Question 1

If the equation y = -10 + 2.5x was plotted:

Accepted Answer

A)   the vertical intercept would be -10.
B)   the slope would be -7.5.
C)   it would graph as a downsloping line.
D)   the slope would be -10.E) A) and B)
F) All of the above

Question 2

Which of the following will not produce an outward shift of the production possibilities curve?

Accepted Answer

A)   An upgrading of the quality of a nation's human resources.
B)   The reduction of unemployment.
C)   An increase in the quantity of a society's labor force.
D)   The improvement of a society's technological knowledge.E) A) and B)
F) B) and D)

Question 3

Which of the following is a microeconomic statement?

Accepted Answer

A)   The real domestic output increased by 2.3 percent last year.
B)   Unemployment was 6.5 percent of the labor force last year.
C)   The price of personal computers declined 4.7 percent last year.
D)   The general price level increased by 3.1 percent last year.E) A) and C)
F) B) and C)

Question 4

Macroeconomics explains the behavior of individual households and business firms;microeconomics is concerned with the behavior of aggregates or the economy as a whole.

Accepted Answer

A) True 
 B)False

Question 5

Answer the question on the basis of the following production possibilities tables for two countries,North Cantina and South Cantina:  Refer to the tables.If South Cantina is producing at production alternative D,the opportunity cost of the third unit of capital goods will be:

Accepted Answer

A)   3 units of consumer goods.
B)   4 units of consumer goods.
C)   5 units of consumer goods.
D)   6 units of consumer goods.E) A) and B)
F) A) and D)

Question 6

Through specialization and international trade,a nation:

Accepted Answer

A)   can attain some combination of goods lying outside its production possibilities curve.
B)   can move from a high consumption-low investment to a high investment-low consumption point on its production possibilities curve.
C)   will only attain some combination of goods lying within its production possibilities curve.
D)   will cause its production possibilities curve to shift leftward.E) A) and D)
F) B) and C)

Question 7

For economists,the word "utility" means:

Accepted Answer

A)   versatility and flexibility.
B)   rationality.
C)   pleasure or satisfaction.
D)   purposefulness.E) A) and D)
F) None of the above

Question 8

Which of the following do economists consider to be capital?

Accepted Answer

A)   A pair of stockings.
B)   A construction crane.
C)   A savings account.
D)   A share of IBM stock.E) A) and C)
F) A) and B)

Question 9

(Consider This) The economic perspective used in customer decision making at fast-food restaurants is reflected in:

Accepted Answer

A)   customers selecting the shortest line.
B)   decisions for which marginal costs exceed marginal benefits.
C)   all customer lines tending to be of different lengths.
D)   irrational purchasing of high-fat-content food.E) A) and B)
F) C) and D)

Question 10

(Last Word) The fallacy of composition is essentially the error of:

Accepted Answer

A)   omitting relevant variables in constructing a model.
B)   reasoning from the general to the particular.
C)   confusing cause and effect in economic relationships.
D)   generalizing from the particular to the general.E) A) and D)
F) B) and C)

Question 11

Marginal analysis means that decision makers compare the extra benefits with the extra costs of a specific choice.

Accepted Answer

A) True 
 B)False

Question 12

Kelly works at an ice cream shop and observes that the number of people buying ice cream varies greatly from day to day.For a couple of weeks she has recorded the number of people at the shop each day,as well as the daily temperature.If Kelly is using the scientific method to better understand ice cream buying habits,her next step is to:

Accepted Answer

A)   conclude definitively that people buy more ice cream when the temperature rises.
B)   state her findings as a well-tested economic principle.
C)   use the observed data to form a hypothesis about ice cream buying behavior.
D)   throw out the data if it does not show a perfect relationship between buying habits and the other information she has collected.E) None of the above
F) B) and C)

Question 13

In drawing a particular budget line,money income and the prices of the two products are fixed.

Accepted Answer

A) True 
 B)False

Question 14

Brinley says that "gas prices are rising because there aren't enough oil refineries." Katie argues that "gas prices are rising because of the growing demand for gasoline from China and India." We can conclude that:

Accepted Answer

A)   Brinley's statement is positive;Katie's statement is normative.
B)   Brinley's statement is normative;Katie's statement is positive.
C)   Both statements are positive.
D)   Both statements are normative.E) None of the above
F) All of the above

Question 15

Which of the following statements,if any,is correct for a nation that is producing only consumer and capital goods?

Accepted Answer

A)   Other things equal,the more consumer goods a nation produces,the greater will be its future growth rate.
B)   Other things equal,the more capital goods a nation produces,the greater will be its future growth rate.
C)   There is no general relationship between the current division of output between consumer and capital goods and the future growth rate.
D)   None of these statements is correct.E) B) and D)
F) B) and C)

Question 16

Answer the question on the basis of the following information.Assume that if the interest rate that businesses must pay to borrow funds were 20 percent,it would be unprofitable for businesses to invest in new machinery and equipment,so investment would be zero.But if the interest rate were 16 percent,businesses would find it profitable to invest $10 billion.If the interest rate were 12 percent,$20 billion would be invested.Assume that total investment continues to increase by $10 billion for each successive 4 percentage point decline in the interest rate. Refer to the information.Which of the following is an accurate verbal statement of the described relationship?

Accepted Answer

A)   There is no regular or dependable relationship between business investment and the interest rate.
B)   The amount of business investment is unaffected by changes in the interest rate.
C)   Investment spending by businesses varies inversely with the interest rate.
D)   Investment spending by businesses varies directly with the interest rate.E) C) and D)
F) A) and C)

Question 17

If someone produced too much of a good,this would suggest that:

Accepted Answer

A)   rational choice cannot be applied to many economic decisions.
B)   the good was produced past the point where its marginal cost exceeded its marginal benefit.
C)   certain goods and services such as education and health care are inherently desirable and should be produced regardless of costs and benefits.
D)   the good was produced to the point where its marginal benefit exceeded its marginal cost.E) B) and D)
F) All of the above

Question 18

The optimal allocation of resources is found:

Accepted Answer

A)   where MB = MC.
B)   at every point along a production possibilities curve.
C)   where the marginal benefit is at its greatest.
D)   where the marginal cost is at its lowest.E) A) and B)
F) A) and C)

Question 19

Answer the question on the basis of the data given in the following production possibilities table:  \quad \quad \quad \quad \quad \quad \quad \quad  Production Possibilities (Alternatives)  ‾\underline{	ext { Production Possibilities (Alternatives)  }} Production Possibilities (Alternatives)  ​ 
 A‾B‾C‾D‾E‾F‾ Capital Goods 543210 onsumer Goods 059121415\begin{array}{ccccccc}&\underline{A}&\underline{B}&\underline{C}& \underline{D} &\underline{E}&\underline{F} \ 	ext { Capital Goods } &5&4&3&2&1&0\	ext { onsumer Goods } & 0 & 5 & 9 & 12 & 14 & 15 \end{array} Capital Goods  onsumer Goods ​A​50​B​45​C​39​D​212​E​114​F​015​   Refer to the table.For these data,the law of increasing opportunity costs is reflected in the fact that:

Accepted Answer

A)   the amount of consumer goods that must be sacrificed to get more capital goods diminishes beyond a point.
B)   larger and larger amounts of capital goods must be sacrificed to get additional units of consumer goods.
C)   the production possibilities data would graph as a straight downsloping line.
D)   the economy's resources are presumed to be scarce. E) B) and D)
F) B) and C)

Question 20

The slope of a line parallel to the vertical axis is:

Accepted Answer

A)   zero.
B)   one.
C)   infinite.
D)   one-half.E) B) and C)
F) A) and D)

Exam 1: Limits, Alternatives, and Choices

If the equation y = -10 + 2.5x was plotted:

Correct Answer
verified

Which of the following do economists consider to be capital?

Correct Answer
verified

(Consider This) The economic perspective used in customer decision making at fast-food restaurants is reflected in:

Correct Answer
verified

The slope of a line parallel to the vertical axis is:

Correct Answer
verified

For economists,the word "utility" means:

Correct Answer
verified

Through specialization and international trade,a nation:

Correct Answer
verified

Brinley says that "gas prices are rising because there aren't enough oil refineries." Katie argues that "gas prices are rising because of the growing demand for gasoline from China and India." We can conclude that:

Correct Answer
verified

Correct Answer
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The optimal allocation of resources is found:

Correct Answer
verified

In drawing a particular budget line,money income and the prices of the two products are fixed.

Correct Answer
verified

Correct Answer
verified

Macroeconomics explains the behavior of individual households and business firms;microeconomics is concerned with the behavior of aggregates or the economy as a whole.

Correct Answer
verified

Answer the question on the basis of the following production possibilities tables for two countries,North Cantina and South Cantina: Refer to the tables.If South Cantina is producing at production alternative D,the opportunity cost of the third unit of capital goods will be:

Correct Answer
verified

Which of the following will not produce an outward shift of the production possibilities curve?

Correct Answer
verified

(Last Word) The fallacy of composition is essentially the error of:

Correct Answer
verified

Which of the following is a microeconomic statement?

Correct Answer
verified

If someone produced too much of a good,this would suggest that:

Correct Answer
verified

Which of the following statements,if any,is correct for a nation that is producing only consumer and capital goods?

Correct Answer
verified

Correct Answer
verified

Marginal analysis means that decision makers compare the extra benefits with the extra costs of a specific choice.

Correct Answer
verified

Exam 1: Limits, Alternatives, and Choices

If the equation y = -10 + 2.5x was plotted:

Correct AnswerverifiedShow Answer

Which of the following do economists consider to be capital?

Correct AnswerverifiedShow Answer

(Consider This) The economic perspective used in customer decision making at fast-food restaurants is reflected in:

Correct AnswerverifiedShow Answer

The slope of a line parallel to the vertical axis is:

Correct AnswerverifiedShow Answer

For economists,the word "utility" means:

Correct AnswerverifiedShow Answer

Through specialization and international trade,a nation:

Correct AnswerverifiedShow Answer

Brinley says that "gas prices are rising because there aren't enough oil refineries." Katie argues that "gas prices are rising because of the growing demand for gasoline from China and India." We can conclude that:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The optimal allocation of resources is found:

Correct AnswerverifiedShow Answer

In drawing a particular budget line,money income and the prices of the two products are fixed.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Macroeconomics explains the behavior of individual households and business firms;microeconomics is concerned with the behavior of aggregates or the economy as a whole.

Correct AnswerverifiedShow Answer

Answer the question on the basis of the following production possibilities tables for two countries,North Cantina and South Cantina: Refer to the tables.If South Cantina is producing at production alternative D,the opportunity cost of the third unit of capital goods will be:

Correct AnswerverifiedShow Answer

Which of the following will not produce an outward shift of the production possibilities curve?

Correct AnswerverifiedShow Answer

(Last Word) The fallacy of composition is essentially the error of:

Correct AnswerverifiedShow Answer

Which of the following is a microeconomic statement?

Correct AnswerverifiedShow Answer

If someone produced too much of a good,this would suggest that:

Correct AnswerverifiedShow Answer

Which of the following statements,if any,is correct for a nation that is producing only consumer and capital goods?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Marginal analysis means that decision makers compare the extra benefits with the extra costs of a specific choice.

Correct AnswerverifiedShow Answer

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