Question 1

The basic difference between consumer goods and capital goods is that

Accepted Answer

A)  consumer goods are produced in the private sector and capital goods are produced in the public sector. 
B)  an economy that commits a relatively large proportion of its resources to capital goods must accept a lower growth rate. 
C)  the production of capital goods is not subject to the law of increasing opportunity costs. 
D)  consumer goods satisfy wants directly, while capital goods satisfy wants indirectly. 
A)  consumer goods are produced in the private sector and capital goods are produced in the public sector. 
B)  an economy that commits a relatively large proportion of its resources to capital goods must accept a lower growth rate. 
C)  the production of capital goods is not subject to the law of increasing opportunity costs. 
D)  consumer goods satisfy wants directly, while capital goods satisfy wants indirectly.

Question 2

The production possibilities curve shows various combinations of two products that an economy can produce when achieving full employment.

Accepted Answer

A) True 
 B)False

Question 3

Assume that a consumer has a given budget or income of $12 and that she can buy only two goods, apples or bananas. The price of an apple is $1.50 and the price of a banana is $0.75. For this consumer, the opportunity cost of buying one more apple is

Accepted Answer

A)  0.5 of a banana. 
B)  0.8 of a banana. 
C)  1 banana. 
D)  2 bananas. 
A)  0.5 of a banana. 
B)  0.8 of a banana. 
C)  1 banana. 
D)  2 bananas.

Question 4

Economists contend that most economic decisions are

Accepted Answer

A)  random. 
B)  chaotic. 
C)  spontaneous. 
D)  purposeful. 
A)  random. 
B)  chaotic. 
C)  spontaneous. 
D)  purposeful.

Question 5

Which of the following exemplifies a microeconomic question?

Accepted Answer

A)  What is the current national rate of unemployment? 
B)  Is the economy experiencing a decline in the rate of inflation? 
C)  Will a new type of electronic reader or tablet increase the number of buyers? 
D)  Is the aggregate output in the economy greater this year than last year? 
A)  What is the current national rate of unemployment? 
B)  Is the economy experiencing a decline in the rate of inflation? 
C)  Will a new type of electronic reader or tablet increase the number of buyers? 
D)  Is the aggregate output in the economy greater this year than last year?

Question 6

Suppose that a consumer purchases just two goods, X and Y. The Y-intercept of the budget line in this case would indicate the

Accepted Answer

A)  maximum dollar amount of budget that the consumer has for good Y. 
B)  price that the consumer has to pay for each unit of good Y. 
C)  maximum quantity of good Y that the consumer could buy with a given budget. 
D)  quantity of good Y that the consumer would want to buy. 
A)  maximum dollar amount of budget that the consumer has for good Y. 
B)  price that the consumer has to pay for each unit of good Y. 
C)  maximum quantity of good Y that the consumer could buy with a given budget. 
D)  quantity of good Y that the consumer would want to buy.

Question 7

Which of the following indicates an inverse relationship between x and y?

Accepted Answer

A)  y = -3 + 5x 
B)  y = 6.2x 
C)  y = 7 - 0.9x 
D)  y = -50 
A)  y = -3 + 5x 
B)  y = 6.2x 
C)  y = 7 - 0.9x 
D)  y = -50

Question 8

When an economy is operating under conditions of full employment, the production of more of commodity A will mean the production of less of commodity B because

Accepted Answer

A)  of the law of increasing opportunity costs. 
B)  economic wants are insatiable. 
C)  resources are limited. 
D)  resources are specialized and only imperfectly substitutable. 
A)  of the law of increasing opportunity costs. 
B)  economic wants are insatiable. 
C)  resources are limited. 
D)  resources are specialized and only imperfectly substitutable.

Question 9

A person should consume more of something when its marginal

Accepted Answer

A)  benefit exceeds its marginal cost. 
B)  cost exceeds its marginal benefit. 
C)  cost equals its marginal benefit. 
D)  benefit is still better. 
A)  benefit exceeds its marginal cost. 
B)  cost exceeds its marginal benefit. 
C)  cost equals its marginal benefit. 
D)  benefit is still better.

Question 10

If two sets of data are inversely related, they will appear on a graph as an upward-sloping line.

Accepted Answer

A) True 
 B)False

Question 11

Normative statements are expressions of facts.

Accepted Answer

A) True 
 B)False

Question 12

Answer the question on the basis of the following five data sets, wherein it is assumed that the variable shown on the left is the independent variable and the one on the right is the dependent variable. Assume in graphing these data that the independent variable is shown on the horizontal axis and the dependent variable on the vertical axis.   Refer to the data sets. For which data set(s) is the vertical intercept zero?

Accepted Answer

A)  data set 4 
B)  data set 5 
C)  data sets 2 and 3 
D)  data sets 1, 2, 4, and 5 
A)  data set 4 
B)  data set 5 
C)  data sets 2 and 3 
D)  data sets 1, 2, 4, and 5

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

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 15

An economic hypothesis

Accepted Answer

A)  has the same meaning as an economic principle or economic law. 
B)  is usually a normative statement. 
C)  is a possible explanation of cause and effect. 
D)  is a stronger generalization than an economic law. 
A)  has the same meaning as an economic principle or economic law. 
B)  is usually a normative statement. 
C)  is a possible explanation of cause and effect. 
D)  is a stronger generalization than an economic law.

Question 16

When studying human behavior, economists assume rational self-interest. This means that

Accepted Answer

A)  people make decisions based on some desired outcome. 
B)  people are quite selfish and are not concerned about others. 
C)  people always make the right decisions. 
D)  people have all the information they need to make a decision. 
A)  people make decisions based on some desired outcome. 
B)  people are quite selfish and are not concerned about others. 
C)  people always make the right decisions. 
D)  people have all the information they need to make a decision.

Question 17

The assertion that "there is no free lunch" means that

Accepted Answer

A)  there are always trade-offs between economic goals. 
B)  all production involves the use of scarce resources and thus the sacrifice of alternative goods. 
C)  marginal analysis is used in economic reasoning. 
D)  choices need not be made if behavior is rational. 
A)  there are always trade-offs between economic goals. 
B)  all production involves the use of scarce resources and thus the sacrifice of alternative goods. 
C)  marginal analysis is used in economic reasoning. 
D)  choices need not be made if behavior is rational.

Question 18

A point or product-combination to the left of (or inside) a budget line

Accepted Answer

A)  is attainable, but a combination or point to the right of the line is unattainable. 
B)  is unattainable, but a combination or point to the right of the line is attainable. 
C)  costs more than a combination or point on the budget line. 
D)  costs more than a combination or point outside the budget line. 
A)  is attainable, but a combination or point to the right of the line is unattainable. 
B)  is unattainable, but a combination or point to the right of the line is attainable. 
C)  costs more than a combination or point on the budget line. 
D)  costs more than a combination or point outside the budget line.

Question 19

The following graph is the production possibilities curve of a nation.   The total opportunity cost of nine drill presses is

Accepted Answer

A)  1 unit of bread. 
B)  1 unit of drill presses. 
C)  3 units of bread. 
D)  10 units of drill presses. 
A)  1 unit of bread. 
B)  1 unit of drill presses. 
C)  3 units of bread. 
D)  10 units of drill presses.

Question 20

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.

Exam 1: Limits, Alternatives, and Choices

The basic difference between consumer goods and capital goods is that

The production possibilities curve shows various combinations of two products that an economy can produce when achieving full employment.

Assume that a consumer has a given budget or income of $12 and that she can buy only two goods, apples or bananas. The price of an apple is $1.50 and the price of a banana is $0.75. For this consumer, the opportunity cost of buying one more apple is

Economists contend that most economic decisions are

Which of the following exemplifies a microeconomic question?

Suppose that a consumer purchases just two goods, X and Y. The Y-intercept of the budget line in this case would indicate the

Which of the following indicates an inverse relationship between x and y?

When an economy is operating under conditions of full employment, the production of more of commodity A will mean the production of less of commodity B because

A person should consume more of something when its marginal

If two sets of data are inversely related, they will appear on a graph as an upward-sloping line.

Normative statements are expressions of facts.

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

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

An economic hypothesis

When studying human behavior, economists assume rational self-interest. This means that

The assertion that "there is no free lunch" means that

A point or product-combination to the left of (or inside) a budget line

The following graph is the production possibilities curve of a nation. The total opportunity cost of nine drill presses is

Purposeful behavior suggests that

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

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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