1. What is the economic meaning of the expression that \"there is no such thing

Question

1. What is the economic meaning of the expression that "there is no such thing as a free lunch"?
A. It refers to "free-riders," who do not pay for the cost of a product, but who receive the benefit from it
B. It means that economic freedom is limited by the amount of income available to the consumer
C. It means that there is an opportunity cost when resources are used to provide "free" products
D. It indicates that products only have value because people are willing to pay for them
2. Which is an illustration of a macroeconomic question?
A. Should the minimum wage be increased for low-income workers?
B. Are increasing wage demands by workers contributing to price inflation?
C. What is the least costly way to produce automobiles and trucks in the United States?
D. Will the introduction of a new computer chip change the demand for computers?
3. The private ownership of property resources and use of prices to direct and coordinate economic activity is characteristic of:
A. A command system
B. A market system
C. Communism
D. Socialism
4. A recent study found that an increase in the Federal tax on beer would reduce the demand for marijuana. We can conclude that:
A. beer and marijuana are substitute goods.
B. beer and marijuana are complementary goods.
C. beer is an inferior good.
D. marijuana is an inferior good.

5. College students living off-campus frequently consume large amounts of ramen noodles and boxed macaroni and cheese. When they finish school and start their careers, their consumption of these goods frequently declines. This suggests that ramen noodles and boxed macaroni and cheese are:
A. inferior goods.
B. normal goods.
C. complementary goods.
D. substitute goods.

13. If the market demand for this product increases, which of the following statements is correct?
   a. Product price will increase and production costs will fall, resulting in greater profits.
   b. Product price will decrease and production costs will rise, resulting in greater profits.
   c. Product price will decrease and production costs will rise, resulting in lower profits.
   d. Product price will increase and production costs will fall, resulting in lower profits.
   e. Product price will increase and profits will increase.
14. Which of the following statements correctly reflects the developments in the U.S. automobile industry following an interest rate hike by the Federal Reserve?
   a. Both equilibrium output and price will increase.
   b. Both equilibrium output and price will decrease.
   c. Both equilibrium output and price may decrease.
   d. Both equilibrium output and price may increase.
   e. none of the above statements is correct.

15. Which of the following statements correctly reflects the developments in the U.S. automobile industry following an across the board increase in wages paid to auto workers?
   a. Equilibrium price will increase.
   b. Equilibrium price will decrease.
   c. Equilibrium price will not change.
   d. Equilibrium price may increase.
   e. none of the above statements is correct.

16. Suppose that currently 4 million automobiles are imported into the U.S. and the average price of those automobiles is $25,000. Further suppose that Congress passes legislation approving a 5 million annual quota on imports, that is signed into law by the President. Which of the following statements correctly reflects the subsequent developments in the domestic U.S. automobile industry?

   a. Equilibrium price & quantity will decrease.
   b. Equilibrium price will increase and the quantity will not change.
   c. Equilibrium price will decrease and the quantity will not change.
   d. Both Equilibrium price and quantity will not be affected.
   e. none of the above statements is correct.

17. Suppose in the current year that there is a nation-wide boom harvest for apple growers and a statewide killer frost in both Florida and California. Which of the following statements correctly reflects the subsequent developments in the U.S. orange market?

   a. Both equilibrium output and price will increase.
   b. Both equilibrium output and price will decrease.
   c. Both equilibrium output and price may decrease.
   d. Equilibrium output may decrease and price will increase.
   e. Equilibrium output will decrease and price may increase.

18. Suppose, ceteris paribus, that the supply of immigrant labor increases in the U.S. and simultaneously the FDA releases new information that conclusively establishes a link between a decrease in the risk of certain cancers and the consumption of oranges. Which of the following statements is correct?
  
   a. The price of Florida oranges will increase and the quantity will increase.
   b. The price of Florida oranges may increase and the quantity may increase.
   c. The price of Florida oranges will decrease and the quantity will increase.
   d. The price of Florida oranges will not change but the quantity will increase.
   e. the price of Florida oranges may decrease and the quantity will increase.

19. Suppose, ceteris paribus, that the Environmental Protection Agency requires that agricultural run-off water must be stored and cleaned prior to release in Florida and simultaneously, due to favorable growing conditions, there is a bumper crop of California oranges. Which of the following statements is correct?
  
   a. The price of Florida oranges will increase and the quantity will decrease.
   b. The price of Florida oranges may increase and the quantity may decrease.
   c. The price of Florida oranges may decrease and the quantity will decrease.
   d. The price of Florida oranges will not change but the quantity will decrease.
   e. the price of Florida oranges may decrease and the quantity may increase.

20. Suppose, ceteris paribus, that agricultural research leads to an increase in yield to citrus growers and at the same time trade negotiations between China and the U.S. worsen, closing U.S. exports to China. Which of the following statements is correct?
  
   a. The price of Florida oranges will decrease and the quantity will decrease.
   b. The price of Florida oranges may decrease and the quantity may decrease.
   c. The price of Florida oranges may decrease and the quantity may increase.
   d. The price of Florida oranges will decrease and the quantity may decrease.
   e. the price of Florida oranges may not change and the quantity may increase.

21. Suppose, ceteris paribus, that the State of Florida imposes a tax on all agricultural products while at the same time a severe drought hits the major apple-growing regions of the U.S. Which of the following statements is correct?
  
   a. The price of Florida oranges will increase and the quantity will increase.
   b. The price of Florida oranges may decrease and the quantity may decrease.
   c. The price of Florida oranges may increase and the quantity may not change.
   d. The price of Florida oranges will not change but the quantity may decrease.
   e. the price of Florida oranges will increase and the quantity may decrease.

22. A television station reports that the price of coffee has increased but the quantity sold in the market has decreased. This situation would be caused by a(n):
A. Increase in demand
B. Increase in supply
C. Decrease in demand
D. Decrease in supply

23. A newspaper reports that in an urban area the average price of new homes had decreased, but the number of new homes sold had increased. This situation would best be explained by a(n):
A. Increase in demand
B. Increase in supply
C. Decrease in demand
D. Decrease in supply

24. A headline reads "Gasoline Prices Are Higher." A likely explanation for this event would be a(n):
A. Increase in the demand for and the supply of gasoline
B. Decrease in the demand for and the supply of gasoline
C. Increase in the supply of gasoline and a decrease in the demand for gasoline
D. Decrease in the supply of gasoline and an increase in the demand for gasoline

25. Other things being equal, how would the market for bicycles be affected by an increase in the availability and number of bicycle paths?
A. An increase in prices and a decrease in the quantity exchanged
B. A decrease in prices and an increase in the quantity exchanged
C. An increase in prices and an increase in the quantity exchanged
D. A decrease in prices and a decrease in the quantity exchanged

26. In a competitive market:
A. external benefits will always exceed external costs.
B. resources will be misallocated if government does not properly adjust demand and supply for large external costs and benefits.
C. Absent government intervention, resources will be allocated efficiently only if external benefits equal external costs.
D. an efficient allocation of resources is realized even where there are large external costs and benefits.

27. Negative externalities arise:
A. when firms pay more than the opportunity cost of resources.
B. when the demand curve for a product is located too far to the left.
C. when firms "use" resources without being compelled to pay for their full costs.
D. only in capitalistic societies.
28. For which of the following goods or services would a government subsidy be most likely to improve the allocation of resources?
A. wheat
B. newspaper publishing
C. cancer research
D. toys

29. The Federal government requires automobile manufacturers to install pollution control equipment. This is an illustration of the:
A. intrusion problem.
B. production of public goods.
C. internalization of external benefits.
D. internalization of external costs.


30. As it relates to a public good, nonexcludability means that:
A. free riders cannot be barred from receiving the benefits.
B. there is no need or demand for the good.
C. either the public sector or the public sector can produce the good, but not both.
D. one person's benefit from the good does not reduce the benefit available to others.

31. Suppose Smith pays $100 to Jones.
A. We can say with certainty that the GDP has increased by $100.
B. We can say with certainty that the GDP has increased, but we cannot determine the amount.
C. We can say with certainty that the nominal GDP has increased, but we can't say whether real GDP has increased or decreased.
D. We need more information to determine whether GDP has changed.

32. Suppose the total market value of all final goods and services produced in a particular country in 2006 is $500 billion and the total market value of final goods and services sold is $450 billion. We can conclude that:
A. GDP in 2006 is $450 billion.
B. NDP in 2006 is $450 billion.
C. GDP in 2006 is $500 billion.
D. inventories in 2006 fell by $50 billion.

Suppose Xenia has a GDP of $15,000,000 and a population of 800,000 with a labor force of 500,000. Further suppose that 80,000 people are not working; 60,000 are actively seeking employment but unable to find a job. Further suppose that 15,000 people are frictionally unemployed and 5,000 are structurally unemployed. Please use this info to answer the next four questions.

33. The UE rate in Xenia is ____?

34. The frictional rate of unemployment in Xenia is____?

35. The structural rate of unemployment in Xenia is ____?

36. The economic cost of UE in Xenia is______?

For Questions 37-40
Suppose expectations are such that the rate of inflation for the foreseeable future is pegged at 2%. Further suppose that lenders and investors are seeking a 4% real return.

37. Money will be lent at what rate of interest under this scenario?
A. 2%
B. 8%
C. 4%
D. 6%
E. Impossible to determine.

38. Suppose that 4 years from now it is obvious that the actual rate of inflation averaged 1%. Which of the following statements is correct regarding loans initially granted with 4-year terms?
A. Both lenders and borrowers meet their objectives.
B. There is an arbitrary redistribution of income from lenders to borrowers.
C. There is no redistribution of income resulting from the loans.
D. There is an arbitrary redistribution of income from borrowers to lenders.

39. Suppose that I have $1,000,000 in my current retirement portfolio. Further suppose that the dollar value of my portfolio must double for me to retire comfortably. Assuming that I make no further contributions to my portfolio, how long must I wait,?
A. 17.5 years
B. 35 years
C. approximately 18 years
D. None of the above

40. Again, assuming that I make no further contributions to my portfolio, how long must I wait if I need the value of my portfolio to double in terms of real dollars?
A. 17.5 years
B. 14 years
C. approximately 8 years
D. impossible to determine

Explanation / Answer

1.

c. It means there is an opportunity cost when resources are used to provide "free" products.

this is true as in economics everything has some value attached and has opportunity cost to forgone something to get something.

we can only do one question at a time per post

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