QUIZ BUS406

1. The tangent at point A on a curve has a positive slope. Therefore, the curve has a

a.  positive slope at point A.  

b. positive slope at all points.  

c. negative slope at point A.  

d. negative slope at all points.

2. If a government enacts a rent control to protect apartment tenants, the result is likely going to be

a. a decrease in rents with a surplus of apartments.  

b. a decrease in rents with a shortage of apartments.  

c. an increase in rents with a surplus of apartments.  

d. an increase in rents with a shortage of apartments.

3. A student has a chance to see Katy Perry in concert. The student also has a major economics exam in the morning. If the student goes to the concert,

a. All of the above are correct.  

b. this decision implies a trade-off.  

c.  the opportunity cost of the concert is time spent studying.  

d. she will get a lower grade on the economics exam.

4. If a market system is functioning well, we can conclude that goods with

a. high opportunity costs tend to have zero money costs.  

b. low opportunity costs tend to have high money costs.  

c.  low opportunity costs tend to have zero money costs.  

d.  high opportunity costs tend to have high money costs.  

e. high opportunity costs tend to have low money costs.

5. An economist might be hired to answer which of the following questions?

a. How much will interest rates change as the federal deficit decreases?  

b. All of the above are correct.  

c. What will the price of oil be next year?  

d. Why is the median income of women about half the median income of men?  

e. How much will inflation change if import restrictions are imposed?

6. The payments to owners of capital include

a. debt and taxes.  

b. expenses and bonuses.  

c. wages and salaries.  

d. All of the above are correct.  

e. interest and profits.

7. According to Robert Reich, secretary of Labor in the Clinton administration,

a. identifying the country of origin of a product is almost impossible, but essential for proper regulation.  

b. the identity of American companies is clear, and laws should be written accordingly.  

c. it is almost impossible to define the nationality of a multinational company.  

d. multinational companies have clear bases of operations, which form their identity.  

e. foreign companies are clearly different from American companies.

8. Which of the following statements is correct?

a. A hypothesis is a theory whose formulation relies on mathematics.  

b. A theory may result from a tested and confirmed hypothesis.  

c. A hypothesis may result from a tested and confirmed theory.  

d.  theory and hypothesis are interchangeable terms for the same thing.

9. Gross Domestic Product in 2013 was almost five times larger than it was in 1960 but it is important to note that

a. measurement of output omitted any effect of inflation.  

b. the population grew substantially over the same time period.  

c. none of the growth represented more output.  

d. graphs of output were unable to display such growth.

10. During a war, a government will often draft people, most of whom are presently employed, into the army. An economist, computing the real cost of the war, would be sure to include which of the following items?

a. the value of the civilian goods no longer produced by the new soldiers  

b.  the cost of feeding and clothing the new soldiers  

c.  the dollar cost of the payroll  

d. the higher prices of civilian goods due to wartime shortages  

e. the cost of transporting the soldiers to combat

11. In Table 3-2, from point C, the opportunity cost of 3 more units of cotton would be

a. 14 units of corn.  

b.  16 units of corn.  

c. 8 units of corn.  

d. 4 units of corn.

12. The market system provides a way

a. to allow specialization and exchange to work in tandem.  

b. to improve the well-being of mankind.  

c. to harness self-interest.  

d.  all of the above are correct.  

e.  to allocate goods and services.

13. If a government enacts a price floor on agricultural products to protect wheat farmers, the result is likely going to be

a.  in increase in price with a surplus of wheat.  

b.  a decrease in price with a shortage of wheat.  

c.  an increase in price with a shortage of wheat.  

d.  a decrease in price with a surplus of wheat.

14. In 1971, a bank worker could process 265 checks in 1 hour. Currently, computers with built-in reader-sorter processing capacity have pushed that number above 100,000 checks per hour. Economists describe this type of activity as

a. comparative advantage.  

b. an increase in labor productivity.  

c. mutual gains from voluntary trade.  

d. speed-up.  

e. exploitation of labor.

15. In Figure 3-4, for which of the following would this statement be true: "To get more apples we have to give up wheat." A movement from

a. A to E  

b. D to C  

c. C to D  

d. D to E  

e. B to C

16. If production involves constant opportunity cost, the production possibilities curve

a. is a straight line.  

b. is "bowed outward."  

c.  is a wavy line.  

d.  has an unpredictable shape.  

e. is "bowed inward."

17. A contour map illustrates which of the following?

a. the way that one variable affects another, which in turn affects a third variable  

b. the way that two variables are correlated and in turn cause changes in a third variable  

c. the cause-effect relationship between two variables  

d. the cause-effect relationship between three variables  

e. the way that three variables are correlated  

18. When interdiction efforts manage to stem the flow of illegal drugs into the United States, assuming no change in demand, the price of these substances rises. This price increase leads to more crime as addicts attempt to maintain their now more-expensive habits. Economists call this side-effect of the drug business

a.  inflation.  

b. the cost disease of personal services.  

c. unemployment.  

d. an externality.  

e. the illusion of rationality.

19. In the 19th century, Russian peasants noticed that during cholera epidemics there were lots of doctors around; in an attempt to eliminate cholera, they killed all the doctors. This is an example of

a.  the fallacy of opportunism.  

b. mistaking correlation with causation.  

c. marginal analysis.  

d. excessive abstraction.  

e. rationality.

20. The concavity or bowed-out shape of the production possibilities frontier is the result of

a.  the principle of increasing cost.  

b. the law of upward-sloping demand.  

c. complementarity in consumption.  

d. the law of downward-sloping demand.