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Microeconomics is the study of
A) topics such as unemployment, inflation, and economic growth.
B) how households and firms make choices.
C) the global economy.
D) the economy as a whole.
Which of the following is a positive economic statement?
A) The standard of living in the United States should be higher.
B) The government should revamp the health care system.
C) If the price of iPhones falls, a larger quantity of iPhones will be purchased.
D) The U.S. government should not have bailed out U.S. auto manufacturers.
The term ________ in economics refers to a group of buyers and sellers of a product and the arrangement by which they come together to trade.
The Coffee Nook, a small cafe near campus, sells cappuccinos for $2.50 and Russian tea cakes for $1.00 each. What is the opportunity cost of buying a cappuccino?
B) 2 1/2 Russian tea cakes
D) 2/5 of a Russian tea cake
Consider the following statements:a. Car owners purchase more gasoline from a gas station that sells gasoline at a lower price than other rival gas stations in the area.b. Banks do not take steps to increase security since they believe it is less costly to allow some bank robberies than to install expensive security monitoring equipment.c. Firms produce more of a particular DVD when its selling price rises.Which of the above statements demonstrates that economic agents respond to incentives?
A) a only.
B) b only.
C) c only.
D) a and b.
E) a, b, and c.
Suppose when the price of laptops fall, college students buy more laptops. This implies that
A) there is a positive relationship between laptop prices and quantities purchased by college students.
B) there is a negative relationship between laptop prices and quantities purchased by college students.
C) there is a one-to-one relationship between laptop prices and quantities purchased by college students.
D) there is a direct relationship between laptop prices and quantities purchased by college students.
Which of the following statements is true?
A) Trade-offs do not apply when the consumers purchase a product for which there is excess supply, such as a stock clearance sale.
B) Anytime you have to decide which action to take you are experiencing economic equity.
C) Economics is a social science that studies the trade-offs we are forced to make because resources are unlimited.
D) Every individual, no matter how rich or poor, is faced with making trade-offs.
DeShawn's Detailing is a service that details cars at the customers' homes or places of work. DeShawn's cost for a basic detailing package is $40, and he charges $75 for this service. For a total price of $90, DeShawn will also detail the car's engine, a service that adds an additional $20 to the total cost of the package. What is the marginal cost of adding the engine detailing to the basic detailing package?
D) $60 plus the value of his time
Consider the following economic agents: a. the governmentb. consumersc. producersWho, in a centrally planned economy, decides what goods and services will be produced with the scarce resources available in that economy?
A) consumers and producers
C) the government, consumers and producers
E) the government
Soo Jin shares a one-bedroom apartment with her classmate. Her share of the rent is $700 per month. She is considering moving to a studio apartment which she will not have to share with anyone. The studio apartment rents for $950 per month. Recently, you ran into Soo Jin on campus and she tells you that she has moved into the studio apartment. Soo Jin is as rational as any other person. As an economics major, you rightly conclude that
A) Soo Jin figures that the benefit of having her own place (as opposed to sharing) is at least $950.
B) the cost of having one's own space outweighs the benefits.
C) Soo Jin did not have a choice; her roommate was a slob.
D) Soo Jin figures that the additional benefit of having her own place (as opposed to sharing) is at least $250.
In economics, choices must be made because we live in a world of
C) unlimited resources.
Suppose a cell phone manufacturer currently sells 20,000 cell phones per week and makes a profit of $5,000 per week. A manager at the plant observes, "Although the last 3,000 cell phones we produced and sold increased our revenue by $6,000 and our costs by $6,700, we are still making an overall profit of $5,000 per week so I think we're on the right track. We are producing the optimal number of cell phones."
Had the firm not produced and sold the last 3,000 cell phones, would its profit be higher or lower, and if so by how much?
A) Its profit will be $700 higher.
B) Its profit will be $6,000 lower.
C) Its profit will be $700 lower.
D) Its profit will be $6,700 higher.
Making optimal decisions "at the margin" requires
A) making decisions according to one's whims and fancies.
B) weighing the costs and benefits of a decision before deciding if it should be pursued.
C) making consistently irrational decisions.
D) making borderline decisions.
The highest valued alternative that must be given up to engage in an activity is the definition of
A) marginal benefit.
B) economic equity.
C) opportunity cost.
D) marginal cost.
Which of the following generates productive efficiency?
A) government production rules and regulations
B) government inspectors
C) competition among sellers
D) competition among buyers
Productive efficiency is achieved when
A) firms produce goods and services at the lowest cost.
B) there are no shortages or surpluses in the market.
C) firms add a low profit margin to the goods and services they produce.
D) firms produce the goods and services that consumers value most.
The relationship between consumer spending and disposable personal income is
A) a direct relationship.
C) a negative relationship.
D) an inverse relationship.
In economics, the accumulated skills and training that workers have is known as
A) physical capital.
B) human capital.
How are the fundamental economic questions answered in a market economy?
A) Households and firms interact in markets to decide the answers to these questions.
B) Large corporations alone decide the answers.
C) Individuals, firms, and the government interact in markets to decide the answers to these questions.
D) The government alone decides the answers.
In economics, the term ________ means "additional" or "extra".
The natural resources used in production are made available in the
A) goods and services market.
B) government market.
C) factor market.
D) product market.