Question 1

Which of the following will tend to result in the least variation in the expected real rate of return from the ownership of stocks?

Accepted Answer

A)  ownership of a single stock for a short period of time 
B)  ownership of a single stock over a lengthy period of time 
C)  ownership of stocks from a specific sector (for example, the automobile industry) over a lengthy period of time 
D)  ownership of a diverse set of stocks (the Standard & Poor's 500, for example) over a lengthy period of time 
A)  ownership of a single stock for a short period of time 
B)  ownership of a single stock over a lengthy period of time 
C)  ownership of stocks from a specific sector (for example, the automobile industry) over a lengthy period of time 
D)  ownership of a diverse set of stocks (the Standard & Poor's 500, for example) over a lengthy period of time

Question 2

Which of the following is true about investments?

Accepted Answer

A)  Most stockholders own stock because they want to run the business. 
B)  The shareholders of a large well-established firm can be reasonably sure that they will earn a real rate of return of about 7 percent in the future. 
C)  Ownership of a corporate bond provides the bondholder with an ownership right to a fraction of the firm's future profits. 
D)  Stock ownership makes it possible for investors to own a fractional share of a firm's future profits even if they do not participate in the operation of the firm. 
A)  Most stockholders own stock because they want to run the business. 
B)  The shareholders of a large well-established firm can be reasonably sure that they will earn a real rate of return of about 7 percent in the future. 
C)  Ownership of a corporate bond provides the bondholder with an ownership right to a fraction of the firm's future profits. 
D)  Stock ownership makes it possible for investors to own a fractional share of a firm's future profits even if they do not participate in the operation of the firm.

Question 3

If the demand for a good is relatively inelastic, this means that consumer purchases of the good are

Accepted Answer

A)  not very sensitive to the price of the good. 
B)  highly sensitive to the price of the good. 
C)  unrelated to the price of the good. 
D)  unaffected by changes in the income level of consumers. 
A)  not very sensitive to the price of the good. 
B)  highly sensitive to the price of the good. 
C)  unrelated to the price of the good. 
D)  unaffected by changes in the income level of consumers.

Question 4

The total economic cost of producing a good or service is called the

Accepted Answer

A)  comparative value of construction. 
B)  social consequence of resources. 
C)  marginal valuation of output. 
D)  opportunity cost of production. 
A)  comparative value of construction. 
B)  social consequence of resources. 
C)  marginal valuation of output. 
D)  opportunity cost of production.

Question 5

The maximum price that consumers are willing to pay for the hundredth unit of a good can be found as

Accepted Answer

A)  the height of the supply curve at a quantity of 100. 
B)  the height of the demand curve at a quantity of 100. 
C)  the difference between the height of the supply and demand curves at a quantity of 100. 
D)  none of the above. 
A)  the height of the supply curve at a quantity of 100. 
B)  the height of the demand curve at a quantity of 100. 
C)  the difference between the height of the supply and demand curves at a quantity of 100. 
D)  none of the above.

Question 6

Figure 3-22        
-Refer to Figure 3-22. Which of the four graphs represents the market for cars as a result of the adoption of new technology on assembly lines?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
A)  A 
B)  B 
C)  C 
D)  D

Question 7

To be economically successful, the entrepreneur must

Accepted Answer

A)  combine resources in a manner that increases their value. 
B)  produce a good that consumers value less than the resources used to produce it. 
C)  use only personal financial capital to avoid the interest payments that would have to be paid if the money is borrowed from the bank. 
D)  transform or rearrange resources to maximize the entrepreneur's cost of production. 
A)  combine resources in a manner that increases their value. 
B)  produce a good that consumers value less than the resources used to produce it. 
C)  use only personal financial capital to avoid the interest payments that would have to be paid if the money is borrowed from the bank. 
D)  transform or rearrange resources to maximize the entrepreneur's cost of production.

Question 8

Which of the following would increase the supply of laptop computers?

Accepted Answer

A)  higher wage rates for the workers that produce laptop computers 
B)  a technological improvement that lowers the cost of producing laptop computers 
C)  an increase in the price of computer chips used to produce laptop computers 
D)  all of the above 
A)  higher wage rates for the workers that produce laptop computers 
B)  a technological improvement that lowers the cost of producing laptop computers 
C)  an increase in the price of computer chips used to produce laptop computers 
D)  all of the above

Question 9

Which of the following investments is characterized by low risk, low fees, and high historic returns when held over a lengthy time period?

Accepted Answer

A)  A managed mutual fund that has performed well during the past two or three years. 
B)  A portfolio of technology stocks. 
C)  A mutual fund that holds stocks in the same proportion as a broad stock market index such as the S&P 500. 
D)  A mutual fund invested in medium-term bonds issued by the U.S. Treasury. 
A)  A managed mutual fund that has performed well during the past two or three years. 
B)  A portfolio of technology stocks. 
C)  A mutual fund that holds stocks in the same proportion as a broad stock market index such as the S&P 500. 
D)  A mutual fund invested in medium-term bonds issued by the U.S. Treasury.

Question 10

Regarding stocks and bonds, which of the following is true?

Accepted Answer

A)  Bond owners are entitled to the fraction of the firm's future revenues represented by their ownership shares. 
B)  As long as the organization issuing the stock is solvent, the stockholder can count on the funds being repaid with interest. 
C)  Bonds provide businesses, governments, and other organizations with a convenient way to borrow money. 
D)  All of the above are true. 
A)  Bond owners are entitled to the fraction of the firm's future revenues represented by their ownership shares. 
B)  As long as the organization issuing the stock is solvent, the stockholder can count on the funds being repaid with interest. 
C)  Bonds provide businesses, governments, and other organizations with a convenient way to borrow money. 
D)  All of the above are true.

Question 11

Which of the following would most likely cause both a decrease in the price of plasma screen TVs and a decrease in the number sold?

Accepted Answer

A)  an increase in the supply of plasma screen TVs 
B)  an increase in the demand for plasma screen TVs 
C)  a decrease in the supply of plasma screen TVs 
D)  a decrease in the demand for plasma screen TVs 
A)  an increase in the supply of plasma screen TVs 
B)  an increase in the demand for plasma screen TVs 
C)  a decrease in the supply of plasma screen TVs 
D)  a decrease in the demand for plasma screen TVs

Question 12

Graphically, the area that represents the difference between the maximum price consumers were willing to pay for a good and the market price is called

Accepted Answer

A)  consumer surplus. 
B)  producer surplus. 
C)  marginal cost. 
D)  triangular arbitrage. 
A)  consumer surplus. 
B)  producer surplus. 
C)  marginal cost. 
D)  triangular arbitrage.

Question 13

If there is a decrease in both the supply and demand for a good, which of the following will definitely occur?

Accepted Answer

A)  The price of the good will increase. 
B)  The price of the good will decrease. 
C)  The equilibrium quantity will increase. 
D)  The equilibrium quantity will decrease. 
A)  The price of the good will increase. 
B)  The price of the good will decrease. 
C)  The equilibrium quantity will increase. 
D)  The equilibrium quantity will decrease.

Question 14

Which of the following is the most likely effect of higher chicken prices on the price and quantity purchased of beef, a substitute product?

Accepted Answer

A)  The price of beef will increase, and the quantity purchased will fall. 
B)  The price of beef will fall, and the quantity purchased will increase. 
C)  The price of beef will increase, and the quantity purchased will increase. 
D)  The price of beef will fall, and the quantity purchased will fall. 
A)  The price of beef will increase, and the quantity purchased will fall. 
B)  The price of beef will fall, and the quantity purchased will increase. 
C)  The price of beef will increase, and the quantity purchased will increase. 
D)  The price of beef will fall, and the quantity purchased will fall.

Question 15

Jane is a 22-year-old college graduate. She has just started working at a job that pays her $75,000 per year. Since you have had an economics course, Jane asks you for advice on where to invest the money she is saving for her retirement. What do you recommend?

Accepted Answer

History indicates that the stock market

Question 16

The height of the demand curve for a product indicates the

Accepted Answer

A)  minimum price consumers are willing to pay for an additional unit of it. 
B)  minimum quantity consumers are willing to purchase at the current price. 
C)  maximum price consumers are willing to pay for an additional unit of it. 
D)  minimum price required to induce suppliers to produce an additional unit of it. 
A)  minimum price consumers are willing to pay for an additional unit of it. 
B)  minimum quantity consumers are willing to purchase at the current price. 
C)  maximum price consumers are willing to pay for an additional unit of it. 
D)  minimum price required to induce suppliers to produce an additional unit of it.

Question 17

If price falls, what happens to the quantity demanded for a product?

Accepted Answer

A)  It increases. 
B)  It decreases. 
C)  It does not change. 
D)  Uncertain--economic theory has no answer to this question. 
A)  It increases. 
B)  It decreases. 
C)  It does not change. 
D)  Uncertain--economic theory has no answer to this question.

Question 18

Use the figure below to answer the following question(s).
Figure 3-9  
-In Figure 3-9, if D and S represent the demand and supply for gasoline, what is the equilibrium price and quantity?

Accepted Answer

A)  price, $1; quantity, 20 
B)  price, $2; quantity, 30 
C)  price, $3; quantity, 40 
D)  price, $4; quantity, 50 
A)  price, $1; quantity, 20 
B)  price, $2; quantity, 30 
C)  price, $3; quantity, 40 
D)  price, $4; quantity, 50

Question 19

If a large percentage increase in the price of a good results in a small percentage increase in the quantity supplied of the good, supply is said to be

Accepted Answer

A)  horizontal. 
B)  relatively inelastic. 
C)  relatively elastic. 
D)  income proof. 
A)  horizontal. 
B)  relatively inelastic. 
C)  relatively elastic. 
D)  income proof.

Question 20

Ceteris paribus, a decrease in the price of a good will cause the

Accepted Answer

A)  quantity demanded of the good to decrease. 
B)  quantity supplied of the good to increase. 
C)  producer surplus derived from the good to decrease. 
D)  supply of the good to decrease. 
A)  quantity demanded of the good to decrease. 
B)  quantity supplied of the good to increase. 
C)  producer surplus derived from the good to decrease. 
D)  supply of the good to decrease.

Which of the following will tend to result in the least variation in the expected real rate of return from the ownership of stocks?

Which of the following is true about investments?

If the demand for a good is relatively inelastic, this means that consumer purchases of the good are

The total economic cost of producing a good or service is called the

The maximum price that consumers are willing to pay for the hundredth unit of a good can be found as

Figure 3-22 -Refer to Figure 3-22. Which of the four graphs represents the market for cars as a result of the adoption of new technology on assembly lines?

To be economically successful, the entrepreneur must

Which of the following would increase the supply of laptop computers?

Which of the following investments is characterized by low risk, low fees, and high historic returns when held over a lengthy time period?

Regarding stocks and bonds, which of the following is true?

Which of the following would most likely cause both a decrease in the price of plasma screen TVs and a decrease in the number sold?

Graphically, the area that represents the difference between the maximum price consumers were willing to pay for a good and the market price is called

If there is a decrease in both the supply and demand for a good, which of the following will definitely occur?

Which of the following is the most likely effect of higher chicken prices on the price and quantity purchased of beef, a substitute product?

Jane is a 22-year-old college graduate. She has just started working at a job that pays her $75,000 per year. Since you have had an economics course, Jane asks you for advice on where to invest the money she is saving for her retirement. What do you recommend?

The height of the demand curve for a product indicates the

If price falls, what happens to the quantity demanded for a product?

Use the figure below to answer the following question(s). Figure 3-9 -In Figure 3-9, if D and S represent the demand and supply for gasoline, what is the equilibrium price and quantity?

If a large percentage increase in the price of a good results in a small percentage increase in the quantity supplied of the good, supply is said to be

Ceteris paribus, a decrease in the price of a good will cause the

The Economic Approach

Some Tools of the Economist

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Consumer Choice and Elasticity

Costs and the Supply of Goods

Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Price-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Gaining From International Trade

Filters

Exam 3: Demand, Supply, and the Market Process

Which of the following will tend to result in the least variation in the expected real rate of return from the ownership of stocks?

Which of the following is true about investments?

If the demand for a good is relatively inelastic, this means that consumer purchases of the good are

The total economic cost of producing a good or service is called the

The maximum price that consumers are willing to pay for the hundredth unit of a good can be found as

Figure 3-22 -Refer to Figure 3-22. Which of the four graphs represents the market for cars as a result of the adoption of new technology on assembly lines?

To be economically successful, the entrepreneur must

Which of the following would increase the supply of laptop computers?

Which of the following investments is characterized by low risk, low fees, and high historic returns when held over a lengthy time period?

Regarding stocks and bonds, which of the following is true?

Which of the following would most likely cause both a decrease in the price of plasma screen TVs and a decrease in the number sold?

Graphically, the area that represents the difference between the maximum price consumers were willing to pay for a good and the market price is called

If there is a decrease in both the supply and demand for a good, which of the following will definitely occur?

Which of the following is the most likely effect of higher chicken prices on the price and quantity purchased of beef, a substitute product?

Jane is a 22-year-old college graduate. She has just started working at a job that pays her $75,000 per year. Since you have had an economics course, Jane asks you for advice on where to invest the money she is saving for her retirement. What do you recommend?

The height of the demand curve for a product indicates the

If price falls, what happens to the quantity demanded for a product?

Use the figure below to answer the following question(s). Figure 3-9 -In Figure 3-9, if D and S represent the demand and supply for gasoline, what is the equilibrium price and quantity?

If a large percentage increase in the price of a good results in a small percentage increase in the quantity supplied of the good, supply is said to be

Ceteris paribus, a decrease in the price of a good will cause the

The Economic Approach

Some Tools of the Economist

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Consumer Choice and Elasticity

Costs and the Supply of Goods

Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Price-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Gaining From International Trade

Filters