Microeconomics-9th-Edition-Parkin-Test-Bank.pdf

Parkin9e_MicTB1_TP_v1.qxd:Layout 1 3/16/09 3:14 PM Page 1 Test Bank 1 Chapters 1-7 to accompany Mark Rush Michael Parkin University of Florida University of Western Ontario Constantin Ogloblin Karen Gebhardt Georgia Southern University Colorado State University Nora Underwood University of Central Florida ly s on aw . se t l to py is ’u h Pearson Addison-Wesley rs rig uc o rk tr S c o ns U s w Boston San Francisco New York r i y hi London Toronto Sydney Tokyo Singapore Madrid fo d b T Mexico City Munich Paris Cape Town Hong Kong Montreal is e d ect an rot p Parkin9e_MicTB1_TP_v1.qxd:Layout 1 3/16/09 3:14 PM Page 2 This work is protected by United States copyright laws and is provided solely for the use of instructors in teaching their courses and assessing student learning. Dissemination or sale of any part of this work (including on the World Wide Web) will destroy the integrity of the work and is not permit- ted. The work and materials from it should never be made available to students except by instructors using the accompanying text in their classes. All recipients of this work are expected to abide by these restrictions and to honor the intended pedagogical purposes and the needs of other instructors who rely on these materials. Senior Editor: Adrienne D’Ambrosio Developmental Editor: Deepa Chungi Editorial Assistant: Laura Murphy Production Editor: Alison Eusden Manufacturing Buyer: Carol Melville Copyright© 2010 Pearson Education, Inc., 75 Arlington Street, Boston, MA 02116. Pearson Addison-Wesley. All rights reserved. Printed in the United States of America. This publication is protected by copyright and permission should be obtained from the publisher prior to any prohibited reproduction, storage in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise. For information regarding permission(s), write to: Rights and Permissions Department. This work is protected by United States copyright laws and is provided solely for the use of instructors in teaching their courses and assessing student learning. Dissemination or sale of any part of this work (including on the World Wide Web) will destroy the integrity of the work and is not permitted. The work and materials from it should never be made available to students except by instructors using the accompa- nying text in their classes. All recipients of this work are expected to abide by these restrictions and to honor the intended pedagogical purposes and the needs of other instructors who rely on these materials. Pearson Addison-Wesley™ is a trademark of Pearson Education, Inc. 1 2 3 4 5 6 OPM 12 11 10 09 ISBN-13: 978-0-321-60714-0 ISBN-10: 0-321-60714-7 P r e f a c e „ Introduction „ Ninth Edition Revisions This book is one of six test banks, each carefully crafted We have made substantial revisions in preparing the to be part of the most complete package of test banks test banks for the Ninth Edition: ever offered to support a beginning economics text- ♦ An important innovation is the inclusion of “News book. Three of the test banks are designed to accom- based multiple choice questions.” These questions pany Michael Parkin’s Microeconomics, Ninth Edition feature either a brief news story before the question and three accompany Michael Parkin’s Macroeconomics, or else a sentence or two sketching out an event in Ninth Edition. The complete set of six books com- the real world. The following question(s) are then prises Microeconomics Test Bank, Volumes I, II, and III based on these real-world events. These questions and Macroeconomics Test Bank, Volumes I, II, and III. will help give your students practice in applying Volume 1 of the Microeconomics Test Bank contains what they are learning to the events and issues they questions from Chapters 1 through 7; volume 2 con- see around them. tains questions from Chapters 8 through 13; and vol- ♦ The questions have all been classified using ume 3 contains questions from Chapters 14 through AACSB standards. 20. Volume 1 of the Macroeconomics Test Bank con- tains questions from Chapters 1 through 5; volume 2 ♦ All the questions have been reviewed to ensure contains questions from Chapters 6 through 9; and consistency with the text as well as clarity for the volume 3 contains questions from Chapters 10 through students. Questions dealing with material elimi- 15. nated from the ninth edition of the textbook were deleted and a large number of new questions were „ Test Bank Principles added to cover both the new as well as the old top- ics in the ninth edition. Three principles guided the writing and revising of the questions: ♦ The artwork was reviewed and changed to remain consistent with the ninth edition of the textbook. ♦ The questions should be “fail-safe” insofar as the topic of the questions has been explained in the ♦ To the greatest extent possible, the questions have textbook. been ordered so that they follow the order the ma- terial is presented in the corresponding textbook ♦ A question should not be a guessing game forcing chapter. If you assign only part of a chapter to the the students to puzzle out what the question asks. students, it will be easy to select questions from ♦ An instructor must be absolutely secure in the that specific part. knowledge that each question contains material ♦ Though not strictly a new revision, it remains covered in the textbook. worthwhile to note that the test banks are available I endeavored to insure that all questions meet all the in a user-friendly computerized test bank. criteria so that they are, as Donald Dutkowsky put it, “bullet proof.” III there also are multiple choice questions that are either „ Final Comments the same as or else closely related to the questions in the Study Guide and on the MyEconLab student website I have been teaching principles classes for over two decades. Nonetheless. tions. Taken together. they may also be given to the students and used as topic. Kalich of Baldwin-Wallace College also features essay questions.IV PREFACE „ Multiple Choice Questions In this fashion. it will be easy to do so. These are practical ques. I am sure that the cludes a new style of questions. I think the best way to view these questions questions first. Each of these questions is identified as to several teaching awards. In addition to questions drawn directly from the text. and questions dealing with a figure third. . While creat- ing on what they have been studying. I have edited the ques- tions to ensure that each conformed with the writing For each chapter there are 3 to 5 extended problems.” These questions feature a brief news clip or a sentence with some news or facts and then question(s) Just as Sir Isaac Newton stood on the shoulders of the based on that information.“News Based Ques. so. you have the means to “reward” count of the number of times that I marveled at a ques- students who are using them by asking questions draw- tion and wished that I had thought of it. These questions have been same order that the topics appear in the textbook. I was stunned by its source. longer ques- carefully crafted for maximum student comprehension. this edition in. style established in the book because this style has been These questions. tions already in the textbook. them: ♦ Peter von Allmen of Moravian College The questions in each section of the chapter are based ♦ Sue Bartlett of the University of South Florida on the material covered only in that section. ing this test bank took significantly more effort than As mentioned in the revisions section. These sections feature questions that are ♦ Leo Chan of the University of Kansas drawn from material covered in more than one chapter ♦ Carol Dole of Jacksonville University in each Part. followed by the nu. are. the essay ques. These questions can be used on exam. ♦ Sang Lee of Southeastern Louisiana University ing questions. there are nearly 15. If you have assigned these student supple- the quality of the questions in the test banks. preparing an ordinary test bank. too do these test banks tions that stress applying the economics the students reflect the superb work of the authors who initially are learning to events taking place in the world around wrote and compiled them.000 multiple within each chapter. ♦ Constantin Oglobin of Georgia Southern tions for each chapter are first. You can use these questions if you want ♦ Donald H. Dutkowsky of Syracuse University more integrative questions that lead students to think ♦ Andrew Foshee of McNeese State University about broader issues. questions dealing with a numerical table is as a valuable supplement to the outstanding ques- second. if you want to write a strictly essay question exam. as the name implies. graph. ♦ James Giordano of Villanova University ♦ John Graham of Rutgers University „ Other Styles of Questions ♦ Jill Boylston Herndon of the University of Florida In addition to multiple choice questions. numeric questions. University meric/graphing questions for each chapter. each chapter ♦ Veronica Z. written by many contributors. and extended ♦ William Mosher of Clark University problems. It is entirely fitting to thank them. giants who came before him. However we have also included “Part Review” multiple choice ♦ Kevin Carey of American University questions. How- textbook. have written hundreds of exams. I lost ments to your class. the questions are arranged in the choice in the test banks. quality you will find made the task worthwhile. you will find each type ♦ Melinda Nish of Salt Lake Community College of question grouped together—that is. tions. Within each chapter. other times the questions are inde- same order that the topics are presented within the pendent. the questions are ordered with non-numerical homework. and so on. Sometimes the questions for a chapter build I also arranged the questions so that they are in the upon each other. Among questions dealing with a similar ever. Of course. true or false questions. and won for the book. PREFACE V ♦ Terry Olson of Truman State University takes. Zaleski of Villanova University errors and I greatly appreciate his efforts! Contributing questions for the Ninth edition are: ♦ Carol Dole. the test banks.UFL. I will ♦ Rochelle L. And so keeping this promise: Davis ♦ Dr. Dr. Ruffer of Youngstown State University make the same offer here: If you find any errors or have ♦ Virginia Shingleton of Valparaiso University any comments or questions. Florida 32611 frank. and Nora was a January 2008 true delight: The questions they contributed are quite likely the highest quality I have ever seen! I have tried to make these Test Banks as helpful and useful as possible. I have a standing offer ♦ Ed Price of Oklahoma State University in the Study Guide asking students who find any errors ♦ Jeff Reynolds of Northern Illinois University to notify me and promising that I will acknowledge them in all future editions of the Study Guide. Davis Mark Rush Economics Department In a previous edition. N. Constantin also created all the University of Florida Extended Problems for the entire book. please let me know and. working with Carol. I will note your help in all future editions of ♦ Nora Underwood of the University of California. Constantin. of Jacksonville University ♦ Constantin Oglobin of Georgia Southern My address is below.RUSH@CBA. And. to be Gainesville. ♦ Nora Underwood of the University of California.EDU. or you can reach me via E-mail at University MARK. mistakes that you may see. Undoubtedly I have made some mis- . Ghosh found several ♦ Peter A. if ♦ Della Sue of Marist College you want. Ghosh of Eastern Mediterranean Uni- ♦ Robert Whaples of Wake Forest University versity in North Cyprus. B. . ..... 210 Chapter 3 Demand and Supply ................................................................................. 1011 ............................. 1 Chapter 2 The Economic Problem .......................................................................Parkin9e_MicTB1_TP_v1............................................................................... 690 Chapter 6 Government Actions in Markets .............................................................. 855 Chapter 7 Global Markets in Action ..............qxd:Layout 1 3/16/09 3:14 PM Page 3 Contents Chapter 1 What Is Economics? .............................................................................................................................. 536 Chapter 5 Efficiency and Equity ............... 379 Chapter 4 Elasticity ........ . C) have an abundance of resources. Answer: C Topic: Definition of Economics Skill: Recognition AACSB: Reflective Thinking 3) An inducement to take a particular action is called A) the marginal benefit. B) want more than we need. D) is the opposite of a tradeoff. B) the marginal cost. B) could be a penalty but could not be a reward. Answer: D Topic: Incentive Skill: Recognition AACSB: Reflective Thinking 4) All economic questions arise because we A) want more than we can get. Answer: A Topic: Scarcity Skill: Recognition AACSB: Reflective Thinking .Chapter 1 What Is Economics? 1 Definition of Economics 1) All economic questions are about A) how to make money. C) opportunity cost. C) could be either a reward or a penalty. D) how to satisfy all our wants. B) what to produce. D) have limited wants that need to be satisfied. Answer: C Topic: Definition of Economics Skill: Recognition AACSB: Reflective Thinking 2) An incentive A) could be a reward but could not be a penalty. D) an incentive. C) how to cope with scarcity. B) compete. Answer: B Topic: Scarcity Skill: Conceptual AACSB: Reflective Thinking 7) Scarcity is a situation in which A) people cannot satisfy all their wants. and societies A) choose abundance over scarcity. Answer: A Topic: Scarcity Skill: Recognition AACSB: Reflective Thinking 8) Economists point out that scarcity confronts A) neither the poor nor the rich. D) the fact the United States buys more goods from foreigners than we sell to foreigners.2     Parkin  ·  Microeconomics. B) the poor but not the rich. Answer: D Topic: Scarcity Skill: Conceptual AACSB: Reflective Thinking . B) make choices to cope with scarcity. D) both the poor and the rich. governments. B) scarcity. Ninth Edition 5) The most fundamental economic problem is A) security. C) trade. B) most people can get only bare necessities. C) people can satisfy all their wants. D) attain wealth. businesses. Answer: D Topic: Scarcity Skill: Conceptual AACSB: Ethical Reasoning 9) Scarcity requires that people must A) cooperate. C) the rich but not the poor. C) health. D) some people can get all they want and some cannot. Answer: B Topic: Scarcity Skill: Recognition AACSB: Reflective Thinking 6) Economics is best defined as the study of how people. C) use their infinite resources. D) make choices. C) limited resources and limitless wants. D) limited wants and limitless resources. D) everyone. D) ability of society to continually make technological breakthroughs and increase production. B) ability of society to consume all that it produces. C) we want more than we can get. B) production possibilities are unlimited. C) when a child wants a $1. Answer: C Topic: Scarcity Skill: Recognition AACSB: Reflective Thinking 14) Scarcity is experienced by A) only the wealthy. Answer: D Topic: Scarcity Skill: Recognition AACSB: Ethical Reasoning . B) a situation that exists during economic recessions but not during economic booms. Answer: A Topic: Scarcity Skill: Recognition AACSB: Reflective Thinking 12) Scarcity arises from A) inefficient production. B) only the poor. D) an economic problem only for poor people.00 can of soda and two 50 ¢ packs of gum and has $2. Answer: C Topic: Scarcity Skill: Recognition AACSB: Reflective Thinking 13) When an economist talks of scarcity. D) people are irrational. the economist is referring to the A) ability of society to employ all of its resources. Answer: C Topic: Scarcity Skill: Recognition AACSB: Reflective Thinking 11) Scarcity is A) our inability to satisfy all our wants. C) inability of society to satisfy all human wants because of limited resources.00 in her pocket. Chapter 1   What Is Economics?     3 10) All economic questions arise because A) people are greedy. B) exploration. C) only producers. B) turmoil in the stock market. Ninth Edition 15) Fundamental economic problems basically arise from A) the fact that society has more than it needs. D) our wants exceeding our scarce resources. D) neither time nor money. B) money but not time. C) the unequal distribution of income. B) our wants exceed the resources available to satisfy them. C) unlimited and so are human desires and wants. D) limited. Answer: D Topic: Scarcity Skill: Recognition AACSB: Reflective Thinking 18) As an economic concept. C) of the inefficient choices we make.4     Parkin  ·  Microeconomics. D) None of the above because scarcity cannot be eliminated. Answer: B Topic: Scarcity Skill: Recognition AACSB: Reflective Thinking 17) Scarcity can be eliminated through A) the use of market mechanisms. Answer: D Topic: Scarcity Skill: Conceptual AACSB: Reflective Thinking . B) exploration that helps us find new resources. Answer: D Topic: Scarcity Skill: Recognition AACSB: Reflective Thinking 16) Scarcity exists because A) society and people are greedy and wasteful. Answer: A Topic: Scarcity Skill: Conceptual AACSB: Reflective Thinking 19) Scarcity is common to all economic systems because resources are A) unlimited due to constant technological advances. D) poor people need more food and other goods. scarcity applies to A) both money and time. but human desires and wants are unlimited. C) time but not money. B) limited and so are human desires and wants. C) wise use of our resources. D) None of the above answers is correct. B) only in underdeveloped countries because there are few productive resources in these countries. unlimited C) unlimited. he or she experiences ________. A) unlimited. A) economics B) scarcity C) opportunity costs D) the fallacy of composition Answer: B Topic: Scarcity Skill: Conceptual AACSB: Reflective Thinking 23) In every economic system. choices must be made because resources are ________ and our wants are ________. limited Answer: B Topic: Scarcity Skill: Conceptual AACSB: Reflective Thinking . unlimited D) limited. regardless of their level of development. Chapter 1   What Is Economics?     5 20) People must make choices because A) most people enjoy shopping. C) there are many goods available. B) of scarcity. D) to all economic systems. Answer: B Topic: Scarcity Skill: Conceptual AACSB: Reflective Thinking 21) The problem of ʺscarcityʺ applies A) only in industrially developed countries because resources are scarce in these countries. limited B) limited. Answer: D Topic: Scarcity Skill: Conceptual AACSB: Reflective Thinking 22) When a wealthy businessman is unable to buy tickets to the Super Bowl. C) only in economic systems that are just beginning to develop because specialized resources are scarce. B) differences in needs.6     Parkin  ·  Microeconomics. C) distribution of income. B) arises from the fact that our wants exceed available resources. Answer: C Topic: Definition of Economics Skill: Recognition AACSB: Reflective Thinking 26) The study of economics A) focuses mainly on individual consumers. Answer: C Topic: Definition of Economics Skill: Recognition AACSB: Reflective Thinking 28) Which of the following best defines the subject of economics? A) the science that studies unemployment. D) different economic systems. C) recognizes that scarcity does not affect rich nations. B) making choices from an unlimited supply of goods and services. D) deals mainly with microeconomics. inflation. D) controlling a budget for a household. Ninth Edition 24) The fundamental questions in economics result from A) an excess of production over the wants of society. B) technological progress. Answer: B Topic: Definition of Economics Skill: Recognition AACSB: Reflective Thinking 27) Economics is best defined as the science of choice and how people cope with A) differences in wants. D) scarcity of resources relative to the wants of society. C) scarcity. C) making choices with unlimited wants but facing a scarcity of resources. and economic stability B) the art of making money C) the study of choices that businesses make to maximize profit D) the study of choices made to cope with scarcity Answer: D Topic: Definition of Economics Skill: Recognition AACSB: Reflective Thinking . Answer: D Topic: Definition of Economics Skill: Recognition AACSB: Ethical Reasoning 25) Economics is best defined as A) how people make money and profits in the stock market. D) ways to reduce wants to eliminate the problem of scarcity. C) macroeconomics. B) microeconomics. microeconomics is concerned with A) how a business firm decides upon the amount it produces and the price it sets. B) affluence in a morally bankrupt world. D) ceteris paribus study. Answer: C Topic: Definition of Economics Skill: Conceptual AACSB: Reflective Thinking 30) Which of the following is a macroeconomic topic? A) the reasons for a rise in the price of orange juice B) the reasons for the rise in average prices C) why plumbers earn more than janitors D) whether the army should buy more tanks or more rockets Answer: B Topic: Microeconomics and Macroeconomics Skill: Recognition AACSB: Reflective Thinking 31) The study of the choices made by individuals is part of the definition of A) microeconomics. D) normative economics. Answer: A Topic: Microeconomics and Macroeconomics Skill: Recognition AACSB: Reflective Thinking 32) In part. C) the study of incentives. D) the Federal Reserveʹs policy decisions. Chapter 1   What Is Economics?     7 29) Economics is the study of A) the distribution of surplus goods to those in need. Answer: B Topic: Microeconomics and Macroeconomics Skill: Recognition AACSB: Reflective Thinking . C) factors that explain changes in the unemployment rate over time. C) the choices we make because of scarcity. B) changes in the economyʹs total output of goods and services over long periods of time. Answer: A Topic: Microeconomics and Macroeconomics Skill: Recognition AACSB: Reflective Thinking 33) The study of the decisions of individual units in the economy is known as A) macroeconomics. B) positive economics.  economy. D) the total employment within the U. Answer: C Topic: Microeconomics and Macroeconomics Skill: Conceptual AACSB: Reflective Thinking . Answer: A Topic: Microeconomics and Macroeconomics Skill: Conceptual AACSB: Reflective Thinking 38) One topic of study for a microeconomist would be the A) factors that lead to inflation. D) effects of an increase in government spending on the nationʹs production. C) why the U. Ninth Edition 34) Which of the following is an example of a microeconomic decision? A) an individual deciding how to allocate the time he or she has for work and leisure B) a small shoe factory deciding how much leather to purchase for the next quarterʹs production need C) a multinational company deciding where to relocate its world headquarter D) All of the above answers are correct. B) factors that affect aggregate unemployment. Answer: D Topic: Microeconomics and Macroeconomics Skill: Recognition AACSB: Reflective Thinking 35) Which term best describes the study of the decisions of people and businesses and the interaction of these decisions? A) marginal study B) macroeconomics C) microeconomics D) scarcity science Answer: C Topic: Microeconomics and Macroeconomics Skill: Recognition AACSB: Reflective Thinking 36) Which of the following questions is a topic that would be studied by microeconomics? A) Why did production and the number of jobs shrink in 2008? B) Will the current budget deficit affect the well-being of the next generation? C) How will a lower price of digital cameras affect the quantity of cameras sold? D) What is the current unemployment rate in the United States? Answer: D Topic: Microeconomics and Macroeconomics Skill: Conceptual AACSB: Reflective Thinking 37) An example of a question that might be explored in microeconomics is to determine A) the number of workers employed by Intel. economy has grown more rapidly than the Japanese economy.S.8     Parkin  ·  Microeconomics.S. C) effects an increase in the price of gasoline has on an individual. B) savings by the household sector. Answer: D Topic: Microeconomics and Macroeconomics Skill: Recognition AACSB: Reflective Thinking 43) Which of the following is a macroeconomic decision or concept? A) the price of oil B) how many television sets to produce C) the unemployment rate for the entire economy D) the unemployment rate for each firm Answer: C Topic: Microeconomics and Macroeconomics Skill: Conceptual AACSB: Reflective Thinking . C) microeconomics. Chapter 1   What Is Economics?     9 39) In part. D) macroeconomics focuses on the national economy and the global economy. Answer: C Topic: Microeconomics and Macroeconomics Skill: Recognition AACSB: Reflective Thinking 42) Macroeconomics differs from microeconomics in that: A) macroeconomics studies the decisions of individuals. C) the effect government regulation has on the price of a product. Answer: A Topic: Microeconomics and Macroeconomics Skill: Recognition AACSB: Reflective Thinking 41) Macroeconomics is concerned with A) individual consumers. B) marginal analysis. D) metroanalysis. microeconomics is concerned with the study of A) unemployment and economic growth. B) government decision making concerning farm price supports. Answer: C Topic: Microeconomics and Macroeconomics Skill: Conceptual AACSB: Reflective Thinking 40) The branch of economics that deals with the analysis of the whole economy is called A) macroeconomics. B) the Federal Reserveʹs policies. B) microeconomics looks at the economy as a whole. C) macroeconomics studies the behavior of government while microeconomics looks at private corporations. D) the effects on Ford Motor of a strike by the United Auto Workers. D) national output of goods and services. C) economy-wide variables. C) The reasons why total employment decreases. B) microeconomics studies decisions of individual people and firms and macroeconomics studies the entire national economy. Answer: B Topic: Microeconomics and Macroeconomics Skill: Recognition AACSB: Reflective Thinking 47) In broad terms the difference between microeconomics and macroeconomics is that A) they use different sets of tools and ideas. D) The effect of the government budget deficit on inflation. Ninth Edition 44) Which of the following questions is a macroeconomic issue? A) How many more pounds of cookies will a consumer purchase if the price of cookies decreases? B) What effect would a cure for Mad Cow Disease have on the market for beef? C) What is the future growth prospect for an economy? D) How many workers should the owner of a business hire? Answer: C Topic: Microeconomics and Macroeconomics Skill: Conceptual AACSB: Reflective Thinking 45) Which of the following is a microeconomic topic? A) The reasons why Kathy buys less orange juice. B) The reasons for a decline in average prices. D) effect on cigarette sales  of an increase in the tax on cigarettes. Answer: B Topic: Microeconomics and Macroeconomics Skill: Recognition AACSB: Reflective Thinking . Answer: A Topic: Microeconomics and Macroeconomics Skill: Recognition AACSB: Reflective Thinking 46) Microeconomics focuses on all of the following EXCEPT the A) purchasing decisions made by an individual consumer. D) microeconomics studies the effects of government taxes on the national unemployment rate.10     Parkin  ·  Microeconomics. C) hiring decisions made by a business. C) macroeconomics studies the effects of government regulation and taxes on the price of individual goods and services whereas microeconomics does not. B) effect on inflation of increasing the money supply. B) positive economics. B) negative economics. C) macroeconomics. D) The cause of a decline in the price of peanut butter. B) Comparing inflation rates across countries. Chapter 1   What Is Economics?     11 48) Studying the determination of prices in individual markets is primarily a concern of A) positive economics. C) How rent ceilings impact the supply of apartments. D) microeconomics. D) How a tax rate increase will impact total production. B) How federal government budget deficits affect interest rates. Answer: C Topic: Microeconomics and Macroeconomics Skill: Conceptual AACSB: Reflective Thinking 51) Which of the following questions is NOT a microeconomic question? A) Can the Federal Reserve keep income growing by cutting interest rates? B) How would a tax on e-commerce affect eBay? C) What is Britneyʹs opportunity cost of having another baby? D) Does the United States have a comparative advantage in  information technology services? Answer: A Topic: Microeconomics and Macroeconomics Skill: Conceptual AACSB: Reflective Thinking 52) Which of the following is a macroeconomic issue? A) How a rise in the price of sugar affects the market for sodas. Answer: B Topic: Microeconomics and Macroeconomics Skill: Conceptual AACSB: Reflective Thinking . Answer: D Topic: Microeconomics and Macroeconomics Skill: Recognition AACSB: Reflective Thinking 49) The analysis of the behavior of individual decision-making units is the definition of A) microeconomics. C) What determines the amount a firm will produce. Answer: A Topic: Microeconomics and Macroeconomics Skill: Recognition AACSB: Reflective Thinking 50) Which of the following is a microeconomic topic? A) How a trade agreement between the United States and Mexico affects both nationsʹ unemployment rates. C) macroeconomics. D) normative economics. 12     Parkin  ·  Microeconomics. C) The hiring decisions that a business makes. B) the way individual markets work. D) for whom to produce. B) scarcity. Ninth Edition 53) Which of the following is a macroeconomic issue? A) The purchasing decisions that an individual consumer makes. Macroeconomics Skill: Recognition AACSB: Reflective Thinking . as opposed to trivial. B) microeconomics. C) the economy as a whole. D) important. Answer: A Topic: Microeconomics and Macroeconomics Skill: Conceptual AACSB: Reflective Thinking 55) Macroeconomics is the branch of economics that studies A) prices of individual goods. B) The effect of increasing the money supply on inflation. issues. Definition of Economics Skill: Recognition AACSB: Reflective Thinking 57) Studying the effects choices have on the individual markets within the economy is part of A) scarcity. D) incentives. B) studying what factors influence the price and quantity of automobiles. Answer: B Topic: Study Guide Question. Answer: B Topic: Study Guide Question. C) the big tradeoff. C) macroeconomics. nationwide employment. Answer: C Topic: Microeconomics and Macroeconomics Skill: Recognition AACSB: Reflective Thinking 56) The fact that wants cannot be fully satisfied with available resources reflects the definition of A) the what tradeoff. D) The effect of an increase in the tax on cigarettes on cigarette sales. C) studying the determination of wages and production costs in the software industry. Answer: B Topic: Microeconomics and Macroeconomics Skill: Conceptual AACSB: Reflective Thinking 54) Macroeconomic topics include A) total. D) the impact of government regulation of markets. Chapter 1   What Is Economics?     13 58) Economics can be defined as the social science that explains the ________. it is answering the ________ question. A) ʺwhatʺ B) ʺhowʺ C) ʺwhereʺ D) ʺfor whomʺ Answer: A Topic: What Goods and Services Are Produced? Skill: Conceptual AACSB: Reflective Thinking . A) the choices that individuals and businesses make B) all aspects of scarcity C) the global economy D) the national economy Answer: A Topic: MyEconLab Questions Skill: Conceptual AACSB: Reflective Thinking 2 Two Big Economic Questions 1) When an economy produces more houses and fewer typewriters. A) some people are poor and others are rich B) something is being wasted C) we are unable to satisfy all our wants D) long lines form at gas stations Answer: C Topic: MyEconLab Questions Skill: Conceptual AACSB: Reflective Thinking 60) Microeconomics is the study of ________. A) choices made by politicians B) choices we make when we trade in markets C) choices that we make as we cope with scarcity D) choices made by households Answer: C Topic: MyEconLab Questions Skill: Conceptual AACSB: Reflective Thinking 59) Scarcity is a situation in which ________.  they are answering the ________ question. the farmer is answering the ________ question. Ninth Edition 2) When firms in an economy start producing more computers and fewer televisions. A) ʺwhatʺ B) ʺwhyʺ C) ʺwhenʺ D) ʺscarcityʺ Answer: C Topic: What Goods and Services Are Produced? Skill: Conceptual AACSB: Reflective Thinking 5) When a farmer decides to raise hogs instead of cattle.14     Parkin  ·  Microeconomics. A) ʺwhenʺ B) ʺfor whomʺ C) ʺwhatʺ D) ʺwhereʺ Answer: C Topic: What Goods and Services Are Produced? Skill: Conceptual AACSB: Reflective Thinking 3) ________ all the objects that we value and are willing to pay for. A) Resources are B) Goods and services are C) Wants are D) Capital is Answer: B Topic: What Goods and Services Are Produced? Skill: Conceptual AACSB: Reflective Thinking 4) If Taco Bell decides to produce more tacos and fewer burritos. Taco Bell is answering the ________ question. A) ʺwhatʺ B) ʺfor whomʺ C) ʺhowʺ D) ʺwhyʺ Answer: A Topic: What Goods and Services Are Produced? Skill: Conceptual AACSB: Reflective Thinking . A) ʺwhatʺ B) ʺwhenʺ C) ʺfor whomʺ D) ʺwhyʺ Answer: A Topic: What Goods and Services Are Produced? Skill: Conceptual AACSB: Reflective Thinking 7) When a country decides to produce fewer bombers and more public housing projects. it is answering the ________ question. A) ʺhowʺ B) ʺfor whomʺ C) ʺwhyʺ D) ʺwhatʺ Answer: D Topic: What Goods and Services Are Produced? Skill: Conceptual AACSB: Reflective Thinking . the farmer is answering the ________ question. it is most directly answering the ________ question. A) ʺhowʺ B) ʺwhatʺ C) ʺdefenseʺ D) ʺfor whomʺ Answer: B Topic: What Goods and Services Are Produced? Skill: Conceptual AACSB: Reflective Thinking 8) When a firm decides to produce more electric cars and fewer gas guzzlers. it is most directly answering the ________ question. Chapter 1   What Is Economics?     15 6) When a farmer decides to grow sugar cane instead of radishes. A) ʺhowʺ B) ʺscarcityʺ C) ʺwhatʺ D) ʺfor whomʺ Answer: C Topic: What Goods and Services Are Produced? Skill: Conceptual AACSB: Reflective Thinking 9) When a textile firm decides to produce more cotton fabric and less synthetic fabric.  the percentage of people employed in ________ over the last 60 years. Answer: A Topic: What Goods and Services Are Produced? Skill: Conceptual AACSB: Reflective Thinking 12) Which of the following statements is correct? A) The United States produces more goods than services. C) The percentage of people producing goods in the United States has steadily increased over the last 60 years. B) ʺhowʺ question. B) The United States produces more services than goods. producers decide to produce more compact cars and fewer SUVs as the price of gasoline rises. Ninth Edition 10) U. D) ʺfor whomʺ question.S. Answer: B Topic: Trends in Production Skill: Recognition AACSB: Reflective Thinking 13) In the United States. Producers are answering the ________ question. D) The United States produces an equal amount of goods and services. A) ʺwhatʺ B) ʺhowʺ C) ʺwhenʺ D) ʺhow manyʺ Answer: A Topic: What Goods and Services Are Produced? Skill: Conceptual AACSB: Reflective Thinking 11) The question ʺShould CDs or DVDs be produced?ʺ is an example of the A) ʺwhatʺ question. C) ʺwhereʺ question.16     Parkin  ·  Microeconomics. A) farming has increased B) manufacturing has increased C) construction has increased D) services has decreased Answer: A Topic: Trends in Production Skill: Recognition AACSB: Reflective Thinking . B) employment in mining. economy has produced more A) goods. D) employment in both agriculture and the service industry has been decreasing. Chapter 1   What Is Economics?     17 14) In the U. textbooks and computers Answer: C Topic: Trends in Production Skill: Recognition AACSB: Reflective Thinking . D) goods and services. economy. a recent trend has been that A) employment in agriculture has been increasing. C) employment in the service industry has been increasing. food and electronic equipment B) goods. Answer: C Topic: Trends in Production Skill: Recognition AACSB: Reflective Thinking 17) The largest part of what the United States produces today is ________ such as ________. and manufacturing has been increasing. trade and health care D) services. C) services. D) The economy is too complex to determine the proportion of production that is devoted to producing services. B) agricultural products.S. Answer: B Topic: Trends in Production Skill: Recognition AACSB: Reflective Thinking 15) Over the last 60 years. economy. education and entertainment C) services. the U. construction.S. A) goods. Answer: C Topic: Trends in Production Skill: Recognition AACSB: Reflective Thinking 16) In the U. B) More services are produced than goods. which of the following statements is true? A) More goods are produced than services. as a proportion of total production.S. C) Production is divided evenly between goods and services.  it is answering the ________ question.18     Parkin  ·  Microeconomics. A) ʺwhatʺ B) ʺhowʺ C) ʺfor whomʺ D) ʺwhereʺ Answer: B Topic: How Are Goods and Services Produced? Skill: Conceptual AACSB: Reflective Thinking 20) Whether a company produces fishing rods mostly by hand or using high -tech machinery is a question of A) for whom will goods be produced. the farmer is answering the ________ question. they are both answering the ________ question. A) ʺhowʺ B) ʺfor whomʺ C) ʺscarcityʺ D) ʺwhatʺ Answer: A Topic: How Are Goods Produced? Skill: Conceptual AACSB: Reflective Thinking . Answer: D Topic: How Are Goods Produced? Skill: Recognition AACSB: Reflective Thinking 21) When a California farmer decides to harvest lettuce by the use of machines instead of by migrant workers. D) how will the goods be produced. C) where will the goods be produced. A) ʺwhatʺ B) ʺhowʺ C) ʺwhereʺ D) ʺfor whomʺ Answer: B Topic: How Are Goods and Services Produced? Skill: Conceptual AACSB: Reflective Thinking 19) When a textile company keeps track of its inventory using a computer and its competitor uses a spreadsheet and pencil. B) why will the goods be produced. Ninth Edition 18) When China builds a dam using few machines and a great deal of labor. A) ʺscarcityʺ B) ʺhowʺ C) ʺwhatʺ D) ʺwhyʺ Answer: B Topic: How Are Goods and Services Produced? Skill: Conceptual AACSB: Reflective Thinking 25) To meet increased demand for its good. it is answering the ________ question. the lawyer is answering the ________ question. Chapter 1   What Is Economics?     19 22) When a farmer decides to harvest oranges by huge machines instead of by migrant workers. A) ʺhowʺ B) ʺscarcityʺ C) ʺwhyʺ D) ʺwhatʺ Answer: A Topic: How Are Goods and Services Produced? Skill: Conceptual AACSB: Reflective Thinking 23) When a lawyer decides to type a brief on a computer rather than use a typewriter. A) ʺhowʺ B) ʺscarcityʺ C) ʺwhyʺ D) ʺwhatʺ Answer: A Topic: How Are Goods and Services Produced? Skill: Conceptual AACSB: Reflective Thinking 24) When a firm decides to produce computers using robots instead of people. A) ʺhowʺ B) ʺwhenʺ C) ʺwhatʺ D) ʺscarcityʺ Answer: A Topic: How Are Goods and Services Produced? Skill: Conceptual AACSB: Reflective Thinking . the farmer is answering the ________ question. a firm decides to hire a few high -skilled workers rather than hire many low-skilled workers. The firm is answering the ________ question. D) the skill and knowledge of workers. Answer: D Topic: Human Capital Skill: Recognition AACSB: Reflective Thinking 28) Entrepreneurs do all of the following EXCEPT A) organize labor. but not by corporations or governments. C) bear risk from business decisions. Answer: D Topic: Entrepreneurship Skill: Recognition AACSB: Reflective Thinking 29) To answer the ʺfor whomʺ question. D) own all the other resources used in the production process. The museum is answering the ________ question. A) ʺfor whomʺ B) ʺwhenʺ C) ʺwhereʺ D) ʺhowʺ Answer: A Topic: For Whom Are Goods and Services Produced? Skill: Conceptual AACSB: Ethical Reasoning . and capital. we study A) the global economy. but not by governments.20     Parkin  ·  Microeconomics. land. B) all capital owned by individuals or corporations. B) come up with new ideas about what and  how to produce. C) machinery that meets or exceeds federal safety standards for use by humans. C) business cycles. D) technological change. B) income differences. A) ʺscarcityʺ B) ʺwhatʺ C) ʺwhyʺ D) ʺhowʺ Answer: D Topic: How Are Goods and Services Produced? Skill: Conceptual AACSB: Reflective Thinking 27) Human capital is A) all capital owned by individuals. Ninth Edition 26) An art museum decides to offer tours by having visitors listen to cassette tapes rather than have tour guides. Answer: B Topic: For Whom Are Goods and Services Produced? Skill: Conceptual AACSB: Reflective Thinking 30) The fact that people with higher incomes get to consume more goods and services addresses the ________ question. Land II. Entrepreneurship A) I and II only B) I and III only C) I. human capital. B) land. C) the wages paid to workers. II. D) None of the above answers are correct because all are factors of production. II and III only D) I. Chapter 1   What Is Economics?     21 31) Which of the following is NOT a factor of production? A) the water used to cool a nuclear power plant. profit. labor. and interest B) land. Answer: C Topic: Factors of Production Skill: Conceptual AACSB: Reflective Thinking 32) Which of the following are considered factors of production used to produce goods and services? I. III and IV Answer: D Topic: Factors of Production Skill: Recognition AACSB: Reflective Thinking 33) Factors of production include all of the following EXCEPT A) labor. D) the management skill of a small business owner. and entrepreneurship C) capital. Labor III. capital. land. rent. and wages Answer: B Topic: Factors of Production Skill: Recognition AACSB: Reflective Thinking . C) capital. B) the effort of farmers raising cattle. Capital IV. and labor D) entrepreneurship. Answer: D Topic: Factors of Production Skill: Recognition AACSB: Reflective Thinking 34) What are the four categories into which factors of production are grouped? A) profit. wages. labor.  rent B) entrepreneurship. money.22     Parkin  ·  Microeconomics. money C) land. A) machines made in past years B) money C) entrepreneurship D) an wheat field that is not irrigated Answer: B Topic: Factors of Production Skill: Recognition AACSB: Reflective Thinking 36) The income earned by the people who sell the services of the factor of production ________ is called ________. C) the fundamental source of abundance. money. B) the inputs used to produce goods and services. labor. profit Answer: D Topic: Factors of Production Skill: Recognition AACSB: Reflective Thinking 37) Factors of production are grouped into four categories: A) land. capital. A) capital. D) only land and labor. the price system. Ninth Edition 35) Factors of production include all of the following EXCEPT ________. entrepreneurship B) land. capital. entrepreneurship D) labor. capital. capital. labor. entrepreneurship Answer: A Topic: Factors of Production Skill: Recognition AACSB: Reflective Thinking 38) Which of the following is NOT a factor of production? A) vans used by a bakery company for deliveries B) a person developing a production schedule for a new product C) 175 shares of Microsoft stock D) wilderness areas that have yet to be developed Answer: C Topic: Factors of Production Skill: Conceptual AACSB: Reflective Thinking 39) Which of the following is correct? Factors of production are A) land. labor. Answer: B Topic: Factors of Production Skill: Recognition AACSB: Reflective Thinking . wages C) land. profit D) entrepreneurship. and capital.