Alumhanna Eco Chapter 1,2, 3

7/21/2019 Alumhanna Eco Chapter 1,2, 3

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Submission to Ch.1,2,3,4

Your submission has been saved! Student: ALI, ALMUHANNA (aaalmuhanna13)Date: 04/28/2015 13:45

Duration: * 2154:52:19 *Workstation: 172.19.166.8

1. The term market powerrefers to

A firm's ability to alter the market price or quantity of a good or service.

A firm's ability to eliminate free riders.

The government's authority to tax businesses.

The government's ability to change market outcomes.

Market power is the ability to alter the market price of a good or service.

2. A merit good is

A good or service that society believes everyone is entitled to a minimalquantity of.

A good society holds to a higher standard in tax regulations.

Income payments for which no goods or services are exchanged.

A product that serves as an incentive to produce more output.

A merit good is a good or service that society deems everyone is entitled to some minimalquantity of, such as food.

3. Who participates in markets?

Business firms.

Business firms and consumers.

Consumers and government agencies.

All of the choices are correct.

Consumers, business firms, government agencies, and foreigners participate in themarketplace.

4. A market is said to be in equilibrium when

The buying intentions of all consumers are realized.The quantity demanded equals the quantity supplied.

The supply intentions of all sellers are realized.

Demand is fully satisfied at all alternative prices.

Equilibrium occurs at the intersection of the supply and demand curves.

5. When economists describe a production process as capital-intensive, they mean that the

Capital used in the process tends to wear out (depreciate) very rapidly.

Process uses a high ratio of machinery and other capital to labor.


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Capital used in the process reflects the most advanced technology.

Process needs a greater emphasis on labor in order to increase productivity.

In the United States much production is capital-intensive.

6. A production possibilities curve indicates the

Maximum combinations of goods and services an economy can produce givenits available resources and technology.

Average combinations of goods and services an economy can produce given itsavailable resources and technology.

Maximum combinations of goods and services an economy can produce givenunlimited resources.

Combinations of goods and services an economy is actually producing.

The production possibilities curve shows us the possible choices we can make in regards towhat to produce.

7. Which of the following is not one of the three core economic issues that must be resolved?How to produce the goods and services we select.

Who should get the goods and services we produce.

What to produce with unlimited resources.

What to produce with limited resources.

Resources are not unlimited.

8. In a market economy, the people who receive the goods and services that are produced are

those who

Have the most political power.Are willing to pay the highest price.

Need the goods and services the most.

Want the goods and services the most.

Those who place low value on the goods and services will not part with their money forthem, and will likely be outbid by those who value them more.

9. The best definition of GDP is

A measure of the per capita economic growth rate of the economy.

The sum of the physical amounts of goods and services in the economy.

A physical measure of the capital stock of the economy.

A dollar measure of final output produced during a given time period.

GDP is a measure of how well a nation is doing economically, especially in terms of itsproduction.

10. If there is a surplus at a given price, then

The market is in equilibrium at that price.


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The price is zero.

That price is greater than the equilibrium price.

That price is lower than the equilibrium price.

At prices above equilibrium, quantity supplied will be greater than quantity demanded, so amarket surplus will exist.

11. Between 1950 and 2010, most of the growth in federal expenditures was a result of increases

in

Direct expenditures.

Income transfers.

Private sector purchases of goods and services.

Public sector purchases of goods and services.

Most of the growth in federal spending has come from increased income transfers, notpurchases of goods and services.

12.Ceteris paribusmeansHolding constant the determinant of demand or supply that you are interestedin examining.

Changing prices to see how demand or supply shifts.

Allowing the free market to decide, not government.

Holding everything constant except for the variables you are interested inexamining.

Ceteris paribusis the assumption of nothing else changing.

13. The role of the entrepreneur in an economy is toBring the factors of production together and assume the risk of production.

Work with government planners to determine what goods are produced.

Arrange bank financing for the owners of new businesses.

Ensure full employment of labor.

The entrepreneur is an important factor of production and acts to mobilize the use of otherresources.

14. The principal mechanism for redistributing incomes is

Market power.

The tax-and-transfer system.

The production of public goods.

Antitrust policy.

The tax-and-transfer system is the principal mechanism for redistributing incomes.

15. Opportunity cost is

The total dollar cost to society of producing the goods.


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The best alternative that must be given up in order to get something else.

Measured only in dollars and cents.

The difficulty associated with using one good in place of another.

Opportunity cost involves the sacrifice to get something else. Opportunity cost is measuredin both relative resource dollar cost and relative time lost of producing alternative output.

16. Market failure implies that the market mechanism

Causes government failure.

Causes shortages or surpluses in the market.

Leads the economy to the wrong mix of output.

Leads the economy to a point outside the production possibilities curve.

Market failure is an imperfection in the market mechanism that prevents optimal outcomes.

17. Economic growth

Is an increase in output or real GDP.

Causes a contraction in the production possibilities curve.

Involves reduced capacity in the short run.

None of the choices are correct.

Economic growth allows more production and consumption.

18. In economics, a public good

Is any good produced by the government.

Has social costs of production lower than private costs of production.

Cannot be denied to consumers who have not paid.Is provided in an optimal amount by the market.

A public good is a good or service whose consumption is nonexcludable.

19. To an economist, the four factors of production are

Labor, workers, profit, and services.

Land, labor, capital, and entrepreneurship.

Entrepreneurship, machinery, workers, and profit.


The general terms for the four factors of production are land, labor, capital, andentrepreneurship.

20. Government intervention to alter market structure or prevent abuse of market power is the

basic purpose of

Merit goods.

Antitrust policy.

Government taxes.


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Social demand.

Antitrust is government intervention to alter market structure or prevent abuse of marketpower.

21. The equilibrium price in a market is found where

The market demand curve intersects they-axis.

The market supply curve intersects they-axis.

The market supply curve intersects thex-axis.

The market supply curve intersects the market demand curve.

The intersection of the demand and supply curves establishes the equilibrium price andoutput.

22. Per capita GDP is

GDP divided by total population.

The sum of consumer goods, investment goods, government services, and net

exports.A dollar measure of the economic growth rate of a country.

The value of the factors of production used to produce output in a country.

Per capita GDP is an important measure of economic well-being.

23. Human capital is defined as the

Amount of machinery, factories, and buildings an individual owns.

Dollar value of all the stocks and bonds an individual owns.

Knowledge and skills workers possess.


Human capital is an important factor of production that allows greater productivity.

24. Antitrust activity addresses

Market power.

Public goods.

Macro instability.

Inequity.

Antitrust is government intervention to alter market structure or prevent abuse of marketpower.

25. In a market economy, producers will produce the goods and services that

Producers want to purchase.

Optimize producer utility.

Consumers need the most.

Consumers demand.


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Price signals in the marketplace move factors of production from one industry to another inresponse to consumer demands.

26. Government failure may result from

Outright waste of resources by the public sector or misallocation of resources.

Operational inefficiency by the public sector only.

Accurate valuations of benefits but inaccurate valuations of costs.

Misallocation of resources only.

Governments failure may result from outright waste (operational inefficiency) or from amisallocation of resources.

27. An example of a positive externality is

Increased factory use of private sector robotics that came from governmentresearch.

Increased health problems from air pollution.

Increased business profits at a hardware store that benefited from a tornado.


An externality is anything that affects a third party to a market transaction. Even thoughone may benefit from it, a natural disaster is not a market transaction.

28. The term opportunity costrefers to the

Amount of resources used to produce a good but not a service.

Value of the best alternative given up when a good or service is produced.

Financial costs of all the factors of production used to produce a good orservice.

Value of all the alternatives given up when a good or service is produced.

Opportunity costrefers to the most desired goods or services forgone, not all the goodsforgone, because not all choices would have been given upjust the best alternative.

29. Business firms supply goods and services to ____ and purchase factors of production in ____

product markets factor markets

factor markets national markets

national markets factor markets

factor markets product markets

A factor market is where the factors of production (land, labor, or capital) are bought andsold. A product market is where finished goods and services are bought and sold. A pair ofshoes is a finished good.

30. Externalities

Are the costs or benefits of market activities that "spill over" onto third parties.

Occur because of government failure.

Occur because of selfish consumers.


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Occur because demand is hidden.

Externalities are costs or benefits of a market activity borne by a third party.

31. Which component(s) of U.S. real GDP increased in size relative to total U.S. real GDP from

1950 to 2000?

Only services.

Agriculture and manufacturing.

Only manufacturing.

Only agriculture.

Due to technological advances, the agricultural component of U.S. real GDP has shrunksignificantly, and with the significant increase in per capita income the demand for serviceshas increased.

32. International participants

Participate only in American factor markets.

Take no part in American markets.Participate in both American factor markets and American product markets.

Participate only in American product markets.

International participants take part in the U.S. market by supplying imports, purchasingexports, and buying and selling factors of production.

33. Which of the following countries (or regions) produces the most output annually?

United States.

China.

Germany.

Japan.

The United States is the largest economy in the world based on GDP.

34. The goal of the business firms in a market economy is to maximize

Total sales.

Total welfare.

Total profits.

Total utility.

Businesses are motivated by profit.

35. The term externalitiesrefers to

Black-market economic activity.

The impact on markets of imported goods.

The inequitable distribution of income.

The costs or benefits of a market activity borne by a third party.


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Externalities are things like pollution that hurt third parties.

36. According to the law of demand, during a given period of time, the quantity of a good

demanded

Does not change when price changes.

Increases as its price rises, ceteris paribus.

Decreases as its price falls, ceteris paribus.

Increases as its price falls, ceteris paribus.

Quantity demanded of an item and price of the same item are inversely related.

37. The term externalitiesrefers to

Only positive benefits of a market activity borne by a third party.

Only negative costs of a market activity borne by a third party.

The negative costs and positive benefits of a market activity borne by a thirdparty.


An externality is anything that affects a third party to a market transaction.

38. The goal of the consumer in a market economy is to use his or her limited income to buy

The goods and services that maximize profits for businesses.

Those goods and services with the lowest prices.

The greatest number of goods and services possible.

The set of goods and services that maximizes the consumer's total utility.

Consumers are motivated by their desire to maximize utility.

39. The doctrine of laissez faire is based on the belief that

Government failure does not exist.

Government directives are likely to do a better job of allocating resources thanmarkets.

Markets are likely to do a better job of allocating resources than governmentdirectives.

Markets result in an unfair distribution of income.

Millions of individuals making choices everyday tend to do a better job than a centralauthority.

40. Adam Smith's invisible hand is now called

The market mechanism.

Opportunity cost.

Laissez faire.

Economic growth.

Adam Smith's invisible hand is now called the market mechanism.


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41. High U.S. incomes have led to the transformation of the United States into primarily

An agricultural economy.

A closed economy with little foreign trade.

A manufacturing economy.

A service economy.

Once households have enough food they begin to demand more consumption items with anincreasing percentage being services.

42. In terms of the production possibilities curve, inefficiency is represented by

All points outside the curve.

All points inside the curve.

All points on the curve.

A rightward shift of the curve.

At points inside the production possibilities curve, we can get more of one good withoutsacrificing any other goods.

43. The current U.S. economy is based primarily on the production of

Goods for federal government use.

Services.

Manufacturing goods.

Agricultural goods.

Production in the U.S. economy is mostly directed toward services.

44. A buyer is said to have a demand for a good only when

The buyer is both willing and able to purchase the good at alternative prices.

The buyer wants to own the good.

An adequate supply of the good is available for purchase.

The price of the good is low enough.

Demand is the ability and willingness to buy specific quantities of a good at alternativeprices in a given time period, ceteris paribus.

45. A change in the price of a good

Results in a change in quantity supplied.

Is a determinant of supply.

Results in a change in supply.

Causes a shift in the supply curve.

Because the supply curve shows the quantity supplied at different price levels, when theprice changes, we can track changes in quantity supplied along the supply curve.


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46. Which economist argued that free markets unleashed the "animal spirits" of entrepreneurs,

propelling innovation, technology, and growth?

Kenneth Olsen.

Irving Fisher.

John Maynard Keynes.

Lord Kelvin.

Competition leads companies to always try to do something better and more efficiently inorder to maximize profits.

47. In economics, scarcity means that

A shortage of a particular good will cause the price to fall.

The market mechanism has failed.

A production possibilities curve cannot accurately represent the trade-offbetween two goods.

Society's desires exceed the want-satisfying capability of the resourcesavailable to satisfy those desires.

We cannot produce everything with fixed resources.

48. A natural monopoly is

An industry that is dominated by a single firm.

An industry in which one firm can achieve economies of scale over the entirerange of market supply.

An unregulated monopoly.

A monopoly that always benefits society even when it is unregulated.

A natural monopoly is an industry in which one firm can achieve economies of scale overthe entire range of market supply.

49. The fundamental problem of economics is

How to create employment for everyone.

The scarcity of resources relative to human wants.

The law of increasing opportunity costs.

How to get government to operate efficiently.

Wants will always exceed resources.

50. A factor market is any place or process where

Finished goods are bought and sold.

Land, labor, or capital is bought and sold.

Finished services are bought and sold.


A factor market is where the factors of production (land, labor, or capital) are bought andsold.


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51.Capital,as economists use the term, refers to

The costs of operating a business.

Final goods that are used to produce other goods and services.

Shares of stock issued by businesses.

The money needed to start a new business.

Physical capital is used to produce other goods and services, including other capital goods.Hammers produce houses. Forklifts move forklift parts around a forklift factory. Money isfinancial capital, which is a throughput. It is used to acquire a hammer or physical capital.

52. The most desirable combination of output attainable with existing resources, technology, and

social values is known as the

Optimal mix of output.

Efficient mix of output.

Optimal mix of production.

Efficient choice of production.

The optimal mix of output maximizes collective social utility and therefore is the mostdesirable.

53. A monopoly exists when

A small number of firms are the only producers of a good.

Consumers are being exploited.

One firm produces the entire market of a good or service.

The government intervenes on behalf of consumers.

There will typically be government intervention to limit the powers of a monopoly.

54. According to the law of demand, a demand curve

Exceeds the economy's ability to produce.

Is a horizontal or flat line.

Has a negative slope.

Has a positive slope.

Because price and quantity demanded are inversely related, the demand curve is

downward-sloping (has a negative slope).

55. Which component(s) of U.S. real GDP decreased in size relative to total U.S. real GDP from

1950 to 2000?

Only agriculture.

Only services.

Only manufacturing.

Agriculture and manufacturing.

Although agriculture, along with manufacturing, mining, and construction, are important


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parts of our economy, their relative size in U.S. real GDP has shrunk significantly sinceWorld War II.

56. A point on a nation's production possibilities curve represents

Combinations of production that are unattainable, given current technologyand resources.

The full employment of resources to achieve a particular combination of goodsand services.

Levels of production that will cause both unemployment and inflation.

An undesirable combination of goods and services.

Being on the curve is efficient because we are getting the most we can out of our resources

57. The basic factors of production include

Land, labor, money, and inputs.

Land, labor, capital, and entrepreneurship.

Labor and money.

Land, labor, money, and capital.

The basic four factors are required for the production of goods and services. Factors ofproduction are what are needed on a camping trip. Money is not needed on a camping trip.

58. Resources are directed from one industry to another by

Changes in market prices.

Market failure.

Government failure.


Price signals in the marketplace move factors of production from one industry to another inresponse to consumer demands.

59. A private good

Results in market failure when provided in markets characterized by laissezfaire.

Experiences free riders.

Is consumed by one person and excludes consumption by others.

Is provided most efficiently by the government.

A private good is a good or service whose consumption by one person excludesconsumption by others. In other words, it's "rival" in consumption.

60. Economics can be defined as the study of

For whom resources are allocated to increase efficiency.

How society spends the income of individuals.

How scarce resources are allocated on a macro level to best meet society'sgoals or on a micro level to best meet an individual's or firm's goals.


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Economics studies how we get the most we can out of what we have.

Prepared by: Plessner, Vo

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Alumhanna Eco Chapter 1,2, 3

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