Reference no: EM13375317

Question 1


The economic surplus of a particular action is:
Answer

The value of the action

The cost of the action

The difference between the benefit and the cost of the action

The average of the benefits and costs
2 points

Question 2


For many students, the opportunity cost of taking an 8:00 a.m. Monday, Wednesday, and Friday class is the value of one hour's worth of:
Answer

Studying

Dental work

Washing

Sleeping
2 points

Question 3


Dillon purchased his nonrefundable, nontransferable ticket to see the M. C. Hammer/Vanilla Ice Career Revival show for $30 last week, while Bob has yet to buy his ticket but wants to go. In deciding whether to go to the show, the price of the ticket is a ________ to Dillon and a _________ to Bob.
Answer

sunk cost; sunk cost

relevant cost; sunk cost

sunk cost; variable cost

fixed cost; variable cost
2 points

Question 4


If a given production combination is known to be attainable, then it must be:
Answer

On the production possibilities curve

Beyond the production possibilities curve

An inefficient point

Either an inefficient or efficient point
2 points

Question 5


Application of the principle of comparative advantage leads to:
Answer

Greater and greater specialization of labor and other factors of production

Lesser and lesser specialization of labor

Societies where everyone can do a little of everything

Lower total output
2 points

Question 6


According to the textbook, the largest factor explaining the variance in the performance of the economies of the world is the:
Answer

Degree of specialization

Size of government

Location of the country

Type of government
2 points

Question 7


In order to understand how the price of a good is determined in the free market, one must account for:
Answer

The desires of demanders exclusively

The desires of suppliers exclusively

The desires of lobbyists exclusively

The desires of demanders and suppliers
2 points

Question 8


The statement "Holding all other relevant factors constant, consumers will purchase more of a good as its price falls" reflects the behavior underlying:
Answer

The demand curve

An increase in demand

The supply curve

A decrease in the demand curve
2 points

Question 9


The market for a good is comprised of:
Answer

Only buyers of the good

Only sellers of the good

Both buyers and sellers of the good

Only the price at which the good is sold
2 points

Question 10


If the percentage change in quantity demanded is less than the corresponding percentage change in price, demand is price _________.
Answer

inelastic

elastic

unit elastic

perfectly elastic
2 points

Question 11


The demand for a specific brand of juice will be _______ the demand for juice in general.
Answer

more elastic than

less elastic than

as elastic as

as inelastic as
2 points

Question 12


Which of the following is most likely to have a negative income elasticity of demand?
Answer

Generic drugs

Luxurious overseas vacations

New SUVs

New computers
2 points

Question 13


The property of diminishing marginal utility means that as more units of a good are consumed:
Answer

Total utility falls

The marginal utility of the extra units is negative

The marginal utility of the extra units becomes smaller and smaller

Total utility diminishes
2 points

Question 14


Joe has a fixed amount of income and buys two different goods, M and N, in accordance with the rational spending rule. If the price of M were to rise, one could predict that Joe would buy:
Answer

The same amount of M and reduce purchases of N

The same amount of N and reduce purchases of M

More N and less M

Less of both M and N
2 points

Question 15


The cost of any particular good or service is equal to the:
Answer

Monetary cost divided by any nonmonetary costs

Monetary cost minus any nonmonetary costs

Monetary cost plus any nonmonetary costs

Difference between the list price and the price one actually pays
2 points

Question 16


A price taker confronts a demand curve that is:
Answer

Vertical at the market price

Upward sloping

Downward sloping

Horizontal at the market price
2 points

Question 17


The common goal shared by all private firms is to:
Answer

Be a responsible member of the community

Treat workers fairly

Maximize profit

Be environmentally friendly
2 points

Question 18


In which of the following short-run scenarios should a firm shut down?
Answer

Price is less than average cost.

Price is less than marginal cost.

Price is less than average variable cost.

Price is less than average revenue.
2 points

Question 19


The reduction in total economic surplus that results from the adoption of a policy is called:
Answer

Deadweight loss

Externality loss

Collateral damage

Rent-seeking loss
2 points

Question 20


When the supply curve for a good is perfectly ________, the burden of a tax collected from sellers falls entirely on _______.
Answer

elastic; buyers

elastic; sellers

inelastic; buyers

vertical; buyers
2 points

Question 21


The rationing and allocative functions of price:
Answer

Work in opposition to each other

Are mutually exclusive

Work together to guide resources to their highest value

Produce disequilibrium in the market
2 points

Question 22


Applying the no cash on the table principle to the stock market means new information:
Answer

Provides opportunities to the first few who act on it

Provides opportunities to all investors

Was already contained in the stock price

Fails to affect the market
2 points

Question 23


A more efficient alternative to restricting trade is:
Answer

To compensate the winners

To compensate the losers

To repeal the principle of comparative advantage

A system of voluntary export restraints
2 points

Question 24


Who loses from import quotas?
Answer

Consumers of imported goods

Consumers of exported goods

Producers of imported goods

Firms that hold import licenses
2 points

Question 25


Which of the following is not correct about the effects of the voluntary export restraints (VERs) that the U.S. imposed on Japanese automobiles in the 1980s?
Answer

It benefited the U.S. automakers.

It hurt the U.S. auto consumers.

It benefited the Japanese automakers.

It hurt the U.S. government.