Question 1

Competition among sellers generates

Accepted Answer

A) productive efficiency. 
B) allocative efficiency. 
C) equity. 
D) scarcity.

Question 2

Economic models do all of the following except

Accepted Answer

A) answer economic questions. 
B) portray reality in all its minute details. 
C) make economic ideas explicit and concrete for use by decision makers. 
D) simplify some aspect of economic life.

Question 3

According to census figures and the Congressional Budget Office,the number of people ______ is projected to increase and the number of people ________ is projected to decrease by the year 2020.

Accepted Answer

A) who are uninsured; who are insured 
B) who are uninsured; age 65 and older 
C) age 65 and older; who are uninsured 
D) who are insured; age 65 and older

Question 4

When goods and services are produced at the lowest possible cost,________ occurs.

Accepted Answer

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

Question 5

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

Question 6

Suppose the U.S.government encouraged consumers to trade in their old automobiles for more efficient,new models by paying up to $5,000 for the old automobiles.These consumers would be exemplifying the economic idea that

Accepted Answer

A) people are rational. 
B) people respond to economic incentives. 
C) optimal decisions are made at the margin. 
D) equity is more important than efficiency.

Question 7

If the marginal cost of producing a television is constant at $200,then a firm should produce this item.

Accepted Answer

A) only if the marginal benefit it receives is greater than $200 plus an acceptable profit margin. 
B) as long as the marginal benefit it receives is just equal to or greater than $200. 
C) as long as its marginal cost does not rise. 
D) until the marginal benefit it receives reaches zero.

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

Question 9

Marginal benefit is the benefit that your activity provides to someone else.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following are primarily macroeconomic topics and which are primarily microeconomic topics?
a.college tuition rates
b.farm subsidies
c.national income
d.automobile prices
e.air traffic congestion
f.economic recession

Accepted Answer

The answer of Which of the following are primarily macroeconomic...

Question 11

What is a marginal cost?

Accepted Answer

The answer of What is a marginal cost?...

Question 12

If a straight line passes through the point x = 12 and y = 4 and also through the point x = 4 and y = 8,the slope of this line is

Accepted Answer

A) negative 8 divided by 4. 
B) seven tenths. 
C) negative one half. 
D) one and one half.

Question 13

When voluntary exchange takes place,only one party gains from the exchange.

Accepted Answer

A) True 
 B)False

Question 14

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.Should DeShawn continue to offer the engine detailing service?

Accepted Answer

A) Yes, he still makes a profit by selling the engine detailing service with the basic detailing package. 
B) Yes, but only if he raises the price of the basic detailing package. 
C) No, his marginal benefit is less than his marginal cost. 
D) More information is needed for DeShawn to make this decision.

Question 15

When voluntary exchange takes place,both parties gain from the exchange.

Accepted Answer

A) True 
 B)False

Question 16

The machines workers have to work with are considered

Accepted Answer

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

Question 17

What is opportunity cost?

Accepted Answer

The answer of What is opportunity cost?...

Question 18

"An increase in the price of oranges will increase the demand for grapefruits." This statement is an example of a normative economic statement.

Accepted Answer

A) True 
 B)False

Question 19

The decisions General Motors makes in determining production levels for its Chevy Volt is an example of a microeconomics topic.

Accepted Answer

A) True 
 B)False

Question 20

Define productive efficiency.Does productive efficiency imply allocative efficiency? Explain.

Accepted Answer

The answer of Define productive efficiency.Does productive efficiency imply allocative...

Exam 1: Economics: Foundations and Models

Competition among sellers generates

Economic models do all of the following except

According to census figures and the Congressional Budget Office,the number of people is projected to increase and the number of people __ is projected to decrease by the year 2020.

When goods and services are produced at the lowest possible cost,________ occurs.

Suppose the U.S.government encouraged consumers to trade in their old automobiles for more efficient,new models by paying up to $5,000 for the old automobiles.These consumers would be exemplifying the economic idea that

If the marginal cost of producing a television is constant at $200,then a firm should produce this item.

Marginal benefit is the benefit that your activity provides to someone else.

Which of the following are primarily macroeconomic topics and which are primarily microeconomic topics? a.college tuition rates b.farm subsidies c.national income d.automobile prices e.air traffic congestion f.economic recession

What is a marginal cost?

If a straight line passes through the point x = 12 and y = 4 and also through the point x = 4 and y = 8,the slope of this line is

When voluntary exchange takes place,only one party gains from the exchange.

When voluntary exchange takes place,both parties gain from the exchange.

The machines workers have to work with are considered

What is opportunity cost?

"An increase in the price of oranges will increase the demand for grapefruits." This statement is an example of a normative economic statement.

The decisions General Motors makes in determining production levels for its Chevy Volt is an example of a microeconomics topic.

Define productive efficiency.Does productive efficiency imply allocative efficiency? Explain.