Question 1

The processes used to produce goods and services describes

Accepted Answer

A) innovation. 
B) entrepreneurship. 
C) technology. 
D) capital. 
A) innovation. 
B) entrepreneurship. 
C) technology. 
D) capital.

Question 2

When every good or service is produced up to the point where the last unit provides a marginal benefit to society equal to the marginal cost of producing it,________ occurs.

Accepted Answer

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

Question 3

Which of the following is a normative economic statement?

Accepted Answer

A) Rising global demand for diesel and heating oil has led to increases in the price of crude oil. 
B) With falling home prices and rising mortgage interest rates,the amount of foreclosures has increased. 
C) The federal government is considering raising the gasoline tax to promote the use of public transportation. 
D) Fashion designers should be allowed to copyright designs to promote innovation. 
A) Rising global demand for diesel and heating oil has led to increases in the price of crude oil. 
B) With falling home prices and rising mortgage interest rates,the amount of foreclosures has increased. 
C) The federal government is considering raising the gasoline tax to promote the use of public transportation. 
D) Fashion designers should be allowed to copyright designs to promote innovation.

Question 4

If the price of milk was $1.25 a gallon and it is now $2.25 a gallon,what is the percentage change in price?

Accepted Answer

A) 4.4 percent 
B) 8 percent 
C) 44 percent 
D) 80 percent 
A) 4.4 percent 
B) 8 percent 
C) 44 percent 
D) 80 percent

Question 5

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. 
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 6

What does the term "marginal" mean in economics?

Accepted Answer

A) the edge of a market 
B) an additional or extra 
C) illegal 
D) secondary 
E) trivial 
A) the edge of a market 
B) an additional or extra 
C) illegal 
D) secondary 
E) trivial

Question 7

The revenue received from the sale of an additional unit of a product

Accepted Answer

A) is a marginal benefit to the firm. 
B) is called profit. 
C) is called gross sales. 
D) is called a net gain. 
A) is a marginal benefit to the firm. 
B) is called profit. 
C) is called gross sales. 
D) is called a net gain.

Question 8

According to the Centers for Disease Control and Prevention,the only state in 2009 in which less than 20 percent of the population was considered obese was

Accepted Answer

A) Colorado. 
B) Maine. 
C) Missouri. 
D) Oregon. 
A) Colorado. 
B) Maine. 
C) Missouri. 
D) Oregon.

Question 9

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 is her marginal benefit if she sells the quilt "as is" now?

Accepted Answer

A) $100 
B) $900 
C) She makes a marginal loss of $600,not a marginal benefit. 
D) The marginal benefit cannot be determined. 
A) $100 
B) $900 
C) She makes a marginal loss of $600,not a marginal benefit. 
D) The marginal benefit cannot be determined.

Question 10

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

Question 11

What does the word "marginal" mean in economics? What is a marginal benefit? What is a marginal cost? What is marginal analysis?

Accepted Answer

In economics,the word "marginal" means "

Question 12

The branch of economics which studies the behavior of entire economies and policies that affect the economy as a whole is called

Accepted Answer

A) public economics. 
B) microeconomics. 
C) macroeconomics. 
D) normative economics. 
A) public economics. 
B) microeconomics. 
C) macroeconomics. 
D) normative economics.

Question 13

Figure 1-1  
-Refer to Figure 1-1.Using the information in the figure above,calculate the percentage change in sales of alcoholic beverages between 2008 and 2010.

Accepted Answer

A) 23.8% 
B) 40% 
C) 42.9% 
D) 73.3% 
A) 23.8% 
B) 40% 
C) 42.9% 
D) 73.3%

Question 14

Which of the following generates allocative efficiency in a market economy?

Accepted Answer

A) national government intervention 
B) voluntary exchange between buyers and sellers 
C) United Nations rules for competition 
D) equity 
A) national government intervention 
B) voluntary exchange between buyers and sellers 
C) United Nations rules for competition 
D) equity

Question 15

In the first six months of 2003,branches of Commerce Bank in New York City were robbed 14 times.The New York City Police recommended steps the bank could take to deter robberies,including the installation of plastic barriers called "bandit barriers." The police were surprised the bank did not take their advice.According to a deputy commissioner of police,"Commerce does very little of what we recommend.They've told our detectives they have no interest in ever putting in the barriers." It would seem that Commerce bank would have a strong incentive to install "bandit barriers" to deter robberies.Why wouldn't they do it?

Accepted Answer

A) The banks would rather delay installation of any theft deterring equipment in anticipation of new lower cost innovations in the security devices market. 
B) The banks must have weighed the cost of installing bandit barriers against the benefits and decided that they have "no interest in ever putting in the barriers." 
C) The banks are concerned that "bandit barriers" would send the wrong message to customers -- that the bank is unsafe. 
D) The banks probably resent any interference from the police department. 
A) The banks would rather delay installation of any theft deterring equipment in anticipation of new lower cost innovations in the security devices market. 
B) The banks must have weighed the cost of installing bandit barriers against the benefits and decided that they have "no interest in ever putting in the barriers." 
C) The banks are concerned that "bandit barriers" would send the wrong message to customers -- that the bank is unsafe. 
D) The banks probably resent any interference from the police department.

Question 16

The economic analysis of minimum wage involves both normative and positive analysis.Consider the following consequences of a minimum wage: a.The minimum wage law causes unemployment.
B.Unemployment would be lower without a minimum wage law.
C.Minimum wage laws benefit some workers and harm others.
D.The minimum wage should be more than $7.25 per hour.
Which of the consequences above are positive statements and which are normative statements?

Accepted Answer

A) a,b,and c are positive statements and d is a normative statement. 
B) a and b are positive statements,c and d are normative statement. 
C) Only a is a positive statement,b,c and d are normative statements. 
D) a and c are positive statements,b and d are normative statements 
A) a,b,and c are positive statements and d is a normative statement. 
B) a and b are positive statements,c and d are normative statement. 
C) Only a is a positive statement,b,c and d are normative statements. 
D) a and c are positive statements,b and d are normative statements

Question 17

Scenario 1-1
Suppose a t-shirt manufacturer currently sells 5,000 t-shirts per week and makes a profit of $10,000 per week. A manager at the plant observes, "Although the last 400 t-shirts we produced and sold increased our revenue by $4,000 and our costs by $4,800, we are still making an overall profit of $10,000 per week so I think we're on the right track. We are producing the optimal number of t-shirts."
-Refer to Scenario 1-1.Using marginal analysis terminology,what is another economic term for the incremental cost of producing the last 400 t-shirts?

Accepted Answer

A) marginal cost 
B) operating cost 
C) explicit cost 
D) Any of the above terms are correct. 
A) marginal cost 
B) operating cost 
C) explicit cost 
D) Any of the above terms are correct.

Question 18

Which of the following is an example of an economic trade-off that a firm has to make?

Accepted Answer

A) whether it is cheaper to produce with more machines or with more workers 
B) deciding why consumers want its products 
C) whether or not consumers will buy its products 
D) deciding what profit margin it desires for its products 
A) whether it is cheaper to produce with more machines or with more workers 
B) deciding why consumers want its products 
C) whether or not consumers will buy its products 
D) deciding what profit margin it desires for its products

Question 19

Which of the following is an example of a "how much" decision?

Accepted Answer

A) The Pleasantville movie theatre is open only in the evenings.The theatre's manager is debating whether to add daily matinee shows. 
B) The Zhous have demolished their old home and are debating whether to build a ranch-style house or a Craftsman home. 
C) You're planning to hold a graduation party and must decide between having your party catered or having a pot-luck. 
D) Chelsea has withdrawn from the swim team to take up a full-time job. 
A) The Pleasantville movie theatre is open only in the evenings.The theatre's manager is debating whether to add daily matinee shows. 
B) The Zhous have demolished their old home and are debating whether to build a ranch-style house or a Craftsman home. 
C) You're planning to hold a graduation party and must decide between having your party catered or having a pot-luck. 
D) Chelsea has withdrawn from the swim team to take up a full-time job.

Question 20

What is scarcity,and why is it a fundamental concept in economics?

Accepted Answer

Scarcity refers to a situation in which

The processes used to produce goods and services describes

When every good or service is produced up to the point where the last unit provides a marginal benefit to society equal to the marginal cost of producing it,________ occurs.

Which of the following is a normative economic statement?

If the price of milk was $1.25 a gallon and it is now $2.25 a gallon,what is the percentage change in price?

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

What does the term "marginal" mean in economics?

The revenue received from the sale of an additional unit of a product

According to the Centers for Disease Control and Prevention,the only state in 2009 in which less than 20 percent of the population was considered obese was

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

What does the word "marginal" mean in economics? What is a marginal benefit? What is a marginal cost? What is marginal analysis?

The branch of economics which studies the behavior of entire economies and policies that affect the economy as a whole is called

Figure 1-1 -Refer to Figure 1-1.Using the information in the figure above,calculate the percentage change in sales of alcoholic beverages between 2008 and 2010.

Which of the following generates allocative efficiency in a market economy?

Which of the following is an example of an economic trade-off that a firm has to make?

Which of the following is an example of a "how much" decision?

What is scarcity,and why is it a fundamental concept in economics?

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, government Price Setting, and Taxes

Externalities, environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, taxes, and the Distribution of Income

Filters

Exam 1: Economics: Foundations and Models

The processes used to produce goods and services describes

When every good or service is produced up to the point where the last unit provides a marginal benefit to society equal to the marginal cost of producing it,________ occurs.

Which of the following is a normative economic statement?

If the price of milk was $1.25 a gallon and it is now $2.25 a gallon,what is the percentage change in price?

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

What does the term "marginal" mean in economics?

The revenue received from the sale of an additional unit of a product

According to the Centers for Disease Control and Prevention,the only state in 2009 in which less than 20 percent of the population was considered obese was

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

What does the word "marginal" mean in economics? What is a marginal benefit? What is a marginal cost? What is marginal analysis?

The branch of economics which studies the behavior of entire economies and policies that affect the economy as a whole is called

Figure 1-1 -Refer to Figure 1-1.Using the information in the figure above,calculate the percentage change in sales of alcoholic beverages between 2008 and 2010.

Which of the following generates allocative efficiency in a market economy?

Which of the following is an example of an economic trade-off that a firm has to make?

Which of the following is an example of a "how much" decision?

What is scarcity,and why is it a fundamental concept in economics?

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, government Price Setting, and Taxes

Externalities, environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, taxes, and the Distribution of Income

Filters