Question 1

In constructing models,economists:

Accepted Answer

A)  make simplifying assumptions. 
B)  include all available information. 
C)  must use mathematical equations. 
D)  attempt to duplicate the real world. 
A)  make simplifying assumptions. 
B)  include all available information. 
C)  must use mathematical equations. 
D)  attempt to duplicate the real world. A

Question 2

A production possibilities curve illustrates:

Accepted Answer

A)  scarcity. 
B)  market prices. 
C)  consumer preferences. 
D)  the distribution of income. 
A)  scarcity. 
B)  market prices. 
C)  consumer preferences. 
D)  the distribution of income. A

Question 3

Purposeful behavior means that:

Accepted Answer

A)  people are selfish in their decision making. 
B)  people weigh costs and benefits to make decisions. 
C)  people are immune from emotions affecting their decisions. 
D)  decision makers do not make mistakes when weighing costs and benefits. 
A)  people are selfish in their decision making. 
B)  people weigh costs and benefits to make decisions. 
C)  people are immune from emotions affecting their decisions. 
D)  decision makers do not make mistakes when weighing costs and benefits. B

Question 4

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 5

Answer the question on the basis of the following information.Assume that if the interest rate that businesses must pay to borrow funds were 20 percent,it would be unprofitable for businesses to invest in new machinery and equipment,so investment would be zero.But if the interest rate were 16 percent,businesses would find it profitable to invest $10 billion.If the interest rate were 12 percent,$20 billion would be invested.Assume that total investment continues to increase by $10 billion for each successive 4 percentage point decline in the interest rate. Refer to the information.Which of the following correctly expresses the indicated relationship as an equation?

Accepted Answer

A)  i = 20 - 4I. 
B)  i = 20 - .4I. 
C)  i = 24 - .4I. 
D)  i = 20 - 10I. 
A)  i = 20 - 4I. 
B)  i = 20 - .4I. 
C)  i = 24 - .4I. 
D)  i = 20 - 10I.

Question 6

Which of the following is not correct? A typical production possibilities curve:

Accepted Answer

A)  indicates how much of two products a society can produce. 
B)  reveals how much each additional unit of one product will cost in terms of the other product. 
C)  specifies how much of each product society should produce. 
D)  indicates that to produce more of one product society must forgo larger and larger amounts of the other product. 
A)  indicates how much of two products a society can produce. 
B)  reveals how much each additional unit of one product will cost in terms of the other product. 
C)  specifies how much of each product society should produce. 
D)  indicates that to produce more of one product society must forgo larger and larger amounts of the other product.

Question 7

Macroeconomics can best be described as the:

Accepted Answer

A)  analysis of how a consumer tries to spend income. 
B)  study of the large aggregates of the economy or the economy as a whole. 
C)  analysis of how firms attempt to maximize their profits. 
D)  study of how supply and demand determine prices in individual markets. 
A)  analysis of how a consumer tries to spend income. 
B)  study of the large aggregates of the economy or the economy as a whole. 
C)  analysis of how firms attempt to maximize their profits. 
D)  study of how supply and demand determine prices in individual markets.

Question 8

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. $\quad $$\quad $(1)$\quad $$\quad $$\quad $$\quad $(2)$\quad $$\quad $$\quad $$\quad $(3)$\quad $$\quad $$\quad $$\quad $(4)$\quad $$\quad $$\quad $$\quad $(5)
$\begin{array}{rl}
{J} & K \
\hline 0 & 10 \
40 & 20 \
80 & 30 \
120 & 40 \
160 & 50 \
200 & 60
\end{array}
\begin{array}{rr}
\mathrm{L} & \mathrm{M} \
\hline 0 & -15 \
30 & -5 \
60 & 5 \
90 & 15 \
120 & 25 \
150 & 35
\end{array}\
\begin{array}{rl}
\mathrm{N}& \mathrm{P} \
\hline 100 & 40 \
80 & 50 \
60 & 60 \
40 & 70 \
20 & 80 \
0 & 90
\end{array}
\begin{array}{rc}
\mathrm{R}& \mathrm{T} \
\hline 0 & -15 \
20 & -25 \
40 & -35 \
60 & -45 \
80 & -55 \
100 & -65
\end{array}
\begin{array}{rr}
\mathrm{U} & \mathrm{V }\
\hline 0 & 0 \
5 & 10 \
10 & 20 \
15 & 30 \
20 & 40 \
25 & 50
\end{array}$ 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 set 1. 
A)  Data set 4. 
B)  Data set 5. 
C)  Data sets 2 and 3. 
D)  Data set 1.

Question 9

Other things equal,which of the following would shift an economy's production possibilities curve to the left?

Accepted Answer

A)  The discovery of a low-cost means of generating and storing solar energy. 
B)  The entrance of more women into the labor force. 
C)  A law requiring mandatory retirement from the labor force at age 55. 
D)  An increase in the proportion of total output that consists of capital or investment goods. 
A)  The discovery of a low-cost means of generating and storing solar energy. 
B)  The entrance of more women into the labor force. 
C)  A law requiring mandatory retirement from the labor force at age 55. 
D)  An increase in the proportion of total output that consists of capital or investment goods.

Question 10

Assume the price of product Y (the quantity of which is on the vertical axis)is $15 and the price of product X (the quantity of which is on the horizontal axis)is $3.Also assume that money income is $60.The absolute value of the slope of the resulting budget line:

Accepted Answer

A)  is 5. 
B)  is 1/5. 
C)  is 4. 
D)  is 20. 
A)  is 5. 
B)  is 1/5. 
C)  is 4. 
D)  is 20.

Question 11

Economics involves marginal analysis because:

Accepted Answer

A)  most decisions involve changes from the present situation. 
B)  marginal benefits always exceed marginal costs. 
C)  marginal costs always exceed marginal benefits. 
D)  much economic behavior is irrational. 
A)  most decisions involve changes from the present situation. 
B)  marginal benefits always exceed marginal costs. 
C)  marginal costs always exceed marginal benefits. 
D)  much economic behavior is irrational.

Question 12

The optimal point on a production possibilities curve is achieved where:

Accepted Answer

A)  the smallest physical amounts of inputs are used to produce each good. 
B)  each good is produced at a level where marginal benefits equal marginal costs. 
C)  large amounts of capital goods are produced relative to consumer goods. 
D)  large amounts of consumer goods are produced relative to capital goods. 
A)  the smallest physical amounts of inputs are used to produce each good. 
B)  each good is produced at a level where marginal benefits equal marginal costs. 
C)  large amounts of capital goods are produced relative to consumer goods. 
D)  large amounts of consumer goods are produced relative to capital goods.

Question 13

If all discrimination in the United States were eliminated,the economy would:

Accepted Answer

A)  have a less concave production possibilities curve. 
B)  produce at some point closer to its production possibilities curve. 
C)  be able to produce at some point outside of its production possibilities curve. 
D)  produce more consumer goods and fewer investment goods. 
A)  have a less concave production possibilities curve. 
B)  produce at some point closer to its production possibilities curve. 
C)  be able to produce at some point outside of its production possibilities curve. 
D)  produce more consumer goods and fewer investment goods.

Question 14

If we are considering the relationship between two variables and release one of the other-things-equal assumptions,we would expect:

Accepted Answer

A)  the relationship to change from direct to inverse. 
B)  the line representing that relationship on a graph to shift. 
C)  the data points to have a tighter fit to the line representing the relationship. 
D)  the relationship to change from inverse to direct. 
A)  the relationship to change from direct to inverse. 
B)  the line representing that relationship on a graph to shift. 
C)  the data points to have a tighter fit to the line representing the relationship. 
D)  the relationship to change from inverse to direct.

Question 15

"Macroeconomics is the part of economics concerned with individual units such as a person,a household,a firm,or an industry." This statement is:

Accepted Answer

A)  positive but incorrect. 
B)  positive and correct. 
C)  normative but incorrect. 
D)  normative and correct. 
A)  positive but incorrect. 
B)  positive and correct. 
C)  normative but incorrect. 
D)  normative and correct.

Question 16

Suppose that Julia receives a $20 gift card for the local coffee shop,where she only buys lattes and muffins.If the price of a latte is $4 and the price of a muffin is $2,then we can conclude that Julia:

Accepted Answer

A)  should only buy muffins. 
B)  should only buy lattes. 
C)  can buy 5 lattes or 10 muffins if she chooses to buy only one of the two goods. 
D)  can buy 5 lattes and 10 muffins with her $20 gift card. 
A)  should only buy muffins. 
B)  should only buy lattes. 
C)  can buy 5 lattes or 10 muffins if she chooses to buy only one of the two goods. 
D)  can buy 5 lattes and 10 muffins with her $20 gift card.

Question 17

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 18

The slope of a line parallel to the horizontal axis is:

Accepted Answer

A)  zero. 
B)  one. 
C)  infinite. 
D)  one-half. 
A)  zero. 
B)  one. 
C)  infinite. 
D)  one-half.

Question 19

A well-tested economic theory is often called:

Accepted Answer

A)  a hypothesis. 
B)  a prototype. 
C)  a principle. 
D)  an anomaly. 
A)  a hypothesis. 
B)  a prototype. 
C)  a principle. 
D)  an anomaly.

Question 20

(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.

In constructing models,economists:

A production possibilities curve illustrates:

Purposeful behavior means that:

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

Which of the following is not correct? A typical production possibilities curve:

Macroeconomics can best be described as the:

Other things equal,which of the following would shift an economy's production possibilities curve to the left?

Assume the price of product Y (the quantity of which is on the vertical axis)is $15 and the price of product X (the quantity of which is on the horizontal axis)is $3.Also assume that money income is $60.The absolute value of the slope of the resulting budget line:

Economics involves marginal analysis because:

The optimal point on a production possibilities curve is achieved where:

If all discrimination in the United States were eliminated,the economy would:

If we are considering the relationship between two variables and release one of the other-things-equal assumptions,we would expect:

"Macroeconomics is the part of economics concerned with individual units such as a person,a household,a firm,or an industry." This statement is:

Suppose that Julia receives a $20 gift card for the local coffee shop,where she only buys lattes and muffins.If the price of a latte is $4 and the price of a muffin is $2,then we can conclude that Julia:

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

The slope of a line parallel to the horizontal axis is:

A well-tested economic theory is often called:

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

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 Cost of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition and Oligopoly

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

Filters

Exam 1: Limits, Alternatives, and Choices

In constructing models,economists:

A production possibilities curve illustrates:

Purposeful behavior means that:

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

Which of the following is not correct? A typical production possibilities curve:

Macroeconomics can best be described as the:

Other things equal,which of the following would shift an economy's production possibilities curve to the left?

Assume the price of product Y (the quantity of which is on the vertical axis)is $15 and the price of product X (the quantity of which is on the horizontal axis)is $3.Also assume that money income is $60.The absolute value of the slope of the resulting budget line:

Economics involves marginal analysis because:

The optimal point on a production possibilities curve is achieved where:

If all discrimination in the United States were eliminated,the economy would:

If we are considering the relationship between two variables and release one of the other-things-equal assumptions,we would expect:

"Macroeconomics is the part of economics concerned with individual units such as a person,a household,a firm,or an industry." This statement is:

Suppose that Julia receives a $20 gift card for the local coffee shop,where she only buys lattes and muffins.If the price of a latte is $4 and the price of a muffin is $2,then we can conclude that Julia:

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

The slope of a line parallel to the horizontal axis is:

A well-tested economic theory is often called:

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

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 Cost of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition and Oligopoly

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

Filters