Question 1

If the marginal benefit of a good is less than its marginal cost, then the nation should

Accepted Answer

A) produce more of that good. 
B) Maintain the current level of production of that good. 
C) reduce the marginal benefit of that good. 
D) reduce the production of that good. 
A) produce more of that good. 
B) Maintain the current level of production of that good. 
C) reduce the marginal benefit of that good. 
D) reduce the production of that good.

Question 2

Assume that a consumer purchases only two products and there is a decrease in the consumer's income.The prices of the two products stay constant.The decrease in income will result in

Accepted Answer

A) a shift of the budget line inward to the left. 
B) a shift of the budget line outward to the right. 
C) a decrease in the slope of the budget line. 
D) an increase in the slope of the budget line. 
A) a shift of the budget line inward to the left. 
B) a shift of the budget line outward to the right. 
C) a decrease in the slope of the budget line. 
D) an increase in the slope of the budget line.

Question 3

If a linear relation is described by the equation C = 35 - 5D, then the vertical intercept of the graph (where C is on the vertical axis) is

Accepted Answer

A) 35. 
B) -5. 
C) 30. 
D) not known. 
A) 35. 
B) -5. 
C) 30. 
D) not known.

Question 4

Which of the following is not a factor of production?

Accepted Answer

A) money 
B) labor 
C) capital 
D) entrepreneur 
A) money 
B) labor 
C) capital 
D) entrepreneur

Question 5

An economic model is a purposeful simplification of reality, whose function includes

Accepted Answer

A) understanding the full complexity of the real world. 
B) predicting the behavior of each and every individual or organization. 
C) analyzing the behavior of a typical or average consumer or firm. 
D) forecasting random economic events with a high level of accuracy. 
A) understanding the full complexity of the real world. 
B) predicting the behavior of each and every individual or organization. 
C) analyzing the behavior of a typical or average consumer or firm. 
D) forecasting random economic events with a high level of accuracy.

Question 6

As a consequence of the problem of scarcity,

Accepted Answer

A) there is never enough of anything. 
B) individuals have to make choices from among alternatives. 
C) only some people can "have it all." 
D) things which are plentiful have relatively high prices. 
A) there is never enough of anything. 
B) individuals have to make choices from among alternatives. 
C) only some people can "have it all." 
D) things which are plentiful have relatively high prices.

Question 7

Rational individuals may make different choices because their preferences and circumstances differ.

Accepted Answer

A) True 
 B)False

Question 8

For economists, the word "utility" means

Accepted Answer

A) versatility and flexibility. 
B) rationality. 
C) pleasure or satisfaction. 
D) purposefulness. 
A) versatility and flexibility. 
B) rationality. 
C) pleasure or satisfaction. 
D) purposefulness.

Question 9

If price (P) and quantity (Q) are directly related, this means that

Accepted Answer

A) a change in Q will alter P, but a change in P will not alter Q. 
B) if P increases, Q will decrease. 
C) if P increases, Q will also increase. 
D) an increase in P will cause Q to change, but the direction in which Q changes cannot be predicted. 
A) a change in Q will alter P, but a change in P will not alter Q. 
B) if P increases, Q will decrease. 
C) if P increases, Q will also increase. 
D) an increase in P will cause Q to change, but the direction in which Q changes cannot be predicted.

Question 10

If two variables are directly related, the relationship will have a graph that

Accepted Answer

A) is a straight line. 
B) may either be upward-sloping or downward-sloping. 
C) is an upward-sloping line. 
D) is horizontal. 
A) is a straight line. 
B) may either be upward-sloping or downward-sloping. 
C) is an upward-sloping line. 
D) is horizontal.

Question 11

Matt observes that "there is a high correlation between educational attainment and the level of income." Jean concurs and adds that "high school graduates should all proceed to college."

Accepted Answer

A) Both Matt's and Jean's statements are positive. 
B) Both Matt's and Jean's statements are normative. 
C) Matt's statement is normative, while Jean's statement is positive. 
D) Matt's statement is positive, while Jean's statement is normative. 
A) Both Matt's and Jean's statements are positive. 
B) Both Matt's and Jean's statements are normative. 
C) Matt's statement is normative, while Jean's statement is positive. 
D) Matt's statement is positive, while Jean's statement is normative.

Question 12

Assume that a consumer has a given budget or income of $12 and that she can buy only two goods, apples or bananas.The price of an apple is $1.50 and the price of a banana is $0.75.For this consumer, the opportunity cost of buying one more apple is

Accepted Answer

A) 0.5 of a banana. 
B) 0.8 of a banana. 
C) 1 banana. 
D) 2 bananas. 
A) 0.5 of a banana. 
B) 0.8 of a banana. 
C) 1 banana. 
D) 2 bananas.

Question 13

The economic perspective entails

Accepted Answer

A) irrational behavior by individuals and institutions. 
B) a comparison of marginal benefits and marginal costs in decision making. 
C) short-term but not long-term thinking. 
D) rejection of the scientific method. 
A) irrational behavior by individuals and institutions. 
B) a comparison of marginal benefits and marginal costs in decision making. 
C) short-term but not long-term thinking. 
D) rejection of the scientific method.

Question 14

In constructing models, economists

Accepted Answer

A) make simplifying assumptions. 
B) include all available information. 
C) must use mathematical equations. 
D) attempt to duplicate the real world. 
A) make simplifying assumptions. 
B) include all available information. 
C) must use mathematical equations. 
D) attempt to duplicate the real world.

Question 15

The resource category called "land" includes forests, animals, and water resources.

Accepted Answer

A) True 
 B)False

Question 16

The production possibilities curve tells us

Accepted Answer

A) the specific combination of two products that is most desired by society. 
B) that costs do not change as society varies its output. 
C) that costs are irrelevant in a society that has fixed resources. 
D) the combinations of two goods that can be produced with society's available resources. 
A) the specific combination of two products that is most desired by society. 
B) that costs do not change as society varies its output. 
C) that costs are irrelevant in a society that has fixed resources. 
D) the combinations of two goods that can be produced with society's available resources.

Question 17

Which of the following is a land resource?

Accepted Answer

A) a farmer 
B) an oil drilling rig 
C) a machine for detecting earthquakes 
D) natural gas 
A) a farmer 
B) an oil drilling rig 
C) a machine for detecting earthquakes 
D) natural gas

Question 18

According to economists, economic self-interest

Accepted Answer

A) is a reality that underlies economic behavior. 
B) has the same meaning as selfishness. 
C) means that people never make wrong decisions. 
D) is usually self-defeating. 
A) is a reality that underlies economic behavior. 
B) has the same meaning as selfishness. 
C) means that people never make wrong decisions. 
D) is usually self-defeating.

Question 19

Which of the following is one of the simplifying assumptions made in constructing a production possibilities curve?

Accepted Answer

A) The state of technology is constantly changing. 
B) A wide variety of products are produced. 
C) Resources are fully employed and are used in least-cost methods of production. 
D) Quantities of available resources in the economy vary as we move from one point on the curve to another. 
A) The state of technology is constantly changing. 
B) A wide variety of products are produced. 
C) Resources are fully employed and are used in least-cost methods of production. 
D) Quantities of available resources in the economy vary as we move from one point on the curve to another.

Question 20

A point or combination that is on the production possibilities curve is

Accepted Answer

A) attainable, and resources are fully employed. 
B) attainable, but some resources are unemployed. 
C) unattainable, but some resources are unemployed. 
D) attainable only if we get additional resources. 
A) attainable, and resources are fully employed. 
B) attainable, but some resources are unemployed. 
C) unattainable, but some resources are unemployed. 
D) attainable only if we get additional resources.

Exam 1: Limits, Alternatives, and Choices

If the marginal benefit of a good is less than its marginal cost, then the nation should

Assume that a consumer purchases only two products and there is a decrease in the consumer's income.The prices of the two products stay constant.The decrease in income will result in

If a linear relation is described by the equation C = 35 - 5D, then the vertical intercept of the graph (where C is on the vertical axis) is

Which of the following is not a factor of production?

An economic model is a purposeful simplification of reality, whose function includes

As a consequence of the problem of scarcity,

Rational individuals may make different choices because their preferences and circumstances differ.

For economists, the word "utility" means

If price (P) and quantity (Q) are directly related, this means that

If two variables are directly related, the relationship will have a graph that

Matt observes that "there is a high correlation between educational attainment and the level of income." Jean concurs and adds that "high school graduates should all proceed to college."

Assume that a consumer has a given budget or income of $12 and that she can buy only two goods, apples or bananas.The price of an apple is $1.50 and the price of a banana is $0.75.For this consumer, the opportunity cost of buying one more apple is

The economic perspective entails

In constructing models, economists

The resource category called "land" includes forests, animals, and water resources.

The production possibilities curve tells us

Which of the following is a land resource?

According to economists, economic self-interest

Which of the following is one of the simplifying assumptions made in constructing a production possibilities curve?

A point or combination that is on the production possibilities curve is

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Governments Role and Government Failure

Elasticity

Utility Maximization

Behavioral Economics

Businesses and the Costs of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Technology, Rd, and Efficiency

The Demand for Resources

Wage Determination

Rent, Interest, and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Antitrust Policy and Regulation

Agriculture: Economics and Policy

Income Inequality, Poverty, and Discrimination

Health Care

Immigration

An Introduction to Macroeconomics

Measuring Domestic Output and National Income

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

Fiscal Policy, Deficits, and Debt

Money, Banking, and Financial Institutions

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

Filters