Question 1

In a graph showing the relationship between variables X and Y, ceteris paribus means that

Accepted Answer

A) X is inversely related to Y. 
B) X is positively related to Y. 
C) X and Y are independent. 
D) other variables not shown are held constant. 
A) X is inversely related to Y. 
B) X is positively related to Y. 
C) X and Y are independent. 
D) other variables not shown are held constant.

Question 2

Which of the following is a labor resource?

Accepted Answer

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

Question 3

If someone produced too little of a good, this would suggest that

Accepted Answer

A) rational choice cannot be applied to many economic decisions. 
B) the good was produced past the point where its marginal cost exceeded its marginal benefit. 
C) government should intervene to produce more of the good. 
D) the good was produced to the point where its marginal benefit exceeded its marginal cost. 
A) rational choice cannot be applied to many economic decisions. 
B) the good was produced past the point where its marginal cost exceeded its marginal benefit. 
C) government should intervene to produce more of the good. 
D) the good was produced to the point where its marginal benefit exceeded its marginal cost.

Question 4

The law of increasing opportunity costs states that

Accepted Answer

A) costs of production increase for one good, but costs decrease for the other good. 
B) increases in wages and other resource costs is what the increasing opportunity costs refer to. 
C) increases in the production of one good require larger and larger sacrifices of the other good. 
D) increases in the production of one good make the production of that good easier. 
A) costs of production increase for one good, but costs decrease for the other good. 
B) increases in wages and other resource costs is what the increasing opportunity costs refer to. 
C) increases in the production of one good require larger and larger sacrifices of the other good. 
D) increases in the production of one good make the production of that good easier.

Question 5

Increasing the share of your income that you save is good for you.Therefore, it would be good for the whole economy if everyone saved more.This exemplifies the

Accepted Answer

A) post hoc fallacy. 
B) fallacy of composition. 
C) use of loaded terminology. 
D) confusion between correlation and causation. 
A) post hoc fallacy. 
B) fallacy of composition. 
C) use of loaded terminology. 
D) confusion between correlation and causation.

Question 6

Economic growth is a result of

Accepted Answer

A) a reduction in the unemployment rate. 
B) an increase in the opportunity costs of production. 
C) a decrease in the demand for resources. 
D) an increase in the supply of resources. 
A) a reduction in the unemployment rate. 
B) an increase in the opportunity costs of production. 
C) a decrease in the demand for resources. 
D) an increase in the supply of resources.

Question 7

The budget line shows

Accepted Answer

A) the amount of product X that a consumer is willing to give up to obtain one more unit of product Y. 
B) all possible combinations of two goods that can be purchased, given money income and the prices of the goods. 
C) the minimum amount of two goods that a consumer can purchase with a specific money income. 
D) all possible combinations of two goods that yield the same level of utility to the consumer. 
A) the amount of product X that a consumer is willing to give up to obtain one more unit of product Y. 
B) all possible combinations of two goods that can be purchased, given money income and the prices of the goods. 
C) the minimum amount of two goods that a consumer can purchase with a specific money income. 
D) all possible combinations of two goods that yield the same level of utility to the consumer.

Question 8

Products and services are scarce because resources are scarce.

Accepted Answer

A) True 
 B)False

Question 9

From an economic perspective, when consumers leave a fast-food restaurant because the lines to be served are too long, they have concluded that the

Accepted Answer

A) marginal cost of waiting is less than the marginal benefit of eating in that restaurant. 
B) marginal cost of waiting is greater than the marginal benefit of eating in that restaurant. 
C) management is exhibiting irrational behavior by not considering the marginal cost and the marginal benefit of standing in line by the consumer. 
D) management is making an assumption that other things are equal. 
A) marginal cost of waiting is less than the marginal benefit of eating in that restaurant. 
B) marginal cost of waiting is greater than the marginal benefit of eating in that restaurant. 
C) management is exhibiting irrational behavior by not considering the marginal cost and the marginal benefit of standing in line by the consumer. 
D) management is making an assumption that other things are equal.

Question 10

Purposeful behavior suggests that

Accepted Answer

A) everyone will make identical choices. 
B) resource availability exceeds economic wants. 
C) individuals may make different choices because of different desired outcomes. 
D) an individual's economic goals cannot involve trade-offs. 
A) everyone will make identical choices. 
B) resource availability exceeds economic wants. 
C) individuals may make different choices because of different desired outcomes. 
D) an individual's economic goals cannot involve trade-offs.

Question 11

Imagine an ideal scenario where world peace prevails and all nations are led by peace-minded leaders.In such a world, the

Accepted Answer

A) MB for defense goods would shift left. 
B) MB for defense goods would shift right. 
C) MC for defense goods would shift left. 
D) MC for defense goods would shift right. 
A) MB for defense goods would shift left. 
B) MB for defense goods would shift right. 
C) MC for defense goods would shift left. 
D) MC for defense goods would shift right.

Question 12

In graphing a relationship between two variables, economists always follow the mathematical convention.Thus, if price is the independent variable then it is measured on the horizontal axis.

Accepted Answer

A) True 
 B)False

Question 13

If an economy is operating on its production possibilities curve for consumer goods and capital goods, this means that

Accepted Answer

A) it is impossible to produce more consumer goods. 
B) resources cannot be reallocated between the two goods. 
C) it is impossible to produce more capital goods. 
D) more consumer goods can only be produced at the cost of fewer capital goods. 
A) it is impossible to produce more consumer goods. 
B) resources cannot be reallocated between the two goods. 
C) it is impossible to produce more capital goods. 
D) more consumer goods can only be produced at the cost of fewer capital goods.

Question 14

"The role of government in the economy should be kept to a minimum" is an example of a positive economic statement.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following statements regarding people's wants is true?

Accepted Answer

A) Over time, people's wants tend to be stable and constant. 
B) As people consume more products, their wants will be reduced. 
C) Intangible services, just like tangible goods, may satisfy people's wants. 
D) People's wants do not include their basic needs. 
A) Over time, people's wants tend to be stable and constant. 
B) As people consume more products, their wants will be reduced. 
C) Intangible services, just like tangible goods, may satisfy people's wants. 
D) People's wants do not include their basic needs.

Question 16

Opportunity costs exist because

Accepted Answer

A) the decision to engage in one activity means forgoing some other activity. 
B) wants are scarce relative to resources. 
C) households and businesses make rational decisions. 
D) most decisions do not involve sacrifices or trade-offs. 
A) the decision to engage in one activity means forgoing some other activity. 
B) wants are scarce relative to resources. 
C) households and businesses make rational decisions. 
D) most decisions do not involve sacrifices or trade-offs.

Question 17

Kara was out jogging and, despite being tired, decided to run one more mile.Based on her actions, economists would conclude that Kara

Accepted Answer

A) must be an avid runner. 
B) decided that the marginal benefit of running one more mile would outweigh the cost of the additional mile. 
C) decided that the marginal cost of running one more mile would outweigh the benefit of the additional mile. 
D) was not very tired, so the marginal cost of the extra mile was very low. 
A) must be an avid runner. 
B) decided that the marginal benefit of running one more mile would outweigh the cost of the additional mile. 
C) decided that the marginal cost of running one more mile would outweigh the benefit of the additional mile. 
D) was not very tired, so the marginal cost of the extra mile was very low.

Question 18

Consumers spend their incomes to get the maximum benefit or satisfaction from the goods and services they purchase.This is a reflection of

Accepted Answer

A) resource scarcity and the necessity of choice. 
B) purposeful behavior. 
C) marginal costs that exceed marginal benefits. 
D) the trade-off problem that exists between competing goals. 
A) resource scarcity and the necessity of choice. 
B) purposeful behavior. 
C) marginal costs that exceed marginal benefits. 
D) the trade-off problem that exists between competing goals.

Question 19

(Consider This) A direct cost of going to college is

Accepted Answer

A) tuition, while an indirect cost (opportunity cost) is books and other supplies. 
B) forgone income while in college, while an indirect cost (opportunity cost) is tuition. 
C) tuition, while an indirect cost (opportunity cost) is forgone income while in college. 
D) books and supplies, while an indirect cost (opportunity cost) is food and housing. 
A) tuition, while an indirect cost (opportunity cost) is books and other supplies. 
B) forgone income while in college, while an indirect cost (opportunity cost) is tuition. 
C) tuition, while an indirect cost (opportunity cost) is forgone income while in college. 
D) books and supplies, while an indirect cost (opportunity cost) is food and housing.

Question 20

Which of the following is a positive economic statement?

Accepted Answer

A) Government must maintain the current level of defense spending to keep the nation safe. 
B) The minimum wage should be increased to give people a decent wage. 
C) Americans should buy American products in order to boost the national economy. 
D) Stock prices rose to a new record last month for the fourth month in a row. 
A) Government must maintain the current level of defense spending to keep the nation safe. 
B) The minimum wage should be increased to give people a decent wage. 
C) Americans should buy American products in order to boost the national economy. 
D) Stock prices rose to a new record last month for the fourth month in a row.

Exam 1: Limits, Alternatives, and Choices

In a graph showing the relationship between variables X and Y, ceteris paribus means that

Which of the following is a labor resource?

If someone produced too little of a good, this would suggest that

The law of increasing opportunity costs states that

Increasing the share of your income that you save is good for you.Therefore, it would be good for the whole economy if everyone saved more.This exemplifies the

Economic growth is a result of

The budget line shows

Products and services are scarce because resources are scarce.

From an economic perspective, when consumers leave a fast-food restaurant because the lines to be served are too long, they have concluded that the

Purposeful behavior suggests that

Imagine an ideal scenario where world peace prevails and all nations are led by peace-minded leaders.In such a world, the

In graphing a relationship between two variables, economists always follow the mathematical convention.Thus, if price is the independent variable then it is measured on the horizontal axis.

If an economy is operating on its production possibilities curve for consumer goods and capital goods, this means that

"The role of government in the economy should be kept to a minimum" is an example of a positive economic statement.

Which of the following statements regarding people's wants is true?

Opportunity costs exist because

Kara was out jogging and, despite being tired, decided to run one more mile.Based on her actions, economists would conclude that Kara

Consumers spend their incomes to get the maximum benefit or satisfaction from the goods and services they purchase.This is a reflection of

(Consider This) A direct cost of going to college is

Which of the following is a positive economic statement?

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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