Exam #1 (pt. 1)

Question 1

Economics:
A. Helps us make business, career, and personal decisions
B. Provides a tool to choose between alternatives
C. Both of the above
D. Neither of the above

Answer 1

C.

Question 2

Economics exists because of:
A. Markets
B. Resources
C. Production
D. Scarcity

Answer 2

D.

Question 3

Economics is a :
A. Fine art
B. Science
C. Social science
D. Theory on how to increase the amount of profit a firm can make

Answer 3

C.

Question 4

Economics is:
A. Universally loved, since it allows us to maximize our happiness
B. Is all about making good decisions in our careers and lives
C. The allocations of scare resources among non-competitive ends
D. the dollar value of the national output of goods and services

Answer 4

B.

Question 5

An economic good is always:
A. Free
B. Scarce
C. Neither scarce nor free
D. Both scarce and free

Answer 5

B.

Question 6

Economic decisions are made by:
A. Relative prices
B. Absolute prices
C. Constant-quality prices
D. Economic price

Answer 6

A.

Question 7

Agriculture is:
A. Global in nature
B. Local in nature
C. About farming, but not food
D. A depressed industry due to ethanol

Answer 7

A.

Question 8

In a command economy, resources are allocated by:
A. Prices and returns
B. Elected officials
C. The dictator
D. Whoever is in charge

Answer 8

D.

Question 9

The massive consolidation of farms in the US is due to:
A. Substitutions of K for L
B. exports
C. Increases in the standard of living
D. Off-farm income

Answer 9

A.

Question 10

Microeconomics concerns:
A. The decisions of individual firms and households
B. Economic growth
C. Little, or small, economic decisions
D. Unemployment and inflation

Answer 10

A.

Question 11

The statement “Michael Phelps is the greatest athlete of all time” is an example of:
A. Positive economics
B. Normative economics
C. Microeconomics
D. Macroeconomics

Answer 11

B.

Question 12

Economists divide people into two broad groups:
A. Employed and unemployed
B. Capitalist and socialist
C. Rich and poor
D. Producers and consumers

Answer 12

D.

Question 13

The payment to capital is:
A. Land
B. Interest
C. Profit
D. Rent

Answer 13

B.

Question 14

An Iowa corn producer who has studied economics will desire to:
A. Maximize output
B. Apply the output-maximizing level fertilizer
C. Use the profit-maximizing level of all inputs, including fertilizer
D. Not use fertilizer, since the cost has increased so dramatically

Answer 14

C.

Question 15

If the price of corn increases:
A. Producers are made better off
B. Consumers are made better off
C. Producers and consumers are made better off
D. Producers benefit, but consumers lose

Answer 15

D.

Question 16

In economics, the term “capital” refers to:
A. Financial capital only
B. Physical and financial capital
C. Physical capital only
D. It depends on the situation

Answer 16

C.

Question 17

The statement “The price of soybeans is $8.21/bu” is an example of:
A. Positive economics
B. Normative economics
C. Microeconomics
D. Macroeconomics

Answer 17

A.

Question 18

All real-world economies are:
A. Market
B. Command
C. Mixed
D. None of the other answers

Answer 18

C.

Question 19

Scarcity:
A. Is the fundamental principle of economics
B. Applies to tangible goods, but not to intangible goods
C. Does not hold for the major religions of the world
D. Explains why we purchase iPods and trips to Florida

Answer 19

A.

Question 20

A market economy:
A. Allocates goods by prices
B. Allocates goods by firms
C. Bases decisions on what is good for everybody
D. A democratic nation

Answer 20

A.

Question 21

If China continues to have high rates of economic growth, then the following groups will benefit:
A. US farmers
B. US ranchers
C. US farmers and ranchers
D. Neither US farmers nor ranchers

Answer 21

C.

Question 22

The relationship between the price of a good and quality of a good consumed is:
A. Depends on the situation
B. Inverse
C. Direct
D. Unknown

Answer 22

B.

Question 23

Total revenues are equal to:
A. Price times quality in terms of dollars
B. Price times rent
C. Net profit
D. The amount of costs that a business firm incurs

Answer 23

A.

Question 24

If the price of organic food decreases relative to food produced with chemicals, then:
A. Farmers will plant more acres to organic and conventional food
B. Farmers will plant more acres to organic food
C. Farmers will plant more acres to conventional food
D. Farmers will continue to grow what they always have

Answer 24

C.

Question 25

A phone call is an example of a: A. Relative good B. Good C. Service D. Input

Answer 25

C.

Question 26

North Korea is an example of: A. A market economy B. A command economy C. A mixed economy D. An "Asian Tiger," a rapidly growing economy

Answer 26

C.

Question 27

The statement "Gambling is legal in Nevada" is an example of: A. Positive economics B. Normative economics C. Prescriptive economics D. Microeconomics

Answer 27

A.

Question 28

Scarcity is the fundamental concept of economics because: A. consumption is greater than production B. it forces us to choose C. the Law of Diminshing Returns D. necessities such as food and water are widely available

Answer 28

b.

Question 29

Free Trade Agreements: a. are formed to reduce or eliminate trade barriers between two nations b. have opened the way for increased exports of US Grain c. has benefits for agriculture producers d. all of the above

Answer 29

d.

Question 30

the term ceteris paribus in economics means: a. prices are fixed and constant b. a graph has only two variables in it c. holding all else constant d. equilibrium

Answer 30

c.

Question 31

the payment to rent is a. rent b. profit c. revenues d. interest

Answer 31

a.

Question 32

a noneconomic good is also called: a. a scarce good b. a free good c. a normative good d. a positive good

Answer 32

b.

Question 33

the payment to management is: a. interest b. profit c. capital d. rent

Answer 33

b.

Question 34

a command economy could NOT be: a. a dictatorship b. a democracy c. a market economy d. a republic

Answer 34

c.

Question 35

most farm families: a. rely on off-farm income b. are full-time farmers c. have lower levels of wealth relative to nonfarm families d. have a large number of children relative to nonfarm families

Answer 35

A.

Question 36

the price of cattle assumes: a. different qualities of livestock b. the same qualities of livestock c. different corn qualities used in cattle production d. relative prices are held constand

Answer 36

b.

Question 37

when the price of gasoline increases, ceteris paribus; a. the quantity demanded of gasoline will decrease b. the quantity demanded of gasoline will increase c. the quantity demanded of gasoline will stay the same d. not enough info to answer

Answer 37

a.

Question 38

economics assumes that all business firms desire to; a. max TR b. max TC c max profits d. max the well-being of the firm's workers

Answer 38

c.

Question 39

suppose that congress increased the min wage to $12.50/hr, ceteris paribus this will; a. increase the number of fast food workers b. decrease the number of fast food workers c. result in no change in the number of fast food workers d. move fast food workers to sit down dinning

Answer 39

b.

Question 40

mechanization of agriculture has: a. eliminated millions of agricultural jobs b. been due to relative price changes c. resulted in larger farms d. all of the above

Answer 40

d.

Question 41

Resources are: A. Plentiful B. Used to produce inputs C. Scarce D. Abundant in high-income nations

Answer 41

C.

Question 42

If the price of corn increases relative to