Question 1

Consider the following economic agents:
A.the government
B.consumers
C.producers
Who,in a modern mixed economy,decides what goods and services will be produced with the scarce resources available in that economy?

Accepted Answer

A)  the government 
B)  producers 
C)  consumers 
D)  consumers and producers 
E)  the government, consumers, and producers

Question 2

Scenario 1-2
Suppose a hat manufacturer currently sells 2,000 hats per week and makes a profit of $5,000 per week. The plant owner observes, "Although the last 300 hats we produced and sold increased our revenue by $1,000 and our costs by $1,100, 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 hats."
-Refer to Scenario 1-2.Had the firm not produced and sold the last 300 hats,would its profit be higher or lower,and by how much?

Accepted Answer

A)  Its profit will be $1,100 higher. 
B)  Its profit will be $100 higher. 
C)  Its profit will be $100 lower. 
D)  Its profit will be $1,000 lower.

Question 3

In a modern mixed economy,who decides what goods and services will be produced?

Accepted Answer

A)  only the producers 
B)  only consumers 
C)  only the government 
D)  producers, consumers, and government

Question 4

Skeeter's Skeeball Castle has seen its business slow down ever since Kerrie's Off-Key Karaoke opened up next door.Since the opening of Kerrie's Off-Key Karaoke,the opportunity cost of playing skeeball at Skeeter's has

Accepted Answer

A)  decreased. 
B)  increased. 
C)  fallen to zero. 
D)  not changed.

Question 5

Table 1-8
 $\begin{array}{|c|c|}
\hline \text { Year } & \begin{array}{c}
\text { Flat-PanelTV Sets } \
\text { (millions) }
\end{array} \
\hline 2014 & 1.0 \
\hline 2015 & 1.5 \
\hline 2016 & 7.3 \
\hline 2017 & 12.7 \
\hline 2018 & 20.0 \
\hline
\end{array}$
-Refer to Table 1-8.The table above shows the sales of flat-panel television sets in Central America.Present the information using a bar graph.

Accepted Answer

The answer of Table 1-8
 \(\begin{array}{|c|c|}
\hline \text { Year }...

Question 6

What is the difference between positive economic analysis and normative economic analysis? Give one example each of a positive and normative economic issue or question or statement.

Accepted Answer

The answer of What is the difference between positive economic...

Question 7

Jewelry manufacturers produce a range of products such as rings,necklaces,bracelets,and brooches.What fundamental economic question are they addressing by offering this range of items?

Accepted Answer

A)  How to produce goods that consumers want? 
B)  Why produce a variety of items? 
C)  What to produce? 
D)  Who to produce the items for?

Question 8

It is necessary for all economic systems to provide people with goods and services and also restrict them from getting as much of these goods and services as they wish,because failure to do this could ________ the efficiency of the system by producing some goods and services that are ________.

Accepted Answer

A)  reduce; not as highly valued as others 
B)  increase; not as highly valued as others 
C)  reduce; valued more than others 
D)  increase; valued more than others

Question 9

Which of the following is part of an economic model?

Accepted Answer

A)  norms 
B)  hypotheses 
C)  opinions 
D)  preferences of economic agents

Question 10

In economics,the difference between a firm's revenues and its costs is referred to as

Accepted Answer

A)  physical capital. 
B)  profit. 
C)  capital gains. 
D)  factor payments.

Question 11

Cassie's Quilts alters,reconstructs,and restores heirloom quilts.Cassie has just spent $800 purchasing,cleaning,and reconstructing an antique quilt which she expects to sell for $1,500 once she is finished.After having spent $800,Cassie discovers that she would need some special period fabric that would cost her $200 in material and time in order to complete the task.Alternatively,she can sell the quilt "as is" now for $900.What should she do?

Accepted Answer

A)  She should cut her losses and sell the quilt now. 
B)  It does not matter what she does; she is going to take a loss on her project. 
C)  She should purchase the period fabric, complete the task and then sell the quilt. 
D)  She should not do any more work on the quilt because she has already spent too much time on it and has not been paid for that time.

Question 12

In a market economy,those who are willing and able to buy what is produced

Accepted Answer

A)  receive what the government allows them to receive. 
B)  receive the most of what is produced. 
C)  receive no more than everyone else in the market. 
D)  solely determine what is produced.

Question 13

Which of the following is not an example of an efficiency-equity trade-off faced by economic agents?

Accepted Answer

A)  According to an article by in the American Journal of Public Health by Edward Kaplan and Michael Merson of Yale University School of Medicine, the federal government's current method of allocating HIV-prevention resources is not cost-effective. Instead of allocating resources to states in proportion to reported AIDS cases, resources should flow first to those activities that prevent more infections per dollar and then to less and less effective combinations of programs and populations until funds are exhausted, even if it means that some populations would be left without any prevention services. 
B)  Concerned about the falling birth rate, the French government has pledged more money for families with three children, in an effort to encourage working women to have more babies. 
C)  The growing demand for corn by ethanol producers has led to a surge in the price of tortillas, a staple in the Mexican diet. To quell public outcry over rising tortilla prices, the Mexican government released government corn stocks at prices well below the market, and pressured states to impose price ceilings on tortillas. 
D)  Some U.S. colleges cut back on merit scholarships since these programs siphon money from need-based programs, thus harming lower-income students with greater financial need.

Question 14

Which of the following is a macroeconomic question?

Accepted Answer

A)  What determines the unemployment rate? 
B)  How is the production quantity of digital cameras determined? 
C)  What factors determine the price of iPhones? 
D)  What determines the wages and benefits of flight attendants?

Question 15

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 16

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

Accepted Answer

A)  choosing the color scheme for your renovated kitchen 
B)  being promoted to the position of Chief of Police 
C)  being appointed to the U.S. Supreme Court 
D)  starting a snow cone business

Question 17

Suppose that to increase sales of hybrid vehicles,auto manufacturers are offering large cash incentives.This is an example of a macroeconomic topic.

Accepted Answer

A) True 
 B)False

Question 18

What is a centrally planned economy?

Accepted Answer

The answer of What is a centrally planned economy?...

Question 19

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.

Question 20

Economists assume that

Accepted Answer

A)  individuals behave in unpredictable ways. 
B)  consumer behavior is explained by the existence of unlimited resources. 
C)  people put other people's interests ahead of their own. 
D)  optimal decisions are made at the margin.

Exam 1: Economics: Foundations and Models

Consider the following economic agents: A.the government B.consumers C.producers Who,in a modern mixed economy,decides what goods and services will be produced with the scarce resources available in that economy?