Explain the factors of production and give an example

Explain the factors of production and give an example

Explain the factors of production and give an example

PART
1

Short Answer Questions
(5 points each)

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1. Explain the factors of
production and give an example for each one.

2. What is the difference
between a normal good and an inferior good?
How does this relate to the demand curve?

3. What is the consequence of a
positive externality in a market? What
is the consequence of a negative externality?
Why do those consequences occur?

4. Briefly explain the three
tax systems – proportional, progressive and regressive. As you explain each one, also compare the relationship
between marginal tax rate and average tax rate as income rises for each one.

Project and Analysis
Questions
(Points listed by
each question)

5.
Scans of internal organs using magnetic
resonance imaging (MRI). These devices
are often covered by subsidized health insurance programs such as
Medicare. Consider the following table
illustrating hypothetical quantities of individual MRI testing procedures
demanded and supplied at various prices.
Answer the following 3 questions
(4
points)

Price

Quantity
Demanded

Quantity
Supplied

$100

100,000

40,000

$300

90,000

60,000

$500

80,000

80,000

$700

70,000

100,000

$900

60,000

120,000

In the absence of a
government-subsidized health plan, what is the equilibrium price and
quantity of MRI tests?

Suppose that the government
establishes a health plan guaranteeing that all qualified participants can
purchase MRI tests at an effective price to the individual of $100 per
test. How many MRI tests are now
demanded? Is the result in the
market a surplus or shortage?

6.
The next 3 parts to this question give
changes that have occurred in the watermelon market. For each change in a determinant given, draw
in the change that would occur on the supply/demand graph for watermelons that
is provided. Be sure and review what
causes the curve to shift and what causes a movement along the curve as well as
what determinants affect supply and what affect demand. Once
you have drawn in your change, write a short explanation for each question discussing
what would be the new equilibrium price and quantity levels because of this
change. In other words, has
equilibrium price or quantity increased, decreased or stayed the same,
etc. If P or Q are indeterminate –
meaning you cannot tell whether it would have changed or not – be sure and
explain that. (To draw in changes on the graph, simply use the Drawing toolbar and
use lines or arrows to draw in your shifts or show movement along for supply or
demand.)
(6
points)

A. A new technology is adopted that allows production of
watermelons to be increased substantially.

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B. There is a substantial decrease in the price of cantaloupes. Cantaloupes are assumed to be a substitute
good for watermelons.

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C. Consumer’s income increases (assuming watermelon is a normal
good) and the number of sellers producing watermelons increases.

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P

7.
In MyLabsPlus, go to Economic News. Then View the Latest News Update under
Economics in the News. On the left hand
menu, select News Archives by Topic. For
this unit, select Government Intervention in Markets and then choose “Weakest
Monsoon Season since 2009 to Shrink India Rice Harvest.”

Read and review the article and graph provided. Be sure and click on the link to read the
full article. Then answer the 3 Thinking
Critically Questions provided and provide your answers to those three questions
in a short essay.
(6 points)

8. Using the historical tables from the
Budget of the US government, utilize the following website to determine where
the US government allocates its expenditures.
(6 points)
The website is http://www.whitehouse.gov/omb/budget/Historicals
Examine
Table 3.1 on Outlays by Superfunction and Function. Consider what government functions have been
capturing growing shares or declining shares of government spending in recent
years.
Select
one of the government functions and describe in a brief summary whether it has
seen an increase or decrease in government spending over the past 10 to 15
years. For the function you have
selected, is it related to the problem of addressing externalities, providing
public goods or dealing with other market failures. Does it appear to be related to political
functions instead of economic functions?

9. Find an article that identifies a change in
supply and/or demand. Use the article to
fulfill the following instructions and questions:
(8 points)

A. Copy
and paste the article into your homework assignment. Be sure and cite your reference for where the
article came from indicating the source, author, title, date, and page for the
article you have chosen.
B. Find one
example in the article of any one of the following four possible shifts of
supply or demand: Leftward
shift of the supply curve; Rightward shift of the supply curve. Leftward shift of the demand curve; Rightward shift
of the demand curve.

Write
a short summary addressing the following items:

·
What shift occurred in either supply or
demand.
·
What determinant of demand or supply was
changed that caused the shift. Describe
the changes in the determinant that have occurred.
·
Indicate evidence in the article of whether
the market is an international, national, regional, or local market
·
Indicate through whom (buyer or seller) the
change in the determinant of demand or supply initially affects the market to
cause the shift.

PART 2

Question 1

“If the United
States enters a war in the Middle East, the economy will go into a
recession” is an example of
Question 1 options:

A)

a positive statement.

B)

an easy to prove
statement.

C)

a normative statement.

D)

a factual statement.

Save
Question 2(2 points)
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Economic analysis is
used
Question 2 options:

A)

only in economics
classrooms.

B)

only by business people.

C)

only by policy makers.

D)

in all decision making.

Save
Question 3(2 points)
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Economic models are
used to
Question 3 options:

A)

simplify reality to
predict outcomes.

B)

exactly replicate reality.

C)

predict all possible
outcomes of a study.

D)

determine the thoughts of
individuals.

Save
Question 4(2 points)
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Economics is called an
empirical science because
Question 4 options:

A)

economists study
real-world evidence to test their models.

B)

economists use assumptions
in their models.

C)

economic models have no
predictive power.

D)

economic analysis is only
useful in a capitalistic society.

Save
Question 5(2 points)
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Economics is the study
of
Question 5 options:

A)

the allocation of scarce
resources to satisfy unlimited wants.

B)

inflation and unemployment
in society.

C)

making money.

D)

maximization of profits
for a firm.

Save
Question 6(2 points)
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A relationship between
two variables in which one variable increases at the same time as the other
decreases is called
Question 6 options:

A)

nonlinear.

B)

constant.

C)

inverse.

D)

direct.

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Question 7(2 points)
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Which of the following
will most likely happen when better technology is used in production?
Question 7 options:

A)

an upward movement along
the production possibilities curve

B)

an outward shift of the
production possibilities curve

C)

an inward shift of the
production possibilities curve

D)

a downward movement along
the production possibilities curve

Save
Question 8(2 points)
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All points inside the
production possibilities curve indicate
Question 8 options:

A)

a lack of sufficient
supply.

B)

inefficiency in
production.

C)

the law of increasing
relative cost.

D)

the law of decreasing
relative cost.

Save
Question 9(2 points)
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Which factor of
production includes water?
Question 9 options:

A)

physical capital

B)

human capital

C)

land

D)

entrepreneurship

Save
Question 10(2 points)
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If Joey goes surfing
for four hours instead of earning $10 per hour for those four hours, his
opportunity cost is
Question 10 options:

A)

the good time spent
surfing.

B)

the cost of gasoline used
to get to the beach.

C)

the travel time to the
beach.

D)

$40.

Save
Question 11(2 points)
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Physical capital is
distinguished from human capital because
Question 11 options:

A)

physical capital refers to
trained people.

B)

physical capital refers to
equipment and machinery, whereas human capital refers to trained people.

C)

human capital refers only
to day laborers.

D)

physical capital refers to
trained people, whereas human capital refers to equipment and machinery.

Save
Question 12(2 points)
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Generally,
specialization leads to
Question 12 options:

A)

constant opportunity
costs.

B)

greater productivity.

C)

the production of fewer
capital goods.

D)

greater self-reliance.

Save
Question 13(2 points)
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The value of the best
alternative sacrificed to obtain something you want is referred to as
Question 13 options:

A)

explicit cost.

B)

opportunity cost.

C)

marginal cost.

D)

sunk cost.

Save
Question 14(2 points)
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In the above figure, what is the opportunity cost of one bushel of soybeans?
Question 14 options:

A)

1 bushel of corn

B)

0.5 bushels of corn

C)

2 bushels of corn

D)

unable to determine

Save

Question 15(2 points)
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Refer to the above figure. The rightward shift of the curve indicates
Question 15 options:

A)

an increase in demand.

B)

an increase in supply.

C)

a change in quantity
demanded.

D)

a change in quantity
supplied.

Save
Question 16(2 points)
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Refer to the above figure. At a price of two cents, the quantity of bubble gum
demanded will be
Question 16 options:

A)

3.

B)

2.

C)

4.

D)

5.

Save
Question 17(2 points)
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Suppose that the demand
curve for apples is downward sloping and the price per bushel increases from
$6.50 to $7.50. We would then expect
Question 17 options:

A)

the demand for apples to
decrease.

B)

the quantity of apples
demanded to fall.

C)

the demand curve to shift
toward the origin.

D)

the quantity of apples
demanded to increase.

Save
Question 18(2 points)
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Which of the following
will occur as the price of a good decreases?
Question 18 options:

A)

The demand curve for that
good will shift to the left.

B)

The demand curve for that
good will shift to the right.

C)

The quantity demanded for
that good will increase.

D)

Demand for that good will
increase.

Save
Question 19(2 points)
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Which of the following
would cause an increase in the market supply of mountain bikes?
Question 19 options:

A)

a decrease in the demand
for mountain bikes

B)

an increase in taxes
levied on mountain bike manufacturers

C)

an increase in the cost of
components used to assemble mountain bikes

D)

an increase in the number
of firms making mountain bikes

Save
Question 20(2 points)
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If one day a terrible
disease were to wipe out over one-half of the world’s lime trees, which of the
following would likely result?
Question 20 options:

A)

The supply curve of lime
juice would shift downward and to the right.

B)

The supply curve of lime
juice would shift upward and to the left.

C)

The demand curve for lime
juice would shift to the right.

D)

The demand curve for lime
juice would shift to the left.

Save
Question 21(2 points)
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If the price of cotton
used in making blue jeans increases, which of the following will occur?
Question 21 options:

A)

There will be a movement
along an unchanged supply curve for jeans.

B)

The supply curve for jeans
will shift rightward.

C)

The supply curve for jeans
will shift leftward.

D)

There will be a rightward
shift in the supply curve for jeans, followed by a movement along the
supply curve.

Save
Question 22(2 points)
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Other things being
equal, the relationship between price and quantity supplied is
Question 22 options:

A)

negative.

B)

constant.

C)

positive.

D)

non-existent.

Save
Question 23(2 points)
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Any improvement in
overall production technology that permits more output to be produced with the
same level of inputs causes
Question 23 options:

A)

a movement up the supply
curve resulting in both a higher equilibrium price and quantity.

B)

a rightward shift of the
supply curve so that more is offered at each price.

C)

no movement of the supply
curve, but a fall in price and a decrease in quantity supplied.

D)

a leftward shift of the
supply curve so that less is offered for sale at each price.

Save
Question 24(2 points)
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In economic
terminology, a normal good is a good
Question 24 options:

A)

on which a monetary value
cannot be placed.

B)

that is liked only by
normal people.

C)

for which demand increases
when price increases.

D)

for which demand increases
when income increases.

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Question 25(2 points)
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An example of a black market
is
Question 25 options:

A)

a retail market.

B)

a discount market.

C)

scalping.

D)

barter.

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Question 26(2 points)
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When are black markets
likely to arise?
Question 26 options:

A)

when the government
removes a price floor

B)

when the government
enforces a price ceiling

C)

when there is a surplus of
a good

D)

when the quantity supplied
of a good exceeds the quantity demanded

Save
Question 27(2 points)
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Price floors
Question 27 options:

A)

provide free market
incentives for producers.

B)

create surpluses by
setting the price above equilibrium.

C)

create shortages by
setting the price above equilibrium.

D)

are used by advocates of
the free market.

Save
Question 28(2 points)
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Which of the following
is NOT a voluntary exchange?
Question 28 options:

A)

Tom’s car is stolen from
in front of his house.

B)

Marie buys groceries.

C)

Scott pays $10,000 for
tuition and fees this semester.

D)

Emily buys a $1,000 plane
ticket to fly from New York to Dallas on short notice.

Save
Question 29(2 points)
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Which of the following
is most likely to generate a surplus?
Question 29 options:

A)

A price floor

B)

A price ceiling

C)

An illegal market

D)

All of these

Save
Question 30(2 points)
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Refer to the above figure. A price support set at P3 will
Question 30 options:

A)

lead to a surplus of Q3 minus
Q1.

B)

lead to a shortage of Q3 minus
Q1.

C)

lead to an equilibrium quantity
of Q2.

D)

be ineffective.

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Question 31(2 points)
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Which of the following
will likely occur when price floors in agriculture are implemented?
Question 31 options:

A)

Quantity supplied will
exceed quantity demanded.

B)

Quantity demanded will
exceed quantity supplied.

C)

Farmland will be
underutilized.

D)

Supply will decrease.

Save
Question 32(2 points)
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Government imposed
price controls often lead to
Question 32 options:

A)

illegal trades of the good.

B)

the most efficient use of
resources.

C)

the equilibrium solution
in terms of price and quantity.

D)

maximization of profits.

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Question 33(2 points)
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Social Security and
Medicare are clear examples of
Question 33 options:

A)

capitalism.

B)

market-determined
services.

C)

market failures and
externalities.

D)

governmental intervention
in the market.

Save
Question 34(2 points)
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In the above figure, market equilibrium at point E yields the quantity X. The
quantity X.0/msohtmlclip1/01/clip_image011.gif” alt=”https://ccco.desire2learn.com/content/enforced2012/708391-S_CCCO_ECO202C21_201330/ppg/pearson/tm/et16ma/u8727.gif?_&d2lSessionVal=xcWsxbeH7gMZd7Daid3tdBR8r”> is the socially
optimal quantity. Point E indicates that currently there is
Question 34 options:

A)

a negative externality.

B)

a positive externality.

C)

a public good.

D)

a positive externality
with subsidy.

Save
Question 35(2 points)
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Refer to the above figure. Medicare subsidies have increased the price of
medical services to Ps. The perceived price on the part of consumers
is
Question 35 options:

A)

Ps.

B)

P0.

C)

Pd.

D)

undetermined without more
information.

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Question 36(2 points)
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The principle feature
of private goods is that
Question 36 options:

A)

they cannot be rented or
purchased.

B)

consumption by one person
reduces the quantity available to others.

C)

no one can be excluded
from consumption of the product.

D)

externality problems
associated with their production are always negative.

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Question 37(2 points)
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An external cost, such
as the cost generated by pollution, is
Question 37 options:

A)

a cost paid by consumers
of the product.

B)

a cost paid by producers
of the product.

C)

a cost paid by a third
party or by society at large.

D)

not a true opportunity
cost of production.

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Question 38(2 points)
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The U.S. legal system
mainly engages in activities that
Question 38 options:

A)

are dedicated to producing
private goods.

B)

focus on income
redistribution.

C)

involve defining and
protecting property rights.

D)

focus on producing public
goods.

Save
Question 39(2 points)
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When negative
externalities exist, the private market equilibrium represents a
Question 39 options:

A)

market price which is too
low and a market quantity which is too low.

B)

market price which is too
low and a market quantity which is too high.

C)

market price which is too
high and a market quantity which is too low.

D)

market price which is too
high and a market quantity which is too high.

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Question 40(2 points)
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Dynamic tax analysis
generally predicts
Question 40 options:

A)

that the higher the tax
rate is, the higher the tax revenue will continue to be into the future.

B)

that the higher tax rates
lead to higher revenues only to a point at which revenues will begin to
decrease due to a diminishing tax base.

C)

that lower tax rates will
always and continuously lead to increased tax revenues.

D)

that lower tax rates are
always going to lead to decreased tax revenues.

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Question 41(2 points)
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The U.S. Social
Security tax is an example of a
Question 41 options:

A)

progressive tax.

B)

proportional tax.

C)

premium tax.

D)

regressive tax.

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Question 42(2 points)
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Ad valorem taxation
Question 42 options:

A)

refers to the personal
income tax.

B)

is used to tax goods but
not services.

C)

is assessed by charging a
tax rate as a fraction of the market price of a good.

D)

is a tax that is applied
only to cigarettes and alcohol.

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Question 43(2 points)
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The tax that brings in
the most revenue in the United States is the
Question 43 options:

A)

capital gains tax.

B)

corporate income tax.

C)

Social Security tax.

D)

personal income tax.

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Question 44(2 points)
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Suppose you are making
$50,000 per year and paying $5,000 per year in income taxes. You get a $10,000
per year raise and your income taxes are now $6,500 per year. Based on this
information, the income tax system is
Question 44 options:

A)

proportional.

B)

progressive.

C)

regressive.

D)

bracketed.

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Question 45(3 points)
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How is the equilibrium
price determined? What happens if the price is above the equilibrium price?
What happens if the price is below the equilibrium price?
Question 46(3 points)
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Briefly discuss the
determinants of demand other than price.
Question 47(3 points)
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What is production?
What economic factors are involved in production?
Question 48(3 points)
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Distinguish between
scarcity and shortages.

 

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