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phasic · 02-06-2007, 05:57 PM

Practice Set 1 - Economic Foundations
Name: David Levey
Start time: February 6, 2007 5:59pm
Number of questions: 50

Finish Help

Question 1 (2 points)
For society, a good is not scarce if

a. at least one individual in society can obtain all he or she wants of the good.
b. firms are producing the good at full capacity.
c. all members of society can have all they want of the good.
d. those who have enough income can buy all they want of the good.

Save answer
Question 2 (2 points)
To improve living standards, policymakers should

a. impose restriction on foreign competition.
b. formulate policies designed to increase productivity.
c. impose tougher immigration policies.
d. provide tax breaks for the middle class.

Save answer
Question 3 (2 points)
Efficiency means that

a. society is conserving resources in order to save them for the future.
b. society's goods and services are distributed equally among society's members.
c. society's goods and services are distributed fairly, though not necessarily equally, among society's members.
d. society is getting the maximum benefits from its scarce resources.

Save answer
Question 4 (2 points)
The term "invisible hand" was coined by

a. Adam Smith.
b. David Ricardo.
c. Karl Marx.
d. Benjamin Franklin.

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Question 5 (2 points)
If an externality is present in a market, economic efficiency may be enhanced by

a. government intervention.
b. increased competition.
c. better informed market participants.
d. weaker property rights.

Save answer
Question 6 (2 points)
An example of a price that changes only infrequently is the price of

a. stocks on the New York Stock Exchange.
b. crude oil.
c. residential real estate.
d. magazines sold at newsstands.

Save answer
Question 7 (2 points)
Macroeconomics is the study of

a. individual decisionmakers.
b. international trade.
c. economy-wide phenomena.
d. markets for large products.

Save answer
Question 8 (2 points)
Economic models are built with

a. recommendations concerning public policies.
b. facts about the legal system.
c. assumptions.
d. statistical forecasts.

Save answer
Question 9 (2 points)
One thing economists do to help them understand how the real world works is as follows:

a. They make assumptions.
b. They ignore the past.
c. They try to capture every aspect of the real world in the models they construct.
d. All of the above are correct.

Save answer
Question 10 (2 points)
Normative conclusions

a. are derived directly from positive analysis.
b. are based on ignorance of positive analysis.
c. involve value judgments.
d. reflect the economist?s role as scientist.

Save answer
Question 11 (2 points)
If an economy is producing efficiently, then

a. there is no way to produce more of one good without producing less of another good.
b. it is possible to produce more of both goods without increasing the quantities of inputs that are being used.
c. it is possible to produce more of one good without producing less of the other.
d. it is not possible to produce more of any good at any cost.

Save answer
Question 12 (2 points)
In the simple circular-flow diagram, households

a. are represented, but firms are not represented.
b. own the factors of production.
c. are buyers of inputs.
d. directly receive revenue from the sale of goods and services.

Save answer
Question 13 (2 points)
The opportunity cost of obtaining more of one good is shown on the production possibilities frontier as the

a. amount of the other good that must be given up.
b. market price of the additional amount produced.
c. amount of resources that must be devoted to its production.
d. number of dollars that must be spent to produce it.

Save answer
Question 14 (2 points)
Policies such as rent control and import quotas persist in spite of the fact that economists are virtually united in their opposition to such policies, probably because

a. economists have not yet convinced the general public that the policies are undesirable.
b. economists engage in positive analysis, not normative analysis.
c. economists have values that are different from the values of most non-economists.
d. economists? theories are not easily confirmed or refuted in laboratory analysis.

Save answer
Question 15 (2 points)
When studying the effects of changes in public policy, economists believe that

a. it is important to distinguish between the short run and the long run.
b. the assumptions used in studying those effects should be the same for the short run as for the long run.
c. the short-run effects of those changes are always more beneficial to society than are the long-run effects.
d. the long-run effects of those changes are always more beneficial to society than are the short-run effects.

Save answer
Question 16 (2 points)
Table 3-5
Hours needed to make one: Amount produced in 2400 hours:
Car Airplane Cars Airplanes
Japan 30 150 80 16
U.S. 50 200 48 12

Refer to Table 3-5. The opportunity cost of 1 car for the United States is

a. 4 airplanes.
b. 3 airplanes.
c. 1/3 airplane.
d. 1/4 airplane.

Save answer
Question 17 (2 points)
Figure 3-2
Chapter_03-MC_nar003-1.jpg

Refer to Figure 3-2. Jerry has an absolute advantage in

a. both goods and Ben has a comparative advantage in ice cream.
b. neither good and Ben has a comparative advantage in cones.
c. ice cream and Ben has a comparative advantage in ice cream.
d. ice cream and Ben has a comparative advantage in cones.

Save answer
Question 18 (2 points)
What must be given up to obtain an item is called

a. out-of-pocket cost.
b. comparative worth.
c. opportunity cost.
d. absolute value.

Save answer
Question 19 (2 points)
These graphs illustrate the production possibilities available to Fred and Ginger with each person working 40 hours.

Figure 3-3
Chapter_03-MC_nar005-1.jpg

Refer to Figure 3-3. The opportunity cost of 1 pair of tap shoes for Fred is

a. 1/3 pair of ballet slippers.
b. 1/5 pair of ballet slippers.
c. 3/5 pair of ballet slippers.
d. 5/3 pairs of ballet slippers.

Save answer
Question 20 (2 points)
Table 3-1
Labor Hours Needed to Make 1 Pound of:
Pounds produced in 40 hours:
Meat Potatoes Meat Potatoes
Farmer 8 2 5 20
Rancher 4 5 10 8

Refer to Table 3-1. The rancher has an absolute advantage in

a. both goods, and the farmer has a comparative advantage in meat.
b. both goods, and the farmer has a comparative advantage in potatoes.
c. meat, and the farmer has a comparative advantage in potatoes.
d. meat, and the farmer has a comparative advantage in neither good.

Save answer
Question 21 (2 points)
A production possibilities frontier will be a straight line if

a. increasing the production of one good by x units entails no opportunity cost in terms of the other good.
b. increasing the production of one good by x units entails a constant opportunity cost in terms of the other good.
c. the economy is producing efficiently.
d. the economy is engaged in trade with at least one other economy.

Save answer
Question 22 (2 points)
These graphs illustrate the production possibilities available to Fred and Ginger with each person working 40 hours.

Figure 3-3
Chapter_03-MC_nar005-1.jpg

Refer to Figure 3-3. Ginger has an absolute advantage in

a. ballet slippers and Fred has an absolute advantage in tap shoes.
b. tap shoes and Fred has an absolute advantage in ballet slippers.
c. neither good and Fred has an absolute advantage in both goods.
d. both goods and Fred has an absolute advantage in neither good.

Save answer
Question 23 (2 points)
Figure 3-1
Chapter_03-MC_nar002-1.jpg

Refer to Figure 3-1. Which of the following statements is correct?

a. Paul has a comparative advantage in both wheat and corn.
b. Paul has a comparative advantage in wheat and Cliff has a comparative advantage in corn.
c. Cliff has a comparative advantage in wheat and Paul has a comparative advantage in corn.
d. Cliff has a comparative advantage in both wheat and corn.

Save answer
Question 24 (2 points)
Table 3-5
Hours needed to make one: Amount produced in 2400 hours:
Car Airplane Cars Airplanes
Japan 30 150 80 16
U.S. 50 200 48 12

Refer to Table 3-5. Japan has a comparative advantage in

a. airplanes and the United States has an absolute advantage in cars.
b. cars and the United States has an absolute advantage in airplanes.
c. cars and the United States has an absolute advantage in neither good.
d. airplanes and the United States has an absolute advantage in both goods.

Save answer

02-06-2007, 05:57 PM
phasic Confirmed User Industry Role: Join Date: Jul 2005 Location: US Posts: 2,104	Who knows micro economics? 50 questions! Practice Set 1 - Economic Foundations Name: David Levey Start time: February 6, 2007 5:59pm Number of questions: 50 Finish Help Question 1 (2 points) For society, a good is not scarce if a. at least one individual in society can obtain all he or she wants of the good. b. firms are producing the good at full capacity. c. all members of society can have all they want of the good. d. those who have enough income can buy all they want of the good. Save answer Question 2 (2 points) To improve living standards, policymakers should a. impose restriction on foreign competition. b. formulate policies designed to increase productivity. c. impose tougher immigration policies. d. provide tax breaks for the middle class. Save answer Question 3 (2 points) Efficiency means that a. society is conserving resources in order to save them for the future. b. society's goods and services are distributed equally among society's members. c. society's goods and services are distributed fairly, though not necessarily equally, among society's members. d. society is getting the maximum benefits from its scarce resources. Save answer Question 4 (2 points) The term "invisible hand" was coined by a. Adam Smith. b. David Ricardo. c. Karl Marx. d. Benjamin Franklin. Save answer Question 5 (2 points) If an externality is present in a market, economic efficiency may be enhanced by a. government intervention. b. increased competition. c. better informed market participants. d. weaker property rights. Save answer Question 6 (2 points) An example of a price that changes only infrequently is the price of a. stocks on the New York Stock Exchange. b. crude oil. c. residential real estate. d. magazines sold at newsstands. Save answer Question 7 (2 points) Macroeconomics is the study of a. individual decisionmakers. b. international trade. c. economy-wide phenomena. d. markets for large products. Save answer Question 8 (2 points) Economic models are built with a. recommendations concerning public policies. b. facts about the legal system. c. assumptions. d. statistical forecasts. Save answer Question 9 (2 points) One thing economists do to help them understand how the real world works is as follows: a. They make assumptions. b. They ignore the past. c. They try to capture every aspect of the real world in the models they construct. d. All of the above are correct. Save answer Question 10 (2 points) Normative conclusions a. are derived directly from positive analysis. b. are based on ignorance of positive analysis. c. involve value judgments. d. reflect the economist?s role as scientist. Save answer Question 11 (2 points) If an economy is producing efficiently, then a. there is no way to produce more of one good without producing less of another good. b. it is possible to produce more of both goods without increasing the quantities of inputs that are being used. c. it is possible to produce more of one good without producing less of the other. d. it is not possible to produce more of any good at any cost. Save answer Question 12 (2 points) In the simple circular-flow diagram, households a. are represented, but firms are not represented. b. own the factors of production. c. are buyers of inputs. d. directly receive revenue from the sale of goods and services. Save answer Question 13 (2 points) The opportunity cost of obtaining more of one good is shown on the production possibilities frontier as the a. amount of the other good that must be given up. b. market price of the additional amount produced. c. amount of resources that must be devoted to its production. d. number of dollars that must be spent to produce it. Save answer Question 14 (2 points) Policies such as rent control and import quotas persist in spite of the fact that economists are virtually united in their opposition to such policies, probably because a. economists have not yet convinced the general public that the policies are undesirable. b. economists engage in positive analysis, not normative analysis. c. economists have values that are different from the values of most non-economists. d. economists? theories are not easily confirmed or refuted in laboratory analysis. Save answer Question 15 (2 points) When studying the effects of changes in public policy, economists believe that a. it is important to distinguish between the short run and the long run. b. the assumptions used in studying those effects should be the same for the short run as for the long run. c. the short-run effects of those changes are always more beneficial to society than are the long-run effects. d. the long-run effects of those changes are always more beneficial to society than are the short-run effects. Save answer Question 16 (2 points) Table 3-5 Hours needed to make one: Amount produced in 2400 hours: Car Airplane Cars Airplanes Japan 30 150 80 16 U.S. 50 200 48 12 Refer to Table 3-5. The opportunity cost of 1 car for the United States is a. 4 airplanes. b. 3 airplanes. c. 1/3 airplane. d. 1/4 airplane. Save answer Question 17 (2 points) Figure 3-2 Chapter_03-MC_nar003-1.jpg Refer to Figure 3-2. Jerry has an absolute advantage in a. both goods and Ben has a comparative advantage in ice cream. b. neither good and Ben has a comparative advantage in cones. c. ice cream and Ben has a comparative advantage in ice cream. d. ice cream and Ben has a comparative advantage in cones. Save answer Question 18 (2 points) What must be given up to obtain an item is called a. out-of-pocket cost. b. comparative worth. c. opportunity cost. d. absolute value. Save answer Question 19 (2 points) These graphs illustrate the production possibilities available to Fred and Ginger with each person working 40 hours. Figure 3-3 Chapter_03-MC_nar005-1.jpg Refer to Figure 3-3. The opportunity cost of 1 pair of tap shoes for Fred is a. 1/3 pair of ballet slippers. b. 1/5 pair of ballet slippers. c. 3/5 pair of ballet slippers. d. 5/3 pairs of ballet slippers. Save answer Question 20 (2 points) Table 3-1 Labor Hours Needed to Make 1 Pound of: Pounds produced in 40 hours: Meat Potatoes Meat Potatoes Farmer 8 2 5 20 Rancher 4 5 10 8 Refer to Table 3-1. The rancher has an absolute advantage in a. both goods, and the farmer has a comparative advantage in meat. b. both goods, and the farmer has a comparative advantage in potatoes. c. meat, and the farmer has a comparative advantage in potatoes. d. meat, and the farmer has a comparative advantage in neither good. Save answer Question 21 (2 points) A production possibilities frontier will be a straight line if a. increasing the production of one good by x units entails no opportunity cost in terms of the other good. b. increasing the production of one good by x units entails a constant opportunity cost in terms of the other good. c. the economy is producing efficiently. d. the economy is engaged in trade with at least one other economy. Save answer Question 22 (2 points) These graphs illustrate the production possibilities available to Fred and Ginger with each person working 40 hours. Figure 3-3 Chapter_03-MC_nar005-1.jpg Refer to Figure 3-3. Ginger has an absolute advantage in a. ballet slippers and Fred has an absolute advantage in tap shoes. b. tap shoes and Fred has an absolute advantage in ballet slippers. c. neither good and Fred has an absolute advantage in both goods. d. both goods and Fred has an absolute advantage in neither good. Save answer Question 23 (2 points) Figure 3-1 Chapter_03-MC_nar002-1.jpg Refer to Figure 3-1. Which of the following statements is correct? a. Paul has a comparative advantage in both wheat and corn. b. Paul has a comparative advantage in wheat and Cliff has a comparative advantage in corn. c. Cliff has a comparative advantage in wheat and Paul has a comparative advantage in corn. d. Cliff has a comparative advantage in both wheat and corn. Save answer Question 24 (2 points) Table 3-5 Hours needed to make one: Amount produced in 2400 hours: Car Airplane Cars Airplanes Japan 30 150 80 16 U.S. 50 200 48 12 Refer to Table 3-5. Japan has a comparative advantage in a. airplanes and the United States has an absolute advantage in cars. b. cars and the United States has an absolute advantage in airplanes. c. cars and the United States has an absolute advantage in neither good. d. airplanes and the United States has an absolute advantage in both goods. Save answer __________________ Brief revisit. (mic drop)