Question 1

"Economics is concerned with how individuals,institutions,and society make optimal choices under conditions of scarcity." 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 2

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 North Cantina is producing 2 units of capital goods and 17 units of consumer goods while South Cantina is producing 2 units of capital goods and 21 units of consumer goods.We can conclude that:

Accepted Answer

A)  North Cantina is fully and efficiently using its resources,but South Cantina is not. 
B)  South Cantina is fully and efficiently using its resources,but North Cantina is not. 
C)  neither South Cantina nor North Cantina is fully and efficiently using its resources. 
D)  both South Cantina and North Cantina are fully and efficiently using their resources. 
A)  North Cantina is fully and efficiently using its resources,but South Cantina is not. 
B)  South Cantina is fully and efficiently using its resources,but North Cantina is not. 
C)  neither South Cantina nor North Cantina is fully and efficiently using its resources. 
D)  both South Cantina and North Cantina are fully and efficiently using their resources.

Question 3

Answer the question on the basis of the following production possibilities tables for two countries,North Cantina and South Cantina:   Refer to the tables.The opportunity cost of the fifth unit of capital goods:

Accepted Answer

A)  is higher in North Cantina than in South Cantina. 
B)  is the same in North Cantina and South Cantina. 
C)  is lower in North Cantina than in South Cantina. 
D)  cannot be determined from the information provided. 
A)  is higher in North Cantina than in South Cantina. 
B)  is the same in North Cantina and South Cantina. 
C)  is lower in North Cantina than in South Cantina. 
D)  cannot be determined from the information provided.

Question 4

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 5

A country can achieve some combination of goods outside its production possibilities curve by:

Accepted Answer

A)  idling some of its resources. 
B)  specializing and engaging in international trade. 
C)  buying the debt (bonds and stocks)of foreign nations. 
D)  producing more capital goods and fewer consumer goods. 
A)  idling some of its resources. 
B)  specializing and engaging in international trade. 
C)  buying the debt (bonds and stocks)of foreign nations. 
D)  producing more capital goods and fewer consumer goods.

Question 6

Which of the following statements pertains to macroeconomics?

Accepted Answer

A)  Because the minimum wage was raised,Mrs.Olsen decided to enter the labor force. 
B)  A decline in the price of soybeans caused farmer Wanek to plant more land in wheat. 
C)  National income grew by 2.7 percent last year. 
D)  The Pumpkin Center State Bank increased its interest rate on consumer loans by 1 percentage point. 
A)  Because the minimum wage was raised,Mrs.Olsen decided to enter the labor force. 
B)  A decline in the price of soybeans caused farmer Wanek to plant more land in wheat. 
C)  National income grew by 2.7 percent last year. 
D)  The Pumpkin Center State Bank increased its interest rate on consumer loans by 1 percentage point.

Question 7

Positive statements are expressions of value judgments.

Accepted Answer

A) True 
 B)False

Question 8

The problems of aggregate inflation and unemployment are:

Accepted Answer

A)  major topics of macroeconomics. 
B)  not relevant to the U.S.economy. 
C)  major topics of microeconomics. 
D)  peculiar to command economies. 
A)  major topics of macroeconomics. 
B)  not relevant to the U.S.economy. 
C)  major topics of microeconomics. 
D)  peculiar to command economies.

Question 9

(Consider This)At fast-food restaurants:

Accepted Answer

A)  consumers enjoy complete and accurate information. 
B)  decisions are usually made by trial and error. 
C)  decisions entail comparisons of marginal costs and marginal benefits. 
D)  benefits always exceed costs. 
A)  consumers enjoy complete and accurate information. 
B)  decisions are usually made by trial and error. 
C)  decisions entail comparisons of marginal costs and marginal benefits. 
D)  benefits always exceed costs.

Question 10

(Last Word)"The government deregulated the electricity industry in California and a shortage of electricity soon occurred.It is clear that the deregulation caused the shortage." This statement needs careful analysis because it may reflect the:

Accepted Answer

A)  fallacy of composition. 
B)  post hoc,ergo propter hoc fallacy. 
C)  use of loaded terminology. 
D)  law of averages. 
A)  fallacy of composition. 
B)  post hoc,ergo propter hoc fallacy. 
C)  use of loaded terminology. 
D)  law of averages.

Question 11

The amount of pizzas that consumers want to buy per week is reflected in the equation P = 15 - .02Qd,where Qd is the amount of pizzas purchased per week and P is the price of pizzas.On the basis of this information we can say that:

Accepted Answer

A)  if pizzas were free,people would consume 800 per week. 
B)  more pizzas will be purchased at a high price than at a low price. 
C)  if the price of pizzas is $6,then 150 will be purchased. 
D)  50 fewer pizzas will be purchased per week for every $1 increase in price. 
A)  if pizzas were free,people would consume 800 per week. 
B)  more pizzas will be purchased at a high price than at a low price. 
C)  if the price of pizzas is $6,then 150 will be purchased. 
D)  50 fewer pizzas will be purchased per week for every $1 increase in price.

Question 12

If economic theories are solidly based on relevant facts,then appropriate economic policy becomes obvious and uncontroversial.

Accepted Answer

A) True 
 B)False

Question 13

(Last Word)A study found that the incidence of skin cancer increases along with the amount of time people work under fluorescent light,leading some people to conclude that fluorescent lighting is a cause of skin cancer.But further analysis found that people who work in offices,where fluorescent light is common,suffer more sunburn on their vacations than other workers.The sunburns,not the fluorescent light,were the cause of the higher incidence of skin cancer.The original conclusion illustrates:

Accepted Answer

A)  the fallacy of composition. 
B)  confusion of correlation and causation. 
C)  identifying marginal costs and marginal benefits. 
D)  biases and loaded terminology. 
A)  the fallacy of composition. 
B)  confusion of correlation and causation. 
C)  identifying marginal costs and marginal benefits. 
D)  biases and loaded terminology.

Question 14

The term "other things equal" means that:

Accepted Answer

A)  the associated statement is normative. 
B)  many variables affect the variable under consideration. 
C)  a number of relevant variables are assumed to be constant. 
D)  when variable X increases so does related variable Y. 
A)  the associated statement is normative. 
B)  many variables affect the variable under consideration. 
C)  a number of relevant variables are assumed to be constant. 
D)  when variable X increases so does related variable Y.

Question 15

According to economists,economic self-interest:

Accepted Answer

A)  is a reality that underlies economic behavior. 
B)  has the same meaning as selfishness. 
C)  means that people never make wrong decisions. 
D)  is usually self-defeating. 
A)  is a reality that underlies economic behavior. 
B)  has the same meaning as selfishness. 
C)  means that people never make wrong decisions. 
D)  is usually self-defeating.

Question 16

The lower the consumer's income,the higher his or her budget line.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following statements is true?

Accepted Answer

A)  Microeconomics focuses on specific decision-making units of the economy;macroeconomics examines the economy as a whole. 
B)  Macroeconomics focuses on specific decision-making units of the economy;microeconomics examines the economy as a whole. 
C)  Every topic in economics is either a microeconomic or a macroeconomic issue;a topic cannot be both. 
D)  Topics in microeconomics have public policy implications;topics in macroeconomics do not. 
A)  Microeconomics focuses on specific decision-making units of the economy;macroeconomics examines the economy as a whole. 
B)  Macroeconomics focuses on specific decision-making units of the economy;microeconomics examines the economy as a whole. 
C)  Every topic in economics is either a microeconomic or a macroeconomic issue;a topic cannot be both. 
D)  Topics in microeconomics have public policy implications;topics in macroeconomics do not.

Question 18

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.The equation for data set 5 is:

Accepted Answer

A)  V = .5Y. 
B)  U = -.5V. 
C)  U = V. 
D)  V = 2U. 
A)  V = .5Y. 
B)  U = -.5V. 
C)  U = V. 
D)  V = 2U.

Question 19

The production possibilities curve:

Accepted Answer

A)  shows all of those levels of production that are consistent with a stable price level. 
B)  indicates that any combination of goods lying outside the curve is economically inefficient. 
C)  is a frontier between all combinations of two goods that can be produced and those combinations that cannot be produced. 
D)  shows all of those combinations of two goods that are most preferred by society. 
A)  shows all of those levels of production that are consistent with a stable price level. 
B)  indicates that any combination of goods lying outside the curve is economically inefficient. 
C)  is a frontier between all combinations of two goods that can be produced and those combinations that cannot be produced. 
D)  shows all of those combinations of two goods that are most preferred by society.

Question 20

If the equation y = 15 - 4x was plotted,the:

Accepted Answer

A)  vertical intercept would be -4. 
B)  vertical intercept would be +4. 
C)  vertical intercept would be +9. 
D)  slope would be -4. 
A)  vertical intercept would be -4. 
B)  vertical intercept would be +4. 
C)  vertical intercept would be +9. 
D)  slope would be -4.

"Economics is concerned with how individuals,institutions,and society make optimal choices under conditions of scarcity." This statement is:

Answer the question on the basis of the following production possibilities tables for two countries,North Cantina and South Cantina: Refer to the tables.The opportunity cost of the fifth unit of capital goods:

A person should consume more of something when its marginal:

A country can achieve some combination of goods outside its production possibilities curve by:

Which of the following statements pertains to macroeconomics?

Positive statements are expressions of value judgments.

The problems of aggregate inflation and unemployment are:

(Consider This)At fast-food restaurants:

(Last Word)"The government deregulated the electricity industry in California and a shortage of electricity soon occurred.It is clear that the deregulation caused the shortage." This statement needs careful analysis because it may reflect the:

The amount of pizzas that consumers want to buy per week is reflected in the equation P = 15 - .02Q_d,where Q_d is the amount of pizzas purchased per week and P is the price of pizzas.On the basis of this information we can say that:

If economic theories are solidly based on relevant facts,then appropriate economic policy becomes obvious and uncontroversial.

The term "other things equal" means that:

According to economists,economic self-interest:

The lower the consumer's income,the higher his or her budget line.

Which of the following statements is true?

The production possibilities curve:

If the equation y = 15 - 4x was plotted,the:

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

"Economics is concerned with how individuals,institutions,and society make optimal choices under conditions of scarcity." This statement is:

Answer the question on the basis of the following production possibilities tables for two countries,North Cantina and South Cantina: Refer to the tables.The opportunity cost of the fifth unit of capital goods:

A person should consume more of something when its marginal:

A country can achieve some combination of goods outside its production possibilities curve by:

Which of the following statements pertains to macroeconomics?

Positive statements are expressions of value judgments.

The problems of aggregate inflation and unemployment are:

(Consider This)At fast-food restaurants:

(Last Word)"The government deregulated the electricity industry in California and a shortage of electricity soon occurred.It is clear that the deregulation caused the shortage." This statement needs careful analysis because it may reflect the:

The amount of pizzas that consumers want to buy per week is reflected in the equation P = 15 - .02Qd,where Qd is the amount of pizzas purchased per week and P is the price of pizzas.On the basis of this information we can say that:

If economic theories are solidly based on relevant facts,then appropriate economic policy becomes obvious and uncontroversial.

The term "other things equal" means that:

According to economists,economic self-interest:

The lower the consumer's income,the higher his or her budget line.

Which of the following statements is true?

The production possibilities curve:

If the equation y = 15 - 4x was plotted,the:

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

The amount of pizzas that consumers want to buy per week is reflected in the equation P = 15 - .02Q_d,where Q_d is the amount of pizzas purchased per week and P is the price of pizzas.On the basis of this information we can say that: