ECO202- Microeconomics (Fall 2014)

question

The statement that there is a direct relation between x and y means that?

answer

x and y move in the same direction.

question

The slope of a steep upward-sloping line is a smaller value than the slope of a nearly flat upward-sloping line. (True/False).

answer

False.

question

Point B in exhibit 1.1 represents?

answer

x=30, y=60

question

The slope of a vertical line is?

answer

infinitely large.

question

A line is tangent to a curve if it?

answer

touches the curve at one point, without crossing it.

question

On a graph with x on the horizontal axis and y on the vertical axis, the origin is?

answer

the point where x=0 and y=0

question

Any point on a graph represents a combination of particular values of 2 variables. (True/False).

answer

True.

question

Money facilitates trade because:

answer

it serves as a medium of exchange.

question

The mixed economy system is the dominant economic system in the world because?

answer

There is private ownership of property but government regulation of individuals reduces some of the flaws of pure capitalism.

question

If all resources are used efficiently to produce goods and services, a nation will find itself producing?

answer

somewhere on its production possibilities frontier.

question

"Efficiency" refers to:

answer

getting the maximum possible output from available resources.

question

A production possibilites frontier will shift outward if there is an improvement in technology. (True/False).

answer

True.

question

Because of specialization and comparative advantage, most people:

answer

consumer the products of many other specialists.

question

Opportunity cost is objective; therefore, its value does not change as circumstances change. (True/False).

answer

False.

question

Any movement along the production possibilities frontier involves the production of:

answer

more of one good and less of the other.

question

Adam Smith's term "the invisible hand," refers to:

answer

market forces.

question

The movement of households from rural to urban settings reduced the degree of specialization in household production. (True/False).

answer

True.

question

International trade occurs because the opportunity cost of producing specific goods differs across-

answer

countries.

question

A tax collects $3,000 per year from a family with an income of $25,000 & takes $4,000 per year from a family with an income of $50,000. This tax plan is-

answer

regressive.

question

Households act as demanders when they demand-

answer

goods and services from firms & the government.

question

In terms of total sales, the dominant form of business firm in the U.S. economy is the-

answer

corporation.

question

Contracts are enforced by-

answer

the government through the judicial system.

question

The difference between fiscal policy and monetary policy is that-

answer

Monetary policy involves regulation of the money supply and fiscal policy involves government spending and taxing.

question

In recent years, redistribution has been the fastest growing category of federal government outlays. (True/False).

answer

True.

question

In the following situation, the tax system is
taxable income $1,000 $2,000 $4,000 $8,000
tax payments $10 $30 $90 $270

answer

Progressive throughout all levels of income.

question

If the tea harvest is bad in a particular year, the supply of tea will-

answer

decrease, its price will increase, and the quantity demanded of coffee will decrease.

question

The law of demand is illustrated by a demand curve that is-

answer

downward sloping.

question

Suppose the current equilibrium price of pizza is $5. If the government decides the price of pizza cannot rise above $4, the result of this policy would be-

answer

a shortage.

question

Based on exhibit 4-6, a rent ceiling of $750 per month would result in a number of units rented of-

answer

50,000.

question

Refer to the supply curve in exhibit 4-9. If the price increases from P to P' quantity supplied will-

answer

increase.

question

A new hormone will increase the amount of milk each cow produces. If this hormone is adopted by many dairies, what will be the effect on the milk market?

answer

an increase in supply, lower equilibrium price, & higher equilibrium quantity.

question

The law of demand says that as the price of a good rises-

answer

buyers purchase less, in part because their real income has fallen.

question

If we say that demand has increased, we mean that there has been-

answer

a rightward shift of the demand curve.

question

In a rental market like the one in exhibit 4-6, a government-imposed rule that rent cannot exceed $750 per month would be called a-

answer

price ceiling.

question

The income effect refers to the impact of a change in-

answer

the price of a good on real income.

question

When quantity demanded of a good is less than the quantity supplied at the prevailing market price,-

answer

the price of the good tends to fall.

question

When a market is in equilibrium-

answer

there is no incentive for consumers or producers to change their current behavior.

question

If the price of the good described in exhibit 4-1 is $1.50, then-

answer

the market is in equilibrium.

question

An increase in the number of producers of a good will-

answer

increase the market supply because the market supply is the sum of all individual supply curves.

question

As a result of international trade-

answer

the loss to producers in the importing country is less than the gain to consumers in the importing country caused by a decrease in price.

question

Regional trading bloc agreements-

answer

make special trade deals between countries in that region and discriminate against countries outside the region.

question

The establishment of GATT resulted in-

answer

lower tariff rates.

question

The basis for international trade is-

answer

comparative advantage.

question

The rate at which two countries trade one good for another-

answer

is known as the terms of trade.

question

The two major trading partners of the United States are-

answer

Mexico & Canada.

question

The largest regional trading bloc is the-

answer

European Community.

question

Predatory dumping is the practice of-

answer

temporarily selling a good in another country for a price lower than the domestic price to drive out competing producers.

question

The two main categories of U.S. exports are-

answer

capital goods and industrial supplies and materials

1 of 48

question

The statement that there is a direct relation between x and y means that?

answer

x and y move in the same direction.

question

The slope of a steep upward-sloping line is a smaller value than the slope of a nearly flat upward-sloping line. (True/False).

answer

False.

question

Point B in exhibit 1.1 represents?

answer

x=30, y=60

question

The slope of a vertical line is?

answer

infinitely large.

question

A line is tangent to a curve if it?

answer

touches the curve at one point, without crossing it.

question

On a graph with x on the horizontal axis and y on the vertical axis, the origin is?

answer

the point where x=0 and y=0

question

Any point on a graph represents a combination of particular values of 2 variables. (True/False).

answer

True.

question

Money facilitates trade because:

answer

it serves as a medium of exchange.

question

The mixed economy system is the dominant economic system in the world because?

answer

There is private ownership of property but government regulation of individuals reduces some of the flaws of pure capitalism.

question

If all resources are used efficiently to produce goods and services, a nation will find itself producing?

answer

somewhere on its production possibilities frontier.

question

"Efficiency" refers to:

answer

getting the maximum possible output from available resources.

question

A production possibilites frontier will shift outward if there is an improvement in technology. (True/False).

answer

True.

question

Because of specialization and comparative advantage, most people:

answer

consumer the products of many other specialists.

question

Opportunity cost is objective; therefore, its value does not change as circumstances change. (True/False).

answer

False.

question

Any movement along the production possibilities frontier involves the production of:

answer

more of one good and less of the other.

question

Adam Smith's term "the invisible hand," refers to:

answer

market forces.

question

The movement of households from rural to urban settings reduced the degree of specialization in household production. (True/False).

answer

True.

question

International trade occurs because the opportunity cost of producing specific goods differs across-

answer

countries.

question

A tax collects $3,000 per year from a family with an income of $25,000 & takes $4,000 per year from a family with an income of $50,000. This tax plan is-

answer

regressive.

question

Households act as demanders when they demand-

answer

goods and services from firms & the government.

question

In terms of total sales, the dominant form of business firm in the U.S. economy is the-

answer

corporation.

question

Contracts are enforced by-

answer

the government through the judicial system.

question

The difference between fiscal policy and monetary policy is that-

answer

Monetary policy involves regulation of the money supply and fiscal policy involves government spending and taxing.

question

In recent years, redistribution has been the fastest growing category of federal government outlays. (True/False).

answer

True.

question

In the following situation, the tax system is
taxable income $1,000 $2,000 $4,000 $8,000
tax payments $10 $30 $90 $270

answer

Progressive throughout all levels of income.

question

If the tea harvest is bad in a particular year, the supply of tea will-

answer

decrease, its price will increase, and the quantity demanded of coffee will decrease.

question

The law of demand is illustrated by a demand curve that is-

answer

downward sloping.

question

Suppose the current equilibrium price of pizza is $5. If the government decides the price of pizza cannot rise above $4, the result of this policy would be-

answer

a shortage.

question

Based on exhibit 4-6, a rent ceiling of $750 per month would result in a number of units rented of-

answer

50,000.

question

Refer to the supply curve in exhibit 4-9. If the price increases from P to P' quantity supplied will-

answer

increase.

question

A new hormone will increase the amount of milk each cow produces. If this hormone is adopted by many dairies, what will be the effect on the milk market?

answer

an increase in supply, lower equilibrium price, & higher equilibrium quantity.

question

The law of demand says that as the price of a good rises-

answer

buyers purchase less, in part because their real income has fallen.

question

If we say that demand has increased, we mean that there has been-

answer

a rightward shift of the demand curve.

question

In a rental market like the one in exhibit 4-6, a government-imposed rule that rent cannot exceed $750 per month would be called a-

answer

price ceiling.

question

The income effect refers to the impact of a change in-

answer

the price of a good on real income.

question

When quantity demanded of a good is less than the quantity supplied at the prevailing market price,-

answer

the price of the good tends to fall.

question

When a market is in equilibrium-

answer

there is no incentive for consumers or producers to change their current behavior.

question

If the price of the good described in exhibit 4-1 is $1.50, then-

answer

the market is in equilibrium.

question

An increase in the number of producers of a good will-

answer

increase the market supply because the market supply is the sum of all individual supply curves.

question

As a result of international trade-

answer

the loss to producers in the importing country is less than the gain to consumers in the importing country caused by a decrease in price.

question

Regional trading bloc agreements-

answer

make special trade deals between countries in that region and discriminate against countries outside the region.

question

The establishment of GATT resulted in-

answer

lower tariff rates.

question

The basis for international trade is-

answer

comparative advantage.

question

The rate at which two countries trade one good for another-

answer

is known as the terms of trade.

question

The two major trading partners of the United States are-

answer

Mexico & Canada.

question

The largest regional trading bloc is the-

answer

European Community.

question

Predatory dumping is the practice of-

answer

temporarily selling a good in another country for a price lower than the domestic price to drive out competing producers.

question

The two main categories of U.S. exports are-

answer

capital goods and industrial supplies and materials

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