question
Ryan spends an hour studying instead of going for a bike ride. Assume studying and bike riding were Ryan's only options for that hour. The opportunity cost to him of studying is
Choose one answer.
a. the improvement in his grades from studying for the hour.
b. the difference between the improvement in his grades and the enjoyment from bike riding.
c. the enjoyment and exercise he would have received from bike riding.
d. zero since neither activity required Ryan to spend any money.
e. the value of the knowledge he gained by studying.
Choose one answer.
a. the improvement in his grades from studying for the hour.
b. the difference between the improvement in his grades and the enjoyment from bike riding.
c. the enjoyment and exercise he would have received from bike riding.
d. zero since neither activity required Ryan to spend any money.
e. the value of the knowledge he gained by studying.
answer
c. the enjoyment and exercise he would have received from bike riding.
question
Which of the following is a false statement about absolute and comparative advantage?
a. Comparative advantage is the basis for gains from trade.
b. It is possible for one country to have the absolute advantage in all goods.
c. It is possible for one country to have the comparative advantage in all goods.
d. To find comparative advantage you need to consider opportunity cost.
e. All of these statements are true.
a. Comparative advantage is the basis for gains from trade.
b. It is possible for one country to have the absolute advantage in all goods.
c. It is possible for one country to have the comparative advantage in all goods.
d. To find comparative advantage you need to consider opportunity cost.
e. All of these statements are true.
answer
c. It is possible for one country to have the comparative advantage in all goods.
question
The gains from trade are
a. limited to trade between nations with similar levels of wealth.
b. always based on different wage rates between nations.
c. a result of more efficient resource allocation.
d. based on the principle of absolute advantage.
e. none of the above
a. limited to trade between nations with similar levels of wealth.
b. always based on different wage rates between nations.
c. a result of more efficient resource allocation.
d. based on the principle of absolute advantage.
e. none of the above
answer
c. a result of more efficient resource allocation.
question
Which of the following would not tend to lower the price of VCRs?
a. decreasing price of DVD players
b. increasing price of video cassettes
c. improvement in VCR production technology
d. reduced price of raw materials used in making VCRs
e. increasing price of pay-per-view movies on cable TV
a. decreasing price of DVD players
b. increasing price of video cassettes
c. improvement in VCR production technology
d. reduced price of raw materials used in making VCRs
e. increasing price of pay-per-view movies on cable TV
answer
e. increasing price of pay-per-view movies on cable TV
question
In a market economy, the allocation of the quantity supplied of any good among demanders is determined by
a. the needs of the individuals.
b. the sellers.
c. the market price.
d. government regulations.
e. a random process.
a. the needs of the individuals.
b. the sellers.
c. the market price.
d. government regulations.
e. a random process.
answer
c. the market price.
question
Milk can be used to make yogurt or cheese. Other things equal, if consumers start demanding more yogurt,
a. the price of milk will fall.
b. less milk will be used in cheese and more will be used in yogurt.
c. the supply of milk will decrease.
d. the price of cheese will fall.
e. all of the above.
a. the price of milk will fall.
b. less milk will be used in cheese and more will be used in yogurt.
c. the supply of milk will decrease.
d. the price of cheese will fall.
e. all of the above.
answer
b. less milk will be used in cheese and more will be used in yogurt.
question
The price elasticity of demand
a. is determined by the Federal Reserve Bank at a monthly meeting.
b. only works well in competitive markets.
c. intersects with the price elasticity of supply to determine the market equilibrium.
d. is equal to the slope of the demand curve.
e. varies from one point to another on a typical demand curve.
a. is determined by the Federal Reserve Bank at a monthly meeting.
b. only works well in competitive markets.
c. intersects with the price elasticity of supply to determine the market equilibrium.
d. is equal to the slope of the demand curve.
e. varies from one point to another on a typical demand curve.
answer
e. varies from one point to another on a typical demand curve.
question
Which of the following statements is true?
a. The elasticity of demand for a product cannot change over time.
b. Elasticity is useful in theory but cannot be measured in real life.
c. The elasticity of demand will be larger if there are good substitutes available.
d. If I can't live without the product, my demand will be elastic.
e. none of these are true
a. The elasticity of demand for a product cannot change over time.
b. Elasticity is useful in theory but cannot be measured in real life.
c. The elasticity of demand will be larger if there are good substitutes available.
d. If I can't live without the product, my demand will be elastic.
e. none of these are true
answer
c. The elasticity of demand will be larger if there are good substitutes available.
question
A firm's total cost is $10,000. Its variable cost is $5,500. What is the firm's fixed cost?
a. $2.22
b. $3,500
c. $4,500
d. $5,500
e. none of the above
a. $2.22
b. $3,500
c. $4,500
d. $5,500
e. none of the above
answer
c. $4,500
question
Which of the following is a correct definition of marginal cost (MC)?
a. It is the added cost that results from hiring one more employee.
b. It is the increase in the average cost that results from producing one more unit of a good.
c. It is the decrease in profits that results from selling another unit of a good.
d. It is the cost per unit of a good produced -- i.e., total cost divided by quantity.
e. It is the added cost that results from producing one more unit of a good.
a. It is the added cost that results from hiring one more employee.
b. It is the increase in the average cost that results from producing one more unit of a good.
c. It is the decrease in profits that results from selling another unit of a good.
d. It is the cost per unit of a good produced -- i.e., total cost divided by quantity.
e. It is the added cost that results from producing one more unit of a good.
answer
e. It is the added cost that results from producing one more unit of a good.
question
A firm will shut down if
a. P > AVC at all levels of output.
b. P < AVC at all levels of output.
c. AVC > AFC at all levels of output.
d. TR > TC at all levels of output.
e. P < TVC at all levels of output.
a. P > AVC at all levels of output.
b. P < AVC at all levels of output.
c. AVC > AFC at all levels of output.
d. TR > TC at all levels of output.
e. P < TVC at all levels of output.
answer
b. P < AVC at all levels of output.
question
A negative externality exists when
a. Jack buys a good from Bill, and this makes Bill worse off.
b. Jack buys a good from Bill, and this makes Jack worse off.
c. Jack buys a good from Bill, and this makes Todd better off.
d. Jack buys a good from Bill, and this makes both of them worse off.
e. Jack buys a good from Bill, and this makes Todd worse off.
a. Jack buys a good from Bill, and this makes Bill worse off.
b. Jack buys a good from Bill, and this makes Jack worse off.
c. Jack buys a good from Bill, and this makes Todd better off.
d. Jack buys a good from Bill, and this makes both of them worse off.
e. Jack buys a good from Bill, and this makes Todd worse off.
answer
e. Jack buys a good from Bill, and this makes Todd worse off.
question
Everything else the same, if the price level in Japan rises relative to the price level in the U.S.,
a. the supply of dollars and the demand for yen in the foreign exchange market will decrease.
b. the supply of dollars and the demand for yen in the foreign exchange market will increase.
c. the demand for dollars and the supply of yen in the foreign exchange market will decrease.
d. the yen will appreciate.
e. the dollar will depreciate.
a. the supply of dollars and the demand for yen in the foreign exchange market will decrease.
b. the supply of dollars and the demand for yen in the foreign exchange market will increase.
c. the demand for dollars and the supply of yen in the foreign exchange market will decrease.
d. the yen will appreciate.
e. the dollar will depreciate.
answer
e. the dollar will depreciate.
question
Hannah runs a manicuring shop. Currently, her shop provides 50 manicures per day, and the shop's daily total cost (TC) is $600. If Hannah decides to provide 25 more manicures per day, the total cost will rise by $75 per day. If Hannah does decide to increase production by this much, what will the shop's daily average total cost (ATC) be?
a. $12.00
b. $3.00
c. $8.00
d. $9.00
e. $13.50
a. $12.00
b. $3.00
c. $8.00
d. $9.00
e. $13.50
answer
d. $9.00
question
If Ross decides to ride his bike this afternoon, he will miss his favorite television show, and he won't have time to study for his economics test. If Ross doesn't ride his bike, he'll choose to watch the television show instead. (He cannot both watch television and study for the test.) Ross's opportunity cost of riding the bike is
a. the value to Ross of watching the television show.
b. the value to Ross of studying for the test.
c. the value of watching the television show plus the value of studying for the test.
d. the value of watching the television show minus the value of studying for the test.
e. the value to Ross of riding his bike minus the value of watching the television show.
a. the value to Ross of watching the television show.
b. the value to Ross of studying for the test.
c. the value of watching the television show plus the value of studying for the test.
d. the value of watching the television show minus the value of studying for the test.
e. the value to Ross of riding his bike minus the value of watching the television show.
answer
c. the value of watching the television show plus the value of studying for the test.
question
The opportunity cost of purchasing an item is
a. the number of hours needed to earn money to buy it.
b. the next best thing you could have done with the time and money spent.
c. always less than the dollar value of the item.
d. always equal to the dollar value of the item.
e. just the time required to buy it.
a. the number of hours needed to earn money to buy it.
b. the next best thing you could have done with the time and money spent.
c. always less than the dollar value of the item.
d. always equal to the dollar value of the item.
e. just the time required to buy it.
answer
b. the next best thing you could have done with the time and money spent.
question
Most residents of Los Angeles think sushi and sashimi are very similar foods. What effect will an increase in the price of sushi have on the demand curve for sashimi in Los Angeles?
a. there will be a movement down the sashimi demand curve
b. the sashimi demand curve will not be affected
c. there will be a movement up the sashimi demand curve
d. the sashimi demand curve will shift to the right
e. the sashimi demand curve will shift to the left
a. there will be a movement down the sashimi demand curve
b. the sashimi demand curve will not be affected
c. there will be a movement up the sashimi demand curve
d. the sashimi demand curve will shift to the right
e. the sashimi demand curve will shift to the left
answer
d. the sashimi demand curve will shift to the right
question
Economists can be college professors or business analysts. If there is an increase in businesses' need for economic analysis,
a. the wage of economists will tend to decrease.
b. colleges will have to pay less money to hire economists as professors.
c. more economists will decide to become professors.
d. fewer economists will decide to become business analysts.
e. All of the above.
a. the wage of economists will tend to decrease.
b. colleges will have to pay less money to hire economists as professors.
c. more economists will decide to become professors.
d. fewer economists will decide to become business analysts.
e. All of the above.
answer
e. All of the above.
question
In a market economy,
a. resources are distributed equally across the all possible uses.
b. resources move to higher valued uses in response to changes in price.
c. resource usage is independent of the price.
d. most resources are distributed by the government.
e. all of the above.
a. resources are distributed equally across the all possible uses.
b. resources move to higher valued uses in response to changes in price.
c. resource usage is independent of the price.
d. most resources are distributed by the government.
e. all of the above.
answer
b. resources move to higher valued uses in response to changes in price.
question
At a price of $4.50/pound, people buy 55 pounds of chocolate cream candy. At a price of $5.50/pound, people buy 45 pounds of chocolate cream candy. What is the arc elasticity of demand for chocolate cream candy in this price range?
a. 1.0
b. 10.0
c. 0.1
d. 0.67
e. none of the above
a. 1.0
b. 10.0
c. 0.1
d. 0.67
e. none of the above
answer
a. 1.0
question
A perfectly competitive firm maximizes its profits using what rule?
a. P = ATC
b. MR = ATC
c. Q = MC
d. P = MC
e. MR = AVC
a. P = ATC
b. MR = ATC
c. Q = MC
d. P = MC
e. MR = AVC
answer
d. P = MC
question
Who among the following is most likely to favor an appreciation of the U.S. dollar?
a. a British professor visiting New York
b. an American farmer whose business depends on exports
c. an American professor on a tour of Italian museums
d. Disneyland in Los Angeles, California, a popular destination for foreign tourists
e. a Japanese retailer whose business depends on imports from the U.S.
a. a British professor visiting New York
b. an American farmer whose business depends on exports
c. an American professor on a tour of Italian museums
d. Disneyland in Los Angeles, California, a popular destination for foreign tourists
e. a Japanese retailer whose business depends on imports from the U.S.
answer
c. an American professor on a tour of Italian museums
question
If the price elasticity of demand for CSUN sweatshirts is 1.5, then
a. an increase in price will cause total consumer expenditures on CSUN sweatshirts to fall
b. an increase in price will cause total consumer expenditures on CSUN sweatshirts to increase
c. an increase in price will cause total consumer expenditures on CSUN sweatshirts to stay the same
d. a decrease in price will cause total consumer expenditures on CSUN sweatshirts to fall
e. none of the above
a. an increase in price will cause total consumer expenditures on CSUN sweatshirts to fall
b. an increase in price will cause total consumer expenditures on CSUN sweatshirts to increase
c. an increase in price will cause total consumer expenditures on CSUN sweatshirts to stay the same
d. a decrease in price will cause total consumer expenditures on CSUN sweatshirts to fall
e. none of the above
answer
a. an increase in price will cause total consumer expenditures on CSUN sweatshirts to fall
question
Economic profit is equal to
a. total revenue minus the explicit cost of producing goods and services.
b. total revenue minus the implicit cost of producing goods and services.
c. total revenue minus the opportunity cost of producing goods and services.
d. average revenue minus the average cost of producing the last unit of a good or service.
e. total revenue minus depreciation.
a. total revenue minus the explicit cost of producing goods and services.
b. total revenue minus the implicit cost of producing goods and services.
c. total revenue minus the opportunity cost of producing goods and services.
d. average revenue minus the average cost of producing the last unit of a good or service.
e. total revenue minus depreciation.
answer
c. total revenue minus the opportunity cost of producing goods and services.
question
Your friend is thinking of opening a video store. She estimates it would cost $500,000 a year to rent the store and buy video stock. She is planning to quit her $50,000 a year job as an accountant to run the store. Her opportunity cost of opening the store is
a. $500,000
b. $550,000
c. $50,000
d. $450,000
e. $60,000
a. $500,000
b. $550,000
c. $50,000
d. $450,000
e. $60,000
answer
b. $550,000
question
Comparative advantage is based on
a. capital costs
b. labor costs
c. opportunity costs
d. dollar price
e. both labor and capital costs
a. capital costs
b. labor costs
c. opportunity costs
d. dollar price
e. both labor and capital costs
answer
c. opportunity costs
question
Americans love to eat peanut butter & jelly sandwiches. If the price of jelly increases (while other things remain constant), what effect will this have on the market for peanut butter?
a. price rises, quantity falls
b. price falls, quantity rises
c. both price and quantity fall
d. both price and quantity rise
e. price rises and quantity remains the same
a. price rises, quantity falls
b. price falls, quantity rises
c. both price and quantity fall
d. both price and quantity rise
e. price rises and quantity remains the same
answer
a. price rises, quantity falls
question
If resources are owned by individuals instead of government,
a. resources will be used less efficiently.
b. resource use will tend to be unchanging and determined by historical usage patterns.
c. resource use will be guided by changing relative prices as owners attempt to maximize self-interest.
d. market prices will not reflect changing values of different uses of the resources.
e. none of the above answers are correct.
a. resources will be used less efficiently.
b. resource use will tend to be unchanging and determined by historical usage patterns.
c. resource use will be guided by changing relative prices as owners attempt to maximize self-interest.
d. market prices will not reflect changing values of different uses of the resources.
e. none of the above answers are correct.
answer
c. resource use will be guided by changing relative prices as owners attempt to maximize self-interest.
question
Acme, Inc. is currently producing 12,000 gadgets per year. Acme's average total cost (ATC) is $18 per year. What is Acme's total cost (TC) per year?
a. $667
b. $108,000
c. $216,000
d. $500
e. $1500
a. $667
b. $108,000
c. $216,000
d. $500
e. $1500
answer
c. $216,000
question
Which of the following would not be a negative production externality associated with tire production?
a. smoke from the tire factory worsens the city's air quality
b. toxins from the tire-making process seep into the area's groundwater
c. neighbors experience the bad smells that come from the tire factory
d. the rubber used to make tires could be used to make something else
e. all of these are negative production externalities
a. smoke from the tire factory worsens the city's air quality
b. toxins from the tire-making process seep into the area's groundwater
c. neighbors experience the bad smells that come from the tire factory
d. the rubber used to make tires could be used to make something else
e. all of these are negative production externalities
answer
d. the rubber used to make tires could be used to make something else
question
Everything else the same, if income in Japan rises while income in the U.S. remains unchanged,
a. the supply of dollars in the foreign exchange market will increase.
b. the demand for yen in the foreign exchange market will decrease.
c. the supply of yen in the foreign exchange market will decrease.
d. the demand for dollars in the foreign exchange market will increase.
e. the demand for dollars in the foreign exchange market will decrease.
a. the supply of dollars in the foreign exchange market will increase.
b. the demand for yen in the foreign exchange market will decrease.
c. the supply of yen in the foreign exchange market will decrease.
d. the demand for dollars in the foreign exchange market will increase.
e. the demand for dollars in the foreign exchange market will decrease.
answer
d. the demand for dollars in the foreign exchange market will increase.
question
Your friend is thinking of opening a video store. She estimates it would cost $500,000 a year to rent the store and buy video stock. She is planning to quit her $50,000 a year job as an accountant to run the store. If there are no other costs of operation and the store's revenue is $530,000, the accounting profits will be
a. $50,000
b. $20,000
c. -$20,000
d. $30,000
e. $530,000
a. $50,000
b. $20,000
c. -$20,000
d. $30,000
e. $530,000
answer
d. $30,000
question
In order to fix 1 car tire, jerry fixed 3 bicycle tires. In order to fix 1 car tire, berry fixes 5 bike tires, who has the comparative advantage
a.Jerry has the comparative advantage over Berry
a.Jerry has the comparative advantage over Berry
answer
...
question
Milk can be used to make yogurt and cheese, other things equal, if consumption starts demanding more yogurt
a.Supply of milk will decrease.
b.Demand of milk will increase.
c.Answer was NONE are
a.Supply of milk will decrease.
b.Demand of milk will increase.
c.Answer was NONE are
answer
c.Answer was NONE are
question
1. Fresh tuna can be canned or used to make sushi. Other things equal, if consumers start demanding more sushi?
a.The price of tuna will fall.
b.Less tuna will be canned and more will be used in tuna sushi.
c.The supply of fresh tuna will decrease.
d.The price of tuna sushi will fall.
e.None of the above.
a.The price of tuna will fall.
b.Less tuna will be canned and more will be used in tuna sushi.
c.The supply of fresh tuna will decrease.
d.The price of tuna sushi will fall.
e.None of the above.
answer
b.Less tuna will be canned and more will be used in tuna sushi.
question
In economics, short run is defined as?
a.A period of time less than a year.
b.A period of time during which at least one production input is fixed.
c.A period of time less than one month.
d.A period of time during which all production inputs are fixed.
e.A period of time during which all production inputs are variable.
a.A period of time less than a year.
b.A period of time during which at least one production input is fixed.
c.A period of time less than one month.
d.A period of time during which all production inputs are fixed.
e.A period of time during which all production inputs are variable.
answer
b.A period of time during which at least one production input is fixed.
question
In economics, the cost of something is?
A. The out-of-pocket expense of obtaining it.
B. What you must give up to get it.
C. Always measured in units of time.
D. Always higher than people think.
A. The out-of-pocket expense of obtaining it.
B. What you must give up to get it.
C. Always measured in units of time.
D. Always higher than people think.
answer
B. What you must give up to get it.
question
Helena does her bathroom Saturday night and she wants to see a movie and surf the web. If she doesn't clean her bathroom and surf the web what is the value (note she cannot see the movie and surf the web).
A. The value of Helen of watching a movie.
B. The value of Helen of suffering the web.
C. The value of Helen surfing the web PLUS the value of watching a movie.
D. The value of cleaning her bathroom MINUS the value of surfing the web.
E. The value of cleaning her bathroom MINUS the value of surfing the web
A. The value of Helen of watching a movie.
B. The value of Helen of suffering the web.
C. The value of Helen surfing the web PLUS the value of watching a movie.
D. The value of cleaning her bathroom MINUS the value of surfing the web.
E. The value of cleaning her bathroom MINUS the value of surfing the web
answer
B. The value of Helen of suffering the web.
question
Consumer surplus is equal the area below the _________ and above___________
A. Price; Supply Curve
B. Demand Area; Price
C. Demand Curve; Supply Curve
D. Price; Demand Curve
E. Supply Curve; Demand Curve
A. Price; Supply Curve
B. Demand Area; Price
C. Demand Curve; Supply Curve
D. Price; Demand Curve
E. Supply Curve; Demand Curve
answer
B. Demand Area; Price
question
On the foreign exchange market, an increase in a country's exchange rate
A. Decrease the quantity demand of its currency
B. Increase the quantity demand of its currency
C. Has no effect on the quantity demand of its currency
D. Decrease the quantity supplied of its currency
E. has no effect of the quantity supplied of its currency
A. Decrease the quantity demand of its currency
B. Increase the quantity demand of its currency
C. Has no effect on the quantity demand of its currency
D. Decrease the quantity supplied of its currency
E. has no effect of the quantity supplied of its currency
answer
...
question
The entry of new firms into a competitive industry will very likely
a. shift the short run industry supply curve to the right
b. cause the market price to fall
c. reduce the profits of firms in the industry
d. cause the market quantity sold to rise
e. all of the above
a. shift the short run industry supply curve to the right
b. cause the market price to fall
c. reduce the profits of firms in the industry
d. cause the market quantity sold to rise
e. all of the above
answer
e. all of the above
question
Which of the following would cause an increase in the demand for us dollars?
a.An interest rate cut in the US
b.An interest rate cut in Europe
c.An interest rate increase in Europe
d.A recession in Europe
e.Less desire by Europeans for US goods
a.An interest rate cut in the US
b.An interest rate cut in Europe
c.An interest rate increase in Europe
d.A recession in Europe
e.Less desire by Europeans for US goods
answer
b.An interest rate cut in Europe
question
In an attempt to boost enrollment, in January 1996, a private college in Iowa offered free tuition for seniors graduating from high school in the county where it is located. For students who accept the offer, how does this offer affect the opportunity cost of attending college?
a. The opportunity cost is not changed, since lost earnings are still a factor.
b. The opportunity cost is now zero for the typical student.
c. The opportunity cost is very low, because the only cost is for books and school supplies.
d. The opportunity cost is not changed, since tuition is not a factor in computing opportunity cost.
e. The opportunity cost is lower than if tuition were charged, but there is still a cost.
a. The opportunity cost is not changed, since lost earnings are still a factor.
b. The opportunity cost is now zero for the typical student.
c. The opportunity cost is very low, because the only cost is for books and school supplies.
d. The opportunity cost is not changed, since tuition is not a factor in computing opportunity cost.
e. The opportunity cost is lower than if tuition were charged, but there is still a cost.
answer
d. The opportunity cost is not changed, since tuition is not a factor in computing opportunity cost.
question
A firms' total cost is $500 when its quantity is 80 units. Its total cost increases to $510 when its quantity increases to 81 units. What is the firm's marginal cost?
a. 6.25
b. 10
c. 5
d. 6.29
e. none of the above
a. 6.25
b. 10
c. 5
d. 6.29
e. none of the above
answer
b. 10
question
A technological breakthroughs in the production of computers creates a __________ and causes the price of computers to __________.
a. leftward shift of supply, rise
b. rightward shift of supply, fall
c. rightward shift of demand, rise
d. rightward shift of supply, rise
e. leftward shift of demand, rise
a. leftward shift of supply, rise
b. rightward shift of supply, fall
c. rightward shift of demand, rise
d. rightward shift of supply, rise
e. leftward shift of demand, rise
answer
b. rightward shift of supply, fall
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