(TCO 1) Opportunity cost is best defined as….

(TCO 1) Opportunity cost is best
defined as (Points : 4)
marginal cost minus marginal benefit.
the time spent on an economic activity.
the value of the best forgone alternative.
the money cost of an economic decision.

Question 2.2. (TCO1) Which of the following is considered to be an
entrepreneur? (Points : 4)
Self-employed person
MBA graduate hired by a firm to be its CEO
Production-line worker
Customer of a firm

Question 3.3. (TCO1) A point outside the production possibilities curve is
(Points : 4)
attainable, but there is not full employment.
attainable, but there is not optimal allocation.
unattainable because the economy is inefficient.
unattainable because of limited resources.

Question 4.4. (TCO1) A basic characteristic of a command system is that (Points
: 4)
wages paid to labor are higher.
government owns most economic resources.
free markets are never permitted in a command economy.
government planners play a limited role in deciding what goods will be
produced.

Question 5.5. (TCO 2) Which is consistent with the law of demand? (Points : 4)
A decrease in the price of tacos causes no change in the quantity of tacos
demanded.
An increase in the price of pizza causes an increase in the quantity of pizza
demanded.
An increase in the price of hamburgers causes a decrease in the quantity
of hamburgers demanded.
A decrease in the price of turkey sandwiches causes a decrease in the
quantity of turkey sandwiches demanded.

Question 6.6. (TCO 2) What combination of changes would most likely decrease the
equilibrium price? (Points : 4)
When supply decreases and demand increases
When demand increases and supply increases
When demand decreases and supply decreases
When supply increases and demand decreases

Question 7.7. (TCO 2) Chuck Grim has a price elasticity of demand for beer of
1.2. Suppose that the price of beer is increased by 10 percent. What will
happen to the total amount Chuck spends on beer? (Points : 4)
It will not change.
It will decrease.
It will increase.
It is impossible to tell.

Question 8.8. (TCO 2) Which of the following factors will make the demand for a
product relatively elastic? (Points : 4)
There are few substitutes.
The time interval considered is long.
The good is considered a necessity.
Purchases of the good require a small portion of consumers’ budgets.

Question 9.9. (TCO 2) Which is true for a purely competitive firm in short-run
equilibrium? (Points : 4)
The firm is making only normal profits.
The firm’s marginal cost is greater than its marginal revenue.
The firm’s marginal revenue is equal to its marginal cost.
A decrease in output would lead to a rise in profits.

Question 10.10. (TCO 2) Which would definitely not be an example of price
discrimination? (Points : 4)
A theater charges children less than adults for a movie.
Universities charge higher tuition for out-of-state residents.
A doctor charges for services according to the income of patients.
An electric power company charges less for electricity used during
off-peak hours when production costs are lower.

Question 11.11. (TCO 3) A major reason that firms form a cartel is to (Points :
4)
reduce the elasticity of demand for the product.
enlarge the market share for each producer.
minimize the costs of production.
maximize joint profits.

Question 12.12. (TCO 3) In the short run, output (Points : 4)
is absolutely fixed.
can vary as the result of using a fixed amount of plant and equipment
more or less intensively.
may be altered by varying the size of plant and equipment which now exist
in the industry.
can vary as the result of changing the size of existing plants and by new firms
entering or leaving the industry.

Question 13.13. (TCO 4) Which phase of the business cycle would be most closely
associated with an economic contraction? (Points : 4)
Peak
Recession
Trough
Recovery

Question 14.14. (TCO 4) In calculating the unemployment rate, part-time workers
are (Points : 4)
counted as unemployed because they are not working full-time.
counted as employed because they are receiving payment for work.
used to determine the size of the labor force, but not the unemployment
rate.
treated the same as “discouraged” workers who are not actively
seeking employment.

Question 15.15. (TCO 4) To avoid multiple counting in national income accounts
(Points : 4)
only final goods and services should be counted.
intermediate goods and services should be counted.
both final and intermediate goods and services should be counted.
primary, intermediate, and final goods an