Principles of Microeconomics - Chapter 1 & 2 Quiz

Which of the following is not listed in the book as a reason to study economics?

to learn how to make lots of money

Among the fundamental concepts in economics are:

A) efficient markets

B) marginalism

C) opportunity cost

D) all of the above

D) All of the above

Which of the following is the best definition of economics?

the study of how individuals and societies choose to use the scarce resources that nature and previous generations have provided.

Which of the following statements is not correct?

If poverty were eliminated, there would be no reason to study economics.

Suppose that you purchased a ticket to a jazz festival for $100 from an online ticket broker. Once you arrived at the festival, you discovered that parking costs you an additional $15. In this situation, the additional $15 you pay for parking is an example of:

Marginal Cost

The concept of opportunity cost:

can be applied to the analysis of any decision-making process.

Opportunity cost is:

that which we forgo, or give up, when we make a choice or a decision.

If you eat at a sushi restaurant that charges $20 for its all-you-can-eat sushi special, then the marginal cost of your 10th piece of sushi is:

Zero.

If information is less costly and more easily available, then usually this:

Makes markets more efficient

An efficient market is a market in which:

profit opportunities are eliminated almost instantaneously.

Marginalism is:

the process of analyzing the additional costs or benefits arising from a decision.

Which of the following is an opportunity cost of attending college?

the income you could have earned if you didn't attend college

The government should extend the duration of unemployment benefits to those workers who lost their jobs due to outsourcing. This statement is best described as:

a normative statement.

Which of the following is a normative question?

To reduce the regressive nature of the gasoline excise tax, should the portion of the gasoline excise tax paid by high-income individuals be increased?

The statement "the unemployment rate is 5.1%" is an example of a:

Positive statement

Capital, as economists use the term:

refers to things that have already been produced that are in turn used to produce other goods and services.

The concept of opportunity cost is based on the principle of:

Scarcity

Someone has a comparative advantage in producing a good if she can produce that good:

at a lower opportunity cost.

Which of the following does not constitute an act of "investment" as economists use the term?

A retiree buys 50 shares of stock at $10 a share and then sells the stock at a profit for $20 a share.

An example of forgoing present benefits in order to receive future benefits is:

Saving

When two people trade:

they both expect to be made better off by the exchange.

If the unemployment rate increases from 10% to 14%, the economy will:

move away from the ppf toward the origin.

Periods of less than full employment correspond to:

points underneath the ppf.

In terms of the production possibility frontier, an increase in productivity attributable to new technology would best be shown by:

the production possibility frontier shifting outward, away from the origin.

An economy produces capital goods and consumer goods. This economy is operating at a point on its production possibility frontier associated with a small amount of capital goods and a large amount of consumer goods. This is most likely to be a:

"poor" country because such a nation has difficulty devoting many resources to the production of capital goods.

An economy in which a central authority draws up a plan that establishes what will be produced and when, sets production goals, and makes rules for distribution is a:

Command Economy

An economy in which individual people and firms pursue their own self-interest without any central direction or regulation is a(n):

laissez-faire economy.

Which of the following is an element of a command economy?

Production decisions are centralized.

In a laissez-faire economy, ________ what gets produced, how it is produced, and who gets it.

the behavior of buyers and sellers determines

An institution through which buyers and sellers interact and engage in exchange is

A market

Consumer sovereignty:

is the idea that consumers determine what is produced in the economy through their demands.

In a free-market system, the amount of output that any one household gets depends on its:

Income & Wealth

The basic coordinating mechanism in a free-market system is:

Price.