I have shown my answers that i thought were correct. Do you mind letting me know what you think. Thank you so much. Anything will help!! I have placed an *. By the ones i think are right!! It has been so long since i took micro!!
1. The basic concern of economics is: (Points: 3)
to keep business firms from losing money.
to prove that capitalism is better than socialism.
****to study the choices people make.
to use unlimited resources to produce goods and services to satisfy limited wants.
2. Scarcity in economics means: (Points: 3)
****not having sufficient resources to produce all the goods and services we want.
the wants of people are limited.
there must be poor people in rich countries.
economists are clearly not doing their jobs.
3. If the state government allocates additional spending on education, the opportunity cost is: (Points: 3)
zero.
the dollar amount of the additional spending.
only considered if additional taxes need to be raised to fund the spending.
****measured in terms of the alternative uses for that money.
4. Marginal analysis: (Points: 3)
refers to decisions about whether to do a bit more or a bit less of an activity.
helps when making a “how much” choice.
involves tradeoffs.
*****involves all of the above.
5. Specialization and trade usually lead to: (Points: 3)
lower economic growth.
****the exchange of goods and services in markets.
lower living standards.
higher prices.
6. Increases in total output realized when individuals specialize in particular tasks and trade are known as: (Points: 3)
****the gains from trade.
the profits obtained from sales of a good or service.
marginal analysis.
a tradeoff.
7. If equilibrium exists: (Points: 3)
all individuals must have an equal amount of income.
the price in that market will not fluctuate by more than 5%.
****there will be no remaining opportunities for individuals to make themselves better off.
the number of buyers equals the number of sellers.
8. Economists believe that resources should be used as efficiently as possible to: (Points: 3)
achieve society's goals.
eliminate scarcity.
reduce inequity.
****do all of the above.
9. The models used in economics: (Points: 3)
are usually limited to variables that are directly related.
are essentially not reliable because they are not testable in the real world.
are of necessity unrealistic and not related to the real world.
*****emphasize basic relationships by abstracting from complexities in the everyday world.
10. When moving along a production possibilities curve, the opportunity cost to society of getting more of one good: (Points: 3)
is constant.
is measured in dollar terms.
****is measured by the amount of the other good that must be given up.
usually decreases.
11. If an economy is producing a level of output that is on its production possibilities curve, the economy: (Points: 3)
has idle resources.
*****has idle resources but is using resources efficiently.
has no idle resources but is using resources inefficiently.
has no idle resources and is using resources efficiently.
12. Technological improvements will: (Points: 3)
leave the production possibilities curve unchanged.
shift the production possibilities curve inward.
****shift the production possibilities curve outward.
necessarily lead to increased unemployment.
13. Trade can be beneficial to an economy because: (Points: 3)
it results in a more efficient use of the combined resources of some of the trading countries, even though it reduces efficiency in others.
****more goods and services can be obtained at lower opportunity cost.
it prevents specialization in those activities in which countries have a comparative advantage.
it prevents unemployment.
14. When a nation experiences economic growth: (Points: 3)
****its production possibilities curve shifts outward.
its production possibilities curve shifts inward.
it has been able to reach full employment.
it has moved to a more consumer-oriented position on its production possibilities curve.
15. The circular-flow diagram illustrates how households _______ goods and services and _______ factors of production. (Points: 3)
*****buy; sell
buy; buy
own; buy
own; sell
16. An example of a positive statement is: (Points: 3)
****The rate of unemployment is 4 percent.
A high rate of economic growth is good for the country.
Everyone in the country needs to be covered by national health insurance.
Baseball players should not be paid higher salaries than the president of the United States.
17. A decrease in the price of a good will result in: (Points: 3)
****an increase in demand.
an increase in supply.
an increase in the quantity demanded.
more being supplied.
18. If people demand more of product A when the price of B falls, then A and B are: (Points: 3)
not related.
substitutes.
****complements.
inferior.
19. For most goods, purchases tend to rise with increases in buyers' incomes and to fall with decreases in buyers' incomes. Such goods are known as: (Points: 3)
inferior goods.
direct goods.
****normal goods.
indirect goods.
20. Given that pizza is a normal good, if students' income at your college increases substantially, there would be: (Points: 3)
****an increase in the demand for pizza.
an increase in the quantity of pizza demanded.
a decrease in the demand for pizza.
no change in the demand for pizza.
21. A decrease in supply means: (Points: 3)
a shift to the left of the entire supply curve.
***moving downward (to the left) along the supply curve with lower prices.
less will be demanded at every price.
more will be supplied at every price.
22. If the quantity supplied in a market exceeds the quantity demanded in a market, we would expect price to: (Points: 3)
stay the same.
increase.
****decrease.
rise in order to clear the market.
23. A competitive market with flexible prices and many buyers and sellers will: (Points: 3)
eliminate surpluses.
****eliminate shortages.
reach an equilibrium where the market has no surpluses or shortages.
accomplish all of the above.
24. If the quantity of housing supplied in a community is greater than the quantity of houses demanded, the existing price: (Points: 3)
*****is above the market equilibrium price.
will rise to clear the market.
will either rise or remain unchanged.
is below the market equilibrium price.
25. A price ceiling will have no effect if: (Points: 3)
****it is set above the equilibrium price.
the equilibrium price is above the price ceiling.
set below the equilibrium price.
it creates a shortage.
26. Price controls: (Points: 3)
always increase economic efficiency.
always lead to more equitable results.
****can result in inequitable outcomes.
are all of the above.
27. State governments place excise taxes on alcohol because: (Points: 3)
they want to subsidize alcohol production.
they want to encourage individuals to produce their own alcohol.
*****it discourages drinking alcohol while raising revenue for the government.
of all of the above.
28. Tax incidence refers to: (Points: 3)
who writes the check to the government.
****who really pays the tax to the government.
the deadweight loss from the tax
the total revenue that the government collects from the tax.
29. Price elasticity of demand measures the responsiveness of the change in ______. (Points: 3)
*****quantity demanded to a change in price
price to a change in quantity demanded
slope of the demand curve to a change in price
slope of the demand curve to a change in quantity demanded
30. The demand for agricultural output is price inelastic. This means that if farmers, taken collectively, have a bumper crop, they will experience ______. (Points: 3)
***lower prices, greater quantities sold, and lower incomes
higher prices, greater quantities sold, and higher incomes
lower prices, lower quantities sold, and lower incomes
higher prices, higher quantities sold, and higher incomes
31. If a university decreases the price of tickets to football games to collect more revenue, it is assuming that the demand for tickets is ______. (Points: 3)
unstable
price inelastic
****price elastic
unit-price elastic
32. Which of the following is not a factor in determining the price elasticity of demand? (Points: 3)
the number of available substitutes
the time period involved
the proportion of the budget spent on the item
****the slope of the supply curve
33. To say that two goods are substitutes, their cross-price elasticities of demand should be _____. (Points: 3)
less than zero
negative, yet almost equal to zero
equal to zero
****greater than zero
34. To say that two goods are complements, their cross-price elasticities of demand should be _____. (Points: 3)
****less than zero
equal to zero
positive, yet almost equal to zero
greater than zero
35. If the income elasticity of demand for a good is positive, the good is said to be a(n) _____. (Points: 3)
inferior good
substitute good
****normal good
positive good
36. If the price elasticity of supply is greater than 1, then _____. (Points: 3)
****supply is price elastic
supply is price inelastic
supply is unit-price elastic
quantity supplied is relatively unresponsive to price changes
37. We can measure total consumer surplus for good X as ______. (Points: 3)
****the sum of the individual consumer surpluses for all buyers of X
the area above the demand curve for X and below the price of X
the area bounded by the demand curve for X and the two axes
all of the above
38. When there is a bountiful harvest of grapefruit, total consumer surplus in the grapefruit market _____. (Points: 3)
will increase
will decrease
will remain the same
*****may change but we can't tell how
39. Which of the following is true if there is a decrease in the demand of ice cream? (Points: 3)
*****There is an increase in producer surplus.
There is a decrease in producer surplus.
There is no change to producer surplus.
It's impossible to tell what will happen to producer surplus.
40. If there is an increase in demand, total surplus ______. (Points: 3)
****will increase
will decrease
will remain the same
may change but we can't tell how
41. If total surplus rises, which of the following must have occurred? (Points: 3)
There was an increase in demand and a decrease in supply.
****There was an increase in demand and an increase in supply.
There was a decrease in demand and a decrease in supply.
There was a decrease in demand and an increase in supply.
42. If the government removed the excise tax on gasoline, which of the following would not occur? (Points: 3)
Consumer surplus would increase.
Producer surplus would increase.
Producer surplus would decrease.
****Total surplus would increase.
43. A fixed input is one ______. (Points: 3)
that exists in nature and there is only so much of it
that can be used for one thing only
that can never produce more or less in any time period
****whose quantity cannot be changed in a particular period
44. The long run is a planning period ______. (Points: 3)
****over which a firm can consider all inputs as variable
that is at least 5 years in length
that must be over 6 months in length
that must be between 6 months and 5 years
45. In the long run _____. (Points: 3)
all inputs are fixed
inputs are neither variable nor fixed
at least one input is variable and one input is fixed
****all inputs are variable
46. The change in total output resulting from a 1-unit increase in the quantity of an input used, holding the quantities of all other inputs constant, is ______. (Points: 3)
average cost
average product
****marginal cost
marginal product
47. The curve that shows the additional cost of each additional unit of output is called the _____. (Points: 3)
average cost curve
total cost curve
marginal product curve
****marginal cost curve
48. When marginal cost is below average variable cost, average variable cost must be ______. (Points: 3)
at its minimum
at its maximum
****falling
rising
49. If marginal cost is greater than average total cost, then _____. (Points: 3)
****average total cost is increasing
average total cost is decreasing
average total cost is unchanged
marginal cost is decreasing
50. When an increase in the firm's output reduces its long-run average cost, it experiences _____. (Points: 3)
****economies of scale
diseconomies of scale
constant returns to scale
variable returns to scale
51. The assumptions of perfect competition imply that ______. (Points: 3)
****individuals in the market accept the market price as given
individuals can influence the market price
the price will be a fair price
the price will be low
52. Individuals in a market who must take the market price as given are ______. (Points: 3)
quantity minimizers
quantity takers
****price takers
price searchers
53. Marginal revenue ______. (Points: 3)
is the slope of the average revenue curve
****equals the market price in perfect competition
is the change in quantity divided by the change in total revenue
is the price divided by the changes in quantity
54. For a firm producing at any level of output less than the most profitable one, an increase in output adds ______. (Points: 3)
more to total cost than to total revenue
****more to total revenue than to total cost
the same amount to total revenue as to total cost
to total revenue but not to total cost
55. In the short run, a perfectly competitive firm produces output and earns an economic profit if _____. (Points: 3)
****P > ATC
P = ATC
P < AVC
AVC > P > ATC
56. In the short run, a perfectly competitive firm produces output and earns zero economic profit if _____. (Points: 3)
P > ATC
****P = ATC
P < AVC
AVC > P > ATC
57. The shutdown price is _____. (Points: 3)
the price at which economic profit is zero
****the minimum level of AVC
the intersection of the MC and ATC curves
the minimum level of AFC
58. The supply curve found by summing up the short-run supply curves of all the firms in a perfectly competitive industry is called the _____. (Points: 3)
firm's marginal cost curve
****short-run market supply curve
the interim market supply curve
competitive curve
59. In long-run equilibrium, economic profits in a perfectly competitive industry are _____. (Points: 3)
positive
****zero
negative
indeterminate
60. The amount by which total utility increases when an additional unit of a good is consumed is called ________ utility. (Points: 3)
average
additional
maximum
****marginal
61. The principle of diminishing marginal utility ______. (Points: 3)
refers to the tendency of total utility to increase until an individual's budget is no longer constrained
****refers to the tendency of marginal utility to decline beyond some level of consumption during a period
indicates that, if a good is inferior, less of it will be purchased when income falls during a period
assumes all goods are normal
62. A line representing all the possible combinations of two commodities that a consumer can purchase at a particular time, given the market prices of the commodities and the consumer's income, is a(n) ______. (Points: 3)
****budget line
consumption line
income consumption curve
indifference curve
63. An increase in the consumer's income will do all of the following, except ______. (Points: 3)
shift the budget line away from the origin
increase the horizontal intercept
increase the vertical intercept
****change the slope of the budget line
64. If a consumer purchases a combination of commodities X and Y such that MUx/Px = 20 and MUy/Py = 5, to maximize utility, the consumers should buy ______. (Points: 3)
*****more of X and less of Y
less of X and less of Y
more of both X and Y
less of both X and Y
65. If a consumer derives more utility by spending an additional $1 on good X rather than on good Y, then ______. (Points: 3)
MUx/Px > MUy/Py
*****MUx/Px = MUy/Py
MUx/Px < MUy/Py
Px/MUx > Py/MUy
66. Assume that a person is consuming the utility-maximizing quantities of pork and chicken. We can conclude that ______. (Points: 3)
the price of pork equals the price of chicken
the marginal utility of pork equals the marginal utility of chicken
****the ratio of the marginal utility to price is the same for pork and for chicken
both A and B are true
67. If the price of a good falls and the consumer decides to buy more of the good solely because it is relatively less expensive, this describes the ______. (Points: 3)
income effect
****substitution effect
consumer surplus effect
marginal-maximizing rule
68. Conditions that prevent the entry of new firms in a monopoly market are ______. (Points: 3)
****barriers to entry
terms of sale
labor market stipulations
production controls
69. A natural monopoly exists whenever a single firm ______. (Points: 3)
is owned and operated by the federal or local government
is investor owned but has been granted the exclusive right by the government to operate in a market
****confronts economies of scale over the entire range of production that is relevant to its market
has gained control over a strategic input of an important production process
70. If your farm has the only known source of a rare cocoa bean needed to make chocolate-covered peanuts, your monopoly would result from ______. (Points: 3)
sunk costs
location
****ownership of inputs
government restrictions
71. Marginal revenue for a monopolist is ______. (Points: 3)
****equal to price
greater than price
less than price
equal to average revenue
72. In a monopoly in the long run ______. (Points: 3)
economic profits will be eliminated by the entry of rival firms
economic profits will be reduced, but not eliminated entirely, by the entry of rival firms
****entry will not occur
none of the above is true
73. In monopoly _______. (Points: 3)
because P > MC, a basic condition for efficiency is violated
****consumers are confronted with a price that is lower than marginal cost
consumers will consume more of the good than is economically efficient
all of the above are true
74. Public policies toward monopoly in the United States consists of _______. (Points: 3)
laws outlawing all of them
****regulation of natural monopolies
government takeover if monopoly profit exceeds a certain level
forcing monopoly industries to become perfectly competitive
75. A monopolist or an imperfectly competitive firm practices price discrimination primarily to ______. (Points: 3)
****increase profits
expand plant size
lower total costs
reduce marginal costs
76. The industry characterized by a few interdependent firms where there are barriers to entry is called ______. (Points: 3)
monopolistic competition
perfect competition
****oligopoly
monopoly
77. A way to measure the degree of concentration in oligopoly is to use ______. (Points: 3)
an elasticity ratio
a demand ratio
****the percentage of sales accounted for by the four largest firms in the industry
the ratio of MC to ATC
78. A cartel is an example of ______. (Points: 3)
price extortion
price leadership
overt collusion
****tacit collusion
79. An analytical approach through which strategic choices can be assessed is called _____. (Points: 3)
benefit-cost analysis
econometric theory
***game theory
none of the above
80. Firms in an industry that informally agree to charge the same price as the largest firm are an example of ______. (Points: 3)
satisfying
price extortion
overt collusion
****tacit collusion
81. A dominant strategy equilibrium exists in a game when ______. (Points: 3)
every player has no choice
****every player makes the same choice, regardless of the action of the other players
each player makes the best choice, given the choice of the other player
no player is able to dictate the actions of any other player
82. When one firm responds to a rival's cheating by cheating and to a rival's cooperation by cooperating, that firm is practicing a ______. (Points: 3)
dormant strategy
trigger strategy
conclusive strategy
****-for-tat strategy
83. An industry characterized by many firms, producing similar but differentiated products, in a market with easy entry and exit is called ______. (Points: 3)
perfect competition
monopoly
****monopolistic competition
oligopoly
84. In large shopping areas, the retail market is most illustrative of ______. (Points: 3)
*****monopolistic competition
monopoly
perfect competition
perfect oligopoly
85. A feature of monopolistic competition that makes it different from monopoly is the ______. (Points: 3)
fact that firms in the model of monopolistic competition follow the marginal decision rule while monopolies do not
downward-sloping demand curve
downward-sloping marginal revenue curve
*****number of firms in the industry
86. The demand curve for a firm under monopolistic competition is ______. (Points: 3)
U-shaped
upward sloping
***downward sloping
vertical
87. If a firm under monopolistic competition is producing a quantity that generates MC = MR, then the marginal decision rule tells us that profit ______. (Points: 3)
****is maximized
can be increased by decreasing production
can be increased by decreasing the price
is maximized only if MC = P
88. In the long run, monopolistically competitive firms tend to experience ______. (Points: 3)
high economic profits
****zero economic profits
negative economic profits
substantial economic losses
89. Defenders of advertising argue that it _______. (Points: 3)
seeks to persuade, rather than inform, buyers
****provides education and information about products
facilitates the concentration of monopoly power
encourages artificial product differentiation
90. If external costs exist, the competitive free market ______. (Points: 3)
****allocates resources inefficiently
allocates resources efficiently
automatically corrects an overallocation of resources
automatically corrects an underallocation of resources
91. According to the Coase theorem, when negative externalities are present, a market will ______. (Points: 3)
always reach an efficient solution
*****reach an efficient solution if transaction costs are low
reach an efficient solution only if the government intervenes in the market
reach an efficient solution only if the negative externalities are offset by positive externalities
92. Taxes are a more effective method of controlling pollution than environmental standards because _____. (Points: 3)
standards allow greater flexibility
standards require less information
standards never require the efficient level of output
taxes encourage reducing pollution at minimum cost
93. The licenses that enable the holder to pollute up to a specified amount during a given time period that can be bought and sold by polluters are called ______. (Points: 3)
emissions taxes
Pigouvian taxes
tradable emission permits
*****environmental standards
94. A tax system _______ when the “right people actually bear the burden of taxes.” (Points: 3)
is efficient
****is equitable
has no deadweight loss
is both A and B
95. Criteria that economists use in selecting a tax system include ______. (Points: 3)
****ability to pay and benefits received
fairness
only benefits received
only ability to pay
96. Paying a fee every time you use the municipal golf course is an example of the ______. (Points: 3)
benefits principle
ability-to-pay principle
progressive tax principle
regressive tax principle
97. A tax that takes a fixed percentage of income, regardless of the level of income, is a(n) ______. (Points: 3)
****proportional tax
benefits tax
progressive tax
regressive tax
98. The rate that would apply to an additional $1 of taxable income received by a taxpayer is the ______. (Points: 3)
****marginal tax rate
average tax rate
total tax rate
lower tax rate
99. If the marginal tax rate is less than the average tax rate, we know that the tax system is ______. (Points: 3)
proportional
progressive
degressive
****regressive
100. The single most important factor influencing children's later socioeconomic attainment is ______. (Points: 3)
parental income
education
****health care
geographic mobility
I started checking your answers -- and realized when I got to 10 that there 90 more to go!! Oh my!!!
In the first ten -- I disagree with # 7 and don't know about # 10.
Please chose no more than ten questions that you're least sure about and post them. We'll try to help you sort those out.