Econ Test 3

Scarcity would play a role in all of the following examples EXCEPT

• a family deciding to spend money on groceries instead of entertainment

• a world where everyone’s needs and wants are always met

• you deciding to go to bed early because you’re exhausted

• your teacher choosing to focus only on key topics after class time is interrupted by a fire drill

• the government allocating funds to infrastructure projects instead of defense

Economics assumes that people make choices

• so that the opportunity cost of an action is greater than the potential benefits of an action

• so that the opportunity cost of an action is less than the potential benefits of an action

• so that the opportunity cost of an action is equal to the potential benefits of an action

• on a purely impulsive basis

• always rationally because we are born with the ability to calculate costs and benefits

Why is positive economics considered to be essentially value-free?

• It could involve an analyst’s opinion.

• It depends on ethics

• It does not require analysis.

• It only applies to historical economic events.

• It does not require an analyst’s opinion.

According to Pareto efficiency, how is one made better off?

• regulation

• stagnation

• accumulation

• redistribution

• substitution

In terms of macroeconomics and microeconomics, why are different aspects of human behavior important?

• Economic activity is independent of consumer choices.

• Economic activity is independent of behavior

• Economic activity is focused on different scales.

• Economic activity is dependent on consumer choices.

• all of the above

Compared to the New York Stock Exchange or the Chicago Mercantile Exchange, most markets in an economy are _____________.

• more specialized

• well informed

• less formal

• more local

• less specialized

As the price of a good increases, why does the opportunity cost of consuming that good also increase?

• Consumers are very price-conscious of any increase, even a slight amount, when given a choice.

• Consumers realize that the opportunity cost of purchasing a lower-priced good may be more efficient.

• Consumers must cut back on their consumption of other goods to afford the higher price.

• Consumers are normally reluctant to reduce spending unless it is efficient.

• all of the above

There are white bass and bluegill fish in a river. Fisherman Mo is able to catch 7 white bass in an hour or 6 bluegill in an hour. Fisherman Po, however, can only catch 5 white bass an hour or 3 bluegill an hour. In this case, Fisherman Mo is said to have a(n)

• production possibility in both types of fish

• absolute advantage in both types of fish

• beneficial bias in both types of fish

• extreme entropy in both types of fish

• positive production in both types of fish

On a figure showing the equilibrium in a market, why is there only one possible point of intersection for the market supply and market demand curves?

• The supply curve is upward sloping, and the demand curve is downward sloping.

• The supply curve and the demand curve never intersect in a competitive market.

• The supply curve is perfectly horizontal, while the demand curve is perfectly vertical.

• Both curves have a contrapositive relationship.

• The supply curve is downward sloping, and the demand curve is upward sloping.

Which of the following best describes the situation in which buyers want to purchase 10,000 gallons of gasoline but suppliers only produce 9,800 gallons?

• market flux

• excess demand

• essentially efficient

• demand limited

• excess supply