Question 1

The economizing problem is one of deciding how to make the best use of

Accepted Answer

A) virtually unlimited resources to satisfy virtually unlimited wants. 
B) limited resources to satisfy virtually unlimited wants. 
C) unlimited resources to satisfy limited wants. 
D) limited resources to satisfy limited wants.

Question 2

When economists say that people act rationally in their self-interest, they mean that individuals

Accepted Answer

A) look for and pursue opportunities to increase their utility. 
B) generally disregard the interests of others. 
C) are mainly creatures of habit. 
D) are usually impulsive and unpredictable.

Question 3

The fundamental economic problem faced by a society is that productive resources are so varied and versatile that it is hard to decide what to do with them.

Accepted Answer

A) True 
 B)False

Question 4

A recurring theme in economics is that people

Accepted Answer

A) have unlimited resources but limited economic wants. 
B) can increase resources by limiting their economic wants. 
C) have limited economic wants and limited resources. 
D) have unlimited economic wants but limited resources.

Question 5

Economists have difficulty applying the scientific method because

Accepted Answer

A) economics has a short history. 
B) the scientific method does not really apply to economics. 
C) people are the focus of economics, and their behavior is highly predictable. 
D) controlled laboratory experiments in economics are often not feasible.

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

Refer to the graphs. Assume that pizza is measured in slices and beer in pints. In which of the graphs is the opportunity cost of a pint of beer equal to one slice of pizza?

Accepted Answer

A) graph A 
B) graph B 
C) graph C 
D) graph D

Question 8

Answer the question on the basis of the data given in the following production possibilities table.  Refer to the table. If the economy is producing at production alternative B, the opportunity cost of the sixth unit of consumer goods will be approximately

Accepted Answer

A) 4 units of capital goods. 
B) 3 units of capital goods. 
C) 1/3 of a unit of capital goods. 
D) 1/4 of a unit of capital goods.

Question 9

Assume the price of product Y (the quantity of which is on the vertical axis)is $10 and the price of product X (the quantity of which is on the horizontal axis)is $5. Also assume that money income is $30. The absolute value of the slope of the resulting budget line is

Accepted Answer

A) 2. 
B) 1/2. 
C) 3. 
D) 6.

Question 10

The comment that "taxes must be reduced for the good of the economy" is an example of a normative economic statement.

Accepted Answer

A) True 
 B)False

Question 11

The slope of a graph relating two variables is −5. This indicates that as one variable decreases, the other variable also decreases.

Accepted Answer

A) True 
 B)False

Question 12

In graphing a relationship between two variables, economists always follow the mathematical convention. Thus, if price is the independent variable then it is measured on the horizontal axis.

Accepted Answer

A) True 
 B)False

Question 13

Assume that a consumer has a given budget or income of $12 and that she can buy only two goods, apples or bananas. The price of an apple is $2.00 and the price of a banana is $1.00. This means that, in order to buy six bananas, this consumer must forgo

Accepted Answer

A) 3 apples. 
B) 0.8 apples. 
C) 6 apples. 
D) 2 apples.

Question 14

Choices entail marginal costs because resources are scarce.

Accepted Answer

A) True 
 B)False

Question 15

The slope of a graph measures the rate of change in one variable as the other variable changes.

Accepted Answer

A) True 
 B)False

Question 16

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.

Question 17

The economizing problem is

Accepted Answer

A) the need to make choices because economic wants exceed economic means. 
B) how to distribute resources equally among all members of society. 
C) that people's means often exceed their wants. 
D) that people do not know how to rationally allocate resources.

Question 18

When economists talk about the capital resources in the economy, they are referring to the amount of money circulating in the economy.

Accepted Answer

A) True 
 B)False

Question 19

Positive statements are expressions of value judgments.

Accepted Answer

A) True 
 B)False

Question 20

An increase in immigration would shift the production possibilities curve to the left.

Accepted Answer

A) True 
 B)False

Exam 1: Limits, Alternatives, and Choices

The economizing problem is one of deciding how to make the best use of

When economists say that people act rationally in their self-interest, they mean that individuals

The fundamental economic problem faced by a society is that productive resources are so varied and versatile that it is hard to decide what to do with them.

A recurring theme in economics is that people

Economists have difficulty applying the scientific method because

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

Refer to the graphs. Assume that pizza is measured in slices and beer in pints. In which of the graphs is the opportunity cost of a pint of beer equal to one slice of pizza?

Answer the question on the basis of the data given in the following production possibilities table. Refer to the table. If the economy is producing at production alternative B, the opportunity cost of the sixth unit of consumer goods will be approximately

Assume the price of product Y (the quantity of which is on the vertical axis) is $10 and the price of product X (the quantity of which is on the horizontal axis) is $5. Also assume that money income is $30. The absolute value of the slope of the resulting budget line is

The comment that "taxes must be reduced for the good of the economy" is an example of a normative economic statement.

The slope of a graph relating two variables is −5. This indicates that as one variable decreases, the other variable also decreases.

In graphing a relationship between two variables, economists always follow the mathematical convention. Thus, if price is the independent variable then it is measured on the horizontal axis.

Assume that a consumer has a given budget or income of $12 and that she can buy only two goods, apples or bananas. The price of an apple is $2.00 and the price of a banana is $1.00. This means that, in order to buy six bananas, this consumer must forgo

Choices entail marginal costs because resources are scarce.

The slope of a graph measures the rate of change in one variable as the other variable changes.

A person should consume more of something when its marginal

The economizing problem is

When economists talk about the capital resources in the economy, they are referring to the amount of money circulating in the economy.

Positive statements are expressions of value judgments.

An increase in immigration would shift the production possibilities curve to the left.