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Economics Final Exam Quiz

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Question;Final;Exam;1);Economics is best defined as the study of;A);financial decision-making.;B);how consumers make purchasing decisions.;C);choices made by people faced with scarcity.;D);inflation, unemployment, and economic growth.;2);Printing presses, forklifts and assembly plants are examples of which factor of;production?;A);physical capital;B);human capital;C);entrepreneurship;D);labor;3);If each extra driver on the road makes every other drivers commute last one;minute longer and there are 600 drivers on the road, then one extra driver;costs society;A);1 hour extra in commuting time.;B);10 hours extra in commuting time.;C);100 hours extra in commuting time.;D);10 extra minutes in commuting time.;4);The opportunity cost of something is;A);the cost of the labor used to produce it.;B);what you sacrifice to get it.;C);the price charged for it.;D);the search cost required to find it.;5);Suppose a ticket to a concert costs $39, and parking costs $5. Further, in;order to watch the concert, you must miss 2 hours of work where your hourly;wage is $15 per hour. The total opportunity cost of watching a concert is;A);$74.;B);$44.;C);$39.;D) $30.;6);If you remove resources from factory production, the quantity of factory goods;will;A);increase.;B);decrease.;C);remain the same but their price will decrease.;D);be diverted to other production.;7);The ability of one person or nation to produce a good at a lower opportunity;cost than another is called a(n);A);market advantage.;B);comparative advantage.;C);absolute advantage.;D);specialization advantage.;Table 3.2;8);Consider two individuals, Rose and Sharon, who produce fish and coconuts. Rose;and Sharon's hourly productivity are shown in Table 3.2. Sharon's opportunity;cost of producing 1 coconut is;A);3/4 fish.;B);1 1/3 fish.;C);3 fish.;D);4 fish.;9);Consider two individuals, Rose and Sharon, who produce fish and coconuts. Rose;and Sharon's hourly productivity are shown in Table 3.2. Sharon's opportunity;cost of producing 1 coconut is;A);3/4 fish.;B);1 1/3 fish.;C);3 fish.;D);4 fish.;10);A perfectly competitive market is a market that has;A);many buyers.;B);many sellers.;C);no single buyer or seller who can affect the price.;D);all of the above are correct.;11);When there is a change in the quantity demanded it means that the;A);hours the customer can buy products each day have increased.;B);number of products in inventory have increased.;C);quantity a consumer is willing to buy changes when the price changes.;D);selling price of the products has not changed.;12);At a price of $1000, Dell Computer Co. is willing 20 laptops and Compaq is;willing to sell 40 laptops. IBM will only sell laptops if the price is $1300 or;higher. From the point of view of IBM, $1300 is the;A);minimum supply price.;B);minimum cost.;C);the equilibrium price.;D);minimum loss price.;13);The concept of elasticity applies to;A);supply only.;B);demand only.;C);neither supply nor demand.;D);both supply and demand.;14);Grand TV Manufacturer wants to increase the quantity of TVs it sells by 8%. If;the price elasticity of demand is 4 the manufacturer must;A);increase price by 2.0%.;B);decrease price by 2.0%.;C);increase price by 1.5%.;D);decrease price by 1.5%.;15);At a price of $1, Greedy Inc. sold 100 gallons of gasoline per week. When the;price rose to $2, only 80 gallons were sold per week. Using the initial-value;method, the price elasticity of demand for gasoline at Greedy Inc. Gas Station;is;A);0.2.;B);0.15.;C);1.5.;D);2.;16);The difference between the maximum amount a person is willing to pay for a good;and its current market price is known as;A);the paradox of value.;B);profits.;C);revealed preferences.;D);consumer surplus.;17);You would be willing to pay a maximum of $1000 for an airplane ticket to;London, UK during the summer, and you can buy an airplane ticket for $890. Your;consumer surplus is;A);$90.;B);$190.;C);$110.;D);$100.;18);Refer to Figure 6.3. If the price of one hour of tutoring is $20, then producer;surplus is;A);$40.;B);$30.;C);$20.;D);$10.;19);The satisfaction experienced from consuming a good or service is referred to;as;A);utility.;B);marginal utility.;C);the law of diminishing marginal utility.;D);all of the above;20);Refer to Figure 7.2. The marginal utility of the first video game rental is;A);10.;B);8.;C);25.;D);40.;21);Refer to Figure 7.2. The marginal utility of the third video game rental is;A);1.;B);3.;C);4.;D);22.;22);The period of time when a firm is able to change all of inputs, or factors of;production, is called the;A);economic term.;B);short run.;C);accounting term.;D);long run.;23);Robert is an entrepreneur who invests in residential real estate. He has a;money market account with $100,000 that earns 3% APY. Robert wants to buy a;house that will give him a monthly cash inflow of $300. What will opportunity;cost of investing in the house be?;A);3000;B);3100;C);3600;D);3500;24);Mario has a company that produces plastic freezer bags. His company objective;is to maximize;A);his company's revenues.;B);his company's total out-of-pocket costs.;C);his company's opportunity costs of each factor of production.;D);his company's economic profits, the difference between total revenue and total;cost.;25);In a perfectly competitive market;A);the government imposes price ceilings on the products produced and buyers and;sellers are price takers.;B);buyers set the price and sellers take the price.;C);both buyers and sellers are price takers.;D);the market demand for products produced is perfectly elastic.;26);The best example of a monopolistically competitive industry is;A);music stores.;B);grocery stores.;C);mobile phone service.;D);A and B are correct.;27);In the form of market organization called "perfect competition," the;firms tend to be ________ and the product they sell is ________.;A);large, identical;B);small, different;C);large, different;D);small, identical;28);Which type of barrier to entry allows the electric company to maintain a;monopoly over the production of electricity?;A);a patent;B);economies of scale;C);diseconomies of scale;D);ownership of a scarce factor of production;29);Which type of barrier to entry allows the electric company to maintain a;monopoly over the production of electricity?;A);a patent;B);economies of scale;C);diseconomies of scale;D);ownership of a scarce factor of production;30);Dollar Data Software has a monopoly on the sale of database programs. If it;sells 12 of these programs its total revenue is $8000, and if it sells 13;programs its total revenue is $8900. The marginal revenue of the thirteenth;program sold is;A);$800.;B);$13.;C);$850.;D);$900.;31);When prices do not change very much, the income-expenditure model can be used;to understand economic fluctuation in the;A);long run.;B);short run.;C);fiscal year.;D);federal budget allocation.;32);If an economy is producing a level of output which is lower than the;equilibrium level, planned expenditures ________ total output and;goods and services are being produced than are being demanded.;A);exceed, more;B);exceed, fewer;C);are less than, more;D);are less than, fewer;33);If the consumption function isC = 90 + 0.75y, then the marginal;propensity to consume is;A);0.2.5.;B);0.75.;C);67.5.;D);90.;34);Which of the following is an example of an investment?;A);A firm builds a new plant.;B);A student attends college.;C);The government builds a dam to have a source of hydroelectric power.;D);all of the above;35);If firms receive an economic forecast predicting future decreases in the growth;of real GDP, they are likely to respond by;A);decreasing their level of investment spending to decrease future production;capacity.;B);increasing their level of investment spending to increase current production;capacity.;C);increasing their level of investment spending to increase future production;capacity.;D);decreasing their level of investment spending to decrease current production;capacity.;36);Optimistic investors tend to ________ their investment spending.;A);reduce;B);increase;C);defer;D);not change;37);The supply of money in the U.S. economy is determined primarily by;A);decisions made by the Federal Reserve and the U.S. Treasury.;B);the actions of the Federal Reserve and the banking system.;C);consumers and the banking system.;D);the demand for money in the economy.;38);Money solves the dilemma of a double coincidence of wants by serving as a;A);medium of exchange.;B);store of value.;C);symbol of value.;D);unit of account.;39);As inflation rates increase, money becomes less useful as a;A);unit of account.;B);store of value.;C);medium of exchange.;D);double coincidence of wants.;40);In the short run when prices don't have enough time to change, the Federal;Reserve;A);can influence the level of interest rates in the economy.;B);cannot influence the level of interest rates in the economy.;C);can influence the level of interest rates in the economy but generally will not;because it would be destabilizing.;D);can only affect the amount of money in the economy.;41);At higher interest rates the;A);money supply is higher.;B);money supply is indeterminate.;C);quantity of money demanded is higher.;D);quantity of money demanded is lower.;42);The demand for money that arises so that individuals or firms can make;purchases on quick notice is called the;A);real demand for money.;B);transaction demand for money.;C);liquidity demand for money.;D);speculative demand for money.;43);In the long run;A);prices are sticky.;B);the economy operates at full employment.;C);increases in government spending do not effect other uses of output.;D);increases in the money supply increase the level of output.;44);Suppose GDP ________ the level of potential output. We would expect to see;unemployment, rising wages, and rising prices.;A);exceeds, high;B);exceeds, low;C);is below, high;D);is below, low;45);Suppose that an economy has been experiencing 4 percent annual inflation. If;output exceeds potential output, prices generally will rise at;A);a rate of 4 percent.;B);a rate greater than 4 percent.;C);a rate less than 4 percent.;D);a rate of 0 percent.;46);Compared to other countries, inflation in the United States has been;A);generally less severe.;B);generally more severe.;C);always worse.;D);about the same.;47);Suppose the inflation rate is 6 percent this year. If nominal wages increase by;6 percent, real wages will;A);increase by 6 percent.;B);increase by 9 percent.;C);decrease by 12 percent.;D);not change.;48);If nominal wages increase by 5 percent while real wages fall by 1 percent, the;inflation rate must be;A);1 percent.;B);4 percent.;C);5 percent.;D);6 percent.;49);A deficit is defined as;A);the excess of total expenditures over total revenues.;B);the excess of total revenues over total expenditures.;C);government spending plus transfer payments.;D);the sum of all past borrowing by the government.;50);If government spending is $900 billion while government revenue is $600;billion, the government is said to have a;A);$300 billion budget surplus.;B);$300 billion budget deficit.;C);$1,500 billion budget deficit.;D);$600 billion budget deficit.;51);Suppose the government's initial debt is $350 billion and that during the next;two years the government runs deficits of $90 and $40 billion. If during the;third year the government has a $70 billion surplus, the government's total;debt at the end of the three years will be;A);$60 billion.;B);$200 billion.;C);$410 billion.;D);$550 billion.;52);The opportunity cost of something is;A);a measure of the scarcity of the good.;B);what you sacrifice to get the good.;C);the price you pay for the good.;D);what you are willing to pay for the good.;53);The slope of the production possibilities curve is;A);positive.;B);positive and increasing.;C);positive and decreasing.;D);the opportunity cost of one good in terms of the other.;54);The relative amounts of the goods that will be exchanged for each other in;trade refers to the nations;A);absolute advantages.;B);terms of trade.;C);production possibilities.;D);autarky status.;55);The rate at which one currency can be traded for another is called the;A);terms of trade.;B);transfer rate.;C);exchange rate.;D);coupon rate.;56);If the dollar to euro exchange rate moves from 1.1 to 0.9 dollars per euro;then the dollar has ________ and the euro has ________.;A);depreciated, depreciated;B);depreciated, appreciated;C);appreciated, depreciated;D);appreciated, appreciated;57);If the dollar depreciates against the yen, U.S. goods sold in ________ would;become less expensive and Japanese goods sold in ________ would become more;expensive.;A);the United States, the United States;B);the United States, Japan;C);Japan, Japan;D);Japan, the United States

 

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