Question 1

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 2

A nation can produce two products: steel and wheat. The table below is the nation's production possibilities schedule.   The marginal opportunity cost of the first unit of steel is

Accepted Answer

A) 15 units of wheat. 
B) 90 units of wheat. 
C) 10 units of wheat. 
D) 100 units of wheat. 
A) 15 units of wheat. 
B) 90 units of wheat. 
C) 10 units of wheat. 
D) 100 units of wheat.

Question 3

Ben says that "an increase in the tax on beer will raise its price." Holly argues that "taxes should be increased on beer because college students drink too much." We can conclude that

Accepted Answer

A) Ben's statement is normative, but Holly's is positive. 
B) Holly's statement is normative, but Ben's is positive. 
C) Both statements are normative. 
D) Both statements are positive. 
A) Ben's statement is normative, but Holly's is positive. 
B) Holly's statement is normative, but Ben's is positive. 
C) Both statements are normative. 
D) Both statements are positive.

Question 4

If the marginal benefits are greater than the marginal cost of an activity, then society should allocate fewer resources to this activity.

Accepted Answer

A) True 
 B)False

Question 5

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

Question 6

Refer to the graphs. Assume that pizza is measured in slices and beer in pints. In which of the graphs is the opportunity cost of a pint of beer the lowest?

Accepted Answer

A) graph A 
B) graph B 
C) graph C 
D) graph D 
A) graph A 
B) graph B 
C) graph C 
D) graph D

Question 7

Rational behavior implies that different people faced with similar choices will make the same decisions.

Accepted Answer

A) True 
 B)False

Question 8

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 9

Which of the following is a normative economic statement?

Accepted Answer

A) The poverty rate hit a new high last year and income inequality also increased. 
B) Health care accounts for roughly a third of total spending in the economy. 
C) The government needs to revamp the Social Security program to make it sustainable. 
D) Retail sales are expected to continue on their downward trend in the next three quarters. 
A) The poverty rate hit a new high last year and income inequality also increased. 
B) Health care accounts for roughly a third of total spending in the economy. 
C) The government needs to revamp the Social Security program to make it sustainable. 
D) Retail sales are expected to continue on their downward trend in the next three quarters.

Question 10

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 11

Camille is at the candy store with Grandma Mary, who offers to buy her $12 worth of candy. If lollipops are $1 each and candy bars are $4 each, what combination of candy can Camille's Grandma Mary buy her?

Accepted Answer

A) twelve lollipops and three candy bars 
B) four lollipops and two candy bars 
C) two lollipops and four candy bars 
D) two lollipop and three candy bars 
A) twelve lollipops and three candy bars 
B) four lollipops and two candy bars 
C) two lollipops and four candy bars 
D) two lollipop and three candy bars

Question 12

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 13

"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 14

A nation can produce two products: steel and wheat. The table below is the nation's production possibilities schedule.   The opportunity cost of producing the 31st unit of wheat is approximately

Accepted Answer

A) 25 units of steel. 
B) 0 units of steel. 
C) 1 unit of steel. 
D) 1/25 of a unit of steel. 
A) 25 units of steel. 
B) 0 units of steel. 
C) 1 unit of steel. 
D) 1/25 of a unit of steel.

Question 15

Assume that a consumer has a given budget or income of $10 and that she can buy only two goods, apples or bananas. The price of an apple is $1.00 and the price of a banana is $0.50. For this consumer, the opportunity cost of buying one more apple is

Accepted Answer

A) 0.5 of a banana. 
B) 0.1 of a banana. 
C) 1 banana. 
D) 2 bananas. 
A) 0.5 of a banana. 
B) 0.1 of a banana. 
C) 1 banana. 
D) 2 bananas.

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

Assume that a consumer has a given budget or income of $10 and that she can buy only two goods, apples or bananas. The price of an apple is $2.00 and the price of a banana is $1.00. What is the slope of the budget line if the quantity of apples were measured on the horizontal axis and bananas on the vertical axis?

Accepted Answer

A) -0.5 
B) -0.8 
C) -1.6 
D) -2 
A) -0.5 
B) -0.8 
C) -1.6 
D) -2

Question 18

The purpose of the ceteris paribus assumption used in economic analysis is to

Accepted Answer

A) avoid making normative statements. 
B) distinguish macroeconomics from microeconomics. 
C) make sure that all relevant factors are considered. 
D) focus on the effect of a single factor on a certain variable. 
A) avoid making normative statements. 
B) distinguish macroeconomics from microeconomics. 
C) make sure that all relevant factors are considered. 
D) focus on the effect of a single factor on a certain variable.

Question 19

Assume that a consumer purchases only two products. Suppose that the consumer's money income doubles, and the prices of the two products also double. These changes in income and prices 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)  no change in 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)  no change in the budget line. 
D)  an increase in the slope of the budget line.

Question 20

Answer the question on the basis of the following production possibilities table for two countries, North Cantina and South Cantina.   Refer to the table. If South Cantina is producing at production alternative C, the opportunity cost of the fourth unit of capital goods will be

Accepted Answer

A) 1/7 of a unit of consumer goods. 
B) 3 units of consumer goods. 
C) 19 units of consumer goods. 
D) 7 units of consumer goods. 
A) 1/7 of a unit of consumer goods. 
B) 3 units of consumer goods. 
C) 19 units of consumer goods. 
D) 7 units of consumer goods.

Exam 1: Limits, Alternatives, and Choices

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

A nation can produce two products: steel and wheat. The table below is the nation's production possibilities schedule. The marginal opportunity cost of the first unit of steel is

Ben says that "an increase in the tax on beer will raise its price." Holly argues that "taxes should be increased on beer because college students drink too much." We can conclude that

If the marginal benefits are greater than the marginal cost of an activity, then society should allocate fewer resources to this activity.

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

Refer to the graphs. Assume that pizza is measured in slices and beer in pints. In which of the graphs is the opportunity cost of a pint of beer the lowest?

Rational behavior implies that different people faced with similar choices will make the same decisions.

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?

Which of the following is a normative economic statement?

As a consequence of the problem of scarcity,

Camille is at the candy store with Grandma Mary, who offers to buy her $12 worth of candy. If lollipops are $1 each and candy bars are $4 each, what combination of candy can Camille's Grandma Mary buy her?

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

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

A nation can produce two products: steel and wheat. The table below is the nation's production possibilities schedule. The opportunity cost of producing the 31st unit of wheat is approximately

Assume that a consumer has a given budget or income of $10 and that she can buy only two goods, apples or bananas. The price of an apple is $1.00 and the price of a banana is $0.50. For this consumer, the opportunity cost of buying one more apple is

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

The purpose of the ceteris paribus assumption used in economic analysis is to

Assume that a consumer purchases only two products. Suppose that the consumer's money income doubles, and the prices of the two products also double. These changes in income and prices will result in

Answer the question on the basis of the following production possibilities table for two countries, North Cantina and South Cantina. Refer to the table. If South Cantina is producing at production alternative C, the opportunity cost of the fourth unit of capital goods will be

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures Caused by Externalities Asymmetric Information

Public Goods, Public Choice, 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

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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