CoreMicroeconomics Third Edition Test Bank

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Page11.Economicsis BEST defined as the study of how:A)to classify resources used to produce final goods and services.B)resources are apportioned to satisfy human wants.C)people make rational decisions.D)technology can be used to change scarce resources into free resources.2.The study of economics:A)primarily considers the stock market.B)is about people's decisions regarding their use of scarce resources.C)doesn't apply to decisions made by businesses.D)states efficiency and equity don't conflict.3.Economics is a:A)natural science.B)physical science.C)life science.D)social science.4.Economics is a social science that involves the study of how individuals, firms, andsocieties:A)maximum happiness.B)maximize incomes.C)choose among alternatives to satisfy their unlimited wants.D)develop their tastes and preferences.5.Because of scarcity:A)resources are limitless.B)wants are limited.C)choices are unlimited.D)we face tradeoffs in nearly every choice we make.6.Scarcityis BEST defined as when:A)the quantity demanded exceeds quantity supplied.B)the quantity supplied exceeds quantity demanded.C)unlimited resources exceed limited wants.D)unlimited wants exceed limited resources.

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Page27.Scarcity refers to the fact that:A)some goods are scarce.B)something is scarce.C)one must make choices given the resource limitations he or she faces.D)there is no long-term benefit to studying economics.8.Why is it important for students to study economics?A)Most students will work as professional economists.B)It helps us reduce our personal income taxes.C)It helps us make better and wiser decisions, given our limited resources.D)There is no long-term benefit to studying economics.9.Reasons to study economics include all of the following, EXCEPT that you:A)will always live in a world of scarcity and choices.B)will understand more about how governments and businesses interact.C)may become a better prepared voter.D)will learn exactly how to invest your cash short-term for the highest return oninvestment.10.Economists tend to look:A)at costs but not at benefits.B)at benefits but not at costs.C)for rational responses to incentives.D)only at macroeconomic topics.11.To say that economics is a way of thinking about how people make rational decisionsmeans that people:A)don't consider the cost of their decisions.B)consider only monetary terms in their decisions.C)respond to incentives.D)are irrational.12.Economists understand that people respond to:A)laws.B)incentives.C)threats more than rewards.D)positives, but not negatives.

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Page313.Paying a salesperson more for increased sales is an example of:A)an incentive.B)an opportunity cost.C)efficiency.D)equity.14.Which of the following statements about economics is correct?A)Economists do not believe that criminals behave rationally.B)Economics has little to say about social issues.C)Economists consider how rational people respond to incentives.D)Economists assume that people don't respond to incentives.15.The field of economics that focuses on decision-making by individuals, businesses,industries, and government is called:A)macroeconomics.B)decision science.C)mini-economics.D)microeconomics.16.The field of economics that is concerned about the broader issues in the economy suchas inflation, unemployment, and national output of goods and services is called:A)macroeconomics.B)microeconomics.C)national economics.D)labor force economics.17.Microeconomics is concerned with issues such as:A)inflation.B)unemployment.C)which job to take.D)interest rates.18.Macroeconomics is concerned with issues such as:A)which orange juice to buy.B)unemployment.C)which job to take.D)what price to charge for goods.

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Page419.The main difference between macroeconomics and microeconomics is that:A)microeconomics largely deals with the fallacy of composition, andmacroeconomics does not deal with the fallacy of composition.B)macroeconomics focuses on the aggregate economy, and microeconomics focuseson small components of that economy.C)macroeconomics looks at how individuals make choices, and microeconomicslooks at the aggregate of those choices.D)macroeconomics is concerned with economic policy, and microeconomics isconcerned with international policies.20.Macroeconomics focuses on:A)decisions made by individuals.B)decisions made by firms.C)the decision to purchase a new home for a family.D)decisions for the entire economy.21.All of the following fall under the category of microeconomics, EXCEPT:A)cooks at McDonalds supply labor in return for wages.B)the cost of living has risen due to rising housing and food prices.C)Jonathan decided to go to the movies instead of go to work.D)Pepsi experienced an increase in revenue last quarter.22.Which of the following is a microeconomic statement?A)The unemployment rate fell by 2%.B)All businesses in the United States experienced a decrease in revenues of 5% dueto the recession.C)About 15% of the teachers were laid off last week.D)GDP increased by 6% last quarter.23.Which topic is MOST likely to be studied in a microeconomics course?A)energy policyB)unemploymentC)inflationD)recession24.Which topic is MOST likely to be studied in a macroeconomics course?A)taxation methodsB)recessionC)public utility regulationD)game theory

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Page525.Macroeconomics deals with all of the following, EXCEPT:A)recession.B)inflation.C)job creation rates.D)markets for semiconductor chips.26.Which of the following is a microeconomic topic?A)the U.S. inflation rate in 2009B)the price of an iPad sold by AppleC)the U.S. unemployment rate in March 2010D)the U.S. rate of growth in GDP for the first quarter in 201027.Which of the following is a macroeconomic topic?A)a study of the business cycleB)the price of a pair of Nike shoesC)the total sales for GE in 2009D)the labor market for computer analysts28.Supply and demand analysis is used:A)only in microeconomics.B)only in macroeconomics.C)in both microeconomics and macroeconomics.D)in neither microeconomics nor macroeconomics.29.Which of the following concepts would be addressed by microeconomics?A)national unemployment rateB)reasons for a decline in a country's total outputC)price of college tuition that an individual student paysD)inflation rate in Brazil30.International finance is generally studied in:A)microeconomics.B)macroeconomics.C)deductive logic.D)inductive logic.

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Page631.The economics of uranium mining would be studied in:A)microeconomics.B)macroeconomics.C)deductive logic.D)inductive logic.32.Which of the following does NOT deal with microeconomics?A)Profits for some manufacturing firms fell in 2009.B)In 2009, the unemployment rate in the United States rose to nearly 10%.C)Salaries of some top executives fell in 2009.D)Competitive markets promote efficiency.33.Which of the following statements regarding macroeconomics and microeconomics isTRUE?A)Microeconomics examines consumer behavior, while macroeconomics studiesbusiness behavior.B)Macroeconomics employs many of the same analytical tools as microeconomics.C)Because it focuses on national economies, macroeconomics does not studyinternational trade and finance.D)Neither macroeconomics nor microeconomics is concerned with prices.34.Which of the following does NOT deal with macroeconomics?A)the effect of the budget deficit on the economyB)the effect of monetary policy on inflationC)the effect of Walmart's pricing policies on consumersD)the effect of the government policies on the country's unemployment rate35.Which is the BEST example of a microeconomic issue?A)whether the Federal Reserve will raise interest rate this weekB)whether the unemployment rate will exceed 6% this monthC)whether the country's price level has increased last quarterD)whether the production of automobiles decreased last year36.Which ofthe following is NOT a macroeconomic issue?A)whether the Federal Reserve will raise interest rate this weekB)whether the unemployment rate will exceed 6% this monthC)whether the country's price level has increased last quarterD)whether the production of automobiles decreased last year

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Page737.Which is a characteristic of economic models?A)They try to boil down an economic situation to its most basic elements.B)They are always complex because the economy is complex.C)They attempt to reproduce reality exactly.D)They try to avoid invoking theceteris paribusassumption.38.Which of the following is NOT true of economic model building?A)There may be exceptions to economic models.B)Adding more complexity to models does not always provide greater insights.C)Economic models always reach verifiable results.D)Economic models provide generalizations about economic behavior.39.Economists like to use graphs and equations primarily because:A)these tools efficiently express economic concepts.B)economics should be difficult.C)a mathematical aptitude is necessary to understand economics.D)the use of mathematics reduces rigor.40.A theory composed of a number of assumptions and facts boiled down to their basicrelevant elements is called a:A)metaphor.B)model.C)conclusion.D)practice.41.The purpose of an economic model is to:A)be a complex, exact replica of reality.B)demonstrate which values and beliefs are best for the economy.C)explain the behavior of the issue being examined.D)manage the economy like an automatic pilot.42.Which of the following statements does NOT describe model building in economics?A)Models are developed to cover specific behaviors only.B)Models are created and then tested.C)Models are used to help understand the general economy.D)Assumptions are used to analyze an economic issue.

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Page843.Economic models must:A)be completely realistic to be useful.B)include all relationships that exist in the relevant thing to be modeled.C)completely represent the real world.D)rely on theceteris paribusassumption.44.Stylized economic models must include:A)assumptions.B)inflation.C)money.D)complexity.45._____ occur(s) when goods are produced at the lowest possible cost, and _____ occur(s)when individuals who desire a product the most receive those goods and services.A)Production efficiency; allocative efficiencyB)Production possibilities; allocative possibilitiesC)Allocative possibilities; production possibilitiesD)Allocative efficiency; production efficiency46._____ is how well resources are used and allocated.A)EquityB)EfficiencyC)ChoiceD)Scarcity47._____ is the fairness of various issues and policies.A)EquityB)EfficiencyC)ChoiceD)Scarcity48.When goods are produced at the lowest possible cost, an economy is said to haveachieved:A)production efficiency.B)allocative efficiency.C)cheap production.D)inferior quality goods.

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Page949.Allocativeefficiency occurs when:A)production is allocated equally among all citizens.B)people who wants a product the most gets it.C)goods are produced at the lowest possible cost.D)resources are equally allocated between the private and public sectors of theeconomy.50.Which of the following is NOT true?A)There are often tradeoffs between efficiency and equity.B)Both equity and efficiency are subjective concepts.C)There are often disagreements over what is an equitable distribution of income.D)Another term for equity is fairness.51.A society that is able to produce goods and services at the lowest cost possible isexperiencing:A)allocative efficiency.B)production efficiency.C)opportunity costs.D)scarcity.52.In the study of economics, the goals of efficiency and equity are often:A)compatible.B)conflicting with one another.C)objectively definable.D)given equal emphasis.53.Production efficiency occurs when goods are:A)produced with the lowest possible resource cost.B)allocated equally.C)delivered to those who have the greatest willingness and ability to acquire them.D)allocated to those with the greatest need.54.Production inefficiency implies that:A)goods are produced at too high a cost.B)people who want the specific goods cannot get them at any price.C)too many Twinkies and too few Ding Dongs were produced.D)workers are lazy.

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Page1055.The main focus of efficiency is:A)firms charging high prices for their goods.B)firms earning the largest profits.C)consumers getting the goods and services they want at the lowest possible resourcecost.D)consumers paying high prices.56.Production efficiency:A)reflects how often economists make assumptions about important variables.B)reflects how well resources are allocated.C)reflects the fact that all labor is equally productive.D)is an assumption used by economists that holds important variables constant.57.If society produces a pie at the lowest possible cost and then distributes the pie evenlyamong its population, then:A)production and allocative efficiency are achieved.B)only production efficiency is achieved.C)neither production efficiency nor allocative efficiency is achieved.D)only allocativeefficiency is achieved.58.Allocative inefficiency implies that:A)goods are produced at too high at cost.B)the people who want a specific good the most cannot get it, while others can.C)too many Twinkies and too few Ding Dongs were produced.D)workers are lazy.59.Economists generally have _________ to say about equity than efficiency.A)lessB)a little bit moreC)about the sameD)much more60.An economy exhibits production efficiency if:A)it produces more than enough clothes to clothe everyone.B)economic growth increases every year.C)it produces goods at the lowest cost possible.D)it eliminates poverty.

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Page1161.Efficiency within economics focuses on:A)how well resources are used and allocated.B)the fairness of various policies.C)how quickly a task can be completed.D)calculations of opportunity cost.62.When goods are produced at the lowest possible cost, the economy is experiencing:A)allocative efficiency.B)production efficiency.C)equity.D)deflation.63.When the individuals who get a good or service are the ones who desire that product themost, the economy is experiencing:A)allocative efficiency.B)production efficiency.C)equity.D)deflation.64.When government policies are being designed:A)there is usually a tradeoff between equity and efficiency.B)equity and efficiency goals are usually independent of each other.C)equity can usually be achieved without an efficiency loss.D)increasing efficiency usually results in more equity.65.The problem of the medically uninsured involves:A)opportunity cost.B)equity.C)production efficiency.D)allocative efficiency.66.Which is an example of a normative question?A)How do interest rates influence employment?B)How should a society achieve full employment?C)How do unemployment rates differ among nations?D)What are the long-term effects of unemployment?

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Page1267.Resources are:A)unlimited but wants are limited.B)limited but efficiency is unlimited.C)limited but wants are unlimited.D)unlimited but efficiency is limited.68.Scarcity:A)is synonymous with poverty.B)is eliminated with greater technology.C)is faced by all individuals and societies.D)can be eliminated with adequate resources.69.The idea that wants are virtually unlimited but the resources to meet those wants arelimited is called:A)the want-resource paradox.B)the economic gap.C)the dismal conclusion.D)scarcity.70.A common definition ofeconomicsis that it is the study of:A)the allocation of scarce resources to competing wants.B)maximizing net personal disposable income.C)the factors underlying financial markets.D)maximizing personal financial wealth.71.There would be no economic problems in a world where all resources are:A)unlimited.B)privately owned.C)owned by the government.D)scarce.72._________ people are forced to make tradeoffs.A)Only wealthyB)Only middle-classC)Only poorD)All

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Page1373.The concept of scarcity:A)exists in all societies.B)affects only greedy people.C)is the cause of poverty.D)used to be a problem, but is not an issue for modern industrial nations.74.When economists say that all societies face scarcity, they are describing:A)free lunches.B)unlimited resources.C)unlimited wants.D)tradeoffs societies must make.75.The core problem in economics is:A)unemployment.B)economic growth.C)inflation.D)scarcity.76.Opportunity costs:A)are generally the same from individual to individual.B)involve monetary rather than nonmonetary costs.C)decrease as individuals become wealthier.D)influence all economic decisions.77.What would be a possible opportunity cost of you going to a doctor for a check-up?A)the cost of getting nontraditional careB)the opportunity to make an acquaintance in the waiting roomC)lost income due to not being at work for those hoursD)the cost of the insurance reimbursing the doctor78.An airline finds that its 6 P.M. flights are half-empty but its mid-afternoon flights arefull. Which would be the MOST plausible thing for an economist to say?A)Cut the price of the early morning flight and raise the price of the afternoon flight.B)Nothing can be done to rectify the situation because of consumer sovereignty.C)Fewer flights should be scheduled in the afternoon to force travelers to take themorning flight.D)Nothing can be done because travelers are inflexible with their schedules.

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Page1479.The opportunity costs of attending college do NOT include:A)the expenditures for food.B)the costs of textbooks or eBooks.C)the forgone wages that could have been earned working.D)required student activity fees.80.The opportunity cost of buying a ticket to a major league baseball game and then goingto the game is:A)the price of the ticket.B)the next best alternative activity that could have been undertaken.C)the time spent at the game.D)all other alternative activities that could have been undertaken.81.___________________ costs include the time and money that could have been spent onanother highly valued activityA)OpportunityB)MarginalC)SocialD)Total82.The basic idea of opportunity cost is that:A)buyers miss opportunities to find better bargains.B)using resources in an activity imposes costs on other people.C)the decision to use resources in one activity means that they cannot be usedelsewhere.D)economic agents are always looking for better opportunities.83.The ____________ of parking at school includes the amount of time I have to search fora parking space.A)opportunity costB)equity concernsC)efficiencyD)productivity

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Page1584.If you were not studying economics, you could be doing one of the following: sleepingin (which you value at $5), playing cards with your friends (which you value at $10), orworking (you would have earned an extra $8). The opportunity cost of studyingeconomics is therefore:A)$23.B)$10.C)$8.D)$5.85.When the government chooses to use resources to build tourist centers, the chosenresources are no longer available to build highways. This BEST illustrates the conceptof:A)macroeconomics.B)scarcity.C)opportunity cost.D)efficiency.86.Suppose Mike has three hours of time to spend and he sets the following activities inorder of priority: (1) see a movie; (2) attend a ball game; (3) study economics. Assumethat each activity takes three hours. What is Mike's opportunity cost of seeing themovie?A)attending a ball game and studying economicsB)studying economicsC)attending a ball gameD)either attending a ball game or studying economics87.The _____ the opportunity cost of an activity, the ____ a person will do that activity.A)higher; moreB)higher; lessC)lower, lessD)It doesn't matter. Price alone will determine the action.88.Opportunity costs exist because:A)using resources for one activity means that their use elsewhere must be given up.B)sellers are unwilling to give up their product without a price.C)there are opportunities to find ways to reduce costs.D)buyers always have an opportunity to go to another seller.

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