Question 1

All of the following are part of an economic model except

Accepted Answer

A) assumptions. 
B) hypotheses. 
C) data. 
D) opinions. 
A) assumptions. 
B) hypotheses. 
C) data. 
D) opinions. D

Question 2

Suppose the extra cost to a pet store of advertising one additional day each week in the local newspaper is $450.Then,the pet store should advertize that one additional day each week if doing so brings in additional revenue of $450 or more each week.

Accepted Answer

A) True 
 B)False  True

Question 3

Normative analysis is concerned with "what ought to be," while positive analysis is concerned with "what is."

Accepted Answer

A) True 
 B)False  True

Question 4

List the four main factors of production.

Accepted Answer

The five main factors of produ

Question 5

What is opportunity cost?

Accepted Answer

Opportunity cost refers to the highest-v

Question 6

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 7

Zane's Vanes is a service that restores old weather vanes.Zane has just spent $125 purchasing a 1920s-era weather vane which he expects to restore and sell for $500 once the work is completed.After having spent $125,Zane realizes that he will need to spend an additional $200 on materials to complete the restoration.Alternatively,he can sell the weather vane without restoring it for $200.
-What is his marginal benefit if he sells the weather vane without restoring it?

Accepted Answer

A) $75 
B) $125 
C) $200 
D) $300 
A) $75 
B) $125 
C) $200 
D) $300

Question 8

All economic questions arise from the fact that resources are scarce.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following contributed to the downfall of the Soviet Union in 1991?

Accepted Answer

A) public dissatisfaction with low living standards and political repression 
B) producing higher-quality goods than were desired by consumers 
C) the rapidly increasing standard of living 
D) the lack of a strong dictator who could coordinate economic activities 
A) public dissatisfaction with low living standards and political repression 
B) producing higher-quality goods than were desired by consumers 
C) the rapidly increasing standard of living 
D) the lack of a strong dictator who could coordinate economic activities

Question 10

Define microeconomics.

Accepted Answer

Microeconomics is the study of

Question 11

The distribution of income primarily determines which of the fundamental economic questions?

Accepted Answer

A) What goods and services are to be produced? 
B) How the goods and services are to be produced? 
C) Who will receive the goods and services produced? 
D) How to plan the economy? 
A) What goods and services are to be produced? 
B) How the goods and services are to be produced? 
C) Who will receive the goods and services produced? 
D) How to plan the economy?

Question 12

There is often a trade-off between

Accepted Answer

A) productive efficiency and allocative efficiency. 
B) limited and unlimited resources. 
C) voluntary and involuntary exchanges. 
D) economic efficiency and economic equity. 
A) productive efficiency and allocative efficiency. 
B) limited and unlimited resources. 
C) voluntary and involuntary exchanges. 
D) economic efficiency and economic equity.

Question 13

Table 1-7
 $$\begin{array} { | c | c | } 
\hline \text { Year } & \text { LED Light Bulbs (millions) } \
\hline 2012 & 12.5 \
\hline 2013 & 14.0 \
\hline 2014 & 17.2 \
\hline 2015 & 20.0 \
\hline 2016 & 21.7 \
\hline
\end{array}$$
-Refer to Table 1-7.The table above shows the sales of LED light bulbs in North America.Present the information using a bar graph.

Accepted Answer

The answer of Table 1-7
 \[\begin{array} { | c |...

Question 14

Voluntary exchange increases economic efficiency

Accepted Answer

A) because neither the buyer nor the seller would agree to a trade unless they both benefit. 
B) because voluntary exchange only takes place with government permission. 
C) because it is free and consequently does not cost anything. 
D) because it allows wealthy individuals to act altruistically and give to the poor. 
A) because neither the buyer nor the seller would agree to a trade unless they both benefit. 
B) because voluntary exchange only takes place with government permission. 
C) because it is free and consequently does not cost anything. 
D) because it allows wealthy individuals to act altruistically and give to the poor.

Question 15

If a straight line passes through the point x = 14 and y = 3 and also through the point x = 4 and y = 10,the slope of this line is

Accepted Answer

A) negative 11 divided by 6. 
B) seven-tenths. 
C) negative seven-tenths. 
D) 6 divided by 11. 
A) negative 11 divided by 6. 
B) seven-tenths. 
C) negative seven-tenths. 
D) 6 divided by 11.

Question 16

What is an entrepreneur,and what decisions does an entrepreneur make in a market system?

Accepted Answer

An entrepreneur is someone who

Question 17

Marginal cost is the ________ associated with a particular increase in an activity.

Accepted Answer

A) total cost 
B) additional cost 
C) opportunity cost 
D) forgone cost 
A) total cost 
B) additional cost 
C) opportunity cost 
D) forgone cost

Question 18

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?

Accepted Answer

A) a only 
B) b only 
C) c only 
D) a and b 
E) a,b,and c 
A) a only 
B) b only 
C) c only 
D) a and b 
E) a,b,and c

Question 19

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 20

What is the difference between goods and services?

Accepted Answer

Goods are tangible merchandise

Exam 1: Economics: Foundations and Models

All of the following are part of an economic model except

Suppose the extra cost to a pet store of advertising one additional day each week in the local newspaper is $450.Then,the pet store should advertize that one additional day each week if doing so brings in additional revenue of $450 or more each week.

Normative analysis is concerned with "what ought to be," while positive analysis is concerned with "what is."

List the four main factors of production.

What is opportunity cost?

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

All economic questions arise from the fact that resources are scarce.

Which of the following contributed to the downfall of the Soviet Union in 1991?

Define microeconomics.

The distribution of income primarily determines which of the fundamental economic questions?

There is often a trade-off between

Table 1-7 Year LED Light Bulbs (millions) 2012 12.5 2013 14.0 2014 17.2 2015 20.0 2016 21.7 -Refer to Table 1-7.The table above shows the sales of LED light bulbs in North America.Present the information using a bar graph.

Voluntary exchange increases economic efficiency

If a straight line passes through the point x = 14 and y = 3 and also through the point x = 4 and y = 10,the slope of this line is

What is an entrepreneur,and what decisions does an entrepreneur make in a market system?

Marginal cost is the ________ associated with a particular increase in an activity.

What is the difference between goods and services?

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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