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Principles of Microeconomics MCQ

When production reflects consumer preferences, ________ occurs.

Equity

Productive efficiency

Efficient central planning

Allocative efficiency.

Answer

Correct Answer: Allocative efficiency.

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A tax on suppliers will cause the schedule to shift .

Demand, right

Supply, left

Demand, left

Supply, right

Answer

Correct Answer: Supply, left

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In the simplest circular-flow model, households supply and demand .

Increase, decrease

Factors of production; goods and services

Increase, quantity demanded

The United States

Answer

Correct Answer: Factors of production; goods and services

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What is the definition of "specialization?"

The gradual development of peculiarities

A person who produces a distinct commodity

The act or process of producing a distinct commodity

A concentration of production effort into a single specific task

Answer

Correct Answer: A concentration of production effort into a single specific task

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What is a social insurance transfer?

A transfer payment that does depend on the income of the recipient.

A type of tax.

A good or service that is provided by the government.

A transfer payment that does not depend on the income of the recipient.

Answer

Correct Answer: A transfer payment that does not depend on the income of the recipient.

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Yield to maturity is ________.

The annual rate of return on a bond if the bond were held to maturity

The price of the bond

The interest rate

The coupon rate of return

Answer

Correct Answer: The annual rate of return on a bond if the bond were held to maturity

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What is the World Trade Organization?

An international organization that can mediate trade disputes.

A trade agreement between the U.S. and the U.K.

A U.N. organization

An agreement between the Soviet Union and the U.S.

Answer

Correct Answer: An international organization that can mediate trade disputes.

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What does yield measures?

The price of a bond

The coupon rate

The current yield

The annual rate of return on a bond if the bond were held to maturity.

Answer

Correct Answer: The annual rate of return on a bond if the bond were held to maturity.

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What is wage?

A sum of money paid regularly to someone for their work

The price of a good

The price of labor defined over a period of time worked.

A unit of measurement for length

Answer

Correct Answer: The price of labor defined over a period of time worked.

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What are variable costs?

Costs of production that vary with the quantity of production

Production that varies with the quantity of costs

Costs of production that do not vary with the quantity of production

The costs of production

Answer

Correct Answer: Costs of production that vary with the quantity of production

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Variable costs are otherwise known as what?

Opportunity costs

Sunk costs

Costs of production that vary with the quantity of production.

Economies of scale

Answer

Correct Answer: Costs of production that vary with the quantity of production.

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What is a unit-free measure?

A measure that does not depend on a unit of measurement.

A measure that is taken in multiple units of measurement.

A measure that is taken without a unit of measurement.

A measure that is taken with a unit of measurement.

Answer

Correct Answer: A measure that does not depend on a unit of measurement.

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What is unemployment insurance?

A program that makes payments to people who are unemployed.

A program that helps people find jobs.

A program that provides training for new jobs.

A program that makes payments to people who lose their jobs.

Answer

Correct Answer: A program that makes payments to people who lose their jobs.

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What does a tax bracket refer to?

The rate at which tax is paid on income.

A range of taxable income that is not taxed.

A range of taxable income that is taxed at the same rate.

The amount of tax owed.

Answer

Correct Answer: A range of taxable income that is taxed at the same rate.

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What is a tariff?

A Tax on imports

A country's 3-letter abbreviation

A fee charged by a company for its services

A measure of weight

Answer

Correct Answer: A Tax on imports

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What is a tangency point?

The only point in common for two curves; the point where the two curves just touch.

A point where two planes intersect

The highest or lowest point on a curve

A point where two lines intersect

Answer

Correct Answer: The only point in common for two curves; the point where the two curves just touch.

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What is tacit collusion?

An illegal agreement between two firms

An agreement between two firms in different industries

Implicit or unstated cooperation of firms to make mutually beneficial pricing or production decisions.

A secret agreement between two firms

Answer

Correct Answer: Implicit or unstated cooperation of firms to make mutually beneficial pricing or production decisions.

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What is the shift of the curve caused by?

A change in the position of a curve

A change in a variable not represented on either axis.

A change in a variable represented on either axis

A change in a curve

Answer

Correct Answer: A change in a variable not represented on either axis.

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What does the Sherman Antitrust Act do?

Establishes ballet as a major art form

Reduces anticompetitive behavior

Makes monopolizing illegal

Makes price fixing illegal

Answer

Correct Answer: Reduces anticompetitive behavior

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What is a scatter plot?

A graph which points in a Cartesian coordinate system represent the values of two variables.

A graph which does not represent the values of any variables.

The scattering of light

A graph which points in a Cartesian coordinate system represent the values of only one variable.

Answer

Correct Answer: A graph which points in a Cartesian coordinate system represent the values of two variables.

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What is sales tax?

A tax on the sale of land

A tax on the import or export of goods

A tax on the sale of goods and services

A type of excise tax that applies to total expenditures on a broad group of goods.

Answer

Correct Answer: A type of excise tax that applies to total expenditures on a broad group of goods.

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What is the real wage?

the word "real" has no bearing on the definition

The highest paid labor

The wage or price of labor NOT adjusted for inflation

The wage or price of labor adjusted for inflation

Answer

Correct Answer: The wage or price of labor adjusted for inflation

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What is the rate of technical substitution?

The rate at which one input must be substituted for another input to decrease the quality of production

The rate at which one input must be substituted for another input to reduce the production

The rate at which one input must be substituted for another input to maintain the same production

The rate at which one input must be substituted for another input to increase the production

Answer

Correct Answer: The rate at which one input must be substituted for another input to maintain the same production

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What is the rate of return?

The return on an asset stated as a percentage of the price of the asset.

A measure of an investment's performance

The percentage of an asset's current market value that was paid for the asset.

The return on an investment over a period of time.

Answer

Correct Answer: The return on an asset stated as a percentage of the price of the asset.

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What does ROR stand for?

Rate of return

Risk of return

Return on reinvestment

Realized on return

Answer

Correct Answer: Rate of return

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What is quantity supplied?

The quantity of a good that firms are willing to buy at a given price.

The quantity of a good that consumers are willing to sell at a given price.

The quantity of a good that consumers are willing to buy at a given price.

The quantity of a good that firms are willing to sell at a given price.

Answer

Correct Answer: The quantity of a good that firms are willing to sell at a given price.

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What is quantity demanded?

The quantity of a good that people are able to buy at a given price during a specific time period.

The quantity of a good that people are required to buy at a given price during a specific time period.

The quantity of a good that people want to buy at a given price during a specific time period.

The quantity of a good that people are willing to sell at a given price during a specific time period.

Answer

Correct Answer: The quantity of a good that people want to buy at a given price during a specific time period.

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What does a positive slope represent?

A slope of a curve that is undefined.

A slope of a curve that is less than zero, representing an inverse or indirect relationship between two variables.

A slope of a curve that is greater than zero, representing a positive or direct relationship between two variables.

A slope of a curve that is equal to zero, representing no relationship between two variables.

Answer

Correct Answer: A slope of a curve that is greater than zero, representing a positive or direct relationship between two variables.

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What is positive externality?

The situation in which benefits spill over onto someone who is not involved in producing or consuming the goods.

The situation in which benefits are shared only among those involved in producing the goods

The situation in which benefits are shared equally among those involved in producing or consuming the goods

The situation in which benefits are not shared equally among those involved in producing or consuming the goods

Answer

Correct Answer: The situation in which benefits spill over onto someone who is not involved in producing or consuming the goods.

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What is positive economics?

Economic analysis that explains what happens in the economy and why, without making recommendations about economic policy.

Economic analysis that explains what happens in the economy but not why it happens

Economic analysis that makes recommendations about economic policy

Economic analysis that explains why economic policy is necessary

Answer

Correct Answer: Economic analysis that explains what happens in the economy and why, without making recommendations about economic policy.

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What does portfolio diversification mean?

Not owning assets in order to limit exposure to risk.

Spreading the collection of assets owned in order to limit exposure to risk.

Spreading the collection of liabilities in order to limit exposure to risk.

Spreading the collection of assets and liabilities in order to limit exposure to risk.

Answer

Correct Answer: Spreading the collection of assets owned in order to limit exposure to risk.

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What is the piece-rate system?

A system by which workers are paid a specific amount per unit they produce.

A system by which workers are paid a specific amount per hour

A system by which workers are paid a specific amount per week.

A system by which workers are paid a specific amount per day

Answer

Correct Answer: A system by which workers are paid a specific amount per unit they produce.

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What is a personal income tax?

A tax on all forms of income an individual or household spends.

A tax on all forms of income an individual or household receives.

A tax on all forms of income an government receives.

A tax on all forms of income an individual or business receives.

Answer

Correct Answer: A tax on all forms of income an individual or household receives.

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What is the term for supply for which the price elasticity is zero?

Elastic supply

Perfectly elastic supply

Inelastic supply

Perfectly inelastic supply

Answer

Correct Answer: Perfectly inelastic supply

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What is the demand for which the price elasticity is zero called?

Perfectly elastic demand

Inelastic demand

Unit elastic demand

Perfectly inelastic demand

Answer

Correct Answer: Perfectly inelastic demand

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What is the elasticity of supply if it is perfectly elastic?

Infinite

-1

Answer

Correct Answer: Infinite

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What is perfectly elastic demand?

The price elasticity is inelastic

The quantity demanded does not change when the price changes

The price elasticity is inelastic to a certain point and then becomes elastic

Demand for which the price elasticity is infinite

Answer

Correct Answer: Demand for which the price elasticity is infinite

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What is a payroll tax?

A tax on the purchase of lottery tickets.

A tax on businesses.

A tax on the wages and salaries of individuals.

A tax on the tips given to waitstaff.

Answer

Correct Answer: A tax on the wages and salaries of individuals.

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What is Pareto efficient?

A situation in which it is not possible to make anyone better off

A situation in which it is not possible to make someone better off without making someone else worse off

A situation in which it is possible to make everyone better off

A situation in which it is possible to make someone better off without making someone else worse off

Answer

Correct Answer: A situation in which it is not possible to make someone better off without making someone else worse off

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What is Pareto efficiency?

A situation in which it is not possible to make someone better off without making someone else worse off.

A situation in which it is possible to make everyone better off

A situation in which it is not possible to make anyone better off

A situation in which it is possible to make someone better off without knowing who that person is

Answer

Correct Answer: A situation in which it is not possible to make someone better off without making someone else worse off.

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What is an oligopoly?

An industry characterized by few firms selling the same product with limited entry of other firms

An industry with many firms producing the same product

An industry with many small firms

A market with very little rivalry among firms

Answer

Correct Answer: An industry characterized by few firms selling the same product with limited entry of other firms

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What is a synonym for "negatively related"?

Unrelated

Inversely related

Directly related

Positively related

Answer

Correct Answer: Inversely related

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What does a negative slope represent?

A negative or inverse relationship between two variables

A slope of a curve that is equal to zero

A positive or direct relationship between two variables

A slope of a curve that is greater than zero

Answer

Correct Answer: A negative or inverse relationship between two variables

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What is a negative slope?

A curve that does not have a slope.

A slope of a curve that is less than zero, representing a negative or inverse relationship between two variables.

A slope of a curve that is equal to zero, representing no relationship between two variables.

A slope of a curve that is greater than zero, representing a positive or direct relationship between two variables.

Answer

Correct Answer: A slope of a curve that is less than zero, representing a negative or inverse relationship between two variables.

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What set of strategies is a Nash equilibrium?

A set of strategies from which no player would like to deviate unilaterally.

A set of strategies that are not currently being used.

A set of strategies that will lead to the best possible outcome.

A set of strategies that are fair to all players.

Answer

Correct Answer: A set of strategies from which no player would like to deviate unilaterally.

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What is the marginal social benefit?

It is the benefit from production of a good from the viewpoint of the marginal producer.

It is the benefit from production of a good from the viewpoint of society as a whole.

It is the marginal benefit from consumption of a good from the viewpoint of society as a whole.

It is the benefit from consumption of a good from the viewpoint of the marginal consumer.

Answer

Correct Answer: It is the marginal benefit from consumption of a good from the viewpoint of society as a whole.

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What is marginal social benefit?

The decrease in producer surplus that results from a decrease in the price of a good

The amount of satisfaction derived from consuming an additional unit of a good

The marginal benefit from consumption of a good from the viewpoint of society as a whole

The increase in total utility that results from consuming one more unit of a good

Answer

Correct Answer: The marginal benefit from consumption of a good from the viewpoint of society as a whole

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What is the marginal revenue product of labor?

The change in labor input due to a one-unit increase in total revenue, holding other inputs fixed

The change in total revenue due to a one-unit increase in capital input, holding other inputs fixed

The change in total revenue due to a one-unit increase in labor input, holding other inputs fixed

The change in labor input due to a one-unit increase in capital input, holding other inputs fixed

Answer

Correct Answer: The change in total revenue due to a one-unit increase in labor input, holding other inputs fixed

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What is the marginal revenue product of capital?

The change in total revenue due to a one-unit increase in capital.

A measure of how much revenue is generated for each unit of output.

The change in total revenue due to a one-unit increase in labor.

The change in total revenue due to a one-unit increase in land.

Answer

Correct Answer: The change in total revenue due to a one-unit increase in capital.

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What is marginal revenue?

The change in total revenue due to a one-unit increase in quantity produced.

The price of one more unit of a good

The total revenue of a good

The change in total revenue due to a one-unit increase in quantity sold.

Answer

Correct Answer: The change in total revenue due to a one-unit increase in quantity sold.

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What does MRS stand for?

Marginal Rate of Substitution

Maximum Rate of Substitution

Minimum Required Salary

Marginal Revenue Schedule

Answer

Correct Answer: Marginal Rate of Substitution

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What is the marginal product of labor?

The total product of labor

The average product of labor

The change in production due to a one-unit increase in labor input.

The change in production due to a one-unit increase in capital input.

Answer

Correct Answer: The change in production due to a one-unit increase in labor input.

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What is marginal private cost?

The marginal cost of production as viewed by the private firm or individual.

The cost of production associated with the firm's fixed factors of production.

The additional cost incurred by the firm to produce one more unit of output.

The cost that must be incurred by the firm to produce one more unit of output.

Answer

Correct Answer: The marginal cost of production as viewed by the private firm or individual.

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What is marginal private benefit?

The increase in producer surplus

The marginal benefit from consumption of a good as viewed by a private individual.

The increase in total costs

The increase in total benefits

Answer

Correct Answer: The marginal benefit from consumption of a good as viewed by a private individual.

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What is marginal cost pricing?

A way to encourage competition among firms

A regulatory method that stipulates that the firm charge a price that equals marginal cost.

A way to increase profits by reducing marginal costs

A method of pricing products to maximize revenue

Answer

Correct Answer: A regulatory method that stipulates that the firm charge a price that equals marginal cost.

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What is the marginal benefit?

There is no benefit from, or the willingness to pay for, one more unit of a good.

The benefit from, or the willingness to pay for, one more unit of a good.

The increase in the benefit from, or the willingness to pay for, one more unit of a good.

The decreased in the benefit from, or the willingness to pay for, one more unit of a good.

Answer

Correct Answer: The increase in the benefit from, or the willingness to pay for, one more unit of a good.

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What does "marginal benefit" refer to?

The increase in the benefit from one more unit of a good.

The increase in the cost of one more unit of a good.

The total benefit from consuming all units of a good.

The benefit from consuming one more unit of a good.

Answer

Correct Answer: The increase in the benefit from one more unit of a good.

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What are mandated benefits?

Benefits that a firm is required by law to provide to its shareholders

Benefits that a firm is not required by law to provide to its employees

Benefits that a firm is required by law to provide to the general public

Benefits that a firm is required by law to provide to its employees

Answer

Correct Answer: Benefits that a firm is required by law to provide to its employees

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What is Macroeconomics?

The branch of economics that focuses on the behavior of individuals and businesses

The branch of economics that examines the workings and problems of the economy as a whole—GDP growth and unemployment.

The study of money and its effects on the economy

The study of how scarcity and choice affect the allocation of resources

Answer

Correct Answer: The branch of economics that examines the workings and problems of the economy as a whole—GDP growth and unemployment.

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What does the term "labor intensive production" mean?

A production that requires a lot of manual labor.

A production that uses a relatively low level of capital per worker.

A production that is very easy to automate.

A production that requires very little labor.

Answer

Correct Answer: A production that uses a relatively low level of capital per worker.

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What is the labor demand?

The amount of labor that a firm requires.

The quantity of labor supplied.

The price of labor.

The relationship between the quantity of labor demanded by firms and the wage.

Answer

Correct Answer: The relationship between the quantity of labor demanded by firms and the wage.

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What does "labor abundant" mean?

A lower level of capital per worker in one country relative to another

More workers in one country relative to another

Higher wages in one country relative to another

A lower level of labor per worker in one country relative to another

Answer

Correct Answer: A lower level of capital per worker in one country relative to another

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What is the income effect?

The amount by which the quantity demanded falls because of the decline in real income from a price decrease.

The amount by which the quantity demanded rises because of the increase in real income from a price decrease.

The amount by which the quantity demanded falls because of the decline in real income from a price increase.

The amount by which the quantity demanded rises because of the increase in real income from a price increase.

Answer

Correct Answer: The amount by which the quantity demanded falls because of the decline in real income from a price increase.

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What does incentive regulation allow firms to do?

Set their own prices

Operate for several years

Keep additional profits or suffer losses

Only operate during the year

Answer

Correct Answer: Keep additional profits or suffer losses

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What is an incentive?

A device that decreases economic efficiency

A device that is not used to increase economic efficiency.

A device that does not motivate people to take action

A device that motivates people to take action, usually so as to increase economic efficiency.

Answer

Correct Answer: A device that motivates people to take action, usually so as to increase economic efficiency.

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What is the range of the Herfindahl-Hirschman index?

-500 to 10,500

0 to 100,000

500 to 11,000

0 to 10,000

Answer

Correct Answer: 0 to 10,000

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What does Head Start provide?

Day care and nursery school training for poor children

Training for early childhood educators

School-age child care

Grants for education

Answer

Correct Answer: Day care and nursery school training for poor children

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What is the Head Start program?

A government transfer program that provides day care and nursery school training for poor children.

A government program that provides food assistance for poor families

A government program that provides financial aid for students to attend college

A government program that helps small businesses get started

Answer

Correct Answer: A government transfer program that provides day care and nursery school training for poor children.

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What is game theory?

A programming language

A branch of applied mathematics with many uses in economics

A branch of sociology

A theory in psychology

Answer

Correct Answer: A branch of applied mathematics with many uses in economics

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What is meant by the gains from trade?

The payment made to engage in trade

Improvements in income, production, or satisfaction owing to the exchange of goods or services.

The benefits received from trade

The losses incurred from trade

Answer

Correct Answer: Improvements in income, production, or satisfaction owing to the exchange of goods or services.

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What is a firm?

An organization that produces goods or services.

A tightly woven fabric

A small, flat-bottomed boat

A person who makes or sells sweets

Answer

Correct Answer: An organization that produces goods or services.

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What is the Federal Trade Commission?

The government agency established to help enforce tax legislation in the United States

The government agency established to help enforce environmental legislation in the United States

The government agency established to help enforce antitrust legislation in the United States

The government agency established to help enforce trade legislation in the United States

Answer

Correct Answer: The government agency established to help enforce antitrust legislation in the United States

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Factor-price equalization is the equalization of the price of what across countries when they are engaging in free trade?

Wages and benefits

Labor and capital

Tariffs and quotas

Supply and demand

Answer

Correct Answer: Labor and capital

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What is economic profit?

A situation in which total revenue is less than total cost

The ability to produce more output with the same inputs

The difference between the market price and the equilibrium price

Total revenue minus total costs, where total costs include opportunity costs, whether implicit or explicit.

Answer

Correct Answer: Total revenue minus total costs, where total costs include opportunity costs, whether implicit or explicit.

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What is an economic model?

An explanation of how the economy or part of the economy works.

A diagram of the economy

A mathematical model of the economy

A physical model of the economy

Answer

Correct Answer: An explanation of how the economy or part of the economy works.

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What are economic interactions?

Interaction between economic agents

Economic activity

Exchanges of goods and services between people.

Interaction between economies

Answer

Correct Answer: Exchanges of goods and services between people.

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What does earnings refer to?

The amount of money a firm owes.

The accounting profits of a firm.

The value of a firm's assets

The wages of employees

Answer

Correct Answer: The accounting profits of a firm.

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What is the earned income tax credit?

A payment from the government to people with high income who work

A tax on people with low income

A payment from the government to people with low income who work

A rebate on taxes for people with high income who work

Answer

Correct Answer: A payment from the government to people with low income who work

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What is a demand curve?

A graph of quantity supplied and price

A graph of supply and price

A graph of quantity demanded and price

A graph of demand showing the downward-sloping relationship between price and quantity demanded.

Answer

Correct Answer: A graph of demand showing the downward-sloping relationship between price and quantity demanded.

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What is the definition of demand?

A relationship between price and quantity demanded.

The amount of a good or service remaining after consumers' demand is satisfied

Answer

Correct Answer: A relationship between price and quantity demanded.

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What is the term used to describe the relationship between price and quantity demanded?

Price elasticity of demand

Law of demand

Supply and demand

Demand

Answer

Correct Answer: Demand

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In a deferred payment contract, when is the worker paid more than the marginal revenue product?

When the worker dies

When the worker is old

When the worker is of retirement age

When the worker is young

Answer

Correct Answer: When the worker is old

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A debt contract is a contract in which the lender provides funds today in exchange for _____.

A promise from the borrower to repay that amount at some point in the future

A promise from the borrower to repay a different amount plus interest at some point in the future

A promise from the borrower to repay that amount plus interest at some point in the future

A promise from the borrower to repay that amount plus interest today

Answer

Correct Answer: A promise from the borrower to repay that amount plus interest at some point in the future

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What does deadweight loss refer to?

The loss in producer surplus due to an inefficient level of production.

The loss in producer and consumer surplus due to an inefficient level of production.

The loss in producer and consumer surplus due to a efficient level of production.

The loss in consumer surplus due to an inefficient level of production.

Answer

Correct Answer: The loss in producer and consumer surplus due to an inefficient level of production.

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What was the Clayton Antitrust Act passed in the United States?

To increase the powers of the Federal Trade Commission

To provide antitrust law

For the regulation of gemstone marketing

To prevent monopolies from forming through mergers.

Answer

Correct Answer: To prevent monopolies from forming through mergers.

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What is the definition of "choice"?

A synonym for the word

A selection among alternative goods, services, or actions

A method of picking something

The act of choosing something

Answer

Correct Answer: A selection among alternative goods, services, or actions

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What does ceteris paribus mean?

Holding all other things the same when one or more variables are changed

A Latin phrase meaning

Holding all other things the same when two or more variables are changed

Holding all other variables constant or keeping all other things the same when one variable is changed.

Answer

Correct Answer: Holding all other variables constant or keeping all other things the same when one variable is changed.

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What does the Latin phrase "ceteris paribus" mean?

"all other things being equal"

"the higher the better"

"first come, first served"

"the one with the most votes wins"

Answer

Correct Answer: "all other things being equal"

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What are the two perpendicular lines called in a Cartesian coordinate system?

Variables

Intervals

Axes

Points

Answer

Correct Answer: Axes

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What is the definition of "cartel"?

A group of consumers in the same industry who coordinate pricing and production decisions.

A group of wholesalers in the same industry who coordinate pricing and production decisions.

A group of producers in the same industry who coordinate pricing and production decisions.

A group of retailers in the same industry who coordinate pricing and production decisions.

Answer

Correct Answer: A group of producers in the same industry who coordinate pricing and production decisions.

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What is the basic principle of capitalism?

An economic system based on a command economy

An economic system based on a market economy in which capital is owned by the state

An economic system based on a market economy in which capital is individually owned

An economic system based on a centrally planned economy

Answer

Correct Answer: An economic system based on a market economy in which capital is individually owned

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What is capital loss?

The decrease in the value of an asset through a decrease in its price.

The decrease in the value of an asset through an increase in its price.

The increase in the value of an asset through a decrease in its price.

The increase in the value of an asset through an increase in its price.

Answer

Correct Answer: The decrease in the value of an asset through a decrease in its price.

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What is capital intensive production?

Production that uses a relatively low level of capital per worker.

Production that does not use any capital.

Production that uses a relatively high level of capital per worker.

Production that is labour intensive.

Answer

Correct Answer: Production that uses a relatively high level of capital per worker.

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What is capital gain?

The decrease in the value of an asset through an increase in its price.

The increase in the value of an asset through an increase in its price.

The increase in the value of an asset through a decrease in its price.

The decrease in the value of an asset through a decrease in its price.

Answer

Correct Answer: The increase in the value of an asset through an increase in its price.

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What is meant by "capital abundant"?

More labor available than capital.

The same level of capital per worker in one country as compared to another.

A lower level of capital per worker in one country relative to another.

A higher level of capital per worker in one country relative to another.

Answer

Correct Answer: A higher level of capital per worker in one country relative to another.

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What does the term "barriers to entry" refer to?

Something that makes it difficult for firms to enter a market.

A market with no potential entrants.

Anything that prevents firms from entering a market.

A market with few entrants.

Answer

Correct Answer: Anything that prevents firms from entering a market.

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What labor supply curve is shown in the situation where the income effect outweighs the substitution effect of an increase in the wage?

Inelastic labor supply curve

Backward-bending labor supply curve

Upward-sloping labor supply curve

Forward-bending labor supply curve

Answer

Correct Answer: Backward-bending labor supply curve

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What causes the labor supply curve to take on a negative slope?

An increase in the wage.

The income effect outweighs the substitution effect of an increase in the wage.

The substitution effect of an increase in the wage.

The income effect of an increase in the wage.

Answer

Correct Answer: The income effect outweighs the substitution effect of an increase in the wage.

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Adverse selection is a situation in which the people who choose to buy insurance will be the:

Neediest group in the population

Riskiest group in the population

Healthiest group in the population

Wealthiest group in the population

Answer

Correct Answer: Riskiest group in the population

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What is adverse selection?

A situation in which the people who choose to buy insurance will be the riskiest group in the population

A situation in which the people who choose to buy insurance will be the healthiest group in the population

A situation in which the people who choose to buy insurance will be the least risky group in the population

A situation in which the people who choose to buy insurance will be the average group in the population

Answer

Correct Answer: A situation in which the people who choose to buy insurance will be the riskiest group in the population

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What is a ad valorem tariff?

A tax on exports evaluated as a percentage of the value of the import

A tax on imports evaluated as a percentage of the value of the export

A tax on imports evaluated as a percentage of the value of the import

A tax on exports evaluated as a percentage of the value of the export

Answer

Correct Answer: A tax on imports evaluated as a percentage of the value of the import

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Which of the following is true about accounting profits?

Accounting profits are total revenue minus total costs.

Accounting profits include implicit opportunity costs.

Accounting profits are total revenue minus explicit costs.

Accounting profits are total revenue minus implicit opportunity costs.

Answer

Correct Answer: Accounting profits are total revenue minus total costs.

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What is the definition of accounting profits?

Accounting profits are total revenue minus total costs, where total costs include the implicit opportunity costs.

Accounting profits are total revenue minus total costs, where total costs exclude the implicit opportunity costs.

Accounting profits are total revenue minus explicit opportunity costs.

Answer

Correct Answer: Accounting profits are total revenue minus total costs, where total costs exclude the implicit opportunity costs.

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What is absolute advantage?

A person or country is equally efficient at producing a good in comparison with another person or country.

A person or country is more efficient at producing a good in comparison with another person or country.

There is no comparison between a person or country's efficiency at producing a good.

A person or country is less efficient at producing a good in comparison with another person or country.

Answer

Correct Answer: A person or country is more efficient at producing a good in comparison with another person or country.

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What is the ability-to-pay principle?

The view that everyone should pay the same amount in taxes regardless of income

The view that taxes should be based on how much someone consumes

The view that those with less income should pay more in taxes than those with more income

The view that those with greater income should pay more in taxes than those with less income.

Answer

Correct Answer: The view that those with greater income should pay more in taxes than those with less income.

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Principles of Microeconomics MCQ

When production reflects consumer preferences, ________ occurs.

A tax on suppliers will cause the ________ schedule to shift ________.

In the simplest circular-flow model, households supply ________ and demand ________.

What is the definition of "specialization?"

What is a social insurance transfer?

Yield to maturity is ________.

What is the World Trade Organization?

What does yield measures?

What is wage?

What are variable costs?

Variable costs are otherwise known as what?

What is a unit-free measure?

What is unemployment insurance?

What does a tax bracket refer to?

What is a tariff?

What is a tangency point?

What is tacit collusion?

What is the shift of the curve caused by?

What does the Sherman Antitrust Act do?

What is a scatter plot?

What is sales tax?

What is the real wage?

What is the rate of technical substitution?

What is the rate of return?

What does ROR stand for?

What is quantity supplied?

What is quantity demanded?

What does a positive slope represent?

What is positive externality?

What is positive economics?

What does portfolio diversification mean?

What is the piece-rate system?

What is a personal income tax?

What is the term for supply for which the price elasticity is zero?

What is the demand for which the price elasticity is zero called?

What is the elasticity of supply if it is perfectly elastic?

What is perfectly elastic demand?

What is a payroll tax?

What is Pareto efficient?

What is Pareto efficiency?

What is an oligopoly?

What is a synonym for "negatively related"?

What does a negative slope represent?

What is a negative slope?

What set of strategies is a Nash equilibrium?

What is the marginal social benefit?

What is marginal social benefit?

What is the marginal revenue product of labor?

What is the marginal revenue product of capital?

What is marginal revenue?

What does MRS stand for?

What is the marginal product of labor?

What is marginal private cost?

What is marginal private benefit?

What is marginal cost pricing?

What is the marginal benefit?

What does "marginal benefit" refer to?

What are mandated benefits?

What is Macroeconomics?

What does the term "labor intensive production" mean?

What is the labor demand?

What does "labor abundant" mean?

What is the income effect?

What does incentive regulation allow firms to do?

What is an incentive?

What is the range of the Herfindahl-Hirschman index?

What does Head Start provide?

What is the Head Start program?

What is game theory?

What is meant by the gains from trade?

What is a firm?

What is the Federal Trade Commission?

Factor-price equalization is the equalization of the price of what across countries when they are engaging in free trade?

What is economic profit?

What is an economic model?

What are economic interactions?

What does earnings refer to?

What is the earned income tax credit?

What is a demand curve?

A tax on suppliers will cause the schedule to shift .

In the simplest circular-flow model, households supply and demand .