Exam I Review micro
What are two changes that would cause an increase in supply?
1) increase of productivity. 2) increase in the number of sellers
The question of "What goods and services get produced?" most closely relates to which of the following issues? A) building a missile defense system, or putting a computer in every elementary school classroom B) taxing high income workers to give payments to poor households C) producing goods and service in the least costly manner D) the distribution of goods and services in the economy E) obtaining specialized training to increase one's income
A) building a missile defense system, or putting a computer in every elementary school classroom
The measure used to determine whether two products are complements or substitutes is called the: A) cross elasticity of demand B) substitute elasticity of demand C) price elasticity of demand D) income elasticity E) price elasticity of supply
A) cross elasticity of demand
Scarcity requires that we: A) make choices about what goods and services to produce B) produce efficiently C) have the most rapid economic growth possible D) learn to limit our wants E) have unlimited resources
A) make choices about what goods and services to produce
What is the "quantity demanded"? A) the amount of a good people are able and willing to buy during a specific time period and at a given price B) the amount of a good people desire C) the amount of a good people are able and willing to buy at all possible prices D) the maximum amount of a good that can be consumed during a specific time period E) the minimum amount of a good that people are willing to buy during a specific time period and at a given price
A) the amount of a good people are able and willing to buy during a specific time period and at a given price
Market equilibrium occurs when: A) the quantity demanded equals the quantity supplied B) everyone who wants the good gets the quantity he or she wants C) buyers get the lowest possible price D) the market is changing rapidly E) other things remain the same
A) the quantity demanded equals the quantity supplied
When unskilled teens earn less than college graduates, society answers the ________ question. A) why B) for whom C) social interest versus self-interest D) how E) what
B) for whom
When the power company decides to use manpower to bury its lines, it directly answers the ________________ question. A) what B) how C) for whom D) when E) why
B) how
The law of supply states that, other things remaining the same: A) if the price of a good increases, the supply increases B) if the price of a good increases, the quantity supplied increases C) demand increases when supply increases D) as people's income increase, the supply of goods increases E) if the price of a good increases, firms buy less of it
B) if the price of a good increases, the quantity supplied increases
Suppose the equilibrium price of oranges is $2.00 per pound. If the actual price is above the equilibrium price a: A) surplus exists and the price rises to restore equilibrium B) surplus exists and the price falls to restore equilibrium C) surplus exists but nothing happens until either the demand or the supply changes D) shortage exists and the price falls to restore equilibrium E) shortage exists and the price rises to restore equilibrium
B) surplus exists and the price falls to restore equilibrium
The quantity supplied of a good is: A) the same thing as the quantity demanded at each price B) the amount that the people are willing and able to sell during a given time period at a specified price C) equal to the difference between the quantity available and the quantity desired by all consumers and producers D) always larger than the quantity demanded at each price E) the amount the firm will sell when it can sell all it wants
B) the amount that the people are willing and able to sell during a given time period at a specified price
Which markets are depicted in the basic circular flow model? A) the factor market and the bond market B) the goods market and the firms market C) the money market and the foreign exchange market D) the stock market and the bond market E) the goods market and the stock market
B) the goods market and the firms market
If Jessie studies economics for two hours instead of going to the movies with her friends, then: A) Jessie definitely is making rational choice B) the opportunity cost of studying is the missed movie C) Jessie is not responding to any incentives D) the benefit of studying is the missed movie E) Jessie is ignoring a sunk cost
B) the opportunity cost of studying is the missed movie
Capital, as a factor of production, refers to: A) stocks and bonds, but not money B) the tools and instruments used to produce other goods and services C) the production factors imported from abroad D) money, stocks, and bonds E) the production technology used by firms
B) the tools and instruments used to produce other goods and services
The price elasticity of demand is a measure of: A) the amount of a product purchased when income increases B) the equilibrium price of a product C) buyers responsiveness to changes in the price of a product D) how much a change in demand affects the equilibrium price E) whether a product is a substitute or a complement
C) buyers responsiveness to changes in the price of a product
To determine the price elasticity of demand, we: A) compare the change in the quantity to the change in price B) need information on consumers' incomes C) compare the percentage change in the quantity demanded to the percentage change in the price D) divide the quantity by the price E) need to know how much is available
C) compare the percentage change in the quantity demanded to the percentage change in the price
If there is a surplus of tacos, then the: A) supply curve of tacos will shift leftward to eliminate the surplus B) quantity of tacos demanded equals the quantity of tacos supplied C) quantity of tacos demanded is less than the quantity of tacos supplied D) market is at equilibrium E) quantity of tacos demanded is greater than the quantity of taco supplied
C) quantity of tacos demanded is less than the quantity of tacos supplied
Choices that are best for the individuals that make them are choices in pursuit of: A) efficiency B) equity C) self-interest D) incentives E) the social interest
C) self-interest
To achieve gains from trade, a country: A) must produce at a point beyond its PPF B) needs to have an absolute advantage in the production of all goods C) specializes in the producing of a good in which it has a lower opportunity cost D) needs to have an absolute advantage in the production of at least one good E) should produce at the midpoint of its PPF
C) specializes in the producing of a good in which it has a lower opportunity cost
If the demand for a good increases when people's income increases: A) the good is an inferior good B) the good is a substitute good for an inferior good C) the good is a normal good D) the good's demand curve must be slope upward E) the law of demand is violated
C) the good is a normal good
If the price elasticity of demand for moose hunting lessons is 4.23, then the demand for moose hunting lessons is: A) unit elastic B) perfectly elastic C) perfectly unit elastic D) elastic E) inelastic
D) elastic
An export good is a good produced: A) in the United States and sold to foreigners living in the United States B) by foreigners in the United States and purchased by U.S. households C) in another country and purchased by U.S. residents D) in the United States and sold in other countries E) in another country and purchased by foreigners not residing in the United States
D) in the United States and sold in other countries
Goods and service are produced by using four factors of production: A) land, labor, capital, and money B) natural resources, human resources, financial assets, and entrepreneurial resources C) labor, human capital, physical capital, and financial capital D) land, labor, capital, and entrepreneurship E) land, labor, money, and equipment
D) land, labor, capital, and entrepreneurship
Payments to the factors of production are: A) rent, interest, bonds, and profit or loss B) land, labor, capital, and entrepreneurship C) rent, mortgages, interest, and bonds D) rent, wages, interest, and profit or loss E) rent, wages, profit or loss, and bonus
D) rent, wages, interest, and profit or loss
The law of demand refers to how: A) the price of the good changes when people's demand for the good changes B) demand changes when the prices of substitutes and complements change C) the quantity demanded changes when the demand for the good changes D) the quantity demanded changes when the price of a good changes E) demand changes when people's income change
D) the quantity demanded changes when the price of a good changes
A production possibilities frontier shows: A) that if price of one good decreases, the price of the other has to increase B) that it is impossible to produce inefficiently C) the limits to future growth of a nation D) the various combinations of output a nation can produce a certain time, given its available resources and technology E) how money can be allocated among two kinds of goods
D) the various combinations of output a nation can produce a certain time, given its available resources and technology
Scarcity means that: A) what we can produce with our resources is greater than our material wants B) resources are unlimited C) choices made in self-interest cannot be the same as those made in the social interest D) wants are greater than what we can produce with our resources E) governments must make up for shortages in resources
D) wants are greater than what we can produce with our resources
What would be an example of a consumption good? A) Rhianna gets a haircut B) Donald Trump purchases furniture for his office C) Antonio, the manager of the local Taco Hut, purchases a new deep fryer D) The local driver's license office purchases a new digital camera and printer E) Jake buys an iPhone
E) Jake buys an iPhone
A change in the demand for apples could result from any of the following EXCEPT: A) a change in the price of a banana B) a change in the number of buyers C) a change in income D) increased preferences for fresh fruit consumption of health reasons E) a change in the price of an apple
E) a change in the price of an apple
Whenever people's incomes increase, they buy more guitars. Hence a scatter diagram shows that the relationship between income and guitars purchased is: A) a linear relationship B) some sort of relationship, but whether it is positive or negative depends on whether income is plotted on the vertical or horizontal axis C) a U-shaped relationship D) a negative relationship E) a positive relationship
E) a positive relationship
Which of the following statements are true about a competitive market? A competitive market: A) must have a physical location B) has one seller competing to sell his or her product C) has a handful of sellers but always has many buyers D) includes markets for goods and services but not for inputs E) has so many buyers and sellers that no one can influence the price
E) has so many buyers and sellers that no one can influence the price
If 'x' increases and as a result 'y' decreases, then 'x' and 'y' are: A) directly related B) not related because the relationship is a causal one C) positively related D) trend-line related E) negatively related
E) negatively related
One reason why the demand for gasoline is inelastic is because: A) people have a long time to shop around for automobiles that use less gas B) substitutes for gas abound C) gasoline is a luxury item D) buses run on diesel fuel rather than gasoline E) substitutes for gas are hard to find
E) substitutes for gas are hard to find
The opportunity cost of a decision is measured in terms of: A) time B) the price of the alternative we choose C) the price of a new opportunity that arises D) sunk cost E) the next best thing given up
E) the next best thing given up
What are the four groups of economic agents?
Households, firms, government, international
