Macroecon Test 1

(U1 & U2) If society chooses to produce at Point D rather than Point B, what will be the long-term effect for this society?

• Fewer consumer goods will be produced in the future.

• It will be possible to produce both more consumer and capital goods in the future.

• Fewer capital goods will be produced in the future.

• The production of both consumer and capital goods will be lower in the future.

• The production of consumer goods will increase in the future, but the production of capital goods must fall.

(U1 & U2) A decision to produce 8 books and 1 computer will result in

• an unattainable point

• full employment

• efficient use of resources

• economic growth

• unemployment

(U1 & U2) If the marginal benefit (MB) is greater than the marginal cost (MC) of a good, then

• more of this good should be consumed with fewer resources allocated to the production this good

• less of this good should be consumed with more resources allocated to the production of this good

• more of this good should be consumed with more resources allocated to the production this good

• more of this and other goods should be consumed with more resources allocated to the production of this and other goods

• either more of this good should be consumed or fewer resources allocated to the production of this good

(U1 & U2) Melissa spends $10 to buy a new dress for her baby. What is the opportunity cost for buying the dress?

• All of the alternative items she could have spent the $10 to buy

• The $10

• The dress

• Melissa's enjoyment of seeing her baby in the dress

• Only the next best alternative use of the $10

(U1 & U2) Which of the following activities would occur in the resource (factor) market?

• A teacher buys a new truck from a car dealership

• The Department of Defense buys a tank from a weapons manufacturer

• A farmer buys a farmland from a retiring farmer

• A retirement fund buys stock in a major corporation

• A welder buys a personal computer from an electronics store

(U1 & U2) A resource market determines all of the following EXCEPT

• a worker's wages

• the incentives for entrepreneurs

• the price of a worker's clothing

• the capital costs of a new factory

• the per-acre price of farmland

(U1 & U2) In the circular flow model, the factor market determines all of the following EXCEPT

• an employee's weekly wages

• price of printing press for commercial use

• office rents for lawyers and doctors

• the price of fertilizer used in the production of cotton

• price of used student textbooks in the student store

(U1 & U2) Market systems promote economic growth and higher standards of living by

• supporting the development of new technology

• creating new firms to compete with private industry

• increasing taxes on business that increase investment

• imposing anti-pollution regulations on corporations

• rationing capital to ensure all businesses have an opportunity to earn profit