Question 1

Entrepreneurship refers to a new college graduate who is looking for a job with a large company.

Accepted Answer

A) True 
 B)False

Question 2

Purposeful behavior implies that everyone will make identical choices.

Accepted Answer

A) True 
 B)False

Question 3

A nation's consumption is strictly limited by its production possibilities, even with specialization and international trade.

Accepted Answer

A) True 
 B)False

Question 4

An increase in immigration would shift the production possibilities curve to the left.

Accepted Answer

A) True 
 B)False

Question 5

Which situation would most likely cause a nation's production possibilities curve to shift inward?

Accepted Answer

A) an increase in unemployment 
B) an increase in the amount of imports 
C) an increase in the number of skilled immigrant workers 
D) the destruction caused by bombing and warfare in a losing military conflict 
A) an increase in unemployment 
B) an increase in the amount of imports 
C) an increase in the number of skilled immigrant workers 
D) the destruction caused by bombing and warfare in a losing military conflict

Question 6

The entrepreneur's sole function is to combine other resources (land, labor, and capital) in the production of some good or service.

Accepted Answer

A) True 
 B)False

Question 7

The production possibilities curve is a graph of

Accepted Answer

A) the maximum amounts of labor and capital resources available for production. 
B) various combinations of goods and services among which consumers are indifferent in terms of preference. 
C) the maximum combinations of products that can be produced with the available resources. 
D) the maximum amount of capital and labor that the economy can employ. 
A) the maximum amounts of labor and capital resources available for production. 
B) various combinations of goods and services among which consumers are indifferent in terms of preference. 
C) the maximum combinations of products that can be produced with the available resources. 
D) the maximum amount of capital and labor that the economy can employ.

Question 8

Economics may best be defined as the

Accepted Answer

A) interaction between macro and micro considerations. 
B) social science concerned with how individuals, institutions, and society make optimal choices under conditions of scarcity. 
C) empirical testing of value judgments through the use of logic. 
D) study of why people are rational. 
A) interaction between macro and micro considerations. 
B) social science concerned with how individuals, institutions, and society make optimal choices under conditions of scarcity. 
C) empirical testing of value judgments through the use of logic. 
D) study of why people are rational.

Question 9

If the equation y = -10 + 2.5x was plotted,

Accepted Answer

A) the vertical intercept would be -10. 
B) the slope would be -7.5. 
C) it would graph as a downsloping line. 
D) the slope would be -10. 
A) the vertical intercept would be -10. 
B) the slope would be -7.5. 
C) it would graph as a downsloping line. 
D) the slope would be -10.

Question 10

Which of the following is considered a firm's "factor of production"?

Accepted Answer

A) money or cash balances of the firm 
B) the firm's shares of common stock 
C) U.S.Treasury bonds owned by the firm 
D) the office building occupied by the firm 
A) money or cash balances of the firm 
B) the firm's shares of common stock 
C) U.S.Treasury bonds owned by the firm 
D) the office building occupied by the firm

Question 11

The opportunity cost of constructing a new public highway is the

Accepted Answer

A) money cost of hiring contractors and construction workers for the new highway. 
B) value of other goods and services that are sacrificed in order to construct the new highway. 
C) expected cost of constructing the new highway in a future year. 
D) value of shorter driving times and distances when the new highway is completed. 
A) money cost of hiring contractors and construction workers for the new highway. 
B) value of other goods and services that are sacrificed in order to construct the new highway. 
C) expected cost of constructing the new highway in a future year. 
D) value of shorter driving times and distances when the new highway is completed.

Question 12

The "other things equal" assumption is employed when

Accepted Answer

A) the graph of a given relationship is shifting up or down. 
B) economists draw a two-dimensional (or two-axes) graph. 
C) the relationship is direct, but not when it is inverse. 
D) the relationship is inverse, but not when it is direct. 
A) the graph of a given relationship is shifting up or down. 
B) economists draw a two-dimensional (or two-axes) graph. 
C) the relationship is direct, but not when it is inverse. 
D) the relationship is inverse, but not when it is direct.

Question 13

If we say that two variables are directly related, this means that

Accepted Answer

A) the relationship between the two is purely random. 
B) an increase in one variable is associated with a decrease in the other variable. 
C) an increase in one variable is associated with an increase in the other variable. 
D) the two graph as a downsloping line. 
A) the relationship between the two is purely random. 
B) an increase in one variable is associated with a decrease in the other variable. 
C) an increase in one variable is associated with an increase in the other variable. 
D) the two graph as a downsloping line.

Question 14

The distinction between microeconomics and macroeconomics is

Accepted Answer

A) that microeconomics examines the beach, while macroeconomics looks at the sand, individual rocks, and shells, so to speak. 
B) so clear-cut that every topic can be readily labeled as either macro or micro. 
C) that microeconomics studies the behavior of individual consumers, workers, and firms, while macroeconomics studies the economy as a whole. 
D) that microeconomics seeks to obtain an overview, while macroeconomics observes the details of individual components. 
A) that microeconomics examines the beach, while macroeconomics looks at the sand, individual rocks, and shells, so to speak. 
B) so clear-cut that every topic can be readily labeled as either macro or micro. 
C) that microeconomics studies the behavior of individual consumers, workers, and firms, while macroeconomics studies the economy as a whole. 
D) that microeconomics seeks to obtain an overview, while macroeconomics observes the details of individual components.

Question 15

The slope of a straight line can be determined by

Accepted Answer

A) comparing the absolute horizontal change to the absolute vertical change between two points on the line. 
B) comparing the absolute vertical change to the absolute horizontal change between two points on the line. 
C) taking the reciprocal of the vertical intercept. 
D) comparing the percentage vertical change to the percentage horizontal change between two points on the line. 
A) comparing the absolute horizontal change to the absolute vertical change between two points on the line. 
B) comparing the absolute vertical change to the absolute horizontal change between two points on the line. 
C) taking the reciprocal of the vertical intercept. 
D) comparing the percentage vertical change to the percentage horizontal change between two points on the line.

Question 16

The economizing problem faced by society is essentially one of deciding how to make the best use of

Accepted Answer

A) limited economic resources to satisfy limited wants. 
B) unlimited economic resources to satisfy unlimited wants. 
C) unlimited economic resources to satisfy limited wants. 
D) limited economic resources to satisfy unlimited economic wants. 
A) limited economic resources to satisfy limited wants. 
B) unlimited economic resources to satisfy unlimited wants. 
C) unlimited economic resources to satisfy limited wants. 
D) limited economic resources to satisfy unlimited economic wants.

Question 17

The comment that "taxes must be reduced for the good of the economy" is an example of a normative economic statement.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is a capital resource?

Accepted Answer

A) a computer programmer 
B) a corporate bond issued by a computer manufacturer 
C) silicon (sand) used to make computer chips 
D) software used by a firm 
A) a computer programmer 
B) a corporate bond issued by a computer manufacturer 
C) silicon (sand) used to make computer chips 
D) software used by a firm

Question 19

Any point inside the production possibilities curve indicates

Accepted Answer

A) the presence of technological change. 
B) that resources are imperfectly substitutable among alternative uses. 
C) the presence of inflationary pressures. 
D) that more output could be produced with the available resources. 
A) the presence of technological change. 
B) that resources are imperfectly substitutable among alternative uses. 
C) the presence of inflationary pressures. 
D) that more output could be produced with the available resources.

Question 20

The slope of a graph measures the rate of change in one variable as the other variable changes.

Accepted Answer

A) True 
 B)False

Exam 1: Limits, Alternatives, and Choices

Entrepreneurship refers to a new college graduate who is looking for a job with a large company.

Purposeful behavior implies that everyone will make identical choices.

A nation's consumption is strictly limited by its production possibilities, even with specialization and international trade.

An increase in immigration would shift the production possibilities curve to the left.

Which situation would most likely cause a nation's production possibilities curve to shift inward?

The entrepreneur's sole function is to combine other resources (land, labor, and capital) in the production of some good or service.

The production possibilities curve is a graph of

Economics may best be defined as the

If the equation y = -10 + 2.5x was plotted,

Which of the following is considered a firm's "factor of production"?

The opportunity cost of constructing a new public highway is the

The "other things equal" assumption is employed when

If we say that two variables are directly related, this means that

The distinction between microeconomics and macroeconomics is

The slope of a straight line can be determined by

The economizing problem faced by society is essentially one of deciding how to make the best use of

The comment that "taxes must be reduced for the good of the economy" is an example of a normative economic statement.

Which of the following is a capital resource?

Any point inside the production possibilities curve indicates

The slope of a graph measures the rate of change in one variable as the other variable changes.

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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