Macroeconomic Study Questions: Quantity Restrictions
1. According to the text, economics is the study of how:
A) governments
allocate resources in the face of constraints.
B) government
policies can be used to meet individuals’ wants and desires.
C) human
beings coordinate their wants and desires in the face of constraints.
D) scarce
resources are allocated to their most productive uses.
2. Your opportunity cost of taking this course is:
A) the
tuition you paid for the course.
B) the net
benefit of the activity you would have chosen if you had not taken the course.
C) the net
benefit of taking this course.
D) the cost
of the activity you would have chosen if you had not taken the course.
3. Microsoft has just taken some Senators out to dinner in
Paris in a private jet. This is likely an example of an attempt to influence:
A) economic
forces.
B) political
forces.
C) social
forces.
D) the price
mechanism.
4. Price controls in competitive markets cause shortages, is
an example of:
A) positive
economics.
B) normative
economics.
C) the art
of economics.
D) Classical
economics.
5. Which of the following cannot be determined using a
production possibility table?
A) What
combination of outputs can be produced.
B) How much
less of one output can be produced if more of another output is produced.
C) What
combination of outputs is best.
D) How much
output can be produced from a given level of inputs.
6. Two countries that specialize their production along the
lines of comparative advantage and then trade with one another will:
A) both
produce and consume more.
B) produce
more and consume less.
C) produce
less and consume more.
D) both
produce and consume less.
7. Countries gain from trade by producing:
A) the goods
they produce at the highest opportunity cost.
B) the goods
they can produce at the lowest opportunity cost.
C) where the
production possibility curve has a slope of -1.
D) all goods
in equal amounts.
8. When firms do not have to compete, they are able to:
A) determine
what consumers will buy.
B) ignore
government regulations.
C) control
the prices charged by their competitors.
D) raise the
price of their product.
9. The Industrial Revolution was important to the history of
economic systems because it:
A) changed
the way people exchanged goods-from barter to using money as a medium of
exchange.
B) concentrated
wealth in the hands of a few noblemen who then controlled the land in their
region, creating a feudal system.
C) increased
the wealth of merchants and artisans and eventually led to a change in economic
systems to mercantilism.
D) increased
the power of capitalists and eventually led to a revolution instituting
capitalism as the dominant economic system.
10. One advantage of a partnership over a sole
proprietorship is:
A) greater
accountability.
B) limited
liability.
C) ease of
formation.
D) the
ability to share the work and risks of business.
11. Which group has ultimate control over the U.S. economy?
A) Business
B) Households
C) Multinationals
D) Government
12. If the hourly wage of U.S. workers is $16, the hourly
wage of Mexican workers is $2, and U.S. workers produce 5 times as much output
per hour as Mexican workers, then it would be efficient to locate production
facilities in:
A) the U.S.
since the cost per unit of output will be higher.
B) the U.S.
since the cost per unit of output will be lower.
C) Mexico
since the cost per unit of output will be higher.
D) Mexico
since the cost per unit of output will be lower.
13. Suppose farmers can use their land to grow either wheat
or corn. The law of supply predicts that an increase in the market price of
wheat will cause:
A) farmers to
substitute production of wheat for production of corn.
B) farmers
to substitute production of corn for production of wheat.
C) farmers
to lower production of corn and wheat.
D) farmers to
raise production of wheat and corn.
14. Suppose a market has an excess demand and price starts
to rise. What will the rise in price cause?
A) A fall in
both quantity supplied and quantity demanded.
B) A rise in
both quantity supplied and quantity demanded.
C) A rise in
quantity supplied and a fall in quantity demanded.
D) A fall in
quantity supplied and a rise in quantity demanded.
15. In a market where there are strong social and political
forces:
A) quantity
demanded will be expected to equal quantity supplied.
B) quantity
demanded might not equal quantity supplied.
C) the
market will be in disequilibrium.
D) the
invisible hand will overcome all other forces.
16. If both buyers and sellers expect the price of a
commodity to rise in future, it is likely that equilibrium:
A) price will
fall with little change in equilibrium quantity.
B) price
will rise with little change in equilibrium quantity.
C) quantity
will fall with little change in equilibrium price.
D) quantity
will rise with little change in equilibrium price.
17. In the late 1990s and early 2000s, more and more devices
were introduced in the market that performed tasks similar to that of PCs. At
the same time, the price of computer chips to make high-end PCs has fallen by
75 percent. What is the effect of the events on equilibrium price and quantity
of high-end PCs?
A) Price
falls continuously as does quantity sold.
B) Price
rises then falls while quantity sold falls continuously.
C) Price
falls continuously while quantity falls initially but then rises, recouping
earlier losses.
D) Price
falls continuously and quantity rises continuously.
18. If the government imposes an excise tax on gasoline
equal to $0.25 per gallon and the demand curve for gasoline is
downward-sloping, the supply of gasoline will:
A) shift
upward and the price will increase by $0.25 per gallon.
B) shift
upward and the price will increase by less than $0.25 per gallon.
C) shift
downward and the price will decrease by $0.25 per gallon.
D) shift
downward and the price will decrease by less than $0.25 per gallon.
19. Quantity restrictions benefit which group the most?
A) Consumers.
B) Suppliers
wanting to enter the market.
C) Existing
suppliers.
D) Government.
20. Suppose that the market labor supply and labor demand
equations are given by Qs = 5W and Qd = 30 – 5W. If a minimum wage is set at
$4.00 (W = 4), then:
A) 15 workers
will be supplied and demanded.
B) 20
workers will be supplied and demanded.
C) 20
workers will be supplied, but only 10 workers will be demanded.
D) 10 workers
will be supplied, but 20 workers will be demanded.
