Microeconomics Exam 1 Test Questions Answers – Flashcards
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Unlimited wants exceed limited resources
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Scarcity is BEST defined when
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Incentives
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Economists understand that people respond to:
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The price of an iPad sold by Apple
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Which of the following is a microeconomic topic:
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A study of the business cycle
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Which of the following is a Macroeconomic topic:
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Production efficiency; Allocation efficiency
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________________ occur(s) when goods are produced at the lowest possible cost, and _________________ occur(s) when individuals who desire a product the most receive those goods and services.
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Macroeconomics
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The field of economics that is concerned about the broader issues in the economy such as inflation, unemployment, and national output of goods and services is called:
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How well resources are used and allocated
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Efficiency within economics focuses on:
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Only production efficiency is achieved
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If society produces a pie at the lowest possible cost and then distributes the pie evenly among its population, then:
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They try to boil down an economic situation to its most basic elements
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Which is a characteristic of economic models?
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Choose among alternatives to satisfy their unlimited wants
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Economics is a social science that involves the study of how individuals, firms, and societies:
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Equity
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___________ is the fairness of various issues and policies.
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Efficiency
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_____________is how well resources are used and allocated.
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$10
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If you were not studying economics, you could be doing one of the following: sleeping in (which you value at $5), playing cards with your friends (which you value at $10), or working (you would have earned an extra $8). The opportunity cost of studying economics is therefore:
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$0.61
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Suppose that a store sells candy bars for $0.89 for one, and $1.50 for two. The marginal cost of the second candy bar is:
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business firms engage in production activities that pollute the air and water.
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Government intervention in the market is helpful when:
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Government that controls resource allocation
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Economist generally define institutions as all of these, EXCEPT as a:
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Influence all economic decisions
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Opportunity costs:
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All of these are incentives
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Which of the following represents incentives for decisions?
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Additional costs and benefits
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Marginal analysis would put an emphasis on:
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Cost of the additional food
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If a restaurant that traditionally has served only lunch and dinner wants to open for breakfast, which of the following factors should be considered?
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Prices and profits
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What drives and disciplines markets?
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making information available to market participants improves the functioning of the market.
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Economists believe that:
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people make rational decisions.
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Economics is BEST defined as the study of how:
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we face tradeoffs in nearly every choice we make.
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Because of scarcity:
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an incentive.
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Paying a salesperson more for increased sales is an example of:
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unemployment
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Macroeconomics is concerned with issues such as:
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in both microeconomics and macroeconomics
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Supply and demand analysis is used:
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Microeconomics
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The economics of uranium mining would be studied in:
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Model
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A theory composed of a number of assumptions and facts boiled down to their basic relevant elements is called a:
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Production efficiency
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When goods are produced at the lowest possible cost, an economy is said to have achieved:
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Conflicting with one another
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In the study of economics, the goals of efficiency and equity are often:
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is faced by all individuals and societies.
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Scarcity:
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The expenditures for food
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The opportunity costs of attending college do NOT include:
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opportunity cost
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When the government chooses to use resources to build tourist centers, the chosen resources are no longer available to build highways. This BEST illustrates the concept of:
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They generally benefit the poorer individual as well as the richer individual.
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Which is TRUE about specialization and exchange between two individuals?
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Incentives matter
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Which of the following is a key idea in economic thinking?
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deciding whether a second burger is worth the extra $2; deciding whether your overtime pay is worth working on Saturday (your day off); deciding whether to pay a fine for polluting the local harbor or installing antipollution machinery. All of these
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Rational behavior requires "thinking at the margin." Which of the following is an example of this type of thinking?
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marginal analysis; marginal analysis
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People use _____ to determine how many hours to work, and businesses use _____ to determine how much of their product they are willing to supply to the market.
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when the market fails to provide goods efficiently
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Which of the following is a case when the government should intervene in the economy?
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Competition leads firms to provide products at the lowest possible price.
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Which of the following is NOT an example of market failure?
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For Part 1, plot each coordinate pair at the specified points. Make sure that you go in order and do not skip a pair as it will be marked incorrect. You can start with (10,10) or (40, 40). For Part 2, click the vertical drop line tool and then click the point at (30,30). For Part 3, click the triangle tool and plot the pairs. Unlike the multi-point line tool, you do not need to go in a particular order. Review Chapter 1; Appendix: Working with Graphs and Formulas.
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The Multi-point Line Tool
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A horizontal line has a slope of zero. You should therefore draw a horizontal line at the height of 5 on the vertical axis. Note that in the graph the value of y is plotted on the vertical axis and the value of x is plotted on the horizontal axis. Review Chapter 1; Appendix: Working with Graphs and Formulas.
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Use the infinite line tool to draw a curve that illustrates a linear relationship between x and y such that the slope is zero and y always equals 5. Label the curve "Linear curve."
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A driver of economic growth
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Trade is:
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Most economic decisions are made by central governments
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Which of the following is NOT part of a market economy?
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all natural resources
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In economics, the term "land" includes:
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land
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Economists refer to "rent" as a payment to:
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Physical and mental skills and talents
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The resource known as "labor" includes:
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Capital
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If a pizza parlor uses an oven in its production process, the oven is an example of which factor of production?
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Land; Rent.
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Natural resources in the production process are called ______, and their payment is called ______.
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Working in a factory
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All of the following are considered human capital, EXCEPT:
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Production efficiency; Allocation efficiency
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____________ occurs when goods and services are produced at their lowest resource cost, while ___________ occurs when the mix of goods and services produced is the most desired by society.
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Allocation inefficiency
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The production of too many Matchbox cars and not enough Barbie Dolls is an example of:
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Who decides what goods and services are in demand?
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Which of the following is NOT one of the three basic economic questions that each society must answer?
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Market Economy
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A laissez-faire approach to the question of "how to produce" would be found in a:
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Money
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Which of the following is NOT an economic factor of production?
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Some resources are not being used.
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Zetaland produces widgets and gadgets. At current levels of output, it can produce more of both. We can conclude that:
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Capital and labor
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Which are the principal resources that can be changed through government action?
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Capital goods
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Suppose that the government could stimulate spending in one of the following expenditure categories. In which of these categories would the spending increase contribute most to an expansion of production possibilities?
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Shift outward of the PPF
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Increased illegal immigration into the United States would best be represented with a production possibilities frontier (PPF) as a:
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rational, if Abdul values sleep more highly than the benefit he would expect to receive from attending the class.
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Abdul decided to sleep in rather than attend his 8:30 A.M. economics class. Economists would find this choice:
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movement from inside the PPF onto the PPF
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A change from an inefficient mix to an efficient mix of output would BEST be represented with a production possibilities frontier (PPF) as a:
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shift outward of the PPF.
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The introduction of the tablet computer to the U.S. economy would BEST be represented with a production possibilities frontier (PPF) as a:
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one country can produce more of a good than another country.
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Absolute advantage is defined as:
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Jasmine has a lower opportunity cost of producing the jean than Jason.
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Jason produces more jeans than Jasmine. Why would Jason and Jasmine want Jasmine to produce the jeans although they both know that he can produce more than she can at a faster rate?
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Ashanti has absolute advantage in dog-walking, and Paolo has comparative advantage in lawn-mowing.
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Paolo can walk three dogs or mow two lawns in two hours. Ashanti can walk six dogs or mow three lawns in two hours. One can conclude that:
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The United States has an absolute advantage over Mexico in producing both goods.
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Suppose that if the United States produced only oil, it could produce 25 million barrels, and if it produced only microchips it could produce 20 million chips. Suppose that if Mexico produced only oil, it could produce 16 million barrels, and if it produced only microchips, it could produce 8 million chips. Which of the following statements is then correct?
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a comparative advantage in the production of copper by other nations
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Which of the following situations would MOST likely lead to an import of copper?
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they are both consuming outside their production possibilities frontier
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Greg and Melissa face the production possibilities frontiers shown for biscuits and cookies. Assume that Greg and Melissa trade 60 biscuits for 60 cookies after they have completely specialized in producing the good in which they have a comparative advantage. We know that Greg and Melissa are each made better off with specialization and trade than acting alone because:
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Comparative Advantage
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The theory which suggested that countries would mutually benefit from trade by specializing in export goods they could produce at a lower opportunity cost than another country is called:
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specialize in the commodity in which it has a comparative advantage
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To gain from trade, a country should:
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Mexico should specialize in producing paint, the United States in producing shoes.
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Suppose the United States must give up the production of one gallon of paint to produce 1 pair of shoes. Mexico must give up 2 gallons of paint to produce one pair of shoes. According to the principle of comparative advantage:
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both countries can move beyond their domestic production possibilities
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When two countries gain from trade:
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production possibilities frontiers for nations are linear
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The practical constraints on trade include all of the following, EXCEPT:
