Download FiNaL - Mira Costa High School

Questions for Final
1.
One example of thinking at the margin is

A government that chooses to shift some of its money to building bridges from
building missiles.
2. All of the following are types of decisions that can be made at the margin EXCEPT

Whether or not to go on vacation
3. An efficient economy is one that

Uses its resources to make the most goods and services
4. The law of increasing costs means that when an economy increases the production of
one item

The opportunity cost goes up.
5. You bought two new CDs with the last $30 in your checking account, and your next
payday is on Monday. What is the opportunity cost of these CDs?

Dinner and a movie with your friends this Saturday night.
6. Why does even a free market economy need some government intervention?

To provide for things that the marketplace does not address.
7. What does the process of specialization do for an economy?

It makes it more efficient.
8. Which of the following is characteristic of a traditional economy?

Children tend to have the same jobs as their parents did.
9. What is the product market?

The market in which households purchase the goods and services that firms
produce.
10. In what kind of an economy does the government make all the decisions?

Centrally planned.
11. all of the following are reasons why policymakers avoid spikes and slumps in
products prices EXCEPT:

they can inhibit competition among businesses.
12. The government plans to ease regulations on the amount of mercury allowed into the
atmosphere even though mercury is proved to be hazardous to people and wildlife.
What might be the government’s reasoning?

The regulations are too costly, cutting into companies’ profits.
13. Which of the following is NOT an example of macroeconomics?

Tightening the family budget.
14. What is a negative externality of drinking a can of caffeine-free, diet soda?

The space that the empty can will take up in a landfill if not recycled
15. Which of the following is a critical rule for determining whether something is a
public good?

The total benefits to society are greater than the total cost.
16. How is future price related to current demand?

If the price is expected to rise, current demand will rise.
17. What determines how a change in prices will affect total revenue for a company?

Elasticity of demand.
18. What does unitary elastic demand mean?

The percentage change in quantity demanded is exactly equal to the percentage
change in price.
19. Which of the following events could cause the demand curve for sports magazines to
shift to the right?

A star basketball player interests thousands of people in professional sports for the
first time.
20. Demand for movie rentals is highly elastic. A video store that raises the price of a
rental will

Possibly gain or lose revenue.
21. How does a supply curve illustrate the law of supply?

It always rises from left to right.
22. Which of the following is NOT an example of the law of supply?

More consumers are buying sofas than ever before.
23. Which of these vents would cause a shift to the right in the supply curve?

Upgrades to its mixing equipment allow the plant to make more bars.
24. How would a new excise tax affect the supply curve?

It would probably cause the supply curve to shift to the left.
25. A firm is losing money. Its fixed cost is $40 an hour. Its variable cost is $32 an hour.
Total revenue is $38 an hour. It decides to remain open. Why?

Total revenue is greater than variable cost.
26. If a bookstore manager prices a book higher than the equilibrium price, then

There will be an excess supply of these books.
27. Suppliers will keep raising prices in a certain market as long as

There is excess demand and quantity demanded exceeds the quantity supplied.
28. If the equilibrium quantity demanded for a new sports watch is 900 truckloads of
watches and the equilibrium price is $70 per watch, then a drop in the price of
watches to $40

Would raise the quantity demanded of these sport watches.
29. In 1994, if the price of wheat had risen above the price floor set by the U.S.
government, then

The government would have done nothing.
30. If the demand for a certain toy was higher than expected and the demand curve
shifted outward to the right, causing a shortage, then

There would be an eventual downward movement along the supply curve,
reestablishing equilibrium.
31. For the average total cost curve of a firm without economies of scale, as output
increases

Costs initially go down and then go up.
32. Price discrimination

Is rare in highly competitive markets.
33. BreatheDeep, a monopolist, produces 10,000 doses of medicine for severe asthma at a
cost of $4 per dose. If each dose is sold for $12, then BreatheDeep’s total profit
would be

$80,000.
34. Monopolistically competitive firms may not be able to produce goods at the lowest
possible average cost. This statement is describing how monopolistically competitive
firms might be

Without economies of scale.
35. Which of the following is NOT an example of barriers to entry?

In some counties, laws require retail stores to be closed on Sundays.
36. How do conglomerates and vertical mergers differ from horizontal mergers?

They do not usually lessen competition in the marketplace.
37. In a publicly held corporation

A large number of stockholders can buy and sell stock.
38. Your uncle owns a convenience store that has branches nationwide. His store is an
example of a

Business franchise
39. Corporations are defined as “entities” because they

Have a legal identity separate from those of their owners.
40. You are part-owner of NewBrands corporation because you

Own the company’s stock.
41. Why might some construction workers be paid more than some teachers?

Construction work is more dangerous than teaching.
42. What is collective bargaining?

Union and company representatives meeting to negotiate a new labor contract.
43. How are wages for a particular job determined?

By the equilibrium between the supply and demand for workers for that job.
44. According to economic theory, what happens to job opportunities in low-paying jobs
when the minimum wage goes up?

The quantity of labor demanded goes down.
45. Which of the following could be considered company benefits?

The employer’s payments to Social Security
46. What is the purpose of the Federal Deposit Insurance Corporation (FDIC)?

To make sure that customers do not lose money if a bank fails
47. Which of the following is NOT an example of a liquid asset?

A certificate of deposit.
48. What condition is necessary for a fiat money system to work?

The government must control the money supply.
49. What happens when you make a purchase using a credit card?

The credit card issuer pays the store.
50. Near money includes

Deposits in savings accounts and money market mutual funds.
51. Which of the following is NOT one of the three advantages of dealing with a
financial intermediary?

A financial intermediary creates financial assets.
52. If a bank issued three loans of $10,000 each with annual interest rates of 8%, what is
the bank’s return on these loans after one year?

$2,400
53. A 10-year bond with a 4.5 percent interest rate has reached maturity and the investor
has received a total of $6,750 in interest. What would be the par value of this loan?

$15,000
54. Joan has bought a 3-year bond for $1,000 at 6 percent interest from a certain
company. A year later, the company that issued her bond raises the coupon rate on its
bonds to 7 percent. If she decides to sell this bond to Matt, he will most likely want to
purchase this bond with

Discount from par.
55. Marisol purchased 100 shares of stock at $45 per share. Six months later the price for
that same stock rose to $60 per share. What would enable her to buy 50 more shares
for $2,250?

She took advantage of the call option offered by the company that issued the
stock.
56. If economists calculate the GDP for 2002, using current prices of year 2002, they are
estimating

Nominal GDP
57. If there is a fall in the interest rate,

Businesses will be more likely to expand their facilities.
58. According to the aggregate supply curve, as the price level increases

Firms have more of an incentive to increase output.
59. Low long-term interest rates might indicate all of the following EXCEPT

That consumers want to borrow money to invest.
60. Going from left to right on the aggregate demand curve, real GDP
price level

Rises; falls
.
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