question

Which is considered a factor of production?

answer

an auto plant

question

A nation can increase its production possibilities by:

answer

Improving labor productivity

question

A point on the frontier of the production possibilities curve is:

answer

Attainable and resources are fully employed

question

Which of the following would be a positive economic statement?

answer

Bankers are now charging higher interest rates on credit cards to cover the increased cost of loaning funds to consumers

question

Economic growth may be represented by a:

answer

Rightward shift of the production possibilities curve

question

Which expression is another way of saying "marginal cost"?

answer

Additional Cost

question

Rational behavior implies that people will make different choices because their circumstances and available information differ

answer

True

question

When an economist says that there is "too much of a good thing," the economist is suggesting that:

answer

The marginal benefit of the thing is less than the marginal cost

question

Microeconomics is the study of economics from the standpoint of:

answer

Specific economic units which make up our economic system

question

From an economic perspective, when consumers leave a fast-food restaurant because the lines to be served are too long, they have concluded that the:

answer

Marginal cost of waiting is greater than the marginal benefit of being served

question

Which is an illustration of a microeconomic question?

answer

Will a new type of television set increase the number of buyers?

question

What is a major opportunity cost of going to college on a full-time basis?

answer

The foregone income that could be earned working full-time job

question

Microeconomics focuses on:

answer

The individual units that make up the whole of the economy

question

Refer to the above graph. The total opportunity cost of nine drill presses is

answer

3 Units of bread

question

Economists would classify all of the following as land except:

answer

A hydroelectric dam

question

You should decide to go to a movie:

answer

if the marginal benefit of the movie exceeds its marginal cost

question

Refer to the above production possibilities curves. Curve (a) is the current curve for the economy. The movement from curve (a) to curve (b) suggests:

answer

An improvement in capital goods technology but not in consumer goods technology

question

Refer to the above graph. The marginal opportunity cost of the fourth unit of bread is

answer

4 units of drill presses

question

The term scarcity in economics refers to the fact that:

answer

No country can produce enough products to satisfy everybody's economic wants

question

Which one of the following would be a normative economic statement?

answer

The worsening balance of trade must be corrected if this nation is to remain competitive in the world economy

question

Economic theory involves the logical development of hypotheses which are then tested against actual outcomes

answer

True

question

Which situation would most likely cause a nation's production possibilities curve to shift inward?

answer

The destruction from bombing and warfare in a losing military conflict

question

Which of the following would be a normative economic statement?

answer

The government should raise taxes to bring in $10 billion more in revenue next year

question

The general concern of economics is with the study of the:

answer

Optimal use of limited productive resources to satisfy economic wants

question

Which is not a factor of production?

answer

Money

question

A schedule or curve that shows the various combinations of two products a consumer can purchase with a specific amount of money income is:

answer

A budget line

question

Which would be considered a macroeconomic study? A study of the effect of:

answer

Government spending to increase employment

question

Points C, D, E, and H on the above graph show:

answer

Possible combinations of food and clothing

question

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

answer

If the expected future benefits from starting a business are greater than the costs

question

Economics is a social science concerned with:

answer

The best use of scarce resources to achieve the maximum satisfaction of economic wants

question

As a student of economics, when you speak of scarcity, you are referring to the ability of society to:

answer

Satisfy economic wants given limited resources

question

An economic model is:

answer

built using theory

question

The production possibilities curve represents:

answer

Maximum combinations of products available with fixed resources and technology

question

After graduating from high school, Ron Willis plans to go to college. The college tuition is $15,000 a year. But, instead of going to college, Ron could take a full-time job paying $20,000. If Ron decides to go to college, what is his opportunity cost for attending for one year?

answer

35000

question

A reduction in the level of unemployment would have which effect with respect to the nation's production possibilities curve?

answer

It would not shift the curve; it would be represented by moving from a point inside the curve toward the curve

question

Which question is an illustration of a macroeconomic question?

answer

How does a cut in the business tax rate increase business investment in the economy?

question

A point inside the production possibilities curve is

answer

Attainable, but the economy is inefficient

question

Which is not considered to be an economic resource?

answer

money

question

The law of increasing opportunity costs says that:

answer

Along a production possibilities curve, increases in the production of one type of good require larger and larger sacrifices of the other type of good

question

The combination of food and clothing shown by point F on the above graph:

answer

Is attainable but involves the unemployment and inefficient use of some of society's resources

question

The effect of specialization and international trade will:

answer

Cause a rightward shift in a nation's production possibilities curve

question

Clara states that "there is a high correlation between the level of people's education and the level of their income." Ellie replies that the correlation occurs because "more education is the best way to earn more income in this country."

answer

Clara's statement is positive and Ellie's statement is normative

question

Which expression is another way of saying "marginal benefit"?

answer

Extra Benefit

question

The statement that "the unemployment rate will increase as the economy moves into a recession" is an example of:

answer

A generalization

question

The role of the entrepreneur in society is to:

answer

Bring the factors of production together and take the risks of producing

question

Assume that a consumer has $12 in income and 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. If the consumer spent all of her money on either apples or bananas, how many apples or how many bananas would she be able to buy?

answer

8 apples and 16 bananas

question

The production possibilities curve for two products is concave because:

answer

As the production of a good increases, there is an increase in opportunity cost

question

A point outside the production possibilities curve is:

answer

Unattainable because of limited resources

question

Refer to the above production possibilities curves. Curve (a) is the current curve for the economy. Given production possibilities curve (a), point N suggests that the economy is

answer

Attaining both full employment and full production

question

If opportunity costs were constant, then the production possibilities curve would be:

answer

A straight line

question

Refer to the above graph. Which point on the production possibilities curve would indicate that there is unemployment in this economy?

answer

D

question

The economizing problem for individuals is that:

answer

Economic wants are greater than economic means

question

Macroeconomics focuses on:

answer

Total output and the general level of prices in the economy

question

The concept of "rational behavior" suggests that:

answer

People make different choices because their circumstances and information differ

question

Tammie makes $150 a day as a bank clerk. She takes off two days of work without pay to fly to another city to attend the concert of her favorite music group. The cost of transportation for the trip is $250. The cost of the concert ticket is $50. The opportunity cost of Tammie's trip to the concert is:

answer

600

question

Henry wants to buy a book. The economic perspective suggests that Henry will buy the book if:

answer

The marginal benefit of the book is greater than its marginal cost

question

The combination of food and clothing shown by point G on the above graph:

answer

Is not attainable, given society's available resources and technology

question

The comment that "social security taxes must be reduced if there are to be adequate incentives to work" is an example of a normative economic statement.

answer

true

question

Opportunity cost is best defined as:

answer

The value of the best foregone alternative

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