question

Economics is most importantly concerned with:

answer

-studying how we allocate scarce resources to satisfy unlimited wants

question

Economic choices or tradeoffs are the result of:

answer

-scarcity

question

Economics is concerned with:

answer

-the choices people must make because resources are scarce -human decision makers and the factors that influence their choices -the allocation of limited resources to satisfy virtually unlimited desires

question

Economic resources are also known as:

answer

-factors of production

question

Which of the following is not an example of a scarce resource? a.) a forest b.) a river c.) a john deere tractor d.) the chef at the citys best cafe e.) all of the above are resources

answer

e.) all of the above

question

Human capital is:

answer

-the expertise or knowledge possessed by workers.

question

Which of the following is true? a.) poverty could be eliminated but scarcity could not b.) scarcity could be eliminated but poverty could not c.) both scarcity and poverty could be eliminated d.) neither scarcity nor poverty could be eliminated

answer

a.) poverty could be eliminated but scarcity could not

question

Which of the following is true of a resources? a.) their availability is unlimited b.)they are the inputs used to produce goods and services c.) increasing the amount of resources available could eliminate scarcity d.)they are inputs used to produce goods and services and increasing the amount of resources available could eliminate scarcity

answer

b.) they are the inputs used to produce goods and services

question

an example of a capital resource is:

answer

-a dump truck

question

entrepreneurship is:

answer

-the resource that organizes the other factors of production in order to produce goods and or services.

question

Which of the following is an example of an individual motivated by self-interest? a.) a student volunteering at a soup kitchen b.) an attorney providing free legal service to low income families c.) a young person volunteering for the peace corps d.) a man buying a new camaro e.) all of the above

answer

e.) all of the above

question

Economists believe that individuals act as if they are motivated by self-interest and:

answer

-respond in predictable ways to changing circumstances

question

From an economists perspective, which of the following observations is not true? a.) self-interest is purely monetary in nature b.) self-interest can include benevolence c.) self-interest is a good predictor of human behavior in most situations. d.) self-interest is not the same as selfishness

answer

a.) self-interest is purely monetary in nature

question

When economists refer to economic behavior, they mean that:

answer

-rational people try to anticipate the likely consequences of their actions

question

What according to an economist, forms the basis of rational human behavior under current and anticipated future circumstances?

answer

-values and information

question

"as a rational person, you would expect individuals to always avoid actions that are illegal."

answer

-this is a false statement because it is expected that individuals will consider the consequences of their actions and that some will choose to commit illegal acts anyway

question

When economists speak of markets, they primarily mean:

answer

-mechanisms that coordinate actions of buyers and sellers

question

Which of the following serve as the language of the market system? a.) monetary and fiscal policies b.) morals c.) market prices d.) governments

answer

c.) market prices

question

which of the following is an example of market failure? a.) overuse of highways that leads to traffic congestion b.) reduced levels of vaccinations which increase illness and disease c.) substantial foreclosures caused by sub-prime lending d.) all of the above

answer

d.) all of the above

question

Market failure occurs when:

answer

-the economy fails to allocate resources efficiently on its own

question

A hypothesis is:

answer

-a testable proposition

question

A theory can best be defined as:

answer

-a deliberate simplification of factual relationships that attempts to explain and predict how those relationships work.

question

The importance of the ceteris paribus assumption is that it:

answer

-allows one to analyze the relationship between two variables apart from the influence of other variables

question

Economics is different from a "hard" science like physics because:

answer

-economists cannot easily control all the variables that might influence human behavior

question

Macroeconomics topics DO NOT usually include; a.) the rate of inflation b.) the rate of unemployment c.) economic growth d.) the profit maximizing decisions of an individual manufacturer e.) the control of the money supply by the central bank

answer

d.) the profit maximizing decisions of an individual manufacturer

question

Which of the following lies primarily within the realm of microeconomics? a.) an empirical analysis of the relationship between the growth of the money supply and the rate of inflation b.)an economic model forecasting the impact of a tax increase on consumer spending and national output c.) a study of supply and demand conditions in the market for orange juice d.) a model forecasting the impact of a change in interest rates on the level of investment in the economy

answer

c.) a study of supply and demand conditions in the market for orange juice

question

illustration of fallacy of composition:

answer

-if Ms. Spann had more money, she could buy more scarce goods; if the nation had more money, everyone could buy more scarce goods

question

which of the following is a statement of positive economics? a.) the income tax reduces after tax incomes of the rich b.) a reduction in tax rates makes the after tax distribution of income fairer c.) tax rates ought to be reduced so that people will work more d.) all of the above e.) none of the above

answer

a.) the income tax reduces after tax incomes of the rich

question

Suppose there are two members of the U.S. Congress who were once economics professors. Why is it important to be able to distinguish their positive from their normative statements about economic policy?

answer

-their positive statements help us understand the economy's response to a particular policy, while their normative statements reflect their value judgments.

question

Which of the following is not an example of the use of the problem solving perspective provided by economics? a.) an investor considers the tax consequences of selling stocks in order to buy bonds b.) a rancher recognizes that raising more cattle this year will damage his pasture and limit next years herd size c.) the Fogelberg family takes its vacation at Lake Arrowhead this year simply because they have done so for as long as anyone can remember

answer

c.) the fogelberg family takes its vacation at Lake Arrowhead this year simply bc they have done so for as long as anyone can remember.

question

The problem of scarcity:

answer

-exists because resources are limited relative to wants

question

The real core of most economic problem is to:

answer

-allocate limited resources among competing uses

question

Which of the following is an example of a capital resource? a.) redwood trees b.) unskilled labor c.) stocks and bonds d.) an oil rig

answer

d.) an oil rig

question

The function of an entrepreneur is to: a.) bear the business risks b.) organize the other factors of production c.) innovate d.) do all of the tasks listed

answer

d.) do all of the tasks listed

question

Every time an individual decides to try out new equipment, or finds better ways to manage money, he or she is exhibiting traits of:

answer

-entrepreneurship

question

Economic goods are:

answer

-scarce products that are created from scarce resources

question

An economy's resources:

answer

-consist of land, labor, capital, and entrepreneurial skills

question

Which of the following would reflect self interested behavior?

answer

-a worker pursuing a higher paying job and better working conditions -a consumer seeking a higher level of satisfaction with her current income -donating a cell phone to a womans shelter -mother theresa using her nobel prize money to care for the poor

question

Negative incentives:

answer

-decrease benefits or increase costs

question

A market economy depends on market mechanisms to:

answer

-determine the most efficient way of using resources

question

In a market economy, the amount of a good that is produced is primarily decided by the interaction of:

answer

-buyers and sellers

question

Which of the following is a resource exchanged in the factor markets? a.) land b.) capital c.) labor d.) entrepreneurship e.) all of the above

answer

e.) all of the above

question

A good economic theory:

answer

-relies on simplifying assumptions in order to explain economic behavior

question

Which of the following is correct? a.) "theory" and "hypothesis" are interchangeable terms meaning the same thing b.) a hypothesis may result from a tested and confirmed theory c.) a theory may result from a tested and confirmed hypothesis d.) a hypothesis is a theory whose formulation relies on mathematics

answer

c.) a theory may result from a tested and confirmed hypothesis

question

The term "ceteris paribus" means that:

answer

-all variables except those specified are constant

question

An economic hypothesis is tested:

answer

-by comparing the hypothesis's predictions to real world data

question

Which of the following is most likely a topic of discussion in microeconomics course? a.) a decrease in the share of national income paid to the government in taxes b.) an increase in the price of lumber used to construct houses c.) an increase in the rate of inflation d.) an increase in the number of jobless individuals filing unemployment claims e.) the size of the national debt

answer

b.) an increase in the price of lumber used to construct houses

question

The branch of economics that focuses on outcomes in highly aggregated markets, such as the markets for labor or consumer products, is called:

answer

-macroeconomics

question

Which of the following most likely and example of correlation but not an example of causation? (superstition)

answer

-usually, if I eat a chili dog and drink a beer before a game, my team wins.

question

The fallacy of composition is:

answer

-the erroneous view that what is true for the individual will also be true for the group

question

Your mother tells you, "watching ten hours of TV per day will make you stupid." This is a positive statement because:

answer

-it is a proposition that can be tested

question

"Mandating longer sentences for any criminal's third arrest will lead to a reduction in crime. Less crime will reduce the number of police officers cities will hire." This quotation:

answer

-contains positive statements only

question

Bill says: "The imposition of a tax on tequila will increase its price." Bob says: "taxes should be imposed on tequila because college students drink too much."

answer

-bill's statement is positive, and bob's statement is normative

question

Which of the following represents a normative statement? a.) a decrease in price leads to an increase in quantity demanded b.) the temperature outside is 90 degrees c.) the study of economics is more important than the study of history d.) People will buy less butter at $1.50 per pound then they will at $1.00 per pound

answer

c.) the study of economics is more important than the study of history

question

Because of scarcity:

answer

-we must sacrifice valuable alternatives to obtain more goods and services we desire.

question

Trent decides to spend an hour playing basketball rather than studying. His opportunity cost is:

answer

-the benefit to his grades from studying for an hour

question

The opportunity cost of an item is:

answer

-the highest valued alternative you give up to get that item

question

The opportunity cost of going to college includes:

answer

-both tuition and the value of the students time

question

Opportunity cost includes:

answer

-both monetary and non-monetary costs

question

Economists believe that in regards to criminal behavior:

answer

-those choosing to commit criminal acts weigh the expected marginal benefits versus the expected marginal costs.

question

Despite the warning on a package of cigarettes about the potential health hazards of smoking, a man lights up a cigarette. An economist would conclude that:

answer

-in the mans judgment, the expected marginal benefit of smoking the cigarette outweighs the expected marginal cost

question

Which of the following best defines rational behavior? a.) analyzing the total costs of a decision b.) analyzing the total benefits of a decision c.) undertaking an activity as long as the total benefit of all activities exceeds the total cost of all activities d.) undertaking activities whenever the marginal benefit exceeds the marginal cost

answer

d.) undertaking activities whenever the marginal benefit exceeds the marginal cost

question

If people are self-interested:

answer

-as their preferences for leisure time increase, they are likely to work less -as the wages they are offered increase, they are likely to work more

question

Pollution damages the environment we live in. An economist would advise that we reduce air pollution:

answer

-as long as the marginal benefit from air pollution reduction outweighs the marginal cost of achieving the reduction

question

specialization is a way for:

answer

-individuals to make the best use of resources by devoting themselves to one primary productive activity

question

Resources are used more efficiently if people, regions, and countries specialize in goods for which they have a(n):

answer

-comparative advantage in production

question

Sergei makes millions of dollars a year playing hockey. Sergei is also the best tailor in his hometown in Russia. Why doesnt Sergei make his own clothes?

answer

-the opportunity cost to him of making his own clothes is very high because it takes away from his lucrative hockey career

question

A nation has a comparative advantage in the production of cars over another nation if:

answer

-it can produce cars at a lower opportunity cost than the other country

question

Mike can wash a car in 5 minutes and wax a car in 15 minutes. Tony can wash a car in 10 minutes and wax a car in 20 minutes. Which of the following is true?

answer

-Mike can wash a car faster and has comparative advantage in washing cars.

question

Which of the following is true? a.) people specialize by concentrating their energies on the activity to which they are best suited, because they incur lower opportunity costs as a result. b.) the primary reason people pursue their comparative advantage is their self-interest c.) one advantage of specialization is that workers acquire greater skill from repetition d.) if a person, a region, or a country.... e.) all of the above

answer

e.) all of the above

question

Which of the following is true? a.) voluntary trades give both parties more in value than what they give up b.) w/o the ability to trade, ppl would not tend to specialize in those areas where they had a comparative advantage c.) ppl can gain by specializing in the production of the good in which they have a comparative advantage. d.) voluntary trade directly increases.... e.) all of the above are true

answer

e.) all of the above are true

question

Which of the following is not true? a.) voluntary exchange is expected to be advantageous to both parties to the exchange b.) what one trader gains from a trade, the other must lose c.) if one party to a potential voluntary trade decides it does not advance his interests, he can veto the potential trade. d.) the expectation of gain motivates ppl to engage in trade.

answer

-b.) what one trader gains from a trade, the other must lose.

question

advantages of specialization do not include:

answer

-reduced interdependence

question

Tom is a castaway who washes up on a remote island. He can kill eight birds per hour or catch ten fish per day. The natives on the island can kill ten birds per day or catch twenty fish per day. According to comparative advantage,

answer

-tom should kill more birds and fish less, then trade birds for fish

question

The opportunity cost of an action is equal to:

answer

-the highest valued opportunity that must be sacrificed in order to take the action

question

A student has a chance to see Green Day in concert. The student also has a major economics exam in the morning. If the student goes to the concert: a.) she may receive a lower grade on the economics exam b.) the opportunity cost of the concert is the value of the time spent studying c.) the decision involves a trade off d.) all of the above are correct

answer

d.) all of the above are correct

question

Lance's boss offers him twice his usual wage rate to work tonight instead of taking his girlfriend on a date. This offer will likely:

answer

-increase the opportunity cost of going on the date

question

Marginal thinking is best demonstrated by:

answer

-choosing to spend one more hour studying economics because you think the improvement in your score on the next quiz will be worth the sacrifice of time.

question

Marginal analysis involves:

answer

-comparing the additional benefit from an action to the additional cost.

question

If a student enrolls in an additional course at the university, an economist would conclude that:

answer

-the expected marginal benefit of an additional course must exceed the expected marginal cost of the course.

question

The expected marginal benefit to you from purchasing a new sport utility vehicle is $20,000. The price of the new sport utility vehicle is $22,000.

answer

-You will not purchase the new sport utility vehicle at this time if you are acting rationally.

question

The marginal benefit to you of drinking bottled iced tea is $1.50. The price of a bottle of iced tea is $1.25.

answer

- If you purchase a bottle of iced tea, the net gain to you from doing so is 25 cents.

question

Gallons of milk at a local grocery store are priced at one for $4.00, or two for $6.00. The marginal cost of buying a second gallon of milk:

answer

-equals $2.00

question

You lose $20 from your wallet and decide to miss an hour from work in order to search for it. To an economist, this means that:

answer

-in your estimation the expected value of searching for the lost $20 for an hour exceeds your hourly wage.

question

Some political leaders have proposed that parents be granted a substantially larger reduction in their annual personal income taxes for each child that they parent. The economic way of thinking indicates that legislation of this type would:

answer

-reduce the after-tax cost of raising children and therefore increase the birth rate.

question

Which of the following policies would be most effective in promoting monthly water conservation? a.) a $100 flat fee for any household that uses over 1500 gallons b.) a per gallon fee that escalates from $1.00 to $2.00 per 25 gallons once household consumption exceeds 1000 gallons c.) A $125 fee for all households in addition to a $0.50 per gallon fee for all consumption

answer

b.) a per gallon fee that escalates from $1.00 to $2.00 per 25 gallons once household consumption exceeds 1000 gallons

question

Which of the following statements is most consistent with the rule of rational choice? a.) "The Environmental Protection Agency should strive to eliminate virtually all air and water pollution." b.) "When evaluating new prescription drugs, the Food and Drug Administration should weigh each drug's potential health benefits against the potential health risks posed by known side effects." c.) "Police forces should be enlarged until virtually all crime is eliminated." d.) "Manufacturers of automobiles should seek to make cars safer, no matter the costs involved."

answer

b.) "When evaluating new prescription drugs, the Food and Drug Administration should weigh each drug's potential health benefits against the potential health risks posed by known side effects."

question

An individual has a comparative advantage in production if that individual:

answer

-can produce at the lowest opportunity cost

question

When a person possesses a comparative advantage in the production of one good or service, it:

answer

- permits gains from trade to be realized due to a more efficient use of resources.

question

Resources and goods are free to move across state lines. If Oregon producers choose to specialize in producing honey and California producers choose to specialize in growing almonds, then we could reasonable conclude that:

answer

-california has a comparative advantage in producing almonds -oregon has a comparative advantage in producing honey -the opportunity cost of growing almonds is lower in California than in Oregon -the opportunity cost of producing honey is lower in Oregon than in California

question

To obtain the greatest gains from trade, a country should specialize in and ____ those goods for which it has a comparative advantage and ____ those goods for which other countries have a comparative advantage.

answer

-export; import

question

A downward sloping straight-line production possibilities curve implies:

answer

-a constant opportunity cost

question

Which of the following is true? a.) By putting unemployed resources to work or by putting already employed resources to better uses, we could expand output in an economy. b.) To generate increased economic growth, a society would produce fewer consumer goods and more capital goods in the present. c.) If the production possibility curve is concave from below (that is, bowed outward from the origin), it reflects increasing opportunity costs of producing additional amounts of a good. d.) increases in a society's output do not make scarcity disappear e.) all of the above

answer

e.) all of the above

question

Investing in capital goods will increase the future production capacity of an economy, so an economy that invests more now (consumes less now) will be able to produce, and therefore consume, more in the future.

answer

-this is true with regard to production possibilities curves

question

The fact that some resources and skills cannot be easily adapted from their current uses to alternative uses is the basic reason for the law of:

answer

-increasing opportunity cost

question

The private ownership of property and the use of the market system to direct and coordinate economic activity are most characteristic of:

answer

-a market economy

question

In a market economy how do we determine who will get the goods and services that have been produced?

answer

-whoever can afford them

question

Which of the following is true? a.) An advanced market economy would tend to use both labor intensive and capital intensive production methods. b.) An economy in which labor is relatively scarce would tend to use capital intensive production methods. c.) An increase in the availability of labor relative to capital in an economy would tend to increase how labor intensive the production processes in that economy would be. d.) all of the above are true e.) both b. and c. are true

answer

e.) both b. and c. are true

question

Which of the following is true? a.) In the product markets, firms are buyers and households are sellers. b.) In the factor markets, firms are sellers and households are buyers. c.) Firms receive money payments from households for labor, land, capital, and entrepreneurship. d.) all ofthe above are true e.) none of the above is true

answer

e.) none of the above is true

question

Which of the following is true of a competitivie market? a.) the rules of supply and demand do not apply to it b.) buyers and sellers have little market power c.) each buyers or sellers effect on market price is substansial d.) few sellers offer similar products

answer

b.) buyers and sellers have little market power

question

The law of demand refers to the:

answer

-inverse relationship between the price of a good and the quantity demanded

question

In economics, the demand for a good refers to the amount of the good people:

answer

-will buy at various prices

question

The demand schedule for a good:

answer

-indicates the quantities that will be purchased at alternative market prices

question

If the price of music downloads decreases, which of the following is most likely to occur? a.) quantity demanded will decrease b.) quantity demanded will increase c.) demand will increase d.) demand will decrease

answer

b.) quantity demanded will increase

question

If the price of tennis rackets were to increase, we would expect:

answer

-the demand for tennis balls to decrease

question

Which of the following is most likely to be an inferior good? a.) porsches b.) lobster c.) used clothing d.) an ivy league education

answer

c.) used clothing

question

A decrease in consumer incomes will: a.) decrease the demand for an inferior good b.) decrease the supply of an inferior good c.) increase the demand for a normal good d.) increase the supply of a normal good e.) do none of the above

answer

e.) do none of the above

question

Whenever the price of Good A decreases, the demand for Good B increases. Good A and B appear to be:

answer

-complements

question

A change in which of the following variable DOES NOT cause a change in demand?

answer

-prices of unrelated goods

question

Each point on the supply curve shows the:

answer

-quantity supplied at that price

question

The supply curve shows:

answer

-how the quantity produced varies with price

question

The difference between a change in quantity supplied and a change in supply is that a change in:

answer

-quantity supplied is caused by a change in a goods own, current price, while a change in supply is caused by a change in some other variable, such as input prices, prices of related goods, expectations, or taxas

question

Which of the following would not shift the supply curve for swordfish? a.) a reduction in the number of available fishing boats b.) unusually stormy weather during fishing season c.) the development of innovative new fishing equipment that makes it easier to catch swordfish d.) an increase in the price of swordfish e.) an increase in the wages of fishermen

answer

d.) an increase in the price of swordfish

question

A supply schedule shows:

answer

-how many units producers are willing and able to sell at various prices

question

An upward-sloping supply curve shows that:

answer

-suppliers are willing to increase production of their goods if they receive higher prices for them

question

The market supply schedule reflects the total quantity:

answer

-supplied at each price by all of the producers

question

Which of the following would be most likely to cause a reduction in the supply of nintendo video gmes?

answer

-an increase in the price of computer chips used to make nintendo games

question

To an economist, a decrease in supply means a: a.) rightward shift of the supply curve b.) movement up along a supply curve c.) downward shift of the supply curve d.) movement down along the supply curve e.) none of the above

answer

e.) none of the above -the following changes would result in a decrease in supply of a specific good a.) an increase in input prices b.) an increase in the price of substitute in production c.) a decrease in the price of a complement in production d.) an expectation of higher prices in the future e.) a decline in the number of suppliers f.) new taxes that affect the cost of production g.) a drought or freezing temperatures

question

which of the following would NOT cause a change in the supply of milk? a.) an increase in government subsidies to dairy farmers b.) an increase in the price of milk c.) the discovery of growth hormones to stimulate the milk production of cows d.) an increase in the cost of feed for cows e.) all of the above will cause a change in the supply of milk

answer

b.) an increase in the price of milk

question

If there is a surplus, ____ will be frustrated by their inability to exchange at the current price, and they will ____ the prices as a result.

answer

-sellers; lower

question

Ceteris paribus, if the vacancy rate in an apartment complex increased from 5% to 20% over the past two years, we would expect to see:

answer

-the rent decrease leading to an increase in quantity demanded.

question

How do you describe equilibrium in a market?

answer

-at equilibrium, quantity demanded equals quantity supplied

question

At the equilibrium price for gasoline: a.) everyone with the desire and the income to buy gasoline at that price can do so b.) surpluses are inevitable c.) quantity demanded exceeds the quantity supplied d.) all sellers willing and able to sell gasoline at that price can do so e.) both a. and d. are correct

answer

e.) both a. and d. are correct

question

When there is an excess quantity supplied of a product at the current price, then: a.) the market price must be below equilibrium price. b.) the market price will tend to rise c.) the market price must be above equilibrium price d.) the market price will tend to fall e.) both c. and d. will occur

answer

e.) both c. and d. will occur

question

Interpret the following statement: "Demand exceeds the available quantity of apartment housing. If the price of apartment rentals were increased, demand would decrease and an equilibrium could be achieved."

answer

-The statement is incorrect because it confuses "demand" with "quantity demanded."

question

When there is an excess quantity demanded of a product at the current price, then:

answer

-the price will tend to rise

question

Which of the following would increase the quantity of LCD TVs demanded but would not increase the demand for LCD TVs? a.) an increase in the price of plasma TVs, a substitute b.) an increase in incomes assuming that LCD TVs are normal goods c.) an increase in the expected future price of LCD TVs d.) a decrease in the current price of LCD TV's

answer

d.) a decrease in the current price of LCD TV's

question

Assume that coffee and tea are substitutes for each other. If weather conditions cause a substantial portion of the available coffee crop to be destroyed, then most probably:

answer

-the demand for tea will increase

question

A shortage currently exists in the market for strawberries. Which of the following statements is correct?

answer

-The quantity of strawberries demanded exceeds the quantity supplied and the market price is below the equilibrium price.

question

Price elasticity of demand is defined as:

answer

-the percentage change in quantity demanded divided by the percentage change in price.

question

Demand is said to be ____ when the quantity demanded is very responsive to changes in price.

answer

-elastic

question

A steel mill raises the price of steel by 7%, which results in a 20% reduction in the quantity of steel demanded. The demand curve facing this firm is:

answer

-elastic

question

Fantastic Cuts Hair Salon knows that a 15% increase in the price of their haircuts will result in a 5% decrease in the number of haircuts sold. What is the elasticity of demand facing Fantastic Cuts?

answer

-0.33

question

Which of the following is false? a.) The price elasticity of demand measures the responsiveness of quantity demanded to a change in price. b.) The price elasticity of demand is defined as the percentage change in quantity demanded divided by the percentage change in price. c.) If demand is elastic, it means the quantity demanded changes by a relatively larger amount than the price change. d.) If demand is inelastic, it means the quantity demanded changes by a relatively smaller amount than the price change. e.) all of the above are true

answer

e.) all of the above are true

question

If the price elasticity of demand was 4.0 (in absolute terms), a 10% off sale would lead to:

answer

-a 40% increase in purchases by customers.

question

The Shoe Emporium reduces the price of its shoes by 50% and finds that the quantity demanded for its shoes more than doubles. The demand for shoes from The Shoe Emporium appears to be:

answer

-elastic

question

If the demand is perfectly inelastic, what would happen to the quantity demanded if there is a tiny increase in price?

answer

-quantity demanded will remain the same

question

Which of the following would most likely feature elastic demand? a.) heart surgery b.) a required textbook c.) fresh green beans d.) all of the above e.) none of the above

answer

c.) fresh green beans

question

Elasticity of demand will ____ as the availability of substitutes ____. a.) increase; decreases b.) decrease; increases c.) increase; increases d.) decrease; decreases e.) both c. and d. are correct

answer

e.) both c. and d. are correct

question

If the supply curve for a product is vertical, then the elasticity of supply is:

answer

-equal to zero

question

The Book Nook reduces prices by 20%. If the dollar value of The Book Nook's sales remain constant, it indicates that:

answer

-the quantity of books sold increases by 20%

question

A 10% decrease in the price of energy bars leads to a 20% increase in the quantity of energy bars demanded. It appears that:

answer

-demand is elastic and total revenue will increase

question

The longer the time period considered, the elasticity of supply tends to:

answer

-increase

question

A price cut will increase the total revenue a firm receives if the demand for its product is:

answer

-elastic

question

If the elasticity of supply of a good was 2, how much would the price have to increase to lead to an increase in output of 6 percent?

answer

-3 percent

question

A perfectly elastic supply curve is:

answer

-horizontal

question

The elasticity of supply is defined as the ____ change in quantity supplied divided by the ____ change in price.

answer

-percentage; percentage

question

If the elasticity of demand for bangles is equal to 1, an increase in price will:

answer

-decrease the quantity demanded but leave total revenue unchanged.

question

If the elasticity of supply of bangles is equal to 1, an increase in the price of bangles will:

answer

-increase the quantity supplied and increase total revenue.

question

A surplus will result whenever the:

answer

-government imposes a price floor above the equilibrium price.

question

Assume a price floor is imposed at the current equilibrium price in the market for lettuce. If the demand for lettuce then increases:

answer

-the quantity of lettuce supplied will increase.

question

The imposition of a price ceiling on a market often results in:

answer

-a shortage

question

Both price floors and price ceilings generally:

answer

-reduce the quantity exchanged in the market

question

Which of the following is an example of an unintended consequence? a.) first time tax credits that cause more home sales b.) a price ceiling on gasoline that causes a gas shortage c.) increased parking fines that lead to fewer violators d.) increased taxes on cigarettes and liquor that lead to less smoking & drinking e.) none of the above

answer

b.) a price ceiling on gasoline that causes a gas shortage

question

If the demand for apples is highly elastic and the supply is highly inelastic, then if a tax is imposed on apples it will be paid:

answer

-largely by the sellers of apples

question

Consumer surplus is:

answer

-the difference between what consumers are willing to pay and what they are required to pay for a good.

question

Graphically, consumer surplus is measured by:

answer

-the area below the demand curve, but above the market price.

question

Which of the following best explains the source of consumer surplus for Good A? a.) Many consumers pay prices that are greater than the equilibrium price of Good A. b.) Many consumers would be willing to pay more than the market price for some units of Good A. c.) Many consumers think the market price of Good A is greater than its cost. d.) Many consumers of Good A place a value on it that is less than the market price.

answer

b.) Many consumers would be willing to pay more than the market price for some units of Good A

question

Ceteris paribus, an increase in the price of a good will cause the:

answer

-consumer surplus derived from the good to decrease.

question

Ethics is:

answer

-a branch of philosophy -are moral rules or standards governing human conduct -are rules or standards governing human conduct, but not necessarily moral rules -the moral principles of an individual person

question

In free market economies:

answer

-most market exchanges will result in all parties winning

question

A market economy without any ethics would have:

answer

-no value

question

Effective free market ethical systems must provide for all of the following EXCEPT: a.) clearly defined rules and regulations b.) meaningful punishments for rule breakers c.) a clearly defined moral foundation d.) adequate market oversight and policing e.) enough freedom for creativity and competition

answer

c.) a clearly defined moral foundation

question

Cost-benefit analysis can determine the optimal amount of all the following EXCEPT

answer

-fairness of rules

question

More efficient positive market ethics will generally help improve all of the following challenges EXCEPT: a.) positive externalities of a market b.) negative externalities of a market c.) moral externalities of a market d.) consumer surplus of a market e.) producer surplus of a market

answer

c.) moral externalities of a market

question

In order for a market's ethics to be effective, all of the following must occur, EXCEPT: a.) the ethics must be clearly defined. b.) there must be clear penalties for ethics violators. c.) everyone must agree to take part in the market. d.) there must be enough police or inspectors to find most violations e.) police or inspectors must be unbiased.

answer

c.) everyone must agree to take part in the market

question

Ethical rules based on morals or concepts of fairness are called:

answer

-normative ethics

question

If we know someone pays all their taxes and gives money to charity, we know that:

answer

-only that they pay their taxes and give money to charity

question

Which of the following does not specify positive ethical rules? a.) websters dictionary b.) roberts rules of order c.) the San Marcos land development code d.) Hoyle's rules of games e.) the Amy vanderbilit complete book of etiquette

answer

a.) websters dictionary

question

Which of the following statements is TRUE? a.) The U.S. government specifies all business ethics adopted by American corporations. b.) Ethics decisions are for philosophers, churches and individuals, not government. c.) The U.S. government insists that foreign trading partners adopt systems of business ethics identical to ours. d.) The U.S. government defines and enforces business ethics in order to protect the economy. e.) The U.S. government does not define or enforce any ethical rules.

answer

d.) The U.S. government defines and enforces business ethics in order to protect the economy.

question

In free markets which allows a high level of unethical corruption:

answer

-suppliers will be forced to be corrupt or to leave the market

question

Ethics violators like embezzlers, frauds, tax cheats and bank robbers: a.) usually follow most rules and other ethics most of the time. b.) not only injure individuals and companies, but also often hurt entire markets. c.) often use rational cost-benefit analysis when deciding whether to cheat. d.) may feel so ashamed and guilty of their crimes that they are driven to suicide. e.) All of the above may be true of ethics violators.

answer

e.) all of the above may be true of ethics violators

question

which of the following would break a positive ethic? a.) Having lustful daydreams about your best friend's girlfriend (or boyfriend) b.) Driving two miles per hour over the speed limit c.) Cursing your instructor when you're alone at home at 3 AM answering these stupid questions d.) Spending the day sleeping & watching TV instead of studying for your classes e.) none of the above

answer

b.) driving two mile per hour over the speed limit

question

Which of these conditions are most likely to motivate honest people to become corrupt? a.) Reading that Bernie Madoff was sentenced to life in prison after stealing billions of dollars b.) Having your boyfriend (or girlfriend) elope with someone who is rich c.) Seeing a film of Bonnie and Clyde being shot by machine guns d.) Seeing your boss and fellow workers get rich by lying and cheating e.) none of the above; if you're an honest person you will stay away

answer

d.) seeing your boss and fellow workers get rich by lying and cheating

question

Plagiarism is unethical because:

answer

-plagiarism might result in stealing profits from the original writer -plagiarism can decrease the value of honest students' diplomas - plagiarism can make it more difficult for instructors to assess the quality of students? writings -plagiarism is a type of fraud

question

Which of the following are NOT very important to maintaining effective market ethics? a.) A willingness by the vast majority of market participants to obey the ethics and report violators b.) the number of inspectors or police c.) the severity of punishments for cheating d.) Whether people understand the reasons for the rules or regulations e.) Whether the likely penalties for cheating are greater than the rewards

answer

d.) whether ppl understand the reasons for the rules and regulations

question

Which of the following people are more likely to break ethical rules? a.) someone who is old b.) somone who is rich c.) someone who is ignorant d.) someone who is very well educated e.) some who is poor

answer

c.) someone who is ignorant

question

Which of the following are reasons why most owners of companies want their employees to act ethically? a.) bc they care about the well-being of their customers b.) to enhance productivity c.) to maximize public good will toward the company d.) to avoid large fines and expensive lawsuits e.) all the above are reasons why

answer

e.) all the above are reasons why

question

A free market lacking clear ethical rules, adequate oversight and meaningful punishments for rule breakers might suffer: a.) decrease in market demand b.) decrease in market supply c.) decrease in equilibrium price d.) total market collapse e.) all of the above

answer

e.) all of the above

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