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EXAM 1

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Chapters 1 - 6
Mau Family
Quiz by Mau Family, updated more than 1 year ago
Mau Family
Created by Mau Family over 8 years ago
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Resource summary

Question 1

Question
A theory that has won virtually universal acceptance is a:
Answer
  • model.
  • hypothesis
  • law.
  • variable.

Question 2

Question
When we are forced to make choices we are facing the concept of:
Answer
  • ceteris paribus.
  • free goods
  • scarcity
  • the margin.

Question 3

Question
Statements that are a hypothesis or statement of fact are:
Answer
  • pecuniary.
  • positive.
  • nominal.
  • normative

Question 4

Question
The economic way of thinking includes:
Answer
  • more attention paid to benefits rather than the costs involved in any choice.
  • the assumption that individuals choose to average out some objective.
  • emphasis on how choices are made at the margin.
  • the notion that the industrialized nations have solved the problem of scarcity

Question 5

Question
A feature that distinguishes economists' approach to making choices is (are):
Answer
  • assigning opportunity costs a major role in their analyses of choices.
  • assuming individuals make choices to maximize objectives
  • emphasizing that choices are made at the margin
  • all of the above.

Question 6

Question
The statement that the minimum wage needs to be increased is a:
Answer
  • positive statement.
  • normative statement
  • condition contained in the fallacy of false cause.
  • scientific conclusion based on marginal analysis.

Question 7

Question
Economics, generally speaking, is primarily concerned with:
Answer
  • the operation of the bond and stock markets.
  • how people choose among the alternatives available to them.
  • the issues of income inequality or income equality.
  • ceteris paribus, the scientific method, and the margin

Question 8

Question
The use of controlled experiments using particular substances to test hypotheses is most likely to be found in:
Answer
  • chemistry.
  • economics.
  • history.
  • the humanities

Question 9

Question
Scarcity is determined by the existence of bad alternatives
Answer
  • True
  • False

Question 10

Question
The value of the next-best choice not chosen is called opportunity cost.
Answer
  • True
  • False

Question 11

Question
Economists are:
Answer
  • concerned with developing theories but not interested in solving problems.
  • interested in solving problems but not concerned with developing theories.
  • reluctant to predict changes in variables such as prices, employment, and spending.
  • not always in agreement on the best way to implement policy decisions.

Question 12

Question
Unemployment and inflation are major topics in macroeconomics.
Answer
  • True
  • False

Question 13

Question
The best example of an increase in capital is:
Answer
  • The discovery of new oil reserves.
  • new computer software.
  • legal immigration of computer programmers.
  • conversion of military facilities to civilian use

Question 14

Question
The slope of a production possibilities curve is based on opportunity cost.
Answer
  • True
  • False

Question 15

Question
The slope of a typical production possibilities curve is:
Answer
  • 0.
  • vertical.
  • positive.
  • negative.

Question 16

Question
Suppose the economy is operating at point C. The opportunity cost of producing the fourth freight train would be:
Image:
fd06fbdc-09ef-461a-896b-cf5abb30d3ba (image/jpeg)
Answer
  • 19 tons of sugar.
  • 45 tons of sugar.
  • 80 tons of sugar
  • 3 freight trains.

Question 17

Question
An economy that has the lowest cost for producing a particular good is said to have a(n):
Answer
  • technological advantage
  • comparative advantage.
  • convex news production possibilities curve.
  • all of the above are correct

Question 18

Question
A factor of production that has been produced for use in the production of other goods and services is:
Answer
  • labor.
  • money.
  • capital.
  • natural resources.

Question 19

Question
Which of the following explains why the U.S. economy produces more than the Chinese economy?
Answer
  • The United States buys more goods from China than China buys from the United States.
  • In comparison to China, the United States has stronger environmental protection rules.
  • The population of the United States is less than 1/4 the population of China.
  • The United States has more capital per worker available than China.

Question 20

Question
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:
Answer
  • export both sweaters and machinery to Britain
  • import both sweaters and machinery from Britain.
  • export sweaters to Britain and import machinery from Britain.
  • import sweaters from Britain and export machinery to Britain.

Question 21

Question
Which of the following statements is false?
Answer
  • Improvements in technology make most workers worse off because they lose their jobs to capital.
  • Technological improvements affect most industries, including oil exploration, fast-food restaurants, and pet stores.
  • When technology improves or changes, some jobs are lost
  • Technological improvements that make capital more productive often leads to higher wages for labor.

Question 22

Question
Suppose the economy is operating at point B. The opportunity cost of producing the third freight train would be:
Image:
5b507211-0320-439a-8814-f7a7a86e6e45 (image/jpeg)
Answer
  • 6 tons of sugar.
  • 19 tons of sugar.
  • 45 tons of sugar.
  • 80 tons of sugar.

Question 23

Question
An economy is said to have a comparative advantage in the production of a good if it can:
Answer
  • produce that good with more resources than another economy.
  • produce that good with a higher opportunity cost than another economy.
  • produce that good outside its production possibilities curve.
  • produce the good at a lower opportunity cost than another economy.

Question 24

Question
The difference between iron ore deposits and the steel produced from these deposits that is later used to make factory equipment illustrates the difference between:
Answer
  • labor and a natural resource.
  • labor and capital.
  • a natural resource and capital.
  • a natural resource and entrepreneurship.

Question 25

Question
Britain imports some goods and exports other goods primarily because of:
Answer
  • free goods.
  • specialization.
  • unemployment.
  • self-sufficiency.

Question 26

Question
The North Korean economy is currently classified as a mixed economy.
Answer
  • True
  • False

Question 27

Question
The concept of comparative advantage is based upon:
Answer
  • absolute labor productivity
  • relative labor costs.
  • dollar prices of labor.
  • relative opportunity costs

Question 28

Question
One of the two criteria for a resource to be considered capital is that it must:
Answer
  • occur naturally.
  • be part of a factory or building.
  • be a skill or talent possessed by a person.
  • be possible to use it to produce other goods and services.

Question 29

Question
The textbook classifies technology as knowledge and entrepreneurs as persons who seek profit.
Answer
  • True
  • False

Question 30

Question
In a market capitalist economy:
Answer
  • factors of production are owned privately and decisions about their use are basically made by individuals.
  • factors of production are owned by the government but decisions about their use are made privately.
  • private ownership exists but decisions about resource allocation are usually made centrally by the government.
  • there is no role for the government.

Question 31

Question
In the textbook, the prices of the factors of production, returns from related goods, technology, expectations regarding future prices, and the number of sellers are called:
Answer
  • demand shifters.
  • supply prices.
  • market realities
  • supply shifters.

Question 32

Question
If the price of chocolate-covered peanuts is 40 cents, the price will:
Image:
28cc9be0-35c0-4e09-8cb0-b1a121309a3a (image/jpeg)
Answer
  • remain unchanged.
  • fall to 30 cents.
  • rise to 50 cents.
  • rise to 60 cents.

Question 33

Question
In a competitive market, when price is below the equilibrium price, there will be pressure for the price to:
Answer
  • fall.
  • stay the same
  • rise
  • change only if demand and/or supply change

Question 34

Question
A decrease in the fee charged for videotape rentals would result in a change illustrated by:
Image:
b375cec8-8e62-4a66-b9b4-1901adf6cbe4 (image/jpeg)
Answer
  • the move from f to g in Figure (a).
  • the move from h to i in Figure (b).
  • the move from j to k in Figure (c).
  • the move from l to m in Figure (d).

Question 35

Question
In the 1990s, the Monks of St. Benedict's the Monks determined that their [blank_start]opportunity costs[blank_end] were [blank_start]too high[blank_end] in the egg and cookie business, so they [blank_start]switched to providing private retreats .[blank_end]
Answer
  • opportunity costs
  • profits
  • operating costs
  • too low
  • too high
  • went out of business
  • opened a new business
  • switched to providing private retreats .

Question 36

Question
An increase in supply is caused by:
Answer
  • an increase in resource prices.
  • a decrease in the number of sellers in the market.
  • suppliers' expectations of higher prices in the future.
  • an advancement in the technology for producing the good.

Question 37

Question
Which of the following will not cause the demand for milk (a normal good) to increase in the current time period?
Answer
  • a fall in the price of milk
  • an increase in income
  • an expected increase in milk prices
  • a decrease in the price of cookies (a complement)

Question 38

Question
If a demand curve shifts to the left, then:
Answer
  • the equilibrium price would go up and the equilibrium quantity would go down.
  • the equilibrium price would go down and the equilibrium quantity would go up.
  • a lower equilibrium price and quantity would result.
  • a higher equilibrium price and quantity would result.

Question 39

Question
A decrease in supply is caused by:
Answer
  • a decrease in resource prices.
  • a decrease in the number of sellers in the market.
  • suppliers' expectations of lower prices in the future.
  • an advancement in the technology for producing the good.

Question 40

Question
The price of cotton rises. What happens in the market for cotton shirts?
Answer
  • The equilibrium price falls and the equilibrium quantity rises.
  • The equilibrium price rises and the equilibrium quantity falls
  • The equilibrium price and quantity rise.
  • The equilibrium price and quantity fall.

Question 41

Question
An increase in demand and a decrease in supply, will lead to a(n) ________ in equilibrium quantity and a(n) ________ in equilibrium price.
Answer
  • decrease; decrease
  • indeterminate change; increase
  • indeterminate change; decrease
  • increase; indeterminate change

Question 42

Question
A shortage will exert pressures for the price to decrease.
Answer
  • True
  • False

Question 43

Question
Which of the following would result in a movement along the demand curve?
Answer
  • a change in preferences
  • an increase in the number of buyers
  • an increase in the number of suppliers
  • a decrease in income

Question 44

Question
According to the textbook, demand and supply determine prices, and prices allocate scarce resources in the economy.
Answer
  • True
  • False

Question 45

Question
If both the demand for a product and the supply of it increase, then the equilibrium quantity will ________ and the equilibrium price will ________.
Answer
  • decrease; increase
  • decrease; decrease
  • decrease; remain constant
  • increase; either increase, decrease, or remain constant

Question 46

Question
A negative relationship between the quantity demanded and price is called the law of ______.
Answer
  • demand
  • diminishing marginal returns
  • market clearing
  • supply

Question 47

Question
Given the demand curve, what is the price some buyers are willing and able to pay for 3 units?
Image:
3b5aa679-03e9-4140-963d-ffc47d9bb368 (image/jpeg)
Answer
  • $2
  • $4
  • $6
  • $8

Question 48

Question
Given the initial equilibrium of S1 and D, any price lower than ________ will create pressure for the price to ________ .
Image:
8ca1c671-2744-4894-aa88-9cc519487fd0 (image/jpeg)
Answer
  • $2.00; fall
  • $2.50; rise
  • $3.00; rise
  • none of the above are true

Question 49

Question
A price above the equilibrium price will:
Answer
  • result in quantity supplied being less than quantity demanded.
  • result in a shortage
  • create pressure for price to fall.
  • tend to rise over time..

Question 50

Question
The equilibrium quantity and the equilibrium price are ________ bags and ________ cents.
Image:
aba70f2a-ece8-4833-b259-fb867b61f749 (image/jpeg)
Answer
  • 140; 40
  • 175; 60
  • 175; 80
  • 210; 50

Question 51

Question
Which of the following is a demand factor in the health-care market?
Answer
  • productivity in health care
  • treatment decisions of doctors
  • changes in health care technology
  • All of the above are demand factors.

Question 52

Question
The equilibrium price established by supply and demand could be called a "just right" price because:
Answer
  • any price above it would be "too high" and cause a shortage.
  • any price below it would be "too low" and cause a surplus.
  • it is the only price where the quantity demanded and the quantity supplied are equal.
  • of all of the above.

Question 53

Question
According to the textbook, which of the following are suggestions to limit health-care spending?
Answer
  • requiring patients to pay a larger share
  • government regulation
  • the use of insurance companies that limit spending
  • all of the above

Question 54

Question
Technological improvements in the health-care industry have been a primary factor in the increase in health-care costs.
Answer
  • True
  • False

Question 55

Question
The United States is confronted with two significant problems in health care. They are:
Answer
  • increasing the demand for health care and decreasing the supply of health care.
  • the need to build more hospitals and the slow rate of technological change in health care.
  • health-care cost and how to limit spending on health care.
  • all of the above

Question 56

Question
Third-party payer systems for health-care services include payments made by:
Answer
  • doctors.
  • patients.
  • hospitals.
  • insurance companies.

Question 57

Question
A market price support policy attempts to assist the farm industry by:
Answer
  • taxing the incomes of farmers.
  • directly subsidizing the incomes of farmers
  • establishing price floors in farm output markets.
  • reducing the amount of resources used in farm production.

Question 58

Question
When the price of P2 becomes available to the consumer because of insurance:
Image:
534a8281-fbed-43b0-8d37-66751333b163 (image/jpeg)
Answer
  • health-care costs are now OP3BQ2, of which OP3CQ2 is paid by consumers and P2P3BQ2 is paid by insurance.
  • health-care costs are now OP3BQ2, of which P2P3BQ2 is paid by consumers and OP2CQ2 is paid by insurance.
  • the new quantity of health care is Q2.
  • the new quantity of health care is Q1.

Question 59

Question
In terms of equity, existing farm policies tend to help:
Answer
  • all farmers equally
  • none of the farmers.
  • poor farmers more than wealthy farmers.
  • wealthy farmers more than poor farmers

Question 60

Question
If the government sets out to help low-income people by establishing a maximum amount for rent:
Answer
  • a price floor has been set and a shortage of rental units may occur.
  • a price ceiling has been set and a shortage of rental units may occur.
  • in the long run more rental units will appear.
  • poor people will definitely be helped.

Question 61

Question
The increase in the cost of health care was caused in part:
Answer
  • by technology, which has created new and costly treatments.
  • by doctors' receiving incomes above the market level.
  • by the government's fixing prices in health care.
  • because insurance companies have been left out of health care.

Question 62

Question
In the market for health care:
Answer
  • equilibrium occurs at the intersection of supply and demand, just as it does with most goods.
  • the effect of third-party payers decreases the price that consumers pay.
  • providers are encouraged to supply a greater quantity than they would without third-party payers.
  • B and C are true.

Question 63

Question
During the 1930s, the role of the federal government in the U.S. agricultural industry:
Answer
  • remained unchanged from the earlier decades.
  • decreased substantially.
  • increased substantially.
  • decreased marginally.

Question 64

Question
A market price support policy attempts to assist the farm industry by:
Answer
  • taxing the incomes of farmers.
  • directly subsidizing the incomes of farmers.
  • establishing price floors in farm output markets.
  • reducing the amount of resources used in farm production.

Question 65

Question
Third-party payer systems are most likely to ________ the quantity of health care ________.
Answer
  • increase; demanded
  • decrease; demanded
  • not change; supplied
  • decrease; supplied

Question 66

Question
In the stock market the demand for stocks in recent years has been greatly affected by demographic change and rising incomes.
Answer
  • True
  • False

Question 67

Question
In the personal computer industry, the reason for the fall in prices and the increase in quantity after 1980 was primarily due to technological change and an increase in the number of sellers.
Answer
  • True
  • False

Question 68

Question
20 percent of total health-care spending is paid by private and government insurance
Answer
  • True
  • False

Question 69

Question
An arrangement in which consumers choose their health-care services while other institutions pay a share of the cost of those services is called a(n) ________ payer system.
Answer
  • provider fees
  • third-party
  • insurance premiums
  • catastrophic insurance

Question 70

Question
The Case in Point on the Oregon Plan makes it clear that the state sets a limit on how much it will spend but not on what procedures it will cover.
Answer
  • True
  • False

Question 71

Question
During the Great Depression:
Answer
  • agriculture was hit particularly hard.
  • prices received by farmers rose by nearly 2/3 between 1930 and 1933.
  • farm legislation in the 1930s sought to reduce the number of farms and farm income
  • all of the above are true.

Question 72

Question
Although health-care costs have increased recently in absolute terms, they have fallen as a percentage of total output.
Answer
  • True
  • False

Question 73

Question
When the price of $20 per visit becomes available to the consumer because of insurance:
Image:
f81cfe1c-d3db-4aeb-95ad-ce9fe3f5bdae (image/jpeg)
Answer
  • health-care costs become $180 million, of which $60 million is paid by consumers and $120 million is paid by insurance.
  • health-care costs become $180 million, of which $120 million is paid by consumers and $60 million is paid by insurance .
  • the new quantity of physician office visits is 1 million visits per week.
  • both A and C are true.

Question 74

Question
Farm legislation has historically tried to increase farm income by:
Answer
  • guaranteeing a minimum price to farmers.
  • imposing limits on production.
  • insulating farmers from fluctuations in prices
  • doing all of the above.

Question 75

Question
The price elasticity of demand for lettuce has been estimated to be -2.58. If an insect infestation destroys 10 percent of the nation's lettuce crop, how will that affect total expenditures on lettuce, all other things unchanged?
Answer
  • total expenditures will remain unchanged
  • total expenditures will fall
  • total expenditures will rise
  • not enough information is given to answer the question

Question 76

Question
The income elasticity of demand for peaches has been estimated to be 1.43. If income grows by 15 percent in a period, how will that affect total expenditures on peaches in that period, all other things unchanged?
Answer
  • total expenditures will rise
  • total expenditures will fall
  • total expenditures will remain unchanged
  • not enough information is given to answer the question

Question 77

Question
The price elasticity of demand for the segment FG is:
Image:
ef894b83-5a47-4180-91c2-154f5b15d9fd (image/jpeg)
Answer
  • 0.
  • 0.09
  • -0.5
  • greater than 1 (absolute value).

Question 78

Question
The concept of cross price elasticity of demand refers to the:
Answer
  • ratio of the percentage change in the quantity demanded of a good at a specific price to the percentage change in the price of a related good.
  • ratio of the percentage change in the price of one good to the percentage change in the quantity demanded of a related good at a specific price.
  • ratio of the price elasticity of a normal good to the price elasticity of a related good.
  • change in income due to a change in the price of a related good.

Question 79

Question
If the income elasticity of demand for a good is positive, the good is said to be a(n):
Answer
  • inferior good
  • substitute good.
  • normal good.
  • positive good

Question 80

Question
A shirt manufacturer sold 10 dozen shirts per day when the price was $4 per shirt but sold 15 dozen shirts per day when the price was $3 per shirt. Hence, the absolute value of the price elasticity of demand is:
Answer
  • greater than zero but less than 1.
  • equal to 1.
  • greater than 1 but less than 3.
  • greater than 3

Question 81

Question
If the price of chocolate-covered peanuts increases and the demand for strawberries does not change, this indicates that these two goods are:
Answer
  • unrelated goods
  • inferior goods.
  • substitute goods
  • complementary goods.

Question 82

Question
If an increase in income leads to a decrease in the demand for a good, then the good is said to be:
Answer
  • normal.
  • a luxury.
  • inferior.
  • a staple or necessity.

Question 83

Question
If your purchases of shoes decrease from 11 pairs per year to 9 pairs per year when the price of shirts increases from $8 to $12, then, for you, shoes and shirts are considered:
Answer
  • inferior goods.
  • superior goods.
  • substitute goods
  • complementary goods

Question 84

Question
The concept of price elasticity of supply can be applied to labor:
Answer
  • to show the amount of income earned at different wage rates.
  • to show how the quantity of labor supplied responds to changes in wages and salaries.
  • to determine how responsive the demand for labor is to changes in wages and salaries.
  • to do all of the above.

Question 85

Question
An important determinant of the price elasticity of demand is the:
Answer
  • importance in household budgets.
  • level of technology
  • quantity of the good supplied.
  • extent of government regulation.

Question 86

Question
Suppose the demand curve has a slope equal to negative 1. The price elasticity of demand at any point on this demand curve is:
Answer
  • infinite.
  • equal to zero.
  • greater than 1, but less than infinite.
  • not described by any of the above.

Question 87

Question
Assume the supply curve shifts to the right by a given amount at each price. Price in the market will decline the most if demand is more:
Answer
  • price elastic and supply is more price inelastic
  • price inelastic and supply is more price inelastic.
  • price elastic and supply is more price elastic.
  • price inelastic and supply is more price elastic.

Question 88

Question
Demand is price inelastic between:
Image:
cb7281fa-5dd7-48bf-bfc5-9869f1ec6f76 (image/jpeg)
Answer
  • $0.40 and $0.50.
  • $0.50 and $0.60.
  • $0.60 and $0.70.
  • $0.70 and $0.80.

Question 89

Question
If an increase in the price of a good leads to an increase in total revenue, then:
Answer
  • the supply curve must be price inelastic.
  • the demand curve must be price elastic.
  • the supply curve is price elastic
  • none of the above is necessarily true; there is no information given regarding the price elasticity of supply.

Question 90

Question
The cross price elasticity of demand for substitutes goods is:
Answer
  • negative.
  • positive.
  • equal to 1.
  • positive only for normal goods.

Question 91

Question
If the price of emergency visits to the doctor were to rise, we would expect:
Answer
  • a significant decline in the number of emergency visits to the doctor
  • only a slight decline is the number of emergency visits to the doctor.
  • the number of emergency visits to the doctor to stay the same.
  • the total income of doctors to fall dramatically.

Question 92

Question
When the percentage change in quantity demanded is larger than the percentage change in price, demand is said to be price inelastic
Answer
  • True
  • False

Question 93

Question
The price elasticity of demand for the segment BC is:
Image:
8f5ddd3f-bff0-4d34-a725-d0a0f4557aaa (image/jpeg)
Answer
  • greater than 3.33 (absolute value).
  • -3.33.
  • -3.
  • -0.33.

Question 94

Question
Suppose that the cross price elasticity of demand for Mountain Dew with respect to the price of Coke is 0.7. A 10 percent increase in the price of Coke would:
Answer
  • reduce the demand for Mountain Dew by 10 percent.
  • reduce the demand for Mountain Dew by 7 percent.
  • increase the demand for Mountain Dew by 7 percent.
  • increase the demand for Mountain Dew by 10 percent.

Question 95

Question
The income elasticity of demand for ground beef has been estimated to be -0.197. If income falls by 10 percent in a period, how will that affect total expenditures on ground beef in that period, all other things unchanged?
Answer
  • total expenditures will rise
  • total expenditures will remain unchanged
  • total expenditures will fall
  • not enough information is given to answer the question

Question 96

Question
Because individuals are unlikely to reveal their demand for public goods, private firms will produce a _______ quantity of public goods than is _______ .
Answer
  • smaller; efficient
  • smaller; inefficient
  • greater; efficient
  • greater; inefficient

Question 97

Question
An efficient allocation of resources implies _______ allocation of goods and services.
Answer
  • an equitable
  • an inequitable
  • neither an equitable nor an inequitable
  • a maximum

Question 98

Question
Maximizing choices must be made within parameters imposed by:
Answer
  • a constraint.
  • a boundary.
  • a limit.
  • all of the above.

Question 99

Question
To be effective in facilitating exchange, property rights must be:
Answer
  • exclusive.
  • nontransferable
  • nonexclusive.
  • defined to give complete freedom to the owner to use the property in any way the owner chooses.

Question 100

Question
Suppose that the expected exam scores from studying economics for 0, 1, 2, or 3 hours are 65, 80, 90, and 95 points, respectively, while the expected exam scores for studying 0, 1, 2, or 3 hours of accounting are 50, 65, 70, and 70 points, respectively. With 3 total hours of study time, your combined scores can be maximized by spending _______ hours studying accounting.
Answer
  • 0
  • 1
  • 2
  • 3

Question 101

Question
Common property resources have never been a serious problem in the efficient allocation of resources.
Answer
  • True
  • False

Question 102

Question
Utility is the difference between a firm's revenue and its total economic cost.
Answer
  • True
  • False

Question 103

Question
Which of the following statements is (are) true?
Answer
  • An efficient allocation of resources maximizes the net benefit of each activity.
  • An efficient allocation of resources implies that the distribution of income is equitable.
  • Judgments about equity are positive judgments.
  • A and B are true.

Question 104

Question
A normal market supply curve reflects:
Answer
  • private benefits to sellers.
  • private costs to sellers.
  • social benefits to buyers.
  • external benefits to sellers.

Question 105

Question
If the price of popcorn is $0.50 per box and the price of peanuts is $0.25 per bag, and you have $10 to spend on both goods, the maximum quantity of popcorn that you can purchase is _______ boxes.
Answer
  • 5
  • 10
  • 20
  • 40
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