Econ 001 - Microeconomics Principles » Fall 2020 » Quiz 2

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Question #1
Trade can benefit a family
A.   by allowing the family to buy a greater variety of goods and services at a lower cost.
B.   by allowing each person to specialize in the activities he or she does best.
C.   Both a and b are correct.
D.   only if the family is not in economic competition with other families.
E.   All of the above are correct.
Question #2
When a production possibilities frontier shifts outward, it is demonstrating the concept of
A.   tradeoffs.
B.   economic growth.
C.   opportunity cost.
D.   recession and unemployment
E.   supply and demand.
Question #3
Macroeconomics is the study of
A.   economy-wide phenomena.
B.   how firms maximize profit.
C.   economic growth and GDP
D.   individual decision-makers.
E.   economic history.
Question #4
An increase in quantity supplied can be caused by a(n)
A.   increase in quantity demanded
B.   increase in price
C.   decrease in the number of firms in the market
D.   rise in resource input prices
Question #5
Which of the following is most closely associated with positive economics?
A.   determining the best level of immigration into the country
B.   determining whether too many luxury goods are being produced
C.   determining the impact of government spending on the actual level of total employment
D.   determining whether the government should reduce poverty
Question #6
An decrease in both equilibrium price and quantity could be produced by a(n)
A.   increase in supply, with demand constant
B.   increase in demand, with supply constant
C.   decrease in demand, with supply constant
D.   rise in supply and demand together
E.   decrease in supply and demand together
Question #7
Under a market system of resource allocation
A.   prices determine what firms produce while the government determines what consumers buy
B.   prices determine both what firms produce and what consumers buy
C.   the government allocates resources while prices allocate goods and services
D.   prices determine what consumers buy while the government determines what firms produce
E.   the government, producers, and consumers work together and allocate resources while prices allocate goods and services
Question #8
All production involves an opportunity cost because
A.   costs of production are sky rocketing
B.   to produce more of one thing, we must produce less of something else
C.   to produce more of one thing, we must produce more of everything
D.   when an individual obtains more of a good, he may not be fully satisfied
Question #9
If the supply of coffee falls due to bad weather conditions in coffee-exporting countries, then the
A.   quantity will fall, but price may rise or fall
B.   price will rise and quantity will fall
C.   price will fall and quantity will rise
D.   price and quantity will rise
E.   price and quantity will fall
Question #10
Since producers must be compensated for the rising opportunity cost that accompanies increases in output,
A.   the law of demand applies to most markets
B.   the supply curve usually slopes upward
C.   the demand curve usually slopes downward
D.   technical inefficiency would not exist in the long run
Question #11
All of the following except one would increase the amount of a particular model of a Tesla automobile that buyers would like to buy. Which is the exception?
A.   increased prices of other Ford models
B.   a decrease in the price of steel
C.   an increase in buyers' incomes
D.   increase in price of similar model produced by Chevy and Dodge
E.   an increase in the U.S. population
Question #12
Price ceilings set below the equilibrium price cause
A.   a new market equilibrium.
B.   surpluses.
C.   shortages.
D.   a greater number of exchanges.
Question #13
What do supply and demand curves have in common?
A.   they both usually slope downward
B.   they both show a relationship between quantity and price
C.   neither of them is influenced by the size of the population
D.   they both usually slope upward
Question #14
If the price of a substitute to good X increases, then the
A.   demand for good X will increase
B.   market price for good X will rise
C.   market price for good X will decrease
D.   demand for good X will decrease
Question #15
"The stock market was freaking out by the surge of Sen. Bernie Sanders's popularity in democratic party's presidential primary campaign" from MarketWatch.com (January 2020) is
A.   a normative statement
B.   a political statement
C.   a financial statement
D.   macroeconomic observation
E.   a positive statement
Question #16
Which of the following statements is correct?
A.   the demand curve typically slopes downward; the supply curve typically slopes upward
B.   both the demand and supply curves typically slope downward
C.   the demand curve typically slopes upward; the supply curve typically slopes downward
D.   both the demand and supply curve typically slope upward
Question #17
"As income rises, the demand for some goods falls." This statement
A.   suggests that most goods are normal goods
B.   suggests that those goods are inferior goods
C.   does not apply to goods traded in competitive markets
D.   suggests that consumers become less fashionable for those goods.
E.   shows that the quantity demanded is inversely related to price
Question #18
Suppose that the Director of White House National Economic Policy, Larry Ludlow, told President Trump in January 2019 that "the unemployment rate is 4 percent." The President responds, "That is still too high. let's get it down to 3." The President's statement is
A.   an incorrect positive statement
B.   an indisputable statistical fact
C.   empirically verifiable by checking economic data
D.   a normative statement
E.   a positive statement
Question #19
In one year, a weapons plant can manufacture either 1,000 more guns or 50 more tanks. The plant's opportunity cost of an extra tank is approximately
A.   1/50 of a gun
B.   1/50 of a tank
C.   50 guns
D.   20 guns

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