Module 1
Module 2
Module 3
Module 4
Module 5
Module 6
Module 7
100
Which of the following is an example of capital?
a. a cheeseburger diner
b. a construction worker
c. petroleum
d. a factory
e. an acre of farmland
d. a factory
100
During the recession phase of a business cycle, which of the following is likely to increase?
a. the unemployment rate
b. the price level
c. economic growth rate
d. the labor force
e. wages
a. the unemployment rate
100
Which points on the graph represent productive efficiency?
a. B and C
b. A and D
c. A, B, C, and D
d. A, B, C, D, and E
e. A, B, C, D, E, and F
c. A, B, C, and D
100
Knowing that Country A's PPC is red and Country B's PPC is orange, use the graph to determine which country has an absolute advantage in producing each good. (Wheat; Textile)
a. Country A; Country B
b. Country A; Country A
c. Country B; Country A
d. Country B; Country B
e. Country A; Neither country
a. Country A; Country B
100
Which of the following is true in a competitive market?
a. there are many buyers and sellers
b. each firm sells a different variety of the product
c. buyers can influence the market price
d. sellers can influence the market price
e. all of the above
a. there are many buyers and sellers
100
The law of supply states that the relationship between price and quantity supplied is
a. positive.
b. negative.
c. indirect.
d. unclear.
e. weak.
a. positive.
100
Which of the following is true about equilibrium?
a. It is a concept used only in economics.
b. Economists use it only in the supply and demand model.
c. It occurs where supply equals demand.
d. It can occur when there is either a shortage or a surplus.
e. It is a point at which there is no tendency for change.
e. It is a point at which there is no tendency for change.
200
Which of the following is not an example of resource scarcity?
a. There is a finite amount of petroleum in the world.
b. Farming communities are experiencing droughts.
c. There are not enough physicians to satisfy all desires for health care in the United States.
d. Cassette tapes are no longer being produced.
e. Teachers would like to have more instructional technology in their classrooms.
d. Cassette tapes are no longer being produced.
200
The labor force is made up of everyone who is
a. employed.
b. old enough to work.
c. actively seeking work.
d. employed or unemployed.
e. employed or capable of working.
d. employed or unemployed.
200
For this economy, an increase in the quantity of capital goods produced without a corresponding decrease in the quantity of consumer goods produced
a. cannot happen because there is always an opportunity cost.
b. is represented by a movement from point E to point A.
c. is represented by a movement from point C to point B.
d. is represented by a movement from point E to point B.
e. is only possible with an increase in resources or technology.
d. is represented by a movement from point E to point B.
200
Knowing Country A's PPC is red and Country B's PPC is orange, for Country A, the opportunity cost of a bushel of wheat is
a. 1/2 unit of textiles.
b. 2/3 unit of textiles.
c. 1 1/3 units of textiles.
d. 1 1/2 units of textiles.
e. 2 units of textiles.
a. 1/2 unit of textiles.
200
The law of demand states that the relationship between price and the quantity demanded is
a. positive.
b. negative.
c. direct.
d. unclear.
e. weak.
b. negative.
200
Because the market supply curve is the sum of individual producers' supply curves, an increase in the number of producers will cause which of the following?
a. the supply curve to shift to the left
b. the supply curve to shift to the right
c. a movement to the right along the supply curve
d. a movement to the left along the supply curve
e. the supply to decrease
b. the supply curve to shift to the right
200
Price will tend to fall when
a. there is a shortage.
b. quantity demanded is greater than quantity supplied.
c. quantity supplied is less than quantity demanded.
d. price is above equilibrium.
e. price is below equilibrium.
d. price is above equilibrium.
300
Suppose that you prefer reading a book you already own to watching videos and that you prefer watching videos to listening to music. If these are your only three choices, what is the opportunity cost of reading?
a. watching videos and listening to music
b. watching videos
c. listening to music
d. sleeping
e. the price of the book
b. watching videos
300
Which of the following provides a long-term increase in the productive capacity of an economy?
a. an expansion
b. a recovery
c. a recession
d. a depression
e. economic growth
e. economic growth
300
An increase in unemployment could be represented by a movement from point
a. D to point C.
b. B to point A.
c. C to point F.
d. B to point E.
e. E to point B.
d. B to point E.
300
Knowing that Country A's PPC is red and Country B's PPC is orange, use the graph to determine which country has a comparative advantage in producing each good. (Wheat; Textile)
a. Country A; Country B
b. Country A; Country A
c. Country B; Country A
d. Country B; Country B
e. Country A; Neither country
a. Country A; Country B
300
Which of the following would increase demand for a normal good? A decrease in
a. price.
b. income.
c. the price of a substitute.
d. consumer taste for a good.
e. the price of a complement.
e. the price of a complement.
300
Which of the following will decrease the supply of rice?
a. There is a technological advance that affects the production of all goods.
b. The price of rice falls.
c. The price of corn (which consumers regard as a substitute for rice) decreases.
d. The wages of workers producing rice increase.
e. The demand for rice decreases.
d. The wages of workers producing rice increase.
300
Which of the following describes what will happen in the market for tomatoes if a salmonella outbreak is attributed to tainted tomatoes?
a. Supply will increase and price will increase.
b. Supply will decrease and price will decrease.
c. Demand will decrease and price will increase.
d. Demand will decrease and price will decrease.
e. Supply and demand will both decrease.
d. Demand will decrease and price will decrease.
400
Which of the following statements is normative?
a. The price of gasoline is rising.
b. The price of gasoline is too high.
c. Gas prices are expected to fall in the near future.
d. Cars can run on gasoline, electricity, or diesel fuel.
e. When the price of gasoline rises, drivers buy less gasoline.
b. The price of gasoline is too high.
400
Which of the following is the most likely result of inflation?
a. falling employment
b. a dollar will buy more than it did before
c. people are discouraged from holding cash
d. price stability
e. low aggregate output per capita
c. people are discouraged from holding cash
400
Which of the following might allow this economy to move from point B to point F?
a. more workers
b. discovery of new resources
c. building new factories
d. technological advances
e. all of the above
e. all of the above
400
Knowing Country A's PPC is red and Country B's PPC is orange, if the two countries specialize and trade, which country should import (wheat; textiles)?
a. Country A; Country A
b. Country A; Country B
c. Country B; Country B
d. Country B; Country A
e. Neither country; Country B
d. Country B; Country A
400
A decrease in the price of butter would most likely decrease the demand for
a. margarine.
b. bagels.
c. jelly.
d. milk.
e. syrup.
a. margarine.
400
An increase in the demand for steak, which increases the price of steak, will lead to an increase in which of the following?
a. the supply of steak
b. the supply of hamburger (a substitute in production)
c. the supply of chicken (a substitute in consumption)
d. the supply of leather (a complement in production)
e. the demand for leather
d. the supply of leather (a complement in production)
400
Which of the following will lead to an increase in the equilibrium price of product X? A(n)
a. increase in consumer incomes if product X is an inferior good.
b. increase in the price of machinery used to produce product X.
c. technological advance in the production of good X.
d. decrease in the price of good Y (a substitute for good X).
e. expectation by consumers that the price of good X is going to fall.
b. increase in the price of machinery used to produce product X.
500
Which of the following questions is studied in microeconomics?
a. Should I go to college or get a job after I graduate?
b. What government policies should be adopted to promote employment in the economy?
c. How many people are employed in the economy this year?
d. Has the overall level of prices in the economy increased or decreased this year?
e. What determines the overall salary levels paid to workers in a given year?
a. Should I go to college or get a job after I graduate?
500
The other things equal assumption allows economists to
a. avoid making assumptions about reality.
b. focus on the effects of only one change at a time.
c. avoid making the ceteris paribus assumption.
d. allow nothing to change in their model.
e. reflect all aspects of the real world in their model.
b. focus on the effects of only one change at a time.
500
This production possibilities curve shows the trade-off between consumer goods and capital goods. Since capital goods are a resource, an increase in the production of captial goods today will increase the economy's production possibilities in the future. Therefore, all other things equal (ceteris paribus), producing at which point today will result in the largest outward shift of the PPC in the future?
a. A
b. B
c. C
d. D
e. E
a. A
500
Knowing Country A's PPC is red and Country B's PPC is orange, what is the highest price Country B is willing to pay to buy wheat from Country A?
a. 1/2 unit of textiles
b. 2/3 unit of textiles
c. 1 unit of textiles
d. 1 1/2 units of textiles
e. 2 units of textiles
d. 1 1/2 units of textiles
500
If an increase in income leads to a decrease in demand, the good is
a. a complement.
b. a substitute.
c. inferior.
d. abnormal.
e. normal.
c. inferior.
500
A technological advance in textbook production will lead to which of the following?
a. a decrease in textbook supply
b. an increase in textbook demand
c. an increase in textbook supply
d. a movement along the supply curve for textbooks
e. an increase in textbook prices
c. an increase in textbook supply
500
The equilibrium price will rise, but the equilibrium quantity ay increase, decrease, or stay the same if
a. demand increases and supply decreases.
b. demand increases and supply increases.
c. demand decreases and supply increases.
d. demand decreases and supply decreases.
e. demand increases and supply does not change.
a. demand increases and supply decreases.
600
Which of the following exist(s) in a command economy but not in a market economy?
a. property rights for individuals
b. land, labor, capital, and entrepreneurship
c. plenty of incentives to motivate firms to produce what consumers need
d. an absence of long lines of customers at shops
e. a central authority making production and consumption decisions
e. a central authority making production and consumption decisions
600
In the United States, a recession officially begins after
a. the NBER makes a judgment call that it has.
b. the business cycle stops rising.
c. two consecutive quarters of falling aggregate output.
d. six weeks of rising unemployment.
e. a depression has worsened for two consecutive months.
a. the NBER makes a judgment call that it has.
600
The production possibilities curve will certainly be straight if
a. making more of one good means that less of the other good can be made.
b. the opportunity cost of making each good increases as more is made.
c. no resources are specialized for the production of either good.
d. the opportunity cost of making the first unit of each good is the same.
e. the economy experiences decreasing opportunity costs for the production of both goods.
c. no resources are specialized for the production of either good.
600
Knowing Country A's PPC is red and Country B's PPC is orange, what are the mutually beneficial terms of trade, measured in units of wheat from Country A per unit of textiles from Country B?
a. between 1 and 2
b. between 2/3 and 2
c. between 1/2 and 1 1/2
d. between 2/3 and 1 1/2
e. between 1/2 and 2
c. between 1/2 and 1 1/2
600
Which of the following will occur if consumers expect the price of a good to fall in the coming months?
a. The quantity demanded will rise today.
b. The quantity demanded will remain the same today.
c. Demand will increase today.
d. Demand will decrease today.
e. No change will occur today.
d. Demand will decrease today.
600
Expectations among hiking-boot makers that boot prices will rise significantly in the future will lead to which of the following now?
a. an increase in boot supply
b. no change in boot supply
c. a decrease in boot supply
d. a movement to the left along the boot supply curve
e. a movement to the right along the boot supply curve
c. a decrease in boot supply
600
An increase in the number of buyers and a technological advance will cause
a. demand to increase and supply to increase.
b. demand to increase and supply to decrease.
c. demand to decrease and supply to increase.
d. demand to decrease and supply to decrease.
e. no change in demand and an increase in supply.
a. demand to increase and supply to increase.
700
All opportunity costs are
a. nonmonetary.
b. forgone monetary payments.
c. losses of time.
d. values of alternatives that must be given up.
e. related to educational opportunities.
d. values of alternatives that must be given up.
700
Which of the following could not be considered an economic model?
a. a graph
b. an equation
c. a computer simulation
d. the economy itself
e. a real but simplified economy
d. the economy itself
700
Allocative efficiency is achieved
a. at every point along a PPC.
b. at every point above a PPC.
c. at every point below a PPC.
d. at the point on a PPC that minimizes the use of resources.
e. at the point along a PPC that makes consumers as well off as possible.
e. at the point along a PPC that makes consumers as well off as possible.
700
There are opportunities for mutually beneficial trade between two countries whenever
a. one can produce more of everything than the other
b. the PPCs of the two countries are identical
c. each country has a comparative advantage in making something
d. the countries are similar in size
e. no country has an absolute advantage in producing both goods
c. each country has a comparative advantage in making something
700
Which of the following will increase the demand for disposable diapers?
a. a new "baby boom"
b. concern over the environmental effect of landfills
c. a decrease in the price of cloth diapers
d. a move toward earlier potty training of children
e. a decrease in the price of disposable diapers
a. a new "baby boom"
700
Starch from the stalks of potato plants is used to make packing peanuts, a complement in production. A decrease in potato demand that lowers potato prices will cause which of the following in the packing-peanut market?
a. an increase in supply and no change in demand
b. an increase in supply and a decrease in demand
c. a decrease in both demand and supply
d. a decrease in supply and no change in demand
e. a decrease in supply and an increase in demand
d. a decrease in supply and no change in demand
700
Which of the following is certainly true if demand and supply increase at the same time?
a. The equilibrium price will increase.
b. The equilibrium price will decrease.
c. The equilibrium quantity will increase.
d. The equilibrium quantity will decrease.
e. The equilibrium quantity may increase, decrease, or stay the same.
c. The equilibrium quantity will increase.