Survey of Economics Exam 1, Litzinger RMU

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A list of all the questions of exam 1 given by Litzinger and the correct answers.

In economic theory and analysis, cost of production that do not change when the rate of output is altered, eg., the cost of basic plant and equipment are called

fixed costs

In economic theory and analysis, goods and services sold to foreign buyers are called

exports

In economic theory and analysis, resource inputs used to produce goods and services, eg., land, labor, capital, entrepreneurship, are called

factors of production

The central problem of economics is the:

Scarcity of resources relative to human wants.

People benefit by participating in the market because:

It facilitates specialization and increased consumption.

In economic theory and analysis, total cost divided by the quantity produced in a given time period is called

average total cost (ATC)

In economic theory and analysis, the total value of goods and services produced within a nation's borders in a given time period is called the

gross domestic product (GDP)

For consumers, most market activity can be explained by the goal of

Maximizing happiness.

In economics, what is the best example of capital?

A computer used by a lawyer to prepare legal documents.

In economic theory and analysis, the difference between total revenue and total cost is called

profit

Market demand is the:

sum of all individual demands for a product in a given time period

Societies must address the question of WHAT to produce because:

we can't produce all the goods and services we want

Per capita GDP is the most practical way to:

Analyze the growth rate of the economy over time.

In economic theory and analysis, the statement "the marginal utility of a good declines as more of it is consumed in a given time period" is called the

law of diminishing marginal utility

Not a factor of production: Land, wages, labor, capital?

Wages

The value of output produced in the United States in current prices measures:

Nominal GDP

In economic theory and analysis, the value of all resources used to produce a good or service, opportunity cost, is called:

economic cost

Which of the following is not included in the U.S. GDP:

Anything not produced in the US, e.g. Toys produced by a U.S. firm located in China

In economic theory and analysis, an economy that uses both market and non market signals to allocate goods and resources is called a:

Mixed economy

If demand is elastic, then:

Quantity demanded is very responsive to changes in price

In economic theory and analysis, a lower limit on the price of a good is called a

price floor

The U.S. GDP for 2009 was approximately:

$15 trillion

Changes in real GDP serve as a better measure of the health of the economy than changes in nominal GDP because real GDP measures changes in:

output only

In economic theory and analysis, the decision to build, buy, or lease plant and equipment, to enter or exit an industry, is called the

investment decision

In economic theory and analysis, the statement "the quantity of a good supplied in a given time period increases as its price increases, ceteris paribus," is called the

law of supply

Which of the following is a constraint that motivates economic interactions:

The limited resources that individuals have

The demand curve is downward sloping because as marginal utility diminishes:

Consumers are willings to buy more of the good only at lower prices

In economic theory and analysis, the percentage change in quantity demanded divided by the percentage change in price measures the

price elasticity of demand

In economic theory and analysis, the doctrine of "leave it alone," of nonintervention by government in the market mechanism is referred to as

laisses faire

In economic theory and analysis, and imperfection in the market mechanism that prevents optimal outcomes is called a

market failure

A price ceiling is:

an upper limit on the price of a good

In economic theory and analysis, the change in total utility obtained by consuming one additional (marginal) unit of a good or service consumed is called the

marginal utility

In economic theory and analysis, the direct exchange of one good for another, without the use of money, is called

barter

Demand is defined as the:

ability and willingness to buy specific quantities of a good or service at various prices in a given time period, ceteris paribus.

In economic theory and analysis, the way personal income is divided up among households or income classes is called the

personal distribution of income

In economic theory and analysis, the price of a product multiplied by the quantity sold in a given time period, p x q, measures the

total revenue

In economic theory and analysis, the knowledge and skills possessed by the workforce is called the

entrepreneurial ability

Consumers _______ factors of production in the _______ market.

Sell; factor

Opportunity costs are experienced whenever choices are made because:

resources are scarce

In economic theory and analysis, the amount by which the quantity demanded exceeds the quantity supplied at a given price, excess demand, is called the:

market shortage

In economic theory and analysis, the amount of satisfaction obtained from entire consumption of a product is called:

total utility

In economic theory and analysis, the most desired goods and services that are forgone in order to obtain something else is referred to as the

opportunity cost

In economic theory and analysis, production processes that use a high ratio of capital to labor inputs are referred to as:

capital intensive

Which of the following has the largest GDP? Britain, United States, China, Japan

USA! USA! USA!

The largest portion of the average U.S. consumer dollar is spent on:

Housing

In economic theory and analysis, a curve describing the quantities of a good a consumer is willing and able to buy at alternative prices in a given tim period, ceteris paribus, is called a

demand curve

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