Question 1

Answer the question on the basis of the following data: $\begin{array}{cc}
\underline{\text { After-Tax Income} } &\underline{ \text { Consumption }} \
\$ 1,000 & \$ 900 \
2,000 & 1,800 \
3,000 & 2,700 \
4,000 & 3,600 \
5,000 & 4,500
\end{array}$  The data suggest that:

Accepted Answer

A)  a policy of tax reduction will increase consumption. 
B)  a policy of tax increases will increase consumption. 
C)  tax changes will have no impact on consumption. 
D)  after-tax income should be lowered to increase consumption. 
A)  a policy of tax reduction will increase consumption. 
B)  a policy of tax increases will increase consumption. 
C)  tax changes will have no impact on consumption. 
D)  after-tax income should be lowered to increase consumption.

Question 2

If the production possibilities curve is a straight line:

Accepted Answer

A)  the two products will sell at the same market prices. 
B)  economic resources are perfectly substitutable between the production of the two products. 
C)  the two products are equally important to consumers. 
D)  equal quantities of the two products will be produced at each possible point on the curve. 
A)  the two products will sell at the same market prices. 
B)  economic resources are perfectly substitutable between the production of the two products. 
C)  the two products are equally important to consumers. 
D)  equal quantities of the two products will be produced at each possible point on the curve.

Question 3

A positive statement is one that is:

Accepted Answer

A)  derived by induction. 
B)  derived by deduction. 
C)  subjective and is based on a value judgment. 
D)  objective and is based on facts. 
A)  derived by induction. 
B)  derived by deduction. 
C)  subjective and is based on a value judgment. 
D)  objective and is based on facts.

Question 4

Consumers spend their incomes to get the maximum benefit or satisfaction from the goods and services they purchase.This is a reflection of:

Accepted Answer

A)  resource scarcity and the necessity of choice. 
B)  purposeful behavior. 
C)  marginal costs that exceed marginal benefits. 
D)  the trade-off problem that exists between competing goals. 
A)  resource scarcity and the necessity of choice. 
B)  purposeful behavior. 
C)  marginal costs that exceed marginal benefits. 
D)  the trade-off problem that exists between competing goals.

Question 5

The fact that the slope of the production possibilities curve becomes steeper as we move down along the curve indicates that:

Accepted Answer

A)  the principle of increasing opportunity costs is relevant. 
B)  society's resources are limited. 
C)  the opportunity cost of producing each product is constant. 
D)  resources are perfectly shiftable between alternative uses. 
A)  the principle of increasing opportunity costs is relevant. 
B)  society's resources are limited. 
C)  the opportunity cost of producing each product is constant. 
D)  resources are perfectly shiftable between alternative uses.

Question 6

The scarcity problem:

Accepted Answer

A)  persists only because countries have failed to achieve continuous full employment. 
B)  persists because economic wants exceed available productive resources. 
C)  has been solved in all industrialized nations. 
D)  has been eliminated in affluent societies such as the United States and Canada. 
A)  persists only because countries have failed to achieve continuous full employment. 
B)  persists because economic wants exceed available productive resources. 
C)  has been solved in all industrialized nations. 
D)  has been eliminated in affluent societies such as the United States and Canada.

Question 7

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 8

The negative slope of the production possibilities curve is a graphical way of indicating that:

Accepted Answer

A)  any economy "can have its cake and eat it too." 
B)  to produce more of one product we must do with less of another. 
C)  the principle of increasing opportunity costs applies to only parts of the economy. 
D)  consumers buy more when prices are low than when prices are high. 
A)  any economy "can have its cake and eat it too." 
B)  to produce more of one product we must do with less of another. 
C)  the principle of increasing opportunity costs applies to only parts of the economy. 
D)  consumers buy more when prices are low than when prices are high.

Question 9

In recent years the economy of Japan has grown,despite the fact that the population of Japan has declined.Which of the following would best explain Japan's economic growth despite having a smaller population?

Accepted Answer

A)  Immigration of new workers into Japan. 
B)  Advancements in technology that make labor more productive. 
C)  Reduced employment of capital because fewer workers are available to use it. 
D)  Greater consumption of goods imported from other countries. 
A)  Immigration of new workers into Japan. 
B)  Advancements in technology that make labor more productive. 
C)  Reduced employment of capital because fewer workers are available to use it. 
D)  Greater consumption of goods imported from other countries.

Question 10

In economics,the pleasure,happiness,or satisfaction received from a product is called:

Accepted Answer

A)  marginal cost. 
B)  rational outcome. 
C)  status fulfillment. 
D)  utility. 
A)  marginal cost. 
B)  rational outcome. 
C)  status fulfillment. 
D)  utility.

Question 11

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 vertical intercept is positive for:

Accepted Answer

A)  all five data sets. 
B)  data sets 1 and 3 only. 
C)  data sets 1,3,and 5 only. 
D)  data set 2 only. 
A)  all five data sets. 
B)  data sets 1 and 3 only. 
C)  data sets 1,3,and 5 only. 
D)  data set 2 only.

Question 12

(Consider This)Free products offered by firms:

Accepted Answer

A)  may or may not be free to society but are never free to individuals. 
B)  may or may not be free to individuals but are never free to society. 
C)  are produced and distributed at no cost to society. 
D)  are usually items nobody wants. 
A)  may or may not be free to society but are never free to individuals. 
B)  may or may not be free to individuals but are never free to society. 
C)  are produced and distributed at no cost to society. 
D)  are usually items nobody wants.

Question 13

Macroeconomics approaches the study of economics from the viewpoint of:

Accepted Answer

A)  the entire economy. 
B)  governmental units. 
C)  the operation of specific product and resource markets. 
D)  individual firms. 
A)  the entire economy. 
B)  governmental units. 
C)  the operation of specific product and resource markets. 
D)  individual firms.

Question 14

(Last Word)The post hoc,ergo propter hoc fallacy suggests that:

Accepted Answer

A)  positive statements are always followed by normative judgments. 
B)  positive statements can never be proven true or false. 
C)  if one acts on one's expectations,those expectations will always be fulfilled. 
D)  cause and effect can be determined merely by observing the sequence of events. 
A)  positive statements are always followed by normative judgments. 
B)  positive statements can never be proven true or false. 
C)  if one acts on one's expectations,those expectations will always be fulfilled. 
D)  cause and effect can be determined merely by observing the sequence of events.

Question 15

The economic perspective entails:

Accepted Answer

A)  irrational behavior by individuals and institutions. 
B)  a comparison of marginal benefits and marginal costs in decision making. 
C)  short-term but not long-term thinking. 
D)  rejection of the scientific method. 
A)  irrational behavior by individuals and institutions. 
B)  a comparison of marginal benefits and marginal costs in decision making. 
C)  short-term but not long-term thinking. 
D)  rejection of the scientific method.

Question 16

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.Using i and I to indicate the interest rate and investment (in billions of dollars)respectively,which of the following is the correct tabular presentation of the described relationship?

A.
$\begin{array}{cc}
\underline{{i}}&\underline{{I} }\
20&\$50\
16 & 40 \
12 & 30 \
8 & 20 \
4 & 10 \
0 & 0
\end{array}$

B.
 $\begin{array}{cc}
\underline{i} & \underline{I} \
24&\$10\
20 & 20 \
16 & 30 \
12 & 40 \
8 & 50 \
4 & 60
\end{array}$

C.
$\begin{array}{cc}
\underline{i}& \underline{I} \
20&\$0\
16 & 10 \
12 & 20 \
8 & 30 \
4 & 40 \
0 & 50
\end{array}$

D.
$\begin{array}{cc}
\underline{i} & \underline{I} \
 20 & \$ 10 \
16 & 20 \
12 & 30 \
8 & 40 \
4 & 50 \
0 & 60
\end{array}$

Accepted Answer

A)  Option A 
B)  Option B 
C)  Option C 
D)  Option D 
A)  Option A 
B)  Option B 
C)  Option C 
D)  Option D

Question 17

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 18

Camille is at the candy store with her grandmother,who offers to buy her $6 worth of candy.If lollipops are $1 each and candy bars are $2 each,what combination of candy can Camille's grandmother buy for her?

Accepted Answer

A)  Six lollipops and three candy bars. 
B)  Two lollipops and two candy bars. 
C)  Three lollipops and two candy bars. 
D)  One lollipop and three candy bars. 
A)  Six lollipops and three candy bars. 
B)  Two lollipops and two candy bars. 
C)  Three lollipops and two candy bars. 
D)  One lollipop and three candy bars.

Question 19

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 variables are directly related in:

Accepted Answer

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

Question 20

An economic model is an ideal or utopian type of economy that society should strive to obtain through economic policy.

Accepted Answer

A) True 
 B)False

Answer the question on the basis of the following data: \ 1,000 \ 900 2,000 1,800 3,000 2,700 4,000 3,600 5,000 4,500 The data suggest that:

If the production possibilities curve is a straight line:

A positive statement is one that is:

Consumers spend their incomes to get the maximum benefit or satisfaction from the goods and services they purchase.This is a reflection of:

The fact that the slope of the production possibilities curve becomes steeper as we move down along the curve indicates that:

The scarcity problem:

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

The negative slope of the production possibilities curve is a graphical way of indicating that:

In recent years the economy of Japan has grown,despite the fact that the population of Japan has declined.Which of the following would best explain Japan's economic growth despite having a smaller population?

In economics,the pleasure,happiness,or satisfaction received from a product is called:

(Consider This)Free products offered by firms:

Macroeconomics approaches the study of economics from the viewpoint of:

(Last Word)The post hoc,ergo propter hoc fallacy suggests that:

The economic perspective entails:

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

Camille is at the candy store with her grandmother,who offers to buy her $6 worth of candy.If lollipops are $1 each and candy bars are $2 each,what combination of candy can Camille's grandmother buy for her?

An economic model is an ideal or utopian type of economy that society should strive to obtain through economic policy.

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

Answer the question on the basis of the following data: \ 1,000 \ 900 2,000 1,800 3,000 2,700 4,000 3,600 5,000 4,500 The data suggest that:

If the production possibilities curve is a straight line:

A positive statement is one that is:

Consumers spend their incomes to get the maximum benefit or satisfaction from the goods and services they purchase.This is a reflection of:

The fact that the slope of the production possibilities curve becomes steeper as we move down along the curve indicates that:

The scarcity problem:

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

The negative slope of the production possibilities curve is a graphical way of indicating that:

In recent years the economy of Japan has grown,despite the fact that the population of Japan has declined.Which of the following would best explain Japan's economic growth despite having a smaller population?

In economics,the pleasure,happiness,or satisfaction received from a product is called:

(Consider This)Free products offered by firms:

Macroeconomics approaches the study of economics from the viewpoint of:

(Last Word)The post hoc,ergo propter hoc fallacy suggests that:

The economic perspective entails:

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

Camille is at the candy store with her grandmother,who offers to buy her $6 worth of candy.If lollipops are $1 each and candy bars are $2 each,what combination of candy can Camille's grandmother buy for her?

An economic model is an ideal or utopian type of economy that society should strive to obtain through economic policy.

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