Decrease in quantity supplied, or movement up the supply curve d) Decrease in supply, or a leftward shift of the supply curve 2. From an economic perspective, when a student decides to attend another year of college, the student has concluded that the marginal: Costs of attending college will be subsidized by someone else such as parents or the government b) Benefits of attending college are greater than the marginal costs c) Costs of attending college has decreased that year d) Benefits of attending college has increased that year 3. Which is assumed to be most limited in scope under a market system? Government b)
Freedom of choice c) Freedom of enterprise Competition 4. If the price of beef rose and the demand for chicken increased, sisters Paramus, then Complementary goods Consumer goods Substitute goods Inferior goods 5. The purpose of the sisters Paramus assumption used in economic analysis is to: Make sure that all relevant factors are considered Allow all relevant factors to change during our analysis Allow economists to assume all relevant factors are increasing over time d) Restrict the analysis to the effect of a single economic factor 6. People demand more of product X when the price of product Y decreases, sisters airbus.
This means X and Y are: Complements Not related Substitutes Both inexpensive 7. If the supply schedule for a product has an upward slope and the price of that product declines from $100 to $75, the: Quantity supplied of the product will decline Supply of the product will shift to the left Supply of the product will shift to the right 8. Macroeconomics focuses on: Studies of how competition in an industry affects economic efficiency b) The pricing decisions of a large company in an economy Studies of how a business determines how to make the best use of the factors of production d)
The workings of the whole economy or large sectors of it 9. In a competitive market for corn, the law of demand indicates that, sisters Paramus, The demand for corn decreases, the price will increase Income decreases, the quantity of corn demanded will increase c) The price of corn decreases, the quantity of corn demanded will increase d) The price of corn decreases, the quantity of corn demanded will decrease 10. The combination of food and clothing shown by point F on the above graph: Is not attainable with current resources and technology Is attainable but involves the unemployment and inefficient use of some of society’s resources c)
Is an efficient use of society’s resources because it is below the production possibilities curve d) Would be a desirable combination of outputs only if there was no international trade 11. Economic growth is shown by a shift of the production possibilities curve outward and to the right. A) True b) False 12. What is a major opportunity cost of going to college on a full-time basis? The foregone income that could be earned working full-time Job b) The greater income that will be earned from having a college degree c) The cost of transportation to college instead of to a Job The cost of living expenses (room and board) to attend college 3.
Which statement would best complete a short definition of economics? “Economics is the study of: The optimal use of scarce productive resources” The production and distribution of capital goods” How the stock market creates wealth for investors” How the economy generates incomes for people” 14. All of the following would affect the position of the demand curve for personal computers, except the: Price of video monitors Size of the population Price of computer software Price of personal computers 15. In the circular flow model, households function on the selling side of the resource arrest and the buying side of product markets. 6. Which statement is an economic rationale for the law of increasing opportunity cost? The economy is achieving productive efficiency by producing goods and services at the least cost b) Many economic resources are better at producing one product than another c) The economy is employing all of its available resources In any economy, the state of technology is changing and resources are variable 17. Refer to the above graph. The marginal opportunity cost of the third unit of defense goods is: 7 units of civilian goods 2 units of civilian goods units of civilian goods 3 units of civilian goods 18.
If an increase in consumer incomes causes the demand curve for product Q to shift to the right, sisters Paramus, then it can be said that product Q is a(n): Luxury good Inexpensive good Normal good Inferior good 19. Economists define “investment” as the creation, or purchase, of capital. 20. An increase in the demand for an American flag increases its equilibrium price and increases its equilibrium quantity, sisters Paramus. 21. Economists argue that: Decisions do not have opportunity costs There is an opportunity cost associated with all decisions c)
Economic decisions do not have opportunity costs but other decisions do d) Economic decisions have opportunity costs but other decisions do not Refer to the above diagram, which shows three supply curves for corn. Which of the following would cause the change in the supply of corn illustrated by the shift from An increase in the price of irrigation equipment A decrease in the price of fertilizer An increase in consumer incomes A change in consumer tastes in favor of cornbread As a consequence of the condition of scarcity: Things which are plentiful have relatively high prices There is never enough of anything
Production has to be planned by government Individuals have to make choices from among alternatives 24. A decrease in the supply of lettuce decreases its equilibrium price and increases its 25. Which would have no effect on the demand for motorcycles? A change in income A change in the price of gas A change in the prices of cars A change in the cost of steel 26. The marginal cost of consuming another unit of a good: Must exceed the total cost or the unit will not be consumed b) Is the additional cost to you over and above any cost you have already incurred c) Equals the total cost of consuming all prior units
Must equal the marginal benefit or the unit will not be consumed 27. Economists define an inferior good as one: That won’t be purchased at any price That doesn’t work That costs too much For which demand increases as income decreases 28. Refer to the above diagram. The equilibrium price and quantity for milk in this market are: $2. 00 and 20 million gallons $1. 00 and 35 million gallons $1. 50 and 28 million gallons $1. 50 and 30 million gallons 29. Refer to the above diagram. If the price were $1 per gallon, there would be a: Surplus of 10 million gallons Shortage of 10 million gallons Shortage of 8 million gallons
Surplus of 8 million gallons All of the following would affect the position of the supply curve for cranberries, except the: Development of a new pest control for cranberries Popularity of cranberry drinks Price of agricultural land for cranberries Cost of fertilizers for cranberry production 31. In a market system, well-defined property rights are important because they: Encourage economic activity Create economic problems Limit destructive economic growth Reduce unnecessary investment 32.
Which is considered a factor of production by economists? Money in a checking account A firm’s common stock An auto plant U. S. Paving bonds 33. Which is not a determinant of demand? Income The cost of inputs in production The prices of related goods Future price expectations If two sets of data are inversely, or negatively, related they will always graph as: An upward sloping line A straight line A downward sloping line Parallel lines 35.
If demand for a good decreases and supply remains constant, sisters Paramus, equilibrium price: And equilibrium quantity will both decrease And equilibrium quantity will both increase Will decrease, and equilibrium quantity will increase Assume that the graphs show a competitive market for the product stated in questions 36 and 37: Select the graph above that best shows the change to demand or supply in the current market given the following situation: In the market for cigarettes, the government has decided to eliminate the production tax that cigarette manufacturers are required to pay, sisters Paramus.
Graph A Graph B Graph C Graph D 37. Select the graph above that best shows the change to demand or supply in today’s market given the following situation: In the market for automobiles, consumers expect that the financially troubled American automakers will be slashing car prices next month in order to sell more cars, sisters Paramus.
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