Which type of economic system would Adam Smith support if he could choose any system?

a) Commandb) Mixedc) Traditionald) Totalitariane) Market

Which type of economic system would Adam Smith support if he could choose any system?

a) Commandb) Mixedc) Traditionald) Totalitariane) Market

At halftime at a Cardinals game, your friend Pierre goes to a concession stand and buys a bag of nachos, his ninth of the game. Assuming that Pierre is acting rationally, it MUST be true that:

A) to Pierre, the marginal benefit of the ninth bag of nachos is greater than the marginal cost

B) to Pierre, the total cost of nine bags of nachos is greater than the total benefit

C) to Pierre, the marginal cost of the ninth bag of nachos is greater than the marginal benefit

D) to Pierre, the marginal benefit of the ninth bag of nachos is greater than the total cost

At halftime at a Cardinals game, your friend Pierre goes to a concession stand and buys a bag of nachos, his ninth of the game. Assuming that Pierre is acting rationally, it MUST be true that:

A) to Pierre, the marginal benefit of the ninth bag of nachos is greater than the marginal cost

B) to Pierre, the total cost of nine bags of nachos is greater than the total benefit

C) to Pierre, the marginal cost of the ninth bag of nachos is greater than the marginal benefit

D) to Pierre, the marginal benefit of the ninth bag of nachos is greater than the total cost

Which of the following statements about a price ceiling is accurate?

a) An effective price ceiling must be priced above the equilibrium price

b) An effective price ceiling must be priced below the equilibrium price

c) A price ceiling will increase the quantity of the good suppliedd) A price ceiling will cause a shift in the demand curve for the

goode) A price ceiling will have no effect on the quantity of the good

supplied

Which of the following statements about a price ceiling is accurate?

a) An effective price ceiling must be priced above the equilibrium price

b) An effective price ceiling must be priced below the equilibrium price

c) A price ceiling will increase the quantity of the good suppliedd) A price ceiling will cause a shift in the demand curve for the

goode) A price ceiling will have no effect on the quantity of the good

supplied

Which of the following would be considered an implicit cost of attending college?

a) Money spent on housing while in collegeb) Wages the student gave up to attend collegec) Money spent on tuition and fees for colleged) Money spent on food while in collegee) Money spent on books required for college

Which of the following would be considered an implicit cost of attending college?

a) Money spent on housing while in collegeb) Wages the student gave up to attend collegec) Money spent on tuition and fees for colleged) Money spent on food while in collegee) Money spent on books required for college

Why does scarcity exist?

a) Each year workers tend to produce less than in previous years.

b) Machines wear out with time.c) There are not sufficient resources to produce all

the products people want.d) There is a limit to people’s wantse) The washing machine eats socks causing

people to continually buy socks

Why does scarcity exist?

a) Each year workers tend to produce less than in previous years.

b) Machines wear out with time.c) There are not sufficient resources to

produce all the products people want.d) There is a limit to people’s wantse) The washing machine eats socks causing

people to continually buy socks

What are the two assumptions that economists make regarding consumers?

A) People are irrational and love moneyB) People love money and presentsC) People are rational and use money to maximize their

total satisfactionD) People are irrational and use money to maximize

their total satisfactionE) People use their money in the least costly way and

act irrationally

What are the two assumptions that economists make regarding consumers?

A) People are irrational and love moneyB) People love money and presentsC) People are rational and use money to maximize

their total satisfactionD) People are irrational and use money to maximize

their total satisfactionE) People use their money in the least costly way and

act irrationally

A decrease in the price of melons will cause

a) The quantity demanded of melons to increaseb) The supply of melons to increasec) The demand of melons to decreased) The quantity supplied of melons to increasee) The supply of melons to decrease

A decrease in the price of melons will cause

a) The quantity demanded of melons to increaseb) The supply of melons to increasec) The demand of melons to decreased) The quantity supplied of melons to increasee) The supply of melons to decrease

An automobile lift used by a mechanic is an example of

a) Productivityb) Physical capitalc) Human Capitald) Entrepreneurship e) The fact that machines will take over the world

An automobile lift used by a mechanic is an example of

a) Productivityb) Physical capitalc) Human Capitald) Entrepreneurship e) The fact that machines will take over the world

Which of the following would be considered a service?

a) Chalkboardb) Vampirec) Earbudsd) Rulere) A massage

Which of the following would be considered a service?

a) Chalkboardb) Vampirec) Earbudsd) Rulere) A massage

Consumer surplus is the

a) Area under the supply curve to the left of the amount sold

b) Area under the supply curve to the right of the amount sold

c) Amount the buyer pays plus the cost of productiond) Amount the seller is paid less the cost of productione) Difference between what a consumer would be willing

to pay for a good or service minus the price s/he actually has to pay for it

Consumer surplus is the

a) Area under the supply curve to the left of the amount sold

b) Area under the supply curve to the right of the amount sold

c) Amount the buyer pays plus the cost of productiond) Amount the seller is paid less the cost of productione) Difference between what a consumer would be

willing to pay for a good or service minus the price s/he actually has to pay for it

What is the opportunity cost of shifting production from combination A to combination E?

A) 8 capital goodsB) 14 consumer goodsC) 8 consumer goodsD) 14 capital goods

What is the opportunity cost of shifting production from combination A to combination E?

A) 8 capital goodsB) 14 consumer goodsC) 8 consumer goodsD) 14 capital goods

What is the opportunity cost of shifting production from combination F to combination C?

A) 2 capital goodsB) 3 consumer goodsC) 2 consumer goodD) 3 capital goodsE) There is no opportunity

cost

What is the opportunity cost of shifting production from combination F to combination C?

A) 2 capital goodsB) 3 consumer goodsC) 2 consumer goodD) 3 capital goodsE) There is no

opportunity cost

The machinery and equipment used to produce goods and service fall under which of the four factors of production?

A) LandB) LaborC) CapitalD) Entrepreneurship

The machinery and equipment used to produce goods and service fall under which of the four factors of production?

A) LandB) LaborC) CapitalD) Entrepreneurship

If supply of a good increases while demand remains unchanged, the equilibrium price will _________ and equilibrium quantity will ___________.

 A) increase; decreaseB) increase; increaseC) decrease; decreaseD) decrease; increase

If supply of a good increases while demand remains unchanged, the equilibrium price will _________ and equilibrium quantity will ___________.

 A) increase; decreaseB) increase; increaseC) decrease; decreaseD) decrease; increase

If demand for a good decreases while supply remains unchanged, the equilibrium price will _________ and equilibrium quantity will ___________.

A) increase; decreaseB) increase; increaseC) decrease; decreaseD) decrease; increase

If demand for a good decreases while supply remains unchanged, the equilibrium price will _________ and equilibrium quantity will ___________.

A) increase; decreaseB) increase; increaseC) decrease; decreaseD) decrease; increase

A point inside a nation’s production possibilities curve can represent:

A) A recession causing many workers to be unemployed

B) An increase in population sizeC) Economic growthD) A technological advancementE) An improvement in living standards

A point inside a nation’s production possibilities curve can represent:

A) A recession causing many workers to be unemployedB) An increase in population sizeC) Economic growthD) A technological advancementE) An improvement in living standards

Which of the following will result in an outward shift of the production possibilities curve?

A) A decrease in the quantity of resourcesB) An improvement in the quality of resourcesC) A fall in education standardsD) A unsustainable growth in populationE) An increase in unemployment rate

Which of the following will result in an outward shift of the production possibilities curve?

A) A decrease in the quantity of resourcesB) An improvement in the quality of resourcesC) A fall in education standardsD) A unsustainable growth in populationE) An increase in unemployment rate

In economics, the concept of opportunity cost is:

A) Negated by ensuring that the government has a role in a capitalist societyB) Best illustrated by knowing why consumers choose one good over anotherC) Quantifiable only if you know the real dollar prices of the goods and services you are giving up to consume somethingD) The methodology that government economists use to determine the total amount of the national debtE) Defined as the highest-valued alternative that must be forgone when a choice is made

In economics, the concept of opportunity cost is:

A) Negated by ensuring that the government has a role in a capitalist societyB) Best illustrated by knowing why consumers choose one good over anotherC) Quantifiable only if you know the real dollar prices of the goods and services you are giving up to consume somethingD) The methodology that government economists use to determine the total amount of the national debtE) Defined as the highest-valued alternative that must be forgone when a choice is made

Nicky makes $25,000 a year as a sales clerk. He then decides to quit his job to enter an MBA program full-time (assume Nicky doesn’t work in the summer or hold any part-time jobs). His tuition, books, and fees total $15,000 a year. Given this information, the annual total economic cost of Nicky's MBA studies is:

A) $10,000B) $30,000C) $40,000D) $15,000E) $25,000

Nicky makes $25,000 a year as a sales clerk. He then decides to quit his job to enter an MBA program full-time (assume Nicky doesn’t work in the summer or hold any part-time jobs). His tuition, books, and fees total $15,000 a year. Given this information, the annual total economic cost of Nicky's MBA studies is:

A) $10,000B) $30,000C) $40,000D) $15,000E) $25,000

Which of the following would cause a rightward shift in the demand curve for golf balls?

a) An increase in the price of golf clubs b) A decrease in the popularity of golfc) An increase in the number of people who

play golfd) A decrease in the price of golf ballse) An increase in the golf club membership

fee

Which of the following would cause a rightward shift in the demand curve for golf balls?

a) An increase in the price of golf clubs b) A decrease in the popularity of golfc) An increase in the number of people who play golfd) A decrease in the price of golf ballse) An increase in the golf club membership

fee

Due to a beef shortage, the price of hamburgers rises. As consumers adjust their buying habits in response to the new price of hamburgers, the equilibrium price of ketchup (a consumer complement to hamburgers) will ______________ and the equilibrium quantity of ketchup sold will _______________.

A) increase; increaseB) decrease; decreaseC) decrease; increaseD) increase; decrease

Due to a beef shortage, the price of hamburgers rises. As consumers adjust their buying habits in response to the new price of hamburgers, the equilibrium price of ketchup (a consumer complement to hamburgers) will ______________ and the equilibrium quantity of ketchup sold will _______________.

A) increase; increaseB) decrease; decreaseC) decrease; increaseD) increase; decrease

Which of the following characteristics of a good would tend to make the demand for the good more inelastic?

 A) it is a luxuryB) it has many substitutesC) consumers need it to surviveD) it is a large portion of income

Which of the following characteristics of a good would tend to make the demand for the good more inelastic?

 A) it is a luxuryB) it has many substitutesC) consumers need it to surviveD) it is a large portion of income

If a price floor was set in the submarine market at $700,000 what would be the quantity supplied and quantity demanded?

a) Qs = 100 Qd = 0b) Qs = 100 Qd = 100c) Qs = 50 Qd = 150d) Qs = 150 Qd = 50e) Not enough Information to determine

If a price floor was set in the submarine market at $700,000 what would be the quantity supplied and quantity demanded?

a) Qs = 100 Qd = 0b) Qs = 100 Qd = 100c) Qs = 50 Qd = 150d) Qs = 150 Qd = 50e) Not enough Information to determine

If a price ceiling was set in the submarine market at $700,000 what would be the quantity supplied and quantity demanded?

a) Qs = 100 Qd = 0b) Qs = 100 Qd = 100c) Qs = 50 Qd = 150d) Qs = 150 Qd = 50e) Not enough Information to determine

If a price ceiling was set in the submarine market at $700,000 what would be the quantity supplied and quantity demanded?

a) Qs = 100 Qd = 0b) Qs = 100 Qd = 100c) Qs = 50 Qd = 150d) Qs = 150 Qd = 50e) Not enough Information to determine

Which of the following would we expect in the submarine market if a price ceiling was set at $300,000?

a) Producers would be building too many submarines

b) Consumers of submarines are much better off than before

c) There would be a persistent shortage of submarines available

d) The submarines would be an inefficiently high quality

e) The price floor will cause an increase in demand for submarines

Which of the following would we expect in the submarine market if a price ceiling was set at $300,000?

a) Producers would be building too many submarines

b) Consumers of submarines are much better off than before

c) There would be a persistent shortage of submarines available

d) The submarines would be an inefficiently high quality

e) The price floor will cause an increase in demand for submarines

If the submarine market was left to market forces and there was no price restriction, then what would the quantity supplied and demanded be?

a) Qs = 100 Qd = 0b) Qs = 0 Qd = 100c) Qs = 50 Qd = 150d) Qs = 150 Qd = 50e) Qs = 100 Qd = 100

If the submarine market was left to market forces and there was no price restriction, then what would the quantity supplied and demanded be?

a) Qs = 100 Qd = 0b) Qs = 0 Qd = 100c) Qs = 50 Qd = 150d) Qs = 150 Qd = 50e) Qs = 100 Qd = 100

When someone has an increase in disposable income what are the only two options for what they can do with the change in disposable income?

a) Consumption and savingsb) Consumption and disjunctionc) Savings and investmentsd) Investments and Lendinge) Borrow or save

When someone has an increase in disposable income what are the only two options for what they can do with the change in disposable income?

a) Consumption and savingsb) Consumption and disjunctionc) Savings and investmentsd) Investments and Lendinge) Borrow or save

% Change in Quantity (Demanded or Supplied)

% Change in Price

Elasticity Coefficient

(E)= _____________

Calculating Elasticity

Percent Change

% change between two

numbers=

New Number

OLD NUMBER

Old Number-

x 100

_________

_________

If the price elasticity of demand is equal to 4, a 1 percent increase in price will cause the quantity demanded to _____ by _____ percent.

a) Increase; 0.25b) Decrease; 0.25c) Increase; 4d) Decrease; 25e) Decrease; 4

If the price elasticity of demand is equal to 4, a 1 percent increase in price will cause the quantity demanded to _____ by _____ percent.

a) Increase; 0.25b) Decrease; 0.25c) Increase; 4d) Decrease; 25e) Decrease; 4

If the price elasticity of supply is equal to 1, a 4 percent increase in price will cause the quantity supplied to _____ by _____ percent.

a) Increase; 0.25b) Decrease; 0.25c) Increase; 4d) Decrease; 25e) Decrease; 4

If the price elasticity of supply is equal to 1, a 4 percent increase in price will cause the quantity supplied to _____ by _____ percent.

a) Increase; 0.25b) Decrease; 0.25c) Increase; 4d) Decrease; 25e) Decrease; 4

When the supply elasticity of a product is 2.5, a 10 percent decrease in price will _____ the quantity supplied of the product by _____ percent.

a) Increase; 25b) Decrease; 25c) Increase; 2.5d) Decrease; 2.5e) Decrease; 4

When the supply elasticity of a product is 2.5, a 10 percent decrease in price will _____ the quantity supplied of the product by _____ percent.

a) Increase; 25b) Decrease; 25c) Increase; 2.5d) Decrease; 2.5e) Decrease; 4

Suppose 500 loaves of bread are demanded at a particular price. If that price rises by 20 percent, the quantity demanded decreases to 495 loaves of bread. This implies:

a) Demand is elasticb) Demand is unit-elasticc) The price elasticity of demand is equal to 4d) Demand is inelastice) Consumers are very responsive to a price change

Suppose 500 loaves of bread are demanded at a particular price. If that price rises by 20 percent, the quantity demanded decreases to 495 loaves of bread. This implies:

a) Demand is elasticb) Demand is unit-elasticc) The price elasticity of demand is equal to 4d) Demand is inelastice) Consumers are very responsive to a price change

If the demand for muffins produced by a bakery is perfectly elastic, then what will be the shape of the demand curve faced by the bakery for muffins?

a) The demand curve will be verticalb) The demand curve will be horizontalc) The demand curve will be upward slopingd) The demand curve will be downward slopinge) The demand curve will be concave

If the demand for muffins produced by a bakery is perfectly elastic, then what will be the shape of the demand curve faced by the bakery for muffins?

a) The demand curve will be verticalb) The demand curve will be horizontalc) The demand curve will be upward slopingd) The demand curve will be downward slopinge) The demand curve will be concave

6 Shifters (Determinants) of Supply1. Subsidies and Taxes2. Technology 3. Opportunity Cost of

Producing Other Goods4. Number of Sellers5. Expectations About Future

Prices and Profits6. Resource Prices

67

5 Shifters (Determinants) of Demand:

1. Buyers (Number of)2. Incomes3. Tastes and preferences4. Expectations about future

prices5. Related goods (prices of)

68

Last year a firm made 1,000 units of its product available at a price of $5 per unit. This year the firm will still make 1,000 units available, but only if the price is $7 per unit. What is most likely to have happened?

a) Supply has increasedb) Supply has decreasedc) Demand has decreasedd) Demand has increasede) Quantity supplied has increased

Last year a firm made 1,000 units of its product available at a price of $5 per unit. This year the firm will still make 1,000 units available, but only if the price is $7 per unit. What is most likely to have happened?

a) Supply has increasedb) Supply has decreasedc) Demand has decreasedd) Demand has increasede) Quantity supplied has increased

Which of the following would lead to an increase in the equilibrium price of product X?

a) An increase in consumer incomes if product X is an inferior good

b) Increase in the price of machinery used to produce product X

c) Technological advance in the production of good Xd) Decrease in the price of good Y which is a substitute

for good Xe) Expectation by consumers that the price of good X is

going to fall

Which of the following would lead to an increase in the equilibrium price of product X?

a) An increase in consumer incomes if product X is an inferior good

b) Increase in the price of machinery used to produce product X

c) Technological advance in the production of good Xd) Decrease in the price of good Y which is a substitute

for good Xe) Expectation by consumers that the price of good X is

going to fall

A rightward shift of a market supply curve might be caused by:

a) An increase in the wages of labor employed in the industry

b) An increase in the price of the final productc) A decrease in the income of consumersd) An increase in the price of a substitute goode) The entry of new firms in the industry

A rightward shift of a market supply curve might be caused by:

a) An increase in the wages of labor employed in the industry

b) An increase in the price of the final productc) A decrease in the income of consumersd) An increase in the price of a substitute goode) The entry of new firms in the industry

If the demand for mangoes increases and the supply decreases:

a) Equilibrium price will decrease, but equilibrium quantity will be unknown

b) Equilibrium price will increase and equilibrium quantity will increase

c) Demand will decrease and supply will increased) Equilibrium price will increase, and equilibrium quantity

will be unknowne) Both equilibrium price and equilibrium quantity will

decrease

If the demand for mangoes increases and the supply decreases:

a) Equilibrium price will decrease, but equilibrium quantity will be unknown

b) Equilibrium price will increase and equilibrium quantity will increase

c) Demand will decrease and supply will increased) Equilibrium price will increase, and equilibrium

quantity will be unknowne) Both equilibrium price and equilibrium quantity will

decrease

If both supply and demand for a good increase, which of the following will definitely happen?

a) Equilibrium price will remain the sameb) Equilibrium price will increasec) Equilibrium price will decreased) Equilibrium quantity will increasee) Equilibrium quantity will decrease

If both supply and demand for a good increase, which of the following will definitely happen?

a) Equilibrium price will remain the sameb) Equilibrium price will increasec) Equilibrium price will decreased) Equilibrium quantity will increasee) Equilibrium quantity will decrease

Based on Figure 1, which refers to the market for coffee, which of the following conditions would most likely move the point of equilibrium from A to B?

A) An increase in the income of a coffee buyer

B) A decrease in the price of coffeeC) A drought in Colombia, a major

coffee producer, that affects the coffee harvest

D) A decrease in the price of non-dairy creamers that are consumed along with coffee

E) An increase in the price of tea, assumed to be a substitute for coffee

Based on Figure 1, which refers to the market for coffee, which of the following conditions would most likely move the point of equilibrium from A to B?

A) An increase in the income of a coffee buyer

B) A decrease in the price of coffeeC) A drought in Colombia, a major

coffee producer, that affects the coffee harvest

D) A decrease in the price of non-dairy creamers that are consumed along with coffee

E) An increase in the price of tea, assumed to be a substitute for coffee

When will a shortage occur in a market?

A)When the actual price is lower than the equilibrium price

B)When quantity supplied is greater than the equilibrium quantity

C)When the quantity that consumers are willing and able to purchase decreases

D)When the quantity available at zero price is insufficient to meet demand

E)When a price floor is set in the market

When will a shortage occur in a market?

A)When the actual price is lower than the equilibrium price

B)When quantity supplied is greater than the equilibrium quantity

C)When the quantity that consumers are willing and able to purchase decreases

D)When the quantity available at zero price is insufficient to meet demand

E)When a price floor is set in the market

Assume that at the current market price of $4 per unit of a good, consumers are willing and able to buy 20 million units. Last year at a price of $4 per unit, consumers were willing and able to buy 30 million units. What is most likely to have happened over the last year?

a) Demand has increasedb) Demand has decreasedc) Supply has increasedd) Supply has decreasede) Quantity supplied has decreased

Assume that at the current market price of $4 per unit of a good, consumers are willing and able to buy 20 million units. Last year at a price of $4 per unit, consumers were willing and able to buy 30 million units. What is most likely to have happened over the last year?

a) Demand has increasedb) Demand has decreasedc) Supply has increasedd) Supply has decreasede) Quantity supplied has decreased

Output per Hour  Cookies Mangoes

Arizona 6 12Iowa 5 15

The table shows the output per hour of cookies and mangoes in Arizona and Iowa. What is the opportunity cost of producing a cookie in Arizona?

a) 2 cookiesb) 12 mangoesc) 15 cookiesd) 3 mangoese) 2 mangoes

Output per Hour  Cookies Mangoes

Arizona 6 12Iowa 5 15

The table shows the output per hour of cookies and mangoes in Arizona and Iowa. What is the opportunity cost of producing a cookie in Arizona?

a) 2 cookiesb) 12 mangoesc) 15 cookiesd) 3 mangoese) 2 mangoes

Output per Hour  Cookies Mangoes

Arizona 6 12Iowa 5 15

The table shows the output per hour of cookies and mangoes in Arizona and Iowa. What is the opportunity cost of producing a mango in Iowa?

a) 5 cookiesb) 1/3 cookiec) ½ cookied) 12 mangoese) 1 mango

Output per Hour  Cookies Mangoes

Arizona 6 12Iowa 5 15

The table shows the output per hour of cookies and mangoes in Arizona and Iowa. What is the opportunity cost of producing a mango in Iowa?

a) 5 cookiesb) 1/3 cookiec) ½ cookied) 12 mangoese) 1 mango

Which state has the comparative advantage in producing mangoes and which has the absolute advantage in producing cookies?

a) Mangoes: Iowa, Cookies: Arizonab) Mangoes: Iowa, Cookies: Iowac) Mangoes: Arizona, Cookies: Iowad) Mangoes: Arizona, Cookies: Arizona e) No state has a clear advantage over the other

Output per Hour  Cookies Mangoes

Arizona 6 12Iowa 5 15

Which state has the comparative advantage in producing mangoes and which has the absolute advantage in producing cookies?

a) Mangoes: Iowa, Cookies: Arizonab) Mangoes: Iowa, Cookies: Iowac) Mangoes: Arizona, Cookies: Iowad) Mangoes: Arizona, Cookies: Arizona e) No state has a clear advantage over the other

Output per Hour  Cookies Mangoes

Arizona 6 12Iowa 5 15

Margarine and butter can both be used as a spread on toast (but typically not together). This means that they are:

a) Independent goodsb) Complements in consumptionc) Substitutes in consumptiond) Giffen goodse) Inferior goods

Margarine and butter can both be used as a spread on toast (but typically not together). This means that they are:

a) Independent goodsb) Complements in consumptionc) Substitutes in consumptiond) Giffen goodse) Inferior goods

If the general education level within a country rises significantly over time, it is likely that:

a) The country will move to a different point along its current production possibilities curve.

b) The country’s production possibilities curve will not change in any way.

c) The country’s production possibilities curve will shift in.d) The country’s production possibilities curve will shift out.e) The country’s production possibilities curve will become

convex to the origin.

If the general education level within a country rises significantly over time, it is likely that:

a) The country will move to a different point along its current production possibilities curve.

b) The country’s production possibilities curve will not change in any way.

c) The country’s production possibilities curve will shift in.d) The country’s production possibilities curve will shift

out.e) The country’s production possibilities curve will become

convex to the origin.

When attempting to explain why a consumer purchases a Kia automobile instead of a Honda automobile or a PC computer instead of an Apple computer, an economist would assert:

A) That the consumer is making a decision based on what gives him maximum utility.

B) That everyone knows Kias are superior to Hondas; the consumer cannot possibly be maximizing his utility.

C) Everyone knows PC computers are superior to Apple computers; the consumer may be maximizing his utility at the margin, but isn’t maximizing total utility.

D) That there is no standard explanation for consumer choices because consumers have varied tastes and preferences.

E) That since rationality is bounded by lack of information, a consumer purchases goods based on convenience than on utility maximization.

When attempting to explain why a consumer purchases a Kia automobile instead of a Honda automobile or a PC computer instead of an Apple computer, an economist would assert:

A) That the consumer is making a decision based on what gives him maximum utility.

B) That everyone knows Kias are superior to Hondas; the consumer cannot possibly be maximizing his utility.

C) Everyone knows PC computers are superior to Apple computers; the consumer may be maximizing his utility at the margin, but isn’t maximizing total utility.

D) That there is no standard explanation for consumer choices because consumers have varied tastes and preferences.

E) That since rationality is bounded by lack of information, a consumer purchases goods based on convenience than on utility maximization.

Due to the law of diminishing marginal utility, _____.

a) The marginal utility curve is upward slopingb) When marginal utility becomes negative, total utility

increasesc) The first unit of a product offers more satisfaction

than the last unit of the same productd) There is more satisfaction with each unit of good

consumede) When marginal utility becomes positive, total utility

declines

Due to the law of diminishing marginal utility, _____.

a) The marginal utility curve is upward slopingb) When marginal utility becomes negative, total utility

increasesc) The first unit of a product offers more satisfaction

than the last unit of the same productd) There is more satisfaction with each unit of good

consumede) When marginal utility becomes positive, total utility

declines

A technological advance in textbook production will lead to which of the following?

a) A decrease in textbook supplyb) An increase in textbook demandc) An increase in textbook supplyd) A movement along the supply curve for textbookse) An increase in textbook prices

A technological advance in textbook production will lead to which of the following?

a) A decrease in textbook supplyb) An increase in textbook demandc) An increase in textbook supplyd) A movement along the supply curve for textbookse) An increase in textbook prices

A budget can be used to increase efficiency, by which of the following entities?

a) Familiesb) Businessesc) The federal governmentd) The state governmente) All of the above

A budget can be used to increase efficiency, by which of the following entities?

a) Familiesb) Businessesc) The federal governmentd) The state governmente) All of the above

Other things remaining unchanged, which of the following is most likely to cause an increase in the demand for personal computers?

a) A reduction in the price of personal computers.b) An increase in the supply of personal computers.c) An increase in the cost of computer printing ink.d) An increase in the number of computer manufacturers.e) A requirement by universities that all students buy

personal computers

Other things remaining unchanged, which of the following is most likely to cause an increase in the demand for personal computers?

a) A reduction in the price of personal computers.b) An increase in the supply of personal computers.c) An increase in the cost of computer printing ink.d) An increase in the number of computer manufacturers.e) A requirement by universities that all students

buy personal computers

Which of the following statements about price controls (price floors and ceilings) is true?

a) A price ceiling causes a shortage if the ceiling price is above equilibrium price

b) A price floor causes a surplus if the price floor is below the equilibrium price

c) Price ceilings and price floors result in an inefficient allocation of resources

d) Price ceilings will always result in a surpluse) Price floors always result in producers exiting the industry

because of mayhem

Which of the following statements about price controls (price floors and ceilings) is true?

a) A price ceiling causes a shortage if the ceiling price is above equilibrium price

b) A price floor causes a surplus if the price floor is below the equilibrium price

c) Price ceilings and price floors result in an inefficient allocation of resources

d) Price ceilings will always result in a surpluse) Price floors always result in producers exiting the industry

because of mayhem

Suppose that aluminum is a key production input for bicycles. If the price of aluminum decreases, and all other variables are held constant, we should expect

a) The demand for aluminum to decreaseb) The supply of bicycles to increasec) The supply of bicycles to decreased) The demand for bicycles to increasee) No change should occur

Suppose that aluminum is a key production input for bicycles. If the price of aluminum decreases, and all other variables are held constant, we should expect

a) The demand for aluminum to decreaseb) The supply of bicycles to increasec) The supply of bicycles to decreased) The demand for bicycles to increasee) No change should occur

Labor, human capital, natural resources, and physical capital are all examples of which of the following?

a) Public goodsb) Substitutes in productionc) Factors of productiond) The five resources to world dominatione) Factors that determine price elasticity of demand

Labor, human capital, natural resources, and physical capital are all examples of which of the following?

a) Public goodsb) Substitutes in productionc) Factors of productiond) The five resources to world dominatione) Factors that determine price elasticity of demand

Which of the following statements about a price ceiling is accurate?

a) Price ceilings only restrict the number of products in a market.

b) An effective price ceiling must be at a price below the equilibrium price

c) A price ceiling will increase the quantity of the good suppliedd) A price ceiling will cause a shift in the demand curve for the

goode) A price ceiling will have no effect on the quantity of the good

supplied

Which of the following statements about a price ceiling is accurate?

a) Price ceilings only restrict the number of products in a market.

b) An effective price ceiling must be at a price below the equilibrium price

c) A price ceiling will increase the quantity of the good suppliedd) A price ceiling will cause a shift in the demand curve for the

goode) A price ceiling will have no effect on the quantity of the good

supplied

In the graph below, consumer surplus is represented by the area

a) OACEb) BCDc) ACDd) ABCe) BCEO

In the graph below, consumer surplus is represented by the area

a) OACEb) BCDc) ACDd) ABCe) BCEO

Economics is best described as

A) The study of how scarce material wants are allocated between unlimited resources

B) The study of how scarce labor can be replaced by unlimited capital

C) The study of how people can best satisfy their unlimited wants with a scarce number of resources

D) The study of how capitalism is superior to any other economic system

E) The analysis of people older than yourself which has no overall relevancy

Economics is best described as

A) The study of how scarce material wants are allocated between unlimited resources

B) The study of how scarce labor can be replaced by unlimited capital

C) The study of how people can best satisfy their unlimited wants with a scarce number of resources

D) The study of how capitalism is superior to any other economic system

E) The analysis of people older than yourself which has no overall relevancy

Which of the following is certainly true if demand and supply increase at the same time?

A)The equilibrium price will increaseB)The equilibrium price decreaseC)The equilibrium quantity will increaseD)The equilibrium quantity will decreaseE)The equilibrium quantity may increase,

decrease, or stay the same

Which of the following is certainly true if demand and supply increase at the same time?

A)The equilibrium price will increaseB)The equilibrium price decreaseC)The equilibrium quantity will increaseD)The equilibrium quantity will decreaseE)The equilibrium quantity may increase,

decrease, or stay the same