Homework answers / question archive / Submitted by Xu, Zhixing (zxu15) on 05/17/2012 22:15:09     1

Submitted by Xu, Zhixing (zxu15) on 05/17/2012 22:15:09     1

Economics

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1.

Macroeconomics focuses on:

A) decisions made by individual households and firms. 
B) aggregates or total economic quantities like overall unemployment. 
C) individual firm decisions regarding product output and price. 
D) household reaction to tax change. 

 

 

2.

Economic theory simplifies relationships to explain how the relationships interact.

A) True 
B) False 

 

 

3.

Economics is generally concerned with

A) the operation of banks in the stock market. 
B) business management. 
C) how resources are allocated among alternative goals. 
D) the right time to start a business. 

 

4.

The ceteris paribus assumption is used in economics because

A) it is too difficult to account for everything that might have an effect on behavior. 
B) it makes it easier to track the thought processes of people, which is necessary to develop good theories. 
C) people are self-interested and rational. 
D) the more complex a model is, the better it is. 

 

5.

"We ought to do more for the education of our children." Statements using words like "ought" or "should" are:

A) normative statements. 
B) positive statements. 
C) irrational statements. 
D) none of the above. 

6.

Which of the following is an example of a positive statement?

A) If you drop a quarter off the top of the Sears Tower in Chicago, it will fall to the ground. 
B) The minimum wage should be raised to $7 and hour. 
C) There is too much crime in the United States; something should be done about it. 
D) People should learn to love each other. 

7.

Which would be least consistent with the kind of rational decision-making assumed in economics?

A) Alfred chooses love over money. 
B) Bernice acts on the basis of faulty information and, as a result, makes a mistake. 
C) Carlisle chooses the more costly of two ways to achieve a given end because he does not care about costs. 
D) Daphne contributes some of her income to charity. 

8.

There are not enough of four goods to satisfy the wants of people. For good A, this is true when the price is $10. This is true for good B at a price of $1, for good C at a price of 25 cents, and for good D at a price of zero. Which situation reflects scarcity rather than shortage?

A) A 
B) C 
C) D 
D) B 

9.

Tuition and fees at a state university are $5,000 per year. If Beth starts college this year, she must quit her $25,000 per year job. Shep is unemployed and also thinking of going back to school.

A) The opportunity cost of attending the state university is the same for each student. 
B) Beth would be more likely to attend college if night classes were offered that did not conflict with her day work schedule. 
C) Shep would be more likely to return to college if he suddenly found a full-time job. 
D) All of the above. 

10.

The government has a dominant role in a market economy such as the U.S.

A) True 
B) False 

11.

Central planners in planned economies

A) generally set production targets for firms. 
B) always consult consumers on the output of goods they want to consume. 
C) allow prices to organize the economy's production. 
D) depend upon the invisible hand to coordinate economic activities. 

12.

Which of the following is a positive economic statement?

A) An increase in the price of coffee leads to less coffee being purchased. 
B) People should avoid drinking caffienated coffee. 
C) Coffee always makes people jittery and less productive. 
D) Coffee drinkers are drug addicts since they need caffeine. 

13.

The impact of a tax increase on household spending patterns is an example of:

A) microeconomics. 
B) macroeconomics. 
C) irrational economics. 
D) either microeconomics or macroeconomics. 

14.

An example of a real variable is

A) the change in the number of cars produced from one year to the next. 
B) the change in the price of cars from one year to the next. 
C) the change in a person's salary from one year to the next. 
D) the increase in the minimum wage. 

15.

To decide how to allocate scarce resources, a laissez-faire economic system relies on

A) central planning. 
B) prices. 
C) barter. 
D) a mix of planning and markets. 

16.

The slope of a straight line

A) is the rise over the run. 
B) is constant along the whole curve. 
C) will be negative if there is an inverse relationship between the variables. 
D) All of the above are true. 

17.

"The hotter it gets, the more water people drink." This statement implies that the relationship between temperature and water consumption must have

A) a negative slope. 
B) a positive slope. 
C) a slope always equal to one. 
D) a slope always equal to 45 degrees. 

18.

The line in the graph indicates that: 

A) there is no mathematical relationship between X and Y 
B) there is a direct relationship between X and Y 
C) there is an inverse relationship between X and Y 
D) there is a normative relationship between X and Y 

19.

A graph's origin is the point of intersection of all lines or curves in the graph.

A) True 
B) False 

20.

Graphs are valuable because they facilitate interpretation of data.

A) True 
B) False 

21.

A line that is tangent to a curve

A) shares one point with the curve. 
B) shares two points with the curve. 
C) shares no points with the curve. 
D) All of the above are correct. 

22.

A straight line tangent to a curved line at a point

A) crosses the curved line at that point. 
B) crosses the curved line at many points. 
C) has the same slope as the curved line at that point. 
D) has the same slope as the curved line at all points. 

23.

The tangent at point A on a curve has a positive slope. Therefore,

A) the curve has a positive slope at all points. 
B) the curve has a positive slope at point A. 
C) the curve has a negative slope at all points. 
D) the curve has a negative slope at point A. 

24.

To calculate the slope of the total product curve,

A) take the change in Y divided by the change in X. 
B) find the slope of a line tangent to the TP curve. 
C) subtract the change in Y from the change in X. 
D) subtract the change in X from the change in Y. 

25.

Given the demand formula for frisbees of P = $8.30 - 1.23Q, what is the proper interpretation of the value of $8.30?

A) $8.30 represents the highest price the consumer would pay for one frisbee. 
B) $8.30 represents the price that would cause the purchases of frisbees to drop to zero. 
C) $8.30 represents the slope of the demand formula. 
D) Only B and C are correct. 

26.

Whenever a society forgoes current consumption to invest in capital goods, the

A) less the society can consume next year. 
B) easier it will be for the society to consume less in the future because people will become accustomed to less. 
C) more the society can produce and consume in the future. 
D) less capital the society can produce in the future. 

27.

If the farmer is producing 5000 bushels of soybeans at point b in the figure, we know that 

 

A) the farmer is not using his resources efficiently. 
B) the farmer is using his land to produce a crop other than soybeans or corn. 
C) the farmer must be using more land than was used in constructing the production possibilities curve. 
D) the farmer is using his resources efficiently. 

28.

When shifting from point A to point B, the opportunity cost of 1,000 additional tractors is 

 

A) one tractor. 
B) 75 tons of butter. 
C) 0.75 million tons of butter. 
D) 4.75 million tons of butter. 

29.

Between points b and c in the above figure, the opportunity cost of another bushel of corn is 

 

A) 1 yard of cloth. 
B) 1.25 yards of cloth. 
C) 0.8yards of cloth. 
D) 2.5 yards of cloth. 

30.

An efficient allocation of resources exists if

A) one group of people can get more of the things they want without someone else having to give up anything. 
B) no one can get more of the things he wants without someone else having to give up something. 
C) the economy operates at any point under the production possibilities frontier. 
D) the economy is operating at any point above the production possibilities frontier. 

31.

The production possibilities frontier illustrates

A) the constant rate of technological progress. 
B) the fundamental concept of scarcity. 
C) the rapid growth in the U.S. economy. 
D) that coal always trades for parkland. 

32.

Any point inside the production possibilities frontier is

A) efficient. 
B) inefficient. 
C) unattainable. 
D) irrelevant. 

33.

The shape of this PPF indicates that 

 

A) the opportunity cost of producing beef is the same as the opportunity cost of producing wheat. 
B) as beef production increases, its opportunity cost increases. 
C) as beef production increases, its opportunity cost decreases. 
D) as beef production increases, its opportunity cost is constant. 

34.

The opportunity cost of food in terms of cars is 

 

A) constant. 
B) increasing as more food is produced. 
C) decreasing as more food is produced. 
D) indeterminate. 

35.

Economic growth can be pictured in a production possibilities curve diagram by

A) making the production possibilities curve more bowed out. 
B) making the production possibilities curve less bowed out. 
C) shifting the production possibilities curve out. 
D) shifting the production possibilities curve in. 

36.

In the graph, we know the student 

 

A) is not taking any other classes. 
B) has equal ability in marketing and economics. 
C) will get a C in both classes. 
D) has a comparative advantage in economics. 

37.

When increasing opportunity costs exist, resources are not perfectly substitutable for each other.

A) True 
B) False 

38.

Suppse a PPF has capital goods on the vertical axis and consumption goods on the horizontal axis. The PPF has a constant slope with a vertical intercept of 80 and a horizontal intercept of 160. Last year, 160 units of consumption goods were produced, so the economy produced ________ units of capital goods.

A) zero 
B) 80 
C) 160 
D) 240 

39.

In the U.S., it requires 20 labor hours to produce one bushel of wheat and 80 labor hours to produce one computer. In France, it requires 25 labor hours to produce one bushel of wheat and 75 labor hours to produce one computer. The opportunity cost of one bushel of wheat in the U.S. is

A) 3 computers. 
B) 1/3 computer. 
C) 20 labor hours. 
D) 1/4 computer. 

40.

If Brazil can produce more shoes with one hour of labor than can Argentina, which of the following is necessarily true?

A) Brazil has a comparative advantage in the production of shoes. 
B) Brazil exports shoes to Argentina if there is free trade. 
C) Brazil has an absolute advantage in the production of shoes. 
D) All of the above are true. 

41.

A person has a comparative advantage in an activity whenever she

A) has an absolute advantage in the activity. 
B) can perform the activity at a lower opportunity cost than can another person. 
C) can do the activity in less time than anyone else. 
D) can do everything better than anyone else. 

42.

A country has an absolute advantage over another in the production of widgets if

A) it can produce widgets using smaller quantities of resources than can the other country. 
B) it can produce more widgets than can the other country. 
C) it can produce more widgets in a year than can the other country. 
D) it can produce widgets at a lower opportunity cost than can the other country. 

43.

Generally, specialization leads to

A) constant opportunity costs. 
B) greater productivity. 
C) the production of fewer capital goods. 
D) greater self-reliance. 

44.

Comparative advantage is determined by comparing the slopes of production possibilities frontiers.

A) True 
B) False 

45.

Assume that Harriet can bake 48 cookies or 24 cupcakes in one hour. What is Harriet's opportunity cost per cupcake?

A) one cookie 
B) one-half of a cookie 
C) two cookies 
D) two cupcakes 

46.

The following table illustrates the production possibilities for two countries if they use all of their resources producing televisions and milk.

	Television		Milk
Bovinia		15		15
Myopia		10		5

Which of the following is true for these countries?

A) Bovinia has a comparative advantage in both televisions and milk. 
B) In the absence of trade, Myopia would never produce milk, because it has a comparative advantage in producing televisions. 
C) Bovinia would never benefit from trade with Myopia, because it has an absolute advantage in producing both goods. 
D) Bovinia has a comparative advantage as well as an absolute advantage in producing milk. 

47.

In the U.S., it requires 20 labor hours to produce one bushel of wheat and 80 labor hours to produce one computer. In France, it requires 25 labor hours to produce one bushel of wheat and 75 labor hours to produce one computer. The opportunity cost of one bushel of wheat in France is

A) 4 computers. 
B) 25 labor hours. 
C) 3 computers. 
D) 1/3 computer. 

48.

Which of the following statements is FALSE?

A) As society increases its wealth, the problem of scarcity disappears. 
B) The factors of production are used to produce outputs that help society satisfy its wants. 
C) Even though a society faces the problem of scarcity, it does not necessarily suffer from poverty. 
D) Land and labor are both factors of production. 

49.

In a two-person, two-good trading model, the individual with a flatter production possibilities frontier has a comparative advantage in

A) neither good. 
B) both goods. 
C) the good on the horizontal axis. 
D) the good on the vertical axis. 

 

50.

If trade benefits one country, it will make the other country worse off.

A) True 
B) False