QUIZ 1-2

1.
Economics is primarily the study of: Student Value Response A. how scarcity can be eliminated B. how firms manipulate prices C. how government influences resource allocation decisions D. the problem 100% of scarce resources relative to human wants Score: 1/1 Correct Answer Feedback

The fundamental economic problem is one of scarce resources relative to human wants. Such scarcity can never be eliminated; it implies we must make choices.

2.
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: Student Response A. increases as more videos are purchased B. is \$1.00 C. is constant and equal Value Correct Answer Feedback

to ½ song D. is constant 100% and equal to 2 songs Score: 1/1

The purchase of an additional video requires \$2.00. At a price of \$1.00 each, two songs would have to be given up to obtain the required amount for one video.

3.
You should decide to study an extra hour tonight Student Value Response A. if the marginal cost of studying an extra hour exceeds its marginal benefit 100% B. if the marginal benefit of studying an extra hour exceeds its marginal cost C. if you got a lower than expected grade on your last exam D. because studying harder will improve your test scores Score: Correct Answer Feedback

Purposeful behavior in the face of scarcity entails comparing marginal benefit to marginal cost. Any activity whose marginal benefit exceeds its marginal cost should be expanded.

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4.

Consider the problem Marsha faces of how to allocate her weekly allowance between books and CDs. An increase in Marsha's income will: Student Value Response 100% A. shift her budget line to the right B. shift her budget line to the left C. rotate her budget line, allowing her to buy more books but not more CDs D. rotate her budget line, allowing her to buy more CDs but not more books Score: 1/1 Correct Answer Feedback Increased income allows Marsha to purchase additional books, additional CDs, or both but does not change the opportunity cost of one in terms of the other. Her budget line shifts out parallel to itself.

5.
The negative slope of the production possibilities curve illustrates that: Student Value Response A. some resources are always unemployed 100% B. when resources are fully employed, an economy can produce more of one thing only Correct Answer Feedback

Each point on the production possibilities curve represents some maximum output of the two goods???the economy has achieved maximum production of one good for a given amount of the other. Increased production of any good requires sacrificing some of the other; the production possibilities curve will exhibit an inverse relationship between the two goods.

is concerned with the economy as a whole or with basic aggregates such as the money supply or consumer spending. opportunity costs are constant D. the effects of an income tax reduction on the size of the national budget deficit C. on the other hand.by producing less of something else C. Macroeconomics. the relationship between the size of the Correct Answer Feedback Microeconomics is concerned with specific economic units and the operation of individual markets. business can sell more when prices are low Score: 1/1 6. the effects of aggregate consumer debt on overall consumption spending D. A microeconomist would most likely study: Student Value Response 100% A. . how consumers respond to a change in gasoline prices B.

growing populations will deplete natural resources 100% D. The fundamental problem of economics implies that: Student Value Response A. a decrease in aggregate demand will: Student Response Value Correct Answer Feedback . it implies we must make choices. 8. inflation and unemployment are unavoidable C. governments must be relied upon to supply essential goods and services B. Such scarcity can never be eliminated. individuals and communities must make choices among competing alternatives Score: 1/1 Correct Answer Feedback The fundamental economic problem is one of scarce resources relative to human wants.money supply and the rate of inflation Score: 1/1 7. If the economy is initially at a point on its long-run aggregate supply curve.

9.A. market systems and command systems. permanently increase inflation D. The two general types of economic systems that exist today are: Student Value Response A. 10. temporarily increase unemployment C. firms respond by increasing output in the short run. temporarily increase inflation Score: 1/1 A fall in aggregate demand will temporarily reduce the rate of inflation and increase unemployment. B. Score: 1/1 Correct Answer Feedback A higher price level will increase firms' profits. market systems and capitalism. socialism and central planning. permanently increase unemployment 100% B. Examples of command Economies are: Student Response Value Correct Answer Feedback . 100% C. D. laissez faire systems and pure command systems.

disinflation is a slowdown in the rate of inflation. such as that caused by higher oil prices or a decline in productivity.A. 12. worsening unemployment and the inflation rate. A firm can produce a single unit of output by combining labor and capital in any of the combinations shown in the following table. Mexico and Brazil Score: 1/1 Deflation is an actual drop in the price level. Cuba and 100% North Korea C. is peculiar to command systems. Labor costs \$2 per unit and capital costs \$4 per unit. Economic Scarcity Student Value Response A. will reduce GDP and raise the price level. Sweden and Norway D. B. is peculiar to market systems. is peculiar to the United States economy. Score: 1/1 Correct Answer Feedback A leftward shift of aggregate supply. 11. C. Technique A B C D . applies to 100% all economies. D. The United States and Japan B.

Which is the most efficient technique for producing the output? Student Value Response 100% A. A share of Microsoft stock D. the costs of techniques B. and D are found to be \$48. A Correct Answer Feedback The cost of technique A is \$44: 10 workers at \$2 each plus 6 machines at \$4 each. B C. A gallon of milk Score: 1/1 Correct Answer Feedback "Capital goods" includes tools. Purely financial instruments such as stocks and bonds are not capital goods. and buildings. C D. Which of the following is a capital good? Student Value Response 100% A. D Score: 1/1 13. A state highway construction bond C. machinery. B. 14. A steel fabrication facility B. Similarly. The command systems of the Soviet Union and eastern Europe failed in part because: Student Response A. productive equipment. \$52. C. previously Value Correct Answer Feedback . respectively.Labor 10 8 6 9 Capital 6 8 10 7 Refer to the table. and \$46.

resulting in a general glut D. resource suppliers. central planners found it increasingly difficult to coordinate the economic decisions of consumers. The competitive market system encourages innovation and technological advance. the guiding function of Correct Answer Feedback . primarily through: Student Value Response A. the process of "dollar voting" C. 15. firms manufactured more output than consumers could afford to buy. and businesses???so that production does not entail too much of one item but too little of another.abundant economic resources became scarce 100% B. prices were set too low in all markets Score: 1/1 Centrally planned economies face a coordination problem???aligning all the millions of individual decisions by consumers. and businesses C. the government's tax code B. resource suppliers.

reduces output by dehumanizing workers B. 16. increases output by allowing workers to each perform a wide variety of tasks Score: 1/1 Correct Answer Feedback Specialization can increase output by allowing workers to learn specific tasks very well (learning by doing).consumer needs and preferences 100% D. Self-interest and pursuit of profits assures that rival firms will spread any new technology. . profitable returns to innovative firms Score: 1/1 Firms that successfully innovate will be rewarded with higher profits in a market system. reduces output by discouraging workers from learning a wide variety of tasks 100% C. or the division of labor: Student Value Response A. increases output by enabling workers to take advantage of differences in their skills D. and by avoiding the time cost of switching jobs. Human specialization. by enabling individuals to best utilize their own individual skills and abilities. 17.

18. answer the question "Who will get the output?" B. Market economies use capital goods because they improve productive efficiency. answer the question "How will the goods and services be produced?" 100% C. are the expected outcomes of a decrease in dollar votes and an increase in dollar votes. Student Response Value True 100% True Score: 1/1 Correct Answer 19. respectively Score: 1/1 Correct Answer Feedback Economic profits and losses provide the signal to firms either to enter or leave an industry.Economic profits and losses: Student Value Response A. Industries that sustain losses will tend to decline while profitable ones will expand. help determine which industries survive or fail D. .

. The production possibilities curve is basically a straight line showing price and production Student Response Value False 100% False Score: 1/1 Correct Answer QUIZ 3 1. When an economist says that the demand for a product has increased. consumers respond to a lower price by buying more D. the demand Correct Answer Feedback Demand is defined as the relationship between price and quantity demanded. firms make less of the product available for sale C. Student Response Value True 100% True Score: 1/1 Correct Answer 20. An "increase in demand" occurs if this relationship exhibits greater quantity demanded at each possible price. quantity demanded is greater at each possible price B.Money functions as a medium of exchange by eliminating the need for a coincidence of wants. all else equal. this means that: Student Value Response 100% A.

will shift to the 100% right if Y is a Correct Answer Feedback The definition of a normal good is one for which demand increases (shifts to the right) when income . purchasing other alternatives instead. When movie ticket prices increase. the substitution effect Score: 1/1 Correct Answer Feedback The substitution effect is reflected in consumer responses to higher prices as they shift purchases away from the good or service whose price has risen. the rationing function of markets 100% D. the demand for product Y: Student Value Response A. diminishing marginal utility B. will necessarily remain unchanged B. the income effect C. If consumer incomes increase. 3. families tend to spend less time watching movies and more time at home watching videos instead. This best reflects: Student Value Response A. will shift to the right if Y is a complementary good C.curve becomes steeper Score: 1/1 2.

the demand and supply curves show the relationship between price and quantity. The primary factor is assumed to be the price. price Correct Answer Feedback Although there are many determinants of quantity demanded and quantity supplied. all other factors held constant. B. the overall state of the economy D. A decrease in the price of a product will increase the amount of it demanded because: Student Value Response A. will shift to the right if Y is an inferior good Score: 1/1 increases. When drawing demand and supply curves. the lower price will decrease real incomes C.normal good D. economists are assuming that the primary influence on production and purchasing decisions is: Student Value Response 100% A. 4. supply curves are upsloping B. the lower 100% Correct Answer Feedback A lower price makes this product a more desirable . the cost of production C. consumer incomes Score: 1/1 5.

the supply of strawberries has substantially increased." 6. All else equal. the demand for strawberries will necessarily rise B. the equilibrium quantity of strawberries will fall C. "Because of unusually good growing conditions. ." This statement indicates that: Student Value Response A.price induces consumers to use this product instead of similar products D. the price of strawberries will rise Score: 1/1 Correct Answer Feedback An increase in supply occurs when more is made available at each price. the price of strawberries will fall. the amount 100% of strawberries that will be available at various prices has increased D. This is the "substitution effect. firms produce more at lower prices Score: 1/1 alternative relative to other similar products whose prices have not changed.

the demand for Y will decrease while the demand for Z will increase D. Goods X and Y are complements while goods X and Z are substitutes. increase in demand and a drop in price 100% C. the demand for both Y and Z will decrease Score: 1/1 Correct Answer Feedback The increased supply of X will decrease its price. the demand for both Y and Z will increase B. drop in Correct Answer Feedback The improved technology will increase the supply of the . increasing the demand for complementary good Y and decreasing the demand for substitute good Z. An improvement in production technology for a specific good will cause a(n): Student Value Response A. the demand 100% for Y will increase while the demand for Z will decrease C. increase in demand and an increase in price B. 8. If the supply of good X increases: Student Value Response A.7.

\$4. thereby lowering the price and increasing the quantity demanded. 9. Score: 1/1 Correct Answer Feedback 10. Equilibrium price will be: Student Value Response A. \$1. \$2. . Answer the next question(s) on the basis of the given supply and demand data for wheat: Refer to the above data. B. 100% C. D.price and increase in quantity demanded D. increase in supply and an increase in price Score: 1/1 product. \$3.

60 and 290.50 and 130. Score: 1/1 Correct Answer Feedback QUIZ 4-5 1. D.Refer to the above diagram. C. \$. Chapter 04 #001 The personal distribution of income refers to the: Student Response A.60 and 130. The equilibrium price and quantity in this market will be: Student Value Response A. division of income between personal taxes. \$1. \$1. B. consumption Value Correct Answer Feedback . \$1.00 and 100% 200.

B. interest. C. and mining. Chapter 04 #002 The functional distribution of income refers to the: Student Response A. transportation. division of income between personal taxes. agriculture. B. way income is 100% distributed among specific households or spending units. for example. and saving. distribution of income to basic resource classes. that is.expenditures. division of income on the basis of Value Correct Answer Feedback . and profits. Score: 1/1 2. rents. consumption expenditures. D. and saving. division of income on the basis of industry sources. wages.

that is. way income is distributed among specific households or spending units. distribution of 100% income to basic resource classes. transportation. rents. Score: 1/1 3. wages. agriculture. personal distribution of income. C. for example. Chapter 04 #007 In the above diagrams for a hypothetical economy. mining. and profits. D. interest.industry sources. Value Correct Answer Feedback . Figure 1 shows the: Student Response A. etc.

partnerships. and partnerships. C. C. D. and sole proprietorships. corporations. Score: 1/1 4. corporations. sole proprietorships. B. and sole proprietorships. Chapter 04 #045 . partnerships. partnerships. microeconomic distribution of income. functional distribution of income. the business population is comprised of: Student Value Response 100% A. international distribution of income. sole proprietorships. D. and corporations. Chapter 04 #038 Listed in descending order of total numbers.100% B. Score: 1/1 Correct Answer Feedback 5. corporations.

D. all corporations. sole proprietorships. partnerships. 100% C. corporations. partnerships. Chapter 04 #058 The economic policies and programs of government affect all of the following except: Student Response A. cooperatives. D. B. B.Limited liability applies to: Student Value Response A. the distribution Value Correct Answer Feedback . financial corporations but not to manufacturing corporations. Chapter 04 #054 Most output in the United States is produced by: Student Value Response A. proprietorships. Score: 1/1 Correct Answer Feedback 6. C. 100% Score: 1/1 Correct Answer Feedback 7.

100% D. and firms. competitive market forces produce incomes Correct Answer Feedback . the composition of output. Chapter 04 #092 Market failure occurs when: Student Value Response A. C. B. workers. the competitive market system produces too much or too little of a good. the underlying motives of consumers. C.of income. not every consumer can buy as much of a good as they want at the price they want it. Score: 1/1 8. 100% B. the allocation of resources.

that are unequal. D. Score: 1/1 9. private goods are being produced at the expense of fewer public goods. public goods are being produced at the expense of fewer Correct Answer Feedback . 100% B. government interferes with competitive market forces. Chapter 04 #121 Refer to the above diagram. The movement from point b to point c suggests that more: Student Value Response A.

public goods are being produced by employing currently idle resources. increasing 100% taxes and Correct Answer Feedback . Chapter 04 #123 Refer to the above diagram. The movement from point b to point c can be achieved by: Student Value Response A.private goods. D. Score: 1/1 10. private goods are being produced by employing currently idle resources. C.

output matches 100% production capacity. D. Chapter 04 #133 Macroeconomic stability is said to exist in an economy whenever: Student Value Response A. there is no inflation. decreasing taxes and increasing government spending. C. decreasing taxes and decreasing government spending. B. labor is fully employed. D. C. total spending exceeds production capacity. unemployment. increasing taxes and decreasing government spending. and inflation are all zero. the rates of output growth.increasing government spending. Correct Answer Feedback . B. Score: 1/1 11. and inflation is low and stable.

taxable income is: Student Value Response 100% A. Score: 1/1 Correct Answer Feedback 13. exports and 100% Correct Answer Feedback . wage and salary income only. B. movement of resources between nations. C. Chapter 04 #159 In determining one's personal income tax. earned income less property income. total income less deductions and exemptions.Score: 1/1 12. Chapter 05 #008 Trade flows measure the: Student Value Response A. D. B. all income other than wages and salaries.

the United 100% States. D. a good should be produced in that nation where: Student Response A. the world's leading trading nation is: Student Value Response A. Score: 1/1 14. South Korea. France. D. Chapter 05 #039 According to the concept of comparative advantage. transfer of information from one nation to another. Value Correct Answer Feedback . Chapter 05 #013 In terms of absolute volume of imports and exports. Score: 1/1 Correct Answer Feedback 15. C. transfer of money between nations. its domestic opportunity cost is greatest. B. C. Japan.imports of goods and services.

C.B. C. its domestic 100% opportunity cost is least. B. The domestic opportunity cost of one unit of X in Alpha is: Student Value Response A. D. 3 units of Y. D. 1 unit of Y. 4 units of 100% Y. 2 units of Y. Score: 1/1 16. . the terms of trade are maximized. Chapter 05 #048 Answer the next question(s) on the basis of the following production possibilities tables for countries Alpha and Beta: Refer to the above tables. money is used as a medium of exchange. Score: 1/1 Correct Answer Feedback 17.

100% D.Chapter 05 #053 Refer to the above domestic production possibilities curve for Karalex. B. C. C to D. B to E. Score: 1/1 Correct Answer Feedback 18. Chapter 05 #074 . A to B. The gain to Karalex from specialization and international trade is represented by a move from: Student Value Response A. C to A.

the supply of euros to decrease.Refer to the above diagram. D. we would expect: Student Value Response A. the demand 100% for euros to increase. B. the supply of euros to increase.S. and the euro to appreciate. the demand for euros to increase. and the euro to depreciate. consumers increase their travel to Euro Zone nations. Score: 1/1 Correct Answer Feedback 19. If U. GDP . and the dollar to appreciate. and the dollar to depreciate. C.

Has been increasing until the last six months. outlaws tariffs on products for which an exporting nation has a comparative advantage. Has been increasing rapidly since 1950 D. C. Score: Correct Answer Feedback 1/1 20. singles out a particular nation for exemption Value Correct Answer Feedback . Decreasing every quarter for the last two years. B. Chapter 05 #085 The "most-favored-nation" clause of reciprocal trade agreements: Student Response A. Has been 100% gradually increasing for the last year.Economic Growth in the United States has been: Student Value Response A. B.

C. Score: 1/1 . confers special trade privileges to nations in which the United States has military bases. means that 100% any tariff reductions the United States negotiates with a specific nation will automatically apply to many other nations.from an import quota. D.