Econ Test 2 (Chapters 6,9,10,11,12)

Front 1

The term diminishing returns refers to a:

Back 1

decrease in the extra output due to the use of an additional unit of a variable input, when more and more of the variable input is used and all other things are held constant.

Front 2

(Table: Labor and Output) The marginal product of the fifth worker is:

Back 2

4.

Front 3

(Table: Labor and Output) The average product when four workers are employed is:

Back 3

9.

Front 4

When marginal cost is rising:

Back 4

both average variable cost and average total cost may be rising, or one of them may be falling.

Front 5

If the marginal cost of the first sports jersey is $21, the marginal cost of the second sports jersey is $40, and the marginal cost of the third jersey is $17, what is the total variable cost of producing three jerseys?

Back 5

$78

Front 6

(Figure: Marginal Product of Labor) Using the marginal product of labor curve in the figure, the total product of labor for three workers is:

Back 6

51 bushels.

Front 7

(Figure: Marginal Product of Labor) Using the marginal product of labor curve in the accompanying figure, the total product of labor for eight workers is:

Back 7

96 bushels.

Front 8

(Figure: Marginal Product of Labor) Using the marginal product of labor curve in the figure, the total product of labor for five workers is:

Back 8

75 bushels.

Front 9

When marginal cost is below average variable cost, average variable cost must be:

Back 9

at its maximum.

Front 10

The total product curve:

Back 10

will become flatter as output increases if there are diminishing returns to the variable input.

Front 11

If an increase in output results in a decrease in average total cost, the corresponding marginal cost is:

Back 11

less than average total cost.

Front 12

When marginal cost is above average variable cost, average variable cost must be:

Back 12

rising.

Front 13

The total cost curve for a snowmobile dealership shows how ________ cost depends on the quantity of ________.

Back 13

total; output

Front 14

At 30 units of output, a firm's marginal cost and average variable cost both equal $10. Therefore, assuming normally shaped cost curves, at 29 units of output its marginal cost:

Back 14

is less than $10 and its average variable cost is more than $10.

Front 15

A fixed input is one:

Back 15

whose quantity cannot be changed in a particular period.

Front 16

The average total cost of producing cell phones in a factory is $20 at the current output level of 100 units per week. If fixed cost is $1,200 per week:

Back 16

average variable cost is $8

Front 17

The average total cost curve in the short run slopes upward because of:

Back 17

diminishing returns.

Front 18

Average variable cost equals all of the following except:

Back 18

variable cost times output.

Front 19

In the short run:

Back 19

Some inputs are fixed and some are variables

Front 20

If a firm produces 10 units of output and incurs $30 in average variable cost and $35 in average total cost, total fixed cost is:

Back 20

$50.

Front 21

Austin's total fixed cost is $3,600. Austin employs 20 workers and pays each worker $60. If labor is his only variable cost, what is Austin's total cost?

Back 21

$4,800

Front 22

If marginal cost is equal to average total cost:

Back 22

average total cost is at its minimum.

Front 23

Lauren has 11 people working in her tangerine grove. The marginal product of the eleventh worker equals 13 bushels of tangerines. If she hires a twelfth worker, the marginal product of that worker will equal:

Back 23

The answer cannot be determined with the information available.

Front 24

Kaile Cakes produces 10 cakes per day. The marginal cost of the tenth cake is $24, and average total cost of 10 cakes is $6. The average total cost of 9 cakes is:

Back 24

$4.

Front 25

If marginal cost is greater than average total cost:

Back 25

average total cost is increasing.

Front 26

Which of the following curves is not affected by diminishing returns?

Back 26

the average fixed cost curve

Front 27

The long run is a planning period:

Back 27

over which a firm can consider all inputs as variable.

Front 28

Oscar owns a meat processing plant whose unpleasant odors waft across the city. Because the production of processed meat provides a negative externality to the community, at the market equilibrium quantity, the marginal social:

Back 28

cost of processed meat exceeds the market price. .

Front 29

In the absence of government action, polluters will pollute up to the point at which the marginal social benefit of pollution is:

Back 29

zero.

Front 30

Positive externalities are:

Back 30

difficult to measure, since marginal benefits are hard to observe.

Front 31

Flu vaccines often provide both private benefits to individuals and positive external benefits to other members of society. As a result, without government intervention one would find:

Back 31

too few doses of flu vaccine being produced, since external benefits would not be considered.

Front 32

Suppose each person in a community had to pay for his or her own education from kindergarten through high school. One would expect that:

Back 32

less education would be acquired, since society has not considered the positive external benefits of education.

Front 33

An example of a good that is rival in consumption and nonexcludable is:

Back 33

national defense.

Front 34

On hot summer days, beach parking lots are usually full by early morning even though one must pay in order to park there. Parking at such lots is:

Back 34

rival in consumption and excludable.

Front 35

When goods are rival in consumption and excludable, markets:

Back 35

will produce an efficient quantity of the good.

Front 36

If an activity generates external costs, the decision makers generating the activity will:

Back 36

not be faced with its full costs.

Front 37

If a coal-powered electrical generator discharges smoke into the air and causes uncompensated costs and discomfort to residents of a town, then this electrical generation has a(n):

Back 37

external cost.

Front 38

All of the following are examples of an external cost except:

Back 38

zoning restrictions on your property.

Front 39

If external costs exist, the competitive free market:

Back 39

allocates resources inefficiently.

Front 40

A copper mining operation discharges waste products into a river and causes higher costs and discomfort to downstream users of the water for which they are not compensated. In this case:

Back 40

too much of society's resources is being used to produce copper.

Front 41

If the marginal benefit received from pollution is equal to its marginal cost, then:

Back 41

society has achieved its socially optimal level of pollution.

Front 42

If the marginal benefit received from pollution is less than its marginal cost, then:

Back 42

society's well-being can be improved if the quantity of pollution decreases.

Front 43

If a good that involves external costs is priced to take these costs into account, then its price will:

Back 43

rise, and output will fall.

Front 44

If at the current amount of pollution, the marginal social benefit of pollution is greater than its marginal social cost, then:

Back 44

there is too little pollution.

Front 45

Which of the following questions is appropriate to the study of macroeconomics?

Back 45

How does the aggregate price level affect overall consumer spending?

Front 46

Controlling interest rates is an example of:

Back 46

monetary policy.

Front 47

Monetary policy involves changes in :

Back 47

the quantity of money.

Front 48

The onset of the Great Depression:

Back 48

came as a considerable shock to the conventional wisdom of economics at that time and opened the door for critiques of mainstream thought by economists like John Maynard Keynes.

Front 49

A period of falling real gross domestic product is a(n):

Back 49

recession.

Front 50

The value, of the final goods and services produced during a particular period is:

Back 50

gross domestic product

Front 51

Intermediate goods are not counted in the calculation of GDP because:

Back 51

to do so would be double counting.

Front 52

The Boeing Company buys $3 million worth of steel, $2.5 million worth of computer hardware and software, and $1 million worth of mechanical tools to manufacture a certain model of aircraft. Boeing sells this particular model of aircraft at $10 million. The value added by Boeing is equal to:

Back 52

$3.5 million.

Front 53

GDP includes the value of all of the following goods except:

Back 53

the value of Bridgestone tires purchased by Ford Motor Co.

Front 54

The inflation-adjusted measure of aggregate output typically used by economists is called:

Back 54

real gross domestic product.

Front 55

If real GDP rises while nominal GDP falls, then prices on average have:

Back 55

fallen.

Front 56

Consider an economy that produces only two goods: DVDs and DVD players. If 10 DVDs are sold at $20 each and 5 DVD players are sold at $100 each, then nominal GDP is:

Back 56

$700.

Front 57

Consider an economy that produces only two goods: DVDs and DVD players. Last year, 10 DVDs were sold at $20 each and 5 DVD players were sold at $100 each, while this year 15 DVDs were sold at $10 each and 10 DVD players were sold at $50 each. Nominal GDP this year is:

Back 57

$500

Front 58

Consider an economy that produces only two goods: DVDs and DVD players. Last year, 10 DVDs were sold at $20 each and 5 DVD players were sold at $100 each, while this year 15 DVDs were sold at $10 each and 10 DVD players were sold at $50 each. Real GDP this year using last year as the base year is:

Back 58

$1,300.

Front 59

Suppose that nominal GDP is $1,000 in 2009 and $1,500 in 2010. If the overall price level ____ between 2009 and 2010, we could say that real GDP _____.

Back 59

increased by 50%; stayed constant

Front 60

If the cost of a market basket is $200 in year 1 and $230 in year 2, the price index for year 2 using year 1 as the base is:

Back 60

115.

Front 61

If the cost of a market basket is $150 in year 1 and $200 in year 2, the price index for year 1 using year 2 as the base is:

Back 61

75

Front 62

If the CPI is 120 in year 1 and 150 in year 2, then the rate of inflation from year 1 to year 2 is:

Back 62

25%

Front 63

The labor force is:

Back 63

the total of the employed and unemployed

Front 64

The unemployment rate is:

Back 64

the percent of the labor force that is unemployed

Front 65

To be counted as unemployed, one must:

Back 65

be out of work and actively looking for a job.

Front 66

If a country has a working-age population of 200 million, 135 million people with jobs, and 15 million people unemployed and seeking employment, then its unemployment rate is:

Back 66

10%

Front 67

If a country has a working-age population of 200 million, 135 million people with jobs, and 15 million people unemployed and seeking employment, then its labor force is:

Back 67

150 million

Front 68

Discouraged workers:

Back 68

have given up looking for a job.

Front 69

According to official statistics, discouraged workers are:

Back 69

not included in the labor force

Front 70

Which of the following situations is likely to lead to anincrease in discouraged workers?

Back 70

The availability of jobs falls

Front 71

An increase in the number of discouraged workers in theeconomy tends to:

Back 71

lower the official unemployment rate.

Front 72

In general, for the U.S. economy, the relation between unemployment and economic growth is:

Back 72

negative

Front 73

Frictional unemployment exists because of all of thefollowing reasons except:

Back 73

for the minimum wage

Front 74

Frictional unemployment is considered to be:

Back 74

good, since that means people may be seeking for jobs that match their job skills

Front 75

Sam, who is 55 years old and has been a steelworker for 30years, is unemployed because the steel plant in his town closed and moved toMexico. Sam is:

Back 75

structurally unemployed

Front 76

Efficiency wages encourage:

Back 76

a worker to stay in their job

Front 77

Unemployment is at its natural level if there is no:

Back 77

cyclical unemployment

Front 78

Cyclical unemployment is the result of:

Back 78

the business cycle

Front 79

If money income remains the same while the average pricelevel doubles:

Back 79

real income will fall

Front 80

A key statistic to measure economic growth is:

Back 80

real GDP per capita

Front 81

The best available measure of the standard of living in acountry is:

Back 81

real GDP per capita

Front 82

If a country has a population of 1,000, an area of 100 square miles, and a GDP of $5 million, then its GDP per capita is:

Back 82

$5,000

Front 83

China has much higher rate of growth than the United States,but the average Chinese household is:

Back 83

still far pooper than a typical U.S. house hold because China’s real GDP per capita is much lower than that of the United States

Front 84

The Rule of 70 indicates that a 6% annual increase in thepotential level of real GDP would lead to the potential output doubling in_______ years.

Back 84

12

Front 85

The Rule of 70 states that a variable's approximate doublingtime equals:

Back 85

70 divided by the growth rate.

Front 86

If real GDP doubles in 35 years, its average annual growth rate is approximately:

Back 86

2%

Front 87

The term human capital describes:

Back 87

the improvement in labor created by education and knowledge that is embodied.

Front 88

The unemployment rate is the number of people classified as unemployed as a percentage of:

Back 88

the labor force.

Front 89

The total labor force equals:

Back 89

the number of employed plus unemployed persons.

Front 90

If the unemployment rate is 8 percent, this means:

Back 90

8 percent of the labor force is unemployed.

Front 91

In November 1995 the labor force in Aberdeen, South Dakota, was 14,800. There were 14,483 persons employed. The local unemployment rate:

Back 91

was 2.1 percent.

Front 92

Which of the following individuals would be consideredunemployed?

Back 92

none of the above

Front 93

If the population older than 16 years of age equals 150 million, the labor force equals 110 million, and the total number of persons employed equals 98 million, then the unemployment rate is:

Back 93

10.9 percent

Front 94

Which of the following is false?

Back 94

The labor force includes those people over the age of 14 who are either employed or unemployed.

Front 95

Suzie Homemaker works in her home as a full-time caretakerand homemaker. Officially, she is

Back 95

. not in the labor force

Front 96

When unemployment rises above the natural rate it reflectsthe existence of ____ unemployment.

Back 96

cyclical

Front 97

The term full employment implies an unemployment rate of:

Back 97

approximately 5%

Front 98

If the economy is operating at the natural rate ofunemployment, which of the following is essentially eliminated?

Back 98

cyclical unemployment

Front 99

In the typical CPI shopping basket, which of the categoriesbelow represents the largest percentage of consumer spending?

Back 99

housing

Front 100

The economy's inflation rate is the

Back 100

percentage change in the price level from the previous period.

Front 101

The CPI is a measure of the overall cost of the goods andservices bought by

Back 101

a typical consumer.

Front 102

In computing the consumer price index, a base year ischosen. Which of the followingstatements about the base year is correct?

Back 102

The value of the consumer price index is always 100 in the base year.

Front 103

The price index was 220 in one year and 260 in the nextyear. What was the inflation rate?

Back 103

18.2 percent

Front 104

. The market basket used to calculate the CPI in Aquiloniais 4 loaves of bread, 6 gallons of milk, 2 shirts, and 2 pairs of pants. In 2005, bread cost $1.00 per loaf, milk cost$1.50 per gallon, shirts cost $6.00 each, and pants cost $10.00 per pair. In 2006, bread cost $1.50 per loaf, milk cost$2.00 per gallon, shirts cost $7.00 each, and pants cost $12.00 per pair. Using 2005 as the base year, what wasAquilonia’s inflation rate in 2006?

Back 104

24.4 percent

Front 105

If the price index was 90 in year 1, 100 in year 2, and 95in year 3, then the economy experienced

Back 105

11.1 percent inflation between years 1 and 2, and 5 percent deflation between years 2 and 3.

Front 106

Which of the following statistics is usually regarded as thebest single measure of a society’s economic well-being?

Back 106

gross domestic product

Front 107

For an economy as a whole,

Back 107

income must equal expenditure.

Front 108

A farmer sells $50,000 of apples to individuals who takethem home to eat and $75,000 of apples to a company that uses them all toproduce cider. How much of the farmer’ssales will be included as apples in GDP?

Back 108

$50,000

Front 109

A steel company sells some steel to a bicycle company for$150. The bicycle company uses the steelto produce a bicycle, which it sells for $250. Taken together, these two transactions contribute

Back 109

$250 to GDP

Front 110

Gross domestic product adds together many different kinds of goods and services into a single measure of the value of economic activity. To do this, GDP makes use of

Back 110

market prices.

Front 111

In the economy of Ukzten in 2010, consumption was $500, exports were $200, GDP was $1200, government purchases were $250, and investment was $300. What were Ukzten’s imports in 2010?

Back 111

$50