Question: “Utility” is the satisfaction that a consumer receives from consuming a good or service. True or False: Because utility is subjective (based on personal opinion), utility cannot be measured.
Answer Choices:
True
False
Answer: False
Question: The “Business Cycle” refers to regular and predictable changes in output that occur throughout the year, such as the increase in consumer expenditure that occurs during the holiday season.
Answer Choices:
True
False
Answer: False
Question: In 1970 LouAnn purchased a new Ford Bronco for $4,000. In 2019 she sold the truck for $20,000. Which of the following are true regarding how these transactions are recorded in US GDP? (choose all that are correct)
Answer Choices:
$4,000 in consumer spending was recorded in 1970 GDP.
$20,000 in consumer spending was recorded in 2019 GDP.
$16,000 in income was recorded in 2019 GDP.
$24,000 in income was recorded in 2019 GDP.
Answer: $4,000 in consumer spending was recorded in 1970 GDP.
Question: Storming includes competition among group members and is an inappropriate part of the group process.
Answer Choices:
True
False
Answer: False
Question: Which of the following is the best description of “normal profit”?
Answer Choices:
Earning a normal profit means that accounting profit is zero.
Earning a normal profit means that economic profit is zero.
Earning a normal profit means doing better than your next best alternative.
Answer: Earning a normal profit means that economic profit is zero.
Question: Conflict is a symptom of a dysfunctional team.
Answer Choices:
True
False
Answer: False
Question: Where businesses engage in price discrimination, more units of the good will be bought and sold. This increases the overall efficiency of the market.
Answer Choices:
True
False
Answer: True
Question: Chaos is a sign of failure in the change process.
Answer Choices:
True
False
Answer: False
Question: In 2018 Dave’s salary was $50,000. In 2019 his salary was 2% higher, $51,000. If inflation between 2018 and 2019 was 3%, which of the following is true?
Answer Choices:
Dave’s nominal and real income increased from 2018 to 2019.
Dave’s nominal and real income decreased from 2018 to 2019.
Dave’s nominal income increased but his real income decreased from 2018 to 2019.
Dave’s real income increased but his nominal income decreased from 2018 to 2019.
Answer: Dave’s nominal income increased but his real income decreased from 2018 to 2019.
Question: Using the data below what is the real value (in base-period dollars) of a 2015 nominal income of $60,000?
Year CPI
2006 201.60
2007 207.34
2008 215.30
2009 214.54
2010 218.06
2011 224.94
2012 229.59
Answer Choices:
2013 232.96
2014 236.74
2015 237.02
Answer: 25314
Question: In 1970 LouAnn purchased a new Ford Bronco for $4,000. In 2019 she sold the truck for $20,000. Which of the following are true regarding how these transactions are recorded in US GDP? <choose all that are correct>
Answer Choices:
$4,000 in consumer spending was recorded in 1970 GDP.
$20,000 in consumer spending was recorded in 2019 GDP.
$16,000 in income was recorded in 2019 GDP.
$24,000 in income was recorded in 2019 GDP.
Answer: $4,000 in consumer spending was recorded in 1970 GDP.
Question: Ann has a consulting business. Ann’s opportunity costs are $60,000 per year in salary that she could have earned working for someone else and $2,000 per year in interest earnings that she gave up when she sold some stock to start her business. Ann’s explicit costs are $10,000 in advertising expenses, $8,000 in rent and $2,000 for materials. Ann earned $70,000 in revenue.
How much was her economic profit?
Answer Choices:
$42,000
$28,000
$50,000
$8,000
$92,000
Answer: $28,000
Question: In economic theory, demand refers to the various amounts of goods or services that consumers are willing to buy over a specified time period ________.
Answer Choices:
as their income changes
as their tastes change
at various prices
when prices increase
Answer: at various prices
Question: As a feature of demand for labor, which of the following scenarios offers the best example of derived demand?
Answer Choices:
A decline in the demand for movie tickets causes a decline in the demand for ushers.
A decline in the demand for movie tickets causes a decrease in the demand for popcorn.
An increase in the demand for movie tickets causes an increase in the demand for movies.
An increase in the demand for movie tickets causes an increase in the price of tickets.
Answer: A decline in the demand for movie tickets causes a decline in the demand for ushers.
Question: When an economy is operating at the natural rate of unemployment, cyclical unemployment is zero.
Answer Choices:
True
False
Answer: True
Question: A.C. Pigou and R. Coase had different ideas for how to address the market inefficiency associated with negative externalities.
Pigou prescribed ____________, and Coase prescribed ____________.
Answer Choices:
Taxes, Property rights
Property rights, Taxes
Subsidies, Taxes
Less government control, more government control
Answer: Taxes, Property rights
Question: In 2015 Joe was employed as an instrument technician at the Detroit Water and Sewerage Department. Due to a decrease in demand, Joe was laid off in January of 2016. After searching unsuccessfully for employment for 5 months, he became discouraged and stopped looking for a job. What type of unemployment did Joe experience in the second half of 2016?
Answer Choices:
Structural unemployment
Frictional unemployment
Cyclical unemployment
Not in the labor force
Answer: Not in the labor force
Question: Which of the following is true regarding increases in nominal GDP?
Answer Choices:
Nominal GDP can increase only if total output is increasing.
Nominal GDP can decrease even if prices are rising and output is rising.
Nominal GDP can increase even if total output is declining.
Nominal GDP can increase even if prices are rising and output is rising.
Answer: Nominal GDP can increase even if total output is declining.
Question: In 2015 Joe was employed as an instrument technician at the Detroit Water and Sewerage Department. Due to a decrease in demand, Joe was laid off in January of 2016. After searching unsuccessfully for employment for 5 months, he became discouraged and stopped looking for a job. What type of unemployment did Joe experience in the second half of 2016?
Answer Choices:
Structural unemployment
Frictional unemployment
Cyclical unemployment
Not in the labor force
Answer: Not in the labor force
Question: Which of the following firms is most likely to be a natural monopoly?
Answer Choices:
ALCOA (producer of aluminum)
Cape Fear Public Utility Authority (supplier of municipal water)
Pfizer (producer of pharmaceutical products)
The state of North Carolina (seller of NC Education lottery tickets)
Xerox (producer of photocopy machines)
Answer: Cape Fear Public Utility Authority (supplier of municipal water)
Question: In the US, which of the following components of spending has historically accounted for the largest percentage of GDP?
Answer Choices:
Government spending
Investment spending
Consumption spending
Net exports (exports – imports)
Answer: Consumption spending
Question: Which of the following are true regarding the CPI? <choose all that are correct>
Answer Choices:
The basket of goods included in the CPI is updated every year.
The CPI is calculated by the U.S. Bureau of Labor Statistics (BLS) every month.
Changes in the CPI are commonly used to measure inflation.
When new products are introduced into consumer markets, they are immediately included in the CPI market basket of goods.
To accurately measure average prices, the CPI gives all goods and services equal weight.
Answer: The CPI is calculated by the U.S. Bureau of Labor Statistics (BLS) every month.
Changes in the CPI are commonly used to measure inflation.