ECON 1100 test 1.txt

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ECON 1100 test 1.txt
2012-12-13 19:06:51
ISU ECON 1100 Final Exam

ECON 1100 quartly tests complied for the final.
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  1. TF If resources were unlimited, opportunity costs would not exist.
  2. TF An economy will never be able to produce a combination of goods and services beyond its current production possibilities curve.
  3. TF The best answer to the how to produce question for an economy is the method of production that uses the most labor.
  4. TF In periods of rising prices, real GDP will rise more slowly than nominal GDP.
  5. TF A regressive tax system is one in which tax rates fall as income rises.
  6. TF The supply curve for gasoline will shift when the price of gasoline increases, ceteris paribus.
  7. If the price of a good is equal to the equilibrium price, there are no shortages or surpluses.
  8. If the actal price of a good is less than the equilibrium price, a surplus results.
  9. The expectation that price will change in the future has the same effect.
  10. According to the law of diminishing marginal utility, the total utility you get from a product declines as more of the product is consumed.
  11. Define Opportunity Cost
    The most desired goods and services that are forgone in order to obtain something else.
  12. Define Factors of Production
    Resources input used to produce goods and services eg land labor capital.
  13. Define Investment
    Expenditures on new plant and equipment in a given time period, plus change in business inventories.
  14. Define Externalities
    Cost of a market activity borne by a third party; the difference between the social and private costs of a market activity.
  15. Define Progressive Tax
    A tax system in which tax rates rise as incomes rise.
  16. Define demand schedule
    A table showing the quantities of a good a consumer is willing and able to buy at alternative prices in a given time.
  17. Define law of supply
    The quantity of a good supplied in a given time period increase as its price increases.
  18. Define Marginal Utility
    The change in total utility obtained by consuming one additional unity of good or service consumed.
  19. Defined Price Elasticity of Demand
    The percentage change in quantity demanded divided by the percentage change in price.
  20. Define Government Failure
    Government intervention that fails to improve economic outcomes.
  21. A society must address the question of WHAT to produce because.
    It cannot produce all the goods and services that it desires.
  22. Government intervention in the economy as a result of market failure will
    Improve the mix of output produced, Worsen the mix of output produced, decrease total output.
  23. GDP is
    The sum of the physical amounts of goods and services in the economy.
  24. Which of the following would not be included in US GDP?
    A computer made by a US firm in Mexico
  25. Foreign trade has become increasingly significant to the US economy because of
    The Lowing of trade barriers.
  26. Which of the following is not an example of investment as economists use the term
    The $10,000 worth of stock that you hold as part of your retirement plan.
  27. US net exports are
    Negative since the value of exports is less than the value of imports.
  28. Ceteris paribus, a rightward shift of the demand curve causes the equilibrium price to and the equilibrium quantity to .
    Increase and increase.
  29. Which of the following is an example of the law of diminishing marginal utility?
    The more I study for an economics test, the more I want to do something else.
  30. According to the text, the typical US consumer spends the largest portion of their income on
  31. Suppose a local government wants to reduce traffic congestion on a bridge by imposing a toll. The Toll will be most effective if the price elasticity of demand for the bridge is
  32. The Concept of elasticity
    Provides evidence of the way total revenue change when prices change.
  33. Which of the following countries is the largest trading partner with the US?
    • Canada
    • What is the total of US crude oil import per day?
    • 9,000,000 bbls
  34. An input output table shows
    All transactions between industries, all imports and exports.
  35. What is the size of the US Federal Government debt?
  36. Define barriers to entry
    Obstacles that make it difficult or impossible for ould be producers to enter a particular market.
  37. Define Market Power
    The ability to alter the market price of a good or service.
  38. Define marginal revenue
    The change in total revenue that results from a one unit increase in quantity sold
  39. Define economies of scale
    Reductions in minimum average cost that come about through increases in the size of plant and equipment.
  40. Define predatory pricing
    Temporary price reductions designed to drive out competition.
  41. Define derived demand
    The demand for labor and other factors of production results from the demand for final goods and services produced by these factors.
  42. Define marginal revenue product
    MRP the change in total revenue associated with one additional unit of input.
  43. Define minimum wage
    The lowest wage an employer can pay an employee and is set by the government.
  44. Define price take
    Such as a company or group of consumers - that is not significant enough to influence the price of a good or service
  45. If the marginal physical product of an input is descreased, total output mush be descreasing
  46. When the cost of an additional unit of output MC is increasing the average total cost ATC must also be increasing
  47. If the MPP curve shifts upward because of technical advance, the MC curve shifts downward.
  48. In order to maximize profit a firm should seek to maximize total revenue
  49. For a firm in a competitive market an increase in the rate of output will produce and increase in profit as long as price is greater than marginal cost.
  50. Since a monoplist controls its market it can charge any price it wants and buyers will have to pay that price
  51. Monopolist maximize profits at the output level where price equals marginal cost.
  52. Since a monoplist is a price setter it will earn unlimited profits
  53. If a firms MPP curve slopes downward its MRP curve must slope upward becase of its inverse relationsho.
  54. All workers are better off when a minimum wage is imposed
  55. Increase productivity allows workers to get higher wages without either losing jobs or causing prices to increase.
  56. Which of the following would cause a firms production function to shift upward?
    Incresed production by the firm
  57. Diminishing returns begin to occur when
    Marginal physical product begins to decline
  58. The most desirable rate of output for a firm is the output that
    Maximizes total profit
  59. Economic and accounting costs will differ whenever
    There are some implicit costs incurred by the firm
  60. The planning period over which all costs are variable is the
    Long run
  61. Assume a perfectly competitive firm can sell 100 cartions of eggs at $1.25 each. What is also true if the firm wants to sell one more carton of eggs.
    It can sell the next carton of eggs for $1.25
  62. Which of the following is always satisfied when any firm maximizes profit?
    MR equals MC
  63. Compared to a competitive market with the same costs and market demand a monopolist will produce
    Less output at a higher price
  64. If a firm temporarily reduces price to drive out competition it is engaging in
    Predatory pricing
  65. Which of the following is a reason why workers typically require higher wages in order to work additional hours?
    The incresing opportunity cost of labor, The increasing value of leisure time forgone, te law of diminishing marginal utility applied to additional income.
  66. Employment will definately rise when productivity
    Rises and wages fall
  67. When the MRP of a worker is difficult to measure, wages can be determined by
    The wages the worker would recieve in his or her best alterative job.
  68. Price X quantity equalts
  69. Change in total cost divided by change in output
  70. Total revenue minus total cost
  71. Which of the following formulas would provide a correct calculations of the marginal physical product.
    Change in quanity divided by a change in labor.
  72. Wal Mart is a prime example of a very large firm which dominates the oligoplistic inductry in which it operates. What is the total number of Wal Maret employes
  73. The most recent recession in the US economy
    Began in December 2007 and ended in June 2009
  74. Define Unemployment rate
    The proportion of the labor force that is unemployed.
  75. Define equilibrium wage
    The wage at which the quanity of a good demanded in a given time period equals the quanity supplied.
  76. Define business cycle
    Alternating periods of economic growth and contractions
  77. Define recession
    A decline in total output for two or more consecutive quarters
  78. Define full employment
    The rate of real output produced at full employmenet
  79. Define inflation
    An increase in the average level of prices of goods and services
  80. Define consumer price index
    A measure of changes in the average price of consumer goods
  81. Define fiscal policy
    The use of governement taxes and spending to alter macroeconomics
  82. Define macroeconomics
    The study of aggregate economic behavior of the economy.
  83. TF one reason why the quanity of real output supplied rises with the price level, ceteris paribus is because prgits are higher.
  84. TF Supplyy side policy focuses on reducing the cost of production or otherwise stimulating more output at every price level.
  85. TF The four components of aggregate demand are consumption investment goveremtn expenditures including both the new governement expenditures plus all subsequent incrreases in consumption
  86. TF The best government policy during a recession is to balance the federal budget
  87. TF A person who quites a job to spend time looking for another is not part of the labor force
  88. TF if all prices and wages in the economy rose by the same percentage during the same time period inflation would not cause a redisribution of increase.
  89. TF The interest rate effects says that consumers buy few goods when the price level falls because the interest rate increases which reduces borrowing.
  90. TF Macro equilibrium never occurs at an output level that provides less than fll employment according to Keynesian economist.s.
  91. TF Social security payments are not included in aggregate demand because they do not reflect a purchase of good s and services.
  92. Which of the fllowing is a measure of overal economic well-being?
    The US unemploymenet rate
  93. The real balance effects relies on the concept that as the price level falls.
    Each dollar you own will purchase more goods and services, each bond you own will increase in value this increasing your weath. You will begin to save less because your weath has increased.
  94. Whihc of the follow could cause the aggregate demand curve to shift out.
    Reduced income taxes
  95. Indivicual employmenet and training programs are police levers most likely to be
  96. Which type of expenditure is typically the largest component of final demand
  97. When the aggregate demand exceeds the full employmenet level of output the result is
    A higher average price levele
  98. Which of the following will definitely reduce a budget deficit and privde discal restraint.
    Lower governemtn spending and higher taxes
  99. The marginal product of additional units of labor eventually diminishes because ceteris paribus
    Additional labor has less land and capital to work with
  100. The effect of union exclusion on nonunion workers is to
    Lower the wages of nonunion workers
  101. The labor force is smaller than the total population because the labor force does not include
    The very young and old.
  102. Which of the following is characteristic of a downturn in the business cycle
    Lower real output
  103. Which of the following is a measure of overal economic well-being for the US
    The US unemploymenet rate
  104. The rate of growth in real GDP is most directly related to which of the following unemploymenet categories
  105. Amanda quit her job as an economics professor at a large public university to look for a job at a msall liberal arts college While she is looking for work Amanda is
    Frictionally unemployed.
  106. Changes in the relative prices may occue during periods of
    inflations stable prices and deflation
  107. Inflation acts like a tax because
    It takes purching power from some people and gives it to others.
  108. Which of the following workers qualifies as umployed
    a person who is looking for work, but cannot find a job because he has no skills.
  109. Which of the following could occur during periods of inflation
    Some prices could fall, people who have borrowed money could be better off. The real incomes of some people could fall.
  110. If the CPI for 2007 was 126 then during the period between a base year and 2007
    Prices of goods and services purchased by consumers increased by an average of 26 percent.
  111. The CPI tends to overestimate the rate of inflation because
    Some price increase are an indication of higher quality products.
  112. Which of the following will cause the aggreate supple curve to incrase ceteris paribus.
    Lower business taxes
  113. If an economy is at a macro equalibrium and aggregate supply incrase
    Borth umploymenet rate will decrease and the price level will increase.
  114. Which of the following is consistant with the classical view of the economy
    A policy of laissez faire because the economy will self-adjust to full employment
  115. A necessary condition for equilibrium in a four sector economy is
    S T M equals I G X