1. Production is inefficient if the economy is producing at a point:
2. On the production possibilities frontier
3. Outside of the production possibilities frontier
4. Inside the production possibilities frontier
5. None of the above

1. Margaret decides to say home and study for her exam rather than going out to a movie with her friends. Her dilemma is an example of:
2. The economics perspective
3. Marginal analysis
4. Opportunity Cost
5. Allocative efficiency

1. The amount of the good that buyers are willing and able to purchase at a given price is called _______________________

1. If a product could be produced at a lower cost, what would be the effect on the equilibrium price and quantity?
2. Price would increase and quantity would decrease
3. Price would decrease and quantity would decrease
4. Price would increase and quantity would increase
5. Price would decrease and quantity would increase

1. If consumer incomes increase the demand curve would
2. Not change
3. Move to the right
4. Move to the left
5. Because of bad weather, there will likely be a shortage of oranges. The result of this will cause orange juice prices to:
6. Rise
7. Fall
8. Remain the same

1. Which of the following is most likely to have the most inelastic demand curve?
2. Insulin
3. M & M's
4. Bananas
5. Hamburgers

1. Which of the following is most likely to have the most elastic demand curve?
2. Food
3. Fruit
4. Water
5. Perfume

1. Consumers represent what percentage of GDP? _________________

1. The three categories of personal consumption are Durable Goods, non-durable goods and ____________________.

1. Give an example of a durable good _______________________ and a non-durable good _____________________.

1. GDP excludes expenditures for:
2. Additions to inventories
3. New housing
4. Haircuts
5. Facebook stock

1. The "G" term on the formula for GDP includes the following EXCEPT:
2. State government purchases of new computers
3. Social security checks
4. Local government expenditures for building new roads
5. Food stamps

1. What would cause an increase in a country's GDP?
2. Toyota produces pick-up trucks in Texas
3. Ford produces cars in China
4. Walmart imports linen products from India
5. Investors buy stock in General Electric

1. The U.S. current GDP is approximately:
2. $50 trillion
3. $500 billion
4. $21 trillion
5. $100 trillion

1. Suppose a country's workers can produce 4 cars per hour or 12 laptops per hour. If there is no trade, what is the opportunity cost of producing one car? _____________

1. After his car broke down on a hot day, Jack walked to a convenience store and bought a cold bottle of water for $1. He would have gladly paid $3. His consumer surplus is: ___________________

1. If an increase in the price of skis leads to a decrease in the demand for ski boots, then skis and ski boots are considered:
2. Substitutes
3. Complements
4. Normal goods
5. Inferior goods

1. If the price of coffee triples, the demand for tea would:
2. Increase
3. Decrease

1. If it is illegal to have peanut butter without jelly and the price of jelly goes up, the demand for peanut butter will:
2. Increase
3. Decrease

1. If your income goes up, the demand for hamburger meat would go _______ ( up or down ) and the demand for steak would go ________ ( up or down ).

1. If the price of a good is below the equilibrium price
2. There is a surplus and the price will rise
3. There is a surplus and the price will fall
4. There is a shortage and the price will rise

1. An increase in the demand for a good will tend to cause
2. An increase in the equilibrium price and quantity
3. A decrease in the equilibrium price and quantity
4. An increase in the equilibrium price and decrease in quantity
5. A decrease in the equilibrium price and increase in quantity

1. If a buyer's willingness to pay for a home entertainment system is $5,000 and she is able to actually buy it for $3,000, would she buy it?
2. Yes
3. No

1. Deflation is always a good thing.
2. True
3. False

1. The reduction of a tax rate
2. Could increase tax revenue if the tax had been extremely high
3. Will always reduce tax revenue regardless of the prior size of the tax
4. Will have no impact on tax revenue
5. Causes a market to be less efficient

1. If the nominal interest rate is 7% and inflation rate is 3%, then the real interest rate is:
2. -4%
3. 4%
4. 10%

1. How much would be added to GDP if you sold your 4-year old car for $4,000 and bought a new car for $25,000?
2. nothing
3. $6,000
4. $21,000
5. $25,000

1. A rise in energy prices that cause higher prices in manufactured goods is an example of what type of inflation?
2. Cost-pull
3. Cost-push
4. Demand pull
5. Demand push

1. A negative externality of a factory could be ________________________.

Short Answers ( 5 points each ) Answer ANY 2:

1. Tony has a pizza business. He buys a pizza oven for $1,000. He buys $200 of cheese, $100 of tomatoes and $50 of pepperoni and sells 1,000 pies at $10 each - how much is added to GDP? ____________________

1. What is the GDP of the following economy?______________________

Personal Consumption: $15,000,000

Gov't Expenditures: 7,000,000

Business Investment: 6,000,000

Exports: 5,000,000

Imports: 3,000,000

1. Suppose a total population of 200 million workers, 100 million of whom are in the labor force, 80 million are employed full-time, 16 million are employed part-time and 5 million are "discouraged workers". What is the unemployment rate?

_________________________

1. Ross has budgeted $20 a month to buy candy bars, music downloads or some combination of both. If Ross spends all his money on candy bars - he can obtain 40 bars a month. If Ross buys only downloads, he can buy 20 a month.
2. What is the price of a candy bar?____________
3. What is the price of a music download?__________
4. What is the opportunity cost of a candy bar? __________________
5. What is the opportunity cost of a download? __________________
6. If he buys 20 candy bars, how many downloads can he make? _____________