Questions and Answers of Principles Of Economics

The statement, “the market price of soybeans is $$4.50$ per bushel” is an example of:a . positive economics b . normative economics c . a value judgment d . consumer behavior
The statement, “the price of wheat should be higher” is an example of:a . positive economics b . normative economics c . a factual statement d . consumer behavior
If the price of wheat rises, who is made better off?a . producers b . consumers c . both a and b d . neither a nor b
An increase in the price of wheat is good for:a . wheat producers b . milling and baking firms c . bread consumers d . cattle producers
Scarcity affects:a . industrial firms b . agricultural producers c . Internet users d . everyone
Scarcity:a . reflects limited resources and unlimited desires b . affects religious persons c . forces us to choose d . all of the other three answers
An example of an economic good is:a . a cookie b . pollution c . garbage d . disease
The following is a noneconomic good:a . a cookie b . a sunset c . a football d . a Lexus automobile
In a market economy, resources are allocated by:a . prices b . whoever is in charge c . an elected group of officials d . a disaster
The United States is an example of:a . a command economy b . a market economy c . a mixed economy d . none of the other three answers
What percent of the US population is engaged in production agriculture?a . 16 b . 3 c . 2 d . 25
If the price of corn increases relative to the price of other crops:a . farmers will plant more corn b . farmers will plant less corn c . farmers will plant the same amount of corn d . a corn
If the price of all crops increases, then:a . farmers will plant more corn b . farmers will plant less corn c . farmers will plant the same amount of corn d . a corn consumer will purchase more
The price of corn is written in which form?a . $$2$ b . $$2/bushel$ c . 2 bushels d . 2 bushels/$$$
The production function is:a . an economic relationship b . a physical relationship c . a mathematical property d . a party for producers
In the following production function, Y = f(L| K, A, M):a . ceteris paribus does not hold b . labor is held constant c . land is allowed to vary d . labor is allowed to vary
Economists assume that producers attempt to:a . do the best that they can to get by b . maximize profits c . feed the world d . produce enough food to feed their family
Profits are equal to:a . costs of production minus revenue b . total revenue minus total costs c . average revenue minus average costs d . marginal revenue minus marginal costs
The long run is defined as:a . ten years b . one year c . depends on the situation d . when at least one input is fixed
If all inputs are variable except land for a wheat producer, then:a . the firm is in the short run b . the firm is in the long run c . the firm is in the immediate run d . the firm is not in
A variable input is one that:a . changes with the weather b . moves up and down c . varies with the level of output d . varies with the level of other inputs
In decreasing returns, an additional unit of input added to a production process:a . increases output at an increasing rate b . decreases output c . increases output, but at a decreasing rate d .
When too much of an input is used, and output decreases, the production process results in:a . constant returns b . increasing returns c . decreasing returns d . negative returns
If average productivity is 20 bu/acre, and marginal productivity is 30 bu/acre then:a . average productivity is increasing b . average productivity is decreasing c . average productivity is
The relationship between average and marginal is:a . average causes marginal b . marginal causes average c . average chases marginal d . marginal chases average
Corn producers interested in maximizing profits should:a. maximize yieldb. maximize revenuec. consider both costs and revenued. minimize costs
Accounting costs include all of the following except:a. electricity paymentb. payment to hired workersc. how much money the operator could earn as a plumberd. fertilizer costs
Opportunity costs are:a. explicit costsb. the value of a resource in its current usec. implicit costsd. the value of a resource in its previous use
Economic profits are:a. accounting profitsb. total revenue minus accounting costsc. total revenue minus accounting costs and opportunity costsd. total revenue minus marginal costs
When economic profits equal zero:a. the firm should shut downb. the firm must increase profitsc. the resources employed by the firm are underpaidd. resources are earning exactly what they are worth
In a situation of negative economic profits:a. the costs of production cannot be paidb. accounting profits are negativec. accounting profits could be positive or negatived. the firm will shut down
In the short run:a. only fixed costs existb. only variable costs existc. both fixed and variable costs are presentd. neither fixed nor variable costs are present
Variable costs:a. do not change with the level of outputb. increase with the level of outputc. decrease with the level of outputd. fluctuate in a manner unrelated to the level of output
Total variable costs divided by output equal:a. average variable costsb. marginal costsc. average fixed costsd. total fixed costs
If MC > ATC, then:a. ATC are increasingb. ATC are decreasingc. ATC are constantd. cannot be determined from the information given
All of the following are typical variable costs for a small business except:a. electricityb. hired laborc. paperd. rental payment
For a fi rm with typical cost curves:a. the ATC increase then decreaseb. the ATC decrease then increasec. MC is greater than ATCd. ATC is greater than MC
A public utility such as Kansas Power and Light (KPL) is:a. an increasing cost fi rmb. a decreasing cost fi rmc. a constant cost firmd. cannot be determined from the information given
A coal mining company is:a. an increasing cost firmb. a decreasing cost firmc. a constant cost firmd. cannot be determined from the information given
A large number of buyers and sellers results in:a. a homogeneous productb. a fixed and constant pricec. freedom of entry and exitd. perfect information
All of the following have freedom of entry and exit except:a. gas stationb. copy storec. cable televisiond. clothing store
Which physical product curves can be graphed on the same graph?a. TPP and APPb. APP and MPPc. TPP and MPPd. TPP, APP, and MPP
The cost of an additional unit of input is:a. Total Revenue Productb. Marginal Factor Costc. Marginal Revenue Productd. Total Factor Cost
A firm will continue to purchase more input until:a. MPP = MFCb. MRP = P Yc. TRP = TFCd. MRP = MFC
When the price of corn increases, feedlots will:a. purchase more cornb. purchase less cornc. purchase same corn amountd. cannot tell
When the price of automobiles increases, Ford Motor Company will purchase:a. more glass, steel, and rubberb. less glass, steel, and rubberc. the same amount of glass, steel, and rubberd. cannot tell
If a tax is placed on gasoline, then a wheat producer will produce:a. more wheatb. less wheatc. the same amount of wheatd. cannot tell from the information given
The profi t-maximizing level of output can be found where:a. MR = MC, and MC cuts MR from belowb. MR = MC, and MC cuts MR from abovec. TR = TCd. the horizontal distance between TR and TC is largest
The shutdown point occurs where:a. P = min ATCb. P = min AVCc. ATC = AVCd. MR = MC
The break-even point occurs where:a. P = MR = MC = ATCb. P = min AVCc. AVC = ATCd. P = MC
To draw an isoquant, the graph must show:a. one input on each axisb. one input and one outputc. one output on each axisd. cost of production on the vertical axis
Each point on the isoquant shows:a. the same level of outputb. the same level of profitc. the same level of inputsd. the same level of expenditures
Relative prices are captured in the:a. equilibrium pointb. isoquantc. isocost lined. vertical axis
The optimal combination of inputs depends on:a. land grant university recommendationsb. traditionc. resource availabilityd. relative prices
In the wide open spaces of the American West, farms are likely to be:a. larger than in the Eastern USb. smaller than in the Eastern USc. the same size as in the Eastern USd. cannot determine from the
Sugar and High Fructose Corn Syrup (HFCS) are:a. perfect substitutesb. perfect complementsc. imperfect complementsd. imperfect substitutes
A pen and a pencil are:a. substitutesb. complementsc. unrelatedd. irreplaceable
Capital and labor are:a. perfect complementsb. perfect substitutesc. imperfect substitutesd. unrelated
If the price of the input on the x-axis decreases, then the slope of the isocost line will:a. become steeperb. become less steepc. shift out paralleld. shift in parallel
Labor-intensive agricultural production practices are most likely to occur in:a. Floridab. Kansasc. Texasd. Sub-Saharan Africa
The production possibilities frontier shows:a. all combinations of two inputs that can produce a constant level of outputb. all combinations of two outputs that can be produced with a constant level
A point located inside the PPF is:a. efficient and attainableb. efficient but not attainablec. not efficient but attainabled. neither efficient nor attainable
A point located outside of the PPF is:a. efficient and attainableb. efficient but not attainablec. not efficient but attainabled. neither efficient nor attainable
The Marginal Rate of Product Substitution refers to:a. the physical tradeoff between inputsb. the physical tradeoff between outputsc. the economic tradeoff between inputsd. the economic tradeoff
An individual who stays up so late that he feels sick the next day is:a. rationalb. irrationalc. not an economic individuald. cannot tell from the information given
Placing a numerical value on the consumption of a piece of apple pie is an example of:a. normative economicsb. cardinal utilityc. ordinal utilityd. positive economics
Modern economics uses which type of consumer theory?a. cardinal utilityb. ordinal utilityc. total utilityd. public utility
Marginal utility refers to:a. the extra level of electricity from a public utilityb. the level of satisfaction from consuming a goodc. utility derived from consuming a goodd. a change in utility when
When a consumer is indifferent between consuming an additional unit of a good:a. TU is negativeb. MU is equal to zeroc. TU is equal to zerod. MU is negative
All of the following are assumptions about consumer behavior except:a. complete preferencesb. consistent consumersc. nonsatiationd. relativity
Indifference curves are convex to the origin due to:a. the Law of Diminishing Marginal Utilityb. the Law of Diminishing Returnsc. relative pricesd. the Law of Demand
A tractor and a plow are:a. substitutesb. complementsc. perfect substitutesd. not enough information to answer
Peanut butter and jelly are:a. substitutesb. complementsc. perfect substitutesd. not enough information to answer
The indifference curve represents:a. consumer incomeb. consumer preferencesc. what consumers can affordd. what consumers actually purchase
An increase in the price of chicken will affect:a. the amount of chicken purchasedb. the amount of beef purchasedc. the relative price of beef and chickend. all of the other three answers
A general infl ation will lead to:a. a decrease in the consumption of beefb. an increase in the consumption of beefc. no change in the consumption of beefd. unemployment
If income decreases then the consumption of beef will:a. increaseb. decreasec. not changed. not enough information to answer
The individual firm supply curve is:a. the horizontal summation of the market supply curveb. the MC curve above the maximum ATCc. the MC curve above the minimum ATCd. the MC curve above the minimum
The market supply curve is:a. the MC curve above the minimum ATCb. the horizontal summation of all individual firm supply curvesc. the vertical summation of all individual firm supply curvesd. not
The Law of Supply states that:a. producers will always maximize profitsb. the price of a good and quantity supplied have a positive relationshipc. supply equals demandd. the Law of Diminishing
An elasticity measures:a. how prices affect inflationb. the Law of Supplyc. how economics influences the stock marketsd. how responsive one variable is to another variable
Relative to the elasticity of apples, the elasticity of fruit is:.a. more elasticb. less elasticc. the same level of elasticityd. not enough information provided to answer
If the price of a good increases 1 percent, and quantity supplied increases 2 percent, then the supply of the good is:a. elasticb. inelasticc. unitary elasticd. cannot tell from the information given
If a change in the price of apples results in a change in the quantity supplied of oranges, then the goods are:a. own-price elasticb. cross-price elasticc. relatedd. unrelated
If the price of fish increases, then there is a change in:a. the supply of fishb. the quantity supplied of fishc. the amount of fish soldd. cannot tell from the information given
Each of the following is a determinant of supply except:a. number of sellersb. technologyc. tastes and preferencesd. input prices
An individual demand curve for pizza can be derived with the following:a. prices of pizza, one other good, and incomeb. price of pizza and two other goodsc. incomed. price of pizza
If the price of milo increases:a. consumers will buy more milob. consumers will buy less miloc. consumers will buy the same amount of milod. cannot tell with the information given
Which has the least elastic demand curve?a. applesb. fruitc. foodd. oranges
If a firm faces an inelastic demand curve, then it will desire to:a. maintain output at the current levelb. increase output to increase revenuec. decrease output to increase revenued. purchase more
If the price of pork increases, then the following will result:a. a change in pork demand and a shift in pork demandb. a change in pork demand and a movement along the pork demand curvec. a change in
If the price of gold is expected to increase in the future, then:a. the demand for gold will increase todayb. the demand for gold will decrease todayc. the quantity demanded of gold will increase
The income elasticity of demand for food is:a. 0 < E m < 1b. E m < 0c. E m > 1d. E m = 0
If the quantity supplied is greater than quantity demanded, there is:a. trade deficitb. equilibriumc. shortaged. surplus
If the price is higher than the equilibrium price, then:a. quantity demanded is greater than quantity suppliedb. quantity supplied is greater than quantity demandedc. the price will increase over
An inverse demand function:a. is incorrectb. has price as a function of quantity demandedc. has quantity demanded as a function of priced. must be inverted to graph the function
An increase in income results in:a. no change in demandb. a change in quantity demandedc. a shift in demandd. a movement along the demand curve
An increase in the price of fertilizer will alter the market for wheat by:a. a leftward shift in demandb. a rightward shift in demandc. a leftward shift in supplyd. a rightward shift in supply
A price support results in:a. off-farm migrationb. shortagesc. surplusesd. lower prices
A price ceiling will result in:a. higher returns to producersb. higher pricesc. surplusesd. shortages

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