Econ 101 Exam #1 Practice Quizzes – Flashcards
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a) how consumers respond to change in gasoline prices
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A microeconomist would most likely study: a) how consumers respond to a change in gasoline prices. b) the effects of an income tax reduction on the size of the national budget deficit. c) the effects of aggregate consumer debt on overall consumption spending. d) the relationship between the size of the money supply and the rate of inflation.
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opportunity cost
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Margaret decides to stay home and study for her exam rather than going out to a movie with her friends. Her dilemma is an example of:
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if the marginal benefit of studying an extra hour exceeds its marginal cost.
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You should decide to study an extra hour tonight:
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the problem of scarce resources relative to human wants
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Economics is primarily the study of:
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is constant and equal to 2 songs.
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Suppose you have a $20 iTunes gift card with which you can buy (download) songs or videos. Songs cost $1.00 each and videos cost $2.00 each. The opportunity cost of one video:
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shift her budget line to the right.
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Consider the problem Marsha faces of how to allocate her weekly allowance between books and videos. An increase in Marsha's allowance will:
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individuals and communities must make choices among competing alternatives.
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The fundamental problem of economics implies that:
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when resources are fully employed, an economy can produce more of one thing only by producing less of something else.
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The negative slope of the production possibilities curve illustrates that:
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central planners found it increasingly difficult to coordinate the economic decisions of consumers, resource suppliers, and businesses.
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The command systems of the Soviet Union and eastern Europe failed in part because:
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profitable returns to innovative firms.
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The competitive market system encourages innovation and technological advance, primarily through:
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increases output by enabling workers to take advantage of differences in their skills.
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Human specialization, or the division of labor:
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private property rights.
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The market system is characterized by:
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a) Profits of peach growers will rise and peach production will rise
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If a change in consumer preferences results in many more consumers registering their "dollar votes" in favor of peaches, which of the following will most likely follow? a) Profits of peach growers will rise and peach production will rise b) Profits of peach growers will rise and peach production will fall c) Profits of peach growers will fall and peach production will rise d) Profits of peach growers will fall and peach production will fall
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Businesses
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Consumer expenditures are represented by:
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d) Any good that returns its producers sufficient revenue to cover its total costs
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For a market system, which of the following best answers the question, "What goods and services will be produced?" a) Only those goods whose long-term profits are greater than average b) Any good for which consumers are willing to pay a positive price c) Any good whose production is characterized by the least-cost technology d) Any good that returns its producers sufficient revenue to cover its total costs
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its total sales revenue exceeds the sum of all its costs.
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A firm will earn a positive economic profit if:
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help determine which industries survive or fail.
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Economic profits and losses: a) answer the question "Who will get the output?" b) answer the question "How will the goods and services be produced?" c) help determine which industries survive or fail. d) are the expected outcomes of a decrease in dollar votes and an increase in dollar votes, respectively.
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what must be sacrificed in using a resource for its next best use.
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In a market system scarce goods are allocated through the operation of:
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natural, human, and manufactured inputs used to produce goods and services.
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Economic resources are the
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labor, land, real capital, and entrepreneurs.
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Economists classify resources as
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factors of production or inputs
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Because economic resources are used to produce goods and services, they are called
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Money is not considered a capital resource because money is not productive
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Why is money not considered to be a capital resource in economics?
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Because entreprenuerial ability is not directly engaged in production.
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Why is entrepreneurial ability distinct from labor even though both are considered as a category of economic resource?
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- Innovate - Take risks - Make decisions
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What are the major functions of the entrepreneur?
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downward sloping
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The marginal benefit curve is
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upward sloping
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The marginal cost curve is
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MB=MC
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The optimal allocation of resources to a particular product will occur when
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fewer
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If current output is such that marginal cost exceeds marginal benefit, should more or fewer resources be allocated to this product?
