Deck 31: (AP) Macroeconomics: Part B

Question 1

Economics is the study of how people:

A)Allocate societal resources by purchasing goods and services
B)Gain access to local and foreign markets
C)Produce goods and services at the lowest production costs
D)Make profits and reduce unemployment

Answer 1

Allocate societal resources by purchasing goods and services

Question 2

Economic pundits are predicting that local construction markets will most likely experience an increase in steel prices of nearly 20% in a coming 48 months. This is due to a shortage of available steel which will not be enough for all the needs of projected construction companies. What is this an example of?

A)Uncontrolled greed
B)Under-planning
C)Scarcity
D)Over-consumption

Answer 2

Scarcity

Question 3

In lowest income neighborhood grocery stores, consumers are limited to one or two breakfast cereals that they can purchase. This is a limitation in:

A)Caloric variety
B)Choice
C)Opportunity
D)Over-consumption

Answer 3

Choice

Question 4

What is the main difference between the two sub disciplines in economics: microeconomics and macroeconomics?

A)Microeconomics studies goods, while macroeconomics studies services.
B)Microeconomics studies individuals, while macroeconomics studies corporations.
C)Microeconomics studies allocation of resources, while macroeconomics studies economies as a whole.
D)Microeconomics studies local markets, while macroeconomics studies international markets.

Question 5

Alchem factories are offered competitive pricing by two competing processors of raw goods. Managers at the factory opt for the first company based on price, despite the second company offering free shipping. The value given up in shipping costs is an example of a(n):

A)Opportunity incentive
B)Substitute cost
C)Substitute incentive
D)Opportunity cost

Question 6

Which of the following questions is not likely to result from positive economics?

A)How much will a new shipping tax increase oil prices?
B)Will an increase in health insurance premiums lower wages in mid-sized companies?
C)Should the state increase the eligibility bracket for workers' compensation?
D)Why is the price of free chlorine $8.50 per container?

Question 7

Comparative advantage is the ability to produce a specific good or service at:

A)Lower opportunity cost
B)Higher opportunity cost
C)Lower tax threshold
D)Higher tax threshold

Question 8

In a competitive market, the prices of goods and services are determined by ­­­­­­­­­­_________ from consumers and _______ from producers.

A)Demand; supply
B)Supply; opportunity
C)Supply; demand
D)Demand; opportunity

Question 9

A software company manager assigns new roles within an Enterprise Resource Planning project according to recent training and acquired skills. This type of task assignment is referred to as:

A)Generalization
B)Specialization
C)Capitalism
D)Opportunity

Question 10

In a legislative meeting designed to investigate new standard of living changes, a number of politicians contemplating whether there should be an increase in minimum wages or a provision of small business tax cuts. This is an example of:

A)Trickle down economics
B)Positive economics
C)Normative economics
D)Negative economics

Question 11

To illustrate an economic model such as the one predicting real GDPs, the following are used except:

A)Graphs
B)Tables
C)Equations
D)Case studies

Question 12

In early assumptions about how individuals utilize time, the following two options were stated:

A)Study and domestics
B)Labor and domestics
C)Labor and leisure
D)Leisure and study

Question 13

Middle class families, on average, earn $60K per annum before taxes are deducted. When state and federal taxes are directly removed from personal income, the remaining is referred to as:

A)Gross income
B)Disposable income
C)Labor income
D)Domestic income

Question 14

Employees at the Jackson factory have been given a substantial income raise of over 5%. As a result, the real income of these employees has risen which leads directly to an increase in the consumption of goods. What is this effect referred to?

A)Spending effect
B)Thrift effect
C)Growth effect
D)Income effect

Question 15

In a free-market economy, the price of rice following a surplus is likely to:

A)Increase
B)Decrease
C)Remain unchanged
D)Require intervention

Question 16

According to a demand curve, the prices of goods and services are determined given quantities. The following are determinants of consumer demand except:

A)Consumer tastes
B)Availability of substitute goods
C)Distribution of income
D)Market speculation

Question 17

The following are advantages of a free-market economy except:

A)Restricted transmission of information between consumers and producers
B)Lack of costly red tape and bureaucracy
C)Built-in incentives for efficiency
D)Competitive producers respond to consumer wishes

Question 18

In recent years, Microsoft has been accused of unfair competitive practices and an unequal access to consumers. Another negative consequence of the free-market economy is:

A)Reduced pricing due to increased consumer choice
B)Global competition
C)Lack of adherence to social and environmental goals
D)Supplies' shortages

Question 19

Local retailers in a small Midwestern city have been accused of price stickiness despite the recent availability of cheaper imports. The following are reasons behind price stickiness except:

A)Imperfect information
B)Money illusion
C)Local bias
D)Menu costs

Question 20

According to economists, goods and services reach an equilibrium in reaction to consumer demands and producer supplies. The following are factors that determine price fluctuations except:

A)Product lifecycle
B)Wage stickiness
C)Competition
D)Cost & demand information

Question 21

The luxury clothing market is known to be especially vulnerable to economic recessions as people curtail spending on expensive non-essentials. Some luxury clothing retailers resort to selling these same goods at outlet markets in an effort to lure customers who are unwilling or unable to pay. This is an example of:

A)First degree price discrimination
B)Price stickiness
C)Second degree price discrimination
D)Demand-pull inflation

Question 22

The following are conditions necessary for companies to institute price discrimination except:

A)Ability to set one's prices
B)Lack of competition
C)Separate markets
D)Demand elasticity

Question 23

Prices for goods and services depend largely on the product's lifecycle. Which is the correct stage progression in a product's lifecycle?

A)Launch maturity
Decline
B)Growth proliferation
Maturity
Decline
C)Growth maturity
Decline
D)Launch growth
Maturity
Decline

Question 24

Prescription drug retailers typically offer lowered prices for seniors in order to keep and maintain their loyalty. What is this practice called?

A)Second degree price discrimination
B)Third degree price discrimination
C)Fourth degree price discrimination
D)Price stickiness

Question 25

The following are different types of market structures except:

A)Perfect competition
B)Monopoly
C)Oligopoly
D)Imperfect competition

Question 26

The short term aggregate supply curve slopes upwards due to these reasons except:

A)Worker misperception
B)Market saturation
C)Imperfect information
D)Sticky wage

Question 27

Echo Energies is a gas company facing increasing shipment costs in the new fiscal year. To maximize its profits in the short run when costs are less than market prices, they should:

A)Increase production
B)Decrease production
C)Layoff employees
D)Renegotiate loans

Question 28

Price Elasticity of Demand (PED) illustrates how well quantities of goods and services demanded by consumers respond to changes in prices. The following are determinants of PED except:

A)Income percentage spent on goods
B)Availability of substitute goods and services
C)Decreased choice
D)Time period

Question 29

In any given economic system, the function of money is to be a:

A)Medium of exchange
B)Tool for the wealthy classes
C)Tool for the oligopoly
D)Medium of competitive qualities

Question 30

According to the Demand for Money (Md) curve above, as the rate of interest falls, demand for money:

A)Decreases rapidly
B)Plateaus
C)Increases
D)Decreases slowly

Question 31

In the quantity theory of money, what does the (P) stand for as seen in the equation MV = PY?

A)Period
B)Peak
C)Product
D)Price

Question 32

Bonds are IOUs or certificates of debts between lenders and borrowers. The following are characteristics of bonds except:

A)Term
B)Profit margin
C)Credit risk
D)Tax treatment

Question 33

The following includes components of the money supply except:

A)Coin
B)Assets
C)Currency
D)Demand deposits

Question 34

The loanable funds _______ brings savers and borrowers together to finance expenditures.

A)Process
B)Market
C)Portfolio
D)Legislation

Question 35

The figure shown depicts a shift in investment (Q0 to Q1) demand by consumers in response to a decrease in interest rates (r0 to r1). What does this shift indicate about consumers' business confidence?

A)Insufficient information available
B)No change in business confidence
C)Decrease in business confidence
D)Increase in business confidence

Question 36

The market for loanable funds is represented by the equation S = I + NCO. What does NCO stand for?

A)National credit output
B)National capital outflows
C)Net credit output
D)Net capital outflows

Question 37

MBC Electronics is a strong-performing firm that has reported high profits in 10 consecutive quarters. Investors, however, see merit in a merge with a larger manufacturer to offset the competitive force of nation-wide chains. This merger is an example of a(n):

A)External expansion
B)Vertical integration
C)Internal expansion
D)Management integration

Question 38

Small companies represent a significant component of the United States economy. The following are the benefits of running a small company except:

A)Quality of service
B)Maintaining low overhead
C)Easily gaining economies of scale
D)Production efficiency

Question 39

Johnson & Johnson managers have shifted production from an aloe vera based hand cream to an oat based one. The cost of the shift has increased by 12%. What is this phenomenon referred to as?

A)Law of increasing costs
B)Law of decreasing sales
C)Product diversification
D)Product integration

Question 40

The main difference between nominal and real interest rates is that the latter accounts for:

A)Lenders' fees
B)International tariffs
C)Competition
D)Inflation

Question 41

Fiscal policy is the use of _________ intervention as a tool to influence economic decisions and outcomes.

A)Private enterprise
B)Federal reserve
C)Central bank
D)Government

Question 42

The city of Newark, New Jersey has instituted strict rent control since the 1960s in a number of neighborhoods. Rent control is an example of:

A)Minimum pricing
B)Price ceilings
C)Collective bargaining
D)Demand inelasticity

Question 43

In Rhode Island, the minimum hourly wage that can be paid to someone above the age of 14 is $6.50. Minimum wage is an example of:

A)Government hegemony
B)Fiscal responsibility
C)Social engineering
D)Price floor

Question 44

Welfare economics is the field of study that examines how:

A)The government develops monetary policies
B)Poor people are given money for food and rent
C)Banks are offered bailout in the case of mortgage defaults
D)The allocation of resources impacts economic well-being

Question 45

Rogers Communication has over a dozen products in various stages of development at any given time. For these products, nearly half will have patents before the testing stage. These patents are considered:

A)Intangible debts
B)Tangible debts
C)Intangible assets
D)Tangible assets

Question 46

The theory of efficiency wages states that workers and companies perform more efficiently when wages are ________.

A)Inflation adjusted
B)Above equilibrium
C)Government legislated
D)Union supported

Question 47

Productivity refers to the quantity of goods and services that a worker can produce from each hour of work. The following factors affect productivity except:

A)Physical capital
B)Natural resources
C)Manufacturing base
D)Technological knowledge

Question 48

What are the two types of return effects of human capital?

A)Private; external
B)Private; internal
C)Public; external
D)Public; internal

Question 49

Human capital as an investment is seminal to the economic growth of a country. The following are characteristics of human capital except:

A)It is productive and produced
B)It is inversely proportional to education
C)It earns returns on the investment
D)It is subject to depreciation

Question 50

Which of the following describes one of the main problems within a command economy?

A)One person is in ownership of most of the resources used in production
B)No one person owns the resources used in production
C)The incremental way that economic decisions are made
D)The fact that the government is the primary decision maker

Question 51

What is the term that economists use to refer to the small changes that are made in regard to economic policy and life?

A)Incentives
B)Production possibilities curve
C)Marginal analysis
D)Specialization

Question 52

Which of the following items is a determinant of demand?

A)Expectations of consumers
B)Incomes of consumers
C)Consumers' preferences and tastes
D)All of the above

Question 53

What is the correct formula for determining the price elasticity of demand?

A)Divide the percentage change in price by the percentage change in quantity demanded
B)Divide the unit elasticity by the percentage change in price
C)Divide the percentage change in quantity demanded by the percentage change in price
D)Subtract the change in price from the change in quantity demanded

Question 54

Which of the following is not one of the factors that determine whether or not the demand for a particular good is elastic or inelastic in respect to the price?

A)How much of a consumer's budget is spent on the good
B)How much the good costs
C)Whether the good being bought is a luxury item or a necessity
D)If close substitutes for the good are available

Question 55

If you are looking at costs of inputs that change with the amount of output that is produced, are these costs fixed or variable?

A)Fixed
B)Variable

Question 56

Which of the following terms refers to a situation within industry in which there is only truly one seller for a particular service or good?

A)Competitive market
B)Price discrimination
C)Monopoly
D)Oligopoly

Question 57

What is the name for the practice of selling at different prices in different markets?

A)Regulated monopoly
B)Price discrimination
C)Barrier to entry
D)Perfect competition

Question 58

If Bread A and Bread B are substitutes for each other, which of the following things would cause the price of Bread B to rise?

A)The price of Bread A rising
B)The price of Bread B falling
C)A decrease in grocery taxes
D)A new nutritional study explaining that bread is a major contributor to obesity

Question 59

If a business is operating under perfect competition, which of the following calculations would be used to determine the marginal revenue product?

A)MRP = MP x Q
B)MRP = MP/P
C)MRP = MP x P
D)MRP = MP P

Question 60

What is it called when there is a situation in which it is too costly to prevent people who refuse to pay from enjoying the benefits of a good or a service?

A)An externality
B)Inelastic
C)Rationing
D)Non-exclusion

Question 61

If Mike says that "price is no object" when re-decorating his house, what is his likely demand curve for purchasing the items he is using to redecorate?

A)Horizontal
B)Vertical
C)Inelastic
D)Both B and C

Question 62

Costs are minimized when all of the marginal products of all the inputs are _________.

A)Increasing
B)Decreasing
C)Equal
D)Zero

Question 63

If the price of a particular good is zero, a consumer of the good will consume until the total utility reaches zero.

Question 64

Fae is a nutritionist who typically charges her clients $150 per hour of nutritional consulting. Fae leaves her office early to buy her children some Christmas presents. Fae spends three hours at the mall and leaves with two stuffed animals that cost $25 each. How much did the gifts actually cost Fae?

A)$50
B)$450
C)$500
D) $$200

Question 65

________ is investment in people, like training and education.

A)Compensating differentials
B)Human capital
C)Capital
D)Productivity

Question 66

What was passed by Congress in 1890 to strictly limit monopoly power, prohibiting things like separation markets and fixing prices with intent to gain?

A)The Clayton Act
B)The Federal Trade Commission Act
C)The Sherman Antitrust Act
D)None of the above

Question 67

Which of the following is not one of the classifications used for taxes?

A)Excludable
B)Progressive
C)Regressive
D)Proportional

Question 68

Suppose that a unit of labor costs $20 per hour. The price of the product being made costs $4 per unit. If this is the case, how much must a worker produce in each hour to obtain a marginal revenue product of $60?

A)15
B)80
C)3
D)10

Question 69

What is it called when a single firm has market power in the labor market?

A)Oligopoly
B)Monopoly
C)Monopsony
D)Imperfect competition

Question 70

Which kind of government features a goal of fair distribution of wealth and wages that are negotiated between managers and trade unions?

A)Communism
B)Capitalism
C)Socialism
D)Monarchy

Question 71

Which of the following is the correct term used for an artificial cap on the price of a good?

A)Price floor
B)Price ceiling
C)Maximum input
D)Minimum wage

Question 72

Which of the following is found by adding the marginal utility value that is gained from each additional unit that is consumed?

A)Consumer surplus
B)Elasticity
C)Proportion of income spent on a good
D)Total utility

Question 73

___________ simply means the level of responsiveness to various changes within the economic system.

A)Proportion
B)Supply
C)Elasticity
D)Demand

Question 74

What occurs when resources within the market are not adequately or optimally distributed?

A)Marginal factor cost
B)Bilateral monopoly
C)Inelasticity
D)Market failure

Question 75

Margene owns a cupcake shop. Every time she frosts another cupcake, she uses $0.32 worth of sugar. For Margene, the cost of frosting a cupcake is a component of which of the following?

A)Marginal cost
B)Total costs
C)Total variable costs
D)All of the above

Question 76

What is the concentration ratio for a monopoly?

A)100
B)10
C)0
D)Impossible to determine with the given information

Question 77

What is the correct term used to describe a group of firms that act in unison in order to set price and output for goods in the market?

A)Oligopoly
B)Cartel
C)Monopoly
D)Barrier to entry

Question 78

What is the difference between the very maximum price that a consumer might be willing to pay and the price the consumer actually pays?

A)Consumer advantage
B)Double counting
C)Consumer surplus
D)Discount rate

Question 79

What is the type of good for which there is actually more demand as a person's income rises?

A)Private good
B)Public good
C)Substitute good
D)Normal good

Question 80

What happens if the demand for oranges increases, but the supply of oranges decreases?

A)The price and quantity will both increase
B)The price and quantity will both decrease
C)The price will increase, but the quantity will decrease
D)The price will increase, but it cannot be determined what will happen to the quantity