Exam 1

Question 1

The basic economic problem is

Answer 1

economic scarcity and unlimited economic wants

Question 2

the individual who brings together economic resources and assumes the risk in a capitalist economy is called the

Answer 2

entrepreneur

Question 3

which is not an economic resource?

Answer 3

Money

Question 4

if an economy is being “productively efficient” then that means the economy is using

Answer 4

the least costly production techniques

Question 5

with allocative efficiency

Answer 5

resources are used in their most appropriate and acceptable application

Question 6

which is one of the four simplifying assumptions made in the chapter about the construction of the production possibilities model?

Answer 6

the economy is fully employed and is using the least cost methods of production

Question 7

refer to the table. the total opportunity cost of the three units of steel is

Answer 7

45 wheat

Question 8

refer to the above graph. the marginal opportunity cost of the fourth units of bread is

Answer 8

0 drill presses

Question 9

The graph above shows the production possibilities curve for an economy producing two goods X and Y. which of the points of the graph indicate unemployment resources?

Answer 9

E and A

Question 10

If an economy that produces capital and consumer goods is operating at a point on its production possibilities curve, this indicates that

Answer 10

more capital goods can be produced only at the cost of some consumer goods.

Question 11

The private ownership of property resources and use of prices to direct and coordinate economic activity is characteristic of

Answer 11

the market system

Question 12

the institution which coordinates actions of consumers and producers to establish prices for goods and services is known as

Answer 12

a market

Question 13

in a competitive market for corn, the law of demand indicates that , other things equal, as

Answer 13

the price of corn decreases, the quantity of corn demand will increase.

Question 14

a result of a fall in the price of gasoline, consumers buy more gasoline and take more driving vacations. this situation is an illustration of

Answer 14

income effect

Question 15

the horizontal axis of a graph which shows a market demand curve indicates the

Answer 15

quantities which consumers will be willing and able to buy at various prices

Question 16

refer to the above table. the quantity demanded for wheat is

Answer 16

37 bushels at 4 and 52 bushels at 3

Question 17

refer to the above table. at a price of 6, the market demand for bushels of wheat among the three buyers in the market is

Answer 17

17

Question 18

which is a determinant of demand>

Answer 18

income

Question 19

which will not cause a change in the demand for product a

Answer 19

a change in the price of A

Question 20

which goods would usually be an inferior good?

Answer 20

generic goods

Question 21

for some products, purchases tend to decrease as the buyers income increases such products are known as

Answer 21

inferior goods

Question 22

refer to the above diagram, which shows three demand curves for coffee. which would cause the change in the demand for coffee illustrated by the shift from D1 to D2

Answer 22

decrease in the price of tea

Question 23

if two goods are close substitutes

Answer 23

a fall in one will decrease the demand for the other

Question 24

Which factor will increase the demand for product

Answer 24

quantity demanded

Question 25

if the price of K declines, the demand curve for the complementary product J will

Answer 25

shift to the right

Question 26

refer to the above graph, which shows the market for chicken where D1 and D2 represent different demand curves. A change from E1 to E2 is most likely to result from

Answer 26

a decrease in consumer incomes

Question 27

when economists say that the demand for a product has decreases, they mean that

Answer 27

the product price has increased and as a consequence consumers are buying less product

Question 28

an increase in the price of product G will result in

Answer 28

a smaller quantity of G demanded

Question 29

Refer to the above graph. An increase in quantity demanded would be a movement from point

Answer 29

line A to line B

Question 30

Suppose that the demand curve for wheat is downward sloping and the price per bushel increases from 4.50 to 5.50. we would expect

Answer 30

the quantity demand of wheat to fall

Question 31

the law of supply is illustrated by a supply curve that is

Answer 31

upward sloping

Question 32

which is a determinant of supply?

Answer 32

technology

Question 33

refer to the above diagram illustrating the market for corn. the equilibrium price and quantity in this market are

Answer 33

8 bushels for 3

Question 34

refer to the above diagram illustrating the market for corn. if the price in this market were ti be fixed at 4 per bushel, the part of the line marked A would represent

Answer 34

surplus of 8000 bushels

Question 35

select the graph above the best shows the change to demand or supply in a particular market given the following situation: in the market for coats, the wearing of leather coats becomes more fashionable among young consumers

Answer 35

graph a

Question 36

sole proprietorship constitute approximately what proportion of business firms in the United States

Answer 36

75 percent

Question 37

What basic economies function does the government perform when it protects product quality

Answer 37

maintaing competition

Question 38

if the production of a product results in sizable spillover costs, an appropriate government policy might be able to

Answer 38

tax the producers and thus shifting the supply curve to the left

Question 39

what type of economic flow would be illustrated by the purchase of a mexican candy making factory by a US corporation

Answer 39

financial flow

Question 40

specialization and international trade will

Answer 40

result in a rightward shift in a nations production possibilities curve

Question 41

the depreciation of the US dollar relative to the French franc would make a vacation trip

Answer 41

the united states less expensive for the french

Question 42

the dollar price of a euro in the above market would be

Answer 42

50

Question 43

a person receives a paper asset from a corporation that is a promise from the corporation to repay a loan at a fixed rate of interest. this type of asset is referred to as a

Answer 43

bond

Question 44

the term double taxation refers to the fact that

Answer 44

taxes are paid on corporate profits and then stockholders pay taxes on the dividends they receive

Question 45

the two largest sources of revenue for the federal government are

Answer 45

corporate and personal income tax