Question 1

(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 2

In drawing a particular budget line,money income and the prices of the two products are fixed.

Accepted Answer

A) True 
 B)False

Question 3

Through specialization and international trade,a nation:

Accepted Answer

A)  can attain some combination of goods lying outside its production possibilities curve. 
B)  can move from a high consumption-low investment to a high investment-low consumption point on its production possibilities curve. 
C)  will only attain some combination of goods lying within its production possibilities curve. 
D)  will cause its production possibilities curve to shift leftward. 
A)  can attain some combination of goods lying outside its production possibilities curve. 
B)  can move from a high consumption-low investment to a high investment-low consumption point on its production possibilities curve. 
C)  will only attain some combination of goods lying within its production possibilities curve. 
D)  will cause its production possibilities curve to shift leftward.

Question 4

If someone produced too much of a good,this would suggest that:

Accepted Answer

A)  rational choice cannot be applied to many economic decisions. 
B)  the good was produced past the point where its marginal cost exceeded its marginal benefit. 
C)  certain goods and services such as education and health care are inherently desirable and should be produced regardless of costs and benefits. 
D)  the good was produced to the point where its marginal benefit exceeded its marginal cost. 
A)  rational choice cannot be applied to many economic decisions. 
B)  the good was produced past the point where its marginal cost exceeded its marginal benefit. 
C)  certain goods and services such as education and health care are inherently desirable and should be produced regardless of costs and benefits. 
D)  the good was produced to the point where its marginal benefit exceeded its marginal cost.

Question 5

Answer the question on the basis of the data given in the following production possibilities table: $\quad $$\quad $$\quad $$\quad $$\quad $$\quad $$\quad $$\quad $$\underline{\text { Production Possibilities (Alternatives) }}$
$\begin{array}{ccccccc}
&\underline{A}&\underline{B}&\underline{C}& \underline{D} &\underline{E}&\underline{F} \
 
\text { Capital Goods } &5&4&3&2&1&0\
\text { onsumer Goods } & 0 & 5 & 9 & 12 & 14 & 15 
\end{array}$  Refer to the table.For these data,the law of increasing opportunity costs is reflected in the fact that:

Accepted Answer

A)  the amount of consumer goods that must be sacrificed to get more capital goods diminishes beyond a point. 
B)  larger and larger amounts of capital goods must be sacrificed to get additional units of consumer goods. 
C)  the production possibilities data would graph as a straight downsloping line. 
D)  the economy's resources are presumed to be scarce. 
A)  the amount of consumer goods that must be sacrificed to get more capital goods diminishes beyond a point. 
B)  larger and larger amounts of capital goods must be sacrificed to get additional units of consumer goods. 
C)  the production possibilities data would graph as a straight downsloping line. 
D)  the economy's resources are presumed to be scarce.

Question 6

If the equation y = -10 + 2.5x was plotted:

Accepted Answer

A)  the vertical intercept would be -10. 
B)  the slope would be -7.5. 
C)  it would graph as a downsloping line. 
D)  the slope would be -10. 
A)  the vertical intercept would be -10. 
B)  the slope would be -7.5. 
C)  it would graph as a downsloping line. 
D)  the slope would be -10.

Question 7

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 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

Kelly works at an ice cream shop and observes that the number of people buying ice cream varies greatly from day to day.For a couple of weeks she has recorded the number of people at the shop each day,as well as the daily temperature.If Kelly is using the scientific method to better understand ice cream buying habits,her next step is to:

Accepted Answer

A)  conclude definitively that people buy more ice cream when the temperature rises. 
B)  state her findings as a well-tested economic principle. 
C)  use the observed data to form a hypothesis about ice cream buying behavior. 
D)  throw out the data if it does not show a perfect relationship between buying habits and the other information she has collected. 
A)  conclude definitively that people buy more ice cream when the temperature rises. 
B)  state her findings as a well-tested economic principle. 
C)  use the observed data to form a hypothesis about ice cream buying behavior. 
D)  throw out the data if it does not show a perfect relationship between buying habits and the other information she has collected.

Question 10

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 11

Brinley says that "gas prices are rising because there aren't enough oil refineries." Katie argues that "gas prices are rising because of the growing demand for gasoline from China and India." We can conclude that:

Accepted Answer

A)  Brinley's statement is positive;Katie's statement is normative. 
B)  Brinley's statement is normative;Katie's statement is positive. 
C)  Both statements are positive. 
D)  Both statements are normative. 
A)  Brinley's statement is positive;Katie's statement is normative. 
B)  Brinley's statement is normative;Katie's statement is positive. 
C)  Both statements are positive. 
D)  Both statements are normative.

Question 12

Which of the following is a microeconomic statement?

Accepted Answer

A)  The real domestic output increased by 2.3 percent last year. 
B)  Unemployment was 6.5 percent of the labor force last year. 
C)  The price of personal computers declined 4.7 percent last year. 
D)  The general price level increased by 3.1 percent last year. 
A)  The real domestic output increased by 2.3 percent last year. 
B)  Unemployment was 6.5 percent of the labor force last year. 
C)  The price of personal computers declined 4.7 percent last year. 
D)  The general price level increased by 3.1 percent last year.

Question 13

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 is an accurate verbal statement of the described relationship?

Accepted Answer

A)  There is no regular or dependable relationship between business investment and the interest rate. 
B)  The amount of business investment is unaffected by changes in the interest rate. 
C)  Investment spending by businesses varies inversely with the interest rate. 
D)  Investment spending by businesses varies directly with the interest rate. 
A)  There is no regular or dependable relationship between business investment and the interest rate. 
B)  The amount of business investment is unaffected by changes in the interest rate. 
C)  Investment spending by businesses varies inversely with the interest rate. 
D)  Investment spending by businesses varies directly with the interest rate.

Question 14

Which of the following will not produce an outward shift of the production possibilities curve?

Accepted Answer

A)  An upgrading of the quality of a nation's human resources. 
B)  The reduction of unemployment. 
C)  An increase in the quantity of a society's labor force. 
D)  The improvement of a society's technological knowledge. 
A)  An upgrading of the quality of a nation's human resources. 
B)  The reduction of unemployment. 
C)  An increase in the quantity of a society's labor force. 
D)  The improvement of a society's technological knowledge.

Question 15

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

Accepted Answer

A)  3 units of consumer goods. 
B)  4 units of consumer goods. 
C)  5 units of consumer goods. 
D)  6 units of consumer goods. 
A)  3 units of consumer goods. 
B)  4 units of consumer goods. 
C)  5 units of consumer goods. 
D)  6 units of consumer goods.

Question 16

Which of the following statements,if any,is correct for a nation that is producing only consumer and capital goods?

Accepted Answer

A)  Other things equal,the more consumer goods a nation produces,the greater will be its future growth rate. 
B)  Other things equal,the more capital goods a nation produces,the greater will be its future growth rate. 
C)  There is no general relationship between the current division of output between consumer and capital goods and the future growth rate. 
D)  None of these statements is correct. 
A)  Other things equal,the more consumer goods a nation produces,the greater will be its future growth rate. 
B)  Other things equal,the more capital goods a nation produces,the greater will be its future growth rate. 
C)  There is no general relationship between the current division of output between consumer and capital goods and the future growth rate. 
D)  None of these statements is correct.

Question 17

(Consider This)The economic perspective used in customer decision making at fast-food restaurants is reflected in:

Accepted Answer

A)  customers selecting the shortest line. 
B)  decisions for which marginal costs exceed marginal benefits. 
C)  all customer lines tending to be of different lengths. 
D)  irrational purchasing of high-fat-content food. 
A)  customers selecting the shortest line. 
B)  decisions for which marginal costs exceed marginal benefits. 
C)  all customer lines tending to be of different lengths. 
D)  irrational purchasing of high-fat-content food.

Question 18

Macroeconomics explains the behavior of individual households and business firms;microeconomics is concerned with the behavior of aggregates or the economy as a whole.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following do economists consider to be capital?

Accepted Answer

A)  A pair of stockings. 
B)  A construction crane. 
C)  A savings account. 
D)  A share of IBM stock. 
A)  A pair of stockings. 
B)  A construction crane. 
C)  A savings account. 
D)  A share of IBM stock.

Question 20

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

Accepted Answer

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

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

In drawing a particular budget line,money income and the prices of the two products are fixed.

Through specialization and international trade,a nation:

If someone produced too much of a good,this would suggest that:

If the equation y = -10 + 2.5x was plotted:

The optimal allocation of resources is found:

For economists,the word "utility" means:

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

Brinley says that "gas prices are rising because there aren't enough oil refineries." Katie argues that "gas prices are rising because of the growing demand for gasoline from China and India." We can conclude that:

Which of the following is a microeconomic statement?

Which of the following will not produce an outward shift of the production possibilities curve?

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

Which of the following statements,if any,is correct for a nation that is producing only consumer and capital goods?

(Consider This)The economic perspective used in customer decision making at fast-food restaurants is reflected in:

Macroeconomics explains the behavior of individual households and business firms;microeconomics is concerned with the behavior of aggregates or the economy as a whole.

Which of the following do economists consider to be capital?

The slope of a line parallel to the vertical axis 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

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

In drawing a particular budget line,money income and the prices of the two products are fixed.

Through specialization and international trade,a nation:

If someone produced too much of a good,this would suggest that:

If the equation y = -10 + 2.5x was plotted:

The optimal allocation of resources is found:

For economists,the word "utility" means:

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

Brinley says that "gas prices are rising because there aren't enough oil refineries." Katie argues that "gas prices are rising because of the growing demand for gasoline from China and India." We can conclude that:

Which of the following is a microeconomic statement?

Which of the following will not produce an outward shift of the production possibilities curve?

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

Which of the following statements,if any,is correct for a nation that is producing only consumer and capital goods?

(Consider This)The economic perspective used in customer decision making at fast-food restaurants is reflected in:

Macroeconomics explains the behavior of individual households and business firms;microeconomics is concerned with the behavior of aggregates or the economy as a whole.

Which of the following do economists consider to be capital?

The slope of a line parallel to the vertical axis 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