50) Which of the following statements are true? I. Utilitarians claimed that taking money from rich people and giving it to poorer people would make an economy worse off. II. Utilitarians took into account the costs of making income transfers. III. The "big tradeoff" is between efficiency and equity. A) II and III B) I and III C) I and II D) I, II, and III E) III only
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Related questions
Suppose that, instead of taking this test, you could either have worked and earned income or partied and had a pleasurable time. Your opportunity cost of taking the test is the
| a. | forgone working or partying, depending on which was your next best choice. | |
| b. | forgone work. | |
| c. | forgone working and partying. | |
| d. | test because you are taking it. |
1 points
QUESTION 2
A trend is
| a. | a measure of closeness on a scatter diagram. | |
| b. | a general tendency for a variable to rise or fall. | |
| c. | the maximum value of a variable. | |
| d. | the difference between the maximum value of a variable and the minimum value of the variable. |
1 points
QUESTION 3
A time-series graph measures
| a. | time on the y-axis and the variable or variables in which we are interested on the x-axis. | |
| b. | time on the x-axis and the variable or variables in which we are interested on the y-axis. | |
| c. | the value of one variable against the value of another variable. | |
| d. | the value of an economic variable for different groups in a population at a point in time. |
1 points
QUESTION 4
Canada has nationalized health care, so that everyone, regardless of their ability to pay, has some access to health care. Based on this observation, Canada has decided that "everyone, regardless of their ability to pay" is the answer to what microeconomic question?
| a. | Why will we offer health care? | |
| b. | How will health care be produced? | |
| c. | For whom will health care be produced? | |
| d. | What type of health care will be produced and in what quantity? |
1 points
QUESTION 5
As a shoe factory adds more workers, shoe production grows, reaches a maximum, and then shrinks. In a diagram that has the number of workers on the horizontal axis and the number of shoes on the vertical axis, the relationship between the number of workers and the number of shoes starts as ________ and then, after the maximum point, is ________.
| a. | positive; negative | |
| b. | negative; positive | |
| c. | linear; negative | |
| d. | positive; linear |
1 points
QUESTION 6
Microeconomics includes the study of the
| a. | choices made by individuals and businesses. | |
| b. | recessions and inflation in the global economy. | |
| c. | aggregate effects on the national economy. | |
| d. | reasons why the government changes interest rates. |
1 points
QUESTION 7
When Fresh Express Salads decides to mechanically pick all of its lettuce, it directly answers the ________ question.
| a. | when | |
| b. | for whom | |
| c. | how | |
| d. | what |
1 points
QUESTION 8
Proponents of cuts in income tax rates argue that when income tax rates are cut, workers have an incentive to increase their work hours. This argument is based on the assumption that
| a. | the opportunity cost of working is negative. | |
| b. | the marginal cost of each additional work hour is not important to most workers. | |
| c. | workers are irrational. | |
| d. | workers make decisions based on the marginal benefit of each hour worked compared to the marginal cost of work. |
1 points
QUESTION 9
A choice made by comparing all relevant alternatives systematically and incrementally is
| a. | an opportunity cost. | |
| b. | a benefit. | |
| c. | a sunk cost. | |
| d. | a choice on the margin. |
1 points
QUESTION 10
A normative statement
i. can be tested as to whether it is true or false.
ii. is considered negative.
iii. depends on a person's values.
| a. | i, ii, and iii | |
| b. | iii only | |
| c. | i and iii | |
| d. | ii and iii |
1 points
QUESTION 11
Normative statements
i. describe how the world is.
ii. describe how the world ought to be.
iii. depend on people's values and cannot be tested.
| a. | iii only. | |
| b. | i only. | |
| c. | ii and iii. | |
| d. | ii only. |
1 points
QUESTION 12
In order to determine whether to major in economics, a rational individual compares the ________ of the decision.
| a. | positive benefits and normative costs | |
| b. | normative benefits and positive costs | |
| c. | marginal benefit and marginal cost | |
| d. | opportunity cost and the sunk cost |
1 points
QUESTION 13
If x increases whenever y decreases, then x and y are
| a. | positively related. | |
| b. | negatively related. | |
| c. | not related. | |
| d. | related but whether positively or negatively related depends on whether the x variable or the y variable is plotted on the vertical axis. |
1 points
QUESTION 14
Rational choice
| a. | is what you must give up get what you want. | |
| b. | is made by comparing different incentives. | |
| c. | making the choice. | |
| d. | provides the answer to only the "how" question. |
1 points
QUESTION 15
Scarcity results from the fact that
| a. | choices made in self-interest rare not always in the social interest. | |
| b. | not all goals are desirable. | |
| c. | people's wants exceed the resources available to satisfy them | |
| d. | we cannot answer the major economic questions. |
1 points
QUESTION 16
When Delta decides to quit flying to Lithuania, it directly answers the ________ question.
| a. | what | |
| b. | why | |
| c. | for whom | |
| d. | how |
1 points
QUESTION 17
A normative statement
| a. | says what is currently believed about the way the world operates. | |
| b. | depends on someone's values. | |
| c. | cannot use the word "should." | |
| d. | must be tested to determine if it is correct. |
1 points
QUESTION 18
Which of the following statements best describes the study of economics? Economics studies how
| a. | to organize production so that scarcity does not occur. | |
| b. | to create incentives so that scarcity does not exist. | |
| c. | firms make profits. | |
| d. | we make choices in the face of scarcity. |
1 points
QUESTION 19
Which of the following best defines economics?
| a. | Economics teaches how to limit our wants. | |
| b. | Economics is concerned with prices and quantities of goods and services, both at the individual level and at the industry level. | |
| c. | Economics helps you earn as much money as possible. | |
| d. | Economics studies how to choose the best alternative when coping with scarcity. |
1 points
QUESTION 20
In economics, cost is ________, and benefit is ________.
| a. | the amount of money that you pay for something; the amount of money that someone else is willing to pay you | |
| b. | what you are willing to pay on the margin; what the government pays you when you are unemployed or retired | |
| c. | what you must give up to get something; what you are willing to give up to get it | |
| d. | the amount of money that you pay on the margin; the amount of money that you receive on the margin |
1 points
QUESTION 21
If Jessie studies economics for two hours instead of going to the movies with her friends, then
| a. | the opportunity cost of studying is the missed movie. | |
| b. | Jessie is ignoring a sunk cost | |
| c. | Jessie is not responding to any incentives. | |
| d. | Jesse definitely is making a rational choice. |
1 points
QUESTION 22
Going skiing will cost Adam $80 a day. He also loses $40 per day in wages because he has to take time off from work. Adam still decides to go skiing.
| a. | The $80 price of skiing is a sunk cost and so did not affect Adam's decision. | |
| b. | He loses a total of $120 per day, so his decision is irrational. | |
| c. | His decision is rational if Adam's marginal benefit of spending a day skiing is greater than his marginal cost. | |
| d. | Adam's lost $40 per day in wages is a sunk cost and so did not affect his decision. |
1 points
QUESTION 23
If a curve falls and then rises, it
| a. | has a maximum. | |
| b. | has a linear relationship. | |
| c. | has a minimum. | |
| d. | has a constant slope relationship. |
1 points
QUESTION 24
In 2003, Michael Jordan decided to retire from professional basketball. Which of the following was an opportunity cost of his decision?
| a. | the avoidance of pain and injury from playing one more year | |
| b. | the time he could spend with his family while retired | |
| c. | the lost salary from playing one more year | |
| d. | the value of new employment opportunities that would await him |
1 points
QUESTION 25
Which of the following statements is a normative statement?
| a. | Military spending as a percent of government spending decreased by 5 percent in the 1990s. | |
| b. | Every American household should have health care insurance coverage. | |
| c. | Welfare reform has decreased the amount the government spends on welfare. | |
| d. | The price of computers fell last year. |
A bowed out PPF reflects which of the following ideas?
i.increasing opportunity cost
ii. resources are not equally productive in all activities
iii. prices of goods increase over time
| Ā | Ā |
I only |
| Ā | Ā |
I and iii |
| Ā | Ā |
ii and iii |
| Ā | Ā |
I and ii |
1 point
QUESTION 2
With no international trade, a country ________ consume at a point outside of its PPF; with international trade, a country ________ consume at a point outside of its PPF.
| Ā | Ā |
can; cannot |
| Ā | Ā |
cannot; can |
| Ā | Ā |
cannot; cannot |
| Ā | Ā |
can; can |
1 point
QUESTION 3
If the production possibilities frontier between two goods is a straight line, then the
| Ā | Ā |
the line does not qualify as a production possibilities frontier because the unattainable production points are too close to the inefficient production points. |
| Ā | Ā |
opportunity cost is not a ratio. |
| Ā | Ā |
increasing opportunity costs. |
| Ā | Ā |
resources are equally productive in both goods. |
1 point
QUESTION 4
As an economy produces more of one of the goods on a bowed out production possibilities frontier, what happens to the opportunity cost of producing the good?
| Ā | Ā |
It might increase, decrease, or remain constant depending on how much people value the additional units of the good. |
| Ā | Ā |
It decreases. |
| Ā | Ā |
It increases. |
| Ā | Ā |
It remains constant. |
1 point
QUESTION 5
"Comparative advantage" is defined as a situation in which one person can produce
| Ā | Ā |
more of a good than another person. |
| Ā | Ā |
a good for a lower dollar cost than another person. |
| Ā | Ā |
a good for a lower opportunity cost than another person. |
| Ā | Ā |
more of all goods than another person. |
1 point
QUESTION 6
When a production possibilities frontier is bowed outward, as more of one good is produced, its opportunity cost
| Ā | Ā |
increases. |
| Ā | Ā |
decreases. |
| Ā | Ā |
might increase, decrease, or remain constant depending on how much people value the additional units of the good. |
| Ā | Ā |
remains constant. |
1 point
QUESTION 7
A bowed out production possibility frontier shows that the
| Ā | Ā |
opportunity cost relationship is linear. |
| Ā | Ā |
the opportunity cost of a good is constant as more of the good is produced. |
| Ā | Ā |
the opportunity cost of a good increase as more of the good is produced. |
| Ā | Ā |
the opportunity cost of a good decrease as more of the good is produced. |
1 point
QUESTION 8
Which of the following statements is correct?
| Ā | Ā |
The production possibilities frontier shows that there are no limits to production. |
| Ā | Ā |
Any point on or within the PPF is production efficient. |
| Ā | Ā |
If capital is idle, the economy is producing at its full potential. |
| Ā | Ā |
A tradeoff is a limit that forces an exchange or a substitution of one thing for something else. |
1 point
QUESTION 9
A major earthquake occurs in the central part of the United States. What impact would this have on the nation's production possibilities frontier and why?
| Ā | Ā |
A tradeoff would occur to replace the resources and goods destroyed. |
| Ā | Ā |
It would shift inward because some of the nation's resources, such as capital and labor, would be destroyed. |
| Ā | Ā |
It would shift outward because unemployment would be reduced. |
| Ā | Ā |
Nothing would happen because the nation would still have the same capabilities. |
1 point
QUESTION 10
When a nation is producing on its production possibilities frontier, if more resources are used to produce one good, then the production of other goods
| Ā | Ā |
must increase. |
| Ā | Ā |
must decrease. |
| Ā | Ā |
must remain the same. |
| Ā | Ā |
must change but they might increase or decrease. |
1 point
QUESTION 11
Moving along a country's PPF, a reasonable opportunity costs increase is that
| Ā | Ā |
unemployment increases as a country produce more and more of one good. |
| Ā | Ā |
unemployment decreases as a country produces more and more of one good. |
| Ā | Ā |
some resources are better suited for producing one good rather than the other. |
| Ā | Ā |
technology declines as a country produce more and more of one good. |
1 point
QUESTION 12
A reason the production possibilities frontier exists is
| Ā | Ā |
scarcity of resources and unlimited technology. |
| Ā | Ā |
unemployment. |
| Ā | Ā |
scarcity of resources. |
| Ā | Ā |
unlimited resources and technology. |
1 point
QUESTION 13
Moving from one point to another on a production possibilities frontier implies
| Ā | Ā |
increasing the production of one good and decreasing the production of another. |
| Ā | Ā |
increasing the production of both goods. |
| Ā | Ā |
decreasing the production of both goods. |
| Ā | Ā |
holding the production levels of both goods constant. |
1 point
QUESTION 14
Specialization and trade make a country better off because with trade the country can consume at a point
| Ā | Ā |
outside its production possibilities frontier. |
| Ā | Ā |
on its trading partner's production possibilities frontier. |
| Ā | Ā |
inside its production possibilities frontier. |
| Ā | Ā |
on its production possibilities frontier. |
1 point
QUESTION 15
The production possibilities frontier is the
| Ā | Ā |
the boundary between the combinations of goods and services that can be produced and the combinations that cannot be produced when technology is changing. |
| Ā | Ā |
the minimum output that can be produced when resources are used inefficiently. |
| Ā | Ā |
the boundary between the combinations of goods and services that can be produced and the combinations that cannot be produced, given the available factors of production and the state of technology. |
| Ā | Ā |
maximum output that can be produced at an opportunity cost of zero. |
1 point
QUESTION 16
The opportunity cost of economic growth is ________ and the benefit of economic growth is ________.
| Ā | Ā |
decreased current consumption; decreased future consumption |
| Ā | Ā |
decreased current consumption; increased future consumption |
| Ā | Ā |
increased current consumption; increased future consumption |
| Ā | Ā |
increased current consumption; decreased future consumption |
1 point
QUESTION 17
In terms of a nation's production possibilities frontier, what impact does international trade have?
| Ā | Ā |
International trade shifts the nation's production possibilities frontier outward. |
| Ā | Ā |
International trade shifts the production possibilities frontier outward for the goods that are exported and inward for the goods that are imported. |
| Ā | Ā |
International trade shifts the nation's production possibilities frontier inward. |
| Ā | Ā |
International trade allows the nation to consume at a point outside its production possibilities frontier. |
1 point
QUESTION 18
The production possibilities frontier illustrates the
| Ā | Ā |
goods and services that people want. |
| Ā | Ā |
limits to people's wants. |
| Ā | Ā |
resources the economy possesses, but not it is the level of technology. |
| Ā | Ā |
maximum combinations of goods and services that can be produced. |
1 point
QUESTION 19
As we move along the production possibilities frontier,
| Ā | Ā |
the possibilities of tradeoffs diminish. |
| Ā | Ā |
the production of one good increases as the production of the other good decreases. |
| Ā | Ā |
more of both goods can be produced. |
| Ā | Ā |
a tradeoff is not possible because nations need all goods. |
1 point
QUESTION 20
What is the opportunity cost of economic growth?
| Ā | Ā |
Eliminate scarcity |
| Ā | Ā |
Land. |
| Ā | Ā |
Capital goods. |
| Ā | Ā |
Consumption of goods. |
1 point
QUESTION 21
Which of the following statements is correct?
i.As the economy grows, the opportunity costs of economic growth decrease.
ii. Economic growth has no opportunity cost.
iii. The opportunity cost of economic growth is current consumption forgone.
| Ā | Ā |
ii only |
| Ā | Ā |
iii only |
| Ā | Ā |
I only |
| Ā | Ā |
I and iii |
1 point
QUESTION 22
Does economic growth depend upon which of the following?
i. Increasing the quantity of labor.
ii. Lowering the prices of goods and services.
iii. Advancing technology.
| Ā | Ā |
ii only. |
| Ā | Ā |
I only. |
| Ā | Ā |
I and iii. |
| Ā | Ā |
iii only. |
1 point
QUESTION 23
When drawing a production possibilities frontier, which of the following is held constant?
| Ā | Ā |
the amount of money in the economy |
| Ā | Ā |
the prices of goods and services |
| Ā | Ā |
the quantity of the goods and services that are produced |
| Ā | Ā |
the available factors of production and the state of technology |
1 point
QUESTION 24
To increase its economic growth, a nation should
| Ā | Ā |
encourage spending on goods and services. |
| Ā | Ā |
increase in current consumption. |
| Ā | Ā |
encourage education because that increases the quality of labor. |
| Ā | Ā |
limit the number of people in college because they produce nothing. |
1 point
QUESTION 25
The opportunity cost of one more slice of pizza in terms of sodas is the
| Ā | Ā |
some pizza slices we have to give up to get one extra soda. |
| Ā | Ā |
the total number of sodas that we have divided by the total number of pizza slices that we have. |
| Ā | Ā |
the total number of pizza slices that we have divided by the total number of sodas that we have. |
| Ā | Ā |
the number of sodas we have to give up to get one extra pizza slice. |
