Chapter 1 Through 3

85 Questions  I  By Elissawery
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 Chapter 1 Through 3
I only got partway through chapter three on the this quiz, so be sure to study chap 4 and the second half of chapter 3 handout in addition to taking this quiz. I apologize for all the typos. . . I was getting impatient with the input of questions taking so long. I hope this helps you all!

  
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Questions and Answers

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  • 1. 
    "The Economy" refers to the sum of all our:
    • A. 

      Production activties

    • B. 

      Production, consumption and leisure activities

    • C. 

      Production and consumption activities

    • D. 

      Consumption and leisure activities


  • 2. 
    The fundamental problem of economics is:
    • A. 

      The law of increasing opportunity costs

    • B. 

      The scarcity of resources relative to human wants

    • C. 

      How to get government to operate efficiently

    • D. 

      How to create employment for everyone


  • 3. 
    The basic factors of production include:
    • A. 

      Land, labor, money, and capital

    • B. 

      Land, labor, money, and inputs

    • C. 

      Land and capital

    • D. 

      Land, labor, campital, and entrepreneurship


  • 4. 
    Capital, as economists use the term, refers to:
    • A. 

      The money needed to start a new business

    • B. 

      The costs of operating a business

    • C. 

      Shares of stock issued by businesses

    • D. 

      Final goods that are used to produce other goods and services


  • 5. 
    Economics is the study of how:
    • A. 

      Best to use society's scarce resources

    • B. 

      Society spends the income of individual

    • C. 

      Society purchases resources,given its macroeconomic goals

    • D. 

      Individual market participants decide what to produce given fixed resource constraints.


  • 6. 
    Opportunity cost may be defined as the:
    • A. 

      Goods or services that are forgone in order to obtain something else.

    • B. 

      Dollar prices paid for final goods and services.

    • C. 

      Dollar cost of producing a particular product

    • D. 

      Difference between wholesale and retail prices


  • 7. 
    A production-possibilities curve indicates the:
    • A. 

      Combinations of goods and services an economy is actually producting

    • B. 

      Maximum combinations of goods and services an economy can produce given available resources and technology

    • C. 

      Average combinations of goods and services an economy can produce given its available resources and technology.

    • D. 

      Maximum combinations of goods and services an economy can produce given unlimited resources


  • 8. 
    Production-possibilities curves demonstrate that:
    • A. 

      Producing more of one good implies a reduction in the potential production of another good.

    • B. 

      It is always possible to produce more of one good

    • C. 

      It is always possible to produce more of one good without producing less of another

    • D. 

      It is never possible to produce zero output


  • 9. 
    If an economy is producing on its production-possibilities curve,then producing:
    • A. 

      More of one good implies producting more of another good

    • B. 

      More of one good implies producting less of another good

    • C. 

      Less of one good implies producting less of another good

    • D. 

      More of one good implies shifting the curve toward the origin


  • 10. 
    Efficiency can be defined as the:
    • A. 

      Maximum resources used in producing a given output of level

    • B. 

      Maximum output of a good produced from the available resources

    • C. 

      Maximum ouput of a good produced if all resources are devoted to its production


  • 11. 
    If an economy is producing inside the production-possibilities curve,then:
    • A. 

      There is full employment of resources

    • B. 

      It is operating efficiently

    • C. 

      It can produce more of one good without giving up some of another good

    • D. 

      There are not enough resources available to produce more output


  • 12. 
    A technological advance would best be represented by:
    • A. 

      A shift outward of the production-possibilities curve

    • B. 

      A shift inward of the production-possibilities curve

    • C. 

      A movement from inside the production-possibilities curve to a point on the production-possibilities curve

    • D. 

      A movement from the production-possibilities curve to a point inside the production-possibilities curve


  • 13. 
    Which of the following will cause the production-possibilities curve to shift inward?
    • A. 

      An increase in population

    • B. 

      A decrease in the size of the labor force

    • C. 

      An increase in knowledge

    • D. 

      A technologocial advance


  • 14. 
    In a market economy,the question of HOW to produce is determined by:
    • A. 

      Government planners

    • B. 

      The production possibilities curve

    • C. 

      The least-cost method of production

    • D. 

      The method of production which uses the lease amount of labor


  • 15. 
    In a market economy,the people who receive the goods and services that are produced are those who:
    • A. 

      Need the goods and services the most

    • B. 

      Have the most political power

    • C. 

      Want the goods and services the most

    • D. 

      Are willing to pay the highest price


  • 16. 
    The market mechanism may best be defined as:
    • A. 

      The use of market prices and sales to signal desired output

    • B. 

      The use of market signals and government directives to select economic outcomes

    • C. 

      The process by which the production-possibilities curve shifts inward

    • D. 

      Price regulation by government


  • 17. 
    The invisible hand refers to:
    • A. 

      Intervention in the economy by the government bureaucrats we do not see and over whom we have no control

    • B. 

      Undiscovered natural resources

    • C. 

      The allocation of resources by market forces

    • D. 

      The person who has the responsibility to coordinate all the markets in a market economy


  • 18. 
    In a mixed economy like that in United States,the question of WHAT to produce is determined by:
    • A. 

      Government directives only

    • B. 

      Price signals and sales in markets only

    • C. 

      Both government directives,and price signals and sales in markets

    • D. 

      The invisible hand only


  • 19. 
    Which of the following canbe used to correct market failure?
    • A. 

      The market mechanism

    • B. 

      Laws and regulations

    • C. 

      Laissez-faire price policies

    • D. 

      Government failure


  • 20. 
    When government directives do not produce better economic outcomes,which of the following has occurred?
    • A. 

      Government failure

    • B. 

      Market failure

    • C. 

      Macroeconomic failure

    • D. 

      Scarcity


  • 21. 
    Macroeconomics focuses on the performance of:
    • A. 

      Individual consumers

    • B. 

      Governement agencies

    • C. 

      The overall economy

    • D. 

      All of the above


  • 22. 
    Which of the following are classified as microeconomic goals?
    • A. 

      Full employment,price stability,growth in output

    • B. 

      The welfare of individual consumers and business firms

    • C. 

      Production,pricing,and purchasing

    • D. 

      Land,labor and capital


  • 23. 

    At which point is society employing some of its available technology but not all of it?
    • A. 

      A

    • B. 

      B

    • C. 

      C

    • D. 

      D


  • 24. 

    At which point is society producin some of each type of structure but still producing inefficiently?
    • A. 

      A

    • B. 

      B

    • C. 

      C

    • D. 

      D


  • 25. 

    At which point might society be able to produce if new resources were discovered but cannot produce at with current resources?
    • A. 

      A

    • B. 

      B

    • C. 

      C

    • D. 

      D


  • 26. 

    An increase in the capacity to produce can be represented by a movement from:
    • A. 

      Point A to point B

    • B. 

      Point A to point C

    • C. 

      Point B to point C

    • D. 

      Point C to point F


  • 27. 

    Which of the following is true about the combination of mops and brooms represented?
    • A. 

      This economy will never be able to reach point E

    • B. 

      Point E is attainable if this economy uses more of its available resources

    • C. 

      Point E is attainable if this economy becomes more efficient

    • D. 

      Point E is attainable only if more resources become available or technological advances are made.


  • 28. 

    This economy will acheive efficiency in production at:
    • A. 

      Point D only

    • B. 

      Point G only

    • C. 

      Point J only

    • D. 

      Points D, G, and J


  • 29. 

    The cost of producing at point G rather than point D is:
    • A. 

      OA units of food

    • B. 

      KL units of clothing

    • C. 

      AB units of food

    • D. 

      OL units of clothing


  • 30. 

    Assume that Point X is associated with production of 500 cars and 1,000 trucks while Point Y is associated with production of 600 cars and 950 trucks.  If Point Z is associated with the production of 700 cars, then it is most reasonable to assume that Point Z is also associated with production of:
    • A. 

      1,100 trucks

    • B. 

      950 trucks

    • C. 

      900 trucks

    • D. 

      812 trucks


  • 31. 
    GDP is:
    • A. 

      Measured in physical units

    • B. 

      A measure of the economic growth rate

    • C. 

      A per capita measure

    • D. 

      The total vaue of all final goods ans services produced within a nation's borders in a given year.


  • 32. 
    Per capita GDP is:
    • A. 

      The sum of consumer goods, investment goods, government services, and net exports

    • B. 

      A dollar measure of the economics growth rateof a country

    • C. 

      The value of the factors of production used to produce output in a country

    • D. 

      A measure of output divided by the total population


  • 33. 
    Which of the following is an indicator of how much output the average person would get if all output were divided up evenly among the population?
    • A. 

      GDP

    • B. 

      Nominal GDP

    • C. 

      Per capita GDP

    • D. 

      Real GDP


  • 34. 
    Nearly half of the people on earth have incomes of less than:
    • A. 

      $20,000 per year

    • B. 

      $5,000 per year

    • C. 

      $2 per day

    • D. 

      $0.50 per day


  • 35. 
    The per capita GDP will always rise when:
    • A. 

      The population rises

    • B. 

      The rate of economic growth increases

    • C. 

      The is an increase in the rate at which the economy's labor force grows

    • D. 

      The rate of economic growth exceeds the rate of population growth


  • 36. 
    An expansion of production possibilities is known as:
    • A. 

      Possibility growth

    • B. 

      Factor mobility

    • C. 

      A market signal

    • D. 

      Economic growth


  • 37. 
    Which of the following sectors contributes the largest absolute amount to GDP in the United States?
    • A. 

      Farming

    • B. 

      Manufacturing

    • C. 

      Services

    • D. 

      Exports


  • 38. 
    Which of the following has contributed to a decline in the farming sector in the United States?
    • A. 

      Higher trade barriers

    • B. 

      Factor immobility

    • C. 

      The growing share of services in U.S. production

    • D. 

      The declining popularity of food products


  • 39. 
    Which of the following is one of the four major uses of total output?
    • A. 

      Services

    • B. 

      Consumption

    • C. 

      Agriculture

    • D. 

      Manufacturing


  • 40. 
    The four major uses of total output are consumption, investment, government purchases, and:
    • A. 

      Net exports

    • B. 

      The factors of production

    • C. 

      Saving

    • D. 

      Capital Stock


  • 41. 
    Gross demestic product includes all of the following except:
    • A. 

      Consumer goods and services

    • B. 

      State and local government purchases

    • C. 

      Exports

    • D. 

      Federal government expenditures on income transfers


  • 42. 
    Suppose during the course of a year an economy produces $11 trillion of consumer goods, $3 trillion of investment goods, $6 trillion in government services, and has $3 trillion of exports and $1 trillion of imports.  For this economy, GDP would be:
    • A. 

      $18 trillion

    • B. 

      $22 trillion

    • C. 

      $23 trillion

    • D. 

      $24 trillion


  • 43. 
    Which of the following expenditures is most important in expanding a country's production possibilities?
    • A. 

      Consumer goods

    • B. 

      Government services

    • C. 

      Net exports

    • D. 

      Investment goods


  • 44. 
    In order to attain higher living standard in the long run:
    • A. 

      The population of a country must grow slowly

    • B. 

      The level of GDP must increase even if the population growth is negative

    • C. 

      A country must devote some of its scarce resources to investment

    • D. 

      A country should export more goods than it imports


  • 45. 
    Changes in business inventories are:
    • A. 

      Included as part of consumption expenditures

    • B. 

      Included as part of investment expenditures

    • C. 

      Included as part of government expenditures

    • D. 

      Not included in GDP


  • 46. 
    The term income transfer refers to:
    • A. 

      A payment to an individual in exchange for newly produced goods or services

    • B. 

      A payment to an individual for which no current goods or services are exchanged

    • C. 

      A payment to an individual in return for current labor provided

    • D. 

      Federal income taxes because money is taken from individuals and paid to the government


  • 47. 
    Net exports are:
    • A. 

      The sum of exports and imports

    • B. 

      Equivalent to the value of exports minus the value of imports

    • C. 

      Positive if the U.S. economy imports more than it exports

    • D. 

      Positive if foreigners consume less of U.S. output thn U.S. residents consume of foreign output.


  • 48. 
    Comparative advantage refers to the ability to produce a good at a:
    • A. 

      Lower opportunity cost than your trading partner

    • B. 

      Higher opportunity cost than your trading partner

    • C. 

      Lower absolute cost of production than your trading partner

    • D. 

      Higher absolute cost than your trading partner


  • 49. 
    The term factor of production refers to:
    • A. 

      Only those goods that are produced and then used to produce other goods and services

    • B. 

      Labor only

    • C. 

      Any resource used to produce goods and services

    • D. 

      Factories and machinery only


  • 50. 
    How will an increase in the level of human capital, ceteris paribus, affect an economy's production-possibilities curve?
    • A. 

      Shift the curve inward

    • B. 

      Result in a movement from inside the curve toa point on the curve

    • C. 

      Shift the curve outward

    • D. 

      Result in a movement along the curve


  • 51. 
    Productivity is a measure of:
    • A. 

      Output per unit of input

    • B. 

      Output per dollar of input

    • C. 

      Input per unit of output

    • D. 

      Input per dollar of output


  • 52. 
    Productivity:
    • A. 

      Rises when the value of output rises relative to the cost of inputs

    • B. 

      Falls when the value of output rises relative to the cost of inputs

    • C. 

      Rises when the ratio of output to input increases

    • D. 

      Falls when factors of production cost more


  • 53. 
    Production processes that use a high ration of capital to labor inputs are referred to as:
    • A. 

      Labor-intensive

    • B. 

      Production-intensive

    • C. 

      Captial-intensive

    • D. 

      Factor-intensive


  • 54. 
    When workers move from one industry to another in response to demand changes, this is an example of:
    • A. 

      Factor quality

    • B. 

      Factor mobility

    • C. 

      Capital stock

    • D. 

      The decreasing investment in human capital


  • 55. 
    Outsourcing leads to:
    • A. 

      Increases in productivity and increases in total output.

    • B. 

      Increases in productivity and decreases in total output.

    • C. 

      Decreases in productivity and increases in total output.

    • D. 

      Decreases in productivity and decreases in total output.


  • 56. 
    Which of the following will contribute to accelerated growth for the U.S. economy in the future?
    • A. 

      A decrease in factor mobility.

    • B. 

      A decrease in the number of government sponsored student loans.

    • C. 

      An increase in foreign investment in the U.S.

    • D. 

      A decrease in tax credits for research and development.


  • 57. 
    The term externalities refers to:
    • A. 

      Black-market economic activity.

    • B. 

      The impact on markets of imported goods.

    • C. 

      The costs and benefits of a market activity bome by a third party.

    • D. 

      The inequitable distribution of income.


  • 58. 
    Goods that have spillover costs are overproduced because:
    • A. 

      The government has failed to establish rules for contracts.

    • B. 

      Most businesses are more concerned about profits than how the environment is affected.

    • C. 

      The government has failed to enforce contract provisions.

    • D. 

      The government is concerned about broad economic welfare.


  • 59. 
    When monopolies exist:
    • A. 

      Prices tend to be higher.

    • B. 

      Quality tends to be higher.

    • C. 

      Production tends to be higher.

    • D. 

      Externalities occur.


  • 60. 
    The result of government intervention in the market is that:
    • A. 

      Society is always better off

    • B. 

      The production-possibilities curve always shifts outward

    • C. 

      Society may be worse off

    • D. 

      Society is always worse off


  • 61. 
    Which ofthe following is a market transaction?
    • A. 

      A stock increases in value over the thirty years that is owned

    • B. 

      A college student purchases a laptop computer.

    • C. 

      Weather destroys a farmer‘s crops leaving the farmer unable to buy groceries.

    • D. 

      A radio station changes its programming from classical to rock.


  • 62. 
    A factor market is any place where:
    • A. 

      Finished goods are bought and sold.

    • B. 

      Land, labor, or capital is bought and sold.

    • C. 

      Finished services are bought and sold.

    • D. 

      Factories are bought and sold.


  • 63. 
    Lntemational participants:
    • A. 

      Take no part in American markets.

    • B. 

      Participate only in American product markets.

    • C. 

      Participate only in American factor markets.

    • D. 

      Participate in both American factor markets and American product markets.


  • 64. 
    A market in which final goods and services are exchanged is a:
    • A. 

      Public-goods market.

    • B. 

      Product market.

    • C. 

      Factor market,

    • D. 

      Labor market.


  • 65. 
    The four factors of production are:
    • A. 

      Labor, raw materials, capital, and money.

    • B. 

      Rent, wages, interest, and profit.

    • C. 

      Production, distribution, pricing, and marketing.

    • D. 

      Land, labor, capital, and entrepreneurship.


  • 66. 
    Which ofthe following statements about markets is true?
    • A. 

      Every market has a physical location.

    • B. 

      Every market has either a demand side or a supply side but not both.

    • C. 

      Every market transaction involves an exchange of dollars.

    • D. 

      Factors of production are traded in every market.


  • 67. 
    The term opportunity costs refers to the:
    • A. 

      Value of all the options given up when a good or service is produced.

    • B. 

      Financial costs of all the factors of production used to produce a good or service.

    • C. 

      Amount of resources used to produce a good or service.

    • D. 

      Value of the best option given up when a good or service is produced.


  • 68. 
    The quantity of a good a consumer is willing to buy depends on:
    • A. 

      The price of a good.

    • B. 

      The consumers income and the opportunity cost of purchasing the good.

    • C. 

      The price of the good and the opportunity cost of purchasing the good.

    • D. 

      The price of the good, the consumer's income and the opportunity cost of purchasing the good.


  • 69. 
    Ceteris paribus, if the opportunity cost of purchasing a good rises, then the maximum price a particular consumer is willing to pay for that good:
    • A. 

      Does not change since the demand curve does not change.

    • B. 

      Decreases.

    • C. 

      Increases.

    • D. 

      Decreases as long as supply also falls.


  • 70. 
    Ceteris paribus, if the price of Belgian chocolate falls, then we will see:
    • A. 

      An increase in the demand for Belgian chocolate.

    • B. 

      A decrease in the demand for Belgian chocolate.

    • C. 

      An increase in the quantity demanded of Belgian chocolate.

    • D. 

      A decrease in the quantity demanded of Belgian chocolate.


  • 71. 
    Which ofthe following is not held constant along a given demand curve for a good?
    • A. 

      Price.

    • B. 

      Consumers income.

    • C. 

      The price of substitutes.

    • D. 

      Consumer tastes.


  • 72. 
    Ceteris paribus, which ofthe following would generally cause a decrease in the demand fornew automobiles?
    • A. 

      A decrease in the price of automobiles.

    • B. 

      The new models are perceived as ugly compared with old models.

    • C. 

      An increase in consumers' income.

    • D. 

      Consumers‘ expectations that the price of automobiles will be higher next year.


  • 73. 
    Assume Pepsi and Dr. Pepper are substitutes. An increase in the price of one will result in:
    • A. 

      A decrease in demand for the other.

    • B. 

      A decrease in the quantity demanded of the other.

    • C. 

      An increase in the demand for the other.

    • D. 

      An increase in the quantity demanded ofthe other.


  • 74. 
    It there are only two airlines that fly between Dallas and New Orleans, what will happen in the market for one airline if the other one goes out of business'?
    • A. 

      The demand curve will shift to the right.

    • B. 

      The demand curve will shift to the left.

    • C. 

      There will be a movement to the right along the initial demand curve.

    • D. 

      There will be a movement to the left along the initial demand curve.


  • 75. 
    Peanut butter and jelly are complements. A decrease in the price of one will result in:
    • A. 

      A decrease in the demand for the other.

    • B. 

      A decrease in the quantity demanded of the other.

    • C. 

      An increase in the demand for the other.

    • D. 

      An increase in the quantity demanded of the other.


  • 76. 
    Given a downward-sloping market demand curve for productai if the price of X is reducedV from $10 to $8, then,ceteris paribus:
    • A. 

      Demand for X will increase.

    • B. 

      Demand for X will decrease.

    • C. 

      The quantity demanded of X will increase.

    • D. 

      The quantity demanded of X will decrease.


  • 77. 
    Cereris paribus, which of the following is most likely to cause an increase in the quantity supplied of perfume?
    • A. 

      An improvement in perfume-making technology.

    • B. 

      An increase in the salaries paid to perfume makers.

    • C. 

      An increase in the price of perfume.

    • D. 

      An increase in the number of sellers of perfume.


  • 78. 
    A shift in supply is defined as a change in:
    • A. 

      Price.

    • B. 

      Quantity supplied because of a change in price.

    • C. 

      Equilibrium quantity.

    • D. 

      Supply because of a change in a non-price determinant.


  • 79. 
    The law of supply implies that:
    • A. 

      Supply curves are flat.

    • B. 

      Supply curves are upward-sloping to the right.

    • C. 

      Supply curves are downward—sloping to the right.

    • D. 

      A change in a determinant of demand shihs the supply curve.


  • 80. 
    Ceteris paribus, the market supply curve of a particular product indicates for a given periodthe:
    • A. 

      Total quantities that are actually sold.

    • B. 

      Total quantities that buyers are willing and able to purchase at alternative prices.

    • C. 

      Total quantities that sellers are willing and able to offer for sale at altemative prices.

    • D. 

      Specific quantities that an individual seller will make available at a given price.


  • 81. 
    Ceteris paribus, if the subsidies given to corn syrup producers decrease, then we can expect:
    • A. 

      A decrease in the demand for com syrup.

    • B. 

      A decrease in the supply of corn syrup.

    • C. 

      An increase in the demand for com syrup.

    • D. 

      An increase in the supply of corn syrup.


  • 82. 
    Both a demand schedule and a supply schedule for a good indicate for a given period of time at different prices, ceteris paribus:
    • A. 

      The motives for exchanging money for various quantities of the good.

    • B. 

      The actual quantities of the good exchanged for money.

    • C. 

      That supply creates its own demand.

    • D. 

      The quantities of the good that market participants are willing and able to exchange.


  • 83. 
    The market mechanism is consistent with:
    • A. 

      A trial and error process.

    • B. 

      Govemment control.

    • C. 

      Committee determination.

    • D. 

      Both govemment control and committee determination.


  • 84. 
    The term market mechanism refers to:
    • A. 

      The use of market prices and sales to determine resource allocation.

    • B. 

      The establishment of a ceiling price in a market.

    • C. 

      Supply and demand curves.

    • D. 

      Govemment laws and regulations conceming how the market should operate.


  • 85. 
    When a surplus exists for a product:
    • A. 

      Producers increase supply.

    • B. 

      Consumers increase demand.

    • C. 

      Govermnent purchases decrease.

    • D. 

      Producers reduce the level of output and reduce price.


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