Q u i z _Answer
1. The most fundamental economic problem is
a. reducing unemployment.
b. health and health care.
c. scarcity.
d. decreasing the inflation rate.
2. Studying how an individual firm decides to set its price is primarily a concern of
a. normative economics.
b. macroeconomics.
c. microeconomics.
d. all economists.
3. Which of the following is a macroeconomic topic?
a. Why has the price of a personal computer fallen over time?
b. How does a rise in the price of cheese affect the pizza market?
c. What factors determine the nation's inflation rate?
d. How does a consumer decide how many tacos to consume?
4. When the economy produces fireworks for sale at the Fourth of July, it most directly is answering the ____ question.
a. what goods and services are produced
b. opportunity cost
c. for whom are goods and services produced
d. how are goods and services produced
5. When doctors have an average income that exceeds $250,000, the economy most directly is answering the ____ question.
a. what goods and services are produced
b. opportunity cost
c. how are goods and services produced
d. for whom are goods and services produced
6. Which of the following is NOT a big macroeconomic question?
a. How are goods and services produced?
b. What determines the cost of living?
c. Why does our economy fluctuate?
d. What determines the standard of living?
7. The big tradeoff between equality and efficiency reflects the point that
a. policy actions to lower inflation also lower output.
b. if more of one good is produced, less of another can be produced.
c. taxing productive activities means producing fewer goods and services.
d. None of the above answers is correct.
8. Opportunity cost is
a. zero for services, because services do not last for very long, and positive for goods, because goods are long lasting.
b. paid by society not by an individual.
c. the highest-valued alternative given up by making a choice.
d. all the alternatives given up by making a choice.
9. Willy makes $25 an hour as a carpenter. He must take two hours off from work (unpaid) to go to the dentist to have a tooth pulled. The dentist charges $60. In terms of dollars, the opportunity cost of Willy's visit to the dentist is
a. $25.
b. $50.
c. $60
d. $110.
10. A company produces 100 units of a good at a cost of $400 or produces 101 units of the same good at a cost of $415 dollars. The $15 difference is
a. the marginal benefit of producing 101 units.
b. the marginal cost of producing the 101st unit.
c. the marginal cost of producing the first unit.
d. less than the average cost.
11. The branch of economics that studies individual markets within the economy is called
a. macroeconomics.
b. microeconomics.
c. individual economics.
d. market economy.
12. Consider a constant slope PPF with a vertical intercept of 80 guns and a horizontal intercept of 120 tons of butter. The opportunity cost of increasing butter output from 30 to 31 tons is
a. 1/2 gun.
b. 2/3 gun.
c. 1 gun.
d. 1 1/2 guns.
13. A nation produces at a point outside its PPF
a when it trades with other nations.
b. when it produces inefficiently.
c. when it produces efficiently.
d. never.
14. Which of the following statements is true?
a. All resources are made by people.
b. Human resources are called labor.
c. Capital is made only by labor.
d. Human capital is a contradiction in terms.
15. A situation in which some resources are used inefficiently is represented in a PPF diagram by
a. any point on either the vertical or horizontal axis.
b. the midpoint of the PPF .
c. a point outside the PPF .
d. a point inside the PPF .
16. Robert has decided to write the essay that is due in his economics class rather than watch a movie. The movie he will miss is Robert's ____ of writing the essay.
a. opportunity cost
b. explicit cost
c. implicit cost
d. discretionary cost
17. The cost of textbooks ____ and the earnings foregone because of attending college ____ part of the opportunity cost of attending college.
a. is; are
b. is; are not
c. is not; are
d. is not; are not
18. The best alternative foregone from an action is called the action's
a. ˇ§lossˇ¨.
b. ˇ§money costˇ¨.
c. ˇ§direct costˇ¨.
d. ˇ§opportunity costˇ¨.
19. The marginal benefit of a product is the
a. benefit that the product gives to someone other than the buyer.
b. maximum someone is willing to pay for that unit of the product.
c. benefit of the product that exceeds the marginal cost of the product.
d. benefit of the product divided by the total number of units purchased.
20. A marginal benefit curve has a ____ slope; a marginal cost curve has a ____ slope.
a. positive; positive
b. positive; negative
c. negative; positive
d. negative; negative
21. The production possibilities frontier will shift inward as a result of
a. an increase in the production of consumption goods.
b. an increase in R&D expenditure.
c. an increase in population.
d. destruction of part of the nation's capital stock.
22. Output combinations beyond the production possibility frontier
a. result in more rapid growth.
b. are associated with unused resources.
c. are attainable only with the full utilization of all resources.
d. are unattainable.
23. The PPF shifts inward as a result of
a. a decrease in the production of consumption goods.
b. an increase in R&D expenditure.
c. an increase in population.
d. the destruction of a portion of the capital stock.