Exam 1
The law of increasing marginal opportunity costs is driven by: A) Resources that are not equally productive nor interchangeable in the production of different goods and services B) The fact that as a firm increases output, costs fall C) Resources that are perfectly substitutable or interchangeable in production
A) Resources that are not equally productive nor interchangeable in the production of different goods and services
Which one of the following statements is true about graphs? A) They are summaries of empirical observations B) They always have a positive slope C) They show a cause-and-effect relationship D) They are always linear
A) They are summaries of empirical observations
Which of the following is not a question an economic system tries to address? A) WHY is output produced B) FOR WHOM output is produced C) WHAT goods and services to produce D) HOW is output produced
A) WHY is output produced
The economic question of "______ to produce" is about decisions related to the mix (quantity and type) of goods and services to make available in a given economy. A) What B) For whom C) Where D) How
A) What
The transformation of the United States into a service economy is a reflection of its A) high incomes. B) democratic form of government. C) sophisticated technology. D) population diversity.
A) high incomes.
The mix of output in poor countries is weighted toward goods rather than services as a consequence of their A) low incomes. B) failure to embrace democracy. C) lack of desire for services.
A) low incomes.
In the world's poorest countries, the level of human capital is _____ the level in the developed countries. A) much lower than B) only slightly lower than C) about the same as
A) much lower than
The per capita income in the United States is increasing because the rate of economic growth is _____ the rate of population growth. A) Higher than B) Equal to C) Lower than
A) Higher than
The economic question of "______ to produce" is about decisions related to the mix of factor inputs (land, labor, capital ...) used to produce goods and services. A) How B) When C) For whom D) What
A) How
Points ______ the production possibilities curve of an economy are attainable, but inefficient. A) Inside B) On C) Outside
A) Inside
Points lying ______ the production possibilities curve (frontier) are attainable, but they reflect inefficient and incomplete use of available resources. A) Inside B) Beyond C) On D) Along
A) Inside
Unemployment occurs at points ______ the production possibilities curve. A) Inside B) Outside C) Along D) External to
A) Inside
From an economic standpoint, ______ includes all natural resources used in the production process. A) Land B) Capital C) Labor D) Supply
A) Land
The production possibilities model helps us understand the ______ of output with a particular amount of inputs. A) Limits B) Lack C) Quality D) Timing
A) Limits
The United States, like most nations, uses a combination of market signals and government directives to direct economic outcomes. This is commonly referred to as a _______ economy. A) Mixed B) Market C) Government intervention D) Laissez-faire
A) Mixed
The law of increasing ______ states that as production of a particular good increases, the cost of producing an additional unit of other goods and services increases. A) Opportunity costs B) Demand C) Supply D) Production E) Accounting costs
A) Opportunity costs
Points lying ______ the production possibilities curve are unattainable with the current availability of resources and technology. A) Outside B) On C) Along D) Inside
A) Outside
Given this production possibility curve, identify which output combination is currently unattainable with available resources. A) Point X B) Point B C) Point C D) Point Y E) Point A
A) Point X
Given this production possibilities curve, identify which output combination could be produced if there were some unemployment, which represents an inefficient use of labor resources. A) Point Y B) Point C C) Point X D) Point B
A) Point Y
Government failure occurs when government intervention improves economic outcomes. True False
False
High productivity in the United States and other high-income countries results from high levels of human capital combined with labor-intensive production processes. True False
False
The three main decisions that must be addressed by an economic system include which goods to demand, how to motivate employees, and how to distribute goods in a market. True False
False
True or false: Following are the three main choices that must be addressed by an economic system: what goods are to be produced, who will produce them, and where they will be produced.
False
True or false: The decline in employment in manufacturing in the US means that fewer manufacturing goods are being produced today. True False
False
True or false: The government has no role in an economy. True False
False
True or false: The three main decisions that must be addressed by an economic system include what goods are to be produced, who will produce them, and where they will be produced. True False
False
By outsourcing routine tasks to foreign workers, U.S. labor-intensive production increases workers always gain jobs GDP increases worker productivity increases
GDP increases and worker productivity increases
What is government failure?
Government intervention that fails to improve economic outcomes
In dealing with the "guns versus butter" decision, North Korea has come down decidedly on the side of ______ (guns/butter).
Guns
The three main choices that must be addressed by an economic system include ______.
HOW output is produced FOR WHOM output is produced WHAT goods and services to produce
Income inequality tends to be lowest in which one of the following countries? Botswana South Africa United States Japan
Japan
Which two of the following economists favored government intervention in an economy? A) John Maynard Keynes B) Adam Smith C) Karl Marx
John Maynard Keynes and Karl Marx
Which two of the following economists favored government intervention in an economy? A) Karl Marx B) John Maynard Keynes C) Adam Smith
Karl Marx and John Maynard Keynes
In addition to entrepreneurship, the factor of production (resource) defined as _____ consists of the physical actions and mental activities that people contribute to the production of goods and services.
Labor
The factors of production include _____. labor entrepreneurship currency and coins capital land (natural resources)
Labor, entrepreneurship, capital, land (natural resources)
What is scarcity?
Lack of enough resources for everyone
Due to scarce resources, every individual, whether rich or poor, faces a(n) _____cost when choosing to produce or consume more of one good over another.
Opportunity
What is mixed economy?
An economy that uses both market signals and government directives to allocate goods and resources
What is market failure?
An imperfection in the market mechanism that prevents optimal outcomes
What is economic growth?
An increase in output (real GDP); an expansion of production possibilities
In a production possibilities curve for two goods, combinations of goods that fall on the curve (select all that apply) ______. A) Are inefficiently produced B) Are efficiently produced C) Are unattainable D) Utilize all of an economy's resources E) Are attainable F) Represent negative economic growth G) Represent economic growth
Are efficiently produced, are unattainable, and utilize all of an economy's resources
If a farmer uses tractors, combines, automated irrigation systems, and computers to manage the farm, this farmer is producing in a ________ manner. A) labor-intensive B) capital-intensive C) per capita GDP-intensive
B) capital-intensive
Education, on-the-job training, and the general increase in skills of a workforce is called: A) entrepreneurship B) human capital C) per capita GDP D) labor
B) human capital
The knowledge and skills possessed by the workforce is called ______. A) factor mobility B) human capital C) capital stock D) productivity
B) human capital
Suppose the population growth rate and the GDP growth rate of a country were 4 and 2 percent, respectively. The growth rate of GDP per capita in the country would be equal to _____. A) positive 2 percent B) negative 2 percent C) positive 0.5 percent D) positive 6 percent
B) negative 2 percent (2%-4%=-2%)
Per capita GDP is falling in countries like Haiti and Libya because ______. A) population is growing slower than GDP B) population is growing faster than GDP C) population and GDP are growing at a similar rate D) population is falling
B) population is growing faster than GDP
In 2019, the average U.S. citizen could have consumed approximately _____ worth of goods and services. A) $46,140 B) $58,700 C) $64,000 D) $26,200
C) $64,000
________ strongly advocated laissez faire; whereas ________ recognized the need for government intervention in an economy. A) Karl Marx and John Maynard Keynes; Adam Smith B) Adam Smith and John Maynard Keynes; Karl Marx C) Adam Smith and Karl Marx; John Maynard Keynes D)Adam Smith; Karl Marx and John Maynard Keynes
C) Adam Smith and Karl Marx; John Maynard Keynes
Points ______ an economy's production possibilities curve are attainable as long as the economy is producing efficiently. A) Outside B) Below C) Along D) Inside
C) Along
Which statements may be true of points located inside the production possibilities curve? Select all that apply. A) At these points, production is maximized. B) At these points, resources are being used inefficiently. C) At these points, society is not using all available resources D) At these points, the economy may be experiencing unemployment
C) At these points, society is not using all available resources
In the "guns versus butter" catchphrase, the word butter refers to: A) Luxury goods. B) Agricultural production C) Civilian goods and services
C) Civilian goods and services
Combining market signals and government directives in order to minimize economic failures is seen as a(n) _____ task. A) Easy B) Impossible C) Difficult
C) Difficult
The choices people must make regarding the use of scarce resources are framed by the science of A) Sociology B) Psychology C) Economics D) Engineering
C) Economics
Real GDP divided by the size of the population is called: A) GDP B) Economic growth C) GDP per capita D) Personal income
C) GDP per capita
The answer to the economic question of "for whom" to produce determines _______. A) The means by which the output is produced B) Who will get the output produced C) How the output will get produced D) Who will produce the output
C) How the output will get produced
The transformation of the United States into a service economy is a reflection of its A) democratic form of government. B) sophisticated technology. C) high incomes. D) population diversity.
C) high incomes.
In the years since 1940, U.S. investment in human capital has A) stagnated. B) fallen slightly. C) risen sharply.
C) risen sharply.
What is capital?
Final goods produced →production of other goods,
Every nation ultimately depends on its resources to produce goods and services. Thus, differences in GDP must be explained in part by A) HOW those resources are used. B) WHAT goods and services are produced. C) FOR WHOM those goods and services are produced. D) All of the above
D) All of the above
Points ______ the production possibilities curve are attainable so long as an economy uses all of its available resources. A) Below B) Inside C) Outside D) Along
D) Along
Goods produced for the purpose of producing other goods and services are classified as _____ goods. A) Multiplier B) Base C) Infrastructure D) Capital
D) Capital
The idea that government interference in the economy should be kept at a minimum is advocated by A) Conservationists B) Socialists C) Liberals D) Conservatives
D) Conservatives
The total market value of all final goods and services produced within a nation's borders in a given time period is: A) Economic growth B) Human capital C) Per capita GDP D) Gross domestic product
D) Gross domestic product
Positive economics focuses on ______, whereas normative economics deals with _________. A) Value judgments; factual statements B) What should be done by government, industry, and consumers; what is happening in the economy right now C) Opinions; facts D) How things might be done without subjective judgments of what is best; what ought to be done
D) How things might be done without subjective judgments of what is best; what ought to be done
The branch of economics that studies the economy as a whole or in the aggregate is known as ______. A) Economics B) Microeconomics C) Positive economics D) Macroeconomics E) Normative economics
D) Macroeconomics
A production possibilities curve shows the attainable combinations ______. A) Of many goods that can be produced given a potential set of resources B) Of many goods that can be produced given an unlimited amount of resources C) Of two goods that can be produced given an unlimited amount of resources D) Of two goods that can be produced given a specific set of resources
D) Of two goods that can be produced given a specific set of resources
The production possibilities model shows the _______ producing two different goods. A) Social desirability of B) Time needed for C) Microeconomic consequences of D) Opportunity costs of
D) Opportunity costs of
To produce at a point lying ______ the production possibilities curve would require economic growth. A) Along B) At the midpoint of C) At the axis of D) Outside E) Inside
D) Outside
Which one of the following illustrates the attainable combinations of two goods that can be produced given a specific set of resources? A) Opportunity cost B) Budget constraint C) Budget line D) Production possibilities curve E) Demand-and-supply curve model
D) Production possibilities curve
Economics is the study of how people use _____ resources. A) Extractive B) Communal C) Financial D) Scarce
D) Scarce
The factors of production include ______. A) Entrepreneurship B) Land (natural resources) C) Labor D) Currency and coins E) Capital
Entrepreneurship, Land (natural resources), Labor, Capital
The idea that the U.S. economy uses the market mechanism to distribute most goods and services and those who receive the most income get the most goods is best represented by the question: HOW is output produced? WHAT goods and services are produced? FOR WHOM output is produced?
FOR WHOM output is produced?
Which of the following government policies are likely to protect labor? Testing food additives Controlling air pollution Setting standards for workplace safety Enforcement of child labor laws Enforcing minimum wage laws
Setting standards for workplace safety, enforcement of child labor laws, and enforcing minimum wage laws
Because business contracts may harm third parties, the government uses regulations to protect the _______. environment market taxation system infant industry
environment
Because business contracts may harm third parties, the government uses regulations to protect the _______. infant industry market taxation system environment
environment
Because business contracts may harm third parties, the government uses regulations to protect the _______. infant industry taxation system market environment
environment
The movement of resources between old and new industries is an example of: factor mobility GDP growth increases in human capital changes in capital-intensive production
factor mobility
True or false: A curve shows a cause-and-effect relationship. True False
false
The economic question of "______ to produce" is about decisions related to who is going to consume the goods and services produced. A) How B) Where C) When D) For whom
for whom
The economic question of " ____ to produce" is about decisions related to the mix of factor inputs (land, labor, capital ...) used to produce goods and services (Enter one word in the blank.)
how
The economic question of "______ to produce" is about decisions related to the mix of factor inputs (land, labor, capital ...) used to produce goods and services. A) For whom B) What C) How D) When
how
The knowledge and skills possessed by the workforce is called _________.
human capital
Production in high income countries are _____ capital-intensive compared to lower income countries. more less similar
more
Production in high income countries are _____ capital-intensive compared to lower income countries. more similar less
more
When the slope of a curve changes from one point to the next, then the curve is _______. linear nonlinear
nonlinear
The statement "We should pursue green energy because environmental sustainability is our most important goal" is an example of ______ economics. normative positive
normative
By ______ routine tasks to foreign workers, U.S. productivity increases. In other words, sending jobs or tasks overseas increases U.S. productivity.
outsourcing
Per capita GDP is falling in countries like Haiti and Libya because ______ is growing than GDP.
population
The essential feature of the market mechanism is the ______signal.
price
Output per labor-hour can be defined as: a factor of production labor-intensive productivity capital-intensive
productivity
When the government regulates the safety of many products, like medicine or food products, this is an example of government: protecting consumers protecting the environment protecting labor providing a legal framework
protecting consumers
When the government sets standards for workplace safety, minimum wages, fringe benefits, and overtime provisions, these are examples of the government ______. providing a legal framework protecting the environment protecting labor protecting consumers
protecting labor
When externalities exist, the government can enact laws to limit these external costs of production. This is best described as an example of the government: protecting labor providing a legal framework protecting the environment
protecting the environment
The title to an automobile or the deed to a cattle ranch assures a buyer that the seller is the legitimate owner of that property. This is an example of the government _________. protecting the environment protecting labor providing a legal framework
providing a legal framework
The sustainable development goals (aka the Millennium Development goals) established by the United Nations are meant to ______. reduce global poverty promote democratic capitalism decrease population growth
reduce global poverty
______ refers to the gap between limited resources and unlimited wants.
Scarcity
What is macroeconomics?
The study of aggregate economic behavior, of the economy as a whole
What is economics?
The study of how best to allocate scarce resources among competing uses
What is microeconomics?
The study of individual behavior in the economy, of the components of the larger economy
What gross domestic product (GDP)?
The total market value of all final goods and services produced within a nation's borders in a given time period
What is market mechanism?
The use of market prices and sales to signal desired outputs (or resource allocations)
______ resources are those for which the quantity desired exceeds the quantity available. A) Insatiable B) Scarce C) Surplus D) Physical
B) Scarce
If GDP growth is 4% and population growth is 2%, per capita GDP growth is ________%.
2
In 2019, the poorest (lowest) 20 percent of households earned about _____ of the national income. 8 percent 12 percent 3 percent 32 percent
3 percent
Refer to Figure 2.3. According to the 2019 data on the distribution of income, the poorest 20 percent of U.S. households earned _______ percent of the total income.
3.1
According to the data provided in the table, the poorest 80 percent of US households earned ______ percent of the income
48%
According to the given graph (see World View, "GDP Per Capita Around The World"), per capita GDP in the United States was approximately _____ times higher than the average for the rest of the world.
5
In 2019, the richest (top) 20 percent of households earned about _____ of the national income. 75 percent 15 percent 50 percent 25 percent
50 percent
According to the data provided in the table, the richest 20 percent of US households earned ______ percent of the income.
52
Using 2019 data, the richest fifth of U.S. households earned ________ percent of all income.
52
Combinations of output that fall inside the production possibilities curve of an economy represent (select all that apply) ______. A) The inefficient use of resources B) A combination of goods that is unattainable C) Efficiently produced goods D) A combination of goods that is attainable
A combination of goods that is attainable and the inefficient use of resources
What is a monopoly?
A firm that produces the majority of goods in an industry
Most people around the world believe that markets do a _____ job of answering the core questions of WHAT, HOW, and FOR WHOM. A) Good B) Fair C) Poor
A) Good
Which of the following are issues would be explored in microeconomics? Select all that apply. A) The level of public debt B) A firm's decision to hire more workers C) Measuring total revenues of a firm or household D) Measuring the price of specific goods E) Unemployment and inflation rates
A firm's decision to hire more workers, Measuring the price of specific goods, and Measuring the price of specific goods
Which of the following are examples of factor mobility? A worker who sold desktop computers is now a representative for a tablet supplier. A textile factory gets converted into a craft brewery. A high school graduate continues on to college to obtain a bachelor's degree. A jute manufacturer increases production of jute to match the low demand for jute.
A worker who sold desktop computers is now a representative for a tablet supplier & A textile factory gets converted into a craft brewery
If GDP is $15 trillion and the population is 300 million, then the GDP per capita is ______. A) $50,000 B) $50 C) $5,000 D) $4,500,000
A) $50,000 ($15 trillion / 300 million = $50,000)
In 2019, the average U.S. citizen could have consumed approximately _____ worth of goods and services. A) $64,000 B) $46,140 C) $58,700 D) $26,200
A) $64,000
Per capita GDP in the United States in 2019 was approximately ______. A) $64,000 B) $28,000 C) $14,000 D) $74,000
A) $64,000
Points ______ the production possibilities curve are attainable so long as an economy uses all of its available resources. A) Along B) Inside C) Below D) Outside
A) Along
Once society has used some political process to set its economic goals, the job for economists is to ______. A) Assist in the design of appropriate policies B) Certify that the goals are appropriate C) Educate Non economists as to the wisdom of those goals
A) Assist in the design of appropriate policies
Of the countries listed below, which rank relatively high on an index that measures economic freedom? A) Australia B) Switzerland C) Zimbabwe D) Venezuela
A) Australia and switzerland
The "guns versus butter" catchphrase refers to the tradeoff all nations confront regarding the use of resources for national A) Defense B) Indentity C) Pride
A) Defense
It is ______ to move resources from one industry to another. A) Difficult B) Impossible C) Extremely easy D) Fairly easy
A) Difficult
Which of the following statements represent positive economics? Select all that apply. A) As the price of airfares falls, airlines experience a spike in business B) The unemployment rate in Mexico is higher than in the United States C) The government ought to increase the minimum wage so that incomes rise. D) If the government increases the minimum wage, the unemployment rate will rise.
As the price of airfares falls, airlines experience a spike in business, the unemployment rate in Mexico is higher than in the United States, and If the government increases the minimum wage, the unemployment rate will rise
The United States gets _______ percent of its energy from carbon-based fuels: coal, petroleum, and natural gas. A) 50 B) 80 C) 10 D) 25
B) 80
In the type of economy existing in the United States and most other countries, the government plays ______ role. A) No B) A substantial C) A divisive
B) A substantial
________ strongly advocated laissez faire. A) John Maynard Keynes B) Adam Smith C) Karl Marx
B) Adam Smith
The highest-valued alternative that is given up or sacrificed when choosing to produce or consume one good over another is referred to as ______. A) An economic choice B) An opportunity cost C) A variable cost D) A fixed cost
B) An opportunity cost
Which of the following best describes the relationship between trade-offs and opportunity cost? A) As you give up consumption of one good over another (a trade-off), the opportunity cost is greater than the trade-off. B) As you give up consumption of one good over another (the trade-off), an opportunity cost is incurred. C) As you give up consumption of one good over another (a trade-off), an opportunity cost is incurred at a constant rate. D) As you give up consumption of one good over another (the trade-off), the opportunity cost falls.
B) As you give up consumption of one good over another (the trade-off), an opportunity cost is incurred
Food production in North Korea has _____ by that country's emphasis on maintaining a formidable military. A) Been only marginally impacted B) Been significantly impaired C) Not been affected
B) Been significantly impaired
In general, the role of economists within society is to A) Formulate society's economic objectives B) Focus on the means for achieving given goals C) Educate noneconomists with respect to appropriate goals
B) Focus on the means for achieving given goals
Government intervention that fails to improve economic outcomes is called a: A) Market economy B) Government failure C) Mixed economy D) Market failure
B) Government failure
The law of increasing opportunity costs states that as production of a particular good ______, the opportunity cost of producing an additional unit of the good ______. A) Decreases; increases B) Increases; increases C) Decreases; remains constant D) Increases; falls
B) Increases; increases
Based on World Bank data for 2018 (see World View, "Comparative Output"), the country with the largest economy from those given below is ______. A) South Korea B) Japan C) Britain D) Germany
B) Japan
Which of the following consists of the physical and mental activities that people contribute to the production of goods and services? A) Employment B) Labor C) Capital D) Investment
B) Labor
The view that government intervention is needed to improve market outcomes is held most strongly by A) Libertarians B) Liberals C) Conservatives
B) Liberals
Every nation faces the need to make three core choices/decisions owing to the fact that resources are _____. A) Inaccessible B) Limited C) Unrefined D) Unlimited
B) Limited
The United States, like most nations, uses a combination of market signals and government directives to direct economic outcomes. This is commonly referred to as a _______ economy. A) Laissez-faire B) Market C) Government intervention D) Mixed
B) Market
Each point on the production possibilities curve represents some alternative ______ of two or more products. A) Price combination B) Output combination C) Supply combination D) Supply and demand combination E) Demand combination
B) Output combination
Positive economics focuses on ______, whereas normative economics deals with _________. A) Opinions; facts B) Value judgments; factual statements C) How things might be done without subjective judgments of what is best; what ought to be done D) What should be done by government, industry, and consumers; what is happening in the economy right now
C) How things might be done without subjective judgments of what is best; what ought to be done
The term "laissez faire" refers to ______. A) The government acting as the dominant force in the economy B) Allowing the government to interfere in the economy C) Keeping government from interfering in the economy
C) Keeping government from interfering in the economy
From an economic standpoint, ______ includes all natural resources used in the production process. A) Supply B) Labor C) Land D) Capital
C) Land
Which of the following includes all natural resources used in the production of goods and services? A) Capital B) Labor C) Land D) Entrepreneurship
C) Land
Suppose a production possibilities curve shows possible combinations of books and movies. Economic growth means that the economy will be able to produce _____ books and _____ movies than it could on the original production possibilities curve. A) Fewer, more B) More, fewer C) More, more D) Fewer, fewer
C) More, more
As more and more of a particular good is produced, which of the following rises? A) The price of the good B) Profit C) Opportunity cost D) Unemployment
C) Opportunity cost
In the production possibility curve, trade-offs arising from limited resources give rise to _____. A) Rational self-interest B) A budget constraint C) Opportunity costs D) Scarce resources E) Unlimited wants
C) Opportunity costs
In the production possibility curve, trade-offs arising from limited resources give rise to _____. A) Rational self-interest B) Unlimited wants C) Opportunity costs D) Scarce resources E) A budget constraint
C) Opportunity costs
The dollar value of GDP divided by the total population is called: A) GDP B) Productivity C) Per capita GDP D) Economic growth
C) Per capita GDP
Given Haiti's population growth, how much does its GDP have to grow to have zero growth in per capita GDP? A) Positive 2.5 percent B) Negative 1.2 percent C) Positive 1.1 percent D) Negative 0.9 percent
C) Positive 1.1 percent
Which of the following statements best summarizes the growth in GDP in the U.S. between 1900 and 2010? A) Real GDP rose more than sixfold B) Real GDP remained constant C) Real GDP rose more than tenfold
C) Real GDP rose more than tenfold
The law of increasing marginal opportunity costs is driven by: A) The fact that as a firm increases output, costs fall B) Resources that are not equally productive nor interchangeable in the production of different goods and services C) Resources that are perfectly substitutable or interchangeable in production
C) Resources that are perfectly substitutable or interchangeable in production
A society's task of minimizing economic failures is best accomplished by A) Making sure that government directives always override market signals A) Asserting that government directives never supplant market signals C) Selecting a balance between market signals and government directives
C) Selecting a balance between market signals and government directives
A synonym for the slope of a graph is the _______ of the graph. A) Type B) Size C) Steepness D) Length
C) Steepness
A linear curve is represented by a ______ line. Multiple choice question. A) Sawtooth B) Wavy C) Straight D)Circular
C) Straight
According to World Bank data (see World View, "Comparative Output"), the country possessing the largest economy in the world as of 2019 is ______. A) Germany B) Japan C) The United States D) The People's Republic of China
C) The United States
An economy can produce either guns or butter with all available resources. Suppose it currently produces all butter and it chooses to produce some guns, thereby giving up some production of butter. As a result, the first 200 units of guns are produced at the cost of only 50 units of butter. Not surprisingly, the next 200 units of guns are produced at the cost of 100 units of butter, and the last 200 units of guns are produced at the cost of 300 units of butter. What does this situation describe? A) The law of equal opportunity costs B) The notion that the production between guns and butter has a 1-to-1 ratio. C) The law of increasing opportunity costs D) The law of decreasing opportunity costs
C) The law of increasing opportunity costs
A linear curve has _______ slope throughout. A) No B) Negative C) The same D) Varying
C) The same
Gross domestic product can be described as ______. A) An increase in output or an expansion of production possibilities B) The total market value of all final goods and services imported by a nation in a given time period C) The total market value of all final goods and services produced within a nation's borders in a given time period D) The total market value of all intermediate goods and services produced within a nation's borders in a given time period
C) The total market value of all final goods and services produced within a nation's borders in a given time period
Which one of the following is true of scarcity with respect to economic resources? A) It causes economic expansion B) It causes inflation C) There aren't enough resources available to satisfy all our desires D) There is unlimited production good and services
C) There aren't enough resources available to satisfy all our desires
Since the 1800s, the mix of output in the US has moved away from _____ and towards _____. A) services; manufacturing B) services; agriculture C) agriculture; services D) manufacturing; agriculture
C) agriculture; services
The notion that "all else is constant" is captured by the Latin phrase, ______. A) caveat emptor B) e pluribus emptor C) ceteris paribus
C) ceteris paribus
There has been a relative _____ in employment to produce agricultural products in the US. At the same time, the US is producing _____ agricultural goods A) increase; fewer B) increase; more C) decline; more D) decline; fewer
C) decline; more
Which of the following statements represent normative analysis? Select all that apply. A) Cable companies should merge because they result in more competitive pricing B) The government should increase the minimum wage C) When the price of gas rises, the quantity consumed falls D) The result of a Continental Airlines and United Airlines merger will be higher ticket prices E) The government ought to bail out distressed banks
Cable companies should merge because they result in more competitive pricing, the government should increase the minimum wage, and the government ought to bail out distressed banks
Factories; tools and machinery; and storage, transportation, and distribution facilities are all examples of ____ goods.
Capital
For economists, ____ goods are goods that are used to produce final consumer goods and services.
Capital
High productivity in the United States and other high-income countries results from which two of the following? decreasing GDP per capita capital-intensive production processes highly skilled labor force small areas of arable land
Capital-intensive production processes & highly skilled labor force
The "economy is us" means that it represents our collective _______. A) Consumption activities B) Production activities C) Emotional activities
Consumption and production activities
What are externalities?
Costs (or benefits) of a market activity borne by a third party; the difference between the social and private costs (benefits) of a market activity
The concept of "the economy" is most analogous to the concept of: A) "free enterprise." B) "the firm." C) an industry. D) "the family."
D) "the family."
If GDP is $50 billion and the population is 20 million, then the GDP per capita is ______. A) $10,000 B) $25 C) $25,000 D) $2,500
D) $2,500 ($50 billion/20 million = $2,500)
The opportunity cost of moving from point E to point D (increasing truck production by 1) is approximately equal to _______ tanks. A) 2 B) 1.5 C) 0.1 D) 0.7
D) 0.7
The opportunity cost of moving from point B to point A (increasing truck production by 1) is _______ tanks. A) 1 B) 0.8 C) 0.7 D) 2 E) 0.5
D) 2
The production possibilities curve illustrates two essential principles: (1) _______, meaning that there's a limit to the amount of output we can produce in a given time period with available resources and technology. (2) _______, or the idea that we can obtain additional quantities of any particular good only by reducing the potential production of another good. A) Economics; trade-offs B) Opportunity costs; scarce resources C) Trade-offs; opportunity costs D) Scarce resources; opportunity costs
D) Scarce resources; opportunity costs
The production possibilities curve illustrates two essential principles: _______ and _______. A) Increasing returns to scale; opportunity costs B) Economics; trade-offs C) Opportunity costs; economics D) Scarce resources; opportunity costs
D) Scarce resources; opportunity costs
Which country ranks number one among the world's nations in economic freedom? A) United States B) United Kingdom C) New Zealand D) Singapore
D) Singapore
Which points or combinations of produced goods on a production possibilities curve are not attainable with the current level of resources? A) Those lying inside the curve. B) Those points where one good is produced entirely at the cost of the other good. C) Those lying on the curve D) Those lying outside the curve
D) Those lying outside the curve
Which of the following is not a question an economic system tries to address? A) FOR WHOM output is produced B) WHAT goods and services to produce C) HOW is output produced D) WHY is output produced
D) WHY is output produced
The three main decisions that must be addressed by an economic system do not include ______. A) WHAT goods and services to produce B) FOR WHOM output is produced C) HOW output is produced D) WHY output is produced
D) WHY output is produced
The answer to the economic question of "for whom" to produce determines _______. A) The means by which the output is produced B) Who will produce the output C) How the output will get produced D) Who will get the output produced
D) Who will get the output produced
Education, on-the-job training, and the general increase in skills of a workforce is called: A) per capita GDP B) labor C) entrepreneurship D) human capital
D) human capital
Suppose you are watching a sporting event on television and the camera zooms out to reveal a "bird's-eye" view of the stadium and its surroundings. From this "bird's-eye" perspective, you observe the state of the sporting event in terms of how many cars there are in the parking lot, how many fans appear to fill the stadium, the moving-colored dots in the center of the stadium, and the various groups of people that appear to be alongside the playing field. Suddenly, the camera zooms onto the playing field and reveals the composition and general tactics of each team, as well as the behavior of the many fans, and the individuals on the sidelines, including players, coaches, cheerleaders, and the press. The more time the camera spends on any particular group, the more details we learn about that specific group and their contribution to the overall event. If this scenario was describing an economy, the "bird's-eye" perspective would refer to ______ economics, whereas the more focused perspective would refer to ______ economics. A) macro; micro B) aggregate; unit C) positive; normative D) micro; macro E) normative; positive
D) micro; macro
Productivity is defined as: A) production that is capital intensive B) input per output C) the absolute quantity of inputs used in production D) output per unit of input
D) output per unit of input
When technology advances, a country's _____. Multiple choice question. A) "stock of capital" increases B) production possibilities decrease C) GDP per capita will increase only if growth in GDP is greater than growth in population. D) production possibilities increase
D) production possibilities increase
The branch of economics that studies the decision-making process of individual workers, households, and firms (that is, individual components of the larger economy) is known as ______. A) Normative economics B) Macroeconomics C) Labor economics D) Positive economics E) Microeconomics
E) Microeconomics
To produce at a point lying ______ the production possibilities curve would require economic growth. A) At the midpoint of B) Along C) Inside D) At the axis of E) Outside
E) Outside
An entrepreneur _____. A) Looks for the latest new products to copy B) Makes strategic business decisions that set the course of an enterprise C) Takes the risk of earning profits or suffering losses from owning an enterprise D) Innovates E) Is employed by a large company
Makes strategic business decisions that set the course of an enterprise, takes the risk of earning profits or suffering losses from owning an enterprise, and innovates
Providing a legal framework encourages: market transactions externalities economic growth investment
Market transactions, economic growth, and investment
What is efficiency?
Maximum output of a good from the resources used in production
Which of the following phrases and statements best describe the concept of laissez faire? Select all that apply. A) Nonintervention by government in the market mechanism B) The role of government is unlimited C) The role of government is to redistribute incomes D) The doctrine of "leave it alone"
Nonintervention by government in the market mechanism and the role of government is unlimited
Which of the following are examples of human capital? Expensive machines On-the-job training Increased productivity of machines Large factories Educational attainment Computer skills
On-the-job training, educational attainment, computer skills
What is income quintile?
One-fifth of the population, rank-ordered by income
Which two of the following define ceteris paribus? A) Other-things-equal B) In a particular analysis, additional factors, other than those under consideration, are given equal consideration when factored into the analysis C) The idea that factors other than those being considered in a particular analysis do not change D) The idea that, in a particular analysis, additional factors, other than those under consideration, play a significant role in said analysis
Other-things-equal and the idea that factors other than those being considered in a particular analysis do not change
What is productivity?
Output per unit of input—for example, output per labor-hour
Given this production possibility curve, identify which output combination(s) are produced efficiently. Select all that apply. A) Point A B) Point C C) Point X D) Point B E) Point Y
Points A, B, and C
A _____ (one word) economic analysis focuses on how things might be done without subjective judgments of what is best, whereas a ______ (one word) economic analysis represents subjective statements about what ought to be done.
Positive and normative
What is capital-intensive?
Production → a high ratio of capital to labor inputs
Which of the following are specific development goals set by the United Nations? Protect the environment and slow climate change. Ending world poverty. Reduce inequalities across income groups, gender, and race. Eliminate world hunger. Increase transfers of money from poor countries to wealthy countries
Protect the environment and slow climate change, Ending world poverty, Reduce inequalities across income groups, gender, and race, Eliminate world hunger
Which of the following are included in the role of government? Providing a legal framework Protecting the environment Requiring maximum levels of agricultural production Monitoring daily production of manufacturers
Providing a legal framework & Protecting the environment
What factors or production?
Resource inputs used to produce goods and services
What is factors of production?
Resource inputs → produce goods and services
Arable land, water, machinery, and a professional baseball player are all considered scarce economic ____ of production.
Resources
Income inequality tends to be highest in which one of the following countries? United States Sweden Germany South Africa
South Africa
What production possibilities?
The alternative combinations of final goods and services that could be produced in a given period with all available resources and technology
What is production possibilities?
The alternative combinations of final goods and services that could be produced in a given period → available resources and technology
What is entrepreneurship?
The assembling of resources to produce → new or improved products and technologies
What is ceteris paribus?
The assumption of nothing else changing
What is laissez-faire?
The doctrine of "leave it alone"
What is per capita GDP?
The dollar value of GDP divided by total population; average GDP
Which of the following are examples of the role of government in protecting consumers? the implementation of antitrust laws the testing of new medicines the practice of sending foreign aid to other countries the protection of the environment the development of new products the regulation of advertising claims
The implementation of antitrust laws, the testing of new medicines, and the regulation of advertising claims
What is human capital?
The knowledge and skills of humans
According to Adam Smith, _____ determines what gets produced, how, and for whom. A) The market mechanism B) Government intervention C) The "invisible hand" D) Laissez faire
The market mechanism, the "invisible hand", and laissez faire
What does each point on a production possibilities curve represent? A) The maximum potential output for a combination of two final goods and services B) Efficiency in production C) An attainable combination of goods that can be produced given unlimited resources D) Inefficiency in production
The maximum potential output for a combination of two final goods and services and efficiency in production
What is opportunity cost?
The most desired goods or services → order to obtain something else
Which of the following are functions of an entrepreneur? A) To manage someone else's operations B) To combine scarce resources and to produce desired goods or services C) To hire the maximum number of workers possible to boost the economy D) To organize other factors of production of new products
To combine scarce resources and to produce desired goods or services and to organize other factors of production of new products
True or false: Economists classify the factors of production into land, labor, capital and entrepreneurial ability. True False
True
True or false: The idea that the U.S. economy uses the market mechanism to distribute most goods and services and those who receive the most income get the most goods is best represented by the question 'FOR WHOM the output is produced.' True False
True
By outsourcing routine tasks to foreign workers, U.S. labor-intensive production increases worker productivity increases workers always gain jobs GDP increases
Worker productivity increases and GDP increases
In the computer market, a new battery is designed that needs to be charged only once per week. The result is _____ in the production possibility curve. an inward shift an outward shift no change
an outward shift
The government regulation of HOW goods are produced will make us better off _____ a sure thing. is is not
is not
The mix of output in poor countries is weighted toward goods rather than services as a consequence of their lack of desire for services. low incomes. failure to embrace democracy.
low incomes.
Income inequality tends to be highest in ______. high-income countries low-income countries
low-income countries
Possible negative consequences of excessive regulation include all of the following except ______. reduced output lower product prices higher product prices fewer consumer choices
lower product prices
When it comes to the choice between reliance on the market and reliance on the government, public opinion around the world clearly favors the ______.
market
Over time, the mix of output in the U.S. has moved away from the agriculture sector toward the _______ sector.
service
When the relationship between two variables changes, the entire curve _______. remains unchanged shifts pivots changes slope
shifts
We calculate slope as the _______ distance between two points divided by the _______ between two points. vertical, horizontal horizontal, vertical
vertical, horizontal
The economic question of "______ to produce" is about decisions related to the mix (quantity and type) of goods and services to make available in a given economy. A) For whom B) What C) Where D) How
what
