Question 1

The decisions Apple makes in determining production levels for its iPhone is an example of a microeconomics topic.

Accepted Answer

A) True 
 B)False

Question 2

On a two-dimensional graph,________ allows for the effects of additional variables.

Accepted Answer

A)  moving along a curve 
B)  shifting curves 
C)  eliminating a curve 
D)  adding an additional curve 
A)  moving along a curve 
B)  shifting curves 
C)  eliminating a curve 
D)  adding an additional curve

Question 3

The extra cost associated with undertaking an activity is called

Accepted Answer

A)  net loss. 
B)  marginal cost. 
C)  opportunity cost. 
D)  foregone cost. 
A)  net loss. 
B)  marginal cost. 
C)  opportunity cost. 
D)  foregone cost.

Question 4

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)A minimum wage law benefits some groups and hurts others.
C)In some cities such as San Francisco and New York,it would be impossible for low-skilled workers to live in the city without minimum wage laws.
D)The gains to winners of a minimum wage law should be valued more highly than the losses to losers because the latter primarily comprises businesses.
Which of the consequences above are positive statements and which 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.

Accepted Answer

The answer of The economic analysis of minimum wage involves...

Question 5

The basic economic problem of ________ has always existed and will continue to exist.

Accepted Answer

A)  scarcity 
B)  efficiency 
C)  inflation 
D)  recession 
A)  scarcity 
B)  efficiency 
C)  inflation 
D)  recession

Question 6

Making optimal decisions "at the margin" requires

Accepted Answer

A)  making decisions according to one's whims and fancies. 
B)  making consistently irrational decisions. 
C)  weighing the costs and benefits of a decision before deciding if it should be pursued. 
D)  making borderline decisions. 
A)  making decisions according to one's whims and fancies. 
B)  making consistently irrational decisions. 
C)  weighing the costs and benefits of a decision before deciding if it should be pursued. 
D)  making borderline decisions.

Question 7

Why is it necessary for all economic systems to not only provide people with goods and services,but also restrict them from getting as much of these goods and services as they wish?

Accepted Answer

A)  Failure to do this could reduce the efficiency of the system by producing some goods and services that are not as highly valued as others. 
B)  Failure to do this could lead to an inequitable allocation of goods and services produced. 
C)  Failure to do this could lead to drastic shortages of good and services. 
D)  Failure to do this could reduces efficiency and leads to an inequitable allocation of output. 
A)  Failure to do this could reduce the efficiency of the system by producing some goods and services that are not as highly valued as others. 
B)  Failure to do this could lead to an inequitable allocation of goods and services produced. 
C)  Failure to do this could lead to drastic shortages of good and services. 
D)  Failure to do this could reduces efficiency and leads to an inequitable allocation of output.

Question 8

Table 1-2
  
-Refer to Table 1-2.The table above shows the sales of DVD recorders in North America.Present the information using a bar graph.

Accepted Answer

The answer of Table 1-2
  
-Refer to Table 1-2.The...

Question 9

In economics,choices must be made because we live in a world of

Accepted Answer

A)  unemployment. 
B)  scarcity. 
C)  greed. 
D)  unlimited resources. 
A)  unemployment. 
B)  scarcity. 
C)  greed. 
D)  unlimited resources.

Question 10

________ increases economic efficiency because it forces firms to produce and sell goods and services as long as the additional benefit to consumers is greater than the additional cost of production.

Accepted Answer

A)  Competition 
B)  Voluntary exchange 
C)  Equity 
D)  A centrally planned economy 
A)  Competition 
B)  Voluntary exchange 
C)  Equity 
D)  A centrally planned economy

Question 11

Explain the economic idea that "people respond to incentives."

Accepted Answer

Human beings act from a variety of motiv

Question 12

Define productive efficiency.Does productive efficiency imply allocative efficiency? Explain.

Accepted Answer

Productive efficiency is an efficiency c

Question 13

If a graph has a line that shows the amount of outsourcing in the last ten years,it is known as

Accepted Answer

A)  a pie chart. 
B)  a time-series graph. 
C)  a demand curve for outsourcing. 
D)  a supply curve of outsourcing. 
A)  a pie chart. 
B)  a time-series graph. 
C)  a demand curve for outsourcing. 
D)  a supply curve of outsourcing.

Question 14

Productive efficiency is achieved when

Accepted Answer

A)  firms add a low profit margin to the goods and services they produce. 
B)  firms produce the goods and services that consumers value most. 
C)  firms produce goods and services at the lowest cost. 
D)  there are no shortages or surpluses in the market. 
A)  firms add a low profit margin to the goods and services they produce. 
B)  firms produce the goods and services that consumers value most. 
C)  firms produce goods and services at the lowest cost. 
D)  there are no shortages or surpluses in the market.

Question 15

Consider the following statements: a.Car owners purchase more gasoline from a gas station that sells gasoline at a lower price than other rival gas stations in the area.
B)Banks do not take steps to increase security since they believe it is less costly to allow some bank robberies than to install expensive security monitoring equipment.
C)Firms produce more of a particular DVD when its selling price rises.
Which of the above statements demonstrates that economic agents respond to incentives?
A) a only.
B) b only.
C) c only.
D) a and b.
E) a, b, and c.

Accepted Answer

The answer of Consider the following statements: a.Car owners purchase...

Question 16

The idea that because of scarcity,producing more of one good or service means producing less of another good or service refers to the economic concept of

Accepted Answer

A)  optimization. 
B)  efficiency. 
C)  trade-off. 
D)  equity. 
A)  optimization. 
B)  efficiency. 
C)  trade-off. 
D)  equity.

Question 17

Arlene quits her $125,000-a-year job to take care of her ailing parents.What is the opportunity cost of her decision?

Accepted Answer

A)  zero, since she will no longer be earning a salary 
B)  It depends on the "going rate" for home-care providers. 
C)  at least $125,000 
D)  the value she attributes to the satisfaction she receives from taking care of her parents 
A)  zero, since she will no longer be earning a salary 
B)  It depends on the "going rate" for home-care providers. 
C)  at least $125,000 
D)  the value she attributes to the satisfaction she receives from taking care of her parents

Question 18

________ is a situation in which a good or service is produced at the lowest possible cost.

Accepted Answer

A)  Allocative efficiency 
B)  Productive efficiency 
C)  Equity 
D)  Optimal marginalism 
A)  Allocative efficiency 
B)  Productive efficiency 
C)  Equity 
D)  Optimal marginalism

Question 19

Which of the following statements about the economic decisions consumers,firms,and the government have to make is false?

Accepted Answer

A)  Governments face the problem of scarcity in making economic decisions. 
B)  Only individuals face scarcity; firms and the government do not. 
C)  Both firms and individuals face scarcity. 
D)  Each faces the problem of scarcity which necessitates trade-offs in making economic decisions. 
A)  Governments face the problem of scarcity in making economic decisions. 
B)  Only individuals face scarcity; firms and the government do not. 
C)  Both firms and individuals face scarcity. 
D)  Each faces the problem of scarcity which necessitates trade-offs in making economic decisions.

Question 20

Suppose the extra cost for a doctor to keep his office open for one extra hour is $200.Then,the doctor should stay open for the extra hour even if he can generate additional revenue of $200 for that hour.

Accepted Answer

A) True 
 B)False

Exam 1: Economics: Foundations and Models

The decisions Apple makes in determining production levels for its iPhone is an example of a microeconomics topic.

On a two-dimensional graph,________ allows for the effects of additional variables.

The extra cost associated with undertaking an activity is called

The basic economic problem of ________ has always existed and will continue to exist.

Making optimal decisions "at the margin" requires

Why is it necessary for all economic systems to not only provide people with goods and services,but also restrict them from getting as much of these goods and services as they wish?

Table 1-2 -Refer to Table 1-2.The table above shows the sales of DVD recorders in North America.Present the information using a bar graph.

In economics,choices must be made because we live in a world of

________ increases economic efficiency because it forces firms to produce and sell goods and services as long as the additional benefit to consumers is greater than the additional cost of production.

Explain the economic idea that "people respond to incentives."

Define productive efficiency.Does productive efficiency imply allocative efficiency? Explain.

If a graph has a line that shows the amount of outsourcing in the last ten years,it is known as

Productive efficiency is achieved when

The idea that because of scarcity,producing more of one good or service means producing less of another good or service refers to the economic concept of

Arlene quits her $125,000-a-year job to take care of her ailing parents.What is the opportunity cost of her decision?

________ is a situation in which a good or service is produced at the lowest possible cost.

Which of the following statements about the economic decisions consumers,firms,and the government have to make is false?

Suppose the extra cost for a doctor to keep his office open for one extra hour is $200.Then,the doctor should stay open for the extra hour even if he can generate additional revenue of $200 for that hour.

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

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

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