Question 1

If a graph has a line that shows the quantity of flat-screen televisions sold in the last five years, it is known as

1. a pie chart.

1. a time-series graph.

1. a demand curve for outsourcing.

1. a supply curve of outsourcing.

Question 2

A university must decide if it should stop offering foreign language classes. This decision involves answering the economic question of "how to produce."

1. True

1. False

Question 3

Figure 4-3

Figure 4-3 shows the market for granola. The market is initially in equilibrium at a price of P1 and a quantity of Q1. Now suppose producers decide to cut output to Q2 in order to raise the price to P2.

Refer to Figure 4-3. At the price P2, consumers are willing to buy the Q2 pounds of granola. Is this an economically efficient quantity?

1. No, the marginal benefit of the last unit (Q2) exceeds the marginal cost of that last unit.

1. Yes, otherwise consumers would not buy Q2 units.

1. Yes, because the price P2 shows what consumers are willing to pay for the product.

1. No, the marginal cost of the last unit (Q2) exceeds the marginal benefit of the last unit.

Question 4

Which of the following is counted as "capital" in economics?

1. the money people have

1. the machines that workers have to work with

1. the labor force

1. the wealth people have

Question 5

"The price of digital cameras fell because of improvements in production technology. As a result, the demand for non-digital cameras decreased. This caused the price of non-digital cameras to fall; as the price of non-digital cameras fell the demand for non-digital cameras decreased even further." Evaluate this statement.

1. The statement is false because the demand for non-digital cameras would increase as the price of digital cameras fell.

1. The statement is false. A decrease in the price of digital cameras would decrease the demand for non-digital cameras, but a decrease in the price of non-digital cameras would not cause the demand for non-digital cameras to decrease.

1. The statement is false because it confuses the law of demand with the law of supply.

1. The statement is false because digital camera producers would not reduce their prices as a result of improvements in technology; doing so would reduce their profits.

Question 6

In a competitive market equilibrium the ________ equals the ________ of the last unit sold.

1. total profit; marginal benefit

1. total cost; marginal cost

1. profit; selling price

1. marginal benefit; marginal cost

Question 7

Which of the following is an example of a "how much" decision?

1. Octavia is debating whether to buy a pair of Jimmy Choo shoes or Steve Madden boots.

1. Humberto has taken a second job to earn money to buy a Harley-Davidson SuperLow Sportster.

1. You plan on going to Las Vegas for your birthday and are deciding if you should fly or drive.

1. Diana is trying to decide if she should open her pet shop on Sundays.

Question 8

Table 4-5

Hourly Wage (dollars)	Quantity of Labor Supplied	Quantity of Labor Demanded
$8.00	350,000	390,000
8.50	360,000	380,000
9.00	370,000	370,000
9.50	380,000	360,000
10.00	390,000	350,000
10.50	400,000	340,000

Table 4-5 shows the demand and supply schedules for the low-skilled labor market in the city of Westover.

Refer to Table 4-5. If a minimum wage of $10.50 is mandated there will be a

1. shortage of 30,000 units of labor.

1. surplus of 30,000 units of labor.

1. shortage of 60,000 units of labor.

1. surplus of 60,000 units of labor.

Question 9

Figure 4-1

Figure 4-1 shows Kendra's demand curve for ice cream cones.

Refer to Figure 4-1. If the market price is $4.00, what is the maximum number of ice cream cones that Kendra will buy?

1. 0

1. 2

1. 3

1. 4

Question 10

Factory incentives on cell phones have encouraged consumers to upgrade their phones. How does this affect the market for bluetooth headsets?

1. The quantity of bluetooth headsets demanded increases.

1. The quantity of bluetooth headsets demanded decreases.

1. The demand for bluetooth headsets increases.

1. The demand for bluetooth headsets decreases.

Question 11

A decrease in the unemployment rate may be represented as a movement from a point inside the production possibilities frontier to a point on the frontier.

1. True

1. False

Question 12

1. In economics, the practical application of an invention is known as

1. technology.

1. entrepreneurship.

1. physical capital.

1. innovation.

Question 13

In the market for factors of production, households earn income by supplying factors of production to firms.

1. True

1. False

Question 14

Discuss the correct and incorrect economic analysis in the following statements.

"If a disease kills a large number of turkeys, the supply of turkeys will decrease. This will result in a price increase, which will then cause the supply of turkeys to increase."____________________

Question 15

Figure 4-1

Figure 4-1 shows Kendra's demand curve for ice cream cones.

Refer to Figure 4-1. What is the total amount that Kendra is willing to pay for 3 ice cream cones?

1. $2.50

1. $7.50

1. $9.00

1. $13.50

Question 16

All else equal, as the price of a product falls, the quantity supplied decreases.

1. True

1. False

Question 17

Which of the following is not a flow in the circular flow model?

1. the flow of goods and services and the flow of resources to produce goods and services

1. the flow of profit and the flow of revenue

1. the flow of income earned by households and the flow of expenditures incurred by households

1. the flow of revenue received by producers and the flow of payments to resource owners

Question 18

The Farm Factory, a booth at the local Farmer's Market, sells fresh eggs for $1.50 per dozen and fresh milk for $2.50 per gallon. What is the opportunity cost of buying a dozen eggs?

1. 1 2/3 gallons of milk

1. 3/5 of a gallon of milk

1. $2.50

1. $1.50

Question 19

For each of the following pairs of products, state which are complements, which are substitutes, and which are unrelated.

a.	Swim fins and scuba tanks

b.	Coca Cola and Volkswagens

c.	Printers and ink cartridges

d.	Ice and ice chests

e.	Heineken and Corona

Question 20

Increases in the minimum wage are intended to raise the incomes of low-income workers. Many economists favor a different policy to achieve this goal, a policy that avoids the deadweight losses that result from the minimum wage. What is this policy?

1. distribution of food stamps to low-income consumers

1. distribution of vouchers that can be used for rent or mortgage payments

1. the Alternative Minimum Tax

1. the earned income tax credit

Question 21

Monique buys a new television for $795. She receives consumer surplus of $355 from the purchase. How much does Monique value her television?

1. $355

1. $440

1. $795

1. $1150

Question 22

Figure 4-5

Figure 4-5 shows the market for apartments in Bay City. Recently, the government imposed a rent ceiling at R0.

Refer to Figure 4-5. What is the area that represents the portion of producer surplus transferred to consumers as a result of the rent ceiling?

1. D + E

1. D + F

1. D

1. F

Question 23

Assume that airline tickets are a normal good. Prices of commercial airline tickets have fallen in recent months. Over this same period, the price of jet fuel has risen and consumer incomes have fallen. Which of the following best explains the falling prices of airline tickets?

1. The supply curve for airline tickets has shifted to the left while the demand curve for airline tickets has shifted to the right.

1. The demand curve for airline tickets has shifted to the left more than the supply curve has shifted to the left.

1. The demand curve and the supply curve for airline tickets have both shifted to the right.

1. The supply curve for airline tickets has shifted to the left more than the demand curve has shifted to the left.

Question 24

Marginal benefit is the benefit that your activity provides to someone else.

1. True

1. False

Question 25

In 18th century Europe, governments gave guilds legal authority to limit production of goods. This authority obstructed the market mechanism because the guild's actions prevented the forces of ________ from coordinating the self-interested decisions of producers and consumers.

1. absolute advantage

1. demand and supply

1. opportunity cost

1. nature

Question 26

Scenario 1-2

Suppose a cigar manufacturer currently sells 1,500 cigars per week and makes a profit of $3,000 per week. The plant foreman observes, "Although the last 500 cigars we produced and sold increased our revenue by $7,500 and our costs by $7,000, we are only making an overall profit of $3,000 per week so I think we need to cut back on production."

Refer to Scenario 1-2. Using marginal analysis terminology, what is another economic term for the incremental cost of producing the last 500 cigars?

1. marginal cost

1. operating cost

1. explicit cost

1. Any of these terms are correct.

Question 27

What is deadweight loss? When is deadweight loss equal to zero? __________

Question 28

Scenario 1-2

Suppose a cigar manufacturer currently sells 1,500 cigars per week and makes a profit of $3,000 per week. The plant foreman observes, "Although the last 500 cigars we produced and sold increased our revenue by $7,500 and our costs by $7,000, we are only making an overall profit of $3,000 per week so I think we need to cut back on production."

Refer to Scenario 1-2. Using marginal analysis terminology, what is another economic term for the incremental revenue received from the sale of the last 500 cigars?

1. gross earnings

1. marginal revenue

1. sales revenue

1. gross profit

Question 29

Table 2-10

	OneWristwatch	Rice (per pound)
Japan	50 hours	2 hours
Thailand	30 hours	1.5 hours

Table 2-10 shows the number of labor hours required to produce a wristwatch and a pound of rice in Japan and Thailand.

Refer to Table 2-10. What is Japan's opportunity cost of producing one wristwatch?

1. 0.04 pounds of rice

1. 4 pounds of rice

1. 25 pounds of rice

1. 40 pounds of rice

Question 30

Figure 2-8

Figure 2-8 shows the production possibilities frontiers for Costa Rica and Guatemala. Each country produces two goods, pineapples and coconuts.

Refer to Figure 2-8. Which country has a comparative advantage in the production of pineapples?

1. Guatemala

1. They have equal productive abilities.

1. Costa Rica

1. neither country

Question 31

Table 1-2

Hours Open	Total Revenue (dollars)
1	$40
2	65
3	80
4	90
5	95
6	98

Julius runs a small tailor shop in the city of Bloomfield. He is debating whether he should extend his hours of operation. Julius figures that his sales revenue will depend on the number of additional hours the tailor shop is open as shown in the table above. He would have to hire a worker for those hours at a wage rate of $18 per hour.

Refer to Table 1-2. What is Julius's marginal benefit if he decides to stay open for three hours instead of two hours?

1. $15

1. $25

1. $65

1. $80

Question 32

A critical function of the government in facilitating the operation of a market economy is

1. producing goods and services for low-income households.

1. setting up and enforcing private property rights.

1. ensuring an equal distribution of income to all citizens.

1. controlling the market prices of food items.

Question 33

Figure 3-8

Refer to Figure 3-8. The graph in this figure illustrates an initial competitive equilibrium in the market for motorcycles at the intersection of D1 and S1 (point A). If there is an increase in the wages of motorcycle workers and an increase in the price of motorcycle insurance, a complement to motorcycles, the equilibrium could move to which point?

1. A

1. B

1. C

1. E

Question 34

If the price of garlic is represented by equation P = 25 - QD, then the corresponding quantity of garlic demanded is represented by the equation

1. QD = P - 25.

1. QD = P + 25.

1. QD = 25 - P.

1. QD = -25 + P.

Question 35

Any output combination inside a production possibilities frontier is associated with unused or underutilized resources.

1. True

1. False

Question 36

Figure 2-1

Refer to Figure 2-1. ________ is (are) technically efficient.

1. Point A

1. Point B

1. Point C

1. Points B and C

Question 37

For each watch that Switzerland produces, it gives up the opportunity to make 50 pounds of chocolate. Germany can produce 1 watch for every 100 pounds of chocolate it produces. Which of the following is true about the comparative advantage between the two countries?

1. Switzerland has the comparative advantage in chocolate.

1. Switzerland has the comparative advantage in watches.

1. Germany has the comparative advantage in watches and chocolate.

1. Germany has the comparative advantage in watches.

Question 38

An economic model is a complex version of reality used to analyze real-world economic situations.

1. True

1. False

Question 39

If opportunity costs are ________, the production possibilities frontier would be graphed as a negatively sloped straight line.

1. decreasing

1. increasing

1. negative

1. constant

Question 40

Socialist politicians including Senator Bernie Sanders and Congresswoman Alexandria Ocasio-Cortez advocate a larger role for government in the economy, including government-provided health care and free college tuition. The policies endorsed by these politicians most closely resemble which of the following?

1. the policies of the social democratic parties of Western Europe

1. Marxist socialism

1. the policies of countries such as North Korea and Cuba

1. the market system, or capitalism