Answer the following 45 questions on a Word Doc and send to me no later than midnight 10/5.  Any tests sent later than midnight will be not be counted and result in a 0. Put your name on the Word Doc. Please select the best answer.  Read your questions carefully. When economists speak of scarcity, they are referring to the a. condition in which society is not employing all its resources in an efficient way. b. condition in which people’s wants outstrip the limited resources available to satisfy those wants. c. economic condition that exists in only very poor countries of the world. d. condition in which society produces too many frivolous goods and not enough socially desirable goods.   The opportunity cost of attending college is a. the money one spends on college tuition. b. equal to the salary one will earn when one graduates from college. c. the total amount of money spent on books, dorm costs and fees d. none of the above

QUESTION

Answer the following 45 questions on a Word Doc and send to me no later than midnight 10/5.  Any tests sent later than midnight will be not be counted and result in a 0.

Put your name on the Word Doc.

Please select the best answer.  Read your questions carefully.

1. When economists speak of scarcity, they are referring to the

2. The opportunity cost of attending college is

3. Here are three things you could do if you do not attend your next-door neighbor’s barbecue: watch television with some friends (you value this at $8), read a good novel (you value this at $4), or go in to work (you could earn $6 during the barbecue). The opportunity cost of going to your neighbor’s barbecue is

4. Refer to above graph The PPF illustrates

5. In the production possibilities framework, economic growth is depicted by

Using the ppc below, answer the following questions: 6,7,8

6. If PPF₂ is the relevant production possibilities frontier, then point __________ illustrates productive inefficiency.

7. If PPF₂ is the relevant production possibilities frontier, then point __________ is unattainable.

8. If PPF₂ is the relevant production possibilities frontier, then point __________ illustrates productive efficiency.

9. The PPF is bowed outward as a result of

10.A person has a comparative advantage in the production of a good when they can produce the product at a(n) ________ opportunity cost compared to another person.

11. According to Adam Smith, there is a(n) ____________ relationship between the degree of specialization and the size of the market.

13. 13. Adam Smith advocated:

1. a strong government as a help to business
2. the strict control of labor to avoid the failure of the marginal producer
3. government assistance to weaker economic groups
4. government protection of freedom and property, but with limited interference in the market

14. Which of the following statements would fall under the concern of Microeconomics?

1. The GDP of the U.S. was 4 trillion dollars
2. Inflation this year will increase by 5 percent
3. Exxon’s profits increased by 25 percent as a result of the War in Iraq.
4. National income is up 5 percent over last year
5. Disposable income for Americans has kept up with inflation since World War II

15. The fallacy of composition is

1. the erroneous view that an economic activity can sometimes exceed the sum of its components
2. the erroneous view that what is true for the individual will also be true for the group
3. the view that the aggregation of economic activity will necessarily lead to an outcome different than the outcome generated by each individual in the group
4. the idea that association does not necessarily indicate causation

16,  Which of the following will cause a movement along the demand curve for shoes?

1. A) An increase in the price of socks
2. B) An increase in income
3. C) An increase in the price of shoes
4. D) All of the above

17. A system of economic organization in which the ownership and control of productive capital assets rests with the state and resources are allocated through central planning and political decision making is called

1. authoritative socialism
2. a market economy
3. a corporate economy
4. capitalism

18 .Which of the following are characteristics of capitalism?

1. allocation of resources via central planning and high marginal tax rates
2. price controls and a system of taxes and subsidies for business enterprises
3. private property and allocation of goods and resources via market-determined prices
4. central allocation of investment funds and substantial income redistribution

19. A trade off

1. is money paid to the government
2. is giving up one thing to gain another
3. is declaring a perfect import-export balance
4. is the thing given up in a market economy

20. Which of the following is most essential for the efficient operation of a market economy?

1. well-defined property rights
2. external benefits
3. high tariffs to keep out cheap foreign goods
4. governmental expenditures

21. Morgan graduates from college and gets a job paying $50,000 a year. While in school, she consumed 4 pounds of chicken and 1 pound of shrimp a month. After she starts work, she consumes 2 pounds of chicken and 3 pounds of shrimp a month. If everything else is held constant, we know that
22. A) chicken and shrimp are normal goods for Morgan.
23. B) chicken is an inferior good and shrimp is a normal good for Morgan.
24. C) chicken is an inferior good for Morgan.
25. D) shrimp is a normal good for Morgan.

The above diagram represents the Circular Flow.  Please answer each question carefully following the pattern of the arrows.

22. Refer to the above diagram.  Flow (1) represents:
23. A) wage, rent, interest, and profit income.         C)   goods and services.
24. B) land, labor, capital, and entrepreneurial ability. D)      consumer expenditures.

23. Refer to the above diagram.  Flow (2) represents:
24. A) wage, rent, interest, and profit income.         C)   goods and services.
25. B) land, labor, capital, and entrepreneurial ability. D)      consumer expenditures.

24. Refer to the above diagram.  Flow (3) represents:
25. A) wage, rent, interest, and profit income.         C)   goods and services.
26. B) land, labor, capital, and entrepreneurial ability. D)      consumer expenditures.

25. Refer to the above diagram.  Flow (4) represents:
26. A) wage, rent, interest, and profit income.         C)   goods and services.
27. B) land, labor, capital, and entrepreneurial ability. D)      consumer expenditures.

26. Which of the following will not cause the demand curve to shift in the production of product K.
27. A) a change in the price of close-substitute product J
28. B) an increase in consumer incomes
29. C) a change in the price of K
30. D) a change in consumer tastes

27. Jane decides she wants to purchase some peanut butter so she can take her lunch to school. She discovers the price of peanut butter has increased 100%, and even though she wants to purchase it, decides against it. Which of the following would most likely be correct?
28. Jane notices that the demand for peanut butter has increased 100%
29. Jane noticed that the demand for lettuce has increased
30. Jane noticed that the demand for jelly has declined
31. Jane doesn’t have a clue what a demand resembles because she fell asleep in economics class.

28. If X is a normal good, a rise in money income will shift the:
29. A) supply curve for X to the left.                       C)   demand curve for X to the left.
30. B) supply curve for X to the right.                     D)   demand curve for X to the right.

29. If products C and D are close substitutes, an increase in the price of C will:
30. A) tend to cause the price of D to fall.
31. B) shift the demand curve of C to the left and the demand curve of D to the right.
32. C) shift the demand curve of D to the right.
33. D) shift the demand curves of both products to the right.

30. A decrease in demand or change in demand is depicted by a:
31. A) move from point x to point y.                       C)   shift from D2 to D1.
32. B) shift from D1 to D2.                                    D)   move from point y to point x.

31. A decrease in quantity demanded (as distinct from a decrease in demand) is depicted by a:
32. A) move from point x to point y.                       C)   shift from D2 to D1.
33. B) shift from D1 to D2.                                    D)   move from point y to point x.

32. Refer to the above diagram. The equilibrium price and quantity in this market will be:
33. A) $1.00 and 200.    B)  $1.60 and 130.    C)  $.50 and 130.    D)  $1.60 and 290.

33. Refer to the above diagram. A surplus of 160 units would be encountered if price was:
34. A) $1.10, that is, $1.60 minus $.50.    B)  $1.60.    C)  $1.00.    D)  $.50.

34. Refer to the above diagram. A shortage of 160 units would be encountered if price was:
35. A) $1.10, that is, $1.60 minus $.50.    B)  $1.60.    C)  $1.00.    D)  $.50.

35. Per capita GDP is
    A. The sum of consumer goods, investment goods, government services and net exports
    B. A dollar measure of the economic growth rate of a country
    C.  The value of the factors of production used to produce output in a country
    D.  GDP divided by total population

36. Ben says that “An increase in the tax on beer will raise its price.” Holly argues that “Taxes should be increased on beer because college students drink too much.” We can conclude that:

1. Ben’s statement is normative, but Holly’s is positive
2. Holly’s statement is normative, but Ben’s is positive
3. Both statements are normative
4. Both statements are positive

37. Refer to the above figure. Which of the following statements is true?
38. A) Panel A shows a decrease in demand and Panel B shows an increase in demand.
39. B) Both Panels A and B show an increase in demand.
40. C) Panel A shows a change in demand and Panel B shows a change in quantity demanded.
41. D) Panel A shows a change in quantity demanded and Panel B shows a change in demand

38. Refer to the above figure. Suppose that Cheerios and Apple Jacks are substitutes. Which diagram shows the effect on the demand for Cheerios when the price of Apple Jacks cereal has increased?
39. A) A
40. B) B
41. C) neither graph
42. D) both graphs

39. Refer to the above figure for the market of Cheerios. Which diagram depicts the effect of an increase in the price of Cheerios?
40. A) A
41. B) B
42. C) neither graph
43. D) both graphs

40. Which of the following is an example of the law of supply?
41. A) The price of gum has increased so producers are making more gum.
42. B) The price of labor has increased and producers decrease supply.
43. C) The amount of a good purchased increases when the price decreases.
44. D) Producers provide less of a good when the price increases.

41. At a price of P0in the above figure, which of the following statements is FALSE?
42. A) Quantity demanded equals quantity supplied.
43. B) There is an equilibrium in the market.
44. C) P0is the market clearing price.
45. D) There is a surplus equal to Q0.

42. Which of the following IS NOT CONSIDERED TO BE an economic goal?
43. A) Economic growth
44. B) Full employment
45. C) Economic security
46. D) Price level stability
47. E) Government Regulation

43. “No individual should have less than $20,000 income in the United States in 2011” is an example of:
    a .a normative statement
44. a positive statement
45. an illogical and refutable statement
46. a truism

44. Which of the following can lead to an increase in the capital stock of the private sector?
45. A) Consumer goods.
46. B) Government services.
47. C) Net exports.
48. Investment goods.

45.If a country goes from capitalism to market socialism to communism, one would expect political freedom to __________and economic freedom to____________

1. increase, decrease
2. decrease, increase
3. increase, increase
4. decrease, decrease

5. ANSWER