Question 1

Which of the following is a positive economic statement?

Accepted Answer

A) The standard of living in the United States should be higher. 
B) If the price of iPhones falls,a larger quantity of iPhones will be purchased. 
C) The government should revamp the health care system. 
D) The U.S.government should not have bailed out U.S.auto manufacturers. 
A) The standard of living in the United States should be higher. 
B) If the price of iPhones falls,a larger quantity of iPhones will be purchased. 
C) The government should revamp the health care system. 
D) The U.S.government should not have bailed out U.S.auto manufacturers.

Question 2

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 3

How are the fundamental economic decisions determined in Cuba?

Accepted Answer

A) Individuals,firms,and the government interact in a market to make these economic decisions. 
B) These decisions are made by the country's elders who have had much experience in answering these questions. 
C) The government decides because Cuba is a centrally planned economy. 
D) The United Nations decides because Cuba is a developing economy. 
A) Individuals,firms,and the government interact in a market to make these economic decisions. 
B) These decisions are made by the country's elders who have had much experience in answering these questions. 
C) The government decides because Cuba is a centrally planned economy. 
D) The United Nations decides because Cuba is a developing economy.

Question 4

A grocery store sells a bag of potatoes at a fixed price of $2.30.Which of the following is a term used by economists to describe the money received from the sale of an additional bag of potatoes?

Accepted Answer

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

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

What is meant by the statement that "optimal decisions are made at the margin"?

Accepted Answer

In economics,the word "marginal" means "

Question 7

Refer to Table 1-3.What is Santiago's marginal cost if he decides to stay open for an extra two hours instead of one hour?

Accepted Answer

A) $18 
B) $36 
C) $38 
D) $102 
A) $18 
B) $36 
C) $38 
D) $102

Question 8

The machines workers have to work with are considered

Accepted Answer

A) human capital. 
B) physical capital. 
C) entrepreneurship. 
D) financial capital. 
A) human capital. 
B) physical capital. 
C) entrepreneurship. 
D) financial capital.

Question 9

Table 1-1
 $$\begin{array} { | c | c | } 
\hline \begin{array} { c } 
\text { Extra Hours } \
\text { Open }
\end{array} & \begin{array} { c } 
\text { Total Revenue } \
\text { (dollars) }
\end{array} \
\hline 1 & \$ 50 \
\hline 2 & 75 \
\hline 3 & 95 \
\hline 4 & 110 \
\hline 5 & 120 \
\hline 6 & 125 \
\hline
\end{array}$$ Lydia runs a small nail salon in the town of New Hope.She is debating whether she should extend her hours of operation.Lydia figures that her sales revenue will depend on the number of extra hours the nail salon is open as shown in the table above.She would have to hire a worker for those extra hours at a wage rate of $10 per hour.
-Refer to Table 1-1.What is Lydia's marginal cost if she decides to stay open for an extra two hours instead of one hour?

Accepted Answer

A) $10 
B) $20 
C) $25 
D) $40 
A) $10 
B) $20 
C) $25 
D) $40

Question 10

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

Accepted Answer

Allocative efficiency is an efficiency c

Question 11

In economics,all of the following is counted as "capital" except

Accepted Answer

A) money. 
B) machine tools. 
C) factory buildings. 
D) warehouses. 
A) money. 
B) machine tools. 
C) factory buildings. 
D) warehouses.

Question 12

The branch of economics which studies the behavior of entire economies is called

Accepted Answer

A) public economics. 
B) microeconomics. 
C) macroeconomics. 
D) normative economics. 
A) public economics. 
B) microeconomics. 
C) macroeconomics. 
D) normative economics.

Question 13

The decision about what goods and services will be produced in a market economy is made by

Accepted Answer

A) lawmakers in the government voting on what will be produced. 
B) workers deciding to produce only what the boss says must be produced. 
C) producers deciding what society wants most. 
D) consumers and firms choosing which goods and services to buy or produce. 
E) consumers dictating to firms what they need most. 
A) lawmakers in the government voting on what will be produced. 
B) workers deciding to produce only what the boss says must be produced. 
C) producers deciding what society wants most. 
D) consumers and firms choosing which goods and services to buy or produce. 
E) consumers dictating to firms what they need most.

Question 14

In economics,the practical application of an invention is known as

Accepted Answer

A) technology. 
B) entrepreneurship. 
C) physical capital. 
D) innovation. 
A) technology. 
B) entrepreneurship. 
C) physical capital. 
D) innovation.

Question 15

Competition forces firms to produce and sell products as long as the ________ to consumers exceeds the ________ of production.

Accepted Answer

A) marginal benefit;marginal cost 
B) marginal benefit;marginal benefit 
C) marginal cost;marginal cost 
D) marginal cost;marginal benefit 
A) marginal benefit;marginal cost 
B) marginal benefit;marginal benefit 
C) marginal cost;marginal cost 
D) marginal cost;marginal benefit

Question 16

How can the influence of a third variable be shown on a two-dimensional graph?

Accepted Answer

A) by allowing the relationship to be nonlinear 
B) by allowing the position of the relationship line or curve to shift on the graph 
C) by drawing a third axis coming out of the two axes 
D) by super-imposing the third variable on the two-dimensional graph 
A) by allowing the relationship to be nonlinear 
B) by allowing the position of the relationship line or curve to shift on the graph 
C) by drawing a third axis coming out of the two axes 
D) by super-imposing the third variable on the two-dimensional graph

Question 17

Human capital refers to

Accepted Answer

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

Question 18

When voluntary exchange takes place,neither party usually gains from the exchange.

Accepted Answer

A) True 
 B)False

Question 19

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.Had the firm not produced and sold the last 3,000 cell phones,would its profit be higher or lower,and by how much?

Accepted Answer

A) Its profit will be $6,700 higher. 
B) Its profit will be $700 higher. 
C) Its profit will be $700 lower. 
D) Its profit will be $6,000 lower. 
A) Its profit will be $6,700 higher. 
B) Its profit will be $700 higher. 
C) Its profit will be $700 lower. 
D) Its profit will be $6,000 lower.

Question 20

In a centrally planned economy,the government decides how economic resources will be allocated.

Accepted Answer

A) True 
 B)False

Exam 1: Economics: Foundations and Models

Which of the following is a positive economic statement?

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

How are the fundamental economic decisions determined in Cuba?

A grocery store sells a bag of potatoes at a fixed price of $2.30.Which of the following is a term used by economists to describe the money received from the sale of an additional bag of potatoes?

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

What is meant by the statement that "optimal decisions are made at the margin"?

Refer to Table 1-3.What is Santiago's marginal cost if he decides to stay open for an extra two hours instead of one hour?

The machines workers have to work with are considered

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

In economics,all of the following is counted as "capital" except

The branch of economics which studies the behavior of entire economies is called

The decision about what goods and services will be produced in a market economy is made by

In economics,the practical application of an invention is known as

Competition forces firms to produce and sell products as long as the ________ to consumers exceeds the ________ of production.

How can the influence of a third variable be shown on a two-dimensional graph?

Human capital refers to

When voluntary exchange takes place,neither party usually gains from the exchange.

In a centrally planned economy,the government decides how economic resources will be allocated.

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

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money,banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

Competition forces firms to produce and sell products as long as the to consumers exceeds the of production.