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Exam 1: The Economic Approach

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Question 71

Multiple Choice

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Which of the following is most clearly consistent with the basic postulate of economics regarding the reaction of people to a change in incentives.

A) Farmers produce fewer bushels of wheat in response to an increase in the price of wheat.
B) People will buy more milk at a price of $2 per gallon than at $1 per gallon.
C) People will buy less gas if the price of gas increases by $.20 per gallon.
D) People will consume more beef if the price increases from $1 to $2 per pound.

E) None of the above
F) B) and C)

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Question 72

Multiple Choice

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In economics, man-made resources such as tools, equipment, and structures that are used to produce other goods and services are referred to as

A) consumer goods.
B) capital.
C) marginal goods.
D) infrastructures.

E) B) and C)
F) A) and D)

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Question 73

Multiple Choice

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Deciding how to make the best use of limited resources to satisfy virtually unlimited wants is known in economics as

Given the current structure of the Social Security and Medicare programs, the retirement of the baby boom generation during the years following 2012 will be most likely to

What percentage of federal spending was financed by borrowing during 2009-2010?

The share of the personal income tax paid by the bottom half of earners

The economic way of thinking is

Andre, a wheat farmer, is deciding whether or not to add fertilizer to his crops. If he adds 1 pound of fertilizer per acre, the value of the resulting crops rises from $80 to $100 per acre. According to marginal analysis, Andre should add fertilizer if it costs less than

A restaurant offers an "all you can eat" meal for $9. Tyrone has eaten three servings and is trying to decide whether or not to go back for a fourth. The economic way of thinking suggests that Tyrone should go back for the fourth serving if and only if

When the Hometown football team is winning by a lot of points after halftime, they often play their second and third team players. One of the coaches notices that when the third team plays that Hometown wins by a bigger margin than when just the first team plays. He recommends that the third team see more playing time as a result. What is wrong with his way of thinking?

When economists say a good is scarce, they mean

How has the share of the personal income tax paid by the top 1 percent of earners and the bottom half of earners changed during the last four decades?

Every economy must ration goods in some way because of

As government becomes larger and larger as a share of the economy, economic growth is likely to decline because

In economics the term utility refers to

Which of the following most clearly distinguishes between positive and normative economics?

If you win the lottery this would be great for you, but if everyone simultaneously won the lottery this wouldn't be nearly as good, why?

People are willing to pay more for a diamond than for a bottle of water because

If a decision maker uses marginal analysis, then the relevant costs are the

Legislation to protect red-cockaded woodpeckers created incentives that resulted in premature harvesting of trees the woodpeckers like to nest in. This is an example of which of the following?