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Exam One – Attempt 1
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Question 1
Marks: 1
According to comparative advantage, trade between two countries:
Choose one answer.
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a. guarantees that consumption levels will be equal in the two countries. ?
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b. will benefit all the industries in each of the countries. ?
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c. maximizes the amount of inputs that are used in the production of all products. ?
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d. allows each of the trading countries to use its resources most efficiently. ?
Question 2
Marks: 1
What happens if the price of a product is below the equilibrium price?
Choose one answer.
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a. There will be an excess demand for the product. ?
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b. The producer will raise the price to make more profit. ?
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c. The buyers will stop purchasing a “cheap” product. ?
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d. none of the above ?
Question 3
Marks: 1
If we wish to observe the effect that an increase in Variable X has on Variable Y as long as nothing else is changing, then we are making the assumption of:
Choose one answer.
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a. normative economics. ?
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b. ceteris paribus. ?
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c. positive economics. ?
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d. false cause. ?
Question 4
Marks: 1
Which of the following is an example of a normative statement?
Choose one answer.
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a. Equilibrium price implies that quantity demanded equals quantity supplied. ?
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b. An increase in consumer income will lead to more purchases of new cars. ?
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c. There should be no unemployment in an advanced industrial society. ?
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d. Higher prices cause consumers to buy less. ?
Question 5
Marks: 1
The face value of money or income is called its ________ value.
Choose one answer.
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a. nominal ?
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b. real ?
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c. external ?
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d. marginal ?
Question 6
Marks: 1
In modern economies, individuals in markets make most of the decisions about:
Choose one answer.
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a. for whom to produce. ?
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b. all of the above ?
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c. how to produce. ?
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d. what to produce. ?
Question 7
Marks: 1
If a competitive market operates perfectly, it relies on
Choose…