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Macroeconomics deals with (Points 3) bits and pieces

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Macroeconomics deals with: (Points: 3)
       bits and pieces of the economy.
       the question of how a business unit should operate profitably.
       the working of the entire economy or large sectors of it.
       how individuals make decisions.


2. 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.


3. 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.


4. The problem of determining what goods and services society should produce: (Points: 3)
       exists because we can produce more than we need or want.
       exists because there are not enough resources to provide all the goods and services that people want to purchase.
       would not exist if all goods and services were scarce.
       would not exist if government owned all of the resources.


5. 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.


6. Which of the following principles underlie the economics of individual choices? (Points: 3)
       There are gains from trade.
       Markets move toward equilibrium.
       People usually exploit opportunities to make themselves better off.
       Resources should be used as efficiently as possible to achieve society's goals.


7. 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.


8. 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.


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 has to sacrifice increasing amounts of good X for each unit of good Y produced, then its production possibilities curve is: (Points: 3)
       bowed out from the origin.
       bowed in toward the origin.
       a straight line.
       a vertical line.


12. 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.


13. The concept of comparative advantage is based upon: (Points: 3)
       absolute labor productivity.
       relative labor costs.
       dollar prices of labor.
       relative opportunity costs.


14. An economy is said to have a comparative advantage in the production of a good if it can produce that good: (Points: 3)
       with more resources than another economy.
       with a higher opportunity cost than another economy.
       outside its production possibilities curve.
       at a lower opportunity cost than another economy.


15. 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.


16. The circular-flow diagram illustrates how households _______ goods and services and _______ factors of production. (Points: 3)
       buy; sell
       buy; buy
       own; buy
       own; sell


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. Given that chicken and beef are substitute goods, if the price of chicken decreases substantially, there would be: (Points: 3)
       an increase in the demand for beef.
       a decrease in the demand for beef.
       a decrease in the quantity of beef demanded.
       no change in the demand for beef.


19. 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.


20. 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.


21. If the price of a commodity increases, you would expect the: (Points: 3)
       supply to increase.
       quantity supplied to increase.
       quantity supplied to decrease.
       supply curve to shift to the right.


22. A shift to the left of a supply curve is caused by: (Points: 3)
       an increase in the number of sellers.
       a technological improvement.
       an increase in the cost of an input.
       an increase in the number of buyers.


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 maximum price set below the equilibrium price is a: (Points: 3)
       demand price.
       supply price.
       price floor.
       price ceiling.


26. Rent controls set a price ceiling below the equilibrium price and therefore: (Points: 3)
       quantity supplied exceeds the quantity demanded.
       quantity demanded exceeds the quantity supplied.
       a surplus of rental units will result.
       poor people will obviously be helped.


27. 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.


28. In a black market, goods or services are bought and sold: (Points: 3)
       at night.
       without any information about quality.
       without any information about price.
       illegally.


29. Using the midpoint method of elasticity to calculate price elasticity of demand eliminates the problem of ______. (Points: 3)
       different elasticities, depending on whether price decreases or increases
       different elasticities because price and quantity are inversely related on the demand curve
       total revenue falling when price falls and demand is inelastic
       total revenue increasing when price falls and demand is elastic


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. 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


33. 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


34. 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


35. If the income elasticity of demand for a good is negative, the good is said to be a(n) ______. (Points: 3)
       inferior good
       negative good
       positive good
       normal good


36. If the price elasticity of supply is less than 1, then supply is _____. (Points: 3)
       price elastic
       price inelastic
       unit-price elastic
       very responsive 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. Along a given demand curve, a decrease in the price of a good _____. (Points: 3)
       will increase consumer surplus
       will decrease consumer surplus
       will have no effect on consumer surplus
       It's impossible to tell what will happen to consumer surplus.


40. When there is a new medical report extolling the health advantages of grapefruit, total producer surplus in the grapefruit market _____. (Points: 3)
       will increase
       will decrease
       will remain the same
       may change but we can't tell how


41. If the price of a good rises, then producer surplus ______. (Points: 3)
       will increase
       will decrease
       will remain the same
       may change but we can't tell how


42. We can measure total producer surplus for good X as ______. (Points: 3)
       the sum of the individual producer surpluses for all buyers of X
       the area below the supply curve for X and above the price of X
       the area bounded by the supply curve for X and the two axes
       all of the above


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. 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


45. A total product curve indicates the relationship between ______. (Points: 3)
       variable input and price
       variable input and variable cost
       variable input and output
       output and price


46. When an additional unit of a variable input adds less to total product than the previous unit, the firm must be experiencing ______. (Points: 3)
       increasing returns
       diminishing marginal returns
       diminishing average returns
       both B and C


47. Average total cost is ______. (Points: 3)
       the change in cost divided by the change in output
       total cost divided by output
       the change in output divided by the change in costs
       total cost times output


48. The long-run average cost curve is tangent to an infinite number of ______. (Points: 3)
       total cost curves
       marginal cost curves
       average variable cost curves
       average total cost curves


49. 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


50. A firm that is experiencing diminishing returns in management's ability to use and disseminate information as it increases production in the long run is an example of ______. (Points: 3)
       economies of scale
       diseconomies of scale
       being too small for the relevant market
       not having enough managers


51. Individuals in a market who must take the market price as given are ______. (Points: 3)
       quantity minimizers
       quantity takers
       price takers
       price searchers


52. An assumption of the model of perfect competition is ______. (Points: 3)
       discrimination
       difficult entry and exit
       many buyers and sellers
       limited information


53. Marginal revenue is a firm's ______. (Points: 3)
       ratio of profit to quantity
       ratio of average revenue to quantity
       price per unit times the number of units sold
       increase in total revenue when it sells an additional unit of output


54. Firms in the model of perfect competition will ______. (Points: 3)
       maximize total revenue by using the marginal decision rule
       increase output up to the point that the marginal benefit of an additional unit of output is greater than the marginal cost
       increase output up to the point that the marginal benefit of an additional unit of output is equal to the marginal cost
       always attempt to minimize average variable 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. A perfectly competitive firm will incur an economic loss but will continue producing the profit-maximizing quantity of output in the short run if price is _____. (Points: 3)
       less than marginal cost
       less than average variable cost
       greater than average total cost
       greater than average variable cost and less than average total cost


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. When a perfectly competitive firm is in long-run equilibrium, the firm is _____. (Points: 3)
       producing at maximum average total cost
       producing at maximum average variable cost
       producing at minimum marginal cost
       producing at minimum long-run average total cost


60. Economists identify the satisfaction a person derives from the consumption of goods and services as ______. (Points: 3)
       happiness
       usefulness
       utility
       pleasure


61. 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


62. Assume that the marginal utilities for the first 3 units of a good consumed are 200, 150, and 125, respectively. The total utility when 2 units are consumed is ______. (Points: 3)
       150
       200
       350
       475


63. When total utility is at a maximum, marginal utility is ______. (Points: 3)
       rising
       at its average value
       at a maximum
       zero


64. A consumer's spending is restricted because of ______. (Points: 3)
       marginal utility
       total utility
       a budget constraint
       utility maximization


65. Whatever the time period involved, a consumer's spending will be _______ by his or her _______. (Points: 3)
       unlimited; marginal utility
       limited; marginal utility
       limited; budget
       unlimited; budget


66. 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


67. Choices that maximize total utility generally produce demand curves that are ______. (Points: 3)
       horizontal
       upward sloping
       downward sloping
       linear


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. 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


70. If your local government gives you the exclusive right to sell breakfast bagels in your community, your monopoly would result from ______. (Points: 3)
       sunk costs
       location
       economies of scale
       government restrictions


71. The demand curve for a monopoly is ______. (Points: 3)
       the sum of all the firm supply curves in the monopoly's industry
       the industry demand curve
       horizontal because no one can enter
       perfectly elastic


72. Marginal revenue for a monopolist is ______. (Points: 3)
       equal to price
       greater than price
       less than price
       equal to average revenue


73. Which of the following is(are) true? (Points: 3)
       Profit-maximizing behavior is based on the marginal decision rule.
       Additional units of a good should be produced as long as MR > MC.
       The profit-maximizing solution occurs where MR = MC.
       All of the above are true.


74. 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


75. 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


76. Oligopoly is a market structure characterized by ______. (Points: 3)
       independence in decision making
       uncertainty about the behavior of rival firms
       substantial diseconomies of scale
       a large number of small firms


77. If the only two firms in an industry agree to fix the price at a given level, this is an example of ______. (Points: 3)
       collusion
       satisfying
       price extortion
       price leadership


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. Unwritten or unspoken understandings through which firms collude to restrict competition are called ______. (Points: 3)
       cartelization
       oligopolization
       overt collusion
       tacit collusion


83. Due to the existence of a large number of similar, but not identical, substitutes in most communities, the market for chiropractors is best considered ______. (Points: 3)
       an oligopoly
       perfect competition
       monopolistic competition
       a monopoly


84. A firm in monopolistic competition maximizes its profit by producing at the level at which ______. (Points: 3)
       MC = ATC
       MC = AR
       MC = MR
       MC = P


85. 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


86. Because monopolistically competitive firms charge a P > MC ______. (Points: 3)
       monopolistic competition is efficient
       monopolistic competition is inefficient
       the marginal benefit to society of an additional unit of output is below its cost
       B and C are true


87. Critics of advertising argue that it ______. (Points: 3)
       tends to make markets more perfect
       leads to low-cost mass production
       results in higher prices to consumers
       encourages competition through new-product advertising


88. 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


89. One advantage of brand names is that ______. (Points: 3)
       they provide some assurance of consistency of quality
       they convey information about the nature of the product
       they indicate that the seller is engaged in repeated interaction with its customers
       they do all of the above


90. If an activity generates external costs, decision makers generating the activity will ______. (Points: 3)
       be faced with its full costs
       be faced with no costs
       not be faced with its full costs
       be faced with excessive costs


91. If a coal-powered electrical generator discharges smoke into the air and causes uncompensated costs and discomfort to residents of a town, this situation is an example of a(n) ______. (Points: 3)
       quasi-public good
       external cost
       external benefit
       specific tax


92. An industry with external costs produces ______. (Points: 3)
       a quantity of output that is the socially optimal quantity
       a smaller quantity of output than the socially optimal quantity
       a larger quantity of output than the socially optimal quantity
       the socially optimal quantity if a specific subsidy is given to buyers


93. 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


94. A tax system _______ when it minimizes the direct and indirect costs to the economy of tax collection. (Points: 3)
       is efficient
       is equitable
       has no deadweight loss
       is both A and B


95. 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


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 higher percentage of income as income rises is a(n) ______. (Points: 3)
       proportional tax
       ability tax
       progressive tax
       regressive tax


98. 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


99. An example of a means-tested program is _______. (Points: 3)
       expenditure on national defense
       a Social Security payment to the disabled
       the food stamp program
       purchasing a new city police car


100. The single most important factor influencing children's later socioeconomic attainment is ______. (Points: 3)
       parental income
       education
       health care
       geographic mobility
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