Question 1

By donating $1,000 to the Salvation Army, Caroline reduced her taxable income. To Caroline, the reduction in her taxable income is

Accepted Answer

A)  a marginal benefit. 
B)  a marginal cost. 
C)  an incentive. 
D)  an opportunity cost. 
E)  the margin.

Question 2

Your economics lecturer offers 10 bonus marks on the final exam if you attend a review session before the exam. These bonus marks are an example of

Accepted Answer

A)  a rational choice. 
B)  a decrease in the marginal benefit of attending the review session. 
C)  an incentive to attend the review session. 
D)  an increase in the marginal cost of attending the review session. 
E)  None of the above answers is correct.

Question 3

Which of the following statements is correct?

Accepted Answer

A)  The slope of a straight line changes depending where on the line it is calculated. 
B)  A straight line that slopes upward moving to the right has a positive slope. 
C)  The slope of a curved line is not defined because it is impossible to calculate the slope along a curved line. 
D)  Answers A and B are correct. 
E)  Answers A and C are correct.

Question 4

Whether a company produces fishing rods mostly by hand or using high-tech machinery is a question of

Accepted Answer

A)  'when will the goods be produced?' 
B)  'where will the goods be produced?' 
C)  'why will the goods be produced?' 
D)  'for whom will goods be produced?' 
E)  'how will the goods be produced?'

Question 5

Which of the following is a normative statement?

Accepted Answer

A)  Flood victims should pay for their own rebuilding. 
B)  Recessions lead to increases in the unemployment rate. 
C)  When the price of kiwi fruit increases, fewer people eat kiwi fruit. 
D)  An increase in the supply of computers has caused computer prices to fall. 
E)  Cyclones strike mainly Queensland and Western Australia.

Question 6

The question of 'What goods and services get produced?' most closely relates to which of the following issues?

Accepted Answer

A)  The distribution of goods and services in the economy. 
B)  Building a missile defence system, or putting a computer in every primary school classroom. 
C)  Producing goods and services in the least costly manner. 
D)  Obtaining specialised training to increase one's income. 
E)  Taxing high-income workers to give payments to poor households

Question 7

As the number of days without rain increases, the amount of wheat grown per acre declines. A graph showing this relationship shows

Accepted Answer

A)  a horizontal line. 
B)  a positive relationship. 
C)  a line with a positive slope. 
D)  a vertical line. 
E)  None of the above answers is correct.

Question 8

You have data for the amount of rainfall in 50 cities for the month of June. The type of graph to best display these data would be a

Accepted Answer

A)  multi-variable time series graph. 
B)  time-series graph. 
C)  cross-section graph. 
D)  scatter diagram. 
E)  trend-line diagram.

Question 9

Rational choice:

Accepted Answer

A)  is always efficient. 
B)  is a choice that uses the available resources to best achieve the objective of the person making the choice. 
C)  provides the answer to only the 'how?' question. 
D)  is made by comparing different incentives. 
E)  is what you must give up to get what you want

Question 10

The above figure shows the relationship between the price of a slice of pizza and how many slices of pizza Ricardo buys in a week. Between points A and B, the slope of the line is ________ the slope of the line between points B and C.

Accepted Answer

A)  less than 
B)  equal to 
C)  greater than 
D)  not comparable to 
E)  unrelated to

Question 11

When an AFL player earns more than a police officer, society answers the ________ question.

Accepted Answer

A)  for whom 
B)  why 
C)  what 
D)  social interest versus self-interest 
E)  how

Question 12

A graph shows the wage rate of factory workers. The slope of the line is positive for periods when the wage rate is

Accepted Answer

A)  high and not changing. 
B)  rising. 
C)  falling. 
D)  high and falling. 
E)  low and falling.

Question 13

The vertical axis in a graph

Accepted Answer

A)  is named the y-axis. 
B)  has no origin. 
C)  is named the x-axis. 
D)  measures time only in a time-series graph. 
E)  measures time in a cross-section and time-series graph.

Question 14

When a home builder decides to computerise all of his production schedule, it directly answers the ________ question.

Accepted Answer

A)  what 
B)  where 
C)  why 
D)  for whom 
E)  how

Question 15

Jamie has enough money to buy either a Mountain Dew, a Pepsi, or a bag of chips. He chooses to buy the Mountain Dew. The opportunity cost of the Mountain Dew is

Accepted Answer

A)  the Mountain Dew. 
B)  the Pepsi and the bag of chips. 
C)  the Pepsi or the bag of chips, whichever is the highest-valued alternative forgone. 
D)  the Pepsi, because it is a drink as is the Mountain Dew. 
E)  zero because he enjoys the Mountain Dew.

Question 16

If a curve falls and then rises, it

Accepted Answer

A)  has a minimum. 
B)  has a linear relationship. 
C)  shows no relationship between the two variables. 
D)  has a constant-slope relationship. 
E)  has a maximum.

Question 17

In order to determine whether to major in economics, a rational individual compares the ________ of the decision.

Accepted Answer

A)  marginal benefit and marginal cost 
B)  normative benefits and positive costs 
C)  self-interest and social interest 
D)  positive benefits and normative costs 
E)  opportunity cost and the sunk cost

Question 18

Which of the following is a topic studied in macroeconomics?

Accepted Answer

A)  How the wheat industry determines how much wheat to grow. 
B)  The effect on economic growth if the government raises taxes. 
C)  The impact of higher prices for petrol on the number of SUVs people buy. 
D)  The pricing decisions in the computer hardware industry. 
E)  The impact of labour unions on wages.

Question 19

In examining two variables, we find that as one variable changes, the other changes. These variables are said to be

Accepted Answer

A)  significantly related. 
B)  statistics. 
C)  independent. 
D)  casually related. 
E)  correlated.

Question 20

Scarcity forces people to:

Accepted Answer

A)  cheat and steal. 
B)  choose among the available alternatives. 
C)  be unwilling to help others. 
D)  live at a low standard of living. 
E)  consume as much as they can as quickly as they can.

Exam 1: Getting Started