Econ prep test 2

1.

1 point

Allocative efficiency occurs at a specific point on the PPF, a point to where you cannot produce more of one good without giving up a good you value more highly

True

False

2.

1 point

Which of the following always lowers the equilibrium price?
a) a decrease in demand combined with an increase in supply
b) an increase in demand combined with a decrease in supply
c) a decrease in both demand and supply
d) an increase in both demand and supply

a decrease in demand combined with an increase in supply

an increase in demand combined with a decrease in supply

a decrease in both demand and supply

an increase in both demand and supply

3.

1 point

The iron law of price is that it must rise before it can fall when a shortage occurs

True

False

4.

1 point

When china builds a dam using few machines and a great deal of labor, it is answering the ____ question

"for whom"

"how"

"what"

"where"

5.

1 point

The economic school of thought that emphasizes the role of market surface in today´s economic problem is called the ___ school

conservative

classical

keynesian

federalist

6.

1 point

Which of the following causes the production possibilities frontier to have a bowed out, curvilinear shape?

the point that moving along the PPF is held constant

the scarcity of resources

the assumption that resources are not specialized

the assumption that resources are specialized and not perfect substitutes for each other

7.

1 point

Productive or technical efficiency occurs

any point on the production possibilities curve

at a specific point (i.e a specific mix of production) on the production possibilities curve (frontier) that is valued above all alternatives

Inside the PC curve (frontier)

all of the above

none of the above

8.

1 point

The loss of the highest valued alternative defines the concept of:

entrepreneurship

marginal benefit

opportunity cost

scarcity

9.

1 point

The gains-from-trade redistribution that occurs in a monopoly ceiling is from the buyers to the seller

True

False

10.

1 point

A change in which of the following shifts the demand curve?

the price of the resources used to produce the product

the technology with which the product is produced

the numbers of sellers in the marked

average household incomes

11.

1 point

The economic school of thought that emphasizes the role of government failure in today’s economic problems is called the ____ school

classical

keynesian

federalist

conservative

12.

1 point

The term ceteris paribus means

the study of scarcity and choice

all other things remaining equal

the greatest good for all

value free and testable

13.

1 point

Which of the following best defines the subjects of economics

the science that study unemployment, inflation, and economic stability

the art of making money

the study of choices made to cope with scarcity

the study of choices that businesses make to maximize profit

14.

1 point

According to your instructor (class discussion), the “bounce” theory of economics is supported by

Keynesian economists and many democrats

neither classical economists or Keynesians

both classical economists or Keynesians

classical economists and many Republicans

15.

1 point

Microeconomics focuses on all of the following EXCEPT the

hiring decisions made by a business

effect on cigarette sales of an increase in the tax of cigarettes

effect on inflation of increasing the money supply

purchasing decisions made by an individual consumer

16.

1 point

as a person consumes more and more of a good, the

the price of a good falls

marginal benefit increase or decrease depending on whether or not the economy is on the PPF

marginal benefit decreases

marginal benefit increases

17.

1 point

Scarcity arises from

exploration

inefficient production

limited resources and limitless wants

limited wants and limitless resources

18.

1 point

Consumer sovereignty determines the “what” in the economic question in a free market capitalist economic system

True

False

19.

1 point

If the numbers of sellers increase in a market (ceteris paribus)

upply increases, price falls, and quantity demanded increases

demand decreases, price decreases, and quantity supplied decreases

supply decreases, price rises, and quantity demanded decreases

demand increases, price increases, and quantity supplied increases

20.

1 point

In economics the term “Capital”, refers to

mineral resources

the money in one's pocket

consumer goods

buildings and equipment

21.

1 point

A change in which of the following would NOT change the supply curve for sneakers

an increase in the price of sneakers

an increase in technology for making sneakers

an increase in the price of rubber, used to produce sneakers

none of the above, that is, each change shifts the supply curve

22.

1 point

Consumer surplus can be defined as demand price minus the market price for a market transaction

True

False

23.

1 point

A decrease in technology for producing person computers leads to

a decrease in the supply for personal computers (supply falls, price rises, and quantity supplied decreases)

no effect on demand or supply

a decrease in the supply for personal computers (supply falls, price rises, and quantity demanded decreases)

a decrease in the demand for personal computers (demand falls, price falls, and quantity supplied falls)

an increase in the demand for personal computers (demand rises, price rises, and quantity supplied rises)

24.

1 point

An increase in supply combined with no change in demand

results in only a movement rightward from the supply curve

raises the equilibrium price

lowers the equilibrium price

decreases demand because the supply curve does not shift

25.

1 point

As an economic concept, Scarcity applies to

time but not money

neither time nor money

money but not time

both time and money

26.

1 point

which function of government provides for the actual government production and provision of goods and services

allocative

infrastructure for free markets

stabilization

redistribution

27.

1 point

Technological progress makes the production possibilities frontier

shift outward from the origin

become more linear and less bowed

shift inward toward the origin

become less linear and more bowed

28.

1 point

The law of demand states that, other things remaining the same, the quantity demanded for any good is:

irectly related to the supply of the good

positively related to the price

inversely related to the price

directly related to the price

29.

1 point

Resource use is allocatively efficient

whenever marginal cost exceeds marginal benefit

when marginal benefit equals marginal cost

whenever marginal benefit exceeds marginal cost

when the maximum possible quantity is being produced