Daniel

Question 1 (1 point)

Specialization in production is important primarily because it: Question 1 options:

a) results in greater total output. b) allows society to avoid the coincidence-of-wants problem. c) allows society to trade by barter. d) allows society to have fewer capital goods. Save
Question 2 (1 point)

If the demand for bacon is relatively elastic, a 10 percent decline in the price of bacon will: Question 2 options:

a) decrease the amount demanded by more than 10 percent. b) increase the amount demanded by more than 10 percent. c) decrease the amount demanded by less than 10 percent. d) increase the amount demanded by less than 10 percent. Save
Question 3 (1 point)

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Refer to the above graph. Which of the following schedules correctly reflects "demand"?

Question 3 options:

a) Option A b) Option B c) Option C d) Option D Save

Question 4 (1 point)

An efficiency loss (or deadweight loss):

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Question 4 options:

a) b)

is measured as the combined loss of consumer surplus and producer surplus. results from producing a unit of output for which the maximum willingness to pay exceeds the minimum acceptable price.

c) can result from underproduction, but not from overproduction. d) can result from overproduction, but not from underproduction. Save
Question 5 (1 point)

Firms are motivated to minimize production costs because: Question 5 options:

a) it is the most environmentally friendly way to produce goods. b) c) d) Save least-cost production techniques use the smallest total quantity of resources. competitive pressures in the market will drive out higher-cost producers. the government provides tax credits and subsidies to low-cost producers.

Question 6 (1 point)

When the price of a product falls, the purchasing power of our money income rises and thus permits consumers to purchase more of the product. This statement describes: Question 6 options:

a) an inferior good. b) the rationing function of prices. c) the substitution effect. d) the income effect. Save
Question 7 (1 point)

The supply of product X is inelastic (but not perfectly inelastic) if the price of X rises by:

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Question 7 options:

a) 5 percent and quantity supplied rises by 7 percent. b) 8 percent and quantity supplied rises by 8 percent. c) 10 percent and quantity supplied remains the same. d) 7 percent and quantity supplied rises by 5 percent. Save
Question 8 (1 point)

Refer to the above graph. Which of the following schedules correctly reflects "supply"?

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Question 8 options:

a) Option A b) Option B c) Option C d) Option D Save

Question 9 (1 point)

In which of the following cases will total revenue increase? Question 9 options:

a) price falls and demand is inelastic b) price falls and supply is elastic c) price rises and demand is inelastic d) price rises and demand is elastic Save
Question 10 (1 point)

A recent study found that an increase in the Federal tax on beer (and thus an increase in the price of beer) would reduce the demand for marijuana. We can conclude that: Question 10 options:

a) beer and marijuana are substitute goods. b) beer and marijuana are complementary goods. c) beer is an inferior good. d) marijuana is an inferior good. Save
Question 11 (2 points)

Market failure is said to occur whenever:

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Question 11 options:

a)

private markets do not allocate resources in the most economically desirable way.

b) prices rise. c) some consumers who want a good do not obtain it because the price is higher than they are willing to pay.

d) government intervenes in the functioning of private markets. Save

Question 12 (2 points)

Refer to the above diagram. A government-set price floor is best illustrated by: Question 12 options:

a) price A. b) quantity E. c) price C. d) price B. Save

Question 13 (2 points)

In the simple circular flow model: Question 13 options:

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a) households are buyers of resources. b) businesses are sellers of final products. c) households are sellers of final products. d) Save there are real flows of goods, services, and resources, but not money flows.

Question 14 (2 points)

The term "quantity demanded": Question 14 options:

a) b) c)

refers to the entire series of prices and quantities that comprise the demand schedule. refers to a situation in which the income and substitution effects do not apply. refers to the amount of a product that will be purchased at some specific price.

d) means the same thing as demand. Save

Question 15 (2 points)

Which of the following is a distinguishing feature of a market system? Question 15 options:

a) public ownership of all capital. b) central planning. c) wide-spread private ownership of capital. d) a circular flow of goods, resources, and money. Save
Question 16 (2 points)

An increase in the excise tax on cigarettes raises the price of cigarettes by shifting the: Question 16 options:

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a) demand curve for cigarettes rightward. b) demand curve for cigarettes leftward. c) supply curve for cigarettes rightward. d) supply curve for cigarettes leftward. Save
Question 17 (2 points)

Economics involves marginal analysis because: Question 17 options:

a) most decisions involve changes from the present situation. b) marginal benefits always exceed marginal costs. c) marginal costs always exceed marginal benefits. d) much economic behavior is irrational. Save
Question 18 (2 points)

If a demand for a product is elastic, the value of the price elasticity coefficient is: Question 18 options:

a) zero. b) greater than one. c) equal to one. d) less than one. Save
Question 19 (2 points)

Which of the following is an example of a public good? Question 19 options:

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a) a weather warning system b) a television set c) a sofa d) a bottle of soda Save

Question 20 (2 points)

The invisible hand refers to the: Question 20 options:

a) fact that the U.S. tax system redistributes income from rich to poor. b) c) notion that, under competition, decisions motivated by self-interest promote the social interest. tendency of monopolistic sellers to raise prices above competitive levels.

d) fact that government controls the functioning of the market system. Save
Question 21 (2 points)

Producer surplus: Question 21 options:

a)

is the difference between the maximum prices consumers are willing to pay for a product and the lower equilibrium price.

b) rises as equilibrium price falls. c) is the difference between the minimum prices producers are willing to accept for a product and the higher equilibrium price.

is the difference between the maximum prices consumers are willing d) to pay for a product and the minimum prices producers are willing to accept. Save
Question 22 (2 points)

The elasticity of supply of product X is unitary if the price of X rises by:

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Question 22 options:

a) 5 percent and quantity supplied rises by 7 percent. b) 8 percent and quantity supplied rises by 8 percent. c) 10 percent and quantity supplied stays the same. d) 7 percent and quantity supplied rises by 5 percent. Save
Question 23 (2 points)

The French term "laissez-faire" means: Question 23 options:

a) "there is no free lunch." b) "let it be." c) "circular flow." d) "public ownership." Save
Question 24 (2 points)

Consumer surplus: Question 24 options:

a)

is the difference between the maximum prices consumers are willing to pay for a product and the lower equilibrium price.

is the difference between the maximum prices consumers are willing b) to pay for a product and the minimum prices producers are willing to accept. c) is the difference between the minimum prices producers are willing to accept for a product and the higher equilibrium price.

d) rises as equilibrium price rises. Save

Question 25 (2 points)

Which one of the following expressions best states the idea of opportunity cost?

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Question 25 options:

a) "A penny saved is a penny earned." b) "He who hesitates is lost." c) "There is no such thing as a free lunch." d) "All that glitters is not gold." Save
Question 26 (2 points)

The competitive market system: Question 26 options:

encourages innovation because government provides tax breaks and a) subsidies to those who develop new products or new productive techniques. b) c) d) Save
Question 27 (2 points)

discourages innovation because it is difficult to acquire additional capital in the form of new machinery and equipment. discourages innovation because firms want to get all the profits possible from existing machinery and equipment. encourages innovation because successful innovators are rewarded with economic profits.

According to the marginal-cost-marginal-benefit rule: Question 27 options:

a)

only government projects (as opposed to private projects) should be assessed by comparing marginal costs and marginal benefits.

b) the optimal project size is the one for which MB = MC. c) the optimal project size is the one for which MB exceeds MC by the greatest amount.

d) project managers should attempt to minimize both MB and MC. Save

Question 28 (2 points)

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Normative statements are concerned primarily with: Question 28 options:

a) facts and theories. b) what ought to be. c) what is. d) rational choice involving costs and benefits. Save
Question 29 (2 points)

The scarcity problem: Question 29 options:

a) b)

persists only because countries have failed to achieve continuous full employment. persists because economic wants exceed available productive resources.

c) has been solved in all industrialized nations. d) Save

Question 30 (2 points)

has been eliminated in affluent societies such as the United States and Canada.

When economists say that people act rationally in their self interest, they mean that individuals: Question 30 options:

a) look for and pursue opportunities to increase their utility. b) generally disregard the interests of others. c) are mainly creatures of habit. d) are usually impulsive and unpredictable. Save