Question 1

What does "there is no such thing as a free lunch" mean in economics?

Accepted Answer

A) Scarce resources are used up to provide "freebies" and giveaways. 
B) Sometimes people may take friends out to lunch and pay for them. 
C) All items in the lunch menu have specific prices. 
D) Products only have value because people are willing to pay for them. 
A) Scarce resources are used up to provide "freebies" and giveaways. 
B) Sometimes people may take friends out to lunch and pay for them. 
C) All items in the lunch menu have specific prices. 
D) Products only have value because people are willing to pay for them.

Question 2

If a positive relationship exists between x and y,

Accepted Answer

A) an increase in x will cause y to decrease. 
B) a decrease in x will cause y to increase. 
C) the relationship will graph as an upsloping line. 
D) the vertical intercept must be positive. 
A) an increase in x will cause y to decrease. 
B) a decrease in x will cause y to increase. 
C) the relationship will graph as an upsloping line. 
D) the vertical intercept must be positive.

Question 3

The marginal cost curve is

Accepted Answer

A) upsloping because of increasing marginal opportunity costs. 
B) upsloping because successive units of a specific product yield less and less extra utility. 
C) downsloping because of increasing marginal opportunity costs. 
D) downsloping because successive units of a specific product yield less and less extra utility. 
A) upsloping because of increasing marginal opportunity costs. 
B) upsloping because successive units of a specific product yield less and less extra utility. 
C) downsloping because of increasing marginal opportunity costs. 
D) downsloping because successive units of a specific product yield less and less extra utility.

Question 4

Alex sees that his neighbors' lawns all need mowing.He offers to provide the service in exchange for a wage of $20 per hour.Some neighbors accept Alex's offer and others refuse.Economists would describe Alex's behavior as

Accepted Answer

A) rational self-interest because he is attempting to increase his own income by identifying and satisfying someone else's wants. 
B) greedy because he is asking for a high wage that some of his neighbors can't afford to pay. 
C) selfish because he is asking for a wage that is higher than others might charge. 
D) irrational because some neighbors refused his offer. 
A) rational self-interest because he is attempting to increase his own income by identifying and satisfying someone else's wants. 
B) greedy because he is asking for a high wage that some of his neighbors can't afford to pay. 
C) selfish because he is asking for a wage that is higher than others might charge. 
D) irrational because some neighbors refused his offer.

Question 5

Assume that a consumer spends a given budget on only two goods and that the prices of the two goods are constant.The budget line in this case would

Accepted Answer

A) definitely be a straight downward-sloping line. 
B) possibly be a straight upward-sloping line. 
C) be a curved graph bowed outward. 
D) be a curved bell-shaped graph. 
A) definitely be a straight downward-sloping line. 
B) possibly be a straight upward-sloping line. 
C) be a curved graph bowed outward. 
D) be a curved bell-shaped graph.

Question 6

Marginal analysis is the valuation of insignificant or small benefits from doing things.

Accepted Answer

A) True 
 B)False

Question 7

If you knew that the vertical intercept for a straight line was 15, that the slope was -.5, and that the independent variable had a value of 8, the value of the dependent variable would be

Accepted Answer

A) 8. 
B) 9. 
C) 10. 
D) 11. 
A) 8. 
B) 9. 
C) 10. 
D) 11.

Question 8

The economizing problem for individuals is a consequence of the fact that

Accepted Answer

A) economic means or incomes are greater than economic wants. 
B) economic wants are greater than economic means or incomes. 
C) positive economics is more important than normative economics. 
D) normative economics is more important than positive economics. 
A) economic means or incomes are greater than economic wants. 
B) economic wants are greater than economic means or incomes. 
C) positive economics is more important than normative economics. 
D) normative economics is more important than positive economics.

Question 9

In a graph with "crop yield" on the vertical axis and "rainfall" on the horizontal axis, the vertical intercept refers to the

Accepted Answer

A) steepness or flatness of the graph. 
B) amount of rainfall when "crop yield" is zero. 
C) amount of crop yield when "rainfall" is zero. 
D) total crop yield during a given period of time. 
A) steepness or flatness of the graph. 
B) amount of rainfall when "crop yield" is zero. 
C) amount of crop yield when "rainfall" is zero. 
D) total crop yield during a given period of time.

Question 10

The process of producing and accumulating capital goods is called

Accepted Answer

A) money capital. 
B) depreciation. 
C) investment. 
D) consumption. 
A) money capital. 
B) depreciation. 
C) investment. 
D) consumption.

Question 11

A production possibilities curve illustrates

Accepted Answer

A) scarcity. 
B) market prices. 
C) consumer preferences. 
D) the distribution of income. 
A) scarcity. 
B) market prices. 
C) consumer preferences. 
D) the distribution of income.

Question 12

(Consider This) Consumers might leave a fast-food restaurant without being served because

Accepted Answer

A) they are misinformed about the marginal cost and marginal benefits of the food being served. 
B) they conclude that the marginal cost (monetary plus time costs) exceeds the marginal benefit. 
C) the environment is not conducive to a rational choice. 
D) the lines waiting for service are not of equal length. 
A) they are misinformed about the marginal cost and marginal benefits of the food being served. 
B) they conclude that the marginal cost (monetary plus time costs) exceeds the marginal benefit. 
C) the environment is not conducive to a rational choice. 
D) the lines waiting for service are not of equal length.

Question 13

Suppose that a consumer purchases just two goods, X and Y.The ratio of the price of good X to the price of good Y is the

Accepted Answer

A) intercept on the Y axis of the budget line. 
B) intercept on the X axis of the budget line. 
C) size of the shift in the budget line. 
D) slope of the budget line. 
A) intercept on the Y axis of the budget line. 
B) intercept on the X axis of the budget line. 
C) size of the shift in the budget line. 
D) slope of the budget line.

Question 14

The study of economics is primarily concerned with

Accepted Answer

A) keeping private businesses from losing money. 
B) demonstrating that capitalistic economies are superior to socialistic economies. 
C) choices that are made in seeking the best use of resources. 
D) determining the most equitable distribution of society's output. 
A) keeping private businesses from losing money. 
B) demonstrating that capitalistic economies are superior to socialistic economies. 
C) choices that are made in seeking the best use of resources. 
D) determining the most equitable distribution of society's output.

Question 15

If the production possibilities curve is a straight line,

Accepted Answer

A) the two goods will sell at the same market prices. 
B) economic resources are perfectly substitutable between the production of the two goods. 
C) the two goods are equally important to consumers. 
D) equal quantities of the two goods will be produced at each possible point on the curve. 
A) the two goods will sell at the same market prices. 
B) economic resources are perfectly substitutable between the production of the two goods. 
C) the two goods are equally important to consumers. 
D) equal quantities of the two goods will be produced at each possible point on the curve.

Question 16

The marginal benefit curve is

Accepted Answer

A) upsloping because of increasing marginal opportunity costs. 
B) upsloping because successive units of a specific product yield less and less extra benefit. 
C) downsloping because of increasing marginal opportunity costs. 
D) downsloping because successive units of a specific product yield less and less extra benefit. 
A) upsloping because of increasing marginal opportunity costs. 
B) upsloping because successive units of a specific product yield less and less extra benefit. 
C) downsloping because of increasing marginal opportunity costs. 
D) downsloping because successive units of a specific product yield less and less extra benefit.

Question 17

The individual who brings together economic resources and assumes the risk of business ventures in a capitalist economy is called the

Accepted Answer

A) manager. 
B) entrepreneur. 
C) stockbroker. 
D) banker. 
A) manager. 
B) entrepreneur. 
C) stockbroker. 
D) banker.

Question 18

If economic resources were perfectly adaptable to alternative uses, then there would be constant opportunity costs along the production possibilities curve.

Accepted Answer

A) True 
 B)False

Question 19

A linear relationship only refers to one whose graph is either vertical or horizontal.

Accepted Answer

A) True 
 B)False

Question 20

You observe that when stock prices rise, interest rates soon fall, and therefore conclude that higher stock prices lead to lower interest rates.This would be an example of

Accepted Answer

A) the fallacy of composition. 
B) trade-off among economic goals. 
C) the post hoc fallacy. 
D) the use of loaded terminology. 
A) the fallacy of composition. 
B) trade-off among economic goals. 
C) the post hoc fallacy. 
D) the use of loaded terminology.

Exam 1: Limits, Alternatives, and Choices

What does "there is no such thing as a free lunch" mean in economics?

If a positive relationship exists between x and y,

The marginal cost curve is

Alex sees that his neighbors' lawns all need mowing.He offers to provide the service in exchange for a wage of $20 per hour.Some neighbors accept Alex's offer and others refuse.Economists would describe Alex's behavior as

Assume that a consumer spends a given budget on only two goods and that the prices of the two goods are constant.The budget line in this case would

Marginal analysis is the valuation of insignificant or small benefits from doing things.

If you knew that the vertical intercept for a straight line was 15, that the slope was -.5, and that the independent variable had a value of 8, the value of the dependent variable would be

The economizing problem for individuals is a consequence of the fact that

In a graph with "crop yield" on the vertical axis and "rainfall" on the horizontal axis, the vertical intercept refers to the

The process of producing and accumulating capital goods is called

A production possibilities curve illustrates

(Consider This) Consumers might leave a fast-food restaurant without being served because

Suppose that a consumer purchases just two goods, X and Y.The ratio of the price of good X to the price of good Y is the

The study of economics is primarily concerned with

If the production possibilities curve is a straight line,

The marginal benefit curve is

The individual who brings together economic resources and assumes the risk of business ventures in a capitalist economy is called the

If economic resources were perfectly adaptable to alternative uses, then there would be constant opportunity costs along the production possibilities curve.

A linear relationship only refers to one whose graph is either vertical or horizontal.

You observe that when stock prices rise, interest rates soon fall, and therefore conclude that higher stock prices lead to lower interest rates.This would be an example of

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

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