41. The concept of opportunity cost:

a.Is irrelevant in socialistic economies because of central planning.

b.Suggests that the use of resources in any particular line of production means that alternative outputs must be forgone.

c.Is irrelevant if the production possibilities curve is shifting to the right.

d.Suggests that insatiable wants can be fulfilled.

42. A market:

a.Reflects upsloping demand and down-sloping supply curves.

b.Entails the exchange of goods but not services.

c.Is an institution which brings together buyers and sellers.

d.Always entails face-to-face contact between buyer and seller.

43. A price ceiling means that:

a.Inflation is moderate in this particular market.

b.Monopolistic sellers are artificially restricting supply to raise price.

c.Government is imposing a legal price that is below the equilibrium price.

d.Government is imposing a legal price that is above the equilibrium price.

44. Which of the following is the major question that any economic system must answer?

a.What to produce?

b.How to produce the goods?

c.For whom are the goods produced?

d.All of the above.

45. Price ceilings and price floors:

a. more equitable distribution of income.

b.Cause a misallocations of resources.

c.Are no longer employed by the government in managing market behavior.

d.Are used to increase tax revenues for the government.

46. Cross elasticityof demandmeasures the:

a. Change in the quantity of good caused by a change in its price.

b. Change in the quantity of a good caused by a change in the quantity of another good.

c. Change in the quantity of a good caused by a change in the price of another good.

d. Change in thepriceof a good caused by a change in the quantity of another good.

47.Which type of good is most adversely affected by recessions?

a. Goods for which the income elasticity of demand is relatively low or negative.

b. Goods for which the income elasticity coefficient is relatively high and positive.

c.Goods for which the cross-price elasticity coefficient is positive.

d.Goods for which the cross-price elasticity is negative.

48.Improvements in the productivity of labor will tend to:

a. decrease wages.

b. decrease the supply of labor.

c.increase wages.

d. increase the supply of labor.

49.Which of the following will not result in a leftward shift of the market demand curve for labor?

a. a decrease in labor productivity

b. a decrease in demand for the firm's product

c. an increase in the wage rate

d. a decrease in the firm's product price

50.Which of the following results in a rightward shift of the market demand curve for labor?

a. a decrease in labor productivity

b. a decrease in the firm's product price

c. an increase in the wage rate

d. an increase in demand for the firm's product

51.When consumers and businesses have greater confidence that they will be able to repay in the future, _______________________.

a.the quantity demanded of financial capital at any given interest rate will remain unchanged.

b.the quantity demanded of financial capital at any given interest rate will shift to the left.

c.the quantity demanded of financial capital at any given interest rate will shift to the right.

d.the quantity demanded of financial capital at any given interest rate will achieve equilibrium.

52.Many cooks view butter and margarine to be substitutes. If the price of butter rises, then in the market for margarine:

a. the equilibrium price will fall and the equilibrium quantity will fall.

b. both the equilibrium price and quantity will rise.

c. the equilibrium price will rise and the equilibrium quantity will decrease.

d. the equilibrium price will rise, while the change to equilibrium quantity is indeterminate.

53. What is meant by globalization?

a. An economy in which most economic decisions are made by buyers and sellers, who may be individuals or firms.

b. The market in which households sell their labor as workers to businesses or other employers.

c. The trend in which buying and selling in markets have increasingly crossed national borders.

d. A market in which firms are sellers of what they produce and households are buyers.

54.In a command economy, the __________ either makes most economic decisions itself or at least strongly influences how the decisions are made.

a. government

b. market

c. firm

d. business sector

55.In the first chapter of The Wealth of Nations, Smith introduces the idea of the __________, which means the way in which the work required to produce a good or service is divided into a number of tasks that are performed by different workers.

a. division of labor

b. interconnected economy

c. task economy

d. modern economy

56.Specialization:

a. leads to greater self-sufficiency.

b. can lead to an increase in overall production.

c. allows workers to develop skills by working on a large number of tasks

d. is always the result of an inefficient use of resources

57.The circular flow diagram of economic activity is a model of the:

a. flow of goods, services, and payments between households and firms.

b. influence of government on business behavior.

c. role of unions and government in the economy.

d. interaction among taxes, prices, and profits.

58.Marginal thinking is best demonstrated by:

a. choosing to spend one more hour studying economics because you think the improvement in your score on the next quiz will be worth the sacrifice of time.

b. deciding to never purchase a coat made with animal skins or furs

c. acquiring the information relevant to a choice before making that choice

d. measuring all of the costs of a meal against all of the benefits when deciding whether to order a second milkshake

59.Why is their scarcity?

a. Because the opportunity set determines this.

b. Because theory dictates it.

c. Because our unlimited wants exceed our limited resources

d. Because human wants are limited.

60.The leader of a federal political party made the following campaign promise: "MY administration will increase national defense without requiring sacrifices elsewhere in the economy." The promise can be kept if:

a. the economy moves along the production possibilities in the direction of a greater quantity of defense.

b. the economy moves from a point inside the production possibilities curve toward a point on the production possibilities curve.

c. the production possibilities frontier shifts outward due to an improvement in technology.

d. either b) or c) occurs, but not as a result of a).

61.Rising marginal cost result from:

a.Rising prices of fixed inputs.

b.Rising prices of valuable inputs.

c.Falling marginal physical product.

d.All of the above.

62.A firm's total variable cost will depend on:

a.The prices of variable resources.

b.The production techniques that are used.

c.The level of output.

d.All of the above.

63.The change in total output associated with one additional unit of input is:

a.The opportunitycost of output.

b.The average productivity.

c.The marginal physical product.

d.The total product from the input.