Acc EXAM 1AQ – Flashcards

What is the best economic explanation for why a person would drop out of college to take a job or start a business?

The economizing problem faced by a society is:

Imagine an ideal scenario where world peace prevails and all nations are led by peace-minded leaders. In such a world, the:

Suppose that a consumer purchases just two goods, X and Y. The ratio of the price of good X to the price of good Y is the:

Which pitfall to sound economic reasoning is illustrated when a person comments that "capitalists focus only on profits and don't care about their workers"?

If the production possibilities curve is a straight line, then:

If you knew that the intercept for a straight line was 12, and that if the value of the independent variable was 3 the value of the dependent variable would be 18, then the slope of the line would be:

Assume that a consumer spends a given budget on only two goods, and that the prices of the two goods are constant. The budget line in this case would: A)Definitely be a straight downward-sloping line B)Possibly be a straight upward-sloping line C)Be a curved graph bowed outwards D)Be a curved bell-shaped graph

a normative statement expresses a

Which one of the following is a normative economic statement? A)The unemployment rate fell for the fourth straight month, reflecting the effects from stronger economic growth in the second quarter B)The worsening balance of trade must be corrected if this nation is to remain competitive in the world economy C)Consumer prices are rising at a faster rate than in past months, indicating a renewal of inflationary pressures on the economy D)To help balance the Federal budget, Congress increased the tax on gasoline to its highest level in the past ten years

Suppose that a nation can only make two products: defense goods and civilian goods. In a graph of the marginal benefit (MB) and marginal cost (MC) of defense goods, a leftward shift of the MB curve will cause the optimal quantity of: A)Civilian goods to decrease B)Both civilian goods and defense goods to decrease C)Defense goods to decrease D)Defense goods to increase

Assume that a consumer has a given budget or income of $12, and that she can buy only two goods, apples or bananas. The price of an apple is $1.50 and the price of a banana is $0.75. Refer to the information given above. If the consumer spent all of her budget on just apples or just bananas, how many apples or bananas maximum would she be able to buy?

In the circular flow diagram, firms get their ability to pay for the costs of production from the: a-Revenues they receive for their products b-Resources they acquire in the resource markets c-Incomes they earn for their resources d-Goods and services they get in the product markets

International specialization and trade: A)Has to be done on a barter system B)Often requires the exchange of currencies C)Does not illustrate the division of labor D)Requires active government regulation

"Creative destruction" in a market system is brought about by: a-Entrepreneurship b-Striking workers c-Regulation by the government d-Money-based trade

If a nation restricts trade with other nations, then the most likely effect is: A)Lower prices of goods and services in the nation B)Increased specialization of production C)Expanded economic wealth of the nation D)Make consumers in the nation worse off

In a command economy like the old Soviet Union, one is able to improve one's lot and get ahead in society largely through: A)Entrepreneurship and risk-taking B)Innovation and profits C)Participating in the political hierarchy D)Getting high prices for one's products and resources

With specialization in a market economy, individual: A)Firms produce a wide range of products B)Producers consume little or none of the products they produce C)Producers consume most of the output that they produce D)Consumers have to produce most of what they consume

In a market system, a firm's employees are typically shielded from business risk by: a-Profit-sharing agreements b-Wage contracts c-The Social Security program Paid vacation leaves

A-A decrease in the price of digital cameras would lead to a(n): incorrect? Increase in the price and quantity sold of memory cards B-Decrease in the price and quantity sold of memory cards C-Increase in the price and a decrease in quantity sold of memory cards D-Decrease in the price and an increase in quantity sold of memory cards

Last year the price of corn was $3 a bushel and the quantity of corn demanded was 10 million bushels. This year the price of corn was $4.00 a bushel and the quantity demanded was 9 million bushels. Is this evidence that law of demand does not apply to corn? a)Yes, because there is a direct relationship between the price of corn and the quantity supplied b)Yes, because there is an inverse relationship between the price of corn and the quantity demanded c)No, because the other-things-equal assumption was violated over the two year period d)No, because the evidence indicates that there is a shortage of corn

An increase in the quantity of hybrid cars supplied would be caused by which of the following? A)An increase in the demand for hybrid cars B)A decrease in the demand for hybrid cars C)Higher prices of car batteries D)Lower prices for gasoline

One objection to a competitive and legal market for human organs for transplant is that it would: A)Decrease the cost of organs for transplant B)Increase the cost of organs for transplant C)Decrease the supply of organs for transplant D)Increase the demand for organs for transplant

A news story states that "DVDs lose their appeal as consumers switch to online streaming for movies." In a competitive market for DVDs, this situation would lead to a(n): A)Increase in the price and the quantity sold of DVDs B)Decrease in the price and the quantity sold of DVDs C)Increase in the price and a decrease in the quantity sold of DVDs D)Decrease in the price and an increase in the quantity sold of DVDs

Which of the following would best be classified as a complement for new houses/homes? A)Lumber or steel B)Construction equipment c)Mortgage loans D)Rental apartments

An increase in the quantity of hybrid cars supplied would be caused by which of the following? a)An increase in the demand for hybrid cars b)A decrease in the demand for hybrid cars C)Higher prices of car batteries D)Lower prices for gasoline

Which of the following factors is a "demand shifter" for new houses? A)The price of lumber B)Wages for construction workers C)The price of new houses D)The interest rates on mortgage loans

Which is most likely to be observed in a community where legal ceilings are imposed on residential rents? A)Poor people will be able to find adequate housing incorrect B)Homeowners will reduce their own use of housing space, making more available to others C)Those whose needs for housing are most urgent will be able to obtain the space they want D)People moving into the community will have difficulty locating residential space to rent

According to the Coase Theorem, externality problems: incorrect A)Do not exist in reality, because all costs and benefits are internal to firms B)Can be solved through private negotiations without the need for government intervention C)Must only be resolved by government action, through either taxes or subsidies D)Can never be resolved adequately because one party always gains while the other loses

Deadweight losses occur when the quantity of an output produced is: A)less than, but not when it is greater than, the competitive equilibrium quantity B)greater than, but not when it is less than, the competitive equilibrium quantity C)less than or greater than the competitive equilibrium quantity D)such that the marginal benefit of the output is just equal to the marginal cost

It is the custom for paper mills located alongside the Layzee River to discharge waste products into the river. As a result, operators of hydroelectric power-generating plants downstream along the river find that they must clean up the river's water before it flows through their equipment. Refer to the above information. Which of the following policies would be most appropriate for dealing with this problem? A)Levy a tax on the consumers of paper products and use the tax revenues to conduct research on new energy sources incorrect B)Levy a tax on the consumers of electricity and use the tax revenues to subsidize the consumers of paper products C)Levy a tax on the producers of electricity and use the tax revenues to clean up the river D)Levy a tax on the producers of paper products and use the tax revenues to clean up the river

It is the custom for paper mills located alongside the Layzee River to discharge waste products into the river. As a result, operators of hydroelectric power-generating plants downstream along the river find that they must clean up the river's water before it flows through their equipment. If the government intervenes and corrects the externality in the situation described above, we would expect: A)The output of the paper mills to increase B)The price of paper from the mills to decrease C)Production of the hydroelectric power plants to decrease D)Production in the paper mills to decrease