\"\"Please give answer with simple explaination\"\" \"\"Please give answer with
ID: 2506185 • Letter: #
Question
""Please give answer with simple explaination""""Please give answer with simple explaination""""Please give answer with simple explaination""
1. In every society, choices must be made because resources are
a. Infinite, but economic want are finite
b. Finite, but economic wants are insatiable
c. Unlimited, but economic wants limited
d. Limited, and so are economic wants
2. Which question is an illustration of a microeconomic question
a. Is the quantity of wine purchased in one year dependent upon the price of wine?
b. Does government spending influence the total level of employment in the economy?
c. Is the purchasing power of the dollar higher or lower today than it was in 2000?
d. Is capitalism superior to socialism?
3. The purpose of the ceteris paribus assumption used in economic analysis is to :
a. Avoid making normative statements
b. A void the post hoc, ergo propter hoc fallacy
c. Make sure that all relevant factors are considered
d. Restrict the analysis to effect of a single economic factor
4. The profit motive is
a. Ineffective at producing consumer goods
b. Inherently beneficial to society if left alone to pursue its own self interests
c. Effective at producing goods when consumption is non-rival or non-excludable
d. Is often at odds with societies interests
5. In the system of central planning
a. There is repaid of the infrastructure
b. There is severe inflation in wholesale and retail prices
c. Economic growth leads to widespread unemployment among workers
d. The outputs of some industries become inputs for other industries
6. The market system communicates changes in supply and demand and elicits appropriate responses from businesses and resource suppliers. This is known as the:
a. Rationing function of prices
b. Guiding function of prices
c. Monetary function of prices
d. Circular flow of income
7. An increase in the quantity of automobiles supplied would be caused by which be caused by which of the following?
a. An increase in the demand for automobiles
b. A decrease in the demand for automobiles
c. Higher prices for steel
d. Higher prices for gasoline
8. All of the following would cause an increase in the demand for private airplanes at a given price, except a:
a. Decrease in interest rates
b. Increase in consumer incomes
c. Decrease in taxes on luxury goods
d. Decrease in the costs of constructing private airplanes
9. In modern economies of mass production,
a. Biological need motivates most consumption
b. The intrinsic value of goods and services motivates mass consumption
c. Affluence makes relative depravation meaningless
d. Invidious comparison motivates much of mass consumption
10. a more equal distribution of income in the United States would result in greater total consumer satisfaction. This statement is based on the concept that:
a. Income inequality is unfair
b. Income inequality is undemocratic
c. Income equality stimulates efficiency
d. Incomes are subject to diminishing marginal utility
11. While command systems suffer from incentive problems, market economies
a. Have no incentive problems
b. Suffer from incentive problems of their own
c. Tend to resolve all problems by their own dynamics
d. Have problems to the degree that there is government interference.
12. What economic concepts can be used to explain the reason that a new car purchased by a consumer and driven off a new car lot decrease in value almost immediately compared with the value of the same make and model of a car still on the new car lot?
a. Positive and negative externalities
b. Liability rules and lawsuits
c. The Coase theorem and moral hazard
d. Asymmetric information and adverse selection
13. Consider a situation where the U.S. Congress wants to place a special tax on private airplanes to increase tax revenue. This tax would only be effective in raising new tax revenues if the price elasticity of:
a. Supply is elastic
b. Supply is inelastic
c. Demand is elastic
d. Demand is inelastic
14. Under what circumstances would you expect economic profits to be zero in a particular industry?
a. During a recession
b. When there is little competition in the industry
c. When the industry is neither expanding nor contracting
d. When the demand for the product being produced is increasing
16. If economic resources are perfectly interchangeable between the two products shown on a production possibilities graph:
a. The economy will always be at full employment
b. More of one product can be produced without producing less fo the other product
c. The production possibilities curve would be straight line
d. The two products are of equal value to the economy
17. Opportunity cost is best defined as:
a. Marginal cost minis marginal benefit
b. The time spent on an economic activity
c. The value of the best foregone alternative
d. The money cost of an economic decision
18. All of the following would affect the position of a country production possibilities curve expect:
a. The quality of labor
b. The level of employment
c. The amount of the capital stock
d. Technological progress
19. The post hoc, ergo propter hoc fallacy consists of:
a. Using an example to a different point
b. Inferring causality from chronological sequence
c. Jumping to conclusions from an inadequate number of cases
d. Arguing for or against the person rather than the position being supported
20. Which is one of the five fundamental question that needs to be answered by economic system
a. What is the rate of unemployment?
b. Who will be the richest person in the economy?
c. What goods and services will be produced?
d. Why are the prices for goods and services so high?
21. The institution of private property is sustained over time by:
a. Competition
b. Bequests
c. Self-interest
d. Free enterprise
Explanation / Answer
1. b. Finite, but economic wants are insatiable
Reason- People must make choices between different items because the resources necessary to fulfill their wants are limited. These decisions are made by giving up (trading off) one want to satisfy another.
2.
a. Is the quantity of wine purchased in one year dependent upon the price of wine?
Reason- Quantity of wine dependent on price of wine- a microeconomic question
3.
d. Restrict the analysis to effect of a single economic factor
Reason- Implementing the ceteris paribus assumption makes it possible to isolate the effect one factor has on another in the derivation and testing of hypotheses and principles.
4.
d. Is often at odds with societies interests
Reason- profit motive apparently allows no room for the interests of the customer, the employee, or society and the environment, unless those interests happen to align with what the profit motive dictates.
5.
d. The outputs of some industries become inputs for other industries
Reason- In the system of central planning, all the decisions are taken by the central authority and system run supposedly most efficient manner
6.
b. Guiding function of prices
Reason- guiding function of prices through changes in prices the market system communicates changes in such basic matters as consumer tastes and elicits appropriate responses for businesses and resource suppliers
7.
a. An increase in the demand for automobiles
Reason- Increased demand will increase supply. All other factors will decrease supply
8.
d. Decrease in the costs of constructing private airplanes
Reason- Decrease in the costs of constructing private airplanes will cause the decrease in the price of planes. All other factors will cause increase in the demand for private airplanes
9.
d. Invidious comparison motivates much of mass consumption
Reason- Invidious comparison refers to a situation when customers consume conspicuously to distinguish themselves from other consumers. This phenomenon primarily drives masss consumption
10.
d. Incomes are subject to diminishing marginal utility
Reason- because it implies that raising the income of poor
people or poor countries will raise their well-being considerably, while an increase of equal amount forthe rich will have comparatively little effect.
11.
c. Tend to resolve all problems by their own dynamics
Reason- Market economies are notable for allowing the incentives that solve the allocation
and performance problems to develop and operate with comparatively limited state
intervention. Market processes generally determine the structure of incentives that
solve the allocation problem, while organisations generally devise incentives to address
the performance problem.
12.
d. Asymmetric information and adverse selection
Reason - The consumer believes that the new car has an average probability of having any defects because it has only been driven by the seller who is engaged in an ongoing business with a reputation to uphold. Once the car is purchased, it is subject to use and treatment that may or may not be appropriate for the mechanical well being of the car.
13.
d. Demand is inelastic
IReason-
f demand is inelastic, special tax will not decrease demand and tax revenue will rise
14.
c. When the industry is neither expanding nor contracting
Rason- Firms will continue to enter a industry untill economic profit is zero. No entry or exit when economic profit is zero
16.
c. The production possibilities curve would be straight line
Reason- This happens when economic resources are perfectly substitutable between the production of the two products.
17.
c. The value of the best foregone alternative
Reason- In microeconomic theory, the opportunity cost of a choice is the value of the best alternative forgone, in a situation in which a choice needs to be made between several mutually exclusivealternatives given limited resources.
18.
b. The level of employment
19.
b. Inferring causality from chronological sequence
Reason- Post hoc ergo propter hoc (Latin: "after this, therefore because of this") is a logical fallacy (of the questionable cause variety) that states "Since event Y followed event X, event Y must have been caused by event X." It is often shortened to simply post hoc.
20.
c. What goods and services will be produced?
21.
b. Bequests
Reason--
Private property is the right of persons and firms to obtain, own, control, employ, dispose of, and bequeath land, capital, and other forms of property.
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