question

Scarcity refers to the situation in which A. unlimited wants exceed limited resources. B. unlimited resources exceed limited wants. C. a country's population is larger than its resource base. D. a nation's poverty level increases faster than its population.

answer

unlimited wants exceed limited resources

question

Refer to Figure above. If the current market price is $25, the market will achieve equilibrium by A. a price increase, increasing the supply and demand B. a price decrease, decreasing the supply and increasing the demand C. a price decrease, decreasing the quantity supplied and increasing the quantity demanded D. a price increase, increasing the quantity supplied and decreasing the quantity demanded

answer

a price decrease, decreasing the quantity supplied and increasing the quantity demanded

question

Opportunity cost is defined as A. the benefit of an activity. B. the monetary expense associated with an activity. C. the highest valued alternative that must be given up to engage in an activity. D. the total value of all alternatives that must be given up to engage in an activity.

answer

the highest valued alternative that must be given up to engage in an activity

question

When every good or service is produced up to the point where the last unit provides a marginal benefit to society equal to the marginal cost of producing it, ________ occurs. A. allocative efficiency B. productive efficiency C. equity D. efficient central planning

answer

allocative efficiency

question

The branch of economics which studies the behavior of entire economies and policies that affect the economy as a whole is called A. public economics. B. microeconomics. C. macroeconomics. D. normative economics

answer

macroeconomics

question

Human capital refers to A. the money people have B. the machines workers have to work with C. the accumulated skills and training workers have D. the wealth people have

answer

the accumulated skills and training workers have

question

Which of the following statements is true? A. an inverse relationship has a positive slope value. B. a direct relationship has a negative slope value. C. a curved line has slope values that change at every point. D. a straight line has a slope of one.

answer

a curved line has slope values that change at every point

question

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. E. consumers dictating to firms what they need most.

answer

consumers and firms choosing which goods and services to buy or produce

question

There is often a trade-off between A. productive efficiency and allocative efficiency. B. limited and unlimited resources. C. voluntary and involuntary exchanges. D. economic efficiency and economic equity.

answer

economic efficiency and economic equity

question

Suppose the U.S. government encouraged new teachers to take jobs in under performing schools by paying the new teachers a $20,000 bonus. These teachers would be exemplifying the economic idea that A. people are rational. B. people respond to economic incentives. C. optimal decisions are made at the margin. D. equity is more important than efficiency.

answer

people respond to economic incentives

question

The production possibilities frontier shows A. the various products that can be produced now and in the future. B. the maximum attainable combinations of two products that may be produced in a particular time period with available resources. C. what an equitable distribution of products among citizens would be. D. what people want firms to produce in a particular time period.

answer

the maximum attainable combinations of two products that may be produced in a particular time period with available resources

question

If the production possibilities frontier is linear, then A. opportunity costs are decreasing as more of one good is produced. B. it is easy to efficiently produce output. C. opportunity costs are increasing as more of one good is produced. D. opportunity costs are constant as more of one good is produced.

answer

opportunity costs are constant as more of one good is produced

question

Refer to the Figure above. How much of the tax is paid by buyers? A. $8 B. $5 C. $4 D. $3

answer

$3

question

14. ________ a nation's production possibilities frontier represents economic growth. A. An outward shift of B. An inward shift of C. Moving up along D. Moving down along

answer

an outward shift of

question

Refer to Table above. Using marginal analysis, how many hours should Eva extend her bakery's hours of operations? She hires a worker for every hour she opens for $8 an hour. A. 2 hours B. 3 hours C. 4 hours D. 5 hours

answer

5 hours

question

Comparative advantage means A. the ability to produce more of a product with the same amount of resources than any other producer. B. the ability to produce a good or service at a lower opportunity cost than any other producer. C. the ability to produce a good or service at a higher opportunity cost than any other producer. D. compared to others you are better at producing a product.

answer

the ability to produce a good or service at a lower opportunity cost than any other producer

question

For each watch that Switzerland produces, it gives up the opportunity to make 50 pounds of chocolate. Germany can produce 1 watch for every 100 pounds of chocolate it produces. Which of the following is true about the comparative advantage between the two countries? A. Switzerland has the comparative advantage in chocolate. B. Switzerland has the comparative advantage in watches. C. Germany has the comparative advantage in watches and chocolate. D. Germany has the comparative advantage in watches.

answer

Switzerland has the comparative advantage in watches

question

A worker is hired in a A. goods and services market B. product market C. government market D. labor market

answer

labor market

question

Published in 1776, ________ was written by Adam Smith. A. "The General Theory of Employment, Interest, and Money" B. "The Communist Manifesto" C. "The Declaration of Economics" D. "An Inquiry into the Nature and Causes of the Wealth of Nations"

answer

"An inquiry into the Nature and Causes of the Wealth of Nations"

question

Refer to Figure above. What is the opportunity cost of one dozen roses? A. 0.4 dozen orchids B. 2.5 dozen orchids C. 7.25 dozen orchids D. 16 dozen orchids

answer

0.4 dozen orchids

question

By drawing a demand curve with price on the vertical axis and quantity on the horizontal axis, economists assume that the most important determinant of the demand for a good is A. consumer income. B. consumer tastes and preferences. C. the price of the good. D. the quality of the good.

answer

the price of the good

question

The ________ effect of a price change refers to the impact of a change in the price of a good on a consumer's purchasing power. A. income B. substitution C. demographics D. ceteris paribus

answer

income

question

If a decrease in income leads to an increase in the demand for macaroni, then macaroni is A. an inferior good. B. a neutral good. C. a necessity. D. a normal good.

answer

an inferior good

question

If the price of smartphones was to increase, then A. the demand for smartphone apps would decrease. B. the demand for smartphone apps would increase. C. the quantity of smartphone apps demanded would increase. D. the quantity of smartphone apps demanded would decrease.

answer

the demand for smartphone apps would decrease

question

Refer to Figure above. Kendra's marginal benefit from consuming the second ice cream cone is A. $6.50 B. $6.00 C. $3.00 D. $2.25

answer

$3.00

question

An increase in the price of MP3 players will result in A. a smaller quantity of MP3 players supplied. B. a larger quantity of MP3 players supplied. C. a decrease in the demand for MP3 players. D. an increase in the supply of MP3 players.

answer

a larger quantity of MP3 players supplied

question

Refer to Figure above. If the economy is currently at point E, what is the opportunity cost of moving to point B? A. 26 thousand forks B. 20 thousand forks C. 60 thousand spoons D. 0 spoons

answer

0 spoons

question

Which of the following would cause the equilibrium price of ketchup to increase and the equilibrium quantity of ketchup to decrease? A. a decrease in the price of tomatoes B. an increase in the price of tomatoes C. an increase in the price of mustard, a substitute for ketchup D. an increase in the price of french fries, a complement for ketchup

answer

an increase in the price of tomatoes

question

An increase in the demand for peanuts due to changes in consumer tastes, accompanied by an increase in the supply of peanuts as a result of favorable growing conditions, will result in A. an increase in the equilibrium quantity of peanuts and no change in the equilibrium price. B. an increase in the equilibrium price of peanuts and no change in the equilibrium quantity. C. an increase in the equilibrium price of peanuts; the equilibrium quantity may increase or decrease. D. an increase in the equilibrium quantity of peanuts; the equilibrium price may increase or decrease.

answer

an increase in the equilibrium quantity of peanuts; the equilibrium price may increase or decrease

question

Refer to Figure above. Which two arrows in the diagram depict the following transaction: Stanley purchases the novel, "Night of Sorrows" for his summer reading pleasure. A. J and M B. J and G C. K and M D. K and G

answer

K and G

question

A consumer is willing to purchase a product up to the point where A. he spends all of his income. B. the marginal benefit is equal to the price of the product. C. the quantity demanded is equal to the quantity supplied. D. he is indifferent between consuming and saving.

answer

the marginal benefit is equal to the price of the product

question

The additional cost to a firm of producing one more unit of a good or service is the A. minimum cost. B. total cost. C. opportunity cost. D. marginal cost.

answer

marginal cost

question

Refer to Figure above. What is the value of producer surplus after the imposition of the price floor? A. $3,000 B. $3,600 C. $4,200 D. $4,500

answer

$3,000

question

If, in a competitive market, marginal benefit is greater than marginal cost A. the net benefit to consumers from participating in the market is greater than the net benefit to producers. B. the government must force producers to lower price in order to achieve economic efficiency. C. the quantity sold is greater than the equilibrium quantity. D. the quantity sold is less than the equilibrium quantity.

answer

the quantity sold is less than the equilibrium quantity

question

To affect the market outcome, a price floor A. must be set above the black market price. B. must be set above the legal price. C. must be set above the price ceiling. D. must be set above the equilibrium price.

answer

must be set above the equilibrium price

question

Refer to Figure above. What is the value of the deadweight loss after the imposition of the price floor? A. $600 B. $1,800 C. $2,700 D. $3,300

answer

$600

question

37. Refer to Figure in Q36. What is the value of the deadweight loss after the imposition of the price floor? A. $600 B. $1,800 C. $2,700 D. $3,300

answer

$600

question

Which of the following is a result of government price controls? A. some people win and some people lose. B. price controls benefit poor consumers but harm producers and wealthy consumers. C. price controls increase economic efficiency. D. the deadweight loss from price ceilings is greater than the deadweight loss from price floors.

answer

some people win and some people lose

question

Refer to Figure above. A decrease in the number of firms in the market would be represented by a movement from A. A to B B. B to A C. $1 to $2 D. $2 to $1

answer

$2 to $1

question

Buyers will bear the entire burden of a unit tax if the demand curve for a product is A. horizontal. B. vertical. C. downward sloping. D. upward sloping.

answer

vertical

question

Optimal decisions are made at the point where marginal benefit is maximized. A. True B. False

answer

false

question

When voluntary exchange takes place, only one party gains from the exchange. A. True B. False

answer

false

question

If a country is producing efficiently and is on the production possibilities frontier, the only way to produce more of one good is with an advance in technology. A. True B. False

answer

false

question

If a country produces only two goods, then it is not possible to have a comparative advantage in the production of both those goods. A. True B. False

answer

true

question

If consumers believe the price of hybrid vehicles will decrease in the future, this will cause the demand for hybrid vehicles to decrease now. A. True B. False

answer

true

question

It is possible for a market for a good to experience a surplus and a shortage at the same time. A. True B. False

answer

false

question

If the demand for a product decreases and the supply of the product does not change, equilibrium price and equilibrium quantity will both increase. A. True B. False

answer

false

question

Producer surplus is the difference between the highest price someone is willing to pay and the price he actually pays. A. True B. False

answer

false

question

Deadweight loss refers to a loss in revenue resulting from producers having to reduce their selling price to remain competitive. A. True B. False

answer

false

question

There is a shortage of every good that is scarce. A. True B. False

answer

False

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