Q1. All points on the production possibilities curve are efficient.
a. true
b. false
Q2. A rightward shift of the production possibilities curve represents economic growth.
a. true
b. false
Q3. Clean air is a scarce resource.
a. true
b. false
Q4. If an economy is operating at a point inside the production possibilities curve, then
a. society's resources are being used to produce too many consumer goods.
b. the curve will move to the left.
c. economic policy must retard further growth of the economy.
d. society's resources are being inefficiently utilized.
Q5. The shape of the production possibilities curve reveals the degree of income equality in an economy.
a. true
b. false
Q6. The slope of the production possibilities curves tells you
a. the quantity of all inputs available for productive uses.
b. the length of time required to switch between two different economic activities.
c. how much of one good must be sacrificed in order to produce more of the other.
d. the size of the labor force.
Q7.
Figure
What change would occur if the economy moves from point C to point B in Figure?
a. Resources previously devoted to producing consumer electronics would be used to produce housewares.
b. Previously unemployed resources would be used to produce housewares.
c. Previously unemployed resources would be used to produce consumer electronics.
d. Resources previously devoted to producing housewares would be used to produce consumer electronics.
Q8. The assumption of rational self-interest implies that people will choose to enrich themselves even if doing so violates the rights or property of others.
a. true
b. false
Q9. The production possibilities curve represents
a. possible combinations of maximum levels of output of two goods.
b. the trade-offs between efficiency and equity.
c. the trade-offs between self-interest and altruism.
d. the trade-offs between technology and ecology.
Q10. Which of the following statements is FALSE?
a. A good is anything that gives satisfaction or happiness to individuals.
b. Wants may include humanitarian and altruistic goals.
c. Wants are unlimited and include all material and nonmaterial desires.
d. Economic goods are available in desired quantities at a zero price.
Q11. In the graph of a production possibilities curve, both the horizontal and vertical axes measure the annual quantities of goods produced.
a. true
b. false
Q12. If you can earn $10 an hour as a retail clerk, $12 an hour as an office assistant, $16 an hour as a house painter, and $20 an hour repairing bicycles, what is your opportunity cost of working to repair bicycles?
a. $12 an hour
b. $10 an hour
c. $20 an hour
d. $16 an hour
Q13. Which one of the following is TRUE?
a. The factors of production are land, labor, capital, and entrepreneurship.
b. Land is a factor of production only in agricultural endeavors.
c. Capital is a factor of production only in high-tech industries.
d. Labor is a factor of production only in providing services.
Q14. Resources are also known as
a. stocks, bonds, and other financial instruments.
b. minerals.
c. factors of production.
d. factories.
Q15. The person who creates a product innovation and brings it to market is providing the resource of
a. labor.
b. land.
c. entrepreneurship.
d. capital.
Q16. Production refers to
a. any activity that causes a material conversion of an object.
b. any activity that results in the conversion of resources into goods and services that can be consumed.
c. any activity carried on by a firm, whether a corporation, partnership, or sole proprietorship.
d. physically producing material goods only.
Q17. Markets tend to
a. benefit sellers at the expense of buyers.
b. exist primarily in towns or cities.
c. facilitate exchange.
d. benefit buyers at the expense of sellers.
Q18. In choosing whether to produce something, a firm wants to know
a. how the cost of producing the good compares to its selling price.
b. how many other firms are producing the same good.
c. how long the typical consumer will shop before making this purchase.
d. how frequently consumers who purchase the good will actually use it.
Q19. Gifts of nature used in the production process are considered
a. entrepreneurship.
b. labor.
c. land.
d. capital.
Q20. The factors of production are
a. never as useful as people expect them to be.
b. valuable only because they are owned by corporations seeking to make a profit from them.
c. scarce resources.
d. abundant without limit on the planet.
Q21. In choosing a method of production, firms will seek to use the least-cost combination of inputs.
a. true
b. false
Q22. Why does a projected population decline concern European leaders?
a. because it will lead to economic recessions
b. because an aging population will increase the burden of providing pensions which is borne by younger workers
c. because it will lead to inflation
d. because it will lead to a decline in per capita real GDP
Q23. The fact that consumers care about prices means that firms have to care about costs.
a. true
b. false
Q24. The market system is also called the price system because
a. people pay money in markets.
b. everything has a price tag.
c. rising prices are the signal to producers to make more of a particular good.
d. inflation is a disturbing problem.
Q25. Why do firms seek to use the least-cost combination of inputs?
a. because they won't be able to stay in business if they don't
b. because that is the combination that their employees prefer
c. because managers and supervisors find their jobs are easiest when the least-cost combination is used
d. because they want to keep costs low in order to appear to the media as a well-run business
Q26. A recent study found that eating dark chocolate can provide cardiovascular health benefits. What effect does this have on the market for dark chocolate?
a. The price of dark chocolate can be expected to decline.
b. Dark chocolate is now relatively less scarce.
c. Dark chocolate is now relatively more scarce.
d. The price that the typical consumer is willing to pay for dark chocolate will decline.
Q27. The market demand for cotton clothing shifts to the right when
a. more consumers enter the market for cotton clothing.
b. the price of cotton decreases.
c. the supply of cotton decreases.
d. cotton clothing becomes less popular.
Q28. What will happen when the price of a good is held below its equilibrium price?
a. A surplus results.
b. Supply of the good decreases.
c. Demand for the good increases.
d. A shortage results.
Q29. If dry cleanersincrease the fees for cleaning services, economic theory predicts that
a. the supply of dry cleaning services will decrease, but demand will remain constant.
b. the supply of dry cleaning services will increase, but demand will remain constant.
c. demand will remain unchanged, but the quantity of cleaning services demanded falls.
d. the quantity of cleaning services demanded remains unchanged, but the demand falls.
Q30. The equilibrium price of a good is a price that everyone is happy with.
a. true
b. false
Q31. Suppose a college increases the wages paid to student employees. Which of the following options is the best description of the most likely effect of the wage increases on the market for school sweatshirts in the bookstore?
a. The demand curve shifts to the left.
b. There is a leftward movement along the demand curve.
c. The demand curve shifts to the right.
d. There is a rightward movement along the demand curve.
Q32. Table
|
Price per Constant-Quality Unit
|
Quantity Demanded of Constant-Quality Units per Year
|
Quantity Supplied of Constant-Quality Units per Year
|
|
$1.00
|
1,000
|
200
|
|
2.00
|
800
|
400
|
|
3.00
|
600
|
600
|
|
4.00
|
400
|
800
|
|
5.00
|
200
|
1,000
|
What condition characterizes a surplus?
a. Quantity supplied exceeds quantity demanded.
b. Quantity demanded exceeds quantity supplied.
c. Consumers are unhappy with the price.
d. Producers are unhappy with the price.
Q33. The market demand curve is the vertical summation of the demand curves of all the individuals in the market.
a. true
b. false
Q34. Scarcity can be eliminated by increasing the price of a good.
a. true
b. false
Q35. Which one of the following is TRUE?
a. An increase in price causes an increase in supply.
b. An increase in supply causes a decrease in demand.
c. An increase in price causes an increase in quantity supplied.
d. An increase in supply causes an increase in demand.
Q36. An increase in quantity demanded is caused by
a. an increase in income.
b. a decrease in the price of a complement.
c. a change in expectations about price in the future.
d. a decrease in the price of the good.
Q37. At prices above the equilibrium price, shortages occur.
a. true
b. false
Q38. The supply curve shifts when the firm experiences a change in its production technology.
a. true
b. false
Q39. A baker raised his bread prices by 10 percent and found that the quantity of bread sold decreased by 10 percent. What happened to the total amount of sales revenue he took in from bread sales?
a. It decreased.
b.
It remained unchanged.
c. It increased.
d. We cannot determine the effect on total revenue unless we also know the slope of the demand curve for bread.
Q40. Everyone who views the latest adventure movie in theaters will derive the same utility from seeing it.
a. true
b. false
Q41. Which of the following statements is true with respect to total utility and marginal utility?
a. Marginal utility is always equal to total utility.
b. Total utility will always be negative when marginal utility is positive.
c. Total utility is minimized when marginal utility is zero.
d. Marginal utility can decline as total utility rises.
Q42. The more you are willing to pay for an item, the more marginal utility you derive from it.
a. true
b. false
Q43. Which one of the following would make the demand for satellite subscription TV relatively less elastic?
a. The cost of administering the satellite service is lowered.
b. Cable TV service becomes less widely available.
c. Other networks of wireless entertainment become more widely available.
d. The cost of transmitting satellite signals is lowered.
Q44. The price elasticity of demand becomes relatively greater as more substitutes are easily available.
a. true
b. false
Q45. Table
|
Glasses of Water
|
Total Utility
|
Marginal Utility
|
|
0
|
0
|
|
|
1
|
100
|
|
|
2
|
175
|
|
|
3
|
225
|
|
|
4
|
250
|
|
|
5
|
260
|
|
|
6
|
255
|
|
Using Table, diminishing marginal utility begins after the ________ glass of water is consumed.
a. fourth
b. second
c. first
d. third
Q46. Table
|
Price
|
Quantity Demanded
|
|
$20
|
90
|
|
$16
|
110
|
|
$12
|
130
|
|
$ 8
|
150
|
According to the data in Table 4.6, what is the elasticity of demand between a price of $20 and a price of $16?
a. 0.60
b. 0.75
c. 0.90
d. 1.25
Q47. The law of diminishing marginal utility asserts that total utility becomes negative when marginal utility begins to diminish.
a. true
b. false
Q48. Diminishing marginal utility means that
a. as more and more of a good is consumed there is no impact on the rate of change of total utility.
b. as more and more of a good is consumed the rate at which total utility increases stays the same.
c. as more and more of a good is consumed the rate at which total utility increases starts to increase.
d. as more and more of a good is consumed the rate at which total utility increases starts to diminish.
Q49. When total utility is maximized,
a. marginal utility is equal to total utility.
b. marginal utility is zero.
c. marginal utility is minimized.
d. marginal utility is negative.
Q50. A price increase will cause a relatively large drop in quantity demanded when
a. demand is perfectly inelastic.
b. the price elasticity of demand is 0.
c. there is very little time allowed for consumers to react.
d. the consumer has easy access to a number of substitute goods.