Question 1

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 resourcesE) C) and D)
F) B) and D)

Question 2

A linear relationship only refers to one whose graph is either vertical or horizontal.

Accepted Answer

A) True 
 B)False

Question 3

An assumption is usually made in a two-axes (or two-dimensional) graph that, aside from the two variables under study, the influence of all other variables or factors is assumed to be constant.

Accepted Answer

A) True 
 B)False

Question 4

A nation can produce two products: tanks and autos. The table below is the nation's production possibilities:  Refer to the above table. The total opportunity cost of three units of tanks is:

Accepted Answer

A)   6 units of tanks
B)   350 units of autos
C)   650 units of autos
D)   1000 units of autosE) A) and B)
F) C) and D)

Question 5

If the opportunity cost of producing extra units of one good (expressed in terms of the amount of another good given up)  remains constant, then the shape of the production possibilities curve is:

Accepted Answer

A)   A straight horizontal line
B)   A straight downward-sloping line
C)   An upward-sloping line
D)   A vertical lineE) None of the above
F) A) and C)

Question 6

The role of an assumption in an economic theory is to:

Accepted Answer

A)   Add realism
B)   Prove the theory
C)   Cover special cases
D)   Simplify the complex realityE) A) and B)
F) B) and C)

Question 7

The question below are based on the following four sets of data-pairs: (1)  A and B, (2)  C and D, (3)  E and F, and (4)  G and H. In each set, the independent variable is in the left column and the dependent variable is in the right column.  The slope of the linear graph that pictures data set 2 above is:

Accepted Answer

A)   .10
B)   20
C)   5
D)   10E) C) and D)
F) A) and B)

Question 8

Which question is an example of a macroeconomic question?

Accepted Answer

A)   What is the level of industrial concentration in the U.S. automobile industry?
B)   What economic incentives can be used to reduce the cost of health care in the nation?
C)   What policies would be recommended for stimulating national economic growth?
D)   What market conditions are expected for milk in the nation this year?E) B) and C)
F) A) and D)

Question 9

Consider an economy that is producing inside its production possibilities curve. This economy could move closer towards its production possibilities curve by:

Accepted Answer

A)   Distributing incomes more equally
B)   Employing more of its available resources
C)   Increasing the levels of wages and prices
D)   Acquiring additional resourcesE) B) and C)
F) A) and D)

Question 10

If falling gasoline prices are good for the consumers, then it must be good everyone in the economy.

Accepted Answer

A) True 
 B)False

Question 11

One major part of the opportunity costs of one's decision to go to college after high-school graduation is the:

Accepted Answer

A)   Additional income that one can get if one had a college degree
B)   Education that one gets while in college
C)   High-school diploma needed in order to apply for college
D)   Full-time job that one could have gotten instead of going to collegeE) A) and D)
F) A) and C)

Question 12

The question below are based on the following four sets of data-pairs: (1)  A and B, (2)  C and D, (3)  E and F, and (4)  G and H. In each set, the independent variable is in the left column and the dependent variable is in the right column.  The linear equation for the relationship in data set 1 above is:

Accepted Answer

A)   B = 6A
B)   B = 6 + 7A
C)   B = 6 - 7A
D)   B = 6 - .14AE) A) and B)
F) All of the above

Question 13

The slope of a graph that shows a direct relationship is:

Accepted Answer

A)   Always positive
B)   Either positive or negative
C)   Possibly zero
D)   Either zero or infiniteE) C) and D)
F) A) and B)

Question 14

In analyzing human decision and action, economists assume that:

Accepted Answer

A)   Scarcity is more important than choice
B)   Costs are more important than benefits
C)   People's behavior reflects rational self-interest
D)   There are scarce resources in the economyE) A) and D)
F) A) and C)

Question 15

Which of the following is another way of saying "marginal benefits of an action"?

Accepted Answer

A)   Benefits given up, once the action is taken
B)   Unintended gains from taking the action
C)   Benefits accruing to others, as a result of one's action
D)   Extra benefits resulting from the actionE) B) and D)
F) B) and C)

Question 16

From an economic perspective, when consumers leave a fast-food restaurant because the lines to be served are too long, they have concluded that the:

Accepted Answer

A)   Marginal cost of waiting is less than the marginal benefit of being served
B)   Marginal cost of waiting is greater than the marginal benefit of being served
C)   Management is exhibiting irrational behavior by not maximizing profits
D)   Management is making an assumption that other things are equalE) A) and D)
F) A) and C)

Question 17

If two sets of data are inversely related, they will appear on a graph as an upward-sloping line.

Accepted Answer

A) True 
 B)False

Question 18

One basic difference between "labor" and "entrepreneur" is that:

Accepted Answer

A)   Labor is hired by a firm whereas the entrepreneur owns the firm
B)   An entrepreneurs has high-level skills whereas labor does not
C)   Labor performs manual work whereas an entrepreneur performs mental work
D)   Education is important for an entrepreneur but not for laborE) A) and B)
F) A) and C)

Question 19

A nation can produce two products: steel and wheat. The table below is the nation's production possibilities schedule:  Refer to the above table. In moving from combination E to F, the opportunity cost of an additional unit of steel is:

Accepted Answer

A)   5 units of steel
B)   0 unit of wheat
C)   1 unit of steel
D)   30 units of wheatE) A) and D)
F) All of the above

Question 20

You observe that when stock prices rise, interest rates soon fall, and therefore conclude that higher stock prices lead to lower interest rates. This would be an example of:

Accepted Answer

A)   The fallacy of composition
B)   Tradeoff among economic goals
C)   The post hoc fallacy
D)   The use of loaded terminologyE) A) and D)
F) B) and C)

Exam 1: Limits, Alternatives, and Choices

One basic difference between "labor" and "entrepreneur" is that:

Correct Answer
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If falling gasoline prices are good for the consumers, then it must be good everyone in the economy.

Correct Answer
verified

A recurring theme in economics is that people:

Correct Answer
verified

A nation can produce two products: tanks and autos. The table below is the nation's production possibilities: Refer to the above table. The total opportunity cost of three units of tanks is:

Correct Answer
verified

The role of an assumption in an economic theory is to:

Correct Answer
verified

The slope of a graph that shows a direct relationship is:

Correct Answer
verified

From an economic perspective, when consumers leave a fast-food restaurant because the lines to be served are too long, they have concluded that the:

Correct Answer
verified

Consider an economy that is producing inside its production possibilities curve. This economy could move closer towards its production possibilities curve by:

Correct Answer
verified

Which of the following is another way of saying "marginal benefits of an action"?

Correct Answer
verified

An assumption is usually made in a two-axes (or two-dimensional) graph that, aside from the two variables under study, the influence of all other variables or factors is assumed to be constant.

Correct Answer
verified

In analyzing human decision and action, economists assume that:

Correct Answer
verified

A nation can produce two products: steel and wheat. The table below is the nation's production possibilities schedule: Refer to the above table. In moving from combination E to F, the opportunity cost of an additional unit of steel is:

Correct Answer
verified

Correct Answer
verified

Which question is an example of a macroeconomic question?

Correct Answer
verified

One major part of the opportunity costs of one's decision to go to college after high-school graduation is the:

Correct Answer
verified

You observe that when stock prices rise, interest rates soon fall, and therefore conclude that higher stock prices lead to lower interest rates. This would be an example of:

Correct Answer
verified

A linear relationship only refers to one whose graph is either vertical or horizontal.

Correct Answer
verified

If the opportunity cost of producing extra units of one good (expressed in terms of the amount of another good given up) remains constant, then the shape of the production possibilities curve is:

Correct Answer
verified

Correct Answer
verified

If two sets of data are inversely related, they will appear on a graph as an upward-sloping line.

Correct Answer
verified

Exam 1: Limits, Alternatives, and Choices

One basic difference between "labor" and "entrepreneur" is that:

Correct AnswerverifiedShow Answer

If falling gasoline prices are good for the consumers, then it must be good everyone in the economy.

Correct AnswerverifiedShow Answer

A recurring theme in economics is that people:

Correct AnswerverifiedShow Answer

A nation can produce two products: tanks and autos. The table below is the nation's production possibilities: Refer to the above table. The total opportunity cost of three units of tanks is:

Correct AnswerverifiedShow Answer

The role of an assumption in an economic theory is to:

Correct AnswerverifiedShow Answer

The slope of a graph that shows a direct relationship is:

Correct AnswerverifiedShow Answer

From an economic perspective, when consumers leave a fast-food restaurant because the lines to be served are too long, they have concluded that the:

Correct AnswerverifiedShow Answer

Consider an economy that is producing inside its production possibilities curve. This economy could move closer towards its production possibilities curve by:

Correct AnswerverifiedShow Answer

Which of the following is another way of saying "marginal benefits of an action"?

Correct AnswerverifiedShow Answer

An assumption is usually made in a two-axes (or two-dimensional) graph that, aside from the two variables under study, the influence of all other variables or factors is assumed to be constant.

Correct AnswerverifiedShow Answer

In analyzing human decision and action, economists assume that:

Correct AnswerverifiedShow Answer

A nation can produce two products: steel and wheat. The table below is the nation's production possibilities schedule: Refer to the above table. In moving from combination E to F, the opportunity cost of an additional unit of steel is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which question is an example of a macroeconomic question?

Correct AnswerverifiedShow Answer

One major part of the opportunity costs of one's decision to go to college after high-school graduation is the:

Correct AnswerverifiedShow Answer

You observe that when stock prices rise, interest rates soon fall, and therefore conclude that higher stock prices lead to lower interest rates. This would be an example of:

Correct AnswerverifiedShow Answer

A linear relationship only refers to one whose graph is either vertical or horizontal.

Correct AnswerverifiedShow Answer

If the opportunity cost of producing extra units of one good (expressed in terms of the amount of another good given up) remains constant, then the shape of the production possibilities curve is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If two sets of data are inversely related, they will appear on a graph as an upward-sloping line.

Correct AnswerverifiedShow Answer

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