ECO Multiple Choice Questions

Question 1
1. 
The economic surplus of a particular action is:
Answer
 
 The value of the action
 
 The cost of the action
 
 The difference between the benefit and the cost of the action
 
 The average of the benefits and costs
2 points  
Question 2
1. 
For many students, the opportunity cost of taking an 8:00 a.m. Monday, Wednesday, and Friday class is the value of one hour's worth of:
Answer
 
 Studying
 
 Dental work
 
 Washing
 
 Sleeping
2 points  
Question 3
1. 
Dillon purchased his nonrefundable, nontransferable ticket to see the M. C. Hammer/Vanilla Ice Career Revival show for $30 last week, while Bob has yet to buy his ticket but wants to go. In deciding whether to go to the show, the price of the ticket is a ________ to Dillon and a _________ to Bob.
Answer
 
 sunk cost; sunk cost
 
 relevant cost; sunk cost
 
 sunk cost; variable cost
 
 fixed cost; variable cost
2 points  
Question 4
1. 
If a given production combination is known to be attainable, then it must be:
Answer
 
 On the production possibilities curve
 
 Beyond the production possibilities curve
 
 An inefficient point
 
 Either an inefficient or efficient point
2 points  
Question 5
1. 
Application of the principle of comparative advantage leads to:
Answer
 
 Greater and greater specialization of labor and other factors of production
 
 Lesser and lesser specialization of labor
 
 Societies where everyone can do a little of everything
 
 Lower total output
2 points  
Question 6
1. 
According to the textbook, the largest factor explaining the variance in the performance of the economies of the world is the:
Answer
 
 Degree of specialization
 
 Size of government
 
 Location of the country
 
 Type of government
2 points  
Question 7
1. 
In order to understand how the price of a good is determined in the free market, one must account for:
Answer
 
 The desires of demanders exclusively
 
 The desires of suppliers exclusively
 
 The desires of lobbyists exclusively
 
 The desires of demanders and suppliers
2 points  
Question 8
1. 
The statement "Holding all other relevant factors constant, consumers will purchase more of a good as its price falls" reflects the behavior underlying:
Answer
 
 The demand curve
 
 An increase in demand
 
 The supply curve
 
 A decrease in the demand curve
2 points  
Question 9
1. 
The market for a good is comprised of:
Answer
 
 Only buyers of the good
 
 Only sellers of the good
 
 Both buyers and sellers of the good
 
 Only the price at which the good is sold
2 points  
Question 10
1. 
If the percentage change in quantity demanded is less than the corresponding percentage change in price, demand is price _________.
Answer
 
 inelastic
 
 elastic
 
 unit elastic
 
 perfectly elastic
2 points  
Question 11
1. 
The demand for a specific brand of juice will be _______ the demand for juice in general.
Answer
 
 more elastic than
 
 less elastic than
 
 as elastic as
 
 as inelastic as
2 points  
Question 12
1. 
Which of the following is most likely to have a negative income elasticity of demand?
Answer
 
 Generic drugs
 
 Luxurious overseas vacations
 
 New SUVs
 
 New computers
2 points  
Question 13
1. 
The property of diminishing marginal utility means that as more units of a good are consumed:
Answer
 
 Total utility falls
 
 The marginal utility of the extra units is negative
 
 The marginal utility of the extra units becomes smaller and smaller
 
 Total utility diminishes
2 points  
Question 14
1. 
Joe has a fixed amount of income and buys two different goods, M and N, in accordance with the rational spending rule. If the price of M were to rise, one could predict that Joe would buy:
Answer
 
 The same amount of M and reduce purchases of N
 
 The same amount of N and reduce purchases of M
 
 More N and less M
 
 Less of both M and N
2 points  
Question 15
1. 
The cost of any particular good or service is equal to the:
Answer
 
 Monetary cost divided by any nonmonetary costs
 
 Monetary cost minus any nonmonetary costs
 
 Monetary cost plus any nonmonetary costs
 
 Difference between the list price and the price one actually pays
2 points  
Question 16
1. 
A price taker confronts a demand curve that is:
Answer
 
 Vertical at the market price
 
 Upward sloping
 
 Downward sloping
 
 Horizontal at the market price
2 points  
Question 17
1. 
The common goal shared by all private firms is to:
Answer
 
 Be a responsible member of the community
 
 Treat workers fairly
 
 Maximize profit
 
 Be environmentally friendly
2 points  
Question 18
1. 
In which of the following short-run scenarios should a firm shut down?
Answer
 
 Price is less than average cost.
 
 Price is less than marginal cost.
 
 Price is less than average variable cost.
 
 Price is less than average revenue.
2 points  
Question 19
1. 
The reduction in total economic surplus that results from the adoption of a policy is called:
Answer
 
 Deadweight loss
 
 Externality loss
 
 Collateral damage
 
 Rent-seeking loss
2 points  
Question 20
1. 
When the supply curve for a good is perfectly ________, the burden of a tax collected from sellers falls entirely on _______.
Answer
 
 elastic; buyers
 
 elastic; sellers
 
 inelastic; buyers
 
 vertical; buyers
2 points  
Question 21
1. 
The rationing and allocative functions of price:
Answer
 
 Work in opposition to each other
 
 Are mutually exclusive
 
 Work together to guide resources to their highest value
 
 Produce disequilibrium in the market
2 points  
Question 22—not sure
1. 
Applying the no cash on the table principle to the stock market means new information:
Answer
 
 Provides opportunities to the first few who act on it
 
 Provides opportunities to all investors
 
 Was already contained in the stock price
 
 Fails to affect the market
2 points  
Question 23—B or D
1. 
A more efficient alternative to restricting trade is:
Answer
 
 To compensate the winners
 
 To compensate the losers
 
 To repeal the principle of comparative advantage
 
 A system of voluntary export restraints
2 points  
Question 24
1. 
Who loses from import quotas?
Answer
 
 Consumers of imported goods
 
 Consumers of exported goods
 
 Producers of imported goods
 
 Firms that hold import licenses
2 points  
Question 25
1. 
Which of the following is not correct about the effects of the voluntary export restraints (VERs) that the U.S. imposed on Japanese automobiles in the 1980s?
Answer
 
 It benefited the U.S. automakers.
 
 It hurt the U.S. auto consumers.
 
 It benefited the Japanese automakers.
 
 It hurt the U.S. government.
2 points