1) 
Refer to Figure 2-6. What is the opportunity cost of moving from point A to point B?
a. zero
b. 6 clocks
c. 6 clocks and 15 candles
d. 15 candles
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2) 
Refer to Figure 2-6. If this economy moved from point C to point F, then
a. it still would not be producing efficiently.
b. there would be no gain in either candles or clocks.
c. it would be producing more candles and more clocks than at point C.
d. It is not possible for this economy to move from point C to point F without additional resources.
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3) Rent-control laws dictate
a. the exact rent that landlords must charge tenants.
b. a maximum rent that landlords may charge tenants.
c. a minimum rent that landlords may charge tenants.
d. both a minimum rent and a maximum rent that landlords may charge tenants.
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4) 
Refer to Figure 2-5. If this economy devotes one-half of its available resources to the production of soccer balls and the other half to the production of sweaters, it could produce
a. 150 sweaters and 100 soccer balls.
b. 150 sweaters and 150 soccer balls.
c. 300 sweaters and 200 soccer balls.
d. We would have to know the details of this economys technology in order to determine this.
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5) Refer to Scenario 5-1. The price elasticity of supply for aged cheddar cheese could be
a. -1.
b. 0.
c. 0.5.
d. 1.5.
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6) How did the influential economist John Maynard Keynes explain his remark that though economics is an easy subject compared with the higher branches of philosophy or pure science, it is a subject at which few excel?
a. Most people who study economics are not very bright.
b. Good economists must possess a rare combination of gifts.
c. Economics is quite boring; hence, people tend to lose interest in it before mastering it.
d. Good thinkers become frustrated with economics because it does not make use of the scientific method.
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7) Policies such as rent control and trade barriers persist
a. because economists are about evenly divided as to the merits of those policies.
b. because almost all economists agree that those policies have no discernible economic effects.
c. because almost all economists agree that those policies are desirable.
d. despite the fact that almost all economists agree that those policies are undesirable.
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8) The producer that requires a smaller quantity of inputs to produce a certain amount of a good, relative to the quantities of inputs required by other producers to produce the same amount of that good,
a. has a low opportunity cost of producing that good, relative to the opportunity costs of other producers.
b. has a comparative advantage in the production of that good.
c. has an absolute advantage in the production of that good.
d. should be the only producer of that good.
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9) In the simple circular-flow diagram, the participants in the economy are
a. firms and government.
b. households and firms.
c. households and government.
d. households, firms, and government.
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10) For which of the following problems can well-designed public policy enhance economic efficiency?
a. both externalities and market power
b. externalities, but not market power
c. market power, but not externalities
d. neither externalities nor market power
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11) Suppose that when the price of ginger ale is $2 per bottle, firms can sell 4 million bottles. When the price of ginger ale is $3 per bottle, firms can sell 2 million bottles. Which of the following statements is true?
a. The demand for ginger ale is income inelastic, so an increase in the price of ginger ale will increase the total revenue of ginger ale producers.
b. The demand for ginger ale is income elastic, so an increase in the price of ginger ale will increase the total revenue of ginger ale producers.
c. The demand for ginger ale is price inelastic, so an increase in the price of ginger ale will increase the total revenue of ginger ale producers.
d. The demand for ginger ale is price elastic, so an increase in the price of ginger ale will decrease the total revenue of ginger ale producers.
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12) With respect to how economists study the economy, which of the following statements is most accurate?
a. Economists study the past, but they do not try to predict the future.
b. Economists use rules of thumb to predict the future.
c. Economists devise theories, collect data, and analyze the data to test the theories.
d. Economists use controlled experiments in much the same way that biologists and physicists do.
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13) Which of the following is an example of a normative – as opposed to a positive – statement?
a. The discount rate is the interest rate the Federal Reserve charges banks to borrow funds.
b. The US income tax rate increases with the amount of income earned.
c. The government should increase the tax on gasoline.
d. The US unemployment rate increased to 10 percent in 2009.
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14) In a market economy, supply and demand determine
a. both the quantity of each good produced and the price at which it is sold.
b. the quantity of each good produced but not the price at which it is sold.
c. the price at which each good is sold but not the quantity of each good produced.
d. neither the quantity of each good produced nor the price at which it is sold.
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15)
Refer to Figure 6-15. Suppose a tax of $2 per unit is imposed on this market. Which of the following is correct?
a. One-fourth of the burden of the tax will fall on buyers, and three-fourths of the burden of the tax will fall on sellers.
b. One-third of the burden of the tax will fall on buyers, and two-thirds of the burden of the tax will fall on sellers.
c. One-half of the burden of the tax will fall on buyers ,and one-half of the burden of the tax will fall on sellers.
d. Two-thirds of the burden of the tax will fall on buyers, and one-third of the burden of the tax will fall on sellers.
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16) 
Refer to Figure 2-12. Which of the following combinations of points are both efficient and attainable for this economy?
a. B, C
b. A, D, H
c. A, B, C, D, H
d. F, G
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17) Which of the following trade-offs does the production possibilities frontier illustrate?
a. if an economy wants to increase efficiency in production, then it must sacrifice equality in consumption
b. once an economy has reached the efficient points on its production possibilities frontier, the only way of getting more of one good is to get less of the other
c. for an economy to consume more of one good, it must stop consuming the other good entirely
d. for an economy to produce and consume goods, it must sacrifice environmental quality
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18) Economists, like mathematicians, physicists, and biologists,
a. make use of the scientific method.
b. try to address their subject with a scientists objectivity.
c. devise theories, collect data, and then analyze these data in an attempt to verify or refute their theories.
d. All of the above are correct.
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19) Suppose there are five suppliers of ice cream in the town of Summerville. If we add the respective quantities that each firm would produce at each of the five ice cream parlors when the price of ice cream is $2 per scoop, $2.50 per scoop, and $3 per scoop, and so forth, we have found the
a. market demand curve.
b. market supply curve.
c. equilibrium curve.
d. surplus or shortage depending on market conditions.
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20) If the price elasticity of demand for a good is 1.5, then a 3 percent decrease in price results in a
a. 0.5 percent increase in the quantity demanded.
b. 2 percent increase in the quantity demanded.
c. 4.5 percent increase in the quantity demanded.
d. 5 percent increase in the quantity demanded.
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21) To obtain the market demand curve for a product, sum the individual demand curves
a. vertically.
b. diagonally.
c. horizontally.
d. and then average them.
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22)
Refer to Figure 4-20. All else equal, an increase in the use of laptop computers for note-taking would cause a move from
a. x to y.
b. y to x.
c. SA to SB.
d. SB to SA.
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23) 
Refer to Figure 3-11. If the production possibilities frontier shown is for 240 hours of production, then which of the following combinations of ham and cheese could Bonovia produce in 240 hours?
a. 225 pounds of ham and 140 pounds of cheese
b. 280 pounds of ham and 100 pounds of cheese
c. 355 pounds of ham and 80 pounds of cheese
d. 330 pounds of ham and 60 pounds of cheese
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24) In a given market, how are the equilibrium price and the market-clearing price related?
a. There is no relationship.
b. They are the same price.
c. The market-clearing price exceeds the equilibrium price.
d. The equilibrium price exceeds the market-clearing price.
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25) The average cost per seat on the 75-passenger Get-There-Safe Bus company’s trip from Milwaukee to Minneapolis, on which no refreshments are served, is $37. In advance of a particular trip, three seats remain unsold. The bus company could increase its profit only if it
a. charged any ticket price above $0 for the three remaining seats.
b. charged at least $18.50 for each of the three remaining seats.
c. charged at least $37 for each of the three remaining seats.
d. paid three people to occupy the three remaining seats.
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26) A $2.00 tax levied on the sellers of birdhouses will shift the supply curve
a. upward by exactly $2.00.
b. upward by less than $2.00.
c. downward by exactly $2.00.
d. downward by less than $2.00.
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27) There are fewer farmers in the United States today than 200 years ago because of
a. improvements in farm technology.
b. increased government regulations in farming.
c. an elastic demand for food.
d. environmental programs designed to reduce soil erosion.
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28) The ability of an individual to own and exercise control over scarce resources is called
a. market failure.
b. property rights.
c. externality.
d. market power.
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29) When a relevant variable that is not named on either axis changes,
a. there will be a movement along the curve.
b. the curve will rotate clockwise.
c. the curve will be unaffected since only the variables on the axis affect the curve.
d. the curve will shift.
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30) 
Refer to Figure 2-1. Which arrow represents the flow of spending by households?
a. A
b. B
c. C
d. D
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31) Since 1946, the president of the United States has received guidance from the Council of Economic Advisers.
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32) A macroeconomist, rather than a microeconomist, would study the effects on a market from two firms merging.
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33) When a production possibilities frontier is bowed outward, the opportunity cost of the second good in terms of the first good increases as more of the second good is produced.
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34) In one month, Moira can knit 2 sweaters or 4 scarves. In one month, Tori can knit 1 sweater or 3 scarves. Together, they could produce more output in total if Moira knits only sweaters and Tori knits only scarves.
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35) One way that governments can improve market outcomes is to ensure that individuals are able to own and exercise control over their scarce resources.
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36) Assume a farmer has the ability to produce corn and/or beans. Whenever the farmer spends 1 hour less producing corn and 1 hour more producing beans, he reduces his output of corn by 2 bushels and raises his output of beans by 3 bushels. In view of these assumptions, the farmers production possibilities frontier is bowed out.
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37) Price controls can generate inequities.
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38) A Just Say No drug education policy that successfully educates consumers to reduce their demand for drugs will lower drug prices and reduce the quantity of drugs demanded.
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39) A tax on buyers usually causes buyers to pay more for the good and sellers to receive less for the good than they did before the tax was levied.
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40) Monopolists are price takers.
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