Question 1

The decision about what goods and services will be produced made in a market economy is made by

Accepted Answer

A)  lawmakers in the government voting on what will be produced. 
B)  workers deciding to produce only what the boss says must be produced. 
C)  producers deciding what society wants most. 
D)  consumers and firms choosing which goods and services to buy or produce. 
E)  consumers dictating to firms what they need most. 
A)  lawmakers in the government voting on what will be produced. 
B)  workers deciding to produce only what the boss says must be produced. 
C)  producers deciding what society wants most. 
D)  consumers and firms choosing which goods and services to buy or produce. 
E)  consumers dictating to firms what they need most.

Question 2

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

Accepted Answer

A)  Dinah's Diner is only open for breakfast and lunch. Dinah is trying to decide whether to open for dinner as well. 
B)  Zander has torn up his front yard and is debating whether to plant grass or install a rock garden. 
C)  You received a nice birthday check from your grandmother and are deciding on whether to spend it on a trip to New York or a trip to San Francisco. 
D)  Sergio quit his job to go back to school full time. 
A)  Dinah's Diner is only open for breakfast and lunch. Dinah is trying to decide whether to open for dinner as well. 
B)  Zander has torn up his front yard and is debating whether to plant grass or install a rock garden. 
C)  You received a nice birthday check from your grandmother and are deciding on whether to spend it on a trip to New York or a trip to San Francisco. 
D)  Sergio quit his job to go back to school full time.

Question 3

In economics,an organization that produces a good or service is called a

Accepted Answer

A)  firm. 
B)  company. 
C)  business. 
D)  All of the above are correct. 
A)  firm. 
B)  company. 
C)  business. 
D)  All of the above are correct.

Question 4

Which of the following is part of an economic model?

Accepted Answer

A)  norms 
B)  hypotheses 
C)  opinions 
D)  preferences of economic agents 
A)  norms 
B)  hypotheses 
C)  opinions 
D)  preferences of economic agents

Question 5

At a recent company meeting,Ravi Batra,sales manager of Life's a Beach,a surfboard producer announced,"We have increased our sales by 13 percent in just 9 months." Suppose 9 months ago,its sales amounted to $245,000,what is the value of its sales today?

Accepted Answer

A)  $31,850 
B)  $207,638 
C)  $276,850 
D)  $359,905 
A)  $31,850 
B)  $207,638 
C)  $276,850 
D)  $359,905

Question 6

Holding all other personal characteristics-such as age,gender,and income-constant,economists would expect that

Accepted Answer

A)  people with health insurance will be less likely to be overweight than people without health insurance. 
B)  people with health insurance will be more likely to be overweight than people without health insurance. 
C)  people with health insurance will be equally likely to be overweight as people without health insurance. 
D)  there is no correlation between having health insurance and being overweight. 
A)  people with health insurance will be less likely to be overweight than people without health insurance. 
B)  people with health insurance will be more likely to be overweight than people without health insurance. 
C)  people with health insurance will be equally likely to be overweight as people without health insurance. 
D)  there is no correlation between having health insurance and being overweight.

Question 7

Allison's Auto Art is a company that applies pinstripes to vehicles.Allison's cost for a basic 1-color pinstriping job is $35,and she charges $95 for this service.For a total price of $175,Allison will apply a fancier 3-color pinstripe application to an automobile,a service that adds an additional $40 to the total cost of the package.What is the marginal cost of moving up from the 1-color application to the 3-color application?

Accepted Answer

A)  $35 
B)  $40 
C)  $80 
D)  $175 
A)  $35 
B)  $40 
C)  $80 
D)  $175

Question 8

Figure 1-2  
-Refer to Figure 1-2.Calculate the area of the triangle A.

Accepted Answer

A)  $1.3 million 
B)  $2.6 million 
C)  $3.4 million 
D)  $5.2 million 
A)  $1.3 million 
B)  $2.6 million 
C)  $3.4 million 
D)  $5.2 million

Question 9

Suppose that some investors have decided that economic and financial uncertainty have made the prospect of investing in domestic stock markets more risky than investing in foreign stock markets,and therefore choose to invest in foreign markets.By using all available information as they act to achieve their goals,these investors are exemplifying the economic idea that

Accepted Answer

A)  people are rational. 
B)  people respond to economic incentives. 
C)  optimal decisions are made at the margin. 
D)  equity is more important than efficiency. 
A)  people are rational. 
B)  people respond to economic incentives. 
C)  optimal decisions are made at the margin. 
D)  equity is more important than efficiency.

Question 10

Scenario 1-2
Suppose a hat manufacturer currently sells 2,000 hats per week and makes a profit of $5,000 per week. The plant owner observes, "Although the last 300 hats we produced and sold increased our revenue by $1,000 and our costs by $1,100, we are still making an overall profit of $5,000 per week so I think we're on the right track. We are producing the optimal number of hats."
-Refer to Scenario 1-2.Had the firm not produced and sold the last 300 hats,would its profit be higher or lower,and if so by how much?

Accepted Answer

A)  Its profit will be $1,100 higher. 
B)  Its profit will be $100 higher. 
C)  Its profit will be $100 lower. 
D)  Its profit will be $1,000 lower. 
A)  Its profit will be $1,100 higher. 
B)  Its profit will be $100 higher. 
C)  Its profit will be $100 lower. 
D)  Its profit will be $1,000 lower.

Question 11

At a recent faculty meeting,Lorraine Waverly,president of Skywalker College,announced that enrollment is up by 12 percent over the previous semester.If enrollment the previous semester was 3,250 students,what is the student enrollment this semester?

Accepted Answer

A)  390 
B)  2,860 
C)  3,640 
D)  4,030 
A)  390 
B)  2,860 
C)  3,640 
D)  4,030

Question 12

The development of a new good or a new process for making a good is called

Accepted Answer

A)  an innovation. 
B)  an invention. 
C)  a factor of production. 
D)  a service. 
A)  an innovation. 
B)  an invention. 
C)  a factor of production. 
D)  a service.

Question 13

The Coffee Nook,a small cafe near campus,sells cappuccinos for $2.50 and Russian tea cakes for $1.00 each.What is the opportunity cost of buying a cappuccino?

Accepted Answer

A)  2 1/2 Russian tea cakes 
B)  2/5 of a Russian tea cake 
C)  $2.50 
D)  $1.00 
A)  2 1/2 Russian tea cakes 
B)  2/5 of a Russian tea cake 
C)  $2.50 
D)  $1.00

Question 14

Political candidates often hold fund raisers by charging "per plate" for dinner.Wendy purchased four tickets to a $1,000 per plate dinner for a local city council candidate.Is this transaction economically efficient?

Accepted Answer

A)  No, political candidates should never be allowed to overcharge for a fund raising dinner. 
B)  Yes, it was a voluntary exchange that benefited both parties. 
C)  No, Wendy paid too much for four dinners. 
D)  Yes, it is efficient only from the perspective of the candidate but not from the perspective of Wendy. 
A)  No, political candidates should never be allowed to overcharge for a fund raising dinner. 
B)  Yes, it was a voluntary exchange that benefited both parties. 
C)  No, Wendy paid too much for four dinners. 
D)  Yes, it is efficient only from the perspective of the candidate but not from the perspective of Wendy.

Question 15

In 2013,Smileytown consumed 12,000 gallons of mouthwash.In 2014,mouthwash consumption rose to 17,000 gallons.Calculate the percentage change in mouthwash consumption.

Accepted Answer

A)  17.2% 
B)  29.4% 
C)  41.7% 
D)  70.6% 
A)  17.2% 
B)  29.4% 
C)  41.7% 
D)  70.6%

Question 16

What is the difference between positive economic analysis and normative economic analysis? Give one example each of a positive and normative economic issue or question or statement.

Accepted Answer

Positive economic analysis is concerned

Question 17

The additional cost to a producer of hiring an additional unit of labor is called the marginal cost.

Accepted Answer

A) True 
 B)False

Question 18

Table 1-3
   Santiago runs a comic book store in the town of East Arbor. He is debating whether he should extend his hours of operation. Santiago figures that his sales revenue will depend on the number of hours the store is open as shown in the table above. He would have to hire a worker for those hours at a wage rate of $18 per hour.
-Refer to Table 1-3.What is Santiago's marginal cost if he decides to stay open for two hours instead of one hour?

Accepted Answer

A)  $18 
B)  $36 
C)  $38 
D)  $102 
A)  $18 
B)  $36 
C)  $38 
D)  $102

Question 19

Which of the following statements is true about competition in a market?

Accepted Answer

A)  Competition forces firms to outsource the production of their labor-intensive products. 
B)  Competition forces firms to undercut their selling price, thus benefiting consumers who will be able to purchase products at the lowest price possible. 
C)  Competition forces firms to produce and sell products as long as the marginal benefit to consumers exceeds the marginal cost of production. 
D)  Competition forces firms to add only low profit margins to their costs of production. 
A)  Competition forces firms to outsource the production of their labor-intensive products. 
B)  Competition forces firms to undercut their selling price, thus benefiting consumers who will be able to purchase products at the lowest price possible. 
C)  Competition forces firms to produce and sell products as long as the marginal benefit to consumers exceeds the marginal cost of production. 
D)  Competition forces firms to add only low profit margins to their costs of production.

Question 20

Even if the population declines,scarcity will still exist.

Accepted Answer

A) True 
 B)False

The decision about what goods and services will be produced made in a market economy is made by

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

In economics,an organization that produces a good or service is called a

Which of the following is part of an economic model?

At a recent company meeting,Ravi Batra,sales manager of Life's a Beach,a surfboard producer announced,"We have increased our sales by 13 percent in just 9 months." Suppose 9 months ago,its sales amounted to $245,000,what is the value of its sales today?

Holding all other personal characteristics-such as age,gender,and income-constant,economists would expect that

Figure 1-2 -Refer to Figure 1-2.Calculate the area of the triangle A.

At a recent faculty meeting,Lorraine Waverly,president of Skywalker College,announced that enrollment is up by 12 percent over the previous semester.If enrollment the previous semester was 3,250 students,what is the student enrollment this semester?

The development of a new good or a new process for making a good is called

The Coffee Nook,a small cafe near campus,sells cappuccinos for $2.50 and Russian tea cakes for $1.00 each.What is the opportunity cost of buying a cappuccino?

Political candidates often hold fund raisers by charging "per plate" for dinner.Wendy purchased four tickets to a $1,000 per plate dinner for a local city council candidate.Is this transaction economically efficient?

In 2013,Smileytown consumed 12,000 gallons of mouthwash.In 2014,mouthwash consumption rose to 17,000 gallons.Calculate the percentage change in mouthwash consumption.

What is the difference between positive economic analysis and normative economic analysis? Give one example each of a positive and normative economic issue or question or statement.

The additional cost to a producer of hiring an additional unit of labor is called the marginal cost.

Which of the following statements is true about competition in a market?

Even if the population declines,scarcity will still exist.

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 decision about what goods and services will be produced made in a market economy is made by

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

In economics,an organization that produces a good or service is called a

Which of the following is part of an economic model?

At a recent company meeting,Ravi Batra,sales manager of Life's a Beach,a surfboard producer announced,"We have increased our sales by 13 percent in just 9 months." Suppose 9 months ago,its sales amounted to $245,000,what is the value of its sales today?

Holding all other personal characteristics-such as age,gender,and income-constant,economists would expect that

Figure 1-2 -Refer to Figure 1-2.Calculate the area of the triangle A.

At a recent faculty meeting,Lorraine Waverly,president of Skywalker College,announced that enrollment is up by 12 percent over the previous semester.If enrollment the previous semester was 3,250 students,what is the student enrollment this semester?

The development of a new good or a new process for making a good is called

The Coffee Nook,a small cafe near campus,sells cappuccinos for $2.50 and Russian tea cakes for $1.00 each.What is the opportunity cost of buying a cappuccino?

Political candidates often hold fund raisers by charging "per plate" for dinner.Wendy purchased four tickets to a $1,000 per plate dinner for a local city council candidate.Is this transaction economically efficient?

In 2013,Smileytown consumed 12,000 gallons of mouthwash.In 2014,mouthwash consumption rose to 17,000 gallons.Calculate the percentage change in mouthwash consumption.

What is the difference between positive economic analysis and normative economic analysis? Give one example each of a positive and normative economic issue or question or statement.

The additional cost to a producer of hiring an additional unit of labor is called the marginal cost.

Which of the following statements is true about competition in a market?

Even if the population declines,scarcity will still exist.

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