Quiz 1 Flashcards
All of the following statements, except one, are valid examples of the way economists use the term scarcity. Which one is the exception?
Select one:
a. Households face a scarcity of income.
b. Individuals face a scarcity of time.
c. Economies face a scarcity of resources.
d. The world faces a scarcity of ideas.
e. Firms face a scarcity of qualified workers.
d. The world faces a scarcity of ideas.
All of the following topics, except one, are valid macroeconomic topics. Which one is the exception?
Select one:
a. the effect of the government budget deficit on inflation
b. the reasons the labour force in a country decreases
c. the reasons the average price level in a country falls
d. the cause of increasing unemployment
e. the reasons the price of coffee fluctuates
e. the reasons the price of coffee fluctuates
The fact that human wants cannot be fully satisfied with available resources is called the problem of
Select one:
a. normative economics.
b. marginal cost.
c. the big tradeoff.
d. scarcity.
e. opportunity cost.
d. scarcity.
The two big economic questions
Select one:
a. involve self-interest only.
b. involve both self-interest and social interest.
c. do not arise from scarcity.
d. involve only social interest.
e. involve neither self-interest nor social interest.
b. involve both self-interest and social interest.
To earn income, people sell the services of the factors of production they own. Land earns ________ ; labour earns ________; capital earns ________; and entrepreneurship earns ________.
Select one:
a. profit / wages / rent / interest
b. wages / interest / profit / rent
c. profit / interest / wages / rent
d. interest / profit / rent / wages
e. rent / wages / interest / profit
e. rent / wages / interest / profit
Factors of production is a term that can be used interchangeably with
Select one:
a. models.
b. consumer goods.
c. either resources or inputs.
d. opportunity cost.
e. technologies.
c. either resources or inputs.
The creation of a successful movie illustrates choices made in self-interest that also achieve the social interest if
Select one:
a. the movie has a higher attendance than any other movie produced that year.
b. the movie is produced in a country where workers typically earn less than workers in North America.
c. the movie is an Academy Award winner because an Academy Award winning movie is most popular with the movie-going public.
d. the movie is produced at the lowest possible cost, and the movie gives the greatest possible benefit.
e. the movie addresses a social issue.
d. the movie is produced at the lowest possible cost, and the movie gives the greatest possible benefit.
Opportunity cost is
Select one:
a. the highest-valued alternative that we give up to get something.
b. your value of leisure.
c. the marginal benefit from an activity.
d. the value of your favourite activity.
e. the money you spend on food, shelter, and clothing.
a. the highest-valued alternative that we give up to get something.
A university decides to change its late night bus service between the campus and student housing from a fare-based service to a free service. This statement means that the incentive to ride the bus ________ and the opportunity cost of a bus ride ________. The university’s decision is a ________ decision.
Select one:
a. remains the same / remains the same / microeconomic
b. changes / decreases / microeconomic
c. changes / increases / microeconomic
d. changes / decreases / macroeconomic
e. remains the same / remains the same / macroeconomic
b. changes / decreases / microeconomic
“The rich should face higher income tax rates than the poor.” This is an example of
Select one:
a. a negative statement.
b. a normative statement.
c. neither a normative nor a positive statement.
d. a positive statement.
e. economic reasoning.
b. a normative statement.
A relative price is
Select one:
a. a quantity of a “basket” of goods and services forgone.
b. determined by demand and supply.
c. the ratio of one price to another.
d. an opportunity cost.
e. all of the above.
e. all of the above.
When a textile firm decides to produce more silk fabric and less cotton fabric, it is answering the question of ________ .
Select one:
a. “how”
b. “what”
c. “where”
d. “who”
e. “when”
b. “what”
Suppose we observe a rise in the price of good A and an increase in the quantity of good A bought and sold. Which of the following is a likely explanation?
Select one:
a. The demand for A increased.
b. The law of demand is violated.
c. The supply of A decreased.
d. The demand for A decreased.
e. The supply of A increased.
a. The demand for A increased.
With allocative efficiency, for each good produced,
Select one:
a. marginal cost exceeds marginal benefit by as much as possible.
b. marginal benefit is at its maximum.
c. marginal benefit equals marginal cost.
d. marginal cost is at its minimum.
e. marginal benefit exceeds marginal cost by as much as possible.
c. marginal benefit equals marginal cost.
In one hour, Sue can produce 50 caps or 10 jackets and Tessa can produce 70 caps or 7 jackets. Sue’s opportunity cost of producing a cap is ________ jackets and Tessa’s opportunity cost of producing a cap is ________ jackets.
________ has a comparative advantage in producing caps.
If Sue and Tessa each specialize in producing the good in which they have a comparative advantage and trade 1 jacket for 7 caps, then ________.
Select one:
a. 5.0 / 10.0 / Tessa / Sue loses but Tessa gains
b. 0.2 / 0.10 / Sue / both Sue and Tessa gain
c. 0.2 / 0.10 / Tessa / both Sue and Tessa gain
d. 0.2 / 0.10 / Sue / Tessa gains but Sue loses
e. 5.0 / 10.0 / Sue / both Sue and Tessa gain
c. 0.2 / 0.10 / Tessa / both Sue and Tessa gain
Good A is a normal good if
Select one:
a. income and the demand for A are negatively related.
b. a rise in the price of a substitute causes the demand for A to increase.
c. a rise in the price of a complement causes the demand for A to decrease.
d. good A satisfies the law of demand.
e. the demand for A increases when income rises.
e. the demand for A increases when income rises.
In Portugal, the opportunity cost of a bale of wool is 3 bottles of wine. In England, the opportunity cost of 1 bottle of wine is 3 bales of wool. Given this information,
Select one:
a. England has an absolute advantage in wool production.
b. England has an absolute advantage in wine production.
c. Portugal has a comparative advantage in wool production.
d. Portugal has a comparative advantage in wine production.
e. no trade will occur.
d. Portugal has a comparative advantage in wine production.
The demand and supply model determines
Select one:
a. relative prices.
b. demand prices.
c. money prices.
d. absolute prices.
e. supply prices.
a. relative prices.
The demand curve slopes downward to the right because
Select one:
a. of the law of supply.
b. as income rises, the quantity demanded increases.
c. of the law of demand.
d. of comparative advantage.
e. an increase in income leads to increased consumption.
c. of the law of demand.
Good A is a normal good if
Select one:
a. good A satisfies the law of demand.
b. income and the demand for A are negatively related.
c. a rise in the price of a substitute causes the demand for A to increase.
d. the demand for A increases when income rises.
e. a rise in the price of a complement causes the demand for A to decrease.
d. the demand for A increases when income rises.
Model A is superior to model B if
Select one:
a. it is preferred by a majority of researchers in a public opinion poll.
b. it contains more real world detail than model B.
c. it is scientifically “elegant.”
d. it contains fewer unrealistic assumptions than model B.
e. its predictions correspond more closely to the facts than the predictions of model B.
e. its predictions correspond more closely to the facts than the predictions of model B.
If Hamburger Helper is an inferior good, then, ceteris paribus, a decrease in income will lead to
Select one:
a. a rightward shift of the demand curve for Hamburger Helper.
b. an initial movement up and then down along the demand curve for Hamburger Helper.
c. a movement up along the demand curve for Hamburger Helper.
d. a leftward shift of the demand curve for Hamburger Helper.
e. a movement down along the demand curve for Hamburger Helper.
a. a rightward shift of the demand curve for Hamburger Helper.
The quantity of shoes produced is measured along the horizontal axis of a bowed outward production possibilities frontier and the quantity of shirts produced is measured along the vertical axis. As you move down toward the right along the production possibilities frontier, the opportunity cost of
Select one:
a. a pair of shoes increases.
b. a shirt increases.
c. a pair of shoes and a shirt is equal at the midpoint between the horizontal axis and the vertical axis.
d. a pair of shoes decreases.
e. a shirt stays constant.
a. a pair of shoes increases.
A shortage will exist if
Select one:
a. there are not enough consumers.
b. the price is below the equilibrium price.
c. the price is above the equilibrium price.
d. there are not enough producers.
e. demand decreases.
b. the price is below the equilibrium price.
