The last samurai
Macro Fall 2009 Test 1
Multiple Choice
Identify the choice that best completes the statement or answers the question.
____ 1. Sophia is planning her activities for a hot summer day. She would like to go to the local swimming pool and see the latest blockbuster movie, but because she can only get tickets to the movie for the same time that the pool is open she can only choose one activity. This illustrates the basic principle that
a.
people respond to incentives.
b.
rational people think at the margin.
c.
people face tradeoffs.
d.
improvements in efficiency sometimes come at the expense of equality.
____ 2. Which of the following phrases best captures the notion of efficiency?
a.
absolute fairness
b.
equal distribution
c.
minimum waste
d.
equitable outcome
____ 3. Market failure can be caused by
a.
low consumer demand.
b.
equilibrium prices.
c.
externalities and market power.
d.
high prices and foreign competition.
____ 4. Which of the following is an example of an externality?
a.
Aaron purchases a new flat screen television.
b.
Bonnie cannot catch the flu from Bobby because Bobby got a flu vaccine.
c.
Clyde sells a book to Cathy.
d.
Doug turns up the heat in his apartment.
____ 5. Which of these consumption activities will most likely impose an external cost?
a.
An athlete works out at a gym.
b.
A secretary smokes a cigarette in a crowded break room.
c.
A young mother pushes her baby in a stroller.
d.
A construction worker eats a hotdog during his lunch break.
____ 6. In the United States, incomes historically have grown about 2 percent per year. At this rate, average income doubles every
a.
15 years.
b.
25 years.
c.
35 years.
d.
45 years.
____ 7. Productivity is defined as the
a.
amount of goods and services produced from each unit of labor input.
b.
number of workers required to produce a given amount of goods and services.
c.
amount of labor that can be saved by
Multiple Choice
Identify the choice that best completes the statement or answers the question.
____ 1. Sophia is planning her activities for a hot summer day. She would like to go to the local swimming pool and see the latest blockbuster movie, but because she can only get tickets to the movie for the same time that the pool is open she can only choose one activity. This illustrates the basic principle that
a.
people respond to incentives.
b.
rational people think at the margin.
c.
people face tradeoffs.
d.
improvements in efficiency sometimes come at the expense of equality.
____ 2. Which of the following phrases best captures the notion of efficiency?
a.
absolute fairness
b.
equal distribution
c.
minimum waste
d.
equitable outcome
____ 3. Market failure can be caused by
a.
low consumer demand.
b.
equilibrium prices.
c.
externalities and market power.
d.
high prices and foreign competition.
____ 4. Which of the following is an example of an externality?
a.
Aaron purchases a new flat screen television.
b.
Bonnie cannot catch the flu from Bobby because Bobby got a flu vaccine.
c.
Clyde sells a book to Cathy.
d.
Doug turns up the heat in his apartment.
____ 5. Which of these consumption activities will most likely impose an external cost?
a.
An athlete works out at a gym.
b.
A secretary smokes a cigarette in a crowded break room.
c.
A young mother pushes her baby in a stroller.
d.
A construction worker eats a hotdog during his lunch break.
____ 6. In the United States, incomes historically have grown about 2 percent per year. At this rate, average income doubles every
a.
15 years.
b.
25 years.
c.
35 years.
d.
45 years.
____ 7. Productivity is defined as the
a.
amount of goods and services produced from each unit of labor input.
b.
number of workers required to produce a given amount of goods and services.
c.
amount of labor that can be saved by