micro

Question 1

The presence of market failures implies that:

Answer 1

there is an active role for government, even in a market system.

Question 2

If an economy is operating on its production possibilities curve for consumer goods and capital goods, this means that:

Answer 2

it is possible to produce more capital goods.

Question 3

Which of the following most closely relates to the idea of opportunity costs?

Answer 3

tradeoffs.

Question 4

A market system is also known as:

Answer 4

capitalism.

Question 5

The opportunity cost of producing the second unit of apple is:

Answer 5

2 oranges.

Question 6

A production possibilities curve shows:

Answer 6

the maximum amounts of two goods that can be produced given available resources and technology.

Question 7

The study of economics is primarily concerned with:

Answer 7

choices that are made in seeking the best use of limited resources.

Question 8

Other things equal, an increase in a consumer’s money income:

Answer 8

shifts her budget line rightward because she can now purchase more of both products.

Question 9

Joe says that ‘An increase in the federal personal income tax lowers households’ disposable income.’ Tim argues that ‘Taxes on cigarettes should be increased because smoking causes health issues.’ We can conclude that:

Answer 9

Tim’s statement is normative, but Joe’s statement is positive.

Question 10

Which of the following will result in an outward shift of the production possibilities curve?

Answer 10

An increase in the total amount of resources available.

Question 11

Private property:

Answer 11

encourages owners to maintain or improve their property, so as to preserve or enhance value.

Question 12

Economic growth may be represented by a (an):

Answer 12

Outward shift of the production possibilities curve.

Question 13

You should decide to go to a movie:

Answer 13

if the marginal benefit of the movie exceeds its marginal cost.

Question 14

Macroeconomics approaches the study of economics from the viewpoint of:

Answer 14

the aggregate economy.

Question 15

The two basic markets shown by the simple circular flow model are:

Answer 15

resource market and product market.

Question 16

‘Consumer sovereignty’ refers to the:

Answer 16

idea that the decisions of producers must ultimately conform to consumer demands.

Question 17

In terms of the circular flow diagram, businesses obtain revenue through the _____ market and make expenditures in the _____ market.

Answer 17

output; input.

Question 18

If the production possibilities curve is a straight line:

Answer 18

The opportunity cost of producing one more unit of goods is constant.

Question 19

Cuba is a command economy that suffered a decline in economic growth because of a cut in support from the former Soviet Union when it collapsed. As a consequence, Cuba:

Answer 19

Experienced an inward shift of its production possibilities curve.

Question 20

Which of the following is a distinguishing feature of a command system?

Answer 20

government ownership of resources.

Question 21

How is the economic perspective reflected in lines for fast food?

Answer 21

Customers select the shortest line because they believe it will reduce their time cost of obtaining food.

Question 22

The invisible hand refers to the:

Answer 22

notion that, under competition, decisions motivated by self-interest promote the social interest.

Question 23

If consumer desire for product X rises, all of the following will occur except:

Answer 23

a reduction in the quantity of resources employed by industry X.

Question 24

Which of the following best illustrates the circular flow model in action?

Answer 24

All of these answers illustrate the workings of the circular flow model.

Question 25

Microeconomics:

Answer 25

is concerned with individual economic units and specific markets.

Question 26

According to the concept of the 'invisible hand,' if Susie opens and operates a profitable childcare center, then:

Answer 26

she has served society's interests by providing a desired good or service.

Question 27

Joe sold gold coins for $2,500 that he bought a year ago for $2,500. He says, 'At least I didn't lose any money on my financial investment.' His economist friend points out that in fact he did lose money, because he could have received a 1 percent return on the $2,500 if he had bought a bank certificate of deposit instead of the coins. The economist's analysis in this case incorporates the idea of:

Answer 27

opportunity costs.

Question 28

Economic systems differ according to which two main characteristics?

Answer 28

Who owns factors of production, and the methods used to coordinate economic activity.

Question 29

Broadly defined, competition involves:

Answer 29

independently acting buyers and sellers and freedom to enter or leave markets.

Question 30

Which of the following is not one of the five fundamental questions?

Answer 30

What prices will be charged for goods and services?

Question 31

An economic system:

Answer 31

is a particular set of institutional arrangements and a coordinating mechanism used to respond to the economizing problem.

Question 32

The market system's answer to the fundamental question 'How will the goods and services be produced?' is essentially:

Answer 32

Using the least-cost production techniques.

Question 33

A command system is

Question 34

What is a plan or scheme that allows a firm to make money at some other firm's expense?

Answer 34

A plan or scheme that allows a firm to make money at some other firm's expense.

Question 35

What is the market system's answer to the question 'How will the goods and services be produced?'

Answer 35

Using the least-cost production techniques.

Question 36

What is a command system also known as?

Answer 36

Both communism and socialism.