Question 1

Positive economics differs from normative economics in that:

Accepted Answer

A) positive economics involves subjective outcomes. 
B) positive economics deals with propositions that can be tested. 
C) normative economics involves economic theory. 
D) normative economics can be proved correct or incorrect. 
A) positive economics involves subjective outcomes. 
B) positive economics deals with propositions that can be tested. 
C) normative economics involves economic theory. 
D) normative economics can be proved correct or incorrect.

Question 2

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 3

Which of the following is true of sunk costs?

Accepted Answer

A) It is a type of opportunity cost. 
B) It is a type of implicit cost. 
C) It should be ignored when making decisions. 
D) It includes annual costs like payroll,insurance expenses,etc. 
A) It is a type of opportunity cost. 
B) It is a type of implicit cost. 
C) It should be ignored when making decisions. 
D) It includes annual costs like payroll,insurance expenses,etc.

Question 4

In which of the following cases will the production possibility frontier depict an increasing opportunity cost of producing one good relative to another?

Accepted Answer

A) The PPF becoming more linear 
B) The PPF becoming more convex to the origin 
C) The PPF becoming more concave to the origin 
D) The PPF curve becoming flatter 
A) The PPF becoming more linear 
B) The PPF becoming more convex to the origin 
C) The PPF becoming more concave to the origin 
D) The PPF curve becoming flatter

Question 5

Which of the following is a positive statement?

Accepted Answer

A) The minimum wage should be raised to $7.50. 
B) If the military draft were re-instituted,military salaries would probably fall. 
C) Customers should not be required to show ID to buy alcohol. 
D) Immigration laws are bad for the economy. 
A) The minimum wage should be raised to $7.50. 
B) If the military draft were re-instituted,military salaries would probably fall. 
C) Customers should not be required to show ID to buy alcohol. 
D) Immigration laws are bad for the economy.

Question 6

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

Question 7

Opportunity cost is calculated as:

Accepted Answer

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

Question 8

Which one of the following is not an opportunity cost of owning a house?

Accepted Answer

A) The mortgage payment made each month to own the house 
B) The money you would receive from selling your house 
C) The membership fee paid to join the neighborhood pool 
D) The property taxes paid to the local government 
A) The mortgage payment made each month to own the house 
B) The money you would receive from selling your house 
C) The membership fee paid to join the neighborhood pool 
D) The property taxes paid to the local government

Question 9

Petroleum oil is an example of:

Accepted Answer

A) a renewable resource. 
B) a composite good. 
C) a biodegradable resource. 
D) a scarce resource. 
A) a renewable resource. 
B) a composite good. 
C) a biodegradable resource. 
D) a scarce resource.

Question 10

Macroeconomics deals primarily with:

Accepted Answer

A) aggregate economic factors. 
B) the behavior of rational consumers. 
C) the role of politics in economics. 
D) a society's economic and cultural environment. 
A) aggregate economic factors. 
B) the behavior of rational consumers. 
C) the role of politics in economics. 
D) a society's economic and cultural environment.

Question 11

Which one of the following represents an economic,but not an accounting,cost of owning a restaurant?

Accepted Answer

A) The interest foregone by the owner on the personal savings invested in the restaurant 
B) The labor hired used to operate the restaurant 
C) The linens used to cover tables 
D) The ingredients used to prepare the meals 
A) The interest foregone by the owner on the personal savings invested in the restaurant 
B) The labor hired used to operate the restaurant 
C) The linens used to cover tables 
D) The ingredients used to prepare the meals

Question 12

The annual income of a worker in the construction sector increased by 30 percent between 2010 and 2011.Does this necessarily imply that the worker's purchasing power had increased? Explain your answer.

Accepted Answer

An increase in annual income will improv

Question 13

If a production possibility frontier is drawn concave to the origin with the quantity of shoes on the X-axis and the quantity of T-shirts on the Y-axis,a movement upward along the PPF reflects:

Accepted Answer

A) an increasing opportunity cost of T-shirts. 
B) an increasing opportunity cost of both shoes and T-shirts. 
C) a decreasing opportunity cost of T-shirts. 
D) a decreasing opportunity cost of both shoes and T-shirts. 
A) an increasing opportunity cost of T-shirts. 
B) an increasing opportunity cost of both shoes and T-shirts. 
C) a decreasing opportunity cost of T-shirts. 
D) a decreasing opportunity cost of both shoes and T-shirts.

Question 14

Which of the following is an example of a normative statement?

Accepted Answer

A) Students who miss more classes tend to earn lower grades. 
B) Students should make better use of their time by attending every class. 
C) The increasing price of textbooks has caused students to purchase fewer texts. 
D) Increasing government grants and loans to college students have caused tuition fees to rise faster than the rate of inflation. 
A) Students who miss more classes tend to earn lower grades. 
B) Students should make better use of their time by attending every class. 
C) The increasing price of textbooks has caused students to purchase fewer texts. 
D) Increasing government grants and loans to college students have caused tuition fees to rise faster than the rate of inflation.

Question 15

Refer to the production possibility frontier in Figure 1-1.What will be the opportunity cost of moving from point B to point A to produce 10 more computers?

Accepted Answer

A) 15 apples 
B) 10 apples 
C) 5 apples 
D) The economy cannot move to point A. 
A) 15 apples 
B) 10 apples 
C) 5 apples 
D) The economy cannot move to point A.

Question 16

Which of the following best describes the difference between micro and macroeconomics?

Accepted Answer

A) Macroeconomics deals with bigger,more important issues,while microeconomics deals with the smaller,less significant details. 
B) Macroeconomics studies the actions of large firms while microeconomics studies the behavior of small firms and individuals. 
C) Macroeconomics is the study of aggregate factors while microeconomics is the study of individuals and individual firms. 
D) Macroeconomics studies long-run behavior (one-year or more)while microeconomics studies short-run or immediate behavior. 
A) Macroeconomics deals with bigger,more important issues,while microeconomics deals with the smaller,less significant details. 
B) Macroeconomics studies the actions of large firms while microeconomics studies the behavior of small firms and individuals. 
C) Macroeconomics is the study of aggregate factors while microeconomics is the study of individuals and individual firms. 
D) Macroeconomics studies long-run behavior (one-year or more)while microeconomics studies short-run or immediate behavior.

Question 17

The implicit cost of time spent on shopping:

Accepted Answer

A) has decreased because of the growth of single-wage-earner families. 
B) has increased because of the decline in average income levels. 
C) has increased,contributing to the growth of fast-food restaurants. 
D) has decreased,contributing to the growth of convenience stores at gas stations. 
A) has decreased because of the growth of single-wage-earner families. 
B) has increased because of the decline in average income levels. 
C) has increased,contributing to the growth of fast-food restaurants. 
D) has decreased,contributing to the growth of convenience stores at gas stations.

Question 18

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 19

The relative price of a good:

Accepted Answer

A) is always measured in current dollars. 
B) is a measure of the relative share of the consumer's income devoted to its purchase. 
C) reflects its price compared to prices of other goods. 
D) is equal to the average price of the good over the last five years. 
A) is always measured in current dollars. 
B) is a measure of the relative share of the consumer's income devoted to its purchase. 
C) reflects its price compared to prices of other goods. 
D) is equal to the average price of the good over the last five years.

Question 20

In the production possibility frontier in Figure 1-1,which point(s)is (are)infeasible?

Accepted Answer

A) D,A,and E 
B) A and E 
C) B and C 
D) D 
A) D,A,and E 
B) A and E 
C) B and C 
D) D

Positive economics differs from normative economics in that:

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

Which of the following is true of sunk costs?

In which of the following cases will the production possibility frontier depict an increasing opportunity cost of producing one good relative to another?

Which of the following is a positive statement?

Opportunity cost is calculated as:

Which one of the following is not an opportunity cost of owning a house?

Petroleum oil is an example of:

Macroeconomics deals primarily with:

Which one of the following represents an economic,but not an accounting,cost of owning a restaurant?

The annual income of a worker in the construction sector increased by 30 percent between 2010 and 2011.Does this necessarily imply that the worker's purchasing power had increased? Explain your answer.

If a production possibility frontier is drawn concave to the origin with the quantity of shoes on the X-axis and the quantity of T-shirts on the Y-axis,a movement upward along the PPF reflects:

Which of the following is an example of a normative statement?

Refer to the production possibility frontier in Figure 1-1.What will be the opportunity cost of moving from point B to point A to produce 10 more computers?

Which of the following best describes the difference between micro and macroeconomics?

The implicit cost of time spent on shopping:

The real price of a good reflects:

The relative price of a good:

In the production possibility frontier in Figure 1-1,which point(s)is (are)infeasible?

Supply and Demand

The Theory of Consumer Choice

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 1: An Introduction to Microeconomics

Positive economics differs from normative economics in that:

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

Which of the following is true of sunk costs?

In which of the following cases will the production possibility frontier depict an increasing opportunity cost of producing one good relative to another?

Which of the following is a positive statement?

Opportunity cost is calculated as:

Which one of the following is not an opportunity cost of owning a house?

Petroleum oil is an example of:

Macroeconomics deals primarily with:

Which one of the following represents an economic,but not an accounting,cost of owning a restaurant?

The annual income of a worker in the construction sector increased by 30 percent between 2010 and 2011.Does this necessarily imply that the worker's purchasing power had increased? Explain your answer.

If a production possibility frontier is drawn concave to the origin with the quantity of shoes on the X-axis and the quantity of T-shirts on the Y-axis,a movement upward along the PPF reflects:

Which of the following is an example of a normative statement?

Refer to the production possibility frontier in Figure 1-1.What will be the opportunity cost of moving from point B to point A to produce 10 more computers?

Which of the following best describes the difference between micro and macroeconomics?

The implicit cost of time spent on shopping:

The real price of a good reflects:

The relative price of a good:

In the production possibility frontier in Figure 1-1,which point(s)is (are)infeasible?

Supply and Demand

The Theory of Consumer Choice

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