Question 1

The optimal allocation of resources is found

Accepted Answer

A) where MB = MC. 
B) at every point along a production possibilities curve. 
C) where the marginal benefit is at its greatest. 
D) where the marginal cost is at its lowest. 
A) where MB = MC. 
B) at every point along a production possibilities curve. 
C) where the marginal benefit is at its greatest. 
D) where the marginal cost is at its lowest.

Question 2

The present choice of position on the production possibilities curve will not influence the future location of the curve.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is considered an economic resource?

Accepted Answer

A) the ice cream that kids buy at the ice cream parlor 
B) the HD-TV sets in people's homes 
C) the land that is designated as national parks by the government 
D) shoppers buying stuff at the mall 
A) the ice cream that kids buy at the ice cream parlor 
B) the HD-TV sets in people's homes 
C) the land that is designated as national parks by the government 
D) shoppers buying stuff at the mall

Question 4

A nation that devotes more of its resources to the production of capital goods rather than consumer goods is likely to

Accepted Answer

A) cause its production possibilities curve to shift outward. 
B) cause its production possibilities curve to shift inward. 
C) increase the slope of its production possibilities curve. 
D) decrease the slope of its production possibilities curve. 
A) cause its production possibilities curve to shift outward. 
B) cause its production possibilities curve to shift inward. 
C) increase the slope of its production possibilities curve. 
D) decrease the slope of its production possibilities curve.

Question 5

Which of the following is associated with macroeconomics?

Accepted Answer

A) an examination of the incomes of professional athletes 
B) an empirical investigation of the general price level and unemployment rates since 1990 
C) a study of the trend of pecan prices since the Second World War 
D) a case study of pricing and production in the textbook industry 
A) an examination of the incomes of professional athletes 
B) an empirical investigation of the general price level and unemployment rates since 1990 
C) a study of the trend of pecan prices since the Second World War 
D) a case study of pricing and production in the textbook industry

Question 6

Which of the following is not a main function of the entrepreneur?

Accepted Answer

A) to make routine pricing decisions 
B) to innovate 
C) to assume the risk of economic losses 
D) to make strategic business decisions 
A) to make routine pricing decisions 
B) to innovate 
C) to assume the risk of economic losses 
D) to make strategic business decisions

Question 7

A positive statement is one that

Accepted Answer

A) is derived by induction. 
B) is derived by deduction. 
C) focuses on the best course of action and is based on value judgments. 
D) focuses on facts, descriptions, and theoretical relationships. 
A) is derived by induction. 
B) is derived by deduction. 
C) focuses on the best course of action and is based on value judgments. 
D) focuses on facts, descriptions, and theoretical relationships.

Question 8

A relationship illustrated by an upward-sloping graph means that a(n)

Accepted Answer

A) increase in the value of one variable causes the value of the other to decrease. 
B) decrease in the value of one variable causes the value of the other to decrease. 
C) decrease in the value of one variable causes the value of the other to increase. 
D) increase in the value of one variable causes no change in the other variable. 
A) increase in the value of one variable causes the value of the other to decrease. 
B) decrease in the value of one variable causes the value of the other to decrease. 
C) decrease in the value of one variable causes the value of the other to increase. 
D) increase in the value of one variable causes no change in the other variable.

Question 9

According to Emerson: "Want is a growing giant whom the coat of Have was never large enough to cover." According to economists, "Want" exceeds "Have" because

Accepted Answer

A) people are greedy. 
B) productive resources are limited. 
C) human beings are inherently insecure. 
D) people are irrational. 
A) people are greedy. 
B) productive resources are limited. 
C) human beings are inherently insecure. 
D) people are irrational.

Question 10

Which of the following suggests a direct relationship between x and y?

Accepted Answer

A) a change in y = -2 coupled with a change in x = -4 
B) a change in y = 2 coupled with a change in x = 0 
C) a change in y = 
D) a change in y = 6 coupled with a change in x = 
A) a change in y = -2 coupled with a change in x = -4 
B) a change in y = 2 coupled with a change in x = 0 
C) a change in y = 
D) a change in y = 6 coupled with a change in x =

Question 11

From an economic perspective, when a consumer decides to buy more life insurance, the consumer has most likely concluded that the

Accepted Answer

A) marginal cost of more insurance coverage is negative. 
B) marginal benefit of more insurance coverage is greater than zero. 
C) marginal benefit of more insurance coverage is greater than the marginal cost. 
D) marginal cost of more insurance coverage is equal to the payment for the extra coverage. 
A) marginal cost of more insurance coverage is negative. 
B) marginal benefit of more insurance coverage is greater than zero. 
C) marginal benefit of more insurance coverage is greater than the marginal cost. 
D) marginal cost of more insurance coverage is equal to the payment for the extra coverage.

Question 12

A reduction in the level of unemployment would have which effect with respect to the nation's production possibilities curve?

Accepted Answer

A) It would shift the curve to the right. 
B) It would shift the curve to the left. 
C) It would not shift the curve; it would be represented by a movement from a point inside the curve toward a point on the curve. 
D) It would not shift the curve; it would be represented by a movement from a point on the curve to a point outside the curve. 
A) It would shift the curve to the right. 
B) It would shift the curve to the left. 
C) It would not shift the curve; it would be represented by a movement from a point inside the curve toward a point on the curve. 
D) It would not shift the curve; it would be represented by a movement from a point on the curve to a point outside the curve.

Question 13

Marginal analysis means that decision makers compare the extra benefits with the extra costs of a specific choice.

Accepted Answer

A) True 
 B)False

Question 14

Specialization and international trade allow a nation to

Accepted Answer

A) produce a combination of goods that is beyond (or outside) its production possibilities. 
B) consume a combination of goods that is beyond (or outside) its production possibilities. 
C) have an upward-sloping production possibilities curve. 
D) consume a lot of goods without having to produce any output. 
A) produce a combination of goods that is beyond (or outside) its production possibilities. 
B) consume a combination of goods that is beyond (or outside) its production possibilities. 
C) have an upward-sloping production possibilities curve. 
D) consume a lot of goods without having to produce any output.

Question 15

Camille is at the candy store with Grandma Mary, who offers to buy her $6 worth of candy.If lollipops are $1 each and candy bars are $2 each, what combination of candy can Camille's Grandma Mary buy her?

Accepted Answer

A) six lollipops and three candy bars 
B) two lollipops and two candy bars 
C) three lollipops and two candy bars 
D) one lollipop and three candy bars 
A) six lollipops and three candy bars 
B) two lollipops and two candy bars 
C) three lollipops and two candy bars 
D) one lollipop and three candy bars

Question 16

Cuba is a command economy that suffered a decline in economic growth because of a cut in the aid provided by the former Soviet Union when the latter collapsed.As a consequence, Cuba

Accepted Answer

A) experienced an outward shift of its production possibilities curve. 
B) experienced an inward shift of its production possibilities curve. 
C) moved from one point to another along its existing production possibilities curve. 
D) went to a point inside its production possibilities curve. 
A) experienced an outward shift of its production possibilities curve. 
B) experienced an inward shift of its production possibilities curve. 
C) moved from one point to another along its existing production possibilities curve. 
D) went to a point inside its production possibilities curve.

Question 17

The law of increasing opportunity costs is reflected in a production possibilities curve that is

Accepted Answer

A) an upsloping straight line. 
B) a downsloping straight line. 
C) bowed out from the origin. 
D) bowed in toward the origin. 
A) an upsloping straight line. 
B) a downsloping straight line. 
C) bowed out from the origin. 
D) bowed in toward the origin.

Question 18

Suppose that a nation can only make two products: defense goods and civilian goods.In a graph of the marginal benefit (MB) and marginal cost (MC) of defense goods, a leftward shift of the MB curve will cause the optimal quantity of

Accepted Answer

A) civilian goods to decrease. 
B) both civilian goods and defense goods to decrease. 
C) defense goods to decrease. 
D) defense goods to increase. 
A) civilian goods to decrease. 
B) both civilian goods and defense goods to decrease. 
C) defense goods to decrease. 
D) defense goods to increase.

Question 19

The process of observing real-world behavior, developing hypotheses, testing them against facts, then using the results to construct theories is called

Accepted Answer

A) opportunity cost estimation. 
B) the scientific method. 
C) marginal analysis. 
D) normative analysis. 
A) opportunity cost estimation. 
B) the scientific method. 
C) marginal analysis. 
D) normative analysis.

Question 20

An economy cannot produce at a point outside of its production possibilities curve because human economic wants are insatiable.

Accepted Answer

A) True 
 B)False

Exam 1: Limits, Alternatives, and Choices

The optimal allocation of resources is found

The present choice of position on the production possibilities curve will not influence the future location of the curve.

Which of the following is considered an economic resource?

A nation that devotes more of its resources to the production of capital goods rather than consumer goods is likely to

Which of the following is associated with macroeconomics?

Which of the following is not a main function of the entrepreneur?

A positive statement is one that

A relationship illustrated by an upward-sloping graph means that a(n)

According to Emerson: "Want is a growing giant whom the coat of Have was never large enough to cover." According to economists, "Want" exceeds "Have" because

Which of the following suggests a direct relationship between x and y?

From an economic perspective, when a consumer decides to buy more life insurance, the consumer has most likely concluded that the

A reduction in the level of unemployment would have which effect with respect to the nation's production possibilities curve?

Marginal analysis means that decision makers compare the extra benefits with the extra costs of a specific choice.

Specialization and international trade allow a nation to

Camille is at the candy store with Grandma Mary, who offers to buy her $6 worth of candy.If lollipops are $1 each and candy bars are $2 each, what combination of candy can Camille's Grandma Mary buy her?

Cuba is a command economy that suffered a decline in economic growth because of a cut in the aid provided by the former Soviet Union when the latter collapsed.As a consequence, Cuba

The law of increasing opportunity costs is reflected in a production possibilities curve that is

Suppose that a nation can only make two products: defense goods and civilian goods.In a graph of the marginal benefit (MB) and marginal cost (MC) of defense goods, a leftward shift of the MB curve will cause the optimal quantity of

The process of observing real-world behavior, developing hypotheses, testing them against facts, then using the results to construct theories is called

An economy cannot produce at a point outside of its production possibilities curve because human economic wants are insatiable.

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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