Which of the following statements is correct?

. If this economy moved from point C to point F t Show more Question 1.1. Figure 2-6 Refer to Figure 2-6. If this economy moved from point C to point F then (Points : 5) it still would not be producing efficiently. there would be no gain in either candles or clocks. it would be producing more candles and more clocks than at point C. It is not possible for this economy to move from point C to point F without additional resources. Question 2.2. Guns and butter are used to represent the classic societal tradeoff between spending on (Points : 5) durable and nondurable goods. imports and exports. national defense and consumer goods. law enforcement and agriculture. Question 3.3. Figure 2-6 Refer to Figure 2-6. What is the opportunity cost of moving from point A to point B? (Points : 5) zero 6 clocks 6 clocks and 15 candles 15 candles Question 4.4. In a particular country in 1998 the average worker needed to work 25 hours to produce 40 units of output. In that same country in 2008 the average worker needed to work 40 hours to produce 68 units of output. In that country the productivity of the average worker (Points : 5) decreased by 1.7 percent between 1998 and 2008. remained unchanged between 1998 and 2008. increased by 4.75 percent between 1998 and 2008. increased by 6.25 percent between 1998 and 2008. Question 5.5. Prices usually reflect (Points : 5) only the value of a good to society. only the cost to society of making a good. both the value of a good to society and the cost to society of making the good. neither the value of a good to society nor the cost to society of making the good. Question 6.6. The basic principles of economics suggest that (Points : 5) markets are seldom if ever a good way to organize economic activity. government should become involved in markets when trade between countries is involved. government should become involved in markets when those markets fail to produce efficient or fair outcomes. All of the above are correct. Question 7.7. As a result of a successful attempt by government to cut the economic pie into more equal slices (Points : 5) the pie gets larger and there will be more pie overall. the pie gets smaller and there will be less pie overall. it increases the reward for working hard resulting in people producing more goods and services. those who earn more income pay less in taxes. Question 8.8. Which of the following is correct? (Points : 5) The word economy comes from the Greek word for rational thinker. Economists study the management of scarce resources. Because economists believe that people pursue their best interests they are not interested in how people interact. All of the above are correct. Question 9.9. In a particular country in 1999 the average worker had to work 20 hours to produce 55 units of output. In that same country in 2009 the average worker needed to work 28 hours to produce 77 units of output. In that country the productivity of the average worker (Points : 5) increased by 2 percent between 1999 and 2009. increased by 5 percent between 1999 and 2009. remained unchanged between 1999 and 2009. decreased by 3 percent between 1999 and 2009. Question 10.10. Table 2-5 Cookies (in dozens) Coffee (in pounds) 1000 0 800 350 600 650 400 800 200 1000 0 1150 Refer to Table 2-5. Table 2-5 shows one set of production possibilities. Which of the following statements is correct? (Points : 5) The opportunity cost of a dozen cookies does not depend on how many pounds of coffee are being produced. The opportunity cost of a dozen cookies increases as more cookies are produced. The opportunity cost of a dozen cookies decreases as more cookies are produced. The opportunity cost of a pound of coffee decreases as more coffee is produced. Question 11.11. In a particular country in 1998 the average worker needed to work 40 hours to produce 100 units of output. In that same country in 2008 the average worker needed to work 36 hours to produce 72 units of output. In that country the productivity of the average worker (Points : 5) decreased between 1998 and 2008 so we would expect the standard of living to have decreased accordingly. increased between 1998 and 2008 so we would expect the standard of living to have increased accordingly. decreased between 1998 and 2008 so we would expect inflation to have decreased accordingly. increased between 1998 and 2008 so we would expect inflation to have increased accordingly. Question 12.12. Efficiency means that (Points : 5) society is conserving resources in order to save them for the future. societys goods and services are distributed equally among societys members. societys goods and services are distributed fairly though not necessarily equally among societys members. society is getting the maximum benefits from its scarce resources. Question 13.13. George has spent $600 purchasing and repairing an old fishing boat which he expects to sell for $900 once the repairs are complete. George discovers that in addition to the $600 he has already spent he needs to make an additional repair which will cost another $400 in order to make the boat worth $900 to potential buyers. He can sell the boat as it is now for $400. What should he do? (Points : 5) He should sell the boat as it is now for $400. He should keep the boat since it would not be rational to spend $1000 on repairs and then sell the boat for $900. He should complete the repairs and sell the boat for $900. It does not matter which action he takes; the outcome is the same either way. Question 14.14. A friend of yours asks you why market prices are better than government-determined prices. Because you under-stand economic principles you say that market-determined prices are better because they generally reflect (Points : 5) the value of a good to society but not the cost of making it. the cost of making a good to society but not its value. both the value of a good to society and the cost of making it. neither the value of a good to society nor the cost of making it. Question 15.15. Which of the following is the most correct statement about the relationship between inflation and unemployment? (Points : 5) In the short run falling inflation is associated with falling unemployment. In the short run falling inflation is associated with rising unemployment. In the long run falling inflation is associated with falling unemployment. In the long run falling inflation is associated with rising unemployment. Question 16.16. Factors of production are (Points : 5) used to produce goods and services. also called output. abundant in most economies. assumed to be owned by firms in the circular-flow diagram. Question 17.17. When the government attempts to improve equality in an economy the result is often (Points : 5) an increase in overall output in the economy. additional government revenue since overall income will increase. a reduction in equality. a reduction in efficiency. Question 18.18. Suppose an economy produces two goods food and machines. This economy always operates on its produc-tion possibilities frontier. Last year it produced 1000 units of food and 47 machines. This year it experienced a technological advance in its machine-making industry. As a result this year the society wants to produce 1050 units of food and 47 machines. Which of the following statements is correct? (Points : 5) Because the technological advance occurred in the machine-making industry it will not be possible to increase food production without reducing machine production below 47. Because the technological advance occurred in the machine-making industry increases in output can only occur in the machine industry. In order to increase food production in these circumstances without reducing machine production the economy must reduce inefficiencies The technological advance reduced the amount of resources needed to produce 47 machines so these resources could be used to produce more food. Question 19.19. To improve living standards policymakers should (Points : 5) impose restrictions on foreign competition. formulate policies designed to increase productivity. impose tougher immigration policies. provide tax breaks for the middle class. Question 20.20. The mainstream view among economists is that (Points : 5) society faces a tradeoff between unemployment and inflation but only in the short run. society faces a tradeoff between unemployment and inflation but only in the long run. society faces a tradeoff between unemployment and inflation both in the short run and in the long run. no tradeoff exists between unemployment and inflation either in the short run or in the long run. Question 21.21. In the United States the overall level of prices more than doubled during the (Points : 5) 1950s. 1960s. 1970s. 1980s. Question 22.22. Senator Green argues that replacing the income tax with a national sales tax would increase the level of output. Senator Brown objects that this policy would benefit the rich at the expense of the poor. (Points : 5) Both Senators arguments are primarily about equality. Both Senators arguments are primarily about efficiency. Senator Greens argument is primarily about equality while Senator Browns argument is primarily about efficiency. Senator Greens argument is primarily about efficiency while Senator Browns argument is primarily about equality. Question 23.23. Figure 2-4 Refer to Figure 2-4 Efficient production is represented by which point(s)? (Points : 5) Y Z W Y Z V Y Z V Question 24.24. To raise productivity policymakers could (Points : 5) increase spending on education. provide tax credits to firms for capital improvements. fund research and development. All of the above are correct. Question 25.25. The famous observation that households and firms interacting in markets act as if they are guided by an invisible hand that leads them to desirable market outcomes comes from whose 1776 book? (Points : 5) David Ricardo Thorstein Veblen John Maynard Keynes Adam Smith Question 26.26. Low rates of inflation are generally associated with (Points : 5) low rates of government spending. small or nonexistent government budget deficits. low rates of productivity growth. low rates of growth of the quantity of money. Question 27.27. Which of the following would likely be studied by a macroeconomist rather than a microeconomist? (Points : 5) the effect of an increase in the alcohol tax on the market for beer the effect of foreign competition on the domestic auto industry the effect of a price war in the airline industry the effect of an increase in the minimum wage on an economys overall rate of unemployment Question 28.28. Figure 2-4 Refer to Figure 2-4 The opportunity cost of this economy moving from point Z to point Y is (Points : 5) 0 lamps. 10 lamps. 10 notepads. 20 lamps. Question 29.29. Table 2-4 Production Possibilities for Batterland Pancakes Waffles 600 0 450 150 300 250 150 325 0 375 Refer to Table 2-4. What is the opportunity cost to Batterland of increasing the production of pancakes from 150 to 300? (Points : 5) 75 waffles 150 waffles 250 waffles 325 waffles Question 30.30. Table 2-5 Cookies (in dozens) Coffee (in pounds) 1000 0 800 350 600 650 400 800 200 1000 0 1150 Refer to Table 2-5. Table 2-5 shows one set of production possibilities. Based on the values in the table the production possibilities frontier is (Points : 5) bowed outward indicating increasing opportunity costs. bowed outward indicating decreasing opportunity costs. a straight line indicating constant opportunity costs. bowed inward indicating decreasing opportunity costs. Question 31.31. Economics is the study of (Points : 5) production methods. how society manages its scarce resources. how households decide who performs which tasks. the interaction of business and government. Question 32.32. You have eaten two bowls of ice cream at Sundae School Ice Cream store. You consider eating a third. As a ra-tional consumer you should make your choice by comparing (Points : 5) the benefits from eating all three bowls of ice cream to how much three bowls of ice cream costs. the benefits from eating all three bowls of ice cream to how much one more bowl of ice cream costs. the benefits from eating one more bowl of ice cream to how much three bowls of ice cream costs. the benefits from eating one more bowl of ice cream to how much one more bowl of ice cream costs. Question 33.33. Prices direct economic activity in a market economy by (Points : 5) influencing the actions of buyers and sellers. reducing scarcity of the goods and services produced. eliminating the need for government intervention. allocating goods and services in the most equitable way. Question 34.34. Senator Bright who understands economic principles is trying to convince workers in her district that trade with other countries is beneficial. Senator Bright should argue that trade can be beneficial (Points : 5) only if it allows us to obtain things that we couldnt make for ourselves. because it allows specialization which increases total output. to us if we can gain and the others involved in the trade lose. in only a limited number of circumstances because others are typically self-interested. Question 35.35. A construction company has built 30 houses so far this year at a total cost to the company of $7.5 million. If the company builds a 31st house its total cost will increase to $7.76 million. Which of the following statements is correct? (Points : 5) For the first 30 houses the average cost per house was $250000. The marginal cost of the 31st house if it is built will be $260000. If the company can experience a marginal benefit of $275000 by building the 31st house then the company should build it. All of the above are correct. Question 36.36. Positive statements are not (Points : 5) descriptive. prescriptive. claims about how the world is. made by economists speaking as scientists. Question 37.37. Which of the following is not an example of scarcity? (Points : 5) Only some people can afford to buy a Ferrari. Every individual in society cannot attain the highest standard of living to which he or she might aspire. Doug has an unlimited supply of apples in his orchard. Each member of a household cannot get everything he or she wants. Question 38.38. The economy of the former Soviet Union is best described as a (Points : 5) primitive economy. market economy. hybrid economy. centrally-planned economy. Question 39.39. When a production possibilities frontier is bowed outward the opportunity cost of producing an additional unit of a good (Points : 5) increases as more of the good is produced. decreases as more of the good is produced does not change as more of the good is produced. may increase decrease or not change as more of the good is produced. Question 40.40. Market power refers to the (Points : 5) power of a single person or small group to influence market prices. ability of a person or small group to successfully market new products. power of the government to regulate a market. importance of a certain market in relation to the overall economy. Show less

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