Question 1

Assume that a consumer spends a given budget on only two goods and that the prices of the two goods are constant. The budget line in this case would

Accepted Answer

A)  definitely be a straight downward-sloping line. 
B)  possibly be a straight upward-sloping line. 
C)  be a curved graph bowed outward. 
D)  be a curved bell-shaped graph. 
A)  definitely be a straight downward-sloping line. 
B)  possibly be a straight upward-sloping line. 
C)  be a curved graph bowed outward. 
D)  be a curved bell-shaped graph.

Question 2

You should decide to go to a movie

Accepted Answer

A)  if the marginal cost of the movie exceeds its marginal benefit. 
B)  if the marginal benefit of the movie exceeds its marginal cost. 
C)  if your income will allow you to buy a ticket. 
D)  because movies are enjoyable. 
A)  if the marginal cost of the movie exceeds its marginal benefit. 
B)  if the marginal benefit of the movie exceeds its marginal cost. 
C)  if your income will allow you to buy a ticket. 
D)  because movies are enjoyable.

Question 3

The slope of a graph that shows a direct relationship is

Accepted Answer

A)  always positive. 
B)  either positive or negative. 
C)  possibly zero. 
D)  either zero or infinite. 
A)  always positive. 
B)  either positive or negative. 
C)  possibly zero. 
D)  either zero or infinite.

Question 4

Economists would classify all of the following as "land," except

Accepted Answer

A)  two thousand acres of virgin forest. 
B)  a hydroelectric dam. 
C)  crude oil reserves. 
D)  iron ore deposits. 
A)  two thousand acres of virgin forest. 
B)  a hydroelectric dam. 
C)  crude oil reserves. 
D)  iron ore deposits.

Question 5

Economic principles are value judgments about what the economy should be like or the way the economic world ought to be.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is assumed in constructing a typical production possibilities curve?

Accepted Answer

A)  The economy is using its resources inefficiently. 
B)  Resources are perfectly shiftable among alternative uses. 
C)  Production technology is fixed. 
D)  The economy is engaging in international trade. 
A)  The economy is using its resources inefficiently. 
B)  Resources are perfectly shiftable among alternative uses. 
C)  Production technology is fixed. 
D)  The economy is engaging in international trade.

Question 7

(Consider This) In response to the terrorist attacks of September 11, 2001, the government decided to allocate more resources toward defense goods. The government's decision reflects their assessment that

Accepted Answer

A)  the marginal benefits of additional defense goods outweighed the marginal cost. 
B)  the marginal cost of additional defense goods outweighed the marginal benefit. 
C)  there cannot be too many defense goods. 
D)  civilian goods are not worth producing. 
A)  the marginal benefits of additional defense goods outweighed the marginal cost. 
B)  the marginal cost of additional defense goods outweighed the marginal benefit. 
C)  there cannot be too many defense goods. 
D)  civilian goods are not worth producing.

Question 8

For economists, the word "utility" means

Accepted Answer

A)  versatility and flexibility. 
B)  rationality. 
C)  pleasure or satisfaction. 
D)  purposefulness. 
A)  versatility and flexibility. 
B)  rationality. 
C)  pleasure or satisfaction. 
D)  purposefulness.

Question 9

Answer the question on the basis of the following production possibilities tables for two countries, North Cantina and South Cantina.   Refer to the tables. Suppose that resources in North Cantina and South Cantina are identical in quantity and quality. We can conclude that

Accepted Answer

A)  South Cantina has better technology than North Cantina in producing both capital and consumer goods. 
B)  North Cantina has better technology than South Cantina in producing both capital and consumer goods. 
C)  North Cantina is growing more rapidly than South Cantina. 
D)  North Cantina has better technology than South Cantina in producing consumer goods but not capital goods. 
A)  South Cantina has better technology than North Cantina in producing both capital and consumer goods. 
B)  North Cantina has better technology than South Cantina in producing both capital and consumer goods. 
C)  North Cantina is growing more rapidly than South Cantina. 
D)  North Cantina has better technology than South Cantina in producing consumer goods but not capital goods.

Question 10

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 11

Even though local newspapers are very inexpensive, people rarely buy more than one of them each day. This fact

Accepted Answer

A)  is an example of irrational behavior. 
B)  implies that electronic media sources are displacing print sources for many consumers. 
C)  contradicts the economic perspective. 
D)  implies that, for most people, the marginal benefit of reading a second newspaper is less than the marginal cost. 
A)  is an example of irrational behavior. 
B)  implies that electronic media sources are displacing print sources for many consumers. 
C)  contradicts the economic perspective. 
D)  implies that, for most people, the marginal benefit of reading a second newspaper is less than the marginal cost.

Question 12

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 13

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. The variables are directly related in

Accepted Answer

A)  all five data sets. 
B)  none of the data sets. 
C)  data sets 1, 2, and 3 only. 
D)  data sets 1, 2, and 5 only. 
A)  all five data sets. 
B)  none of the data sets. 
C)  data sets 1, 2, and 3 only. 
D)  data sets 1, 2, and 5 only.

Question 14

Which one of the following expressions best states the idea of opportunity cost?

Accepted Answer

A)  "A penny saved is a penny earned." 
B)  "He who hesitates is lost." 
C)  "There is no such thing as a free lunch." 
D)  "All that glitters is not gold." 
A)  "A penny saved is a penny earned." 
B)  "He who hesitates is lost." 
C)  "There is no such thing as a free lunch." 
D)  "All that glitters is not gold."

Question 15

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 16

Which question is an example of a microeconomic question?

Accepted Answer

A)  What should the Federal government do to reduce the trade deficit with Japan? 
B)  Will the merger of two airlines likely lead to a higher cost of air travel in the economy? 
C)  What factors are contributing to the steep rise in the federal government's total debt? 
D)  Will the inflation rate remain relatively stable this year? 
A)  What should the Federal government do to reduce the trade deficit with Japan? 
B)  Will the merger of two airlines likely lead to a higher cost of air travel in the economy? 
C)  What factors are contributing to the steep rise in the federal government's total debt? 
D)  Will the inflation rate remain relatively stable this year?

Question 17

The quantity or supply of land resources available to a nation is pretty much fixed and cannot increase over time.

Accepted Answer

A) True 
 B)False

Question 18

(Last Word) The fallacy of composition is essentially the error of

Accepted Answer

A)  omitting relevant variables in constructing a model. 
B)  reasoning from the general to the particular. 
C)  confusing cause and effect in economic relationships. 
D)  generalizing from the particular to the general. 
A)  omitting relevant variables in constructing a model. 
B)  reasoning from the general to the particular. 
C)  confusing cause and effect in economic relationships. 
D)  generalizing from the particular to the general.

Question 19

A nation can produce two products: tanks and autos. The table below is the nation's production possibilities schedule.   The total opportunity cost of three units of tanks is

Accepted Answer

A)  6 units of tanks. 
B)  350 units of autos. 
C)  650 units of autos. 
D)  1,000 units of autos. 
A)  6 units of tanks. 
B)  350 units of autos. 
C)  650 units of autos. 
D)  1,000 units of autos.

Question 20

Assume that a change in government policy results in greater production of both consumer goods and investment goods. We can conclude that

Accepted Answer

A)  the economy was not employing all of its resources before the policy change. 
B)  the economy's production possibilities curve has been shifted to the left as a result of the policy decision. 
C)  this economy's production possibilities curve is convex (bowed inward) to the origin. 
D)  the law of increasing opportunity costs does not apply in this society. 
A)  the economy was not employing all of its resources before the policy change. 
B)  the economy's production possibilities curve has been shifted to the left as a result of the policy decision. 
C)  this economy's production possibilities curve is convex (bowed inward) to the origin. 
D)  the law of increasing opportunity costs does not apply in this society.

Exam 1: Limits, Alternatives, and Choices

Assume that a consumer spends a given budget on only two goods and that the prices of the two goods are constant. The budget line in this case would

You should decide to go to a movie

The slope of a graph that shows a direct relationship is

Economists would classify all of the following as "land," except

Economic principles are value judgments about what the economy should be like or the way the economic world ought to be.

Which of the following is assumed in constructing a typical production possibilities curve?

(Consider This) In response to the terrorist attacks of September 11, 2001, the government decided to allocate more resources toward defense goods. The government's decision reflects their assessment that

For economists, the word "utility" means

Answer the question on the basis of the following production possibilities tables for two countries, North Cantina and South Cantina. Refer to the tables. Suppose that resources in North Cantina and South Cantina are identical in quantity and quality. We can conclude that

Which of the following is a capital resource?

Even though local newspapers are very inexpensive, people rarely buy more than one of them each day. This fact

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

Which one of the following expressions best states the idea of opportunity cost?

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

Which question is an example of a microeconomic question?

The quantity or supply of land resources available to a nation is pretty much fixed and cannot increase over time.

(Last Word) The fallacy of composition is essentially the error of

A nation can produce two products: tanks and autos. The table below is the nation's production possibilities schedule. The total opportunity cost of three units of tanks is

Assume that a change in government policy results in greater production of both consumer goods and investment goods. We can conclude 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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