Question 1

A trend is

Accepted Answer

A) a general tendency for a variable to rise or fall. 
B) the difference between the maximum value of a variable and the minimum value of the variable. 
C) the minimum value of a variable. 
D) a measure of closeness on a scatter diagram. 
E) the maximum value of a variable.

Question 2

The marginal benefit of an activity is i.the benefit from a one-unit increase in the activity.
Ii)the benefit of a small,unimportant activity.
Iii)measured by what the person is willing to give up to get one additional unit of the activity.

Accepted Answer

A) i only 
B) ii only 
C) iii only 
D) i and iii 
E) ii and iii

Question 3

What is the reason that all economic issues and problems occur?

Accepted Answer

A) All nations use some form of money to buy and sell goods and services. 
B) People seek only their own self-interest. 
C) Powerful governments are able to control production and consumption. 
D) Human wants exceed the resources available to satisfy them. 
E) Humans are always wasteful and inefficient in production and consumption.

Question 4

As the price of home-heating oil rises,families buy less home-heating oil.Hence,a scatter diagram with the price of home-heating oil on the vertical axis and the quantity purchased on the horizontal axis reveals a ________ relationship.

Accepted Answer

A) time-series 
B) cross-sectional 
C) linear 
D) positive 
E) negative

Question 5

Going skiing will cost Adam $80 a day.He also loses $40 per day in wages because he has to take time off from work.Yet,Adam still decides to go skiing.

Accepted Answer

A) His decision is rational if Adam's marginal benefit of spending a day skiing is greater than his marginal cost. 
B) He loses a total of $120 per day,so his decision is irrational. 
C) The $80 price of skiing is not an opportunity cost and so did not affect Adam's decision. 
D) Adam's lost $40 per day in wages is not an opportunity cost and so did not affect his decision. 
E) Adam is definitely making a decision that is in the social interest.

Question 6

The characteristic from which all economic problems arise is

Accepted Answer

A) providing a minimal standard of living for every person. 
B) hunger. 
C) the nature of political decisions. 
D) how to make a profit. 
E) scarcity.

Question 7

If a curve falls and then rises,it

Accepted Answer

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

Question 8

If Jessie studies economics for two hours instead of going to the movies with her friends,then

Accepted Answer

A) Jessie is not responding to any incentives. 
B) Jessie is definitely making a rational choice. 
C) Jessie is ignoring a sunk cost. 
D) the benefit of studying is the missed movie. 
E) the opportunity cost of studying is the missed movie.

Question 9

The slope

Accepted Answer

A) of a straight line is the same regardless of where on the line it is calculated. 
B) equals the change in the value of the variable measured on the vertical axis divided by the change in the variable measured along the horizontal axis. 
C) will be small if a large change in the variable measured on the vertical axis is associated with a small change in the variable measured along the horizontal axis. 
D) Answers A and B are correct. 
E) Answers A and C are correct.

Question 10

To graph a relationship involving more than two variables,we use which assumption?

Accepted Answer

A) Trend assumption 
B) Linear assumption 
C) Positive-relationship assumption 
D) Ceteris paribus 
E) Marginal analysis

Question 11

The important characteristic of normative statements is that they

Accepted Answer

A) are based on somebody's values and cannot be tested. 
B) explain what normally happens in the real world. 
C) do not use the ceteris paribus assumption. 
D) explain what really exists. 
E) help guide us to what will normally occur if some economic variable changes its value.

Question 12

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

Question 13

Scarcity exists because

Accepted Answer

A) some individuals have low incomes. 
B) people take too much leisure time. 
C) human wants exceed the resources available to satisfy them. 
D) the costs of production are high. 
E) some people make bad economic decisions.

Question 14

If the quantity of the variable on the y-axis increases by 10 when the quantity of the variable on the x-axis decreases by 2,then the slope of the curve equals

Accepted Answer

A) -5. 
B) -10. 
C) 10. 
D) 2. 
E) None of the above answers is correct.

Question 15

-Moving rightward along a straight line,the slope of the line

Accepted Answer

A) always decreases. 
B) decreases if the line slopes downward to the right. 
C) increases if the line slopes upward to the right. 
D) stays the same. 
E) always increases.

Question 16

In order to make a rational choice,people must

Accepted Answer

A) compare marginal costs and marginal benefits. 
B) determine what is in the social interest. 
C) only know what they want. 
D) decide quickly without wasting time. 
E) be able to afford the choice decided upon.

Question 17

Which of the following is a macroeconomic issue?

Accepted Answer

A) The number of jobs and production in Zimbabwe increase. 
B) The Australian Football League signs a new television contract. 
C) Power stations are required to install more anti-pollution devices. 
D) The South Australian wheat harvest is smaller than normal. 
E) The price of a ticket to Dreamworld on the Gold Coast is increased.

Question 18

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

Accepted Answer

A) 'how 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) 'when will the goods be produced?'

Question 19

-In the figure above,an increase in z leads to a

Accepted Answer

A) leftward shift of the line showing the relationship between x and y. 
B) movement up along one of the lines showing the relationship between x and y. 
C) movement down along one of the lines showing the relationship between x and y. 
D) rightward shift of the line showing the relationship between x and y. 
E) trend change in both x and y.

Question 20

-The figure above shows the relationship between the time a student spends studying and the student's GPA that semester.The slope of the relationship at point A ________ the slope at point B.

Accepted Answer

A) is equal to 
B) cannot be compared to 
C) is greater than 
D) is less than 
E) can be compared but more information is needed to determine whether the slope is greater than,less than or equal to

Exam 1: Getting Started