MT 1 Practice Exam Flashcards
Every society faces economic trade-offs. This means
A) some people live better than others do
B) society’s output can’t be made available to all
C) producing more of one good means less of another good can be produced
D) not everyone can have enough goods to survive
C) producing more of one good means less of another good can be produced
In a market economy, who decides what goods & services will be produced? A) only consumers B) the government C) consumers & producers D) only the producers
C) consumers & producers
Opportunity cost is defined as___
A) the monetary expense associated with an activity.
B) the highest valued alternative that must be given up to engage in an activity.
C) the benefit of an activity.
D) the total value of all alternatives that must be given up to engage in an activity
B) the highest valued alternative that must be given up to engage in an activity.
Which of the following is a macroeconomics question?
A) What determines the wages and benefits of flight attendants?
B) What determines the unemployment rate?
C) How is the production quantity of digital cameras determined?
D) What factors determine the price of iPhones?
B) What determines the unemployment rate?
Consider the following statements:
a. Consumers rent more DVDs from a video store that rents DVDs at a lower price than other
rival video stores in the area.
b. Department stores take steps to increase security since they believe it is more costly to allow shoplifting than to install expensive security monitoring equipment.
c. Farmers produce more cotton when its selling price falls
Which of the above statements demonstrates that economic agents respond to incentives? A) a only B) b only C) c only D) a & b E) a, b & c
D) a & b
The basic economic problem of scarcity
A) is a problem only in developing economies.
B) does not apply to the wealthy in society.
C) will eventually disappear as technology continues to advance.
D) has always existed and will continue to exist.
D) has always existed and will continue to exist.
Fast food restaurants produce a range of menu items such as hamburgers, chicken sandwiches, salads, and french fries. What fundamental economic question are they addressing by offering this range of items?
A) How to produce goods that consumers want?
B) Why produce a variety of menu items?
C) Who to produce the menu items for?
D) What to produce
D) What to produce
Trade-offs force society to make choices when answering what three fundamental questions? A) How much will be saved; what will be produced; and how can these goods and services be fairly distributed?
B) What goods and services to produce; how will these goods and services be produced; and who receives them?
C) What will be the prices of goods and services; how will these goods and services be produced; and who will receive them?
D) Who gets jobs; what wages do workers earn; and who owns what property
B) What goods and services to produce; how will these goods and services be produced; and who receives them?
Suppose when the price of hybrid automobiles rises, consumers buy fewer hybrid automobiles. This implies that
A) there is a one-to-one relationship between hybrid automobile prices and quantities purchased by consumers.
B) there is a positive relationship between hybrid automobile prices and quantities purchased by consumers.
C) there is a direct relationship between hybrid automobile prices and quantities purchased by consumers.
D) there is a negative relationship between hybrid automobile prices and quantities purchased by consumers
D) there is a negative relationship between hybrid automobile prices and quantities purchased by consumers
In a production possibilities frontier model, a point inside the frontier is
A) productively efficient
B) allocatively efficient.
C) allocatively inefficient.
D) productively inefficient
D) productively inefficient
The unattainable points in a production possibilities diagram are
A) the points within the production possibilities frontier.
B) the points of the horizontal and vertical intercepts.
C) the points outside the production possibilities frontier.
D) the points along the production possibilities frontier
C) the points outside the production possibilities frontier.
George Jack
Lawns mowed 10 6
Gardens cultivated 5 4
The table show the output per day of 2 gardeners. They can either devote their time to mowing lawns or cultivating gardens.
Which of the following statements is true?
A) Jack has an absolute advantage in lawn mowing and George in garden cultivating
B) George has an absolute advantage in both tasks
C) Jack has an absolute advantage in both tasks
D) Jack has an absolute advantage in garden cultivating and George in lawn mowing.
B) George has an absolute advantage in both tasks
George Jack
Lawns mowed 10 6
Gardens cultivated 5 4
The table show the output per day of 2 gardeners. They can either devote their time to mowing lawns or cultivating gardens.
What's George's opportunity cost of mowing a lawn? A) 2 lawns mowed B) 2/3 of a garden cultivated C) 1 1/2 lawns mowed D) 1/2 a garden cultivated
D) 1/2 a garden cultivated
1 cell phone Lumber (per board foot)
Estonia 40 hrs 8 hrs
Finland 16 hrs 4 hrs
The table shows the # of labor hours required to produce a cell phone & a board foot of lumber in Estonia & Finland
Estonia has a comparative advantage in the production of ____
Lumber
1 cell phone Lumber (per board foot)
Estonia 40 hrs 8 hrs
Finland 16 hrs 4 hrs
The table shows the # of labor hours required to produce a cell phone & a board foot of lumber in Estonia & Finland
What’s Estonia’s opportunity cost of producing 1 board foot of lumber?
.2 cell phones
