Economics for Non-Majors Final Exam Questions
Course Introduction
Economics for Non-Majors introduces students to the fundamental concepts and frameworks of economics without requiring prior knowledge of the subject. This course explores key principles such as supply and demand, market structures, opportunity cost, and the role of government in the economy. Through real-world examples and practical case studies, students will learn how economic decisions are made by individuals, businesses, and governments, and how these choices impact society. Emphasis is placed on critical thinking and applying economic reasoning to everyday issues, equipping students from diverse fields with valuable analytical tools for personal and professional decision-making.
Recommended Textbook
Essentials of Economics 9th Edition by Bradley R
Schiller
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Chapter 1: The Challenge of Economics
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Sample Questions
Q1) Society is producing some output,but some of the available resources are unemployed.Select the appropriate point.(See Figure 1.1)
A) A
B) B
C) C
D) D
Answer: C
Q2) Which of the following is true about the factors of production?
A) The factors of production as well as technology determine the physical limits to production.
B) Rich countries have an unlimited quantity of factors.
C) The factors include natural resources but not skilled labor.
D) Some factors are scarce but other factors are not.
Answer: A
Q3) Economic models:
A) Focus on details about the economy.
B) Focus on basic relationships.
C) Cannot be constructed because of the complexity of the economy.
D) Can be used to predict market behavior but not consumer behavior.
Answer: B
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Chapter 2: The US Economy
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Sample Questions
Q1) A capital-intensive production process increases the level of output per worker.
A)True
B)False
Answer: True
Q2) Which of the following countries currently has the largest GDP?
A) Japan.
B) China.
C) Britain.
D) United States.
Answer: D
Q3) Currently,the U.S.economy is best described as:
A) A service economy.
B) A manufacturing economy.
C) An agricultural economy.
D) A government economy.
Answer: A
Q4) In the United States,net exports account for two-thirds of GDP.
A)True
B)False
Answer: False
Page 4
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Chapter 3: Supply and Demand
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Sample Questions
Q1) One NEWSWIRE article in the text,"Hurricane Sandy to Raise Prices on Used Cars" describes the impact of thousands of cars being destroyed by the storm.This is an example of:
A) An increase in supply.
B) A decrease in supply.
C) An increase in demand.
D) A decrease in demanD.
Answer: B
Q2) Ceteris paribus,according to the law of demand,if the price of a computer game increases from $25 to $30,the:
A) Quantity demanded will not be affected.
B) Demand curve for computer games will shift to the left.
C) Quantity demanded of computer games will increase.
D) Quantity demanded of computer games will decrease.
Answer: D
Q3) If you really want a new BMW then,from an economic standpoint,you demand it.
A)True
B)False
Answer: False
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Chapter 4: Consumer Demand
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Q1) The demand is price-elastic when the percentage change in quantity demanded is greater than the percentage change in price for a particular good.
A)True
B)False
Q2) If marginal utility is rising,total utility must be falling.
A)True
B)False
Q3) Market demand is the sum of individual consumer demands.
A)True
B)False
Q4) If the price elasticity of demand for Baja Fresh tacos is 2.5,then Baja Fresh can:
A) Reduce the price of tacos by 25 percent and total revenue will remain the same.
B) Raise the price of tacos and total revenue will increase.
C) Reduce the price of tacos by less than 25 percent and total sales will remain the same.
D) Reduce the price of tacos and total revenue will increase.
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Chapter 5: Supply Decisions
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Sample Questions
Q1) An investment in human and nonhuman capital will result in:
A) An increase in the marginal physical product of labor.
B) An increase in marginal costs.
C) A decrease in the production function.
D) A decrease in production possibilities.
Q2) Which of the following statements concerning the relationship between total product (TP)and marginal physical product (MPP)is not correct?
A) TP will continue to rise even though MPP is falling but greater than zero.
B) TP is increasing at an increasing rate if MPP is increasing.
C) TP will fall if MPP is negative.
D) TP will fall if MPP is falling.
Q3) In Table 5.4,variable cost,
A) Is equal to $25 at an output of 10 units.
B) Is the greatest at an output of zero units.
C) Decreases as output increases.
D) Is equal to $40 at every output level.
Q4) Economic costs include only the explicit payments made for a factor of production.
A)True
B)False
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Chapter 6: Competition
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Sample Questions
Q1) From the NEWSWIRE article,"Catfish Farmers Feel Forced Out of Business",the expected economic profit from the catfish market:
A) Is enough to attract entry.
B) Is less than zero because firms are exiting the industry.
C) Is zero because there are significant barriers to entry.
D) Is so high that even inefficient firms are attracted to the industry.
Q2) A producer tries to maximize profits by operating at an output where:
A) MC equals price.
B) Price minus ATC is greatest.
C) MR is greater then MC.
D) the profit per unit is greatest.
Q3) In a competitive market if a firm is operating at a point where MC is greater than price it will attempt to cut back production.
A)True
B)False
Q4) The marginal cost curve is the short-run supply curve for a competitive firm.
A)True
B)False
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Chapter 7: Monopoly
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Sample Questions
Q1) Monopoly may not be a problem in contestable markets if:
A) The structure of a market is competitive.
B) Firms can exit from the market.
C) Antitrust regulations are enforced.
D) Potential competition exists.
Q2) Which of the following do a monopolist and a competitive firm have in common?
A) Predatory pricing.
B) Barriers to entry.
C) Marginal cost pricing.
D) Profit-maximization rule.
Q3) As noted in the text,which of the following allowed Polaroid to win the monopoly power battle with Kodak?
A) A government franchise.
B) Natural monopoly.
C) A patent.
D) Exclusive licensing.
Q4) Why does a monopolist demand curve lie above the marginal revenue curve whereas in a competitive market the demand curve and marginal revenue curve are equal? Would it be possible that the marginal revenue curve and demand curve could ever be the same for a monopolist?
Page 9
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Chapter 8: The Labor Market
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Sample Questions
Q1) The opportunity cost of working is the:
A) Wage rate plus the value of fringe benefits earned in the process.
B) Wage rate earned in the process but not the fringe benefits.
C) Personal satisfaction gained from working.
D) Value of leisure time that is given up in the process.
Q2) When making the hiring decision,firms should compare the:
A) Wage rate to the MRP of the worker.
B) Wage rate to the price of the product.
C) MPP to the MRP.
D) Price of the product to the MPP of the worker.
Q3) An increase in the labor productivity is best illustrated by:
A) An upward shift of the MRP curve.
B) A downward shift of the MPP curve.
C) A leftward shift of the labor-supply curve.
D) A rightward shift of the labor-supply curve.
Q4) An increase in the wage rate will always cause more labor to be supplied.
A)True
B)False
Q5) What would we expect to occur to the wage rate and number of persons hired if they workers formed a union?
Page 10
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Chapter 9: Government Intervention
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Sample Questions
Q1) Firms in Colorado dump waste into the Colorado River and as a result the people in California and Mexico cannot use the water.What type of market failure is most likely involved?
A) Inequity.
B) Public goods.
C) Externalities.
D) Market power.
Q2) The market will under produce goods that yield external benefits and overproduce goods that yield external costs.
A)True
B)False
Q3) If you play your music too loud and your neighbor cannot study,this is an example of a negative externality.
A)True
B)False
Q4) A private good is a good that:
A) Is financed by private dollars instead of taxes.
B) Can be jointly consumed.
C) Can be denied to those who do not pay for it.
D) Consumers use privately in their homes.
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Chapter 10: The Business Cycle
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Sample Questions
Q1) Since World War II,the United States has experienced:
A) An increase in output every year.
B) Only one recession and it was minor.
C) Several recessions but none as severe as the Great Depression.
D) Several recessions and in each case a war was necessary to end it.
Q2) Based on the News Wire article titled "Inflation and the Weimar Republic," which of the following is the best illustration of the price effect of inflation?
A) "Profits fell as employees demanded frequent wage adjustments"
B) " businessmen traveling around the country found themselves borrowing funds from their customers each stage of the way.The cash they'd allocated for the entire trip barely sufficed to pay the way to the next stop"
C) "Those thrifty Germans who had placed their savings in corporate or government bonds saw their lifetime efforts come to naught"
D) "Debtors sought out creditors to pay them in valueless currency"
Q3) The production of goods and services in the U.S.has risen steadily since 1929.
A)True
B)False
Q4) Define a recession and the effects of recession on rate of growth.
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Chapter 11: Aggregate Supply and Demand
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Sample Questions
Q1) Which of the following economic theories focus on aggregate demand to explain changes in unemployment and inflation?
A) Classical and supply-side
B) Keynesian and monetarist
C) Classical and Keynesian
D) Classical but not monetarist
Q2) A News Wire article in the textbook is titled "Hurricane Damage to Gulf Ports Delays Deliveries,Raises Costs." Increased costs are likely to cause:
A) A decrease in the equilibrium price level and a decrease in real equilibrium output.
B) An increase in the equilibrium price level and an increase in real equilibrium output.
C) An increase in the equilibrium price level and a decrease in real equilibrium output.
D) A decrease in the equilibrium price level and an increase in real equilibrium output.
Q3) Inflation and unemployment are macroeconomic failures.
A)True
B)False
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Chapter 12: Fiscal Policy
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Sample Questions
Q1) On October 24,1929,the stock market crashed.By the end of the year,over $40 billion of wealth had vanished.Which of the following indicates the appropriate change in the U.S.economy?
A) The economy moved up along the aggregate demand curve.
B) The economy moved down along the aggregate demand curve.
C) Aggregate demand shifted to the left.
D) Aggregate demand shifted to the right.
Q2) Assume an MPC of 0.6.The change in total spending for the economy as a result of a $10 billion new government spending injection would be:
A) $6 billion.
B) $25 billion.
C) $60 billion.
D) $600 billion.
Q3) A tax cut causes a decrease in disposable income.
A)True
B)False
Q4) Full-employment GDP is the most desired level of GDP for an economy.
A)True B)False
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Chapter 13: Money and Banks
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Sample Questions
Q1) Which of the following is not an essential characteristic of money?
A) It serves as a benchmark for barter.
B) It serves as a store of value.
C) It serves as a medium of exchange.
D) It serves as a standard of value.
Q2) Money functions well as a store of value when prices are rising.
A)True
B)False
Q3) Refer to Table 13.2.With a required reserve ratio of 15 percent,Bank of the Universe would have excess reserves of:
A) $150,000.
B) $850,000.
C) $1,000,000.
D) Zero.
Q4) If the banking system has a required reserve ratio of 15 percent,then the money multiplier is:
A) 1.5.
B) 6.67.
C) 5.0.
D) 15.0
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Chapter 14: Monetary Policy
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Sample Questions
Q1) By buying bonds,the Fed decreases the quantity of reserves in the banking system and decreases the money supply.
A)True
B)False
Q2) Aggregate demand is the:
A) Total quantity of output demanded at alternative price levels.
B) Total quantity of output demanded but only at full employment.
C) Quantity of goods demanded by the largest corporations in the country.
D) Quantity of new goods and services produced.
Q3) Using the reserve requirement in Table 14.2,if the Fed buys $20 billion worth of bonds in the open market,the lending capacity of the banking system will _______ by approximately ______.
A) Rise;$20 billion
B) Rise;$133 billion
C) Fall;$20 billion
D) Fall;$133 billion
Q4) If the Fed wants to increase the money supply,it should increase the discount rate.
A)True
B)False
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Chapter 15: Economic Growth
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Sample Questions
Q1) Which of the following does not contribute to an increase in productivity?
A) Research and development.
B) Income transfers.
C) Capital investment.
D) Improvements in the quality of labor.
Q2) A major goal of short-run macroeconomic policy is to move to a point on the _____ curve.
A) Investment demand
B) Production function
C) Production possibilities
D) Aggregate supply
Q3) When an economy moves from a point inside its production possibilities curve to a point on its production possibilities curve,it is using all of its productive capacity.
A)True
B)False
Q4) Productivity can be measured by output per labor hour.
A)True
B)False
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Chapter 16: Theory and Reality
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Q1) The shape of the aggregate demand curve is the most important determinant of the effectiveness of fiscal and monetary policy.
A)True
B)False
Q2) According to modern Keynesians,which of the following is an appropriate policy during a recession?
A) Expand the money supply and increase government spending.
B) Expand the money supply and decrease government spending.
C) Contract the money supply and increase government spending.
D) Contract the money supply and decrease government spending.
Q3) Policies that make good sense politically typically make good sense economically,too.
A)True
B)False
Q4) Refer to Figure 16.1.A shift from AD<sub>1</sub> to AD<sub>2</sub> could be caused by:
A) A decrease in government spending.
B) An increase in the money supply.
C) An increase in taxes.
D) An increase in the incentives to save.
18
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Chapter 17: International Trade
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Q1) If a country has a comparative advantage in the production of paper:
A) Its opportunity cost of producing paper is lower than its trading partners.
B) It can produce paper with fewer resources than its trading partners.
C) Its opportunity cost of producing paper is greater than its trading partners.
D) The relative price of paper is higher in that country than its trading partners.
Q2) Tariffs tend to reduce the volume of imports because they:
A) Set maximum allowable import limits.
B) Place severe quality restrictions on imported goods.
C) Make imports more expensive to domestic consumers.
D) Reduce prices of domestically produced goods.
Q3) Based on the information in Table 17.2,the opportunity cost of producing 1 bushel of corn in Country A is:
A) 2/9 of a bushel of wheat.
B) 1/3 of a bushel of wheat.
C) 1/2 of a bushel of wheat.
D) 3 bushels of wheat.
Q4) A quota is a tax on specific goods.
A)True
B)False
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