1.

(01.01 MC) Why might salt be a resource with a high cost in one market and a very low cost in another market? (1 point)

	Trade could affect costs.
	Its supply could be scarce in one market and very great in another.
	The higher cost market might have a much lower demand for salt than its supply.
	The higher cost market might have no demand for salt.
	The lower cost market might have more trade-offs for salt harvesting.

2.

(01.02 LC) Resource allocation is determined by which of the following? (1 point)

	What are the most advantageous terms of trade?
	When does marginal cost equal marginal benefit?
	Which economy enjoys a lower opportunity cost for this good?
	What is essential knowledge to pass on to the next generation?
	What goods and services should be produced?

3.

(01.03 LC) (1 point) Which of the following points represents a failure to maximize productive resources?

	D only
	E only
	A and E
	B and D
	B, C, and D

4.

(01.03 MC) A production possibility curve would ________ if the availability of an input increased and would ________ if a lack of technology decreased production efficiency. (1 point)

	shift outward; shift inward
	not move; shift outward
	not move; not move
	shift outward; shift outward
	shift inward; shift inward

5.

(01.04 MC) If a country, individual, or business can produce one unit of output using the fewest resources relative to all other producers of the same output, then it must have ________ in that good. (1 point)

	an absolute advantage
	superior human capital
	a comparative advantage
	achieved allocative efficiency
	achieved productive efficiency

6.

(01.04 MC) In the country Gamma, it takes 6 hours to produce 1 automobile and 1 hour to produce a bale of cotton. In the country Delta, it takes 4 hours to produce 1 automobile and 1 hour to produce a bale of cotton. Which country should specialize in automobiles and which should specialize in cotton? (1 point)

	Neither Delta nor Gamma should specialize in automobiles or cotton.
	Delta should specialize in automobiles and cotton.
	Delta should specialize in automobiles, and Gamma should specialize in cotton.
	Gamma should specialize in automobiles and cotton.
	Gamma should specialize in automobiles, and Delta should specialize in cotton.

7.

(01.05 LC) Every choice requires a sacrificed or foregone best alternative. Economists call this the (1 point)

	fixed cost
	accounting cost
	normative cost
	positive cost
	opportunity cost

8.

(01.05 MC) A consulting firm gives the managing director the following options to improve his company.

	Cost (thousands of dollars)	Benefit (thousands of dollars)
Option A	10	50
Option B	50	100
Option C	120	150
Option D	200	210
Option E	125	200

Based on the data provided, which option returns the lowest net benefit? (1 point)

	Option A
	Option B
	Option C
	Option D
	Option E

9.

(01.06 MC) The table below shows the marginal utility that David enjoys based on the number of t-shirts he purchases.

T-shirts Purchased	Marginal Utility
1	8
2	7
3	6
4	5
5	4
6	2

Based on the table above, what is the total utility that David enjoys from purchasing three t-shirts? (1 point)

	6 utils
	12 utils
	15 utils
	18 utils
	21 utils

10.

(01.06 MC) Below is the total benefit Kenneth estimates he would get for jars of chocolate-flavored hazelnut butter.

Jars	Total Benefit (dollars)
1	5
2	9
3	12
4	14
5	15
6	14
7	10

What is Kenneth's marginal benefit for his 6th jar of chocolate flavored hazelnut butter? (1 point)

	1
	0
	1
	4
	14

11.

(02.01 MC) Economic theory teaches that a consumer's quantity demanded may not change in response to a lower price when (1 point)

	consumers are not always rational
	not all consumers seek to maximize their utility per dollar
	their demand may be perfectly inelastic
	they do not consider the lower price an incentive to consume
	their demand may be perfectly elastic

12.

(02.01 MC) Which of the following would cause the demand curve for milk to shift to the right? Assume it is a normal good. (1 point)

	The number of people who cannot drink milk increases.
	A major economic downturn lowers the average household income.
	The price of one of its substitutes goes down.
	A significant number of people move into the market.
	News of a new technology in the milking process makes consumers expect prices to lower soon.

13.

(02.02 MC) A producer of widgets decides to stop producing widgets. Ceteris paribus, if this producer of widgets had a typical supply curve before their exit from the widget-making industry, what must happen to the market supply curve? (1 point)

	It will not change.
	It will become more elastic.
	There is insufficient data to determine.
	It will shift right at every price with more output supplied.
	It will shift left at every price with less output supplied.

14.

(02.02MC) What would be the effect of a new government subsidy on a good's supply curve, ceteris paribus? (1 point)

	No change
	A shift to the left
	A shift to the right
	A decrease in price
	A decrease in quantity supplied

15.

(02.03 MC) If an increase in a product's price increases the total revenue businesses collect, what must be true? (1 point)

	Exchange is in the elastic part of the demand curve for its product.
	Exchange is in the inelastic part of the demand curve for its product.
	The firm is charging too much.
	The market is not perfectly competitive.
	The product's elasticity coefficient must be greater than one for this range.

16.

(02.03 MC) Use the graph to answer the question that follows. (1 point) What is the price elasticity of demand when price increases from $4 to $6?

	0.33
	0.66
	1.22
	5
	12.2

17.

(02.04 MC) What is the price elasticity of supply for a good that sees a 4% increase in quantity supplied for a 2% increase in price? (1 point)

	0.5
	1
	2
	8
	16

18.

(02.05 MC) If the price of Good A goes down by 5 percent and the quantity demanded of Good B goes down by 5 percent, which of the following is true? (1 point)

	Both goods have unit elastic supply.
	The goods are complements, and the cross-price elasticity is 1.
	The goods are substitutes, and the cross-price elasticity is 1.
	The goods are complements, and the cross-price elasticity is 1.
	The goods are substitutes, and the cross-price elasticity is 25.

19.

(02.06 HC) Use the graph to answer the question that follows. (1 point) If the price is set at P3, what area represents the total economic surplus?

	A + B + C + D
	A + B + C
	A + B + C + F + G
	D
	E

20.

(02.06 MC) What distinguishes the supply and demand model from the short-run cost curves model? (1 point)

	Supply and demand show the interaction between consumers and producers; short-run cost curves show how product supply curves are determined.
	Supply and demand show the flow of outputs between economic actors; short-run cost curves show the flow of inputs between suppliers.
	Supply and demand show a product market in the long run; short-run cost curves show the product market for a set time.
	Supply and demand show the relationship between inputs and outputs; short-run cost curves show the relationships among various inputs.
	Supply and demand show the ideal price in the product market; short-run cost curves show the ideal price in the resource market.

21.

(02.07 MC) Use the graph to answer the question that follows. (1 point) A shortage will exist in this market whenever price is

	above P3
	below P2
	above P2
	equal to P3
	indeterminate

22.

(02.08 MC) Which of the following, ceteris paribus, would lead to an increase in quantity consumed and a decrease in price? (1 point)

	A lump-sum tax
	A per-unit tax
	A binding price floor
	A decrease in income tax
	A per-unit subsidy

23.

(02.08 MC) Which of the following is the result whenever the government intervenes in an efficient market and creates deadweight loss? (1 point)

	Productive inefficiency
	Allocative inefficiency
	Shortages
	Unemployment
	Tax revenue

24.

(02.09 MC) How would the creation of an import quota affect the market for a good? (1 point)

	Imported supply increases
	Domestic supply decreases
	Market price increases
	Consumer surplus increases
	Producer surplus decreases

25.

(03.01 MC) A business hires workers to help harvest blueberries. The following table shows the marginal productivity of each worker in number of bushels of blueberries.

Number of Workers	Marginal Product
1	7
2	10
3	12
4	11
5	9
6	6

Which number of workers produces a total product of 49 bushels of blueberries? (1 point)

	2
	3
	4
	5
	6

26.

(03.02 MC) In the short run, a firm's total cost is $200 if it does not produce any units of output. Its variable cost is $10 per unit. If the firm produces 5 units, variable costs are ________, while fixed costs are ________. (1 point)

	$20; $200
	$20; $250
	$50; $200
	$50; $250
	$250; $450

27.

(03.02 MC) Use the graph to answer the question that follows. (1 point) The shift indicated on the graph could be explained by

	an increase in fixed costs
	increased productivity
	decreased productivity
	a decrease in variable costs
	a decrease in total costs

28.

(03.02 MC) The entire market for a good is 1,000 units, and the minimum efficient scale is 5 units. Which of the following terms accurately describes this market? (1 point)

	Inefficient
	Concentrated
	Fragmented
	Monopolized
	Diseconomy

29.

(03.03 MC) Use the graph to answer the question. (1 point) Which of the following would accurately describe firms unable to achieve the minimum efficient scale?

	They would produce closer to point D.
	They would be unable to cross the range from B to C.
	They are producing between A and B.
	They are producing between C and D.
	They are producing beyond point D.

30.

(03.04 MC) A firm's total revenue is $50,000. Its explicit costs are $40,000. Its accounting profit is $10,000, while its economic profit is $5,000. What are its implicit costs? (1 point)

	$0
	$5,000
	$10,000
	$40,000
	$90,000