Microeconomics Introduction to Economics

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Microeconomics Introduction to Economics
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2013-09-03 23:00:19
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Micro Intro Economics Quiz
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Irvin Tucker's 8ed. study notes
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  1. What are the three fundamental questions?
    • 1. What to produce
    • 2. How to produce
    • 3. For whom to produce
  2. Marginal analysis means evaluating_____changes from a current situation.
    Positive or negative changes
  3. A Production Possibility Curve shows what?
    The various combinations of two outputs that an economy would like to produce
  4. A Production possibilities curve is drawn based on which assumption
    Resources such asa labor and capital will grow and are fully employed and technology ia unchanged
  5. If an economy can produce various combinations of food and shelter along a ppc curve, then if we increase the production of shelter along the ppc which of the following is true:
    A.) we also increase the production of food
    B.) we must decrease the production of food, this forgone food production represents the opportunity cost ofthe increase of shelter
    C.) we cannot change the production of food
    B
  6. Which of the following best definition of economics?
    A. economics is the study of how to manage corporations to generate the greatest return on shareholder investment 
    B. Economics is the study of how to manage city and county government to generate the greatest good to its citizens
    C. Economics is the study of how society choose to allocate its scarce resources 
    C
  7. What are the Factors of Production:
    Categories of input used to produce goods and services
  8. What are the 3 Categories of the factors of production? And describe each
    • Land: is the natural resource 
    • -has nonrenewable and renewable resources that include air and water are renewable while fossil fuels are nonrenewable resources 

    Labor: mental and physical capacity of workers 

    Capital the equipment used to produce --> paper claim.
  9. The condition of scarcity....
    A. Cannot be eliminated 
    B. prevails in poor economies
    C. Prevails in rich economies 
    D. all of the above.
    D
  10. Which of the following best describes an entrepreneur?
    A. a person who works as an office clerk at a major corporation 
    B. A person who combines the factors of production to produce innovative products 
    C. A special type of capital
    B
  11. What are renewable resources?
    they are a type of land resources (for example forests, rangelands and marine fisheries that naturally regenerate and thus can tolerate a sustained harvest but can be depleted from excessive harvest
  12. What is the difference between Association and Causation?
    We cannot assume that just because event A correlates with event B there must be a cause that lead A to B
  13. What are two ways of economic thinking?
    Positive and normative economics
  14. What is Positive economics?
    An analysis based on verifiable data, FACTS
  15. Whats is normative economics?
    an analysis based on opinions, value judgement that cannot be verifiable
  16. What is an economic model?
    • a simplified description of reality used to understand and predict relationship between 2 variables, 
    • Purpose: to forecast or predict results of various changes in variables
  17. What is the model-building process?
    • 1. Identify the problem
    • 2. Model development--> develop a model based on simplified assumption
    • 3. Test a theory
  18. What must we do after we test the theory
    Formulate a conclusion if evidence supports model, conclusion is accepted if not, model is reject and we must start over
  19. What must the model development satisfy
    The theory of the ceteris paribus that while certain variables change all other remain unchanged.
  20. What is the meaning of Ceteris Paribus
    all certain variables change others remain the same
  21. What is financial capital
    money used to purchase capital, money by itself is not productive it is just a paper claim on capital
  22. What are the two branches of Economic Studies
    • Macroeconomics and Microeconomics
    • Macro --> the studies of the economy as a whole
    • Micro--> the studies of individuals, firms, and households
  23. What is   direct relationship ?
    • when 2 variables move together as one variable increases the other increases too
    • they are positively associated. Slope = Positive
  24. what is an inverse relationship?
    • they move opposite of each other 
    • negatively associated and Slope = negitative
  25. Independent Relationships are described as?
    there is no relationship between the two variables  Slope = 0
  26. T/F Slope of a straight line same at any point
    T
  27. What limits an economy to points on or below its PPC curve
    Scarcity
  28. What is the law of opportunity cost?
    the principle that the opportunity cost increases as production of one output expands
  29. The production possibilities curve shows that: A) some of one good must be given up to get more of another good in an economy that is operating efficiently. B) no output combination is impossible. C) an economy that is operating efficiently can have more of one good without giving up some of another good. D) scarcity can be eliminated.
    A
  30. T/F Increases in resources or technological advance causeseconomic growth
    T
  31. What does economic growth do to the PPC curve
    Shifts the curve outward.
  32. What is an investment?
    the accumulation of capital, such as factories, machines and inventories used to produce goods and services.
  33. What is the law of demand?
    there is a inverse relationship between the price of a good and the quantity buyers are willing to purchase in a defined time period, ceteris paribus.
  34. In the context of the production possibilities curve, opportunity cost is measured in
    the quantity of other goods given up
  35. the opportunity cost of your college education is
    A. C and D
    B. D and E
    C. the actual dollar cost of your education
    D. your best alternative use of the money you spend for a college education
    E. money you could have earned working instead of going to college
    B
  36. The Secretary of Labor states that wage rates in the country have risen by 2 percent this past year. The head of a local labor union states that wage gains should have been higher. The Secretary's statement is a (n) ____ economic statement, and the labor head's statement is a (n) ____ economic statement.
    A) normative; normative
    B) normative; positive
    C) positive; normative
    D) positive; positive
    E) proper; improper
    C
  37. A production possibility graph slopes down because of:
    A) the law of increasing costs.
    B) nonhomogeneous resources.
    C) inefficiency.
    D) improper output mix.
    E) unemployment.
    B
  38. Your scarcity problem would disappear if you were rich.
    A) True B) False
    False
  39. A nation can accelerate its economic growth by:
    A) reducing the number of immigrants allowed into the country.
    B) adding to its stock of capital.
    C) printing more money.
    D) imposing tariffs and quotas on imported goods.
    B
  40. Which of the following would eliminate scarcity as an economic problem?
    A) Moderation of people's competitive instincts.
    B) Discovery of sufficiently large new energy reserves.
    C) Resumption of steady productivity growth. D) None of these.
    d
  41. Which one of the following is a positive economic statement?
    A) An increase in the minimum wage will reduce employment for teenagers.
    B) The minimum wage should be increased. C) Social justice will be served by increasing the minimum wage.
    D) Thoughtful people oppose an increase in the minimum wage.
    A
  42. An outward shift of an economy's production possibilities curve is caused by:
    A) an increase in capital.
    B) an increase in labor.
    C) an advance in technology.
    D) all of these.
    D
  43. Mikki decides to work five hours the night before her economics exam. She earns an extra $75, but her exam score is 10 points lower than it would have been had she stayed home and studied. Her opportunity cost is the:
    A) five hours she worked.
    B) $75 she earned.
    C) 10 points she lost on her exam.
    D) time she could have spent watching television.
    E) guilt she feels about neglecting her economics studies.
    C
  44. The law of increasing costs indicates that the opportunity cost of producing a good:
    A) is proportional to the production of the good.
    B) is constant to the production of the good. C) increases as more of the good is produced. D) decreases as more of the good is produced.
    E) increases as less of the good is produced.
    C
  45. Scarcity:
    A) exists because resources are unlimited while human wants are limited.
    B) means we are unable to have as much as we would like to have.
    C) will likely be eliminated as technology continues to expand.
    D) is not an issue addressed in economics.
    B
  46. The various combinations of goods and services that can be produced, when an economy uses its available resources and technology efficiently, is called:
    A) scarcity.
    B) opportunity cost.
    C) unlimited production.
    D) capital accumulation.
    E) production possibilities.
    The various combinations of goods and services that can be produced, when an economy uses its available resources and technology efficiently, is called: A) scarcity. B) opportunity cost. C) unlimited production. D) capital accumulation. E) production possibilities.
  47. To abstract from reality in an economic model means that:
    A) we include only a few of the essential aspects of reality.
    B) the economic study surveys only a very limited period of time.
    C) we include only those elements which support our hypothesis.
    D) the model includes every aspect of the real world.
    E) the model examines the actions of the consumers in the absence of producers and the government.
    A
  48. A point outside the production possibilities curve represents a combination of goods that is: A) inefficient. B) efficient. C) unattainable. D) attainable.
    C
  49. All points on the production possibilities curve represent efficient levels of production. A) True B) False
    a
  50. Which of the following is the best example of an activity that would be undertaken by an entrepreneur? A) Buying and selling of stocks and bonds. B) Starting a new business. C) Working on an assembly line. D) Running for political office.
    b
  51. Which of the following will be most likely to cause the production possibilities curve for a country to shift inward? A) an increase in the labor force B) an increase in unemployment C) development of an improved technological method of production D) a decrease in the stock of physical capital
    D
  52. Which one of the following is the most accurate definition of economics? A) Economics is the study of stocks and bonds. B) Economics is the study of how people allocate unlimited resources. C) Economics is the study of how consumers choose to spend their income. D) Economics is the study of how society chooses to allocate scarce resources
    d
  53. Entrepreneurs can delegate every one of the following tasks to labor except: A) hiring and training new employees. B) assuming business risk and uncertainty. C) supervision of the production process. D) researching ideas for new products. E) marketing the goods and services produced
    B
  54. Which of the following causes the production possibilities curve to shift to the right? A) d and e. B) c and e. C) A war. D) The development of a new technology that improves productivity. E) The discovery of oil reserves.
    A
  55. Human wants: A) are unfilled only in the poorer countries of the world. B) can be completely satisfied by advancing technology. C) can never be fully satisfied. D) only apply to necessities. E) exist only if we are selfish.
    c
  56. Which of the following would be most likely to cause the production possibilities curve for computers and education to shift outward? A) A choice of more computers and less education. B) A choice of more education and less computers. C) A reduction in the labor force. D) An increase in the quantity of resources.
    d
  57. Which of the following would be most likely to cause the production possibilities curve for computers and education to shift outward? A) A choice of more computers and less education. B) A choice of more education and less computers. C) A reduction in the labor force. D) An increase in the quantity of resources.
    A
  58. Suppose an economy is faced with the production possibilities table shown in Exhibit 2-10. As additional units of capital goods are being produced, the number of consumption goods produced must ____, because ____. A) increase; the production possibility table shows only the maximum efficiency points B) increase; of the law of increasing costs C) decrease; of the law of increasing costs D) decrease; of the finite nature of the resource base E) increase; capital goods will assist in the production of consumer goods

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