Question 1

Trade-offs force society to make choices when answering what three fundamental questions?

Accepted Answer

1.What goods and services will

Question 2

Define allocative efficiency.Explain the significance of this concept in economics?

Accepted Answer

Allocative efficiency is an efficiency c

Question 3

Households ________ factors of production and ________ goods and services.

Accepted Answer

A)  supply; demand 
B)  supply; supply 
C)  demand; supply 
D)  demand; demand 
A)  supply; demand 
B)  supply; supply 
C)  demand; supply 
D)  demand; demand

Question 4

What is equity,and how does it differ from efficiency?

Accepted Answer

Equity refers to the fair distribution o

Question 5

Human capital refers to

Accepted Answer

A)  the money people have. 
B)  the machines that workers have to work with. 
C)  the accumulated skills and training that workers have. 
D)  the wealth people have. 
A)  the money people have. 
B)  the machines that workers have to work with. 
C)  the accumulated skills and training that workers have. 
D)  the wealth people have.

Question 6

Which of the following generates allocative efficiency in a market economy?

Accepted Answer

A)  national government intervention 
B)  voluntary exchange between buyers and sellers 
C)  United Nations rules for competition 
D)  equity 
A)  national government intervention 
B)  voluntary exchange between buyers and sellers 
C)  United Nations rules for competition 
D)  equity

Question 7

The revenue received from the sale of ________ of a product is a marginal benefit to the firm.

Accepted Answer

A)  an additional unit 
B)  the total number of units 
C)  no units 
D)  only profitable units 
A)  an additional unit 
B)  the total number of units 
C)  no units 
D)  only profitable units

Question 8

Zane's Vanes is a service that restores old weather vanes.Zane has just spent $125 purchasing a 1920s-era weather vane which he expects to restore and sell for $500 once the work is completed.After having spent $125,Zane realizes that he will need to spend an additional $200 on materials to complete the restoration.Alternatively,he can sell the weather vane without restoring it for $200.What is his marginal cost to complete the restoration?

Accepted Answer

A)  $75 
B)  $125 
C)  $200 
D)  $300 
A)  $75 
B)  $125 
C)  $200 
D)  $300

Question 9

You explain to your roommate Surya,who makes beaded headbands,about an economic theory which asserts that consumers will purchase more of a product at lower prices than they will at higher prices.She contends that the theory is incorrect because over the past two years she has lowered the price of her headbands and yet has seen a decrease in sales.How would you respond to Surya?

Accepted Answer

A)  Surya is right; she has evidence to back her claim. The theory must be erroneous. 
B)  Surya is making the mistake of assuming that correlation implies causation. 
C)  I will explain to her that she is making the error of reverse causality: it is the decrease in demand that has caused her to lower her prices. 
D)  I will explain to her that there are some omitted variables that have contributed to a decrease in her sales such as changes in income. 
A)  Surya is right; she has evidence to back her claim. The theory must be erroneous. 
B)  Surya is making the mistake of assuming that correlation implies causation. 
C)  I will explain to her that she is making the error of reverse causality: it is the decrease in demand that has caused her to lower her prices. 
D)  I will explain to her that there are some omitted variables that have contributed to a decrease in her sales such as changes in income.

Question 10

The development of a new good or a new process for making a good is called

Accepted Answer

A)  an innovation. 
B)  an invention. 
C)  a factor of production. 
D)  a service. 
A)  an innovation. 
B)  an invention. 
C)  a factor of production. 
D)  a service.

Question 11

Suppose the extra annual cost to a nation to enact a mandatory seat belt law for motorcycles is $850.Then,the nation should enact this seat belt law if doing so results in an additional benefit of $850 or more each year.

Accepted Answer

A) True 
 B)False

Question 12

What is a firm? What other terms do economists use interchangeably with the term "firm"?

Accepted Answer

A firm is an organization that

Question 13

Which of the following statements is correct?

Accepted Answer

A)  Mrs. Lovejoy decides to invest in companies which she believes are producing their goods based on the preferences of consumers. Mrs. Lovejoy is therefore investing in companies that are productively efficient. 
B)  Mrs. Lovejoy decides to invest in companies which she believes are producing their goods based on the preferences of consumers. Mrs. Lovejoy is therefore investing in companies that are both allocatively and productively efficient. 
C)  Mrs. Lovejoy decides to invest in companies which she believes can produce their goods at the lowest possible cost. Mrs. Lovejoy is therefore investing in companies that are productively efficient. 
D)  Mrs. Lovejoy decides to invest in companies which she believes can produce their goods at the lowest possible cost. Mrs. Lovejoy is therefore investing in companies that are allocatively efficient. 
A)  Mrs. Lovejoy decides to invest in companies which she believes are producing their goods based on the preferences of consumers. Mrs. Lovejoy is therefore investing in companies that are productively efficient. 
B)  Mrs. Lovejoy decides to invest in companies which she believes are producing their goods based on the preferences of consumers. Mrs. Lovejoy is therefore investing in companies that are both allocatively and productively efficient. 
C)  Mrs. Lovejoy decides to invest in companies which she believes can produce their goods at the lowest possible cost. Mrs. Lovejoy is therefore investing in companies that are productively efficient. 
D)  Mrs. Lovejoy decides to invest in companies which she believes can produce their goods at the lowest possible cost. Mrs. Lovejoy is therefore investing in companies that are allocatively efficient.

Question 14

The economic analysis of minimum wage involves both normative and positive analysis.Consider the following consequences of a minimum wage:
A.The minimum wage law causes unemployment.
B.A minimum wage law benefits some groups and hurts others.
C.In some cities such as San Francisco and New York,it would be impossible for low-skilled workers to live comfortably in the city without minimum wage laws.
D.The gains to winners of a minimum wage law should be valued more highly than the losses to losers because the latter primarily comprises businesses.
Which of the consequences above are positive statements and which are normative statements?

Accepted Answer

A)  a, b, and c are positive statements and d is a normative statement. 
B)  a and b are positive statements, c and d are normative statement. 
C)  Only a is a positive statement, b, c, and d are normative statements. 
D)  a and c are positive statements, b and d are normative statements. 
A)  a, b, and c are positive statements and d is a normative statement. 
B)  a and b are positive statements, c and d are normative statement. 
C)  Only a is a positive statement, b, c, and d are normative statements. 
D)  a and c are positive statements, b and d are normative statements.

Question 15

________ is a problem that occurs when one concludes that a change in variable X caused a change in variable Y when in actual fact,it is a change in variable Y that caused a change in variable X.

Accepted Answer

A)  The omitted variable 
B)  The positive-to-negative relationship 
C)  Reverse causality 
D)  Nonlinear slope 
A)  The omitted variable 
B)  The positive-to-negative relationship 
C)  Reverse causality 
D)  Nonlinear slope

Question 16

Which of the following is a normative economic statement?

Accepted Answer

A)  Rising corn prices have increased the price of corn-based ethanol. 
B)  With rising home prices and falling mortgage interest rates, the amount of home foreclosures has decreased. 
C)  The federal government is considering increasing regulations on the use of fossil fuels to promote the use of wind power. 
D)  Farmers should not be allowed to grow and sell genetically-modified crops. 
A)  Rising corn prices have increased the price of corn-based ethanol. 
B)  With rising home prices and falling mortgage interest rates, the amount of home foreclosures has decreased. 
C)  The federal government is considering increasing regulations on the use of fossil fuels to promote the use of wind power. 
D)  Farmers should not be allowed to grow and sell genetically-modified crops.

Question 17

If a graph has a line that shows the amount of outsourcing in the last ten years,it is known as

Accepted Answer

A)  a pie chart. 
B)  a time-series graph. 
C)  a demand curve for outsourcing. 
D)  a supply curve of outsourcing. 
A)  a pie chart. 
B)  a time-series graph. 
C)  a demand curve for outsourcing. 
D)  a supply curve of outsourcing.

Question 18

Figure 1.1
  
-Refer to Figure 1-1.Using the information in the figure above,calculate the percentage change in revenue from alcoholic beverage sales between 2013 and 2015.

Accepted Answer

A)  23.8% 
B)  40% 
C)  42.9% 
D)  73.3% 
A)  23.8% 
B)  40% 
C)  42.9% 
D)  73.3%

Question 19

Examining the conditions that could lead to inflation in an economy is an example of a microeconomic topic.

Accepted Answer

A) True 
 B)False

Question 20

DeShawn's Detailing is a service that details cars at the customers' homes or places of work.DeShawn's cost for a basic detailing package is $40,and he charges $75 for this service.For a total price of $90,DeShawn will also detail the car's engine,a service that adds an additional $20 to the total cost of the package.What is the marginal cost of adding the engine detailing to the basic detailing package?

Accepted Answer

A)  $20 
B)  $30 
C)  $60 
D)  $60 plus the value of his time 
A)  $20 
B)  $30 
C)  $60 
D)  $60 plus the value of his time

Trade-offs force society to make choices when answering what three fundamental questions?

Define allocative efficiency.Explain the significance of this concept in economics?

Households factors of production and goods and services.

What is equity,and how does it differ from efficiency?

Human capital refers to

Which of the following generates allocative efficiency in a market economy?

The revenue received from the sale of ________ of a product is a marginal benefit to the firm.

The development of a new good or a new process for making a good is called

Suppose the extra annual cost to a nation to enact a mandatory seat belt law for motorcycles is $850.Then,the nation should enact this seat belt law if doing so results in an additional benefit of $850 or more each year.

What is a firm? What other terms do economists use interchangeably with the term "firm"?

Which of the following statements is correct?

________ is a problem that occurs when one concludes that a change in variable X caused a change in variable Y when in actual fact,it is a change in variable Y that caused a change in variable X.

Which of the following is a normative economic statement?

If a graph has a line that shows the amount of outsourcing in the last ten years,it is known as

Figure 1.1 -Refer to Figure 1-1.Using the information in the figure above,calculate the percentage change in revenue from alcoholic beverage sales between 2013 and 2015.

Examining the conditions that could lead to inflation in an economy is an example of a microeconomic topic.

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, The Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology,Production,and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, The Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money,Banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, International Trade, and Exchange Rates

Filters

Exam 1: Economics: Foundations and Models

Trade-offs force society to make choices when answering what three fundamental questions?

Define allocative efficiency.Explain the significance of this concept in economics?

Households ________ factors of production and ________ goods and services.

What is equity,and how does it differ from efficiency?

Human capital refers to

Which of the following generates allocative efficiency in a market economy?

The revenue received from the sale of ________ of a product is a marginal benefit to the firm.

The development of a new good or a new process for making a good is called

Suppose the extra annual cost to a nation to enact a mandatory seat belt law for motorcycles is $850.Then,the nation should enact this seat belt law if doing so results in an additional benefit of $850 or more each year.

What is a firm? What other terms do economists use interchangeably with the term "firm"?

Which of the following statements is correct?

________ is a problem that occurs when one concludes that a change in variable X caused a change in variable Y when in actual fact,it is a change in variable Y that caused a change in variable X.

Which of the following is a normative economic statement?

If a graph has a line that shows the amount of outsourcing in the last ten years,it is known as

Figure 1.1 -Refer to Figure 1-1.Using the information in the figure above,calculate the percentage change in revenue from alcoholic beverage sales between 2013 and 2015.

Examining the conditions that could lead to inflation in an economy is an example of a microeconomic topic.

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, The Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology,Production,and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, The Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money,Banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, International Trade, and Exchange Rates

Filters

Households factors of production and goods and services.