(Test Bank) Microeconomics

Karlan, 3

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Test Bank

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Test Bank for Microeconomics, The downloadable file consists of 1439 pages, and the total size of the file is 10.16 MB. Purchase now only for highly discounted price.

Author(s): Karlan

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Version 1 1 CHAPTER 1 1) The principles of economics can explain which of the following? 1.Why people choose to work or go to college 2.Why a country might prosper 3.How the value of money changes over time A) II and III only B) I and II only C) III only D) I, II, and III 2) Who makes decisions about how to allocate resources? A) Individuals B) Businesses C) Governments D) All of these make decisions about resource allocation. 3) Which of the following statements best describes the study of economics? A) Economics studies how the Federal Reserve handles fluctuation in business cycles. B) Economics studies how individuals and groups manage scarce resources. C) Economics studies how people maximize returns in the stock market. D) Economics studies how governments determine appropriate tax rates. 4) Alan could apply the principles of economic decision making when deciding: 1.how to spend his paycheck. 2.who to marry. 3.what to have for dinner after a long day at work. Version 1 2 A) I, II, and III B) I only C) I and III D) II and III 5) The two broad fields that make up the subject of economics are: A) microeconomics and macroeconomics. B) personal investments and business investments. C) fiscal policy and monetary policy. D) imports and exports. 6) Which of the following is considered a microeconomic issue? A) The local university decides to raise tuition for online course offerings. B) The country of Zimbabwe has experienced a decline in inflation. C) The economic growth rate rises in the United States. D) The unemployment rate in Greece falls. 7) Which of the following is considered a microeconomic issue? A) The unemployment rate in the United States from 1980 to present day B) Apple's newest version of the iPhone C) France’s growth rate over the last year D) All of these are examples of microeconomic issues. 8) Suppose Disney World decides to charge local residents a lower price than other park visitors. This would fall under which field of economics? Version 1 3 A) Macroeconomics B) Public policy C) Customer service D) Microeconomics 9) Which of the following is considered a microeconomic issue? A) Chinese economic growth has declined. B) The Federal Reserve cuts key interest rates in order to stimulate lending. C) Walmart decides to add more self-checkout machines as the cost of labor rises. D) India experiences a reduction in unemployment after opening its borders to trade. 10) Which of the following is considered a microeconomic issue? A) The Bureau of Economic Analysis reviews quarterly national income accounting data. B) A firm decides to purchase pay-per-click online advertising. C) The Federal Reserve increases the discount rate. D) The CPI reports a rise in inflation during the month of July. 11) Which of the following questions would be studied in microeconomics? A) Why did our economic growth rate slow down during the 2000s? B) How did the recession end in 2009 if unemployment continued to rise? C) How will the legalization of marijuana in Colorado affect the market for cigarettes? D) When should Congress raise taxes in order to tackle the debt crisis? 12) Which broad field of economics would most likely study how consumers respond to a hike in alcohol taxes? Version 1 4 A) Microeconomics B) Marginal economics C) Macroeconomics D) Monetary economics 13) The broad field of _____ would most likely study how all consumers respond to a hike in cigarette taxes. A) microeconomics B) development economics C) macroeconomics D) labor economics 14) The Bureau of Economic Analysis releases last quarter's growth rate in real GDP. This release would most likely have been written by a: A) monetary economist. B) macroeconomist. C) microeconomist. D) labor economist. 15) Which of the following is considered a macroeconomic topic? A) iTunes raises the price of all its music. B) iTunes raises the price of its pop artists’ music only. C) A local McDonald’s franchise decides to hire more workers. D) The U.S. labor force participation rate falls. 16) Which of the following is considered a macroeconomic issue? Version 1 5 A) T-Mobile and Sprint announce plans for a merger. B) Sears goes bankrupt and the entire retail fashion industry experiences losses. C) The unemployment rate in the U.S. falls during the month of June. D) Microsoft decides to offer all users a free upgrade to Windows 10. 17) Which of the following questions would a macroeconomist most likely try to answer? A) What stage of the business cycle is our economy currently in? B) Why do Broadway musicals and airlines have different price discrimination strategies? C) How much would marijuana consumption change if the market became legal? D) Should IZZE increase its distribution from national to international? 18) Which of the following is a topic that would be studied in macroeconomics? A) Gasoline price changes B) Unemployment rates over time C) Taxation strategies of major corporations D) Consumer participation in Facebook 19) A macroeconomist would study how: A) the economy works on a regional, national, or international scale. B) rent ceilings impact the construction rates of new apartments. C) the increase in the female labor force participation rate impacts childhood obesity. D) grocery cart rental fees impact parking lot accident rates. 20) Economists have observed that economic growth generally leads to improved standards of living. This observation is most related to the field of: Version 1 6 A) microeconomics. B) public policy. C) macroeconomics. D) financial economics. 21) Which of the following economic decisions would most likely be studied by a macroeconomist? A) Domino's Pizza decides to provide quantity discounts in order to increase revenue. B) A local entrepreneur decides to open a Waffle House in the local Walmart parking lot. C) The government of Estonia implements a flat rate personal income tax for all citizens. D) Prices for train fares rise as labor unions negotiate higher wage rates. 22) The assumption of rational behavior: A) offers a perfect framework for how people actually behave. B) helps economists explain how people behave in a way that will best achieve their goals. C) explains why people voluntarily engage in decisions for which costs exceed benefits. D) is best applied to psychology and should not be used in the science of economics. 23) Which of the following statements about rationality is true? 1.Economists wish to prove that all individuals are rational. 2.Engaging in a behavior for which the marginal costs exceed the marginal benefits is irrational. 3.As long as the marginal benefit of an action is positive, the action is rational. 4.Individuals are hardly ever rational. Version 1 7 A) II only B) I and III C) II and IV D) II, III, and IV 24) When we believe the best result will come from the decision we have made, we are being: A) gullible. B) short-sighted. C) rational. D) considerate. 25) When we assume that consumers want to pay the lowest price possible, we assume that consumers are: A) cheap. B) deceitful. C) rational. D) informed. 26) Scarcity can best be defined as a situation in which: A) consumers look for bargains. B) some producers are selfish with resources. C) people respond to incentives. D) all wants cannot be satisfied due to resource constraints. 27) Scarcity reflects our inability to satisfy wants due to: Version 1 8 A) an unequal distribution of resources. B) limited resources. C) inefficient political systems. D) unemployed workers. 28) Which of the following is a basic tenant of the economic concept of scarcity? A) Developing countries will always have a battle to fight hunger. B) Resources are often wasted, which results in shortages. C) Income must be redistributed through taxation in order to address income disparity. D) Limited resources require economies to make choices among production alternatives. 29) Which of the following is not a direct result of scarcity? A) Buildings in New York City are taller than buildings in Greenville, SC due to fewer acres of land per person. B) Due to high gas prices, Shana decides to trade her Chevy Tahoe for a Honda Accord. C) A college student misses a test review in order to get a few more hours of sleep. D) The energy industry is searching for a way to store the extra power generated by renewable energy. 30) Which of the following is a problem created by scarcity? A) The college course you need to take in the fall is only offered at times that conflict with your work schedule. B) The White House eliminates tours for the public due to budget constraints. C) Your cell phone battery is low and you decline a phone call from a friend to conserve energy. D) All of these are problems created by scarcity. Version 1 9 31) Individuals, firms, and societies are limited in the amount of goods and services that they can produce. This is a direct result of: A) unemployment. B) waste. C) irrational behavior. D) scarcity. 32) The problems created by scarcity: A) could be solved if more people worked overtime. B) are of no concern to the top income earners. C) concern individuals, but are not a concern on the macro level. D) apply to everyone because resources are limited in general. 33) Which of the following statements about scarcity is true? A) Scarcity is an undeniable part of everyone's reality due to the world's limited resources. B) Scarcity is not a problem for billionaires like Bill Gates. C) Scarcity in the world can be eliminated by rational decision making. D) Scarcity is a problem studied in microeconomics and is not a macroeconomic concern. 34) How should we best approach the issue of scarcity? A) We should only desire things that we are capable of consuming and producing. B) We should make changes to fiscal policy until the situation of scarcity is eliminated. C) We should make decisions that allow us to arrange our resources rationally. D) We should adopt economic policies that will lead to unlimited resources. Version 1 10 35) The problem of having unlimited wants under the constraint of limited resources describes: A) opportunity cost. B) sunk costs. C) scarcity. D) the marginal principle. 36) The greatest constraint faced by banks considering the alternative of lending to Bangladeshi villagers is: A) not having qualified loan officers to make the loans. B) having limited funds available for loans. C) not being able to determine appropriate currency exchange rates. D) counterfeit financial reports that make it difficult to properly assess collateral. 37) Suppose Hassan wants to rent a house near the lake over a holiday weekend, but the only house available is out of his price range. This is an example of: A) a resource constraint. B) rising marginal benefits. C) changing incentives. D) sunk costs. 38) The famous saying, "There is no such thing as a free lunch," is an example of which economic concept? Version 1 11 A) Maximization B) Trade-offs C) Basic necessities D) The income effect 39) Mimi gets a job twenty miles from her house and purchases a new car to commute. As a result of this new expense, Mimi decides to sell her season tickets to the local football stadium. Mimi's situation can be described as: A) ignoring sunk costs. B) a trade-off. C) irrational decision making. D) a normative choice. 40) Trade-offs: A) are associated with every decision. B) do not exist if we receive something for free. C) always result in market failure. D) can be avoided through economic planning. 41) When making a decision, it is often more difficult to identify the ______ associated with the decision because ______. A) costs; an individual must weigh monetary costs and opportunity costs differently B) costs; an individual should consider opportunity costs but ignore sunk costs C) benefits; it is impossible to put a dollar value on benefits D) benefits; individual people identify benefits while firms identify costs Version 1 12 42) Economists assume that people choose to do something when they believe: A) the benefits outweigh the costs of the decision. B) it will make society better off. C) their decision cannot be questioned by anyone else. D) it won't harm anyone and will better themselves. 43) Suppose a university offers college seniors one "free" course. Is this course also free to society? A) Yes, because the seniors live in society. B) Yes, because the school has satisfied the assumption of making a rational choice. C) No, because if a college senior takes the last seat in the class, then a paying student will not have the opportunity to take it. D) No, because some students will not take a free class seriously and will ultimately become less productive workers. 44) Opportunity cost: A) only includes explicit, out-of-pocket expenses. B) is the value of your next best alternative. C) is never provided in dollar values. D) would not include wages lost when you take a vacation. 45) You decide to drive your car on a long road trip of 1,500 miles. The opportunity cost of driving your car: A) is only the amount of money spent on gas. B) is zero, because the car is paid for. C) includes lost wages you could have earned instead of driving. D) equals the total expenses of the trip. Version 1 13 46) If Johnny weren't in economics class this morning, he'd be sleeping. The value Johnny places on sleeping represents his: A) marginal benefit. B) incentives. C) sunk cost. D) opportunity cost. 47) Your sister always brags about how savvy she is as a grocery shopper, claiming she saves lots of money by using coupons and shopping at multiple stores to get the lowest prices on all goods. Why might your sister be overestimating her savings? A) She does not count the value of the time it takes her to sort and clip coupons as a cost. B) She does not count the cost of the gas she uses driving extra miles to multiple grocery stores. C) She does not count the value of the time it takes her to check out at multiple stores and use multiple coupons, compared to a trip to one store with no coupons. D) All of these are correct. 48) A gas station that does not offer pay at the pump service decides to require drivers to prepay for gas to decrease the amount of drive-offs. Which of the following could be an opportunity cost of this decision? A) The value of the gas that is no longer stolen by people who drove off B) The time saved from not having to look for people waiting for you to turn on the pump C) Lost revenue from people who underestimate how much their gas tank can hold so they don't end up overpaying D) A loss of snack sales due to people paying for gas before pumping rather than after pumping Version 1 14 49) The drug approval process regulated by the Federal Drug Administration (FDA) slows the pace at which helpful medications reach the marketplace. The alternative of having the medication available to consumers earlier is an example of: A) the opportunity cost of the FDA's regulation. B) how easy it is to identify and evaluate sunk costs. C) the marginal benefit of the FDA's regulation. D) promoting consumer health in the population. 50) You're trying to determine whether to spend your Saturday afternoon attending a street festival, working to earn $100, or studying for your midterm exam. You really don't want to work, so you flip a coin between attending the street festival and studying. The coin flip determines that you should stay home and study. The opportunity cost of your time spent studying includes: A) the loss of $100 worth of wages and the joy from going to the street festival. B) earning a high score on your midterm and thus improving your grade in the class. C) the benefit that you could have received from attending the street festival. D) the time you spent deciding and using a coin flip to determine your Saturday afternoon activity. 51) Jimmy is invited to a costume party with a 1990s theme. His first thought is to dress up as MC Hammer, but he is also considering going as a lifeguard from Baywatch. The opportunity cost of arriving dressed like MC Hammer is: A) the cost of purchasing parachute pants like those MC Hammer would wear. B) the money he saves since he doesn't need to purchase red swimming trunks. C) the enjoyment he would have received if he had dressed as a lifeguard. D) There is no opportunity cost because he was going to attend the party either way. Version 1 15 52) A local fast-food restaurant mails coupons for a free sandwich to every home in the community. Natasha, who is on a diet, receives one of the coupons. Which of the following is an opportunity cost of redeeming the sandwich coupon for Natasha? A) Lost wages due to spending time going out to eat rather than eating the Healthy Choice meal she brought to work B) The benefit she would receive from sticking to her "get fit for the summer" diet plan C) The benefit she would receive from eating a "Blastin' Burger," one of her favorite fast food options D) There is no opportunity cost of redeeming the coupon because the sandwich is free. 53) You are shopping at the local mall with an $80 gift card that expires tomorrow. Only three items catch your attention: a bottle of perfume, a remote control helicopter, and an "Amazing Ab Belt." You would be willing to give up $60 for the perfume, $70 for the belt, and $80 for the helicopter. Knowing this, you decide to purchase the helicopter. The opportunity cost of the helicopter is: A) $130, the combined value of the alternatives forgone. B) $80, the amount spent using the gift card. C) $70, the value of the ab belt. D) $60, the value of the perfume. 54) Cameron can spend his weekend afternoon doing one of three things: playing golf, driving his boat, or cleaning his house. Although he enjoys golfing, he sometimes becomes frustrated when playing so he decides to enjoy a more relaxing afternoon on his boat. Cameron never really considered the idea of cleaning the house, but he did give playing golf some serious thought. Cameron's opportunity cost of driving the boat is: A) having a messy house, since he decided not to clean it. B) the enjoyment he would have gotten from playing golf. C) having a messy house and not being able to enjoy playing golf. D) enjoying a relaxing day out on the lake.