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Ketchup is a ________ for French fries; potato chips are a ___________ for French fries.
substitute … complement.<br>(b) complement … substitute.<br>(c) substitute … substitute.
<br>(d) complement … complement.
<br>(e) income effect … substitution effect.
<br>(b) Yes, because it is priceless.
<br>(c) Yes, because it is done effectively in groups as well as individually.
<br>(d) No, because it does not cost any money and it is freely available to all (
except in public schools).
<br>(e) No, because prayer is a “service” rather than a “good”.
3. One reason the demand curve is downward sloping (as price decreases, quantity demanded increases) is because
(a) as the price of a good decreases, it becomes
more attractive as a substitute for something else.<br>(b) as the price of a good decreases, it becomes less attractive as a substitute for something else.<br>(c) as the price of a good decreases, it shifts from being a substitute to being a complement.
<br>(d) as the price of a good decreases, it becomes causes a loss in income.
<br>(e) as the price of a good increases, it becomes a better substitute.
opportunity cost of not going to a church party includes: (a) Not making new friends. <br>(b) Not seeing old friends. <br>(c) Not enjoying the gathering itself. <br>(d) Not learning information about new opportunities. <br>(e) All of the above.
5. On “iTunes” on the internet, when a visitor buys one song, iTunes lists other similar songs that the visitor might also like and want to buy. The software makes it very easy and convenient for the visitor to sample or hear portions of similar songs, which the visitor might enjoy immensely. This extra, free service by iTunes is an example of which of the following principles in economics?
(a) The Invisible Hand: by trying to sell its other songs, iTunes provides
a benefit to potential buyers.
<br>(b) The Law of Diminishing Returns: visitors will keeping buying and buying with no end.
<br>(c) The Law of Demand.
<br>(d) The Invisible Hand: by using the internet, the “hand” seems invisible due to technology.
<br>(e) Giffen goods do exist and are all around us.
taxes<br>(b) efficiency<br>(c) costs<br>(d) wages<br>(e) union power
7. A one-word description for transaction costs would be this:
8 . According to the Law of the Demand, when the price of a good increases, the demand:
<br>(d) increases, then decreases.
<br>(e) decreases, then increases
Use the following table to answer questions
9 through 12, where the total costs for a firm are listed alongside the number of units (output) level for each cost figure.
$300<br>(d) $400<br>(e) $1200
$550<br>(d) $1100<br>(e) $2200
(a) supply increases.
<br>(b) supply decreases.
supply remains the same.<br>(d) it depends on what the demand curve looks like.<br>(e) there is no way to answer this question without more information.
(a) The Law of Demand does not apply to purple balloons.
<br>(e) Purple balloons are price inelastic.
<br>(e) Less than its marginal cost.
(a) “Once I saw that fantastic movie, I wanted even more to see it again!”
<br>(e) “The lower its price is, the more that people want to buy it!”
[[Image:Consumer and Producer Surplus.png]]
Suppose a price ceiling is set at $2. What is the surplus or shortage of goods in the market?
<br>(e) Shortage: 800 units.
(a) a total of 2 servings of turkey and 1 serving of stuffing, for 22 overall points of utility.
<br>(d) a total of 2 servings of turkey and 1 serving of stuffing, for 26 overall points of utility.
<br>(e) a total of 3 servings of turkey and 3 servings of stuffing, for 29 overall points of utility.
20. Which is an example of Gresham’s Law when extended to a social situation?
(a) Your minister negotiated a new contract for use of a baseball field.
<br>(b) A few people in your youth group started swearing all the time and acting rudely, and since then discussions about the Bible have disappeared and some have left the group.
) Inflation increased when the dollar was placed on the gold standard. <br>(d) Your minister told everyone to bring their own Bible to the Sunday services.<br>( e) Tighter airport security has led to more people driving to their destinations.
21. What type of good does this indifference curve represent?
<br>(e) Perfect Knowledge
24 . Suppose a firm has a marginal revenue that is greater than marginal cost. What does the firm do with its output?
(a) it increases its output as much as it can.
<br>(e) it shuts down.
<br>(e) there is insufficient information to answer this question.
(a) use the inputs having the lowest relative cost
<br>(e) adjust inputs until the marginal product of each is equally high
(a) A and B are substitutes, while C and D are complements.
<br>(e) A, B, C and D are complements.
(a) You cannot reduce your average total cost any more than you already have.
<br>(d) costs exceed revenue.
<br>(e) marginal cost exceeds marginal revenue.
(a) transaction costs are always expensive
<br>(b) transaction costs are the same as taxes
<br>(c) transaction costs are the total of what people pay when they buy something
<br>(d)transaction costs interfere with the ability of people to arrange for the most efficient use of time and resources
<br>(e) transaction costs help employ people, and thus are always a good thing
(a) In the short run, demand for good A increases by 40%; in the long run, demand for good A increases by 75%.
<br>(d) In the short run, demand for good A decreases by 80%; in the long run, demand for good A increases by 150%.
<br>(e) In the short run, demand for good A decreases by 60%; in the long run, demand for good A increases by 150%.
(a) Unemployment increases.
<br>(e) The minimum wage is increased.
(a) P>AVC and P>ATC.
<br>(b) P>AVC and P<ATC.
P<ATC and P<AVC.
<br>(d) P<AVC and P<ATC.
<br>(e) P=AVC and P=ATC.
In Luke 13:6-9, Jesus told this parable: “A man had a fig tree which had been planted in his vineyard; and he came looking for fruit on it and did not find any. And he said to the vineyard-keeper, ‘Behold, for three years I have come looking for fruit on this fig tree without finding any. Cut it down! Why does it even use up the ground?’ And he answered and said to him, ‘Let it alone, sir, for this year too, until I dig around it and put in fertilizer and if it bears fruit next year, fine; but if not, cut it down.’” Which principle of economics does their agreement to
chop down the tree if it does not bear fruit soon illustrate?
(a) Caveat emptor.