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38 Cards in this Set
- Front
- Back
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Identify the choice that best completes the statement or answers the question.
1. Because people’s wants are unlimited but resources are scarce, a. only the rich get everything they want b. choices must be made c. there will be more services produced than goods d. people search for spiritual fulfillment rather than material fulfillment e. poor people never get anything they want |
c. thexre will be more services produced than goods
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2. Economics is best described as the
a. study of choice when scarcity exists a b. study of the production of goods and services c. theory of consumer behavior d. science of money e. art of spending money wisely |
xa. study of choice when scarcity exists a
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3. The economic behavior of individual decision makers and the determination of price and output in specific markets are both studied in a
a. microeconomics b. macroeconomics c. positive economics d. normative economics e. disequilibrium economics |
xxxa. microeconomics
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4. An economic model
a. always has a mathematical foundation b. can never be proven wrong c. can be constructed for an individual economic unit but not for the economy as a whole d. is a simplification of the real world d e. can be constructed for the economy as a whole but not for an individual economic u |
xxxd. is a simplification of the real world d
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5. Ceteris paribus means “other things constant.”
a. True t b. False |
xxx true ceterus
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. The cost of attending college
a. is entirely monetary and consists of expenditures on tuition, books, transportation, and meals b. is not monetary, but consists solely of forgone income c. is the most valued alternative given up to attend college c d. is negligible for most people, because they really have no choice but to attend college e. is the same whether you attend a public or a private college c |
is the most valued alternative given up to attend college
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7. At various points along the production possibilities frontier,
a. the greatest achievable output levels are illustrated a b. resources are not fully employed c. more of one good can be obtained without giving up more of the other d. more efficient output levels are possible a |
xxxd. more efficient output levels are possible ae. society is equally well off
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8. A point outside the production possibilities frontier
a. represents unemployment of resources b. represents full employment of resources c. would not represent an efficient combination of goods d. cannot be reached using the available technology e. is less desirable than one that lies inside the frontier |
xxxd. cannot be reached using the available technology
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9. The economic question of what will be produced is
a. primarily answered by the government in a system of pure capitalism b. primarily answered by markets in a command economy c. faced by all economies regardless of their wealth d. does not have to be answered by economies possessing great wealth e. cannot be illustrated by the economic concept of the production possibilities frontier b |
xxxb. primarily answered by markets in a command economy
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10. A mixed capitalist economy is one in which
a. decisions are based primarily on religion or custom b. all resources are publicly owned and economic planning is centralized c. all resources are privately owned and prices are used to coordinate economic activity d. resources are both publicly and privately owned and some markets are regulated e. all resources are publicly owned and prices are used to coordinate economic activity |
xxx. resources are both publicly and privately owned and some markets are regulated
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11. The law of demand says that the lower the price of a good, other things constant,
a. the smaller the demand for that good b. the larger the demand for that good c. the smaller the quantity demanded of that good d. the larger the quantity demanded of that good e. the smaller the real income of consumers and the lower the quantity demanded of that good |
xxxd. the larger the quantity demanded of that good
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12. Which of the following will not shift the demand curve for movie tickets?
a. a change in the cost of babysitting services b a change in the price of movie tickets c. a change in the quality of television programs d. a change in the income of movie-goers e. a change in the number of consumers |
xxxb a change in the price of movie tickets
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13. Which of the following is most likely to be an inferior good?
a. airline travel b. restaurant meals c. a subscription to the Wall Street Journal d. soft drinks e. used clothing |
xxxe. used clothing
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14. Which of the following would be most likely to increase the demand for downtown parking in a large city? Prrice or other thing looking for other
a. improved bus service to the downtown area b. lower downtown parking fees c. more downtown parking lots d. more freeways leading to the downtown area e. a major employer moves to the suburbs |
xxxd. more freeways leading to the downtown area
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15. Which of the following causes the supply of leather jackets to decrease?
a. an increase in the price of leather jackets b. an increase in the price of leather raw material leather get expensive c. a decrease in the price of zippers d. an increase in the number of motorcycles e. a decrease in consumer income |
xxxb. an increase in the price of leather raw material leather get expensive
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16. A shortage occurs whenever
a. quantity demanded exceeds quantity supplied b. price is to low c. quantity demanded is less than quantity supplied d. goods are scarce e. some of the people who need the product are not willing and able to buy it at the equilibrium price |
xxxa. quantity demanded exceeds quantity supplied
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17. The most important characteristic of the equilibrium price is that it
a. guarantees that producers earn profit b. clears the market, leaving neither a surplus nor a shortage c. maximizes the quantity demanded d. minimizes the quantity demanded e. guarantees that all buyers who desire the product will get it |
xxxb. clears the market, leaving neither a surplus nor a shortage
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8. Over the last few years, demand for DVDs has increased, and yet their equilibrium price has fallen. Which of the following best explains this situation?
a. When the price falls, the quantity supplied increases. b. There has been a shortage of DVDs. c. The supply of DVDs must have decreased. d. The demand curve for DVDs slopes upward, so an increase in demand leads to a lower price. e. The supply of DVDs must have increased more than the demand for DVDs increased. |
xxxe. The supply of DVDs must have increased more than the demand for DVDs increased
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19. Elasticity measures
a. whether a price increase causes quantity demanded to increase or decrease b. the strength of an economy’s tendency to recover from recession c. the responsiveness of decision makers to changes in prices, income, or other variables d. the profitability of investment in an industry e. the long-run flexibility of prices in the economy |
xxxc. the responsiveness of decision makers to changes in prices, income, or other variables
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20. If the price of Pepsi-Cola increases from 50 cents to 60 cents per can and the quantity demanded decreases from 100 cans to 50 cans, then the demand for Pepsi-Cola is
a. unit elastic b. perfectly elastic c. perfectly inelastic d. relatively elastic e. relatively inelastic |
xxxd. relatively elastic
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21. If a firm raises the price of its product, its total revenue will
a. always increase b. increase only if demand is price inelastic c. increase only if demand is price elastic d. remain constant, regardless of price elasticity of demand e. never increase |
xxxb. increase only if demand is price inelastic
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22. If the administration raises tuition on our campus in order to increase revenue, it will
a. not be successful if the demand curve slopes downward b. be successful if demand is elastic c. be successful if demand is inelastic d. be successful if supply is elastic e. be successful if supply is inelastic |
xxxc. be successful if demand is inelastic
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23. One group of people uses New York City subways only during rush hour to travel to and from work. Another group uses them only in midday for leisure activity. If New York City wants to increase transit fares with the smallest possible reduction in revenue, for which group should it increase the fare?
a. The rush-hour group because its demand for subway service is more elastic than that of the midday group. b. The rush-hour group because its demand for subway service is less elastic than that of the midday group. c. The midday group because its demand for subway service is more elastic than that of the rush-hour group. d. The midday group because its demand for subway service is less elastic than that of the rush-hour group. e. It doesn’t matter because both groups have the same elasticity of demand |
xxxb. The rush-hour group because its demand for subway service is less elastic than that of the midday group.
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24. As consumers have a longer time period to respond, the demand for a product typically becomes more inelastic.
a. True b. False |
xxxfalse longer time
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25. Utility is
a. the sense of pleasure or satisfaction derived from consuming goods and services b. the cost of acquiring goods and services c. the profit consumers earn from consuming goods and services d. the monetary value to consumers of goods and services e. the desire to consume goods and services |
xxxa. the sense of pleasure or satisfaction derived from consuming goods and services
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26. Suppose Enid could increase her total utility by purchasing one more book and one less video rental. Which of the following is true?
a. The marginal utility of video rentals exceeds the marginal utility of books. b. The marginal utility of books exceeds the marginal utility of video rentals. c. The marginal utility of video rentals is negative. d. The marginal utility per dollar spent on books exceeds that of video rentals. e. Total utility is at a maximum |
xxxd. The marginal utility per dollar spent on books exceeds that of video rentals.
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d
True/False 27. T F Your scarcity problem would disappear if you were rich. f |
xxxfalse dis
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28. T F Every economic choice has an opportunity cost.
t |
xxxtrueb economic choice
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29. T F The most efficient point of the production possibilities curve is the midpoint on the curve.
F |
xxx false curve
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30. T F According to the law of demand, if the price of a good increases, other things being equal, the quantity demanded will increase.
PRICE AND ANTITYGTGEETHR FALSE |
xxxPRICE AND quANTITYGTGEETHR
FALSE |
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31. T F If a vacation in Italy is a normal good, other things being equal, an increase in consumer income will increase the demand for travel to Italy.
T |
xxxtrueitaly
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32. T F Goods with many substitutes tend to have inelastic demand curves.
F |
xxxfalse goods many substitutes
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33. T F If the demand curve for a good is elastic, consumers will spend more on that good when its price decreases.
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xxxtrue demand curve
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34. T F The price system eliminates scarcity.
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xxxfalse system
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need
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need n0w
need absoluter need complement |
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inealastic
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need
neeed need outlay no substitturted |
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Law demand quantity demand goes up price goes down
the exception |
inferiorgoods
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Law demand quantty
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demand goes up price goes down
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