econ midterm questions

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Part 1

Which of the following statements about scarcity is​ true?

Part 2

A.

Scarcity is not a problem for the wealthy.

B.

Scarcity is only a problem when a country has too large a population.

C.

Scarcity only arises when there is a wide disparity in income distribution.

D.

Scarcity refers to the situation in which unlimited wants exceed limited resources.

Scarcity is the fundamental economic problem of having seemingly unlimited human wants in a world of limited resources.

D

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Part 1

Economics is the study of the​ ________ people make to attain their​ goals, given their​ ________ resources.  

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Part 1

A.

​income; available

B.

​decisions; household

C.

​purchases; unlimited

D.

​choices; scarce

choices; scarce resources.

The idea that because of​ scarcity, producing more of one good or service means producing less of another good or service refers to the economic concept of

Part 2

A.

efficiency.

B.

optimization.

C.

equity.

D.

a​ trade-off.

a trade-off.

The​ highest-valued alternative that must be given up to engage in an activity is the definition of

Part 2

A.

opportunity cost.

B.

economic equity.

C.

marginal cost.

D.

marginal benefit.

opportunity cost.

Trademinus−offs

force society to make choices when answering what three fundamental​ questions?

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Part 1

A.

Who gets​ jobs; what wages do workers​ earn; and who owns what​ property?

B.

What goods and services to​ produce; how will these goods and services be​ produced; and who receives​ them?

C.

How much will be​ saved; what will be​ produced; and how can these goods and services be fairly​ distributed?

D.

What will be the prices of goods and​ services; how will these goods and services be​ produced; and who will receive​ them?

What goods and services to​ produce; how will these goods and services be​ produced; and who receives​ them?

Which of the following is a positive economic​ statement?

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Part 1

A.

The government should revamp its immigration policies.

B.

Raising the tax on gasoline raises the selling price of gasoline.

C.

U.S. citizens should only buy products which are produced in the United States.

D.

The government should ban the production and sale of incandescent light bulbs.

Raising the tax on gasoline raises the selling price of gasoline.

Which of the following is a normative economic​ statement?

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Part 1

A.

With rising home prices and falling mortgage interest​ rates, the amount of home foreclosures has decreased.

B.

The federal government is considering increasing regulations on the use of fossil fuels to promote the use of wind power.

C.

Farmers should not be allowed to grow and sell

genetically minus−modified

crops.

D.

Rising corn prices have increased the price of

corn minus−based

ethanol.

Farmers should not be allowed to grow and sell genetically modified crops.

Which of the following statements about positive economic analysis is true​ ?

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Part 1

A.

There is much less disagreement among economists over normative economic analysis than over positive economic analysis.

B.

Positive analysis uses an economic model to estimate the costs and benefits of different course of actions.

C.

There is much more disagreement among economists over positive economic analysis than over normative economic analysis.

D.

Unlike positive economic​ analysis, normative economic analysis can be tested.

Positive analysis focuses on objective statements that can be tested and validated, often using economic models to compare potential outcomes. Positive analysis uses an economic model to estimate the costs and benefits of different course of actions.

Microeconomics is the study of

Part 2

A.

how households and firms make choices.

B.

the economy as a whole.

C.

the global economy.

D.

topics such as​ unemployment, inflation, and economic growth.

individual decisions and resource allocation.

how households and firms make choices.

Which of the following is a macroeconomic​ question?

Part 2

A.

What determines the production of electric​ scooters?

B.

What determines the wage of auto​ workers?

C.

What factors determine the price of​ carrots?

D.

What determines the inflation​ rate?

A question related to the performance or behavior of the economy as a whole, focusing on aggregate measures such as inflation, unemployment, and national output.

What determines the inflation​ rate?

Which of the following is a macroeconomic​ question?

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Part 1

A.

How is the production quantity of snowboards​ determined?

B.

What determines the salaries of Wall Street​ executives?

C.

What determines the growth rate of gross domestic​ product?

D.

What factors determine the price of electronic​ cigarettes?

A question concerning overall economic performance, typically focusing on national and aggregate indicators. What determines the growth rate of gross domestic​ product?

Question content area

Part 1

The points outside the production possibilities frontier are

Part 2

A.

attainable.

B.

efficient.

C.

unattainable.

D.

inefficient.

unattainable

points that cannot be produced with current resources and technology.

Increasing opportunity cost is represented by a​ ________ production possibilities frontier.

Part 2

A.

vertical

B.

linear

C.

bowed out

D.

bowed in

curved outward
bowed out

An inward shift of a​ nation's production possibilities frontier can occur due to

Part 2

A.

an increase in the labor force.

B.

a natural disaster like a hurricane or bad earthquake.

C.

a reduction in unemployment.

D.

a change in the amounts of one good desired.

a decline in resource availability or productivity.

a natural disaster or significant economic downturn.

Without an increase in the supply of the factors of​ production, how can a nation achieve economic​ growth?

Part 2

A.

by increasing the prices of factors of production

B.

by lowering the prices of factors of production

C.

through technological advancement which enables more output with the same quantity of resources

D.

by producing more​ high-value goods and fewer​ low-value goods

through technological advancement which enables more output with the same quantity of resources

________ exists because unlimited wants exceed the limited resources available to fulfill those wants.

Question content area bottom

Part 1

A.

Productive efficiency

B.

Economic growth

C.

Scarcity

D.

The command economy

Scarcity

The concept of​ ________ is that the economic cost of using a factor of production is the alternative use of that factor that is given up.

Question content area bottom

Part 1

A.

entrepreneurship

B.

opportunity cost

C.

normative economics

D.

marginal cost

opportunity cost

The production possibilities frontier shows

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Part 1

A.

the various products that can be produced now and in the future.

B.

what people want firms to produce in a particular time period.

C.

what an equitable distribution of products among citizens would be.

D.

the maximum attainable combinations of two products that may be produced in a particular time period with available resources.

the maximum attainable combinations of two products that may be produced in a particular time period with available resources.

________ shows that if all resources are fully and efficiently​ utilized, more of one good can be produced only by producing less of another good.

Question content area bottom

Part 1

A.

Absolute advantage

B.

The production possibilities frontier model

C.

Comparative advantage

D.

The mixed market system

The production possibilities frontier model

Horatio can produce either a combination of 15 bird houses and 25 wind chimes or a combination of 30 bird houses and 15 wind chimes. If he now produces 30 bird houses and 15 wind​ chimes, what is the opportunity cost of producing an additional 10 wind​ chimes?

Question content area bottom

Part 1

A.

2 bird houses

B.

15 bird houses

C.

30 bird houses

D.

45 bird houses

To produce 10 additional wind chimes, Horatio must give up 15 bird houses, demonstrating the concept of opportunity cost in production.

If the best surgeon in town is also the best at cleaning swimming​ pools, then according to the theory of comparative​ advantage, this person should

Part 2

A.

specialize in cleaning swimming pools because it is more​ labor-intensive.

B.

specialize in being a surgeon because its opportunity cost is lower.

C.

split his time evenly between being a surgeon and cleaning swimming pools.

D.

pursue the activity he enjoys more.

specialize in being a surgeon because his opportunity cost is lower for medical services.

Specializing in the production of a good or service in which one has a comparative advantage enables a country to do which of the​ following?

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Part 1

A.

produce a combination of goods that lies outside its own production possibilities frontier

B.

increase the variety of products that it can produce with a decrease in resources

C.

consume a combination of goods that lies outside its own production possibilities frontier

D.

never have to engage in trade with other nations

gain from trade and consume more than it could produce on its own. consume a combination of goods that lies outside its own production possibilities frontier

Which of the following is a factor of​ production?

Question content area bottom

Part 1

A.

an oven in a bakery

B.

a share of General​ Motors' stock

C.

a​ $500 Treasury bond

D.

a credit card

an oven in a bakery

Question content area

Part 1

An example of a factor of production is

Part 2

A.

a worker hired by Dell.

B.

stock issued by Dell.

C.

a computer produced by an Dell.

D.

the computers exported by Dell.

a worker hired by Dell.

By drawing a demand curve with​ ________ on the vertical axis and​ ________ on the horizontal​ axis, economists assume that the most important determinant of the demand for a good is the​ ________ of the good.

Part 2

A.

​quantity; price; price

B.

​quantity; price; quantity

C.

​price; quantity; price

D.

​price; quantity; quantity

price; quantity; price

The law of demand​ implies, holding everything else​ constant, that as the price of bagels​ increases,

Part 2

A.

the demand of bagels will increase.

B.

the quantity of bagels demanded will decrease.

C.

the quantity of bagels demanded will increase.

D.

the demand for bagels will decrease.

the quantity of bagels demanded will decrease.

Question content area

Part 1

If a demand curve shifts to the​ right, then

Part 2

A.

quantity demanded has increased.

B.

demand has decreased.

C.

quantity demanded has decreased.

D.

demand has increased.

demand has increased.

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Part 1

A movement along the demand curve for toothpaste would be caused by

Part 2

A.

a change in the price of toothbrushes.

B.

a change in the price of toothpaste.

C.

a change in consumer income.

D.

a change in population.

a change in the price of toothpaste, resulting in a change in the quantity demanded for toothpaste.

If an increase in income leads to in an increase in the demand for peanut​ butter, then peanut butter is

Part 2

A.

a necessity.

B.

a neutral good.

C.

a normal good.

D.

a complement.

a normal good.

Elvira decreased her consumption of bananas when the price of peanut butter increased. For​ Elvira, peanut butter and bananas are

Part 2

A.

both inferior goods.

B.

both luxury goods.

C.

complements.

D.

substitutes.

complements.

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Part 1

Tomas increased his consumption of potato chips when the price of pistachios increased. For​ Tomas, potato chips and pistachios are

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Part 1

A.

both luxury goods.

B.

both inferior goods.

C.

complements.

D.

substitutes.

substitutes.

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Part 1

If in the market for peaches the supply curve has shifted to the​ left,

Part 2

A.

the quantity of peaches supplied has increased.

B.

the supply of peaches has increased.

C.

the quantity of peaches supplied has decreased.

D.

the supply of peaches has decreased.

the supply of peaches has decreased.

What is the difference between an​ 'increase in​ supply' and an​ 'increase in quantity​ supplied'?

Part 2

A.

An​ "increase in​ supply" means the supply curve has shifted to the right while an​ "increase in quantity​ supplied" means at any given price supply has increased.

B.

An​ "increase in​ supply" means the supply curve has shifted to the right while an​ "increase in quantity​ supplied" refers to a movement along a given supply curve in response to an increase in price.

C.

There is no difference between the two​ terms; they both refer to a movement along a given supply curve.

D.

There is no difference between the two​ terms; they both refer to a shift of the supply curve.

An "increase in supply" indicates a rightward shift of the supply curve, while an "increase in quantity supplied" refers to a movement along the existing supply curve due to price changes.

Question content area

Part 1

At a​ product's equilibrium price

Part 2

A.

the quantity of the product demanded is less than the quantity of the product supplied.

B.

the​ product's demand curve is the same as the​ product's supply curve.

C.

the​ product's demand curve crosses the​ product's supply curve.

D.

the quantity of the product demanded is greater than the quantity of the product supplied.

the quantity demanded equals the quantity supplied. the​ product's demand curve crosses the​ product's supply curve.

Question content area top

Part 1

At market​ equilibrium,

Question content area bottom

Part 1

A.

shortages are greater than surpluses.

B.

surpluses are greater than shortages.

C.

demand equals supply.

D.

quantity demanded equals quantity supplied.

the quantity demanded equals the quantity supplied and there are no forces pressing the market to change.

Question content area top

Part 1

The cost of producing cigarettes in the United States has increased and at the same​ time, more and more Americans are choosing to not smoke cigarettes. Which of the following best explains the effect of these events in the cigarette​ market?

Question content area bottom

Part 1

A.

Both the supply and demand curves have shifted to the left. As a​ result, there has been a decrease in the equilibrium quantity and an uncertain effect on the equilibrium price.

B.

The supply curve has shifted to the right and the demand curve has shifted to the left. As a​ result, there has been an increase in the equilibrium price and an uncertain effect on the equilibrium quantity.

C.

The supply curve has shifted to the right and the demand curve has shifted to the left. As a result there has been an increase in the equilibrium quantity and an uncertain effect on the equilibrium price.

D.

Both the supply and demand curves have shifted to the right. As a​ result, there has been an increase in the equilibrium quantity and an uncertain effect on the equilibrium price.

Both the supply and demand curves have shifted to the left. As a​ result, there has been a decrease in the equilibrium quantity and an uncertain effect on the equilibrium price.

Question content area top

Part 1

A decrease in the demand for soft drinks due to changes in consumer​ tastes, accompanied by an increase in the supply of soft drinks as a result of reductions in input​ prices, will result in

Question content area bottom

Part 1

A.

an increase in the equilibrium quantity of soft​ drinks; the equilibrium price may increase or decrease.

B.

a decrease in the equilibrium price of soft​ drinks; the equilibrium quantity may increase or decrease.

C.

a decrease in the equilibrium price of soft drinks and no change in the equilibrium quantity.

D.

a decrease in the equilibrium quantity of soft drinks and no change in the equilibrium price.

a decrease in the equilibrium price of soft​ drinks; the equilibrium quantity may increase or decrease.

Let D ​= demand, S​ = supply, P​ = equilibrium​ price, Q ​= equilibrium quantity. What happens in the market for electric vehicles if the government offers incentives to manufacturers to produce more electric​ vehicles?

Part 2

A.

D​ increases, S no​ change, P and Q increase

B.

S​ increases, D no​ change, P​ decreases, Q increases

C.

D and S​ increase, P and Q decrease

D.

D no​ change, S​ increases, P​ decreases, Q decreases

S​ increases, D no​ change, P​ decreases, Q increases

Assume that both the demand curve and the supply curve for 3D printers shift to the right but the demand curve shifts more than the supply curve. As a result

Part 2

A.

both the equilibrium price and quantity of 3D printers will increase.

B.

the equilibrium price of 3D printers may increase or​ decrease; the equilibrium quantity will increase.

C.

the equilibrium price of 3D printers will​ decrease; the equilibrium quantity may increase or decrease.

D.

the equilibrium price of 3D printers will​ increase; the equilibrium quantity may increase or decrease.

the equilibrium price of 3D printers will increase; the equilibrium quantity will increase.

Jaycee Jeans sold 40 pairs of jeans at a price of​ $40. When it lowered its price to​ $20, quantity sold increased to 60 pairs. Calculate the absolute value of the price elasticity of​ demand? Use the midpoint formula.

Part 2

A.

0.6

B.

0.53

C.

1

D.

1.67

0.6

Question content area

Part 1

At a price of​ $100, Beachside Canoe Rentals rented 11 canoes. When it increased its rental price to​ $125, 9 canoes were rented. Calculate the absolute value of the price elasticity of demand for canoe rentals using the midpoint formula.

Part 2

A.

0.75

B.

2

C.

1.25

D.

0.9

0.9

If at a price of​ $24, Octavia sells 36​ home-grown orchids and at​ $30 she sells 24​ home-grown orchids, the demand for her orchids is

Part 2

A.

unit elastic.

B.

inelastic.

C.

perfectly elastic.

D.

elastic.

elastic.

Economists use the concept of​ ________ to measure how one economic​ variable, such as​ quantity, responds to a change in another economic​ variable, such as price.

Question content area bottom

Part 1

A.

elasticity

B.

slope

C.

relativity

D.

efficiency

elasticity

The price elasticity of demand is equal to

Question content area bottom

Part 1

A.

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

B.

the change in quantity demanded divided by the change in price.

C.

the value of the slope of the demand curve.

D.

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

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

Total revenue equals

Part 2

A.

price per unit times quantity supplied.

B.

price per unit times quantity sold.

C.

change in price per unit times quantity sold.

D.

price per unit times change in quantity sold.

price per unit times quantity sold.

Question content area

Part 1

If a firm wanted to know whether the demand for its product was​ elastic, unit​ elastic, or​ inelastic, then the firm could

Part 2

A.

talk to its customers.

B.

not do anything as there is no way to find an elasticity value.

C.

survey competitors and ask them what they think demand elasticity for the product is.

D.

change price a little bit and observe what happens to total revenue.

analyze the impact of a price change on quantity demanded to determine elasticity.

change price a little bit and observe what happens to total revenue.

The price elasticity of demand for bread is estimated at

minus−0.40.

What happens to sales revenue if the price of bread​ rises?

Part 2

A.

It stays the same.

B.

It rises.

C.

It falls.

D.

It drops to zero.

it rises

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Part 1

Economists assume that the goal of consumers is to

Part 2

A.

make themselves as well off as possible.

B.

consume as much as possible.

C.

do as little work as possible to survive.

D.

spend all their income.

maximize their utility. make themselves as well off as possible.

Question content area

Part 1

As a consumer consumes more and more of a product in a particular time​ period, eventually marginal utility

Part 2

A.

is constant.

B.

rises.

C.

declines.

D.

fluctuates.

declines, meaning each additional unit provides less satisfaction than the previous one.

Question content area

Part 1

​If, as a person consumes more and more of a​ good, each additional unit adds less satisfaction than the previous unit​ consumed, we are seeing the workings of

Part 2

A.

the law of demand.

B.

the law of diminishing marginal utility.

C.

the law of increasing marginal opportunity cost.

D.

the law of supply.

the law of diminishing marginal utility.

Question content area

Part 1

Which of the following is likely to occur as the result of the law of diminishing marginal​ utility?

Part 2

A.

Wesley enjoyed his second bottle of iced tea less than his first​ bottle, other things constant.

B.

Hudson enjoyed his second slice of pizza more than his first.

C.

​Petra's utility from her second apple was less than her satisfaction from her first orange.

D.

​Sabines' utility from her first granola bar is greater than​ Rachel's utility from her second granola bar.

Wesley enjoyed his second bottle of iced tea less than his first​ bottle, other things constant.

Question content area

Part 1

Consumers have to make tradeoffs in deciding what to consume because

Part 2

A.

there are not enough of all goods produced.

B.

the prices of goods vary.

C.

not all goods give them the same amount of satisfaction.

D.

they are limited by a budget constraint.

they are limited by a budget constraint.

If your total satisfaction increases when you consume another​ unit, your marginal utility must be

Part 2

A.

decreasing.

B.

increasing.

C.

negative.

D.

positive.

positive.