Economics Quiz

The term used to describe a situation in which markets do not allocate resources efficiently is

Refer to Table 2-2. What is the opportunity cost to Batterland of increasing the production of pancakes from 150 to 300?

Which of the following would most likely serve as an example of a monopoly?

The term used to describe a situation in which markets do not allocate resources efficiently is

• economic meltdown

• market failure

• equilibrium

• the effect of the invisible hand

Prices direct economic activity in a market economy by

• influencing the actions of buyers and sellers

• reducing scarcity of the goods and services produced

• eliminating the need for government intervention

• allocating goods and services produced in the most equitable way

The term market failure refers to

• a. a situation in which the market on its own fails to allocate resources efficiently.

• b. an unsuccessful advertising campaign which reduces demand for a product.

• c. a situation in which competition among firms becomes ruthless.

• d. a firm which is forced out of business because of losses.

The terms equality and efficiency are similar in that they both refer to benefits to society. However they are different in that

• equality refers to uniform distribution of those benefits and efficiency refers to maximizing benefits from scarce resources

• equality refers to maximizing benefits from scarce resources and efficiency refers to uniform distribution of those benefits

• equality refers to everyone facing identical tradeoffs and efficiency refers to the opportunity cost of the benefits

• equality refers to the opportunity cost of the benefits and efficiency refers to everyone facing identical tradeoffs

When economists make normative statements, they are

• a. speaking as scientists.

• b. speaking as policy advisers.

• c. making claims about how the world is.

• d. revealing that they are very liberal in their views of how the world works.

An increase in the overall level of prices in an economy is referred to as

• a. economic growth.

• b. inflation.

• c. monetary policy.

• d. supply shocks.

When economists attempt to simplify the real world and make it easier to understand they make

• a. assumptions.

• b. mistakes in judgment.

• c. predictions.

• d. evaluations.