Economics may best be defined as: A) the interaction between macro and micro considerations. B) the social science concerned with the efficient use of scarce resources to achieve maximum satisfaction of economic wants. C) the empirical testing of value judgments through the use of logic. D) the use of policy to refute facts and hypotheses. Group of answer choices A B C D Question 22 pts Rational behavior suggests that: A) everyone will make identical choices. B) resource availability exceeds economic wants. C) individuals will make different choices because their preferences and circumstances differ. D) an individual's economic goals cannot involve tradeoffs. Group of answer choices A B C D Question 32 pts Which of the following is a positive statement? A) The humidity is too high today. B) It is too hot to jog today. C) The temperature is 92 degrees today. D) I enjoy summer evenings when it cools off. Group of answer choices A B C D Question 42 pts Macroeconomics focuses on: A) the workings of the whole economy or large sectors of it. B) the pricing decisions of a large company in an economy. C) studies of how competition in an industry affects economic efficiency. D) studies of how a business determines how to make the best use of the factors of production. Group of answer choices A B C D Question 52 pts Which of the following lists includes only capital resources (and therefore no labor or land resources)? A) an ice arena; a professional hockey player; hockey uniforms. B) the owner of a new startup firm; a chemistry lab; a researcher. C) a hydroelectric dam; water behind the dam; power lines. D) autos owned by a car rental firm; computers at the car rental agency; the vans that shuffle rental customers to and from the airport. Group of answer choices A B C D Question 62 pts The main function of the entrepreneur is to: A) make routine pricing decisions. B) innovate C) purchase capital. D) create market demand. Group of answer choices A B C D Question 72 pts With allocative efficiency: A) the state of technology, or methods used to produce output, do not change. B) the available supplies of factors of production are fixed in both quantity and quality. C) there is production of any particular mix of goods and services in the least costly way. D) there is production of that particular mix of goods and services most wanted by society. Group of answer choices A B C D Question 82 pts In drawing the production possibilities curve we assume that: A) technology is fixed. B) unemployment exists. C) economic resources are unlimited. D) wants are limited. Group of answer choices A B C D Question 92 pts The production possibilities curve illustrates the basic principle that: A) the production of more of any one good will in time require smaller and smaller sacrifices of other goods. B) an economy will automatically obtain full employment of its resources. C) if all the resources of an economy are in use, more of one good can be produced only if less of another good is produced. D) an economy's capacity to produce increases in proportion to its population size. Group of answer choices A B C D Question 102 pts Refer to the above diagram. Other things equal, this economy will achieve the most rapid rate of growth if: A) the ratio of capital to consumer goods is minimized. B) it chooses point C. C) it chooses point B. D) it chooses point A. Group of answer choices A B C D Question 112 pts Opportunity cost is best defined as: A) marginal cost minus marginal benefit. B) the time spent on an economic activity. C) the value of the best foregone alternative. D) the money cost of an economic decision. Group of answer choices A B C D Question 122 pts A point inside the production possibilities curve is: A) attainable and the economy is efficient. B) attainable, but the economy is inefficient. C) unattainable, but the economy is inefficient. D) unattainable and the economy is efficient. Group of answer choices A B C D Question 132 pts The relationship between quantity supplied and price is _____ and the relationship between quantity demanded and price is _____. A) direct, inverse B) inverse, direct C) inverse, inverse D) direct, direct Group of answer choices A B C D Question 142 pts Which of the following will not cause the demand for product K to change? A) a change in the price of close-substitute product J B) an increase in consumer incomes C) a change in the price of K D) a change in consumer tastes Group of answer choices A B C D Question 152 pts If products A and B are complements and the price of B decreases the: A) demand curves for both A and B will shift to the left. B) amount of B purchased will increase, but the demand curve for A will not shift. C) demand for A will increase and the amount of B demanded will increase. D) demand for A will decline and the demand for B will increase. Group of answer choices A B C D Question 162 pts If products C and D are close substitutes, an increase in the price of C will: A) tend to cause the price of D to fall. B) shift the demand curve of C to the left and the demand curve of D to the right. C) shift the demand curve of D to the right. D) shift the demand curves of both products to the right. Group of answer choices A B C D Question 172 pts When the price of a product increases, a consumer is able to buy less of it with a given money income. This describes: A) the cost effect. B) the inflationary effect. C) the income effect. D) the substitution effect. Group of answer choices A B C D Question 182 pts The term "quantity demanded": A) refers to the entire series of prices and quantities that comprise the demand schedule. B) refers to a situation in which the income and substitution effects do not apply. C) refers to the amount of a product that will be purchased at some specific price. D) means the same thing as "demand." Group of answer choices A B C D Question 192 pts By an "increase in demand" we mean that : A) product price has fallen so consumers move down to a new point on the demand curve. B) the quantity demanded at each price in a set of prices is greater. C) the quantity demanded at each price in a set of prices is smaller. D) a leftward shif of the demand curve has occurred. Group of answer choices A B C D Question 202 pts The law of supply indicates that: A) producers will offer more of a product at high prices than they will at low prices. B) the product supply curve is downsloping. C) consumers will purchase less of a good at high prices than they will at low prices. D) producers will offer more of a product at low prices than they will at high prices. Group of answer choices A B C D Question 212 pts The location of the product supply curve depends on: A) production technology. B) the number of buyers in the market. C) the tastes of buyers. D) the location of the demand curve. Group of answer choices A B C D Question 222 pts Refer to the above diagram. The equilibrium price and quantity in this market will be: A) $1.00 and 200. B) $1.60 and 130. C) $.50 and 130. D) $1.60 and 290. Group of answer choices A B C D Question 232 pts Refer to the above diagram. A surplus of 160 units would be encountered if price was: A) $1.10, that is, $1.60 minus $.50. B) $1.60. C) $1.00. D) $.50. Group of answer choices A B C D Question 242 pts Refer to the above diagram. A shortage of 160 units would be encountered if price was: A) $1.10, that is, $1.60 minus $.50. B) $1.60. C) $1.00. D) $.50. Group of answer choices A B C D Question 252 pts An increase in demand, holding supply constant, will tend to cause: A) higher prices and a larger quantity sold. B) higher prices and a smaller quantity sold. C) lower prices and a smaller quantity sold. D) lower prices and a larger quantity sold