1)
Refer to Figure 3-3. If the production possibilities frontiers shown are each for one day of production, then which of the following combinations of tacos and burritos could Arturo and Dina together not produce in a given day?
a. 200 tacos and 400 burritos
b. 300 tacos and 350 burritos
c. 400 tacos and 300 burritos
d. 600 tacos and 250 burritos
Answer: View Answer

2) Table 5-5
The following table shows a portion of the demand schedule for a particular good at various levels of income.
Price Quantity Demanded (Income = $5,000) Quantity Demanded (Income = $7,500) Quantity Demanded (Income = $10,000)
$24 2 3 4
$20 4 6 8
$16 6 9 12
$12 8 12 16
$8 10 15 20
$4 12 18 24
Refer to Table 5-5. Using the midpoint method, at a price of $12, what is the income elasticity of demand when income rises from $5,000 to $10,000?
a. 0.00
b. 0.41
c. 1.00
d. 2.45
Answer: View Answer

3)
Refer to Figure 6-18. Buyers pay how much of the tax per unit?
a. $1.
b. $1.50.
c. $2.50.
d. $3.50.
Answer: View Answer

4) Two individuals engage in the same two productive activities. In which of the following circumstances would neither individual have a comparative advantage in either activity?
a. One individuals production possibilities frontier is steeper than the other individuals production possibilities frontier.
b. One individual is faster at both activities than the other individual.
c. One individuals opportunity costs are the same as the other individuals opportunity costs.
d. None of the above is correct; one of the two individuals always will have a comparative advantage in at least one of the two activities.
Answer: View Answer

5) Refer to Table 3-9. Barbs opportunity cost of testing one computer is setting up
a. 4/5 computer and Jims opportunity cost of testing one computer is setting up 3/4 computer.
b. 4/5 computer and Jims opportunity cost of testing one computer is setting up 4/3 computers.
c. 5/4 computers and Jims opportunity cost of testing one computer is setting up 3/4 computer.
d. 5/4 computers and Jims opportunity cost of testing one computer is setting up 4/3 computers.
Answer: View Answer

6) For which of the following individuals would the opportunity cost of going to college be highest?
a. a promising young mathematician who will command a high salary once she earns her college degree
b. a student with average grades who has never held a job
c. a famous, highly-paid actor who wants to take time away from show business to finish college and earn a degree
d. a student who is the best player on his college basketball team, but who lacks the skills necessary to play professional basketball
Answer: View Answer

7) Today’s supply curve for gasoline could shift in response to a change in
a. today’s price of gasoline.
b. the expected future price of gasoline.
c. the number of buyers of gasoline.
d. All of the above are correct.
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8) Table 3-4
Assume that the farmer and the rancher can switch between producing meat and producing potatoes at a constant rate.
Labor Hours Needed to Make 1 Pound of Pounds Produced in 24 Hours
Meat Potatoes Meat Potatoes
Farmer 8 2 3 12
Rancher 3 6 8 4
Refer to Table 3-4. The farmer has an absolute advantage in the production of
a. meat.
b. potatoes.
c. both goods.
d. neither good.
Answer: View Answer

9) Which of the following is an example of something economists study?
a. Kate chooses to work overtime to earn extra income for her family.
b. Ryan sells his economics textbook from last semester to his roommate for half the price of a new textbook.
c. The unemployment rate in the United States is at its highest level in over fifty years.
d. All of the above are correct.
Answer: View Answer

10) Economists use some familiar terms in specialized ways
a. to make the subject sound more complex than it is.
b. because every respectable field of study has its own language.
c. to provide a new and useful way of thinking about the world.
d. because it was too difficult to come up with new terms.
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11)
Refer to Figure 2-3. Efficient production is represented by which point(s)?
a. J, K, N
b. K, M, N
c. K, N
d. L, M
Answer: View Answer

12) An outcome that can result from either a price ceiling or a price floor is
a. a surplus in the market.
b. a shortage in the market.
c. a nonbinding price control.
d. long lines of frustrated buyers.
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13) The minimum wage, if it is binding, raises the incomes of
a. no workers.
b. only those workers who cannot find jobs.
c. only those workers whose jobs would pay less than the minimum wage if it didnt exist.
d. all workers.
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14) For an economist, the idea of making assumptions is regarded generally as a
a. bad idea, since doing so leads to the omission of important ideas and variables from economic models.
b. bad idea, since doing so invariably leads to data-collection problems.
c. good idea, since doing so helps to simplify the complex world and make it easier to understand.
d. good idea, since economic analysis without assumptions leads to complicated results that the general public finds hard to understand.
Answer: View Answer

15) Table 3-5
Assume that England and Spain can switch between producing cheese and producing bread at a constant rate.
Labor Hours Needed to Make 1 Unit of Number of Units Produced in 40 Hours
Cheese Bread Cheese Bread
England 1 4 40 10
Spain 4 8 10 5
Refer to Table 3-5. If England and Spain each spends all its time producing the good in which it has a comparative advantage and the countries agree to trade 2 units of bread for 6 units of cheese, then England will consume
a. 34 units of cheese and 2 units of bread and Spain will consume 6 units of cheese and 3 units of bread.
b. 34 units of cheese and 2 units of bread and Spain will consume 16 units of cheese and 3 units of bread.
c. 34 units of cheese and 12 units of bread and Spain will consume 6 units of cheese and 3 units of bread.
d. 34 units of cheese and 12 units of bread and Spain will consume 16 units of cheese and 3 units of bread.
Answer: View Answer

16) Suppose that a tax is placed on books. If the sellers pay the majority of the tax, then we know that the
a. demand is more inelastic than the supply.
b. supply is more inelastic than the demand.
c. government has required that buyers remit the tax payments.
d. government has required that sellers remit the tax payments.
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17) Suppose that the Federal Reserve Bank announces that it will be making a change to a key interest rate to increase the money supply. This is likely because
a. the Federal Reserve Bank is worried about inflation.
b. the Federal Reserve Bank is worried about unemployment.
c. the Federal Reserve Bank is hoping to reduce the demand for goods and services.
d. the Federal Reserve Bank is worried that the economy is growing too quickly.
Answer: View Answer

18) The tax burden will fall most heavily on buyers of the good when the demand curve
a. is relatively steep, and the supply curve is relatively flat.
b. is relatively flat, and the supply curve is relatively steep.
c. and the supply curve are both relatively flat.
d. and the supply curve are both relatively steep.
Answer: View Answer

19)
Refer to Figure 3-3. Arturo would incur an opportunity cost of 36 burritos if he increased his production of tacos by
a. 27.
b. 48.
c. 108.
d. 144.
Answer: View Answer

20) Economists hold many positions advising the president and Congress including
a. being a member of the Council of Economic Advisers.
b. helping to enforce antitrust laws at the Department of Justice.
c. conducting research at the Congressional Budget Office.
d. All of these are possible positions that economists hold.
Answer: View Answer

21) The slope of a fairly flat upward-sloping line will be a
a. small positive number.
b. large positive number.
c. small negative number.
d. large negative number.
Answer: View Answer

22) The term tax incidence refers to
a. whether buyers or sellers of a good are required to send tax payments to the government.
b. whether the demand curve or the supply curve shifts when the tax is imposed.
c. the distribution of the tax burden between buyers and sellers.
d. widespread view that taxes (and death) are the only certainties in life.
Answer: View Answer

23) The business cycle is the
a. relationship between unemployment and inflation.
b. irregular fluctuations in economic activity.
c. positive relationship between the quantity of money in an economy and inflation.
d. predictable changes in economic activity due to changes in government spending and taxes.
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24)
Refer to Figure 3-10. Which of the following statements is correct regarding absolute advantage?
a. Alice has an absolute advantage in the production of both lemonade and pizzas.
b. Betty has an absolute advantage in the production of both lemonade and pizzas.
c. Alice has an absolute advantage in the production of pizzas while Betty has an absolute advantage in the production of lemonade.
d. Alice has an absolute advantage in the production of lemonade while Betty has an absolute advantage in the production of pizzas.
Answer: View Answer

25)
Refer to Figure 6-17. The price that buyers pay after the tax is imposed is
a. $8.00.
b. $9.00.
c. $10.50.
d. $12.00.
Answer: View Answer

26) Rent control
a. is an example of a price ceiling.
b. leads to a larger shortage of apartments in the long run than in the short run.
c. leads to lower rents and, in the long run, to lower-quality housing.
d. All of the above are correct.
Answer: View Answer

27) Which of the following statements is correct about the roles of economists?
a. Economists are best viewed as policy advisers.
b. Economists are best viewed as scientists.
c. In trying to explain the world, economists are policy advisers; in trying to improve the world, they are scientists.
d. In trying to explain the world, economists are scientists; in trying to improve the world, they are policy advisers.
Answer: View Answer

28)
Refer to Figure 3-2. Suppose Peru decides to increase its production of rubies by 30. What is the opportunity cost of this decision?
a. 1/8 emerald
b. 1/3 emerald
c. 1 emerald
d. 3 emeralds
Answer: View Answer

29)
Refer to Figure 5-4. The section of the demand curve from A to B represents the
a. elastic section of the demand curve.
b. inelastic section of the demand curve.
c. unit elastic section of the demand curve.
d. perfectly elastic section of the demand curve.
Answer: View Answer

30) If the rent for apartments in New York City were fixed below the current price, then we would expect
a. an increase in the number of people wanting to rent apartments in New York City.
b. a decrease in the number of people wanting to rent apartments in New York City.
c. an increase in the number of apartments available for rent in New York City.
d. None of the above is correct.
Answer: View Answer

31) The supply curve for a good is a line that relates
a. profit and quantity supplied.
b. quantity supplied and quantity demanded.
c. price and quantity supplied.
d. price and profit.
Answer: View Answer

32) 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
a. decreased between 1998 and 2008, so we would expect the standard of living to have decreased accordingly.
b. increased between 1998 and 2008, so we would expect the standard of living to have increased accordingly.
c. decreased between 1998 and 2008, so we would expect inflation to have decreased accordingly.
d. increased between 1998 and 2008, so we would expect inflation to have increased accordingly.
Answer: View Answer

33)
Refer to Figure 2-1. Ali buys a new pair of shoes at a shoe store. To which of the arrows does this transaction directly contribute?
a. A only
b. A and B
c. C only
d. C and D
Answer: View Answer

34)
Refer to Figure 3-5. If the production possibilities frontier shown for Merve is for 8 hours of work, then how long does it take Merve to make one purse?
a. 1/2 hour
b. 2 hours
c. 4 hours
d. 8 hours
Answer: View Answer

35) A market supply curve shows
a. the total quantity supplied at all possible prices.
b. the average quantity supplied by producers at all possible prices.
c. how quantity supplied changes when consumer income changes.
d. suppliers responses, in terms of the amounts they will supply, to the demands of buyers.
Answer: View Answer

36) Market economies are distinguished from other types of economies largely on the basis of
a. the political affiliations of government officials.
b. the process by which government officials are elected or appointed.
c. the ways in which scarce resources are allocated.
d. the number of retail outlets available to consumers.
Answer: View Answer

37)
Refer to Figure 3-3. If the production possibilities frontier shown for Arturo is for 100 hours of production, then how long does it take Arturo to make one burrito?
a. 1/4 hour
b. 1/3 hour
c. 3 hours
d. 4 hours
Answer: View Answer

38)
Refer to Figure 2-14. The movement from point B to point C could have been caused by
a. inflation.
b. a change in income.
c. a change in the price of grapes.
d. a change in the cost of producing grapes.
Answer: View Answer

39) Refer to Table 3-18 Chris and Tony both produce tomatoes and pasta sauce. The table shows their possible production per month if both work the same number of 8 hour days. Which of the following prices would result in a mutually advantageous trade between Chris and Tony?
a. 1 lb. of tomatoes for 23 jars of sauce
b. 1 lb. of tomatoes for 27 jars of sauce
c. 1 lb. of tomatoes for 33 jars of sauce
d. .Both a and b are correct.
Answer: View Answer

40) In general, demand curves for necessities tend to be price elastic.
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41) The President counts among his economic advisors the Congressional Budget Office.
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42) A tax on sellers reduces the size of a market.
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43) Deciding that A causes B when in fact B causes A is a mistake called omitted variable bias.
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44) If a good or service has only one seller, then the seller is called a monopoly.
Answer: View Answer

45) When the market price is above the equilibrium price, suppliers are unable to sell all they want to sell.
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46)
Refer to Figure 2-14. It is possible for this economy to produce 75 doghouses.
Answer: View Answer