Question 1

Which of the following is a macroeconomics question?

Accepted Answer

A) What determines the unemployment rate? 
B) How is the production quantity of digital cameras determined? 
C) What factors determine the price of iPhones? 
D) What determines the wages and benefits of flight attendants? 
A) What determines the unemployment rate? 
B) How is the production quantity of digital cameras determined? 
C) What factors determine the price of iPhones? 
D) What determines the wages and benefits of flight attendants?

Question 2

If it costs Vijay $150 to design 5 Web sites and $175 to design 6 Web sites,then $175 is the marginal cost of producing the 6th Web site.

Accepted Answer

A) True 
 B)False

Question 3

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 4

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 cost to complete the restoration?

Accepted Answer

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

Question 5

Allocative efficiency best explains ________,and productive efficiency best explains ________.

Accepted Answer

A) how something will be produced;when something will be produced 
B) when something will be produced;why something will be produced 
C) why something will be produced;what will be produced 
D) what will be produced;how something will be produced 
A) how something will be produced;when something will be produced 
B) when something will be produced;why something will be produced 
C) why something will be produced;what will be produced 
D) what will be produced;how something will be produced

Question 6

If a straight line passes through the point x = 24 and y = 8 and also through the point x = 8 and y = 16,the slope of this line is

Accepted Answer

A) negative 8 divided by 4. 
B) seven-tenths. 
C) negative one-half. 
D) one and one-half. 
A) negative 8 divided by 4. 
B) seven-tenths. 
C) negative one-half. 
D) one and one-half.

Question 7

The prevalence of Alzheimer's dementia is very high among residents living in nursing homes.A student concludes that it is likely that living in a nursing home causes Alzheimer's dementia.What is the flaw in the student's reasoning?

Accepted Answer

A) The student has failed to take into account other causes of Alzheimer's disease. 
B) The student is drawing a false conclusion;he is confusing cause and effect. 
C) The student is using an inadequate sample size. 
D) The student is drawing a false conclusion by making the mistake of omitting critical variables such as the age and gender of the residents. 
A) The student has failed to take into account other causes of Alzheimer's disease. 
B) The student is drawing a false conclusion;he is confusing cause and effect. 
C) The student is using an inadequate sample size. 
D) The student is drawing a false conclusion by making the mistake of omitting critical variables such as the age and gender of the residents.

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

Economists assume that rational behavior is useful in explaining choices people make

Accepted Answer

A) because irrational people do not make economic choices. 
B) even though people may not behave rationally all the time. 
C) because individuals act rationally all the time in all circumstances. 
D) even though people rarely,if ever,behave in a rational manner. 
A) because irrational people do not make economic choices. 
B) even though people may not behave rationally all the time. 
C) because individuals act rationally all the time in all circumstances. 
D) even though people rarely,if ever,behave in a rational manner.

Question 10

________ involves undertaking an activity until its marginal benefits equal marginal costs.

Accepted Answer

A) Scarcity reduction 
B) Central planning 
C) Marginal analysis 
D) Market intervention 
A) Scarcity reduction 
B) Central planning 
C) Marginal analysis 
D) Market intervention

Question 11

The revenue received from the sale of ________ of a product is a marginal benefit to the firm.

Accepted Answer

A) an additional unit 
B) the total number of units 
C) no units 
D) only profitable units 
A) an additional unit 
B) the total number of units 
C) no units 
D) only profitable units

Question 12

________ occurs when economic benefits are distributed fairly.

Accepted Answer

A) Productive efficiency 
B) Allocative efficiency 
C) Equality 
D) Equity 
A) Productive efficiency 
B) Allocative efficiency 
C) Equality 
D) Equity

Question 13

What is an economic variable? Give an example of an economic variable.

Accepted Answer

An economic variable is someth

Question 14

Which of the following is not an example of an efficiency-equity trade-off faced by economic agents?

Accepted Answer

A) According to an article by in the American Journal of Public Health by Edward Kaplan and Michael Merson of Yale University School of Medicine,the federal government's current method of allocating HIV-prevention resources is not cost-effective.Instead of allocating resources to states in proportion to reported AIDS cases,resources should flow first to those activities that prevent more infections per dollar and then to less and less effective combinations of programs and populations until funds are exhausted,even if it means that some populations would be left without any prevention services. 
B) Concerned about the falling birth rate,the French government has pledged more money for families with three children,in an effort to encourage working women to have more babies. 
C) The growing demand for corn by ethanol producers has led to a surge in the price of tortillas,a staple in the Mexican diet.To quell public outcry over rising tortilla prices,the Mexican government released government corn stocks at prices well below the market,and pressured states to impose price ceilings on tortillas. 
D) Some U.S.colleges cut back on merit scholarships since these programs siphon money from need-based programs,thus harming lower-income students with greater financial need. 
A) According to an article by in the American Journal of Public Health by Edward Kaplan and Michael Merson of Yale University School of Medicine,the federal government's current method of allocating HIV-prevention resources is not cost-effective.Instead of allocating resources to states in proportion to reported AIDS cases,resources should flow first to those activities that prevent more infections per dollar and then to less and less effective combinations of programs and populations until funds are exhausted,even if it means that some populations would be left without any prevention services. 
B) Concerned about the falling birth rate,the French government has pledged more money for families with three children,in an effort to encourage working women to have more babies. 
C) The growing demand for corn by ethanol producers has led to a surge in the price of tortillas,a staple in the Mexican diet.To quell public outcry over rising tortilla prices,the Mexican government released government corn stocks at prices well below the market,and pressured states to impose price ceilings on tortillas. 
D) Some U.S.colleges cut back on merit scholarships since these programs siphon money from need-based programs,thus harming lower-income students with greater financial need.

Question 15

If a graph has a line that shows the quantity of flat-screen televisions sold in the last five 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 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

Human capital refers to the accumulated skills and training that workers possess.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following statements about scarcity is true?

Accepted Answer

A) Scarcity refers to the situation in which unlimited wants exceed limited resources. 
B) Scarcity is not a problem for the wealthy. 
C) Scarcity is only a problem when a country has too large a population. 
D) Scarcity only arises when there is a wide disparity in income distribution. 
A) Scarcity refers to the situation in which unlimited wants exceed limited resources. 
B) Scarcity is not a problem for the wealthy. 
C) Scarcity is only a problem when a country has too large a population. 
D) Scarcity only arises when there is a wide disparity in income distribution.

Question 19

What is a centrally planned economy?

Accepted Answer

A centrally planned economy is

Question 20

The Stogie Shop,a cigar store in the mall,sells hand-rolled cigars for $10.00 and machine-made cigars for $2.50 each.What is the opportunity cost of buying a hand-rolled cigar?

Accepted Answer

A) 4 machine-made cigars 
B) one-quarter of a machine-made cigar 
C) $10.00 
D) $2.50 
A) 4 machine-made cigars 
B) one-quarter of a machine-made cigar 
C) $10.00 
D) $2.50

Exam 1: Economics: Foundations and Models

Which of the following is a macroeconomics question?

If it costs Vijay $150 to design 5 Web sites and $175 to design 6 Web sites,then $175 is the marginal cost of producing the 6th Web site.

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.

Allocative efficiency best explains ________,and productive efficiency best explains ________.

If a straight line passes through the point x = 24 and y = 8 and also through the point x = 8 and y = 16,the slope of this line is

The prevalence of Alzheimer's dementia is very high among residents living in nursing homes.A student concludes that it is likely that living in a nursing home causes Alzheimer's dementia.What is the flaw in the student's reasoning?

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

Economists assume that rational behavior is useful in explaining choices people make

________ involves undertaking an activity until its marginal benefits equal marginal costs.

The revenue received from the sale of ________ of a product is a marginal benefit to the firm.

________ occurs when economic benefits are distributed fairly.

What is an economic variable? Give an example of an economic variable.

Which of the following is not an example of an efficiency-equity trade-off faced by economic agents?

If a graph has a line that shows the quantity of flat-screen televisions sold in the last five years,it is known as

Human capital refers to the accumulated skills and training that workers possess.

Which of the following statements about scarcity is true?

What is a centrally planned economy?

The Stogie Shop,a cigar store in the mall,sells hand-rolled cigars for $10.00 and machine-made cigars for $2.50 each.What is the opportunity cost of buying a hand-rolled cigar?

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

Filters

Allocative efficiency best explains ,and productive efficiency best explains .