Daniyar Nurekenov
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Quiz on Chapters(1-5), created by Daniyar Nurekenov on 27/12/2018.

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Daniyar Nurekenov
Created by Daniyar Nurekenov almost 6 years ago
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Chapters(1-5)

Question 1 of 50

1

Government policies designed to promote efficiency:

Select one of the following:

  • a. usually do so at the expense of equity.

  • b. tend to cause the economy to grow more slowly.

  • c. always fail.

  • d. require very high taxes.

Explanation

Question 2 of 50

1

All of the following can be considered a student's costs of going to college, EXCEPT:

Select one of the following:

  • a. textbooks.

  • b. tuition and fees.

  • c. room and board (that costs her about the same as she was paying before entering college).

  • d. the student's time, which can no longer be devoted to earning a salary.

Explanation

Question 3 of 50

1

An airline's plane from Los Angeles to New York is about to take off, but it still has a few seats empty. If the average cost per seat is $500, what price should the airline charge passengers in standby to fill in those remaining seats? (Consider that quantitative decisions are made at the margin)

Select one of the following:

  • At least $500.

  • Exactly $500.

  • Any price above zero that will entice standby passengers to take the flight.

  • Slightly less than $500.

Explanation

Question 4 of 50

1

The Federal government enacted regulation in the 1960s requiring people to wear seatbelts in their cars. All of the following resulted from this regulation, EXCEPT:

Select one of the following:

  • overall deaths due to car accidents changed very little in the United States.

  • fewer deaths occurred per accident.

  • fewer pedestrians were killed in car accidents.

  • the frequency of accidents increased.

Explanation

Question 5 of 50

1

When two persons trade goods:

Select one of the following:

  • one person always gains at the expense of the other.

  • both persons usually gain from the exchange.

  • one person usually gains at the expense of the other.

  • the overall well being of

Explanation

Question 6 of 50

1

In a market economy, the decisions of what and how much to produce are made by:

Select one of the following:

  • voters in elections.

  • all producers and consumers.

  • the government only.

  • non governmental agencies.

Explanation

Question 7 of 50

1

Even though markets do a great job in organizing economic activity, governments are needed to do all of the following EXCEPT:

Select one of the following:

  • establish and enforce property rights.

  • intervene when markets fail due to externalities.

  • intervene when markets fail due to market power.

  • decide what and how much should be produced.

Explanation

Question 8 of 50

1

Living standards in the United States have risen tremendously over the years, mainly due to:

Select one of the following:

  • relentless increases in the productivity of labor over the years.

  • the forceful efforts of labor unions.

  • successive increases in the minimum wage.

  • trade protection from competition from countries

Explanation

Question 9 of 50

1

Rapid and persistent inflation occurs mainly due to

Select one of the following:

  • high wage increases demanded by labor unions

  • greedy firms that abuse consumers with higher-than-necessary prices.

  • rapid increases in the quantity of money in the economy.

  • trade with other countries.

Explanation

Question 10 of 50

1

A government that implements a policy designed to reduce inflation can expect unemployment to:

Select one of the following:

  • increase in the short-run.

  • decrease in the short-run.

  • increase in the long-run.

  • decrease in the long-run.

Explanation

Question 11 of 50

1

Which of the following is FALSE, regarding economics as a science?

Select one of the following:

  • Economic knowledge is obtained through the scientific method, just as in any other science.

  • It is difficult to conduct experiments in economic matters.

  • Economists pay close attention to natural experiments resulting from historical events.

  • Economic theories represent irrefutable facts.

Explanation

Question 12 of 50

1

Economists use assumptions in order to:

Select one of the following:

  • ecreate real situations accurately, with all their complexity.

  • avoid dealing with issues they would rather not talk about.

  • simplify economic theories, so as to make it possible to answer economic questions.

  • make their theories more realistic.

Explanation

Question 13 of 50

1

Economic models are:

Select one of the following:

  • simplified versions of economic theories.

  • All of the other options are true.

  • created by making assumptions.

  • usually composed of diagrams and equations.

Explanation

Question 14 of 50

1

All of the following are characteristics of the circular-flow model of the economy, EXCEPT:

Select one of the following:

  • the model has two markets: one for goods and services and one for factors of production.

  • the model includes two sectors: firms and households

  • the model describes two circular flows: one for inputs and one for outputs

  • the two flows described by the model move in opposite directions.

Explanation

Question 15 of 50

1

In the circular-flow model of the economy:

Select one of the following:

  • the economy has only two sectors: firms and households.

  • dollars in the economy are used over and over in an endless cycle.

  • firms produce and provide factors of production.

  • the government is the source of revenue for households to purchase goods and services from firms.

Explanation

Question 16 of 50

1

Which of the following is true regarding the production possibilities frontier (PPF) for the economy?

Select one of the following:

  • Any point on the PPF represents an efficient level of production.

  • Any point inside the PPF represents a combination of production that is not feasible.

  • The opportunity cost of producing one more unit of one of the goods remains the same at any point along the PPF.

  • Increases in the resources available for production will cause the PPF to shift toward the origin.

Explanation

Question 17 of 50

1

Economic growth in the economy can be portrayed in the model of the production possibilities frontier as a:

Select one of the following:

  • movement up and left along the PPF.

  • shift of the PPF away from the origin.

  • movement down and right along the PPF.

  • shift of the PPF toward the origin.

Explanation

Question 18 of 50

1

Microeconomics is the study of:

Select one of the following:

  • how governments can get the economy out of a recession.

  • economy-wide phenomena, including inflation, unemployment, and economic growth.

  • how households and firms make decisions and how they interact in markets.

  • how governments can reduce inflation

Explanation

Question 19 of 50

1

Which of the following is an example of a normative statement?

Select one of the following:

  • Higher interest rates will cause people to borrow and invest less.

  • The government should increase spending during recessions, so that the economy recovers quickly.

  • When the price of a good increases, consumers respond by reducing the quantity of that good they want to purchase.

  • Over the past 50 years, the number of women who participate in the labor force has increased dramatically.

Explanation

Question 20 of 50

1

Economists tend to disagree with each other because:

Select one of the following:

  • different economists espouse different theories, so they believe different things are going on in the economy.

  • different economists make different assumptions to theories, leading them to different conclusions in economic matters

  • different economists have different values and priorities in economic matters.

  • All the other options are true.

Explanation

Question 21 of 50

1

Which of the following is NOT a characteristic of a perfectly competitive market?

Select one of the following:

  • The goods being offered for sale are all the same.

  • There are a large number of buyers and sellers.

  • Buyers and sellers are price takers.

  • It is difficult for new firms to enter the market.

Explanation

Question 22 of 50

1

A market with only one firm is called:

Select one of the following:

  • an oligopoly.

  • a monopoly.

  • perfect competition.

  • monopolistic competition.

Explanation

Question 23 of 50

1

An increase in demand means that:

Select one of the following:

  • when price falls consumers are willing to purchase greater quantities of the good.

  • consumers are willing to purchase greater quantities of the good at any given price.

  • when the price rises, consumers are willing to purchase greater quantities of the good.

  • consumers cause the price drop by buying greater quantities of the good.

Explanation

Question 24 of 50

1

If good B is a substitute for good A, and the price of good B increases:

Select one of the following:

  • the quantity demanded of good A will decrease.

  • the demand for good A will increase.

  • the price of good A will decrease.

  • the quantity demanded of good B will increase.

Explanation

Question 25 of 50

1

When the price of good X increases:

Select one of the following:

  • the quantity supplied of good X will increase.

  • the quantity supplied of good X will decrease.

  • the supply curve for good X will shift to the right.

  • the supply curve for good X will shift to the left.

Explanation

Question 26 of 50

1

A new technology that helps firms reduce production costs will cause a:

Select one of the following:

  • movement down and left along the supply curve.

  • movement up and right along the supply curve.

  • shift to the right of the supply curve.

  • shift to the left of the supply curve.

Explanation

Question 27 of 50

1

If the price in a market happens to be below equilibrium, there will be a ________ in the market, and the price will tend to ________.

Select one of the following:

  • surplus, fall

  • surplus, rise

  • shortage, fall

  • shortage, rise

Explanation

Question 28 of 50

1

If the price in a market happens to be above equilibrium, there will be a ________ in the market, and the price will tend to ________.

Select one of the following:

  • surplus, fall

  • surplus, rise

  • shortage, fall

  • shortage, rise

Explanation

Question 29 of 50

1

Suppose that a scientific study just published demonstrates that eating apples makes people much healthier. How will this affect the equilibrium price and quantity in the market?

Select one of the following:

  • The equilibrium price will increase and the equilibrium quantity will decrease.

  • The equilibrium price will decrease and the equilibrium quantity will increase.

  • Both the equilibrium quantity and price will increase.

  • Both the equilibrium quantity and price will decrease.

Explanation

Question 30 of 50

1

Suppose the price of corn syrup increases. Given that corn syrup is a major ingredient in the production of soft drinks, how will this affect the equilibrium price and quantity in the soft drink market?

Select one of the following:

  • The equilibrium price will increase and the equilibrium quantity will decrease.

  • The equilibrium price will decrease and the equilibrium quantity will increase

  • Both the equilibrium quantity and price will increase

  • Both the equilibrium quantity and price will decrease.

Explanation

Question 31 of 50

1

The production possibilities frontiers used to explain trade are straight lines because:

Select one of the following:

  • it is assumed the farmer and rancher can switch at a constant rate from producing meat to producing potatoes

  • that is always true when the same person produces two goods.

  • the farmer is better than the rancher in producing both goods.

  • the gains of trade will benefit the farmer and the rancher.

Explanation

Question 32 of 50

1

The principle of absolute advantage refers to the situation in which one producer

Select one of the following:

  • can produce a good in greater quantities than other producers.

  • can produce a good using less resources than other producers.

  • is able to produce exactly the same quantity of a good as other producers.

  • has access to more resources than other producers.

Explanation

Question 33 of 50

1

The principle of comparative advantage refers to the situation in which one producer:

Select one of the following:

  • has a lower opportunity cost than other producers in the production of a good.

  • can produce a good in greater quantities than other producers.

  • has access to more resources than other producers.

  • can produce a good using more resources than other producers.

Explanation

Question 34 of 50

1

Which of the following is true regarding the principle of comparative advantage?

Select one of the following:

  • Nations should specialize in producing those goods for which they have a lower opportunity cost.

  • Nations should export goods for which they do not have an absolute advantage.

  • Nations should specialize in producing those goods for which they have an absolute advantage.

  • Nations should export goods for which they have a higher opportunity cost.

Explanation

Question 35 of 50

1

Which of the following is true regarding the principle of absolute advantage?

Select one of the following:

  • A nation cannot have an absolute advantage in more than one good.

  • A nation with an absolute advantage in the production of a good may have a comparative advantage in the production of the same good.

  • A nation has nothing to gain from trade if it can produce more of a good than other nations.

  • A nation has nothing to gain from trade if it has more resources than other nations.

Explanation

Question 36 of 50

1

The boy next door has offered to mow Tiger Woods' lawn. It will take this boy twice as long as Tiger Woods to mow the lawn. Should Tiger Woods let the boy mow his lawn, instead of doing it himself?

Select one of the following:

  • Yes, as long as the boy has a lower opportunity cost than Tiger Woods.

  • Yes, because the boy next door needs the money and Tiger Woods can help him out that way.

  • No, because it will be more efficient if Tiger Woods mows his own lawn, since he can do it faster.

  • No, because Tiger Woods has better things to do with his money than pay the boy to mow the lawn.

Explanation

Question 37 of 50

1

Suppose that engaging in free trade means we have to stop making cars, which could cause American car manufacturers to reduce output and could cause people to lose jobs. Is it worth it having free trade?

Select one of the following:

  • Yes, because in spite of the lost jobs, we still want to get along with other nations.

  • Yes, because the gains outweigh the losses: new businesses and new jobs will flourish in other industries.

  • No, because we need to protect our jobs.

  • No, because our wages would have to fall drastically to make us remain competitive with low wage countries.

Explanation

Question 38 of 50

1

Suppose that Jill can type 10 pages per hour on the computer, while Jim can only type 8. Further suppose that Jill can review 5 articles per hour while Jim can only review 2. If they are working on a final project together, who should specialize in what task in order to be as productive as possible?

Select one of the following:

  • Jill should specialize in typing and Jim in reviewing articles.

  • Jill should specialize in reviewing articles and Jim in typing.

  • . Jill should perform both tasks, since she is better at both than Jim.

  • Jim should perform both tasks, since he is better at both than Jill.

Explanation

Question 39 of 50

1

Suppose that Jill can type 10 pages per hour on the computer, while Jim can only type 8. Further suppose that Jill can review 5 articles per hour while Jim can only review 2. Based on this, we can say that:

Select one of the following:

  • Jim has a comparative advantage over Jill in reviewing articles.

  • Jill has an absolute advantage over Jim in reviewing articles.

  • Jim has an absolute advantage over Jill in typing

  • Jill has a comparative advantage over Jim in typing.

Explanation

Question 40 of 50

1

The principle of comparative advantage suggests all of the following, EXCEPT:

Select one of the following:

  • specialization allows producers to become more efficient.

  • free trade tends to cause bankruptcies and high unemployment.

  • free trade allows producers to specialize.

  • as producers become more efficient, overall production increases, making everybody better off.

Explanation

Question 41 of 50

1

A good will tend to have an inelastic demand if:

Select one of the following:

  • the good has many close substitutes

  • the good is a luxury

  • the market is defined very broadly.

  • the time horizon is long.

Explanation

Question 42 of 50

1

A perfectly elastic demand is represented graphically by a:

Select one of the following:

  • relatively steep demand curve.

  • relatively flat demand curve

  • vertical demand curve.

  • horizontal demand curve

Explanation

Question 43 of 50

1

What effect will an increase in the price have on total revenue if demand is elastic?

Select one of the following:

  • Total revenue will increase.

  • Total revenue will decrease.

  • Total revenue will first decrease and then increase.

  • Total revenue will remain unchanged.

Explanation

Question 44 of 50

1

The price elasticity of demand tends to be more elastic:

Select one of the following:

  • at points further up and to the left along the demand curve.

  • at points further down and to the right along the demand curve.

  • when the demand curve becomes steeper.

  • when the demand curve is vertical.

Explanation

Question 45 of 50

1

Suppose that General Cars increases the price of its Cadiclap model from $13,500 to $16,500. As a result of this, the quantity demanded of the Cadiclap model decreases from 600,000 to 400,000 per year. Find the price elasticity of demand of the Cadiclap using the mid-point method.

Select one of the following:

  • -3.0

  • -0.5

  • -2.0

  • -0.3

Explanation

Question 46 of 50

1

If a firm needs to increase its total revenue, the firm should ________ the price if the demand for its product is ________.

Select one of the following:

  • raise, inelastic

  • raise, elastic

  • drop, elastic

  • drop, unit elastic

Explanation

Question 47 of 50

1

Suppose that consumers' incomes rise by 3% and this causes demand for a good to increase by 4.5%. What is the income elasticity of demand?

Select one of the following:

  • 1.50

  • 0.67

  • -1.50

  • -0.67

Explanation

Question 48 of 50

1

Suppose that a good has an income elasticity of demand of -2.0. This means that the good is:

Select one of the following:

  • normal.

  • inferior.

  • a substitute.

  • a complement.

Explanation

Question 49 of 50

1

Suppose that two goods have a cross-price elasticity of demand of -0.8. This means that these goods are:

Select one of the following:

  • normal

  • inferior

  • substitutes.

  • complements.

Explanation

Question 50 of 50

1

The price of good A increases from $4.50 to $5.50. This causes the quantity demanded of good B to increase from 900 to 1100 units per month. Find the cross price elasticity of demand using the mid-point method.

Select one of the following:

  • -1.0

  • +2.0

  • +1.0

  • -2.0

Explanation

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