Question 1

The technique called input-output analysis relies heavily on

Accepted Answer

A) a mathematical framework that includes details for each product. 
B) a model that incorporates the interdependence of the economies industries. 
C) large amounts of production data. 
D) All of these responses are correct. 
A) a mathematical framework that includes details for each product. 
B) a model that incorporates the interdependence of the economies industries. 
C) large amounts of production data. 
D) All of these responses are correct.

Question 2

The production possibilities frontier cannot be used to show

Accepted Answer

A) scarcity in a society. 
B) the trade-offs involved in production decisions. 
C) the unequal distribution of resources among the members of society. 
D) All of the responses are correct. 
A) scarcity in a society. 
B) the trade-offs involved in production decisions. 
C) the unequal distribution of resources among the members of society. 
D) All of the responses are correct.

Question 3

"Peak" pricing can best be defined as

Accepted Answer

A) setting higher prices to reflect higher demand. 
B) pricing to obtain maximum profit. 
C) setting price higher when demand is more elastic. 
D) raising price to determine elasticity. 
A) setting higher prices to reflect higher demand. 
B) pricing to obtain maximum profit. 
C) setting price higher when demand is more elastic. 
D) raising price to determine elasticity.

Question 4

Allocations that are inefficient are sometimes chosen by policy makers as a way of improving fairness.

Accepted Answer

A) True 
 B)False

Question 5

Economists can objectively evaluate the desirability of the distribution of income.

Accepted Answer

A) True 
 B)False

Question 6

An optimal allocation of resources is one which is

Accepted Answer

A) unfair. 
B) fair. 
C) efficient. 
D) inefficient. 
A) unfair. 
B) fair. 
C) efficient. 
D) inefficient.

Question 7

Centrally planned economies use free-market systems for their production planning.

Accepted Answer

A) True 
 B)False

Question 8

With a monopoly, the producer's surplus is lower than it would be with a perfectly competitive industry.

Accepted Answer

A) True 
 B)False

Question 9

If the poor cannot afford proper medical treatment, an economist, for reasons of efficiency, would favor

Accepted Answer

A) giving the poor added income to spend as he or she sees fit. 
B) paying doctors bonuses to treat the poor. 
C) paying the medical bills of the poor. 
D) giving the poor "medical stamps." 
A) giving the poor added income to spend as he or she sees fit. 
B) paying doctors bonuses to treat the poor. 
C) paying the medical bills of the poor. 
D) giving the poor "medical stamps."

Question 10

The production possibilities frontier illustrates

Accepted Answer

A) the constant rate of technological progress. 
B) the fundamental concept of scarcity. 
C) the rapid growth of the U.S.economy. 
D) that guns always trade for butter. 
A) the constant rate of technological progress. 
B) the fundamental concept of scarcity. 
C) the rapid growth of the U.S.economy. 
D) that guns always trade for butter.

Question 11

Which of the following statements is correct?

Accepted Answer

A) Low prices may not always be in the public interest. 
B) If prices on scarce resources are set "too low," consumers will receive the "wrong" signals and be encouraged to consume more, thus squandering resources. 
C) Raising prices on scarce resources is generally politically unpopular. 
D) All of the responses are correct. 
A) Low prices may not always be in the public interest. 
B) If prices on scarce resources are set "too low," consumers will receive the "wrong" signals and be encouraged to consume more, thus squandering resources. 
C) Raising prices on scarce resources is generally politically unpopular. 
D) All of the responses are correct.

Question 12

Under perfect competition, if marginal cost is below price, then a producer can benefit from increasing his or her output.

Accepted Answer

A) True 
 B)False

Question 13

Which of the proposals for education reform is likely to be supported by an economist concerned with efficiency?

Accepted Answer

A) Give families "education stamps" to be spent at the school of their choice. 
B) Assign children to particular schools based on where they live. 
C) Give all schoolchildren the same number of years of education. 
D) Abolish private (i.e., fee-charging) schools. 
A) Give families "education stamps" to be spent at the school of their choice. 
B) Assign children to particular schools based on where they live. 
C) Give all schoolchildren the same number of years of education. 
D) Abolish private (i.e., fee-charging) schools.

Question 14

Assuming one can derive a correct input-output table, are there still any reasons to prefer the market to central planning?

Accepted Answer

The market reflects consumer choice.The

Question 15

Higher efficiency in the economy can be reached if prices are held low by law.

Accepted Answer

A) True 
 B)False

Question 16

Laissez-faire refers to a program of minimal interference in the market system.

Accepted Answer

A) True 
 B)False

Question 17

If a technological breakthrough reduces input quantities needed to produce some item,

Accepted Answer

A) cost of production will be increased. 
B) the price of the product will rise. 
C) the price of the product will fall. 
D) quantity demanded of the product will fall. 
A) cost of production will be increased. 
B) the price of the product will rise. 
C) the price of the product will fall. 
D) quantity demanded of the product will fall.

Question 18

An efficient solution to a pricing problem

Accepted Answer

A) makes both buyers and sellers better off than any other possible solution. 
B) may not be the socially "fair" solution. 
C) occurs when producers' total cost of production equals consumers' total utility from the output produced. 
D) maximizes the output of the good being priced. 
A) makes both buyers and sellers better off than any other possible solution. 
B) may not be the socially "fair" solution. 
C) occurs when producers' total cost of production equals consumers' total utility from the output produced. 
D) maximizes the output of the good being priced.

Question 19

The price system takes into account consumer preferences in the distribution of goods and services.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following functions is not performed by prices in a free market?

Accepted Answer

A) Guiding the allocation of resources 
B) Conveying information about the marginal cost of production 
C) Making the distribution of income more equitable 
D) Replacing the need for governmental supervision of production 
A) Guiding the allocation of resources 
B) Conveying information about the marginal cost of production 
C) Making the distribution of income more equitable 
D) Replacing the need for governmental supervision of production

Exam 11: The Case for Free Markets: the Price System

The technique called input-output analysis relies heavily on

The production possibilities frontier cannot be used to show

"Peak" pricing can best be defined as

Allocations that are inefficient are sometimes chosen by policy makers as a way of improving fairness.

Economists can objectively evaluate the desirability of the distribution of income.

An optimal allocation of resources is one which is

Centrally planned economies use free-market systems for their production planning.

With a monopoly, the producer's surplus is lower than it would be with a perfectly competitive industry.

If the poor cannot afford proper medical treatment, an economist, for reasons of efficiency, would favor

The production possibilities frontier illustrates

Which of the following statements is correct?

Under perfect competition, if marginal cost is below price, then a producer can benefit from increasing his or her output.

Which of the proposals for education reform is likely to be supported by an economist concerned with efficiency?

Assuming one can derive a correct input-output table, are there still any reasons to prefer the market to central planning?

Higher efficiency in the economy can be reached if prices are held low by law.

Laissez-faire refers to a program of minimal interference in the market system.

If a technological breakthrough reduces input quantities needed to produce some item,

An efficient solution to a pricing problem

The price system takes into account consumer preferences in the distribution of goods and services.

Which of the following functions is not performed by prices in a free market?

What Is Economics

The Economony: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: an Initial Look

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: the Importance of Marginal Analysis

The Financial Markets and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

Monopoly

Between Competition and Monopoly

Limiting Market Power: Antitrust and Regulation

The Shortcomings of Free Markets

The Economics of the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation

Bringing in the Supply Side: Unemployment and Inflation

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

The Financial Crisis and the Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade-Off Between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder

Exchange Rates and the Macroeconomy

Contemporary Issues in the Useconomy

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