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

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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.
Good Guy Beket
Quiz by Good Guy Beket, updated more than 1 year ago
Good Guy Beket
Created by Good Guy Beket almost 8 years ago
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Question 1

Question
When the government redistributes income with taxes and welfare, the economy becomes more efficient.
Answer
  • True
  • False

Question 2

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

Question 3

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

Question 4

Question
Rational people act only when the marginal benefit of the action exceeds the marginal cost.
Answer
  • True
  • False

Question 5

Question
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.
Answer
  • True
  • False

Question 6

Question
When a jet flies overhead, the noise it generates is an externality.
Answer
  • True
  • False

Question 7

Question
A tax on alcoholic drinks raises the price of alcoholic drinks and provides an incentive for consumers to drink more.
Answer
  • True
  • False

Question 8

Question
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.
Answer
  • True
  • False

Question 9

Question
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.
Answer
  • True
  • False

Question 10

Question
High and persistent inflation is caused by excessive growth in the quantity of money in the economy.
Answer
  • True
  • False

Question 11

Question
Economic models must mirror reality or they are of no value.
Answer
  • True
  • False

Question 12

Question
Assumptions make the world easier to understand because they simplify reality and focus our attention.
Answer
  • True
  • False

Question 13

Question
It is reasonable to assume that the world is composed of only one person when modelling international trade.
Answer
  • True
  • False

Question 14

Question
When people act as scientists, they must try to be objective.
Answer
  • True
  • False

Question 15

Question
If an economy is operating on its production possibilities frontier, it must be using its resources efficiently.
Answer
  • True
  • False

Question 16

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

Question 17

Question
Points outside the production possibilities frontier are attainable but inefficient.
Answer
  • True
  • False

Question 18

Question
If an economy were experiencing substantial unemployment, the economy is producing inside the production possibilities frontier.
Answer
  • True
  • False

Question 19

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

Question 20

Question
An advance in production technology would cause the production possibilities curve to shift outward.
Answer
  • True
  • False

Question 21

Question
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.
Answer
  • True
  • False

Question 22

Question
Comparative advantage, not absolute advantage, determines the decision to specialize in production.
Answer
  • True
  • False

Question 23

Question
Absolute advantage is a comparison based on productivity.
Answer
  • True
  • False

Question 24

Question
Self-sufficiency is the best way to increase one's material welfare.
Answer
  • True
  • False

Question 25

Question
Comparative advantage is a comparison based on opportunity cost.
Answer
  • True
  • False

Question 26

Question
If a producer is self-sufficient, the production possibilities frontier is also the consumption possibilities frontier.
Answer
  • True
  • False

Question 27

Question
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.
Answer
  • True
  • False

Question 28

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

Question 29

Question
If trade benefits one country, its trading partner must be worse off due to trade.
Answer
  • True
  • False

Question 30

Question
Talented people that are the best at everything have a comparative advantage in the production of everything.
Answer
  • True
  • False

Question 31

Question
A perfectly competitive market consists of products that are all slightly different from one another.
Answer
  • True
  • False

Question 32

Question
An oligopolistic market has only a few sellers.
Answer
  • True
  • False

Question 33

Question
The law of demand states that an increase in the price of a good decreases the demand for that good.
Answer
  • True
  • False

Question 34

Question
If apples and oranges are substitutes, an increase in the price of apples will decrease the demand for oranges.
Answer
  • True
  • False

Question 35

Question
If golf clubs and golf balls are complements, an increase in the price of golf clubs will decrease the demand for golf balls.
Answer
  • True
  • False

Question 36

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

Question 37

Question
The law of supply states that an increase in the price of a good increases the quantity supplied of that good.
Answer
  • True
  • False

Question 38

Question
An increase in the price of steel will shift the supply of cars to the right.
Answer
  • True
  • False

Question 39

Question
When the price of a good is below the equilibrium price, it causes a surplus.
Answer
  • True
  • False

Question 40

Question
The market supply curve is the horizontal summation of the individual supply curves.
Answer
  • True
  • False

Question 41

Question
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.
Answer
  • True
  • False

Question 42

Question
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.
Answer
  • True
  • False

Question 43

Question
The demand for tyres should be more inelastic than the demand for Michelin brand tyres.
Answer
  • True
  • False

Question 44

Question
The demand for aspirin over one month should be more elastic than the demand for aspirin over one year.
Answer
  • True
  • False

Question 45

Question
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.
Answer
  • True
  • False

Question 46

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

Question 47

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

Question 48

Question
The demand for a necessity such as petrol tends to be elastic.
Answer
  • True
  • False

Question 49

Question
If a demand curve is linear, the price elasticity of demand is constant along it.
Answer
  • True
  • False

Question 50

Question
If the income elasticity of demand for a bus ride is negative, then a bus ride is an inferior good.
Answer
  • True
  • False

Question 51

Question
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.
Answer
  • True
  • False

Question 52

Question
A price ceiling set below the equilibrium price causes a surplus.
Answer
  • True
  • False

Question 53

Question
A price floor set above the equilibrium price is a binding constraint.
Answer
  • True
  • False

Question 54

Question
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.
Answer
  • True
  • False

Question 55

Question
The minimum wage helps all teenagers because they receive higher wages than they would otherwise.
Answer
  • True
  • False

Question 56

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

Question 57

Question
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.
Answer
  • True
  • False

Question 58

Question
A price floor in a market always creates a surplus in that market.
Answer
  • True
  • False

Question 59

Question
A €10 tax on football boots will always raise the price that the buyers pay for football boots by €10.
Answer
  • True
  • False

Question 60

Question
The ultimate burden of a tax falls most heavily on the side of the market that is less elastic.
Answer
  • True
  • False

Question 61

Question
Total revenue equals the quantity of output the firm produces times the price at which it sells its output.
Answer
  • True
  • False

Question 62

Question
Wages and salaries paid to workers are an example of implicit costs of production.
Answer
  • True
  • False

Question 63

Question
If total revenue is €100, explicit costs are €50, and implicit costs are €30, then accounting profit equals €50.
Answer
  • True
  • False

Question 64

Question
If there are implicit costs of production, accounting profits will exceed economic profits.
Answer
  • True
  • False

Question 65

Question
When a production function gets flatter, the marginal product is increasing.
Answer
  • True
  • False

Question 66

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

Question 67

Question
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.
Answer
  • True
  • False

Question 68

Question
Fixed costs plus variable costs equal total costs.
Answer
  • True
  • False

Question 69

Question
Average total costs are total costs divided by marginal costs.
Answer
  • True
  • False

Question 70

Question
When marginal costs are below average total costs, average total costs must be falling.
Answer
  • True
  • False

Question 71

Question
An oligopoly is a market structure in which many firms sell products that are similar but not identical.
Answer
  • True
  • False

Question 72

Question
The market for crude oil is an example of an oligopolistic market.
Answer
  • True
  • False

Question 73

Question
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.
Answer
  • True
  • False

Question 74

Question
When firms cooperate with one another, it is generally good for society as a whole.
Answer
  • True
  • False

Question 75

Question
When firms cooperate with one another, it is generally good for the cooperating firms.
Answer
  • True
  • False

Question 76

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

Question 77

Question
The price and quantity generated by a Nash equilibrium is closer to the competitive solution than the price and quantity generated by a cartel.
Answer
  • True
  • False

Question 78

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

Question 79

Question
Cooperation is easily maintained in an oligopoly because cooperation maximizes each individual firm's profits.
Answer
  • True
  • False

Question 80

Question
The prisoners' dilemma demonstrates why it is difficult to maintain cooperation even when cooperation is mutually beneficial.
Answer
  • True
  • False

Question 81

Question
The factors of production are labour, land, and money.
Answer
  • True
  • False

Question 82

Question
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.
Answer
  • True
  • False

Question 83

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

Question 84

Question
A factor exhibits diminishing marginal productivity if employing additional units of the factor reduces output.
Answer
  • True
  • False

Question 85

Question
If there is an increase in the equilibrium wage, there must have been an increase in the value of the marginal product of labour.
Answer
  • True
  • False

Question 86

Question
An increase in the demand for textbooks will increase the value of the marginal product of textbook writers.
Answer
  • True
  • False

Question 87

Question
A decrease in the supply of labour reduces the value of the marginal product of labour, decreases the wage, and decreases employment.
Answer
  • True
  • False

Question 88

Question
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.
Answer
  • True
  • False

Question 89

Question
An increase in the demand for pencils will likely improve the fortunes of both the pencil factory and the workers in the pencil factory.
Answer
  • True
  • False

Question 90

Question
The demand for labour is downward sloping because the production function exhibits diminishing marginal productivity of labour.
Answer
  • True
  • False

Question 91

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

Question 92

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

Question 93

Question
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.
Answer
  • True
  • False

Question 94

Question
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.
Answer
  • True
  • False

Question 95

Question
If nominal GDP in 2005 exceeds nominal GDP in 2004, real output must have risen.
Answer
  • True
  • False

Question 96

Question
If UK GDP exceeds UK GNP, then foreigners produce more in the UK than UK citizens produce in the rest of the world.
Answer
  • True
  • False

Question 97

Question
Wages are an example of a transfer payment because there is a transfer of payment from the firm to the worker.
Answer
  • True
  • False

Question 98

Question
In the UK, investment is the largest component of GDP.
Answer
  • True
  • False

Question 99

Question
Nominal GDP employs current prices to value output while real GDP employs constant base-year prices to value output.
Answer
  • True
  • False

Question 100

Question
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.
Answer
  • True
  • False

Question 101

Question
An increase in the price of imported cameras is captured by the CPI but not by the GDP deflator.
Answer
  • True
  • False

Question 102

Question
An increase in the price of helicopters purchased by the UK armed forces is captured by the CPI.
Answer
  • True
  • False

Question 103

Question
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.
Answer
  • True
  • False

Question 104

Question
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.
Answer
  • True
  • False

Question 105

Question
The "base year" in a price index is the benchmark year against which other years are compared.
Answer
  • True
  • False

Question 106

Question
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.
Answer
  • True
  • False

Question 107

Question
The producer price index (PPI) is constructed to measure the change in price of total production.
Answer
  • True
  • False

Question 108

Question
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.
Answer
  • True
  • False

Question 109

Question
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.
Answer
  • True
  • False

Question 110

Question
The largest category of goods and services in the CPI is food and non-alcoholic beverages.
Answer
  • True
  • False
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