Good Guy Beket
Quiz by , created more than 1 year ago

Hell on Earth Economics [Teacher: Abdinova Makpal ; Final Exam + Quizzes] ▼ (Quiz #1 [Chapters 1-3, 4-5, 6-9]) Quiz on Quiz #1 - Full [Only 10 questions per variant], created by Good Guy Beket on 29/11/2018.

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Good Guy Beket
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Quiz #1 - Full [Only 10 questions per variant]

Quiz #1 - Full [Only 10 questions per variant]

Question 1 of 110

1

When the government redistributes income with taxes and welfare, the economy becomes more efficient.

Select one of the following:

  • True
  • False

Explanation

Question 2 of 110

1

When economists say, "There is no such thing as a free lunch," they mean that all economic decisions involve trade-offs.

Select one of the following:

  • True
  • False

Explanation

Question 3 of 110

1

Adam Smith's “invisible hand” concept describes how corporate business reaches into the pockets of consumers like an “invisible hand.”

Select one of the following:

  • True
  • False

Explanation

Question 4 of 110

1

Rational people act only when the marginal benefit of the action exceeds the marginal cost.

Select one of the following:

  • True
  • False

Explanation

Question 5 of 110

1

The European Union will benefit economically if we eliminate trade with Asian countries because its citizens will be forced to produce more of their own cars and clothes.

Select one of the following:

  • True
  • False

Explanation

Question 6 of 110

1

When a jet flies overhead, the noise it generates is an externality.

Select one of the following:

  • True
  • False

Explanation

Question 7 of 110

1

A tax on alcoholic drinks raises the price of alcoholic drinks and provides an incentive for consumers to drink more.

Select one of the following:

  • True
  • False

Explanation

Question 8 of 110

1

An unintended consequence of public support for higher education is that low tuition provides an incentive for many people to attend state universities even if they have no desire to learn anything.

Select one of the following:

  • True
  • False

Explanation

Question 9 of 110

1


Sue is better at cleaning and Bob is better at cooking. It will take fewer hours to eat and clean if Bob specializes in cooking and Sue specializes in cleaning than if they share the household duties evenly.

Select one of the following:

  • True
  • False

Explanation

Question 10 of 110

1

High and persistent inflation is caused by excessive growth in the quantity of money in the economy.

Select one of the following:

  • True
  • False

Explanation

Question 11 of 110

1

Economic models must mirror reality or they are of no value.

Select one of the following:

  • True
  • False

Explanation

Question 12 of 110

1

Assumptions make the world easier to understand because they simplify reality and focus our attention.

Select one of the following:

  • True
  • False

Explanation

Question 13 of 110

1

It is reasonable to assume that the world is composed of only one person when modelling international trade.

Select one of the following:

  • True
  • False

Explanation

Question 14 of 110

1

When people act as scientists, they must try to be objective.

Select one of the following:

  • True
  • False

Explanation

Question 15 of 110

1

If an economy is operating on its production possibilities frontier, it must be using its resources efficiently.

Select one of the following:

  • True
  • False

Explanation

Question 16 of 110

1

If an economy is operating on its production possibilities frontier, it must produce less of one good if it produces more of another.

Select one of the following:

  • True
  • False

Explanation

Question 17 of 110

1

Points outside the production possibilities frontier are attainable but inefficient.

Select one of the following:

  • True
  • False

Explanation

Question 18 of 110

1

If an economy were experiencing substantial unemployment, the economy is producing inside the production possibilities frontier.

Select one of the following:

  • True
  • False

Explanation

Question 19 of 110

1

The production possibilities frontier is bowed outward because the trade-offs between the production of any two goods are constant.

Select one of the following:

  • True
  • False

Explanation

Question 20 of 110

1

An advance in production technology would cause the production possibilities curve to shift outward.

Select one of the following:

  • True
  • False

Explanation

Question 21 of 110

1

If Japan has an absolute advantage in the production of an item, it must also have a comparative advantage in the production of that item.

Select one of the following:

  • True
  • False

Explanation

Question 22 of 110

1

Comparative advantage, not absolute advantage, determines the decision to specialize in production.

Select one of the following:

  • True
  • False

Explanation

Question 23 of 110

1

Absolute advantage is a comparison based on productivity.

Select one of the following:

  • True
  • False

Explanation

Question 24 of 110

1

Self-sufficiency is the best way to increase one's material welfare.

Select one of the following:

  • True
  • False

Explanation

Question 25 of 110

1

Comparative advantage is a comparison based on opportunity cost.

Select one of the following:

  • True
  • False

Explanation

Question 26 of 110

1

If a producer is self-sufficient, the production possibilities frontier is also the consumption possibilities frontier.

Select one of the following:

  • True
  • False

Explanation

Question 27 of 110

1

If a country's workers can produce 5 hamburgers per hour or 10 bags of French fries per hour, absent trade, the price of 1 bag of fries is 2 hamburgers.

Select one of the following:

  • True
  • False

Explanation

Question 28 of 110

1

If producers have different opportunity costs of production, trade will allow them to consume outside their production possibilities frontiers.

Select one of the following:

  • True
  • False

Explanation

Question 29 of 110

1

If trade benefits one country, its trading partner must be worse off due to trade.

Select one of the following:

  • True
  • False

Explanation

Question 30 of 110

1

Talented people that are the best at everything have a comparative advantage in the production of everything.

Select one of the following:

  • True
  • False

Explanation

Question 31 of 110

1

A perfectly competitive market consists of products that are all slightly different from one another.

Select one of the following:

  • True
  • False

Explanation

Question 32 of 110

1

An oligopolistic market has only a few sellers.

Select one of the following:

  • True
  • False

Explanation

Question 33 of 110

1

The law of demand states that an increase in the price of a good decreases the demand for that good.

Select one of the following:

  • True
  • False

Explanation

Question 34 of 110

1

If apples and oranges are substitutes, an increase in the price of apples will decrease the demand for oranges.

Select one of the following:

  • True
  • False

Explanation

Question 35 of 110

1

If golf clubs and golf balls are complements, an increase in the price of golf clubs will decrease the demand for golf balls.

Select one of the following:

  • True
  • False

Explanation

Question 36 of 110

1

If consumers expect the price of shoes to rise, there will be an increase in the demand for shoes today.

Select one of the following:

  • True
  • False

Explanation

Question 37 of 110

1

The law of supply states that an increase in the price of a good increases the quantity supplied of that good.

Select one of the following:

  • True
  • False

Explanation

Question 38 of 110

1

An increase in the price of steel will shift the supply of cars to the right.

Select one of the following:

  • True
  • False

Explanation

Question 39 of 110

1

When the price of a good is below the equilibrium price, it causes a surplus.

Select one of the following:

  • True
  • False

Explanation

Question 40 of 110

1

The market supply curve is the horizontal summation of the individual supply curves.

Select one of the following:

  • True
  • False

Explanation

Question 41 of 110

1

If the quantity demanded of a good is sensitive to a change in the price of that
good, demand is said to be price inelastic.

Select one of the following:

  • True
  • False

Explanation

Question 42 of 110

1

Using the midpoint method to calculate elasticity, if an increase in the price of pencils from €0.10 to €0.20 reduces the quantity demanded from 1000 pencils to 500 pencils, then the demand for pencils is unit price elastic.

Select one of the following:

  • True
  • False

Explanation

Question 43 of 110

1

The demand for tyres should be more inelastic than the demand for Michelin brand tyres.

Select one of the following:

  • True
  • False

Explanation

Question 44 of 110

1

The demand for aspirin over one month should be more elastic than the demand for aspirin over one year.

Select one of the following:

  • True
  • False

Explanation

Question 45 of 110

1

The price elasticity of demand is defined as the percentage change in the price of that good divided by the percentage change in quantity demanded of that good.

Select one of the following:

  • True
  • False

Explanation

Question 46 of 110

1

If the cross-price elasticity of demand between two goods is positive, the goods are likely to be complements.

Select one of the following:

  • True
  • False

Explanation

Question 47 of 110

1

If the demand for a good is price inelastic, an increase in its price will increase total revenue in that market.

Select one of the following:

  • True
  • False

Explanation

Question 48 of 110

1

The demand for a necessity such as petrol tends to be elastic.

Select one of the following:

  • True
  • False

Explanation

Question 49 of 110

1

If a demand curve is linear, the price elasticity of demand is constant along it.

Select one of the following:

  • True
  • False

Explanation

Question 50 of 110

1

If the income elasticity of demand for a bus ride is negative, then a bus ride is an inferior good.

Select one of the following:

  • True
  • False

Explanation

Question 51 of 110

1

If the equilibrium price of petrol is €1.00 per litre and the government places a price ceiling on petrol of €1.50 per litre, the result will be a shortage of petrol.

Select one of the following:

  • True
  • False

Explanation

Question 52 of 110

1

A price ceiling set below the equilibrium price causes a surplus.

Select one of the following:

  • True
  • False

Explanation

Question 53 of 110

1

A price floor set above the equilibrium price is a binding constraint.

Select one of the following:

  • True
  • False

Explanation

Question 54 of 110

1

The shortage of housing caused by a binding rent control is likely to be more severe in the long run when compared to the short run.

Select one of the following:

  • True
  • False

Explanation

Question 55 of 110

1

The minimum wage helps all teenagers because they receive higher wages than they would otherwise.

Select one of the following:

  • True
  • False

Explanation

Question 56 of 110

1

A 10 per cent increase in the minimum wage is more likely to raise unemployment among teenage workers than among mid-career professional workers

Select one of the following:

  • True
  • False

Explanation

Question 57 of 110

1

A price ceiling that is not a binding constraint today could cause a shortage in the future if demand were to increase and raise the equilibrium price above the fixed price ceiling.

Select one of the following:

  • True
  • False

Explanation

Question 58 of 110

1

A price floor in a market always creates a surplus in that market.

Select one of the following:

  • True
  • False

Explanation

Question 59 of 110

1

A €10 tax on football boots will always raise the price that the buyers pay for football boots by €10.

Select one of the following:

  • True
  • False

Explanation

Question 60 of 110

1

The ultimate burden of a tax falls most heavily on the side of the market that is less elastic.

Select one of the following:

  • True
  • False

Explanation

Question 61 of 110

1

Total revenue equals the quantity of output the firm produces times the price at which it sells its output.

Select one of the following:

  • True
  • False

Explanation

Question 62 of 110

1

Wages and salaries paid to workers are an example of implicit costs of production.

Select one of the following:

  • True
  • False

Explanation

Question 63 of 110

1

If total revenue is €100, explicit costs are €50, and implicit costs are €30, then accounting profit equals €50.

Select one of the following:

  • True
  • False

Explanation

Question 64 of 110

1

If there are implicit costs of production, accounting profits will exceed economic profits.

Select one of the following:

  • True
  • False

Explanation

Question 65 of 110

1

When a production function gets flatter, the marginal product is increasing.

Select one of the following:

  • True
  • False

Explanation

Question 66 of 110

1

If a firm continues to employ more workers within the same size factory, it will eventually experience diminishing marginal product

Select one of the following:

  • True
  • False

Explanation

Question 67 of 110

1

If the production function for a firm exhibits diminishing marginal product, the corresponding total cost curve for the firm will become flatter as the quantity of output expands.

Select one of the following:

  • True
  • False

Explanation

Question 68 of 110

1

Fixed costs plus variable costs equal total costs.

Select one of the following:

  • True
  • False

Explanation

Question 69 of 110

1

Average total costs are total costs divided by marginal costs.

Select one of the following:

  • True
  • False

Explanation

Question 70 of 110

1

When marginal costs are below average total costs, average total costs must be falling.

Select one of the following:

  • True
  • False

Explanation

Question 71 of 110

1

An oligopoly is a market structure in which many firms sell products that are similar but not identical.

Select one of the following:

  • True
  • False

Explanation

Question 72 of 110

1

The market for crude oil is an example of an oligopolistic market.

Select one of the following:

  • True
  • False

Explanation

Question 73 of 110

1

The unique feature of an oligopoly market is that the actions of one seller have a significant impact on the profits of all of the other sellers in the market.

Select one of the following:

  • True
  • False

Explanation

Question 74 of 110

1

When firms cooperate with one another, it is generally good for society as a whole.

Select one of the following:

  • True
  • False

Explanation

Question 75 of 110

1

When firms cooperate with one another, it is generally good for the cooperating firms.

Select one of the following:

  • True
  • False

Explanation

Question 76 of 110

1

When oligopolists collude and form a cartel, the outcome in the market is similar to that generated by a perfectly competitive market.

Select one of the following:

  • True
  • False

Explanation

Question 77 of 110

1

The price and quantity generated by a Nash equilibrium is closer to the competitive solution than the price and quantity generated by a cartel.

Select one of the following:

  • True
  • False

Explanation

Question 78 of 110

1

The greater the number of firms in the oligopoly, the more the outcome of the market looks like that generated by a monopoly.

Select one of the following:

  • True
  • False

Explanation

Question 79 of 110

1

Cooperation is easily maintained in an oligopoly because cooperation maximizes each individual firm's profits.

Select one of the following:

  • True
  • False

Explanation

Question 80 of 110

1

The prisoners' dilemma demonstrates why it is difficult to maintain cooperation even when cooperation is mutually beneficial.

Select one of the following:

  • True
  • False

Explanation

Question 81 of 110

1

The factors of production are labour, land, and money.

Select one of the following:

  • True
  • False

Explanation

Question 82 of 110

1

The demand for a factor is considered to be a derived demand because it is derived from the firm's decision to supply output in another market.

Select one of the following:

  • True
  • False

Explanation

Question 83 of 110

1

For a competitive profit-maximizing firm, the demand curve for a factor is the value of the marginal product curve for that factor.

Select one of the following:

  • True
  • False

Explanation

Question 84 of 110

1

A factor exhibits diminishing marginal productivity if employing additional units of the factor reduces output.

Select one of the following:

  • True
  • False

Explanation

Question 85 of 110

1

If there is an increase in the equilibrium wage, there must have been an increase in the value of the marginal product of labour.

Select one of the following:

  • True
  • False

Explanation

Question 86 of 110

1

An increase in the demand for textbooks will increase the value of the marginal product of textbook writers.

Select one of the following:

  • True
  • False

Explanation

Question 87 of 110

1

A decrease in the supply of labour reduces the value of the marginal product of labour, decreases the wage, and decreases employment.

Select one of the following:

  • True
  • False

Explanation

Question 88 of 110

1

The only way for the value of the marginal product of a factor to rise is for the price of the output produced by the factor to rise.

Select one of the following:

  • True
  • False

Explanation

Question 89 of 110

1

An increase in the demand for pencils will likely improve the fortunes of both the pencil factory and the workers in the pencil factory.

Select one of the following:

  • True
  • False

Explanation

Question 90 of 110

1

The demand for labour is downward sloping because the production function exhibits diminishing marginal productivity of labour.

Select one of the following:

  • True
  • False

Explanation

Question 91 of 110

1

For an economy as a whole, income equals expenditure because the income of the seller must be equal to the expenditure of the buyer.

Select one of the following:

  • True
  • False

Explanation

Question 92 of 110

1

The production of an apple contributes more to GDP than the production of a gold
ring because food is necessary for life itself.

Select one of the following:

  • True
  • False

Explanation

Question 93 of 110

1

If a timber yard sells €1,000 of timber to a carpenter and the carpenter uses the timber to build a garage which he sells for €5,000, the contribution to GDP is €6,000.

Select one of the following:

  • True
  • False

Explanation

Question 94 of 110

1

A country with a larger GDP per person generally has a greater standard of living or quality of life than a country with a smaller GDP per person.

Select one of the following:

  • True
  • False

Explanation

Question 95 of 110

1

If nominal GDP in 2005 exceeds nominal GDP in 2004, real output must have risen.

Select one of the following:

  • True
  • False

Explanation

Question 96 of 110

1

If UK GDP exceeds UK GNP, then foreigners produce more in the UK than UK citizens produce in the rest of the world.

Select one of the following:

  • True
  • False

Explanation

Question 97 of 110

1

Wages are an example of a transfer payment because there is a transfer of payment from the firm to the worker.

Select one of the following:

  • True
  • False

Explanation

Question 98 of 110

1

In the UK, investment is the largest component of GDP.

Select one of the following:

  • True
  • False

Explanation

Question 99 of 110

1

Nominal GDP employs current prices to value output while real GDP employs constant base-year prices to value output.

Select one of the following:

  • True
  • False

Explanation

Question 100 of 110

1

A new car produced in 2004, but first sold in 2005, should be counted in 2005 GDP because that is when it was first sold as a final good.

Select one of the following:

  • True
  • False

Explanation

Question 101 of 110

1

An increase in the price of imported cameras is captured by the CPI but not by the GDP deflator.

Select one of the following:

  • True
  • False

Explanation

Question 102 of 110

1

An increase in the price of helicopters purchased by the UK armed forces is captured by the CPI.

Select one of the following:

  • True
  • False

Explanation

Question 103 of 110

1

Because an increase in petrol prices causes consumers to ride their bikes more and drive their cars less, the CPI tends to underestimate the cost of living.

Select one of the following:

  • True
  • False

Explanation

Question 104 of 110

1

An increase in the price of diamonds will have a greater impact on the CPI than an equal percentage increase in the price of food because diamonds are so much more expensive.

Select one of the following:

  • True
  • False

Explanation

Question 105 of 110

1

The "base year" in a price index is the benchmark year against which other years are compared.

Select one of the following:

  • True
  • False

Explanation

Question 106 of 110

1

If the CPI rises at 5 percent per year, then every individual in the country needs exactly a 5 percent increase in their income for their standard of living to remain constant.

Select one of the following:

  • True
  • False

Explanation

Question 107 of 110

1

The producer price index (PPI) is constructed to measure the change in price of total production.

Select one of the following:

  • True
  • False

Explanation

Question 108 of 110

1

If the Office of National Statistics fails to recognize that recently produced cars can be driven for many more miles than older models, then the CPI tends to overestimate the cost of living.

Select one of the following:

  • True
  • False

Explanation

Question 109 of 110

1

If your wage rises from €500 per week to €625 per week while the CPI rises from 112 to 121, you should feel an increase in your standard of living.

Select one of the following:

  • True
  • False

Explanation

Question 110 of 110

1

The largest category of goods and services in the CPI is food and non-alcoholic beverages.

Select one of the following:

  • True
  • False

Explanation

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