Question 1

Which of the following can be categorized as a sunk cost of a firm?

Accepted Answer

A) The retirement benefit provided to the workers 
B) The investment on a research project that failed to take-off 
C) The higher wages paid to workers for working extra hours 
D) The value of the closing stock of inventory 
A) The retirement benefit provided to the workers 
B) The investment on a research project that failed to take-off 
C) The higher wages paid to workers for working extra hours 
D) The value of the closing stock of inventory

Question 2

Which of the following is generally considered to be a microeconomic question?

Accepted Answer

A) The relationship between the money supply and nominal GDP 
B) The responsiveness of aggregate demand to change in government expenditure 
C) The relationship between productivity of workers and wages received by them 
D) The relationship between inflation and unemployment 
A) The relationship between the money supply and nominal GDP 
B) The responsiveness of aggregate demand to change in government expenditure 
C) The relationship between productivity of workers and wages received by them 
D) The relationship between inflation and unemployment

Question 3

Economic theory:

Accepted Answer

A) can determine which public policy is the most desirable. 
B) tries to account for all possible influences. 
C) is a tool for understanding economic relationships. 
D) uses no assumptions in deriving results. 
A) can determine which public policy is the most desirable. 
B) tries to account for all possible influences. 
C) is a tool for understanding economic relationships. 
D) uses no assumptions in deriving results.

Question 4

What does the consumer price index measure?

Accepted Answer

A) The average price of a good over five years 
B) The change in nominal prices of goods and services 
C) The change in the value of a currency 
D) The change in the average price level in the economy 
A) The average price of a good over five years 
B) The change in nominal prices of goods and services 
C) The change in the value of a currency 
D) The change in the average price level in the economy

Question 5

-The production possibility frontier in Figure 1-1 exhibits _____ opportunity cost of apples.

Accepted Answer

A) increasing 
B) decreasing 
C) constant 
D) zero 
A) increasing 
B) decreasing 
C) constant 
D) zero

Question 6

Consider the following theory: the more one practices for the SAT test,the higher the person will score.This theory:

Accepted Answer

A) is complete and very useful for high school students. 
B) is incomplete because it leaves out many other factors that will influence SAT scores. 
C) is not useful since it is hard to measure practice time. 
D) is useful because more practice will guarantee higher SAT scores. 
A) is complete and very useful for high school students. 
B) is incomplete because it leaves out many other factors that will influence SAT scores. 
C) is not useful since it is hard to measure practice time. 
D) is useful because more practice will guarantee higher SAT scores.

Question 7

Positive economic analysis utilizes:

Accepted Answer

A) value judgments of highly trained professional economists. 
B) economic theories and empirical tests of the theories. 
C) normative economic theories in arriving at judgments on the suitability of a change in government economic policy. 
D) the same criteria as normative economics,but does not take into consideration the value judgments of the policy makers. 
A) value judgments of highly trained professional economists. 
B) economic theories and empirical tests of the theories. 
C) normative economic theories in arriving at judgments on the suitability of a change in government economic policy. 
D) the same criteria as normative economics,but does not take into consideration the value judgments of the policy makers.

Question 8

Suppose the consumer price index was 100 in the year 2000 and 200 in the year 2010.If the nominal price of apples has increased from 100 to 150 over this period,the real price of apples has:

Accepted Answer

A) fallen by 25 percent. 
B) fallen by 50 percent. 
C) risen by 50 percent. 
D) risen by 25 percent. 
A) fallen by 25 percent. 
B) fallen by 50 percent. 
C) risen by 50 percent. 
D) risen by 25 percent.

Question 9

Opportunity cost is the equivalent of:

Accepted Answer

A) explicit cost. 
B) implicit cost. 
C) economic cost. 
D) sunk cost. 
A) explicit cost. 
B) implicit cost. 
C) economic cost. 
D) sunk cost.

Question 10

A farmer can produce 10,000 pears on his one acre farmland.When he uses the same land for apple cultivation,a total of 5,000 apples can be produced.He realizes that with the introduction of a new fertilizer,he can increase the maximum production of apples to 7,000.The maximum production of pears,however,remains unchanged.Given that his production possibility frontier (PPF)is linear and apples are graphed on the Y-axis and pears on the X-axis,calculate the slope of his PPF.

Accepted Answer

A) -1.4 
B) -0.2 
C) -0.7 
D) -0.4 
A) -1.4 
B) -0.2 
C) -0.7 
D) -0.4

Question 11

Which of the following is an example of a positive economic statement?

Accepted Answer

A) The distribution of income in the United States should be more equal. 
B) The after-tax distribution of income is more equal than the pre-tax distribution of income. 
C) The tax system should be more progressive so that the after-tax distribution of income can be more equal. 
D) The government should not be involved in the income redistribution schemes. 
A) The distribution of income in the United States should be more equal. 
B) The after-tax distribution of income is more equal than the pre-tax distribution of income. 
C) The tax system should be more progressive so that the after-tax distribution of income can be more equal. 
D) The government should not be involved in the income redistribution schemes.

Question 12

The real price of a good reflects:

Accepted Answer

A) the purchasing power of consumers. 
B) its nominal price adjusted for the changing value of money. 
C) the absolute average price of goods and services. 
D) the total amount of money in circulation in the economy. 
A) the purchasing power of consumers. 
B) its nominal price adjusted for the changing value of money. 
C) the absolute average price of goods and services. 
D) the total amount of money in circulation in the economy.

Question 13

-Consider the production possibility frontier of an economy in Figure 1-1.If the economy is governed by rational actors,it is likely to choose between how many of the production points labeled in the figure?

Accepted Answer

A) 5 
B) 4 
C) 3 
D) 2 
A) 5 
B) 4 
C) 3 
D) 2

Question 14

The opportunity cost of a good is always constant if the production possibility frontier is:

Accepted Answer

A) a downward-sloping straight line. 
B) concave to the origin. 
C) convex to the origin. 
D) negatively sloped. 
A) a downward-sloping straight line. 
B) concave to the origin. 
C) convex to the origin. 
D) negatively sloped.

Question 15

A farmer can produce 10,000 pears if he uses the whole of his one acre farmland.If he uses the same land for apple cultivation,a total of 5,000 apples can be produced.However,he decides to produce both and the opportunity cost of producing either fruit is constant.If his production possibility frontier (PPF)is graphed with apples on the Y-axis and pears on the X-axis,what will be the slope of this PPF?

Accepted Answer

A) -2 
B) -1 
C) -1.5 
D) -0.5 
A) -2 
B) -1 
C) -1.5 
D) -0.5

Which of the following can be categorized as a sunk cost of a firm?

Which of the following is generally considered to be a microeconomic question?

Economic theory:

What does the consumer price index measure?

-The production possibility frontier in Figure 1-1 exhibits _____ opportunity cost of apples.

Consider the following theory: the more one practices for the SAT test,the higher the person will score.This theory:

Positive economic analysis utilizes:

Suppose the consumer price index was 100 in the year 2000 and 200 in the year 2010.If the nominal price of apples has increased from 100 to 150 over this period,the real price of apples has:

Opportunity cost is the equivalent of:

Which of the following is an example of a positive economic statement?

The real price of a good reflects:

-Consider the production possibility frontier of an economy in Figure 1-1.If the economy is governed by rational actors,it is likely to choose between how many of the production points labeled in the figure?

The opportunity cost of a good is always constant if the production possibility frontier is:

An Introduction to Microeconomics

Supply and Demand

Individual and Market Demand

Using Consumer Choice Theory

Exchange, Efficiency, and Prices

Production

The Cost of Production

Profit Maximization in Perfectly Competitive Markets

Using the Competitive Model

Monopoly

Product Pricing With Monopoly Power

Monopolistic Competition and Oligopoly

Game Theory and the Economics of Information

Using Noncompetitive Market Models

Employment and Pricing of Inputs

Wages, Rent, Interest, and Profit

Using Input Market Analysis

General Equilibrium Analysis and Economic Efficiency

Public Goods and Externalities

Filters

Exam 3: The Theory of Consumer Choice

Which of the following can be categorized as a sunk cost of a firm?

Which of the following is generally considered to be a microeconomic question?

Economic theory:

What does the consumer price index measure?

-The production possibility frontier in Figure 1-1 exhibits _____ opportunity cost of apples.

Consider the following theory: the more one practices for the SAT test,the higher the person will score.This theory:

Positive economic analysis utilizes:

Suppose the consumer price index was 100 in the year 2000 and 200 in the year 2010.If the nominal price of apples has increased from 100 to 150 over this period,the real price of apples has:

Opportunity cost is the equivalent of:

Which of the following is an example of a positive economic statement?

The real price of a good reflects:

-Consider the production possibility frontier of an economy in Figure 1-1.If the economy is governed by rational actors,it is likely to choose between how many of the production points labeled in the figure?

The opportunity cost of a good is always constant if the production possibility frontier is:

An Introduction to Microeconomics

Supply and Demand

Individual and Market Demand

Using Consumer Choice Theory

Exchange, Efficiency, and Prices

Production

The Cost of Production

Profit Maximization in Perfectly Competitive Markets

Using the Competitive Model

Monopoly

Product Pricing With Monopoly Power

Monopolistic Competition and Oligopoly

Game Theory and the Economics of Information

Using Noncompetitive Market Models

Employment and Pricing of Inputs

Wages, Rent, Interest, and Profit

Using Input Market Analysis

General Equilibrium Analysis and Economic Efficiency

Public Goods and Externalities

Filters