Intro to Micro Ch1 practice questions

19. Which of the following is a normative economic statement? A) Rising global demand for coal has led to increases in the price of coal. B) With rising mortgage rates and rising unemployment rates, the number of unsold homes has increased. C) The state of Texas is considering increasing funds for light-rail development to promote the use of public transportation. D) Pharmaceutical manufacturers should not be allowed to patent their products so prescription drugs would be more affordable.

. D) Pharmaceutical manufacturers should not be allowed to patent their products so prescription drugs would be more affordable.

Which of the following is a macroeconomic question? A) What determines the inflation rate? B) What determines the production of DVDs? C) What factors determine the price of carrots? D) What determines the wage of auto workers?

A

16. Voluntary exchange ________ economic efficiency because neither the buyer nor the seller would agree to a trade unless ________. A) increases; they both benefit B) increases; only one party benefits C) decreases; neither benefit D) decreases; they both benefit

A) increases; they both benefit

18. Which of the following is a positive economic statement? A) The standard of living in the United States should be higher. B) If the price of iPhones falls, a larger quantity of iPhones will be purchased. C) The government should revamp the health care system. D) The U.S. government should not have bailed out U.S. auto manufacturers.

B

The three fundamental questions that any economy must address are: A) What will be the prices of goods and services; how will these goods and services be produced; and who will receive them? B) What goods and services to produce; how will these goods and services be produced; and who receives them? C) Who gets jobs; what wages do workers earn; and who owns what property? D) How much will be saved; what will be produced; and how can these goods and services be fairly distributed?

B

12. ________ is a situation in which a good or service is produced at the lowest possible cost. A) Allocative efficiency B) Productive efficiency C) Equity D) Optimal marginalism

B) Productive efficiency

20. The economic analysis of minimum wage involves both normative and positive analysis. Consider the following consequences of a minimum wage: a. The minimum wage law causes unemployment. b. A minimum wage law benefits some groups and hurts others. c. In some cities such as San Francisco and New York, it would be impossible for lowskilled workers to live comfortably in the city without minimum wage laws. d. The gains to winners of a minimum wage law should be valued more highly than the losses to losers because the latter primarily comprises businesses. Which of the consequences above are positive statements and which are normative statements? A) a, b, and c are positive statements and d is a normative statement. B) a and b are positive statements, c and d are normative statement. C) Only a is a positive statement, b, c, and d are normative statements. D) a and c are positive statements, b and d are normative statements.

B) a and b are positive statements, c and d are normative statement.

. In economics, the term ________ means "additional" or "extra." A) allocative B) marginal C) equity D) optimal

B) marginal

In economics, choices must be made because we live in a world of A) unemployment. B) scarcity. C) greed. D) unlimited resources.

B) scarcity.

9. The highest-valued alternative that must be given up to engage in an activity is the definition of A) economic equity. B) marginal benefit. C) opportunity cost. D) marginal cost.

C

. Which of the following is a microeconomic question? A) How much will be saved and how much will be produced in the entire economy? B) What will the level of economic growth be in the entire economy? C) What factors determine the price of carrots? D) What determines the average price level and inflation?

C) What factors determine the price of carrots?

15. Jewelry manufacturers produce a range of products such as rings, necklaces, bracelets, and brooches. What fundamental economic question are they addressing by offering this range of items? A) How to produce goods that consumers want? B) Why produce a variety of items? C) What to produce? D) Who to produce the items for?

C) What to produce?

By definition, economics is the study of A) how to make money in the stock market. B) how to make money in a market economy. C) the choices people make to attain their goals, given their scarce resources. D) supply and demand.

C) the choices people make to attain their goals, given their scarce resources.

Consider the following statements: a. Car owners purchase more gasoline from a gas station that sells gasoline at a lower price than other rival gas stations in the area. b. Banks do not take steps to increase security since they believe it is less costly to allow some bank robberies than to install expensive security monitoring equipment. c. Firms produce more of a particular DVD when its selling price rises. Which of the above statements demonstrates that economic agents respond to incentives? A) a only B) b only C) c only D) a, b, and c

CORRECT ANSWER IS D i said c

17. Economic models do all of the following except A) answer economic questions. B) portray reality in all its minute details. C) make economic ideas explicit and concrete for use by decision makers. D) simplify some aspect of economic life.

D

cakes for $1.00 each. What is the opportunity cost of buying a cappuccino? A) 2 1/2 Russian tea cakes B) 2/5 of a Russian tea cake C) $2.50 D) $1.00

D correct answer is a not d its the quantity not cost of good

3. Economists assume that individuals A) behave in unpredictable ways. B) will never take actions to help others. C) prefer to live in a society that values fairness above all else. D) are rational and respond to incentives.

D) are rational and respond to incentives.

11. The decision about what goods and services will be produced in a market economy is made by A) lawmakers in the government voting on what will be produced. B) workers deciding to produce only what the boss says must be produced. C) producers deciding what society wants most. D) consumers and firms choosing which goods and services to buy or produce.

D) consumers and firms choosing which goods and services to buy or produce.

14. In economics, the term "equity" means A) everyone has an equal standard of living. B) the hardest working individuals consume all they want. C) only elected officials have high standards of living. D) economic benefits are distributed fairly.

D) economic benefits are distributed fairly.

13. Allocative efficiency is achieved when firms produce goods and services A) at the lowest possible cost. B) that consumers value most. C) at the lowest opportunity cost. D) at a marginal cost of zero

b i had no answer here

Marginal analysis involves undertaking an activity A) until its marginal costs start declining. B) only when its marginal benefits are positive. C) until its marginal benefits equal marginal costs. D) only if its marginal costs are greater than its marginal benefits.

until its marginal benefits equal marginal costs.