ECONOMICS

Question 1 of 169

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1. The scientific method can best be defined as

Select one of the following:

• the use of modern electronic testing equipment in understanding the world.
• the use of controlled experiments in understanding the way the world works.
• the dispassionate development and testing of theories about how the world works
• finding evidence to support preconceived theories about how the world works.

Explanation

Question 2 of 169

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2. The use of theory and observation is more difficult in economics than in sciences such as physics due to

Select one of the following:

• The difficulty in actually performing an experiment in an economic system.
• The difficulty in devising an economic experiment.
• The difficulty in evaluating an economic experiment.
• All of the above.

Explanation

Question 3 of 169

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3. Because it is difficult for economists to use experiments to generate economic data

Select one of the following:

• They do without.
• They make up the data.
• They ask policymakers to conduct experiments for them.
• They use whatever data the world gives them.

Explanation

Question 4 of 169

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4. Economists make assumptions

Select one of the following:

• To diminish the chance of wrong answers.
• To make certain that all necessary variables are included.
• Because all scientists make assumptions.
• To make the world easier to understand.

Explanation

Question 5 of 169

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5. If an economist develops a theory about international trade based on the assumption that there are only two countries and two goods.

Select one of the following:

• The theory can be useful only in situations involving two countries and two goods.
• It is a total waste of time, since the actual world has many countries trading many goods.
• The theory can be useful in helping economists understand the complex world of international trade involving many countries and many goods.
• The theory can be useful in the classroom, but has no use in the real world.

Explanation

Question 6 of 169

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6. What would be the best statement about a theory based on assumptions which are not true?

Select one of the following:

• If the assumptions underlying the theory are not true, the theory must be false.
• The ideas may be good in theory, but not in practice.
• The theory is a good one if no logical mistakes were made in developing it.
• The theory is a good one if it helps to understand how the world works.

Explanation

Question 7 of 169

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7. What is the goal of theories?

Select one of the following:

• To provide an interesting, but not useful, framework of analysis
• To help scientists understand how the world works.
• To provoke stimulating debate in scientific journals
• To demonstrate that the developer of the theory is capable of logical thinking

Explanation

Question 8 of 169

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8. Economists use models in order to

Select one of the following:

• Lear how the economy works.
• Make their profession appear more precise.
• Make economics difficult for students.
• Make sure that all of the details of the economy are included in their analysis

Explanation

Question 9 of 169

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9. A model

Select one of the following:

• Simplifies reality.
• Can explain how the economy is organized.
• Assumes away irrelevant details.
• All of the above

Explanation

Question 10 of 169

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10. Economic models are usually composed of

Select one of the following:

• Plastic.
• Beautiful people.
• Assumptions only.
• Diagrams and equations.

Explanation

Question 11 of 169

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11. Which of the following is the most accurate statement about economic models?

Select one of the following:

• Economic models attempt mirror reality exactly.
• Economic models are useful, but should not be used for policy- making.
• Economic models cannot be used in the real world because they omit details.
• Economic models omit many details to allow us to see what is truly important.

Explanation

Question 12 of 169

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12. The foundation stones from which economic models are built are

Select one of the following:

• Economic policies.
• The legal system.
• Assumptions.
• Statistical forecasts.

Explanation

Question 13 of 169

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13. A circular-flow diagram is

Select one of the following:

• A model that illustrates cost – benefit analysis.
• A model that explains how the economy is organized.
• A model that explains how banks circulate money in the economy.
• A model that shows the flow of traffic in an economic region.

Explanation

Question 14 of 169

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14. Factors of production are

Select one of the following:

• Inputs into the production process.
• Weather, social, and political conditions that affect production.
• The physical relationships between economic inputs and outputs.
• The mathematical calculations firms make to determine production.

Explanation

Question 15 of 169

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15. For a scientist, the decision of which assumption to make

Select one of the following:

• Is part art.
• Is the flip of a coin.
• Is almost impossible.
• Is the easiest part of the scientific method.

Explanation

Question 16 of 169

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1.People who provide you with goods and services

Select one of the following:

Are acting out of generosity
Are acting because they like you
Are required to do so by government
Do so because they get something in return

Explanation

Question 17 of 169

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2.A rancher can produce only hamburgers, and a farmer can produce only french fries. The rancher and the farmer both like both foods. They

Select one of the following:

cannot gain from trade.
could gain from trade under certain circumstances, but not always.
could gain from trade because each would enjoy a greater variety of food.
could gain from trade only if each were indifferent between hamburgers and french fries.

Explanation

Question 18 of 169

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3.Without trade

Select one of the following:

a country’s production possibilities frontier is also its consumption possibilities frontier.
a country is better off because it will become self-sufficient.
a country can still benefit from international specialization.
more product variety is available in a country.

Explanation

Question 19 of 169

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4. Which of the following is NOT correct?

Select one of the following:

Trade allows for specialization.
Trade is good for nations.
Trade is based on absolute advantage.
Trade allows individuals to consume outside of their individual production possibilities curve.

Explanation

Question 20 of 169

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Refer to the tables shown. For the Farmer, the opportunity cost of 1 pound of meat is:

Select one of the following:

8 hours labor
4 hours labor
2 pounds potatoes
1/2 pound potatoes

Explanation

Question 21 of 169

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Refer to the tables shown. For the Rancher, the opportunity cost of 1 pound of meat is:

Select one of the following:

5 hours labor
1 hour labor
¼ pound of potatoes
4 pounds potatoes

Explanation

Question 22 of 169

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Refer to the tables shown. For the Farmer, the opportunity cost of 1 pound of potatoes is:

Select one of the following:

8 hours labor
4 hour labor
2 pound of meat
½ pounds meat

Explanation

Question 23 of 169

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Refer to the tables shown. For the Rancher, the opportunity cost of 1 pound of potatoes is:

Select one of the following:

4 hours labor
2 hours labor
1/4 pound of meat
4 pounds meat

Explanation

Question 24 of 169

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Refer to the tables shown. The Farmer has an absolute advantage in _and the Rancher has an absolute advantage in_.

Select one of the following:

Meat, potatoes
Potatoes, meat
Meat, meat
Neither food, both goods

Explanation

Question 25 of 169

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Refer to the tables shown. The Rancher has an absolute advantage in _and the Farmer has a comparative advantage in_.

Select one of the following:

Both goods, meat
meat, neither good
Meat, potatoes
both goods, potatoes

Explanation

Question 26 of 169

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11. A country’s consumption possibilities frontier can be outside its production possibilities frontier

Select one of the following:

With trade
By allocating resources differently
By producing a greater variety of goods and services
By lowering unemployment in the country

Explanation

Question 27 of 169

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12. A production possibilities frontier will be linear and not bowed out if

Select one of the following:

a. no tradeoffs exist.
b. the tradeoff between the two goods is always at a constant rate.
c. unemployment is zero.
d. resources are allocated efficiently.

Explanation

Question 28 of 169

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Refer to the tables shown. The Farmer has an absolute advantage in _and the Rancher has a comparative advantage in_.

Select one of the following:

Meat, meat
Potatoes, potatoes
Neither good, potatoes
Neither good, meat

Explanation

Question 29 of 169

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Refer to the tables shown. The Rancher has a comparative advantage in _and the Farmer has a comparative advantage in_.

Select one of the following:

Potatoes, meat
Both goods, neither good
Meat, potatoes
Neither good, both goods

Explanation

Question 30 of 169

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Refer to the tables shown. The Farmer and Rancher both could benefit by the Farmer specializing in __and the Rancher specializing in_.

Select one of the following:

Meat, potatoes
Potatoes, meat
Neither good, meat
They cannot benefit by specialization and trade

Explanation

Question 31 of 169

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16. Imports are

Select one of the following:

Goods produced abroad and sold domestically
People who work in foreign countries
Whatever is given up to obtain some item
An example of an economic model

Explanation

Question 32 of 169

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17.Exports are

Select one of the following:

Goods produced domestically and sold abroad
A country’s ability to produce a good
A limit placed on the quantity of goods brought into a country

Explanation

Question 33 of 169

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Which of the following are the words most commonly used by economists?

Select one of the following:

• Supply and demand
• Scarcity and human wants
• Entrepreneurial ability
• Prices and exchange

Explanation

Question 34 of 169

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In a free market, who determines how much of a good will be sold and the price at which it is sold?

Select one of the following:

• Demanders
• Suppliers
• The government
• Both suppliers and demanders

Explanation

Question 35 of 169

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A market is

Select one of the following:

• A place where only buyers come together
• A place where only sellers meet
• A group of demanders and suppliers of a particular good or service
• A group of people with common desires

Explanation

Question 36 of 169

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Firms that sell their products in a competitive market have limited pricing power because

Select one of the following:

• Sellers have reason to charge more than their competitors
• Each buyer has a significant influence on the price of the product
• Other sellers are offering very similar products
• None of the above are correct

Explanation

Question 37 of 169

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If a seller in a competitive market chooses to charge more than the market price, then

Select one of the following:

• Buyers will tend to make their purchases elsewhere
• The owners of the raw materials used in production would raise the prices for the raw materials
• Other sellers would also raise their price
• Buyers would tend to buy more from this seller

Explanation

Question 38 of 169

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If buyers and/or sellers are price takers, then individually

Select one of the following:

• They can somewhat influence the market price
• They have ultimate control over market price
• Buyers will be able to find prices lower than those determined in the market
• They have no influence on market price because there are so many in the market

Explanation

Question 39 of 169

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There are thousands of wheat farmers who produce and sell wheat and there are millions of consumers who use wheat and wheat products. The market for wheat would be considered

Select one of the following:

• Perfectly competitive
• Monopolistic
• Monopolistically competitive
• Oligopolistic

Explanation

Question 40 of 169

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As a seller, you would be considered part of a perfectly competitive market if

Select one of the following:

• Your actions are quickly followed by competitors
• Your pricing has no impact on the amount you can sell
• Your actions essentially have no effect on the market price
• Increases in the price of your product have an impact on the market price

Explanation

Question 41 of 169

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A market with many sellers offering similar but slightly different products is called

Select one of the following:

• A monopoly
• Oligopolistic
• Monopolistically competitive

Explanation

Question 42 of 169

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If a seller is supplying a product that is slightly different than that of many close competitors and is able to charge a different price than competitors, then the seller

Select one of the following:

• Is a monopolist
• Is producing a homogeneous product
• Will eventually have to decrease the price
• Is participating in a monopolistically competitive market

Explanation

Question 43 of 169

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Which of the following would NOT be a determinant of demand?

Select one of the following:

• Tastes
• The price of related goods
• Income
• The prices of the inputs used to produce the good

Explanation

Question 44 of 169

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If a good is “normal”, then an increase in income will result in

Select one of the following:

• A decrease in the demand for the good
• No change in the demand for the good
• An increase in the demand for the good
• A lower market price

Explanation

Question 45 of 169

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Suppose you like banana cream pie made with vanilla pudding. Assuming all other things are constant, you notice that the price of bananas is higher. How would your demand for vanilla pudding be affected by this?

Select one of the following:

• It would increase
• It would decrease
• It would be unaffected
• There is insufficient information given to answer the question

Explanation

Question 46 of 169

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A higher for batteries would tend to

Select one of the following:

• Increase the demand for flashlights
• Decrease the demand for electricity
• Increase the demand for electricity
• Increase the demand for batteries

Explanation

Question 47 of 169

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In general, elasticity is

Select one of the following:

• the friction that develops between buyer and seller in a market.
• a measure of how much government intervention is prevalent in a market.
• a measure of how much buyers and sellers respond to changes in market conditions.
• a measure of the competitive nature of a market.

Explanation

Question 48 of 169

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Demand is said to be elastic

Select one of the following:

• if the price of the good responds substantially to changes in demand.
• if demand shiftssubstantially when the price of the good changes.
• if the quantity demanded responds substantially to changes in the price of the good.
• if buyers don’t respond much to changes in the price of the good.

Explanation

Question 49 of 169

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Demand is said to be inelastic

Select one of the following:

• if the price of the good responds only slightly to changes in demand.
• if demand shiftsonly slightly when the price of the good changes.
• if buyers respond substantially to changes in the price of the good.
• if the quantity demanded changes only slightly when the price of the good changes.

Explanation

Question 50 of 169

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If a good is a necessity, demand for the good would tend to be

Select one of the following:

• elastic.
• inelastic.
• unit elastic.
• horizontal.

Explanation

Question 51 of 169

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If a good is a luxury, demand for the good would tend to be

Select one of the following:

• elastic.
• inelastic.
• unit elastic.
• horizontal.

Explanation

Question 52 of 169

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If a person has very little concern for his/her health, demand for health care would tend to be

Select one of the following:

• elastic.
• inelastic.
• unit elastic.
• horizontal.

Explanation

Question 53 of 169

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A person who lives to be on the sea in a boat would tend to have what type of demand for boats?

Select one of the following:

• elastic.
• inelastic.
• unit elastic.
• weak.

Explanation

Question 54 of 169

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Demand for a good would tend to be more elastic

Select one of the following:

• the greater the availability of complements.
• the longer the period of time considered.
• the fewer substitutes there are.
• the broader the definition of the market .

Explanation

Question 55 of 169

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If there are very few, if any, good substitutes for good A, then

Select one of the following:

• the demand for good A would tend to be price elastic.
• the supply of good A would tend to be price elastic.
• the demand for good A would tend to be price inelastic.
• the demand for good A would tend to beincome elastic.

Explanation

Question 56 of 169

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The demand for a good tends to be more elastic

Select one of the following:

• the greater the availability of close substitutes.
• the narrower the definition of the market.
• the longer the period of time.
• All of the above are correct.

Explanation

Question 57 of 169

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Economists compute the price elasticity of demand as

Select one of the following:

• the percentage change in the price divided by the percentage change in quantity demanded.
• the change in the quantity demanded divided by the change in price.
• the percentage change in the quantity demanded divided by the percentage change in price.
• the percentage change in the quantity demanded divided by the percentage change in income.

Explanation

Question 58 of 169

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Suppose there is a 6 percent increase in the price of good X and a resulting 6 percent decrease in the quantity of X demanded. Price elasticity of demand for X is

Select one of the following:

• 1.
• 0.
• 6.
• Infinite.

Explanation

Question 59 of 169

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Suppose the price of product X is reduced from $1.45 to $1.25 and, as a result, the quantity of X demanded increases from 2,000 to 2,200. Using the midpoint method, the price elasticity of demand for X in the given price range is

Select one of the following:

• 2.00.
• 1.00.
• 1.55.
• .64.

Explanation

Question 60 of 169

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If the price elasticity of demand for a good is 4.0, then a 10 percent increase in price would result in a

Select one of the following:

• 4.0 percent decrease in the quantity demanded.
• 10 percent decrease in the quantity demanded.
• 40 percent decrease in the quantity demanded.
• 400 percent decrease in the quantity demanded.

Explanation

Question 61 of 169

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The main reason for using the midpoint method is that it

Select one of the following:

• gives the same answer regardless of the direction of change.
• rounds prices to the nearest dollar.
• uses fewer numbers.
• rounds quantities to the nearest whole unit.

Explanation

Question 62 of 169

1

The local pizza restaurant makes such great bread sticks that consumers do not respond much to a change in the price. If the owner is only interested in increasing revenue, he should

Select one of the following:

• Raise the price of the bread sticks.
• lower the price of the bread sticks.
• Reduce costs.
• Leave the price of the bread sticks alone.

Explanation

Question 63 of 169

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1) A legal maximum price at which a good can be sold is a

Select one of the following:

• price floor
• price stabilization
• price support
• price ceiling

Explanation

Question 64 of 169

1

• A legal minimum price at which a good can be sold is a

Select one of the following:

• price floor
• price stabilization
• price ceiling
• price cut

Explanation

Question 65 of 169

1

• If a price ceiling is not binding

Select one of the following:

• the equilibrium price is above the ceiling
• the equilibrium price is below the ceiling
• it has no legal enforcement mechanism
• people must voluntarily agree to abide by it

Explanation

Question 66 of 169

1

• A price ceiling which is not binding

Select one of the following:

• has no effect
• is a detriment to society
• will cause a shortage
• will cause a surplus

Explanation

Question 67 of 169

1

• In the figure shown, a binding price ceiling is shown in

Select one of the following:

• panel (a)
• panel (b)
• both panel (a) and panel (b)
• neither panel (a) nor panel (b)

Explanation

Question 68 of 169

1

• In which panel(s) in the figure shown would there be a shortage for CDs at the market price?

Select one of the following:

• panel (a)
• panel (b)
• both panel (a) and panel (b)
• neither panel (a) nor panel (b)

Explanation

Question 69 of 169

1

• If a price ceiling is a binding constraint on the market

Select one of the following:

• the equilibrium price must be below the price ceiling
• the equilibrium price must be above the price ceiling
• the forcesof supply and demand must be in equilibrium
• it will have no effecton supply or demand

Explanation

Question 70 of 169

1

• If a price ceiling is a binding constraint

Select one of the following:

• the actual price will be below the price ceiling
• the actual price will be above the price ceiling
• the equilibrium price will equal the price ceiling
• the actual price will be equal the price ceiling

Explanation

Question 71 of 169

1

• A binding price ceiling is imposed on the market for peaches. At the ceiling price,

Select one of the following:

• the quantity demanded of peaches will be greater than the quantity supplied
• the quantity demanded of peaches will be equal to the quantity supplied
• the quantity demanded of peaches will be smaller than the quantity supplied
• the quantity demanded of peaches will be artificiallyrestricted by the price ceiling

Explanation

Question 72 of 169

1

• A binding price ceiling in the computer market will cause

Select one of the following:

o a surplus of computers
o a shortage of computers
o an increase in the demand for computers
o quantity demanded of computers to be equal to quantity supplied

Explanation

Question 73 of 169

1

• A binding price ceiling will make it necessary to

Select one of the following:

o supply more of the product
o develop a way of rationing the product, because there will be a shortage
o develop a better marketing plan, because there will be a surplus
o increase demand for product, because there will be a surplus

Explanation

Question 74 of 169

1

• According to the graph shown, if the government imposes a binding price ceiling in this market at a price of $5.00, the result would be

Select one of the following:

• a shortage of 30 units
• a shortage of 20 units
• a surplus of 40 units
• a surplus of 20 units

Explanation

Question 75 of 169

1

• According to the graph shown, a binding price ceiling would exist at a price of

Select one of the following:

• $8.00
• $6.00
• $5.00

Explanation

Question 76 of 169

1

• According to the graph shown, a binding price floor would exist at a price of

Select one of the following:

• $5.00
• $2.00
• $6.00
• none of the above

Explanation

Question 77 of 169

1

• Rationing by long lines

Select one of the following:

• is inefficient, because it wastes buyers’ time
• is efficient, because those who are willing to wait the longest get the goods
• is the only way scarce goods can be rationed
• is only necessary if price ceilings are not binding

Explanation

Question 78 of 169

1

• According to the law of supply,

Select one of the following:

• the supply curve slopes downward
• firms are willing to produce a greater quantity of a good when the price of the good is higher
• firms’ production levels are not correlated with the price of a good
• none of the above

Explanation

Question 79 of 169

1

Industrial organization is the study of

Select one of the following:

• How industries organize for political advantage
• Now firms’ decisions regarding prices and quantities depend on the market conditions they face
• How labor unions organize workers in industries
• How profitable firms are in organized industries

Explanation

Question 80 of 169

1

The amount of money that firms receives from the sale of its outputs is called

Select one of the following:

• Total revenue
• Total net profit
• Total gross profit
• Net revenue

Explanation

Question 81 of 169

1

The amount of money that a firm pays to buy inputs is called

Select one of the following:

• Total cost
• Variable cost
• Marginal cost
• Fixed cost

Explanation

Question 82 of 169

1

Profit defined as

Select one of the following:

• Net revenue minus depreciation
• Average revenue minus average total cost
• Marginal revenue minus marginal cost
• Total revenue minus total cost

Explanation

Question 83 of 169

1

Profit plus total cost equals

Select one of the following:

• Total revenue
• Not profit
• Operational profit
• Capital profit

Explanation

Question 84 of 169

1

Total revenue equals

Select one of the following:

• Total output multiplied by sales price of output
• Total output multiplied by the profit
• (total output multiplied by sales price) – inventory surplus
• (total output multiplied by sales price) – inventory shortage

Explanation

Question 85 of 169

1

Those things that must be forgone to acquire a good are called

Select one of the following:

• competitors
• substitutes
• opportunity cost
• explicit costs

Explanation

Question 86 of 169

1

XYZ corporation produced 300 units of output but sold only 275 of the units it produced. The average cost of production for each unit of output produced was $100. Each of the 275 units sold were sold for a price of $95. Total revenue for the XYZ corporations would be

Select one of the following:

• $30,000.
• $28,500.
• $26,125.
• -$3,875.

Explanation

Question 87 of 169

1

Opportunity costs are comprised of

Select one of the following:

• Explicit costs
• Implicit costs
• Forgone income.
• all of the above

Explanation

Question 88 of 169

1

Which of the following would be categorized as an opportunity cost?
(i) Wages of workers
(ii) Raw materials costs
(iii) Forgone investment opportunities

Select one of the following:

• (i) and (iii)
• (iii) only
• (ii) and (iii)
• All the above

Explanation

Question 89 of 169

1

Which of the following is an implicit cost?
(i) A business owner forgoing an opportunity to earn a large salary working for a wall street brokerage firm
(ii) Interest on debt
(iii) Uncollected revenue

Select one of the following:

• (i) only
• (ii) and (iii)
• (i) and (iii)
• All the above

Explanation

Question 90 of 169

1

An example of an implicit cost of production would be

Select one of the following:

• The cost of raw materials for producing bread in a bakery.
• The cost of a delivery truck in a business that rarely makes deliveries.
• The income an entrepreneur could have earned working for someone else.
• All of the above

Explanation

Question 91 of 169

1

To an economist, the field of industrial organization answers which of the following questions?

Select one of the following:

• How does the difference in the number of firms affect prices and efficiency of market outcomes?
• Why are consumers subject to the law of demand?
• Why do firms experience falling marginal product of labor?
• Why do firms consider production costs when determining product supply?

Explanation

Question 92 of 169

1

Assuming John owns a shoe-shine business, his accountant most likely includes which of the following costs on his financial statements?

Select one of the following:

• Cost of shoe polish
• Dividends John’s money was earning in the stock market before John sold his stock and bought a shoe-shine booth
• Wages John could earn washing windows
• All of the above

Explanation

Question 93 of 169

1

An important implicit cost of almost every business is

Select one of the following:

• The opportunity cost of financial capital that has been invested in the business
• The cost of accounting services
• The cost of compliance with government regulation
• The cost of debt

Explanation

Question 94 of 169

1

1. Monopolistic competition is characterized by which of the following attributes? (i) Many sellers (ii) Product differentiation (iii) barriers to entry

Select one of the following:

(i) and (iii) only
(i) and (ii) only
(ii) and (iii) only
All of the above

Explanation

Question 95 of 169

1

2. In a monopolistically competitive market structure each firm sells a good that is

Select one of the following:

Slightly different from goods sold be other firms
Produced at minimum average cost
Identical to other goods sold in the market
Produced at minimum marginal cost

Explanation

Question 96 of 169

1

3. In a monopolistically competitive industry, price is

Select one of the following:

Above marginal cost since each firm is a price setter
Equal to marginal cost since each firm is a price taker
Below marginal cost since each firm is a price setter
Always a fraction of marginal cost since each firm is a price setter.

Explanation

Question 97 of 169

1

4. Which of the following market structures is consistent with many sellers in the market place? (i) perfect competition (ii) monopolistic competition (iii) monopoly (iv) oligopoly

Select one of the following:

(i) only
both (i) and (ii)
(ii) only
all of the above

Explanation

Question 98 of 169

1

5. Which of the following market structures do not have barriers to entry that restrict firms from entering the market? (i) perfect competition (ii) monopolistic competition (iii) monopoly (iv) oligopoly

Select one of the following:

(i) only
(i) and (ii) only
(ii) and (iii) only
All of the above are correct.

Explanation

Question 99 of 169

1

6. A profit-maximizing firm in a monopolistically competitive market differs from a firm in a perfectly competitive market because the firm in the monopolistically competitive market

Select one of the following:

Faces a downward-sloping demand curve for its product
Faces a horizontal demand curve at the market clearing price
Is characterized by market share maximization
Has no barriers to entry

Explanation

Question 100 of 169

1

7. The profit-maximizing rule for a firm in a monopolistically competitive market is to select the quantity at which

Select one of the following:

Average revenue exceeds average total cost
Marginal revenue is equal to marginal cost
Average total cost is minimum
Average total cost is equal to marginal revenue

Explanation

Question 101 of 169

1

8. A profit-maximizing firm in a monopolistically competitive market is characterized by which of the following?

Select one of the following:

Revenue is always maximized along with profit
Average revenue exceeds marginal revenue
Marginal revenue exceeds average revenue.
Average revenue is equal to marginal revenue.

Explanation

Question 102 of 169

1

9. Which of the following graphs would most likely represent profit-maximizing firm in a monopolistically competitive market?

Select one of the following:

panel a
panel b

Explanation

Question 103 of 169

1

10. The firm depicted in panel b faces a horizontal demand curve. If panel b depicts a profit-maximizing firm,

Select one of the following:

• It would not be operating in a monopolistically competitive market
• It would not have excess capacity in its production as long as it is earning zero economic profit
• It is not able to choose the price at which it sells its product
• All the above

Explanation

Question 104 of 169

1

11. Product differentiation causes the seller of a good to face what type of demand curve?

Select one of the following:

• Horizontal
• Vertical
• Downward sloping
• Upward sloping

Explanation

Question 105 of 169

1

12. Which of the graphs shown would be consistent with a firm in a monopolistically competitive market that is minimizing its losses?

Select one of the following:

• Panel a
• Panel b
• Panel c
• Panel d

Explanation

Question 106 of 169

1

13. Free entry into a market drives economic profit to

Select one of the following:

• Zero
• The Nash equilibrium

Explanation

Question 107 of 169

1

1. Which of the following best describes the economy’s stock of equipment and structures?

Select one of the following:

Aggregate stock
Capital
Aggregate demand
Long term inventory

Explanation

Question 108 of 169

1

2. Rent, interest, and profit are all forms of income paid to the owners of

Select one of the following:

Land and capital
Long term inventory
Aggregate stock
Aggregate demand

Explanation

Question 109 of 169

1

3. For a computer software firm, capital could be thought of as
(i) Wages paid to computer programmers.
(ii) Computer equipment
(iii) The interest earned by shareholders.

Select one of the following:

(i) Only
(i) and(iii)
(ii) Only
(ii) and(iii)

Explanation

Question 110 of 169

1

4. When a gas station sells gas, which of the following would qualify as capital?
(i) The service attendants time
(ii) The physical space on which the station exists
(iii) The gas tanks and pumps

Select one of the following:

(i)only
(iii)only
(i)and(iii)
(ii)and(iii)

Explanation

Question 111 of 169

1

5. A firm’s demand for a factor of production is derived form its decision to supply a good in the market, therefore we call this type of demand

Select one of the following:

Derived demand
Supplied demand
Differentiated demand
Secondary demand

Explanation

Question 112 of 169

1

6. Labor markets are governed by the force(s) of

Select one of the following:

Supply and demand
Regulation and supply
Supply only
Demand only

Explanation

Question 113 of 169

1

7. Gertrude Kelp owns thee boats that participate in commercial fishing for fresh pacific salmon off the coast of Alaska. As part of her business the hires a captain and several crew members for each boat. In the market for fresh pacific salmon, Gertrude is one of thousands of fisher-persons. While Gertrude usually catches a significant number of fish each year, her contribution to the entire harvest of salmon is negligible relative to the size of the market.
What type of market structure is most likely to characterize the fresh pacific salmon market?

Select one of the following:

Monopolist
Oligopolist
Perfect competitor
Monopolistic competitor

Explanation

Question 114 of 169

1

8. Gertrude Kelp owns thee boats that participate in commercial fishing for fresh pacific salmon off the coast of Alaska. As part of her business the hires a captain and several crew members for each boat. In the market for fresh pacific salmon, Gertrude is one of thousands of fisher-persons. While Gertrude usually catches a significant number of fish each year, her contribution to the entire harvest of salmon is negligible relative to the size of the market.

Select one of the following:

Hire more crew workers
Become a seller in the factor market
Reduce her demand for crew workers
Try to increase her catch to make up for lost revenue

Explanation

Question 115 of 169

1

9. Gertrude Kelp owns thee boats that participate in commercial fishing for fresh pacific salmon off the coast of Alaska. As part of her business the hires a captain and several crew members for each boat. In the market for fresh pacific salmon, Gertrude is one of thousands of fisher-persons. While Gertrude usually catches a significant number of fish each year, her contribution to the entire harvest of salmon is negligible relative to the size of the market.
If Gertrude is a competitor in both the fresh pacific salmon market and the market for crew workers she is called a

Select one of the following:

Price taker in the salmon market and a wage setter in the crew market
Price taker in both markets
Price takerin the crew market and a price setter in the salmon market
Price setter in both markets

Explanation

Question 116 of 169

1

10. Gertrude Kelp owns thee boats that participate in commercial fishing for fresh pacific salmon off the coast of Alaska. As part of her business the hires a captain and several crew members for each boat. In the market for fresh pacific salmon, Gertrude is one of thousands of fisher-persons. While Gertrude usually catches a significant number of fish each year, her contribution to the entire harvest of salmon is negligible relative to the size of the market.
If Gertrude is a price taker in the crew market, she has only to decide

Select one of the following:

The wage to pay the crew she hires
How many crew members to hire
The price of fish she will catch
The size of the boats others use to catch salmon

Explanation

Question 117 of 169

1

11. Gertrude Kelp owns thee boats that participate in commercial fishing for fresh pacific salmon off the coast of Alaska. As part of her business the hires a captain and several crew members for each boat. In the market for fresh pacific salmon, Gertrude is one of thousands of fisher-persons. While Gertrude usually catches a significant number of fish each year, her contribution to the entire harvest of salmon is negligible relative to the size of the market.
Labor market theory assumes that Gertrude’s demand for crew workers and her supply of fresh pacific salmon results from

Select one of the following:

Her intrinsic desire to hire crew members
Her primary goal of maximizing profit
Altruistic motives to provide fresh salmon to consumers
All of the above

Explanation

Question 118 of 169

1

12. When a firm is a profit maximizer

Select one of the following:

It is driven to produce as much of its product as possible
It does not care directly about the number of workers it hires
It will measure its success by the number of employees it has
Its revenue will always be maximized as well

Explanation

Question 119 of 169

1

1. Macroeconomics is

Select one of the following:

• The study of market regulation.
• The study of economy-wide phenomena.
• The study of how households and firms make decisions and how they interact .
• The study of money and financial markets.

Explanation

Question 120 of 169

1

2. Statistics such as GDP, the unemployment rate, the rate of inflation, and the trade balance are

Select one of the following:

• Microeconomic, since they affect individual households and firms.
• Both microeconomic and macroeconomic.
• Macroeconomic, since they tell us something about the economy as a whole.
• Neither macroeconomic nor microeconomic.

Explanation

Question 121 of 169

1

3. The goal of macroeconomics is

Select one of the following:

• To explain the economic changes that affect a particular household, firm, or market.
• To explain the economic changes that affect many households, firms, and markets at once.
• To devise policies to deal with market failures such as monopoly, externalities, common resources, and public goods.
• All of the above.

Explanation

Question 122 of 169

1

4. Gross Domestic Product measures

Select one of the following:

• The total income of everyone in the economy.
• The total expenditure on the economy’s output of goods and services.
• Both a and b.
• Neither a nor b.

Explanation

Question 123 of 169

1

5. For the economy as a whole

Select one of the following:

• Income must equal expenditure.
• Expenditure exceeds income because of taxes.
• Income exceeds expenditure because of saving.
• Expenditure exceeds income because of the government budget deficit.

Explanation

Question 124 of 169

1

6. In a simple circular-flow diagram, total income and total expenditure in an economy

Select one of the following:

• Are seldom equal because of the dynamic changes which occur in an economy.
• Are equal only when all goods and services produced are sold.
• Are always equal because every transaction has both a buyer and seller.
• Are always equal because of accounting rules.

Explanation

Question 125 of 169

1

7. If you buy a new snowboard from the local sporting goods store, as a result of your purchase

Select one of the following:

• The increase in expenditure in the economy will equal the increase in income in economy.
• The increase in expenditure in the economy will exceed the increase in income in the economy
• The increase in income in the economy will exceed the increase in expenditure in the economy.
• It is impossible to tell whether the increase in income in the economy will equal the increase in expenditure.

Explanation

Question 126 of 169

1

8. A circular- flow diagram is used to describe

Select one of the following:

• How weather patterns affect the economy.
• The most efficient organization of the work process.
• The flow of income and expenditures in an economy.
• How banks create money.

Explanation

Question 127 of 169

1

9. In the real economy, expenditure and income are always the same

Select one of the following:

• Only if households spend all of their income and buy all the goods and services produced in the economy
• Only if households spend all of their income.
• Only if households buy all the goods ad services produced in the economy.
• Regardless of whether households spend all of their income or buy all of the goods and services produced in the economy.

Explanation

Question 128 of 169

1

10. Which of the following statements best explains the total income and total expenditure in an economy?

Select one of the following:

• Government taxes firms and redistributes the money to households until household income is high enough to equal total expenditures.
• Total income and total expenditure are always equal in an economy because only households purchase goods and services.
• Total income and total expenditure are equal in an economy because firms use the money they receive in sales to pay for workers' wages, landowners' rent, and firm owners' profit.
• All of the above are correct explanations

Explanation

Question 129 of 169

1

11. Gross domestic product is defined as

Select one of the following:

• The market value of all final goods and services produced within a country in a given period of time.
• The market value of all final goods and services produced by a country’s citizens in a given period of time
• The market value of all goods and services producedwithin a country in a given period of time.
• The market value of all goods and services producedby a country’s citizens in a given period of time.

Explanation

Question 130 of 169

1

12. The real economy is more complicated than the one illustrated in a simple circular-flow diagram because

Select one of the following:

• Households do not buy all goods and services produced in the economy, and households do not spend all of their income on goods and services.
• Saving should be counted as part of expenditure.
• Taxes should be included as part of expenditure.
• The income government gives poor people should be counted as government production of human capital.

Explanation

Question 131 of 169

1

13. In order to include many different products in a summary or aggregate measure gdp

Select one of the following:

• Uses a combination of weights and measures.
• Uses a combination of price indexes and costs of productions
• Uses only cost of production of the products.
• Uses market prices.

Explanation

Question 132 of 169

1

14. A nation’s standard of living is measured by its

Select one of the following:

• Nominal GDP.
• Real GDP.
• Nominal GDP per person.
• Real GDP per person.

Explanation

Question 133 of 169

1

15. Which of the following is a store of value?

Select one of the following:

• U.S. government bonds.
• Currency
• Fine art.
• All of the above correct.

Explanation

Question 134 of 169

1

• Which of the following is a store of value?

Select one of the following:

• Currency
• U.S. government bonds
• Fine art
• All of the above are correct

Explanation

Question 135 of 169

1

• When you put money in a cookie jar, which function of money are you using?

Select one of the following:

• Store of value
• Medium of exchange
• Unit of account
• None of the above is correct

Explanation

Question 136 of 169

1

• Which of the following best illustrates the medium of exchange function of money?

Select one of the following:

• You pay for your textbooks with currency
• You mark prices of CDsat your music store in dollars
• You keep a jar of pennies
• None of the above is correct

Explanation

Question 137 of 169

1

• Liquidity refers to

Select one of the following:

• A measurement of the intrinsic value of commodity money
• The stability of an asset to serve as a store of value
• None of the above refers to liquidity
• The ease with which an asset is converted to the medium of exchange

Explanation

Question 138 of 169

1

• Fiat currency

Select one of the following:

• Is used as a medium of exchange.
• Is equivalent to wealth
• Is backed by gold
• Both b and c are correct

Explanation

Question 139 of 169

1

• Commodity money is

Select one of the following:

• More commonly used than fiat money
• Backed by gold
• Money with intrinsic value
• All of the above are correct

Explanation

Question 140 of 169

1

• Inflation can be measured by the

Select one of the following:

• Percentage change in the consumer price index
• Change in the consumer price index
• Percentage change in the price of a specific commodity
• Change in the price of a specific commodity

Explanation

Question 141 of 169

1

• The rate of inflation measures

Select one of the following:

• The rate of increase in nominal GDP
• The rate of increase in the price of particular good
• The rate of change in nominal interest rates
• The rate of increase in the overall level of prices

Explanation

Question 142 of 169

1

• Deflation is a time period during which

Select one of the following:

• Inflation falls
• Prices fall
• Output and prices fall
• Output falls

Explanation

Question 143 of 169

1

• An extraordinarily high rate of inflation is called

Select one of the following:

• Deflation
• Disinflation
• Classical inflation
• Hyperinflation

Explanation

Question 144 of 169

1

• The quantity theory of money

Select one of the following:

• Argues that inflation is caused by too little money in the economy
• Can explain both moderate and hyperinflations
• Is a fairly recent addition to economic theory
• All of the above are correct

Explanation

Question 145 of 169

1

• The price level

Select one of the following:

• Refers to the price of individual goods
• Is high when the value of money is high
• All of the above are correct
• Is measured by a price index like the CPI or GDP deflator

Explanation

Question 146 of 169

1

• When the price level rises, the number of dollars needed to buy a representative basket goods

Select one of the following:

• Increases, so the value of money rises
• Increases, so the value of money falls
• Decreases, so the value of money rises
• Decreases, so the value of money falls

Explanation

Question 147 of 169

1

• The value of money

Select one of the following:

• Is positively related to the price level
• Is constant
• Is determined by the supply and demand of money
• Is not explained by the quantity theory of money

Explanation

Question 148 of 169

1

1. The word economy comes from the Greek word for

Select one of the following:

a) “Environment”
c) “One who manages a household”
b) “One who participates in a market”
d) “Conservation”

Explanation

Question 149 of 169

1

2. Economics deals primarily with the concepts of

Select one of the following:

a) Poverty
b) Scarcity
c) Change
d) Power

Explanation

Question 150 of 169

1

3. Which of the following is NOT included in the decisions that every society must make?

Select one of the following:

a) What goods will be produced
b) What determines consumer preferences
c) Who will produce goods
d) Who will consume the goods

Explanation

Question 151 of 169

1

4. Scarcity exists when

Select one of the following:

a) There is less than an infinite among
b) There is less of a good or resources
c) Society can meet the wants (доконцаневидно)
d) невидно

Explanation

Question 152 of 169

1

5. Economics is defines as

Select one of the following:

a) The study of business
b) The study of how society manages its scarce resources
c) The study of central planning
d) The study of government regulation

Explanation

Question 153 of 169

1

6. Which of the following is NOT a major area of study for economists?

Select one of the following:

a) How people make decisions
b) How people interact with each other
c) How forces and trends affects the overall economy
d) How countries choose national leaders

Explanation

Question 154 of 169

1

7. Daniel decides to spend an hour playing basketball rather than working at $6 dollar per hour. His tradeoff is

Select one of the following:

b) the increase in skill he obtains from playing basketball for that hour.
a) Nothing, because he enjoys playing basketball more than working.
c) the $6 he could have earned.
d) nothing, because he spent $6 for admission into the sports complex to play basketball.

Explanation

Question 155 of 169

1

8. When society requires that firms reduce pollution,

Select one of the following:

a) there is no tradeoff, since everyone benefits from reduced pollution.
b) there is no tradeoff for society as a whole, since the cost of reducing pollut(доконцаневидно)
c) there is a tradeoffonly if some firms are forced to close.
d) there is no tradeoff because of reduced incomes o the firm (доконцаневидно) customers

Explanation

Question 156 of 169

1

9. A good definition of equity would be

Select one of the following:

a) everyone receiving the same income
b) fairness
c) efficiency
d) (доконцаневидно)

Explanation

Question 157 of 169

1

10. Вопроса не видно

Select one of the following:

a) the out-of-pocket expense of obtaining it
b) what you give up to get it
c) always measured in units of time
d) always higher than people think

Explanation

Question 158 of 169

1

11. The opportunity cost of going to college is

Select one of the following:

a) the total spent on food, clothing, books, transportation tuition, lodging, and other expenses.
b) zero for studens who are fortunate enough to have all of their college expenses paid by someone else.
c) the value of the best opportunity a student gives up to attend college.
d) zero, since a college education will allow a student to earn a larger income after graduation.

Explanation

Question 159 of 169

1

12. For most students, the largest single cost of a college education is

Select one of the following:

a) transportation, parking, and entertainment
b) tuition, fees, and books.
c) room and board.
d) the wages given up to attend school.

Explanation

Question 160 of 169

1

13. Carolyn decides to spend an additional hour working overtime rather than watching a video with her friends. She earns $8 for her hour's work. Her opportunity cost of working is

Select one of the following:

a) the $8 she earns
b) the enjoyment she would have received had she watched the video
c) the $8 minus the enjoyment she would have received from watching the video
d) nothing, since she would have received less than $8 of enjoyment from the video

Explanation

Question 161 of 169

1

14. College-age athletes who drop out of school to play professional sports

Select one of the following:

a) are making a bad economic decision, since they can't play forever.
b) are unaware of their opportunity cost of attending college.
c) underestimate the value of a college education.
d) are well aware that their opportunity cost of attending college is very high.

Explanation

Question 162 of 169

1

15. People make decisions at the margin by

Select one of the following:

a) following tradition
b) comparing costs and benefits
c) experience
d) calculating dollar costs

Explanation

Question 163 of 169

1

16. Which of the following is the best example of a marginal change?

Select one of the following:

a) Mark graduates from college and takes a job. His income increases from $10,000 per year to $50,000 per year.
b) The price of housing rises in Seattle by 25% in one year.
c) Kim works at the college bookstore. She gets a raise from $5.15 per hour to $5.20 per hour.
d) A drought hits the upper Midwest and the price of wheat increases from $4.00 per bushel to $8.00 per bushel.

Explanation

Question 164 of 169

1

17. A rational decision maker takes an action only if

Select one of the following:

a) The marginal benefit is greater than the marginal cost
b) The marginal benefit is less than the marginal cost
c) The marginal benefit is greater than the average cost
d) The marginal benefit is greater than both the average cost and the marginal cost

Explanation

Question 165 of 169

1

18. You have spent $500 purchasing and repairing an old car which you expects to sell for $800 once the repairs are complete. You discover that you need an additional part, which will cost $400, including labor. In order to complete the repairs. You can sell the car as it is now for $300. What should you do?

Select one of the following:

a) You should complete the repairs and sell the car
b) You should cut your losses and take the $300
c) You should never sell something for less than it costs
d) It doesn’t matter which action you take; the outcome is the same either way

Explanation

Question 166 of 169

1

19. In the former Soviet Union, producers were paid for meeting output targets, not for selling products. Under those circumstances, what were paid for meeting output targets, not for selling products. Under those circumstances, what were the economic incentives for producers?

Select one of the following:

b) To conserve on costs, so as to maintain efficiency in the economy
a) To produce good quality products so that society benefits from the resources used
c) To produce these products that society desires most
d) To produce enough to meet the output target, without regard for quality or cost

Explanation

Question 167 of 169

1

by Which of the following?

Select one of the following:

revenue is always maximized along with profit
average revenue exceeds marginal revenue
marginal revenue exceedsaverage revenue
average revenue is equas to marginal revenue

Explanation

Question 168 of 169

1

	Created by Hello World almost 7 years ago

Джумадилова Ш.

Question 1 of 169

1. The scientific method can best be defined as

Select one of the following:

Explanation

Question 2 of 169

2. The use of theory and observation is more difficult in economics than in sciences such as physics due to

Select one of the following:

Explanation

Question 3 of 169

3. Because it is difficult for economists to use experiments to generate economic data

Select one of the following:

Explanation

Question 4 of 169

4. Economists make assumptions

Select one of the following:

Explanation

Question 5 of 169

5. If an economist develops a theory about international trade based on the assumption that there are only two countries and two goods.

Select one of the following:

Explanation

Question 6 of 169

6. What would be the best statement about a theory based on assumptions which are not true?

Select one of the following:

Explanation

Question 7 of 169

7. What is the goal of theories?

Select one of the following:

Explanation

Question 8 of 169

8. Economists use models in order to

Select one of the following:

Explanation

Question 9 of 169

9. A model

Select one of the following:

Explanation

Question 10 of 169

10. Economic models are usually composed of

Select one of the following:

Explanation

Question 11 of 169

11. Which of the following is the most accurate statement about economic models?

Select one of the following:

Explanation

Question 12 of 169

12. The foundation stones from which economic models are built are

Select one of the following:

Explanation

Question 13 of 169

13. A circular-flow diagram is

Select one of the following:

Explanation

Question 14 of 169

14. Factors of production are

Select one of the following:

Explanation

Question 15 of 169

15. For a scientist, the decision of which assumption to make

Select one of the following:

Explanation

Question 16 of 169

1.People who provide you with goods and services

Select one of the following:

Explanation

Question 17 of 169

2.A rancher can produce only hamburgers, and a farmer can produce only french fries. The rancher and the farmer both like both foods. They

Select one of the following:

Explanation

Question 18 of 169

3.Without trade

Select one of the following:

Explanation

Question 19 of 169

4. Which of the following is NOT correct?

Select one of the following:

Explanation

Question 20 of 169

Refer to the tables shown. For the Farmer, the opportunity cost of 1 pound of meat is:

Refer to the tables shown. The Farmer has an absolute advantage in _and the Rancher has an absolute advantage in_.

Refer to the tables shown. The Rancher has an absolute advantage in _and the Farmer has a comparative advantage in_.

Refer to the tables shown. The Farmer has an absolute advantage in _and the Rancher has a comparative advantage in_.

Refer to the tables shown. The Rancher has a comparative advantage in _and the Farmer has a comparative advantage in_.

Refer to the tables shown. The Farmer and Rancher both could benefit by the Farmer specializing in __and the Rancher specializing in_.