Question 1

"An increase in the price of gasoline will increase the demand for hybrid vehicles." This statement is an example of a positive economic statement.

Accepted Answer

A) True 
 B)False

Question 2

In economics, the term ________ refers to a group of buyers and sellers of a product and the arrangement by which they come together to trade.

Accepted Answer

A) collective 
B) cooperative 
C) market 
D) trade-off 
A) collective 
B) cooperative 
C) market 
D) trade-off

Question 3

All of the following contributed to the downfall of the Soviet Union in 1991 except

Accepted Answer

A) public dissatisfaction with low living standards and political repression. 
B) an inability to produce low-cost consumer goods that households wanted. 
C) lack of high-quality goods and services. 
D) lack of a strong dictator who could coordinate economic activities. 
A) public dissatisfaction with low living standards and political repression. 
B) an inability to produce low-cost consumer goods that households wanted. 
C) lack of high-quality goods and services. 
D) lack of a strong dictator who could coordinate economic activities.

Question 4

"A decrease in the price of tablet computers will decrease the demand for desktop computers." This statement is an example of a normative economic statement.

Accepted Answer

A) True 
 B)False

Question 5

Where do economic agents such as individuals, firms, and nations interact with each other?

Accepted Answer

A) in public locations monitored by the government 
B) in any arena that brings together buyers and sellers 
C) in any physical location where people can physically get together for selling goods, such as shopping malls 
D) in any location where transactions can be monitored by consumer groups and taxed by the government 
A) in public locations monitored by the government 
B) in any arena that brings together buyers and sellers 
C) in any physical location where people can physically get together for selling goods, such as shopping malls 
D) in any location where transactions can be monitored by consumer groups and taxed by the government

Question 6

Scenario 1-1
Suppose a cell phone manufacturer currently sells 20,000 cell phones per week and makes a profit of $5,000 per week.A manager at the plant observes, "Although the last 3,000 cell phones we produced and sold increased our revenue by $6,000 and our costs by $6,700, we are still making an overall profit of $5,000 per week so I think we're on the right track.We are producing the optimal number of cell phones."
-Refer to Scenario 1-1.Using marginal analysis terminology, what is another economic term for the incremental cost of producing the last 3,000 cell phones?

Accepted Answer

A) marginal cost 
B) operating cost 
C) explicit cost 
D) Any of the above terms are correct. 
A) marginal cost 
B) operating cost 
C) explicit cost 
D) Any of the above terms are correct.

Question 7

A restaurant sells a large soft drink at a fixed price of $1.79.A term used by economists to describe the money received from the sale of an additional large soft drink is

Accepted Answer

A) marginal revenue. 
B) gross earnings. 
C) pure profit. 
D) net benefit. 
A) marginal revenue. 
B) gross earnings. 
C) pure profit. 
D) net benefit.

Question 8

Optimal decisions are made at the point where marginal cost equals zero.

Accepted Answer

A) True 
 B)False

Question 9

The Coffee Nook, a small cafe near campus, sells cappuccinos for $2.50 and Russian tea cakes for $1.00 each.What is the opportunity cost of buying a cappuccino?

Accepted Answer

A) 2 1/2 Russian tea cakes 
B) 2/5 of a Russian tea cake 
C) $2.50 
D) $1.00 
A) 2 1/2 Russian tea cakes 
B) 2/5 of a Russian tea cake 
C) $2.50 
D) $1.00

Question 10

"The distribution of income should be determined by the government" is an example of a positive economic statement.

Accepted Answer

A) True 
 B)False

Question 11

What is the difference between an invention and an innovation?

Accepted Answer

An invention is the development of a new

Question 12

Which of the following is an example of an activity undertaken by an entrepreneur?

Accepted Answer

A) designing your landscaping for your new home 
B) holding a position as the president of a liberal arts college 
C) running for the president of the United States 
D) starting your own pet sitting business 
A) designing your landscaping for your new home 
B) holding a position as the president of a liberal arts college 
C) running for the president of the United States 
D) starting your own pet sitting business

Question 13

Which of the following is a macroeconomics question?

Accepted Answer

A) What determines the growth rate of gross domestic product? 
B) How is the production quantity of snowboards determined? 
C) What factors determine the price of electronic cigarettes? 
D) What determines the salaries of Wall Street executives? 
A) What determines the growth rate of gross domestic product? 
B) How is the production quantity of snowboards determined? 
C) What factors determine the price of electronic cigarettes? 
D) What determines the salaries of Wall Street executives?

Question 14

The government makes all economic decisions in a mixed economy.

Accepted Answer

A) True 
 B)False

Question 15

What is the "omitted variable" problem in determining cause and effect?

Accepted Answer

A) It is a problem that arises when an insignificant variable is given too much weight in an economic analysis leading to skewed conclusions about cause and effect. 
B) It is a problem that arises when a significant variable is not given enough weight in an economic experiment leading to skewed conclusions about cause and effect. 
C) It is a problem that arises when an insignificant economic variable that should have been omitted is included in an economic experiment leading to false conclusions about cause and effect. 
D) It is a problem that arises when an economic variable that affects other variables is omitted from an analysis and its omission leads to false conclusions about cause and effect. 
A) It is a problem that arises when an insignificant variable is given too much weight in an economic analysis leading to skewed conclusions about cause and effect. 
B) It is a problem that arises when a significant variable is not given enough weight in an economic experiment leading to skewed conclusions about cause and effect. 
C) It is a problem that arises when an insignificant economic variable that should have been omitted is included in an economic experiment leading to false conclusions about cause and effect. 
D) It is a problem that arises when an economic variable that affects other variables is omitted from an analysis and its omission leads to false conclusions about cause and effect.

Question 16

If the price of gasoline was $3.25 a gallon and it is now $3.75 a gallon, what is the percentage change in price?

Accepted Answer

A) 7.1 percent 
B) 13.3 percent 
C) 15.4 percent 
D) 33.3 percent 
A) 7.1 percent 
B) 13.3 percent 
C) 15.4 percent 
D) 33.3 percent

Question 17

When production reflects consumer preferences, ________ occurs.

Accepted Answer

A) allocative efficiency 
B) productive efficiency 
C) equity 
D) efficient central planning 
A) allocative efficiency 
B) productive efficiency 
C) equity 
D) efficient central planning

Question 18

How are the fundamental economic questions answered in a market economy?

Accepted Answer

A) The government alone decides the answers. 
B) Individuals, firms, and the government interact in markets to decide the answers to these questions. 
C) Households and firms interact in markets to decide the answers to these questions. 
D) Large corporations alone decide the answers. 
A) The government alone decides the answers. 
B) Individuals, firms, and the government interact in markets to decide the answers to these questions. 
C) Households and firms interact in markets to decide the answers to these questions. 
D) Large corporations alone decide the answers.

Question 19

A college must decide if it wants to offer more Internet-based classes.This decision involves answering the economic question of "what to produce."

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is a problem inherent in centrally planned economies?

Accepted Answer

A) Households and firms make poor decisions in choosing how resources are allocated. 
B) There is too little production of low-cost, high-quality goods and services. 
C) Production managers are more concerned with satisfying consumer wants than with satisfying government's orders. 
D) Exports tend to exceed imports. 
A) Households and firms make poor decisions in choosing how resources are allocated. 
B) There is too little production of low-cost, high-quality goods and services. 
C) Production managers are more concerned with satisfying consumer wants than with satisfying government's orders. 
D) Exports tend to exceed imports.

"An increase in the price of gasoline will increase the demand for hybrid vehicles." This statement is an example of a positive economic statement.

In economics, the term ________ refers to a group of buyers and sellers of a product and the arrangement by which they come together to trade.

All of the following contributed to the downfall of the Soviet Union in 1991 except

"A decrease in the price of tablet computers will decrease the demand for desktop computers." This statement is an example of a normative economic statement.

Where do economic agents such as individuals, firms, and nations interact with each other?

A restaurant sells a large soft drink at a fixed price of $1.79.A term used by economists to describe the money received from the sale of an additional large soft drink is

Optimal decisions are made at the point where marginal cost equals zero.

The Coffee Nook, a small cafe near campus, sells cappuccinos for $2.50 and Russian tea cakes for $1.00 each.What is the opportunity cost of buying a cappuccino?

"The distribution of income should be determined by the government" is an example of a positive economic statement.

What is the difference between an invention and an innovation?

Which of the following is an example of an activity undertaken by an entrepreneur?

Which of the following is a macroeconomics question?

The government makes all economic decisions in a mixed economy.

What is the "omitted variable" problem in determining cause and effect?

If the price of gasoline was $3.25 a gallon and it is now $3.75 a gallon, what is the percentage change in price?

When production reflects consumer preferences, ________ occurs.

How are the fundamental economic questions answered in a market economy?

A college must decide if it wants to offer more Internet-based classes.This decision involves answering the economic question of "what to produce."

Which of the following is a problem inherent in centrally planned economies?

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

Filters

Exam 1: Economics: Foundations and Models

"An increase in the price of gasoline will increase the demand for hybrid vehicles." This statement is an example of a positive economic statement.

In economics, the term ________ refers to a group of buyers and sellers of a product and the arrangement by which they come together to trade.

All of the following contributed to the downfall of the Soviet Union in 1991 except

"A decrease in the price of tablet computers will decrease the demand for desktop computers." This statement is an example of a normative economic statement.

Where do economic agents such as individuals, firms, and nations interact with each other?

A restaurant sells a large soft drink at a fixed price of $1.79.A term used by economists to describe the money received from the sale of an additional large soft drink is

Optimal decisions are made at the point where marginal cost equals zero.

The Coffee Nook, a small cafe near campus, sells cappuccinos for $2.50 and Russian tea cakes for $1.00 each.What is the opportunity cost of buying a cappuccino?

"The distribution of income should be determined by the government" is an example of a positive economic statement.

What is the difference between an invention and an innovation?

Which of the following is an example of an activity undertaken by an entrepreneur?

Which of the following is a macroeconomics question?

The government makes all economic decisions in a mixed economy.

What is the "omitted variable" problem in determining cause and effect?

If the price of gasoline was $3.25 a gallon and it is now $3.75 a gallon, what is the percentage change in price?

When production reflects consumer preferences, ________ occurs.

How are the fundamental economic questions answered in a market economy?

A college must decide if it wants to offer more Internet-based classes.This decision involves answering the economic question of "what to produce."

Which of the following is a problem inherent in centrally planned economies?

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

Filters