Econ Exam 1
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50 terms
Terms | Definitions |
|---|---|
 The basic concern of economics is:A. to keep business firms from losing money. B. to prove that capitalism is better than socialism. C. to study the choices that individuals make. D. to use unlimited resources to produce goods and services to satisfy limited wants. | C. to study the choices that individuals make. |
| In Ventura County, California, strawberry production is limited by the number of acres available for agriculture production. This statement best represents the economic concept of: A. resources are scarce. B. "how much?" is a decision at the margin. C. there are gains from trade. D. resources should be used as efficiently as possible to achieve society's goals. | A. resources are scarce. |
| 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 and whatever she would have earned had she not been in college. | D. whatever she would have purchased with the $10,000 and whatever she would have earned had she not been in college. |
| Which of the following is an example of marginal analysis? A. How do tax cuts change the growth rate of median income? B. What additional output does a family business produce when it hires one more worker? C. When a large corporation lays off workers, how do profits change if sales remain constant? D. A commuter takes the bus to work rather than driving. | B. What additional output does a family business produce when it hires one more worker? |
| Gains from trade arise because of: A. specialization in production. B. specialization in consumption. C. marginal analysis. D. individual choice. | A. specialization in production. |
| It is better to produce corn in Kansas because of the fertile soil rather than in Death Valley, California. This statement best represents the economic concept of: A. resources are scarce. B. markets move toward equilibrium. C. resources should be used as efficiently as possible to achieve society's goals. D. markets usually lead to efficiency. | C. resources should be used as efficiently as possible to achieve society's goals. |
| All children have to be immunized against polio, measles, mumps, and other diseases. If you don't have enough money to pay for the immunizations, they will be provided for free at the county health clinic. This statement best represents the economic concept of: A. people usually exploit opportunities to make themselves better off. B. resources should be used as efficiently as possible to achieve society's goals. C. when markets don't achieve efficiency, government intervention can improve society's welfare. D. government policies can change spending. | C. when markets don't achieve efficiency, government intervention can improve society's welfare. |
| (Figure: Guns and Butter) If the economy were operating at point B, producing 16 units of guns and 12 units of butter per period, a decision to move to point E and produce 18 units of butter: A. indicates you can have more butter and guns simultaneously. B. makes it clear that this economy experiences decreasing opportunity costs. C. involves a loss of 8 units of guns per period. D. involves a loss of 4 units of guns per period. | C. involves a loss of 8 units of guns per period. |
| (Figure: Guns and Butter) The combination of guns and butter at point H: A. can be attained, but would cost too much. B. cannot be attained, given the level of technology and the factors of production available. C. has no meaning since it does not relate to the preferences of consumers. D. is attainable but would increase unemployment. | B. cannot be attained, given the level of technology and the factors of production available. |
| (Figure: Guns and Butter) On this figure, points A, B, E, and F: A. indicate combinations of guns and butter that society can produce using all of its factors efficiently. B. show that the opportunity cost of more guns increases, but that of more butter decreases. C. indicate that society wants butter more than it wants guns. D. indicate constant costs for guns and increasing costs for butter. | A. indicate combinations of guns and butter that society can produce using all of its factors efficiently. |
| If the production possibility frontier were a straight line sloping down from left to right, this would suggest that: A. more of both goods could be produced moving along the frontier. B. the two products must have the same price. C. the opportunity costs of the products are constant. D. there are no opportunity costs. | C. the opportunity costs of the products are constant. |
| Alison has a linear production possibility frontier in the production of bracelets and necklaces. In one hour, she can produce 5 bracelets or 10 necklaces. What is the opportunity cost for her to make one necklace? A. 5 bracelets B. 10 necklaces C. 0.50 bracelet D. 2 necklaces | C. 0.50 bracelet |
| When moving along a production possibility frontier, the opportunity cost to society of getting more of one good: A. is constant. B. is measured in dollar terms. C. is measured by the amount of the other good that must be given up. D. usually decreases. | C. is measured by the amount of the other good that must be given up. |
| If the opportunity cost of manufacturing machinery is lower in the United States than in Britain and the opportunity cost of manufacturing sweaters is higher in the United States than in Britain, then the United States will: A. export both sweaters and machinery to Britain. B. import both sweaters and machinery from Britain. C. export sweaters to Britain and import machinery from Britain. D. import sweaters from Britain and export machinery to Britain. | D. import sweaters from Britain and export machinery to Britain. |
| (Figure: Comparative Advantage) Eastland has a comparative advantage in producing: A. oranges only. B. peaches only. C. both oranges and peaches. D. neither oranges nor peaches. | A. oranges only. |
| (Figure: Comparative Advantage) The opportunity cost of producing 1 unit of oranges for Eastland is: A. 1 unit of peaches. B. 1/4 unit of peaches. C. 4 units of peaches. D. 10 units of peaches. | A. 1 unit of peaches. |
| In the simplest circular-flow model, households supply ________ and demand ________. A. capital; barter B. wages and income; capital markets C. factors of production; goods and services D. firms; markets | C. factors of production; goods and services |
| Economists who are asked to choose between two different government policies may disagree because: A. they make different value judgments about the desirability of the policies. B. they are basing their conclusions on models that make different simplifications. C. as a matter of course, economists often take opposing points of view so that all sides of a question may be discussed. D. they make different value judgments about the desirability of the policies and because they are basing their conclusions on models that make different simplifications. | D. they make different value judgments about the desirability of the policies and because they are basing their conclusions on models that make different simplifications. |
| Which of the following statements is a positive statement? Which is a normative statement? X. The federal minimum wage is increasing to $6.50 an hour. Y. The minimum wage should be high enough that families will not live in poverty. A. X is positive; Y is normative B. X is positive; Y is positive C. X is normative; Y is positive D. X is normative; Y is normative | A. X is positive; Y is normative |
| Competitive markets allow: A. mutually beneficial trades to take place. B. consumers to gain at the expense of producers. C. producers to reap greater benefits since they have greater power in the market. D. property rights to be unnecessary components of effective distribution. | A. mutually beneficial trades to take place. |
| The Kansas market for corn is considered a competitive market. This means there are ________ buyers and ________ sellers of corn in Kansas. A. many; few B. few; many C. many; many D. few; few | C. many; many |
| The primary difference between a change in demand and a change in the quantity demanded is: A. a change in demand is a movement along the demand curve and a change in quantity demanded is a shift in the demand curve. B. a change in quantity demanded is a movement along the demand curve and a change in demand is a shift in the demand curve. C. both a change in quantity demanded and a change in demand are shifts in the demand curve, only in different directions. D. both a change in quantity demanded and a change in demand are movements along the demand curve, only in different directions. | C. both a change in quantity demanded and a change in demand are shifts in the demand curve, only in different directions. |
| Which of the following factors would cause a movement along the demand curve? A. change in the prices of related goods B. change in the price of the good C. change in the population D. both a change in the price of the good and a change in the population | B. change in the price of the good |
| (Figure: Demand for Coconuts) If there is an overall increase in taste and preference for coconuts, then the movement that would take place in the model could be: A. A to C. B. B to A. C. C to A. D. B to E. | A. A to C. |
| An inverse relationship between price and quantity is represented by: A. the demand curve. B. the supply curve. C. the production possibility frontier. D. equilibrium. | A. the demand curve. |
| A direct relationship between price and quantity is represented by: A. the demand curve. B. the supply curve. C. the production possibility frontier. D. equilibrium. | B. the supply curve. |
| Which of the following influences does not shift the supply curve? A. people deciding that they want to buy more of the product B. a decrease in the price of inputs C. a rise in the wages paid to workers D. development of new technology | A. people deciding that they want to buy more of the product |
| (Figure: Demand and Supply of Wheat) If a price of $8 temporarily exists in this market, a: A. shortage of 2,000 bushels will result. B. surplus of 4,000 bushels will result. C. shortage of 4,000 bushels will result. D. surplus of 6,000 bushels will result. | B. surplus of 4,000 bushels will result. |
| An increase in demand, with no change in supply, will lead to ________ in equilibrium quantity and ________ in equilibrium price. A. an increase; an increase B. an increase; a decrease C. a decrease; an increase D. a decrease; a decrease | A. an increase; an increase |
| An increase in supply, with no change in demand, will lead to ________ in equilibrium quantity and ________ in equilibrium price. A. an increase; an increase B. an increase; a decrease C. a decrease; an increase D. a decrease; a decrease | B. an increase; a decrease |
| In many parts of the United States when Wal-Mart opens a new store, some smaller retailers go out of business. One of the reasons for this development could be that: A. Wal-Mart practices unfair pricing methods that reduce consumer surplus over time. B. consumers in those areas receive no consumer surplus from Wal-Mart. C. consumers in those areas receive a larger consumer surplus from shopping at Wal-Mart than from the smaller stores. D. smaller stores increase prices to compete. | C. consumers in those areas receive a larger consumer surplus from shopping at Wal-Mart than from the smaller stores. |
| (Table: Consumer Surplus and Phantom Tickets) Using the information in the table, if the price of a ticket to see Phantom of the Opera is $50, then Robert's consumer surplus is: A. $60. B. $50. C. $10. D. $240. | C. $10. |
| (Table: Consumer Surplus and Phantom Tickets) If the box-office price of a ticket to see Phantom of the Opera is $50, and there is no other market for tickets, then total consumer surplus for the five students is: A. $100. B. $175. C. $230. D. $240. | D. $240. |
| (Figure: Consumer Surplus II) At a price of P1, consumer surplus equals the area: A. ABP2. B. AFP1. C. AQ30. D. P1P2BF | B. AFP1. |
| (Figure: Consumer Surplus II) If the good is free, consumer surplus equals the area: A. ABP2. B. AFP1. C. BGF. D. AQ30. | D. AQ30. |
| When there is a new medical report extolling the health advantages of grapefruit, total producer surplus in the grapefruit market: A. will increase. B. will decrease. C. will remain the same. D. may change but we can't tell how. | A. will increase. |
| (Figure: Consumer and Producer Surplus) In the figure, if an effective price ceiling exists in this market, then producer surplus ________ and total surplus ________. A. decreases; decreases B. increases; stays the same C. decreases; stays the same D. increases; decreases | A. decreases; decreases |
| Total surplus is: A. the sum of consumer and producer surplus. B. measured as the area between the supply and demand curves from their beginnings to their ends. C. the total net gain to consumers from trading in the market. D. the total net gain to producers from trading in the market. | A. the sum of consumer and producer surplus. |
| A price control is: A. when a firm controls the price of the good it produces. B. a legal restriction on how high or low a price in a market may go. C. an upper limit on the quantity of some good that can be bought or sold. D. a tax placed on the sale of a good which controls the market price. | B. a legal restriction on how high or low a price in a market may go. |
| If the government feels that the equilibrium price in the market is too high for the ________, it can impose a ________. A. consumers; price ceiling B. consumers; price floor C. producers; price ceiling D. producers; price floor | A. consumers; price ceiling |
| (Table: Market for a Can of Soda) If the government does not impose a price control, the price of a can of soda will equal: A. $0.50. B. $0.75. C. $1.00. D. $1.25. | B. $0.75. |
| A price ceiling is not effective if: A. it is set above the equilibrium price. B. the equilibrium price is above the price ceiling. C. it is set below the equilibrium price. D. it creates a shortage. | A. it is set above the equilibrium price. |
| A minimum price set above the equilibrium price is a: A. demand price. B. supply price. C. price floor. D. price ceiling. | C. price floor. |
| (Figure: Market for Clams) The government imposes a quota limiting sales of clams to 1,000 pounds. According to the figure, the wedge is: A. $7.50. B. $5.00. C. $2.50. D. The wedge cannot be determined from the information provided. | C. $2.50. |
| Quota limits cause: A. the demand price to be greater than the supply price. B. the quantity demanded to be greater than the quantity supplied. C. the quantity demanded to be less than the quantity supplied. D. the demand price to be less than the supply price. | A. the demand price to be greater than the supply price. |
| The price elasticity of demand measures the responsiveness of the change in: A. quantity demanded to a change in price. B. price to a change in quantity demanded. C. the slope of the demand curve to a change in price. D. the slope of the demand curve to a change in quantity demanded. | A. quantity demanded to a change in price. |
| (Figure: Demand for Shirts) The price elasticity of demand for the segment AB, using the midpoint method, is: A. 13. B. 11. C. 0.91. D. 0.1. | B. 11. |
| The price of gasoline rises 5% and the quantity of gasoline purchased falls 1%. The price elasticity of demand is equal to ________ and demand is described as ________. A. 0.2; inelastic B. 5; inelastic C. 0.2; elastic D. 5; elastic | A. 0.2; inelastic |
| If a good is a necessity with few substitutes, then the price elasticity of demand will tend to be: A. more price-elastic. B. more price-inelastic. C. equal to 1. D. the same as that of a luxury good. | B. more price-inelastic. |
| Goods A and B have a positive cross-price elasticity of demand. This means Goods A and B are: A. normal goods. B. substitutes. C. complements. D. inferior goods. | B. substitutes. |
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