Need A Tutor?    |   Need Homework Help?                                                                             Help and Support     | Join or Cancel

The study of a single individual and how it determines prices would fall under the study of:
a) fiscal policy.
b) microeconomics.
c) macroeconomics.
d) economic growth.
   
If resources are “scarce,” it means that they:
a) have no opportunity cost.
b) are probably not valued by consumers.
c) cannot provide enough goods or services to satisfy all human material wants and needs.
d) have an unlimited supply.
   
We are forced to make choices because of:
a) efficiency.
b) scarcity.
c) the margin.
d) exploitation.
   
The opportunity cost of something is:
a) equal to the money cost.
b) less during periods of falling prices.
c) what is given up to acquire it.
d) greater during periods of rising prices.
   
The best measure of the opportunity cost of any choice is:
a) the monetary cost of that choice.
b) your hourly wage.
c) the cost associated with not taking full advantage of the opportunity offered by that choice.
d) whatever you have given up to make that choice, even if no monetary costs are involved.
   
You are analyzing a trade-off when you compare the ________and ________ of doing something.
a) marginal benefits; total benefits
b) costs; benefits
c) direct costs; opportunity costs
d) direct costs; total costs
   
You decide to join the economics club, but this means you can't join the accounting club because it meets at the same time.
This statement best represents this economic concept:
A) The real cost of something is what you must give up to get it.
B) "How much" is a decision at the margin.
C) People usually exploit opportunities to make themselves better off.
D) There are gains from trade.
   
The basic concern of microeconomics is:
A) to keep business firms from losing money.
B) to prove that capitalism is better than socialism.
C) to study the choices people make.
D) to use unlimited resources to produce goods and services to satisfy limited wants.
   
Economists tend to believe that to change people's behavior you must:
a) legislate the change.
b) appeal to their religious values.
c) change their incentives.
d) appeal to their concern for society.
   
Your elderly grandma tells you: "I haven't been taking my beloved walks because I'm concerned about falling and getting hurt.
See, there is always a cost to doing something. But if you don't do anything, then there is no cost." Your grandma does not understand
the economic concept of:
A) scarcity.
B) efficiency.
C) opportunity cost.
D) marginal analysis.
   
A new fast-food restaurant offered a free meal (valued at $5) a week for a year to its first 100 customers. Ramona camped out for
48 hours before the opening to be one of the first 100 customers. The cost of the free meal a week for a year for Ramona was:
A) zero.
B) $260.
C) whatever else she would have done with the 48 hours.
D) The cost is impossible to determine.
   
Which of the following is an example of individual choice?
a) Lauren spends her allowance on pillows for her bed.
b) Africa decides to accept U.S. aid for humanitarian efforts.
c) France decides to withhold funding to rebuild Iraq.
d) The government announces plans to ban smoking in all Florida restaurants.
   
A choice made _____ is a choice whether to do a little more or a little less of something.
A) at the front end
B) in the beginning
C) at the margin
D) ceteris paribus
   
Which book illustrates the advantages of specialization using an eighteenth-century pin factory?
a) Free to Choose, by Milton Friedman
b) The General Theory, by John Maynard Keynes
c) The Wealth of Nations, by Adam Smith
d) Das Kapital, by Karl Marx
   
A friend comes up to you and offers you a free ticket to a professional baseball game that night. You decide to attend the game.
The game takes five hours and costs you $15 for transportation. If you had not attended the game, you would have worked at your
part-time job for $8 an hour. What is the cost to you of attending the game?
A) The cost is zero—the ticket is free.
B) $65
C) $40
D) $55
   
Specialization and trade should lead to all of the following except:
a) individuals learning specific skills and earning a salary.
b) the exchange of goods and services in markets.
c) higher living standards.
d) a decrease in total economic output.
   
Macroeconomics deals with:
a) bits and pieces of the economy.
b) the working of the entire economy or large sectors of it.
c) how individuals make decisions.
d) the question of how a business unit should operate profitably.
   
Khalil is offered a free ticket to the opera. His opportunity cost of going to the opera is:
A) zero—the tickets were free.
B) the price listed on the ticket.
C) whatever Khalil would have done had he not gone to the opera.
D) the price listed on the ticket and whatever Khalil would have done had he not gone to the opera.
   
A key theme fundamental to all of economics is:
a) We are a rich country but are simply not aware of it.
b) There are unlimited resources.
c) People have unlimited wants facing limited means to satisfy them.
d) There are limited wants.
   
You decide whether to eat one more slice of pizza based on how hungry you feel. This statement best represents this economic concept:
A) Resources are scarce.
B) The real cost of something is what you must give up to get it.
C) "How much" is a decision at the margin.
D) There are gains from trade.
   
Scarcity in economics means:
a) We do not have sufficient resources to produce all of the goods and services we want.
b) There must be poor people in rich countries.
c) The wants of people are limited.
d) Economists are clearly not doing their jobs.
   
Margo spends $10,000 on one year's college tuition. The opportunity cost of spending one year in college for Margo is:
a) $10,000.
b) $10,000 and whatever she would have earned had she not been in college.
c) whatever she would have earned had she not been in college
d) whatever she would have purchased with the $10,000 instead.
 
Margo spends $10,000 on one year's college tuition. The opportunity cost of spending one year in college for Margo is:
A) $10,000.
B) whatever she would have purchased with the $10,000 instead.
C) whatever she would have earned had she not been in college.
D) whatever she would have purchased with the $10,000 plus whatever she would have earned had she not been in college.
   
The cost of going to college is:
a) tuition, the cost of housing, and the cost of books.
b) forgone income only.
c) tuition, the cost of housing, books, and forgone income.
d) tuition and the cost of housing.
   
In an attempt to reduce shooting deaths, some cities have offered money to people who turn in illegal guns.
This program is an example of the government using ________ to influence behavior.
a) the gains from trade
b) law
c) incentives
d) marginal analysis
   
Corner offices in high-rise office buildings usually cost more to rent than other offices. This best illustrates the economic principle of:
a) scarce resources.
b) opportunity costs.
c) marginal analysis.
d) resources being used as efficiently as possible to achieve society's goals.
   
Which of the following is not one of the four principles of individual choice?
a) People usually take advantage of opportunities to make themselves better off.
b) The real cost of something is its opportunity cost.
c) Unpaid volunteer work is irrational, since economic rationality dictates that individuals should only engage in work they are paid for.
d) Resources are scarce.
   
Which of the following is NOT a resource in the production of rice?
A) fertile land
B) labor
C) capital equipment
D) money
   
Who wrote The Wealth of Nations, a book that many credit with establishing economics as a discipline?
a) John Maynard Keynes
b) David Ricardo
c) Adam Smith
d) Karl Marx
   
Individuals gain from trade because:
a) of specialization in production.
b) self-sufficiency is efficient.
c) they can sell at a lower price than they can buy at.
d) of the principle of absolute advantage.
   
For a student who owns his or her own home and doesn't plan to live in the dorm, the cost of going to college is:
A) tuition and the cost of housing.
B) tuition, the cost of housing, and the cost of books.
C) tuition, the cost of books, and forgone income.
D) forgone income only.
   
Whenever a choice is made:
A) the cost of that choice is opportunity cost.
B) the cost is easy to measure in dollar terms.
C) efficiency is improved.
D) scarcity is not the problem.
   
When a chef prepares a dinner for a customer, which of the following is physical capital?
a) the chef
b) the oven
c) the food ingredients
d) the chef's training and experience
   
Manny is attending college and majoring in economics. By doing so, Manny is
improving his:
A) land.
B) labor.
C) capital.
D) human capital.
   
Gains from trade exist for:
 
individuals, states, and countries
   
We have to make choices because:
 
resources are scare
   
An economy is efficient if it is:
 
producing a combination of goods.
   
Specialization in production was the starting point for what book in economics that many regard as the beginning of economics?
 
The Wealth of Nations by Adam Smith
   
A resource is anything that:
 
can be used in production.
   
The problem of scarcity is confronted by?
 
all societies
   
Grades are low in class and your professor makes available a 10-point extra credit assignment. Most of the students turn in the assignment.
This statement best represents this economic concept:
 
People usually exploit opportunities to make themselves better off.
   
For an economist, the cost of something is:
 
what you gave up to get it.
   
If the price of gasoline falls and stays low for an extended period, we expect people to
 
buy larger and less fuel efficient cars
   
Khalil is offered a free ticket to the opera. His opportunity cost of going to the opera is
 
whatever Khalil would have done had he not gone to the opera
   
Economists who are asked to choose between two different government policies may disagree because:
 
they base their conclusions on models that make different assumptions
   
Economists may disagree about policies because
 
they may use different economic models
   
All points on the production possibility frontier are?
 
efficient production points.

 
Technological improvements will:
 
shift the production possibility frontier outward.
   
Economic models are:
 
often useful in forming economic policy
   
The production possibility frontier illustrates that:
 
if all resources of an economy are being used efficiently, more of one good can be produced only if less of another good is produced.
   
Which of the following is an example of a positive statement?
 
The federal government pays for 46% of U.S. health care costs.
   
Which of the following is false about the circular-flow diagram?
 
Money flows from households to firms as households offer factors of production for sale.
   
A good is inferior if which of the following is true?
 
When income increases, the demand decreases
   
Markets that are characterized by many buyers and many sellers are referred to as:
 
competitive.
   
The Kansas market for corn is considered a competitive market.
This means there are ________ buyers and ________ sellers of corn in Kansas.
 
many; many
   
The law of demand is illustrated by a demand curve that is:
 
D. Downward sloping
   
A negative relationship between the quantity demanded and price is called the law of:
 
Demand
   
Suppose the equilibrium price of Good X is $25 and the equilibrium quantity is 124 units. If the price of Good X is $2:
 
there will be an excess demand for Good X
   
When a market is in equilibrium, one will find that the
 
quantity demanded is equal to quantity supplied.
   
_________ illustrates a direct relationship between selling price and quantity supplied.
 
A supply curve
   
A technological advance in the production of automobiles will:
 
increase the supply of automobiles.
   
When the government policy is to control the quantity of a good that can be bought and sold rather than the price at which it is transacted,
it is called a
 
Quota
   
A price floor for an agricultural product usually
 
increases the price paid by consumers.
   
Which of the following is a source of inefficiency from a rent-control price ceiling:
 
wasted resources of consumers searching for the good.
All of the answers are correct.
inefficient allocation of the good to consumers.
inefficiently low quantity of the good exchanged.
   
The United States and the European Union impose price floors on many agricultural products.
These price floors lead to unwanted surpluses. To deal with a surplus:
 
the U.S. government in some cases has destroyed the surplus production.
   
A price floor is a ________ usually set ________ the equilibrium price.
 
minimum price; above
   
If minimum wages are set above the equilibrium wage in the market,
then the number of workers hired will be _______ the number of people who are willing to work.
 
less than
   
A price floor usually causes:
 
a surplus in the market and wasted resources.
   
Economists in general agree that rent controls are:
 
an inefficient but sometimes effective way to help low-income families.
   
A binding price ceiling is designed to:
 
keep prices low.
   
The basic concern of microeconomics is:
 
to study choices people make
   
Marla will make $10 by tutoring for an additional hour, but she will lose an hour of studying for her economics test.
Marla decides to study rather than tutor. Marla's choice indicates that she:
A) values an additional hour of studying more than the $10 she would earn tutoring.
B) values an hour of studying less than the $10 she would earn tutoring.
C) does not understand that there is no benefit from studying.
D) doesn't need the money.
   
Thinking in economic terms, when Mary Sweet-Tooth is deciding whether to eat another brownie, she:
A) considers only the price of the brownie.
B) considers only how much additional exercise she will need to do to work off the calories associated with eating another brownie.
C) compares all of the benefits and costs of eating another brownie.
D) considers whether she can do so without anyone else noticing
   
You are planning to study eight hours this week for your economics final and are considering studying a ninth hour. You should:
A) compare the benefits of one more hour of study with the cost of one less hour of sleep.
B) compare the benefits of one more hour of study with the cost of one less hour of studying calculus.
C) compare the benefits of one more hour of study with the cost of one less hour of work at your part-time job.
D) make your decision based on the cost of the next best alternative use of your time compared to the benefit of one more hour of study.
   
Which of the following policies is MOST likely to reduce traffic congestion in a large metropolitan area because people
usually exploit opportunities to make themselves better off?
A) a limited number of free early-bird parking passes given only to those who arrive prior to 6 A.M.
B) a toll road that requires each car to pay a fee to enter the city center
C) an increase in the price of subway and bus fare to and from the city
D) asking citizens to carpool
   
Because people usually exploit opportunities to make themselves better off, if the price of gasoline rises and stays high
for an extended period, we expect people to:
A) increase the number of miles they drive.
B) buy larger and less fuel-efficient cars.
C) use more public transportation.
D) ride their bicycles less.
   
Because people usually exploit opportunities to make themselves better off, to
encourage young people to go to college in their home state, state universities can:
A) charge higher tuition to in-state students.
B) award special scholarships to out-of-state students.
C) offer high-interest loans to in-state students.
D) offer lower tuition to in-state students
   
Because people usually exploit opportunities to make themselves better off, which of the following methods of
reducing pollution is likely to be most effective?
A) appealing to the polluter to be a good citizen
B) publicizing the harmful effects of pollution
C) imposing a tax per unit of pollution generated
D) All three methods are equally effective.
   
Economists tend to believe that to change people's behavior you must:
A) appeal to their concern for society.
B) change their incentives.
C) legislate the change.
D) appeal to their religious values.
   
Which of the following is NOT one of the four principles for understanding individual choice?
A) Resources are scarce.
B) Overall spending sometimes gets out of line with the economy's productive capacity.
C) "How much" is a decision at the margin.
D) People usually take advantage of opportunities to make themselves better off.
   
When the San Francisco city manager faces a complaint that the city council chamber podium is not accessible to individuals with disabilities,
he responds that the $1 million improvement will not happen because "that money could be spent building 70 curb ramps."
This statement best represents this economic concept:
A) Resources are scarce.
B) The real cost of something is what you must give up to get it.
C) "How much" is a decision at the margin.
D) When markets don't achieve efficiency, government intervention can improvesociety's welfare.
   
Gains from trade arise because of:
A) specialization in production.
B) specialization in consumption.
C) marginal analysis.
D) individual choice.
   
Economists use the term equilibrium to describe when:
A) individuals are equal.
B) no individual would be better off taking a different action.
C) no individual has an incentive to change his or her behavior.
D) no individual would be better off taking a different action or no individual has an incentive to change his or her behavior.
   
Which of the following statements is CORRECT?
A) Resource scarcity is not a major concern in the rich countries of the world.
B) Some opportunity costs are zero.
C) An economic situation is in equilibrium when no individual would be better off taking a different action.
D) Some very talented, skilled individuals who can do everything better than most people should not specialize in doing any one thing.
C) an economic situation is in equilibrium when no individual would be better off
   
An economy is efficient when:
A) the problem of scarcity is eliminated.
B) output is distributed equitably.
C) all opportunities to make some people better off without making other people worse off have been taken.
D) all opportunities to make some people worse off without making other people better off have been taken.
   
Resources are being used efficiently when:
A) scarcity is no longer an issue.
B) they are also used equitably.
C) every opportunity to make people better off without making others worse off has been seized.
D) gains from trade are still available.
   
When the nations that constitute the Organization of Petroleum Exporting Countries (OPEC) restrict the supply of oil to
increase their profits, the oil market:
A) achieves an efficient outcome because profits increase.
B) achieves an equitable outcome because the nations with oil resources receive the profits commensurate with that resource.
C) fails because there is no longer an efficient allocation of resources.
D) fails because there is no longer an equitable allocation of resources.
   
Although for smokers the marginal benefit from smoking may exceed the marginal cost of smoking, the negative effects
of second-hand smoke may increase the marginal costs of smoking to society to a point where it exceeds that marginal
benefit to society. This is an example of:
A) individual actions whose side effects are not properly taken into account by the market.
B) one party preventing mutually beneficial trades in an attempt to capture a greater share of resources for itself.
C) some goods' unsuitability for efficient management by markets.
D) regulating self-interest.
   
Everyone benefits from street lighting, yet the marginal benefit to any one individual usually falls short of the marginal cost.
This is an example of:
A) individual actions whose side effects are not properly taken into account by the market.
B) one party preventing mutually beneficial trades in an attempt to capture a greater share of resources for itself.
C) the unsuitability of some goods for efficient management by markets.
D) regulating self-interest.
C) the unsuitability of some goods for efficient management by markets
   
When markets don't achieve efficiency:
A) they must achieve equity.
B) government must be participating in the market.
C) government may intervene to improve society's welfare.
D) they should be closed.
   
One parent picks up the child from day care while the other parent goes to the grocery store and begins to make dinner.
This is an example of the principle that:
A) markets move toward equilibrium.
B) government policies can change spending.
C) there are gains from trade.
D) markets usually lead to efficiency.
C) there are gains from trade
   
Which of the following is NOT one of the five principles for understanding how individual choices interact?
A) There are gains from trade.
B) Markets move toward equilibrium.
C) Resources should be used as efficiently as possible to achieve society's goals.
D) Markets always lead to efficiency.
   
A simplified representation that is used to study a real situation is called a(n) model When building a model, economists:
A) simplify reality to highlight what really matters.
B) attempt to duplicate reality in all of its complexity.
C) ignore the facts and instead try to determine what the facts should be.
D) are careful to avoid the scientific method.
A) simplify reality to highlight what really matters
   
The importance of an economic model is that it allows us to:
A) build a complex and accurate model of the economy.
B) build an accurate mathematical model of the economy.
C) focus on the effects of only one change at a time.
D) avoid opportunity costs.
C) focus on the effects of only one change at a time
   
The _____ illustrates the trade-offs facing an economy that produces only two goods.
A) production possibility frontier
B) circular-flow diagram
C) all else equal assumption
D) income distribution
   
The production possibility frontier illustrates that:
A) the economy will automatically end up at full employment.
B) an economy's productive capacity increases one-for-one with its population.
C) if all resources of an economy are being used efficiently, more of one good can be produced only if less of another good is produced.
D) economic production possibilities have no limit.
   
The simplest circular-flow model shows the interaction between households and firms. In this model:
A) only barter transactions take place.
B) households and firms interact in the market for goods and services, but firms are the only participants in the factor markets.
C) firms supply goods and services to households, which in turn supply factors of production to firms.
D) attention is focused on flows of goods, services, and factors of production, but money flows between households and firms are ignored.
   
The law of demand states that other things equal, as the price:
A) increases, the quantity demanded will increase.
B) decreases, the demand curve will shift to the right.
C) increases, demand will decrease.
D) increases, the quantity demanded will decrease.
   
In much of the country, homeowners choose to heat their houses with either natural gas or heating oil.
Which of the following would cause an increase in the demand for natural gas?
A) an increase in the price of natural gas
B) a decrease in the price of natural gas
C) a decrease in the price of heating oil
D) an increase in consumer incomes
   
Raclette is a popular wintertime dish in Switzerland. It is essentially melted Raclette cheese over boiled new potatoes.
If the price of Raclette cheese decreased, we would expect to see:
A) an increase in demand for Raclette cheese.
B) an increase in demand for new potatoes.
C) no effect on the demand for either of the Raclette ingredients, since this is a
traditional dish and its consumption does not depend on the prices of the ingredients.
D) an increase in demand for Raclette cheese and for new potatoes.
   
Which of the following would shift the demand curve for new textbooks to the right?
A) a decrease in the price of paper
B) a fall in the price of used textbooks
C) an increase in college enrollment
D) a fall in the price of new textbooks
   
Which of the following will NOT cause an increase in the supply of cornflakes?
A) an increase in the price of cornflakes
B) a cost-saving improvement in the technology of corn production
C) a reduction in the price of corn
D) the expectation by producers that the price of cornflakes will fall in the future