital equipment D. A decrease in natural resources E. A decrease in the number of workers
C. An increase in capital equipment
(Diagram) On the graph above, what area represents consumer surplus when the price is $10? A. A B. B C. C D. A and B E. B and C
C. C
"If you want to have anything done correctly, you have to do it yourself." This quote violates the principle of which of the following economic concepts? A. Scarcity B. Supply C. Comparative advantage D. Diminishing marginal returns E. Demand
C. Comparative advantage
Compare 2011 with 2012. Which of following statements is (are) true? Year. Quantity sold. Price 2011. 30,000. $10 2012. 50,000. $20 I. Demand has increased II. Quantity demanded has increased III. Supply has increased IV. Quantity supplied has increased V. Supply has decreased A. I only B. V only C. I and IV only D. I and V only E. I, II, and III only
C. I and IV only
(Diagram) How might point E be attained A. If the country's resources were more fully employed B. If the country's resources were shifted to encourage more efficient use of scarce resources C. If improvements in technology occurred in either the computer sector or the form products sector D. If firms decreased their outputs of computers E. If the nation used more of its scarce resources to produce farm products
C. If improvements in technology occurred in either the computer sector or the form products sector
(Diagram) Which of the following is most likely to cause the production possibilites curve to shift outward toward point W? A. Employing the country's resources more fully B. Shifting the county's resources to encourage more efficient use of scarce resources C. Improving the technology for the reduction of either consumer or capital goods D. Decreasing production of capital goods E. Shifting some scarce resources to produce consumer goods in the current period
C. Improving the technology for the reduction of either consumer or capital goods
To be considered scarce, an economic resource must be A. Limited but not free or desirable B. Limited and free, but not desirable C. Limited and desirable, but not free D. Limited, free, and desirable E. Free and desirable, but not limited
C. Limited and desirable, but not free
(Table) Which of the following statements is correct based on the concept of comparative advantage? A. Mars and venus should continue producing the quantities indicated by the asterisks B. Mars should specialize in the production of food C. Mars should specialize in the production of clothing D. Venus has the comparative advantage in clothing E. Mars has an absolute in the production of food
C. Mars should specialize in the production of clothing
(Diagram) If the country is currently producing at point C, it can produce more computers by doing which of the following A. Moving to point A B. Moving to point B C. Moving to point D D. Moving to point E E. Remaining at point C
C. Moving to point D
(Diagram) If the country if surrently producing at point C, it can produce more capital goods by moving in the direction of A. Point A B. Point B C. Point D D. Point W E. Point X
C. Point D
(Diagram) Which of the following statements about the production possibilities curve is true? A. Point A is not attainable is a developed society B. Point D is not attainable given the society's resources C. The relative position of points C and D reflect production alternatives rather than relative prices D. Elimination of unemployment will move the production possibilites curve to the right, closer to point E E. Point E lies outside the production possibilites curve because it represents a combination of resources not desired by the citizens of the country
C. The relative position of points C an D reflect production alternative rather than relative prices
If the price of lunch at the school cafeteria increases and cafeteria revenue remains constant, the price elasticity of demain for a school lunch must be A. Elastic B. Perfectly elastic C. Unit elastic D. Inelastic E. Perfectly inelastic
C. Unit elastic
If the cost of producing automobiles increases, the price, equilibrium quantity, and consumer surplus will most Isley change in which of the following ways? Price Quantity Consumer surplus A. Increase. Increase. Increase B. Increase. Decrease. Increase C. increase. Decrease Decrease D. Decrease Increase Decrease E. Decrease. Decrease. Decrease
C. increase. Decrease Decrease
Which of the following statements best reflects the law of diminishing marginal utility? A. "I have to have a scoop of ice cream on my pie" B. "I'll never get tired of your cooking" C. "The last bite tastes just as good as the first" D. "I couldn't eat another doughnut if you paid me" E. "I prefer to eat several small meals a day, rather than three large ones"
D. "I couldn't eat another doughnut if you paid me"
(Diagram) In a competitive market the value of consumer surplus is A. $0 B. $11 C. $18 D. $33 E. $42
D. $33
If hot dogs are inferior goods, an increase in income will result in A. An increase in the quantity demanded for hot dogs B. An increase in the demand for hot dogs C. A decrease in the quantity demanded for hot dogs D. A decrease in the demand for hot dogs E. No change in the demand for hot dogs
D. A decrease in the demand for hot dogs
The crucial problem of economics is A. Establishing a fair tax system B. Providing social goods and services C. Developing a price mechanism that reflects the relative scarcities of products and resources D. Allocating scarce productive resources to satisfy unlimited resources wants E. Enacting a set of laws that protests resources from overuse
D. Allocating scarce productive resources to satisfy unlimited resources wants
(Diagram) Producer surplus is the A. Area under the supply curve to the left of the amount sold B. Area under the supply curve to the right of the amount sold C. Amount the seller is paid plus the cost of production D. Amount the seller is paid less the cost of production E. Cost to sellers of participating in a market
D. Amount the seller is paid less the cost of production
(Diagram) The production possibilites curve would most likely shift to the right of the country were currently producing at which of the following points? A. Point A B. Point B C. Point C D. Point D E. Point E
D. Point D
The additional cost of producing an additional unit of product J is A. The dollar value of resources used to make the extra unit of product J B. The retail price paid for product J C. The wholesale price of product J D. The amount of product K that could have been produced with the resources used to make the unit of J E. The profit that was earned from producing product J
D. The amount of product K that could have been produced with the resources used to make the unit of J
During a football game, it starts to rain and the temp drops. The senior class which runs the concession stand and is studying economics, raises the price of coffee from .50 cents to .75 cents a cup. They sell more than ever before. Which answer explains this? A. The supply of coffee increased B. The demand curve for coffee was elastic C. The supply of coffee decreased D. The demand for coffee increased E. The demand curve for coffee was inelastic
D. The demand for coffee increased
A paper mill located on a scenic river decided to dump its untreated waste products into the river. Which of the following is the likely result of this action? A. The marginal private cost and marginal social cost of paper reduction will be equal B. The marginal private cost will be greater than the marginal social cost of paper production C. The price of paper produced by the mill will increase D. The mill will produce more paper than society would like it to produced E. The mill will produce the socially optimal amount of paper
D. The mill will produce more paper than society would like it to produced
Which of the following will not cause the demand curve to shift? A. A change in tastes for athletic shoes B. Widespread advertising campaign of athletic shoes C. Increase in money incomes of athletic shoe consumers D. Expectations that the price of athletic shoes will decrease in the price of athletic shoes E. A decrease in the price of athletic shoes
E. A decrease in the price of athletic shoes
Which of the following would cause a leftward shift of the production possibilites curve? A. An increase in unemployment B. An increase in inflation C. An increase in capital equipment D. A decrease in consumer demand E. A decrease in working age population
E. A decrease in working age population
Which of the is true if the production possibilities curve is a curved line concave to the origin? A. Resources are perfectly substitutble between the production of the two goods B. It is possible to produce more of both products C. Both products are equally capable of satisfying consumer wants D. The prices of the two products are the same E. As more of one good is produced, increasing amounts of the other good must be given up
E. As more of one good is produced, increasing amounts of the other good must be given up
Which of the following items would be considered scarce? A. Education B. Gold C. Time D. Education and gold E. Education, gold, and time
E. Education, gold, and time
During the 1990's, the price of VCR's fell by about 30 percent, and quantity sold decreases by the same amount. The demand for VCRs must A. Be inelastic B. Be elastic C. Be unit elastic D. Have shifted to the right E. Have shifted to the left
E. Have shifted to the left
A downward sloping demand curve can be explained by I. Diminishing marginal utility II. Diminishing marginal returns III. The substitution effect IV. The income effect A. I only B. II only C. I and III only D. I and IV only E. I, III, and IV only
E. I, III, and IV only
Which of the following statements about price controls is true? A. A price causes a shortage if the ceiling price is above the equilibrium price B. A price floor causes a surplus if the price floor is below the equilibrium price C. A price ceiling causes an increase in demand if the ceiling price is set below the equilibrium price D. A price ceiling causes a decrease in demand if the price floor is set above the equilibrium price E. Price ceilings and price floors result in a misallocatoin of resources
E. Price ceilings and price floors result in a misallocatoin of resources
Product % change in income % change in quantity A. +5. +5 B. +5. -5 C. -10. -5 D. -10. +10 Based on the information in the table above, which product (S) is/are inferior? A. Product A only B. Product B only C. Product D only D. Product A and C only E. Product B and D only
E. Product B and D only
If the price of paperback books increases and consumer expenditures on paperback books also increase, which of the following is necessarily true? A. Paperback books are normal goods B. Paperback books are inferior goods C. The demand for paperback books is unit elastic D. The demand for paperback books is elastic E. The demand for paperback books is inelastic
E. The demand for paperback books is inelastic
