1) When economists are trying to help improve the world, they are
a. in the realm of positive economics rather than normative economics.
b. in the realm of macroeconomics rather than microeconomics.
c. scientists.
d. policy advisers.
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2) A competitive market is one in which there
a. is only one seller, but there are many buyers.
b. are many sellers, and each seller has the ability to set the price of his product.
c. are many sellers, and they compete with one another in such a way that some sellers are always being forced out of the market.
d. are so many buyers and so many sellers that each has a negligible impact on the price of the product.
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3)
Refer to Figure 2-9, Panel (a). Production is
a. possible at points A, B, C, and D, but efficient only at points A, C, and D.
b. possible at points A, B, C, and D, but efficient only at point B.
c. possible at points A, C, D, and F, but efficient only at points A, C, and D.
d. possible at points A, C, D, and F, but efficient only at point F.
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4) The second number in any ordered pair is
a. the x-coordinate.
b. the y-coordinate.
c. the horizontal location of the point.
d. the slope.
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5)
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
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6)
Refer to Figure 2-14. The movement from point B to point C is a(n)
a. shift of the demand curve.
b. movement along the demand curve.
c. indication that the price of grapes has changed.
d. indication that the costs incurred by firms that produce grapes have changed.
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7) 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 opportunity cost of 1 pound of meat for the rancher is
a. 1/2 pound of potatoes.
b. 2 hours of labor.
c. 2 pounds of potatoes.
d. 3 hours of labor.
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8) In a certain economy, toys and greeting cards are produced, and the economy currently operates on its production possibilities frontier. Which of the following events would allow the economy to produce more toys and more greeting cards, relative to the quantities of those goods that are being produced now?
a. The economy experiences economic growth.
b. There is a technological advance in the toy industry, but the greeting card industry experiences no such advance.
c. There is a technological advance in the greeting card industry, but the toy industry experiences no such advance.
d. All of the above are correct.
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9)
Refer to Figure 3-1. The rate of tradeoff between producing chairs and producing couches depends on how many chairs and couches are being produced in
a. Panel (a).
b. Panel (b).
c. both Panel (a) and Panel (b).
d. neither Panel (a) nor Panel (b).
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10) What will happen to the equilibrium price and quantity of traditional camera film if traditional cameras become more expensive, digital cameras become cheaper, the cost of the resources needed to manufacture traditional film falls, and more firms decide to manufacture traditional film?
a. Price will fall, and the effect on quantity is ambiguous.
b. Price will rise, and the effect on quantity is ambiguous.
c. Quantity will fall, and the effect on price is ambiguous.
d. Quantity will rise, and the effect on price is ambiguous.
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11) Refer to Scenario 5-1. The price elasticity of supply for bread could be
a. -1.
b. 0.
c. 0.5.
d. 1.5.
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12) 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
a. bowed outward indicating increasing opportunity costs.
b. bowed outward indicating decreasing opportunity costs.
c. a straight line indicating constant opportunity costs.
d. bowed inward indicating decreasing opportunity costs.
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13)
Refer to Figure 6-6. If the government imposes a price floor of $14 on this market, then there will be
a. no surplus.
b. a surplus of 20 units.
c. a surplus of 30 units.
d. a surplus of 40 units.
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14) Larry Summers, a chief economic adviser to President Obama, stated that as a result of using Keynesian policies in 2008 and 2009,
a. US government policy moved in a strongly activist direction.
b. the US has shifted from worrying about an economic depression to thinking about what kind of expansion the country will have.
c. the US has shifted from rescuing the economy to economic recovery.
d. All of the above are correct.
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15) The flatter the demand curve through a given point, the
a. greater the price elasticity of demand at that point.
b. smaller the price elasticity of demand at that point.
c. closer the price elasticity of demand will be to the slope of the curve.
d. greater the absolute value of the change in total revenue when there is a movement from that point upward and to the left along the demand curve.
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16)
Refer to Figure 2-6. Unemployment could cause this economy to produce at which point(s)?
a. A, B
b. C, D, F, G
c. C, F, G
d. D
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17) Normative statements are not
a. descriptive.
b. prescriptive.
c. claims about how the world should be.
d. made by economists speaking as policy advisers.
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18)
Refer to Figure 2-14. The slope of the curve between points A and B is
a. -5
b. -1/5
c. 1/5
d. 5
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19) For which of the following goods is the income elasticity of demand likely highest?
a. natural gas
b. doctors visits
c. hamburgers
d. boats
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20) Which of the following is not correct?
a. The economy contains many labor markets for different types of workers.
b. The impact of the minimum wage depends on the skill and experience of the worker.
c. The minimum wage is binding for workers with high skills and much experience.
d. The minimum wage is not binding when the equilibrium wage is above the minimum wage.
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21) Refer to Table 3-1. Which of the following combinations of wheat and beef could Zardia not produce in one 10-hour day?
a. 10 bushels of wheat and 45 pounds of beef
b. 20 bushels of wheat and 30 pounds of beef
c. 25 bushels of wheat and 25 pounds of beef
d. 30 bushels of wheat and 15 pounds of beef
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22) Which of the following statements is not valid when supply is perfectly elastic?
a. The elasticity of supply approaches infinity.
b. The supply curve is horizontal.
c. Very small changes in price lead to very large changes in quantity supplied.
d. The time period under consideration is more likely a short period rather than a long period.
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23) Which of the following would not interfere with market equilibria?
a. a minimum wage
b. a rent control
c. a non-binding price floor
d. a binding price ceiling
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24) Economists speaking like policy advisers make
a. claims about how the world is.
b. descriptive statements.
c. normative statements.
d. More than one of the above is correct.
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25)
Refer to Figure 3-4. If the production possibilities frontiers shown are each for one year of writing, then which of the following combinations of novels and poems could Perry and Jordan together not write in a given year?
a. 1 novel and 21 poems
b. 2 novels and 20 poems
c. 3 novels and 15 poems
d. 5 novels and 6 poems
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26)
Refer to Figure 5-5. Using the midpoint method, demand is unit elastic between prices of
a. $18 and $24.
b. $24 and $30.
c. $24 and $36.
d. $30 and $36.
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27) Table 3-10
Juanita and Shantala run a business that programs and tests cellular phones. Assume that Juanita and Shantala can switch between programming and testing cellular phones at a constant rate. The following table applies.
Minutes Needed to Number of Cellular Phones Programmed or Tested in a 40-Hour Week
Program 1 Cellular Phone Test 1 Cellular Phone Cellular Phones Programmed Cellular Phones Tested
Juanita ? 2 160 1200
Shantala 10 4 240 600
Refer to Table 3-10. Juanita has an absolute advantage in
a. programming cellular phones and a comparative advantage in programming cellular phones.
b. programming cellular phones and a comparative advantage in testing cellular phones.
c. testing cellular phones and a comparative advantage in programming cellular phones.
d. testing cellular phones and a comparative advantage in testing cellular phones.
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28) Table 3-7
Assume that Japan and Korea can switch between producing cars and producing airplanes at a constant rate.
Hours Needed to Make 1 Quantity Produced in 2400 Hours
Car Airplane Cars Airplanes
Japan 30 150 80 16
Korea 50 150 48 16
Refer to Table 3-7. Japans opportunity cost of one car is
a. 1/5 airplane and Koreas opportunity cost of one car is 1/3 airplane.
b. 1/5 airplane and Koreas opportunity cost of one car is 3 airplanes.
c. 5 airplanes and Koreas opportunity cost of one car is 1/3 airplane.
d. 5 airplanes and Koreas opportunity cost of one car is 3 airplanes.
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29) An ordered pair is
a. the process of checking calculations twice before placing them on a graph.
b. two numbers that can be represented by a single point on a graph.
c. two numbers that are represented by two points on a graph.
d. two points on a graph that are of equal distance from the origin.
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30) Which of the following changes would not shift the demand curve for a good or service?
a. a change in income
b. a change in the price of the good or service
c. a change in expectations about the future price of the good or service
d. a change in the price of a related good or service
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31) When it comes to people’s tastes, economists generally believe that
a. tastes are based on forces that are well within the realm of economics.
b. tastes are based on historical and psychological forces that are beyond the realm of economics.
c. tastes can only be studied through well-constructed, real-life models.
d. because tastes do not directly affect demand, there is little need to explain people’s tastes.
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32) When quantity supplied decreases at every possible price, we know that the supply curve has
a. shifted to the left.
b. shifted to the right.
c. not shifted; rather, we have moved along the supply curve to a new point on the same curve.
d. not shifted; rather, the supply curve has become flatter.
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33) Suppose that in a particular market, the supply curve is highly elastic and the demand curve is highly inelastic. If a tax is imposed in this market, then the
a. buyers will bear a greater burden of the tax than the sellers.
b. sellers will bear a greater burden of the tax than the buyers.
c. buyers and sellers are likely to share the burden of the tax equally.
d. buyers and sellers will not share the burden equally, but it is impossible to determine who will bear the greater burden of the tax without more information.
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34) Which of the following statements about comparative advantage is not true?
a. Comparative advantage is determined by which person or group of persons can produce a given quantity of a good using the fewest resources.
b. The principle of comparative advantage applies to countries as well as to individuals.
c. Economists use the principle of comparative advantage to emphasize the potential benefits of free trade.
d. A country may have a comparative advantage in producing a good, even though it lacks an absolute advantage in producing that good.
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35)
Refer to Figure 3-3. Arturos opportunity cost of one burrito is
a. 3/4 taco and Dinas opportunity cost of one burrito is 1/2 taco.
b. 3/4 taco and Dinas opportunity cost of one burrito is 2 tacos.
c. 4/3 tacos and Dinas opportunity cost of one burrito is 1/2 taco.
d. 4/3 tacos and Dinas opportunity cost of one burrito is 2 tacos.
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36) Suppose that a worker in Radioland can produce either 4 radios or 1 television per year, and a worker in Teeveeland can produce either 2 radios or 4 televisions per year. Each nation has 100 workers. Also suppose that each country completely specializes in producing the good in which it has a comparative advantage. If Radioland trades 100 radios to Teeveeland in exchange for 100 televisions each year, then each country’s maximum consumption of new radios and televisions per year will be
a. 100 radios, 300 televisions in Radioland and 300 radios, 100 televisions in Teeveeland.
b. 300 radios, 100 televisions in Radioland and 100 radios, 300 televisions in Teeveeland.
c. 200 radios, 100 televisions in Radioland and 100 radios, 200 televisions in Teeveeland.
d. 300 radios, 100 televisions in Radioland and 100 radios, 400 televisions in Teeveeland.
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37) A tax on a market with elastic demand and elastic supply will shrink the market more than a tax on a market with inelastic demand and inelastic supply will shrink the market.
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38) Minimum-wage laws benefit society by creating a surplus of labor.
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39) The US should not restrict employers from outsourcing work to foreign countries is a normative statement.
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40) When a binding price ceiling is imposed on a market for a good, some people who want to buy the good cannot do so.
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41) Economic models can help us understand reality only when they include all details of the economy.
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42) Prices are inefficient rationing devices.
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43) A binding price floor causes a shortage in the market.
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44) Whether a tax is levied on sellers or buyers, buyers and sellers usually share the burden of taxes.
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45) If a supply curve is horizontal, then supply is said to be perfectly elastic, and the price elasticity of supply approaches infinity.
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46) The opportunity cost of something is what you give up to get it.
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