review

1.

1 point

Normative economics deals with ____.

facts

large units in the economy

opinion of what should or should not be

descriptions of actual situations

2.

1 point

Nature of the product is homogenous

Oligopoly

Perfect Competition

Monopolistic Competition

Monopoly

3.

1 point

Janet is said to have a comparative advantage in software design compared with Miguel if

she can produce software code faster than Miguel

their skills are about the same

their skills cannot be compared

she can produce software code at a lower opportunity cost than Miguel

4.

1 point

The consumer surplus that a person recieves from a good purchased is the difference between the minimum amount a producer is willing to accept for the good and the price that is actually paid.

True

False

5.

1 point

The difference between what a consumer is willing to pay for a certain quantity of a good and the amount actually paid is _____.

the income effect

the substitution effect

producer surplus

none of the above

6.

1 point

Which of the following is true of a change in quantity supplied?

It is caused by a change in quality

It is a movement along the supply curve

It only happens in the long run

It is the movement or shift in the supply curve

7.

1 point

If an increase in income leads to a decrease in the demand for ramen noodles, what do we conclude?

The price of ramen noodles has increased

Tastes have shifted away from ramen noodles

Ramen noodles is a normal good

Ramen noodles is an inferior good

8.

1 point

The process of seeking new technology and new forms of organization is known as _____.

Natural Resources

Capital

Entrepreneurship

Labor

9.

1 point

The branch of economics that focuses on the choices of individual firms is known as _____.

Macroeconomics

Microeconomics

International Trade

Comparative Economic Systems

10.

1 point

If hot dogs and hamburgers are substitutes and the price of hot dogs decreases, what do we expect?

The demand curve for hot dogs to shift to the right

The demand curve for hamburgers to shift to the left

A decrease in the quantity demanded of hot dogs

The demand curve for hot dogs to shift to the left

11.

1 point

Why is the production possibilities curve bowed outward?

increasing prices

growth

the law of increasing opportunity costs

under employed resources

12.

1 point

Income elasticity of demand is which of the following?

Positive for a normal good

Negative for an inferior good

Both a) and b)

None of the above

13.

1 point

According to the principle of diminishing marginal utility, the greater the consumption of a good,

the smaller the increase in utility that results from a one-unit increase in the consumption of the good.

the higher the marginal utility from consuming the good.

the higher the price of the good.

Both a) and b)

14.

1 point

How do you determine the elasticity of demand?

ratio of the percent change in the quantity of a good demanded

15.

1 point

Which of the following is an example of the "new protectionism"?

voluntary export restraints

orderly marking agreements

antidumping rules

All of the above

16.

1 point

The resources oil, gold and coal are classified as _______.

Land

Labor

Capital

None of the above

17.

1 point

Suppose the price of hamburgers increases by 1% and the quantity demanded falls by 2%.

Demand is elastic

Demand is inelastic

Total Revenue will decrease

Both a) and c)

18.

1 point

If one country has an absolute disadvantage in the production of all goods, then

There will be no specialization

This country will gain from trade, but no other country will benefit

This country will not trade with any other country

This country will gain if it specializes in producing and exports a good in which it has a comparative advantage

19.

1 point

Has many firms, all small

Perfect Competition

Monopolistic Competition

Oligopoly

Both a) and b)

20.

1 point

What is the Law of Demand?

an inverse relationship between price and quality demanded

an inverse relationship between price and quantity demanded

a direct relationship between price and quality demanded

a direct relationship between price and quantity demanded

21.

1 point

Clean Air Act amendments in 1977 require use of scrubbing to reduce emissions at any new power plant. This policy illustrates which of the following?

The Coase theorem in practice

A pure cap-and-trade system

How special interests can benefit from a command-and-control approach

Successful implementation of emissions charges

22.

1 point

If the cross price elasticity of demand for good Q with respect to the price good Z is -1.9, the goods are ____.

inferior goods

substitutes

normal goods

compliments

23.

1 point

Price ceilings

cause shortages

cause surpluses

24.

1 point

Price floors

cause shortages

cause surpluses

25.

1 point

There is too much pollution in an industry when

The marginal external cost is zero

None of the above

The marginal external cost of pollution equals the marginal cost of pollution abatement

The marginal external cost of pollution exceeds the marginal cost of pollution abatement

26.

1 point

Protectionism leads to

Increases in the gains from trade

higher prices for consumers of imported goods

higher profits among domestic producers of import-competing goods

Both b) and c)

27.

1 point

If the dollar appreciates against the Euro, the dollar price of German produced cars will increase.

True

False

28.

1 point

Has few firms, at lease some of them large

Monopoly

Perfect Competition

Monopolistic Competition

Oligopoly

29.

1 point

A market is which of the following?

defined by government

an illegal association of people

never used in economics

any arrangement people have for trading

30.

1 point

The tendency to prefer simpler theories to more complex ones is known as ____.

Bounded rationlity

Unbounded rationality

Ockham's razor

None of the Above

31.

1 point

The income effect during happy hours arises from which of the following?

The increase in real income caused by a decrease in the price of Yuengling.

The increase in marginal utility resulting from an increase in real income.

The substitution of Yuengling for chicken wings when the prices of goods change.

None of the above.

32.

1 point

If the market for kidneys is legalized, lives will be saved.

True

False

33.

1 point

Ceteris paribus means

for certain parameters

holding all other things constant

let the buyer beward

making all the necessary changes

34.

1 point

Bounded rationality means that people often follow their emotions rather than trying to make choices that best serve their objectives.

True

False

35.

1 point

When does the passage of a law prohibiting the use of a drug lead to an increase in expenditure on that drug?

The demand curve is a horizontal line

The demand for the drug is inelastic

The demand for the drug is elastic

The prohibition has no effect at all on the price of the drug

36.

1 point

The proposition that problems of externalities will be resolved efficiently through private exchange when transactions costs are low is known as

Coase theorem

Tort law

Pollution abatement

Property rights

37.

1 point

Nature of the product is differentiated

Monopolistic Competiton

Perfect Competition

Oligopoly

Monopoly

38.

1 point

An economist's statement that "the unemployment rate is 6%" is a/an ____.

opinion

normative statement

relative statement

positive statement

39.

1 point

What will be the result be if the price of a good is lower than the equilibrium price?

A shortage

A surplus

Excess demand

Both a) and c)

40.

1 point

Other things begin equal, a decrease in the cost of producing a good will cause which of the following?

A rightward shift in the supply curve

A decrease in the quantity supplied

A leftward shift in the supply curve

None of the Above

41.

1 point

Limiting the number of imported goods is known as a(n)

trading bloc

quota

tariff

none of the above

42.

1 point

Has one firm

Oligopoly

Perfect Competition

Monopolistic Competition

Monopoly

43.

1 point

An economic model

is a way of representing a theory

often involves the use of a graph or mathematical expression

is used to explain the relationship among observed facts

All of the above

44.

1 point

Public good lead to market failure because

People do not act rationally when using public goods

People trust one another too easily

Public goods are non-excludable

All of the Above

45.

1 point

Noise pollution from an airport near your house is an example of a(n) ____.

Efficient outcome

Externality

Monopoly

Public good

46.

1 point

Other things being equal, the more substitutes a good has, the more its demand will tend to be ____.

inelastic

unit elastic

elastic

income elastic

47.

1 point

If lettuce and radishes are complementary goods and the price of lettuce rises, how will consumers respond?

More lettuce and more radishes

Less lettuce and more radishes

Less lettuce and less radishes

More lettuce and less radishes

48.

1 point

A point outside a production possibilities curve is impossible to achieve.

True

False

49.

1 point

The satisfaction that people obtain from the consumption of goods and services is known as

Choice

Utility

Objectivity

Constraint

50.

1 point

Why do countries trade?

Comparative advantage

Opportunity costs

Efficiency in distrubition

None of the above