The fundamental problem of economics is: (B) The scarcity of resources relative to human wants.
Which of the following groups represents scarce resources? (D) Land, labor, capital, and entrepreneurship.
Given that resources are scarce (C) Opportunity costs are experienced whenever choices are made.
The concept of opportunity cost would become irrelevant if: (D) Resources were no longer scarce
In economics, capital means: (B) Goods that can be used to produce other goods
Production-possibilities curves are applicable to :(C) Economies based on the market mechanism
GDP can be found by :(A) Adding up the spending during a year by business, government, households, and foreigners, and subtracting imports.
GDP per capita is the most practical way to: (C) Measure how much output is potentially available to the average person
As an economy moves out of a recession into a period of economic growth, we would expect consumers to increase their expenditures the most (in percentage terms) on: (C) Durables.
Which of the following is an example of the economic concept of investment? (C) The purchase of land by a real estate developer
Government income-transfer payments are not included in the calculation of GDP because (A) It is difficult to measure the value of these payments.
By definition, a progressive tax: (C) Imposes higher tax rates on higher incomes
Suppose average yearly lottery expenditures fall from 10 percent of income in the lowest class (under $10,000) to only 0.1 percent of income in the $50,000 to $60,000 class. Based on this information, we can best conclude that lotteries serve as (A) A regressive tax.
The goals of the principal participants in the economy are (C) Satisfaction from the purchase of goods and services for consumers, profits for businesses, and general welfare for government
The goal of the supplier of a product or service in a market economy is: (C) Profits subject to the constraint of scarce resources
When a buyer purchases a good, ceteris paribus: (C) The demand curve shifts to the left, and the quantity demanded falls.
The factors of production include (C) Land, labor, capital, and entrepreneurship
A production function (D) Shows the minimum amount of output that can be obtained from a given set of inputs
The amount of fixed cost is (C) The difference between total cost and average variable cost in the short run
A competitive firm is one(C) That can alter the market price of the good(s) it produces
The market-equilibrium price occurs where (A) Market supply crosses market demand
The law of diminishing returns explains (A) Why marginal cost eventually increases in the short run as more output is produced
Profit per unit equals: (B) Average revenue divided by average total cost.
At long-run equilibrium in a monopoly: (A) Economic profit will always be zero
Economies of scale over the entire range of market output (B) Become a high barrier to entry, preventing a market from being competitive
The term "labor supply" can be defined, ceteris paribus, as the (C) Willingness and ability to work specific amounts of time at alternative wage rates in a given period.
An individual's labor-supply curve reflects his or her (D) Equilibrium wage.
The demand for factors of production is (A) Derived from the demand for the goods and services they produce
MRP for a perfectly competitive firm is equal to (D) MPP times the price of the product
Which of the following is an economic justification for laissez- faire? (C) The efficiency of the invisible hand.
Total revenue definitely declines, ceteris paribus (D) When price rises and demand is elastic
If marginal utility is negative (B) Total utility decreases with additional consumption of a good
Which of the following should increase during the expansion phase of the business cycle? (C) Real GDP
Macro outcomes include (A) Internal market forces.
External shocks include (B) Wars, natural disasters, and trade disruptions.
Keynesian theory became important when Classical economic theory did not adequately explain(A) A prolonged inflation with simultaneously low unemployment
Which of the following measures the value of output in constant prices (B) GDP?
Disposable income is calculated as (A) Consumption + saving.
When calculating aggregate demand, government expenditure: (A) Does not include income transfers
As the size of purchases becomes larger, a greater percentage of the purchases are made using(C) Other methods of payment not involving cash.