Question 1

Suppose that for the past two months, you have studied economics one hour a day. You now decide to study economics two hours a day. For the past two months, ________.

Accepted Answer

A)  your marginal cost of studying economics for an hour must have exceeded its marginal benefit 
B)  the marginal cost of studying economics must have fallen 
C)  your marginal benefit from studying economics an hour must have been greater than its marginal cost 
D)  the opportunity cost of studying economics must have risen. 
A)  your marginal cost of studying economics for an hour must have exceeded its marginal benefit 
B)  the marginal cost of studying economics must have fallen 
C)  your marginal benefit from studying economics an hour must have been greater than its marginal cost 
D)  the opportunity cost of studying economics must have risen.

Question 2

-In the above figure,

Accepted Answer

A)  consumption expenditures are a linear function of labor income. 
B)  the slope of the function depicted is 0.9. 
C)  consumption expenditures are positively related to labor income. 
D)  All of the above answers are correct. 
A)  consumption expenditures are a linear function of labor income. 
B)  the slope of the function depicted is 0.9. 
C)  consumption expenditures are positively related to labor income. 
D)  All of the above answers are correct.

Question 3

The tools, instruments, machines, and buildings that people use to produce goods and services are called human capital.

Accepted Answer

A) True 
 B)False

Question 4

A positive statement is

Accepted Answer

A)  about what ought to be. 
B)  about what is. 
C)  the result of a model's normative assumptions. 
D)  valid only in the context of a model with simple assumptions. 
A)  about what ought to be. 
B)  about what is. 
C)  the result of a model's normative assumptions. 
D)  valid only in the context of a model with simple assumptions.

Question 5

-The above figure shows the relationship between the Joneses' total consumption and total household income. The figure illustrates that the Joneses' total consumption varies

Accepted Answer

A)  directly with their total household income. 
B)  independently of their total household income. 
C)  inversely with their total household income. 
D)  negatively with their income. 
A)  directly with their total household income. 
B)  independently of their total household income. 
C)  inversely with their total household income. 
D)  negatively with their income.

Question 6

In economics, normative statements are about

Accepted Answer

A)  the way things ought to be. 
B)  the way things are. 
C)  marginal benefits, not marginal costs. 
D)  marginal costs, not marginal benefits. 
A)  the way things ought to be. 
B)  the way things are. 
C)  marginal benefits, not marginal costs. 
D)  marginal costs, not marginal benefits.

Question 7

The statement "Unemployment should be below 6 percent" is

Accepted Answer

A)  a positive statement. 
B)  a normative statement. 
C)  a prediction. 
D)  an assumption. 
A)  a positive statement. 
B)  a normative statement. 
C)  a prediction. 
D)  an assumption.

Question 8

-In the above figure, when income is zero, household expenditures equal

Accepted Answer

A)  0. 
B)  $1000. 
C)  $4000. 
D)  $8000. 
A)  0. 
B)  $1000. 
C)  $4000. 
D)  $8000.

Question 9

-In evaluating a relationship between x and y, ceteris paribus means other variables

Accepted Answer

A)  are not relevant to x and y. 
B)  move in opposite directions to x and y. 
C)  are not changing while x and y change. 
D)  move in the same direction as x and y. 
A)  are not relevant to x and y. 
B)  move in opposite directions to x and y. 
C)  are not changing while x and y change. 
D)  move in the same direction as x and y.

Question 10

-What does the slope of the line shown in the above figure equal?

Accepted Answer

The slope equals the change in

Question 11

-In the above figure, the curve's slope is

Accepted Answer

A)  positive and is becoming steeper. 
B)  positive and is becoming less steep. 
C)  negative and is becoming steeper. 
D)  negative and is becoming less steep. 
A)  positive and is becoming steeper. 
B)  positive and is becoming less steep. 
C)  negative and is becoming steeper. 
D)  negative and is becoming less steep.

Question 12

The fact that wants cannot be fully satisfied with available resources reflects the definition of

Accepted Answer

A)  the what tradeoff. 
B)  scarcity. 
C)  the big tradeoff. 
D)  for whom to produce. 
A)  the what tradeoff. 
B)  scarcity. 
C)  the big tradeoff. 
D)  for whom to produce.

Question 13

Explain whether the statement, "Hillary Clinton was elected President of the United States in 2012," is a normative or positive statement.

Accepted Answer

The statement is a positive statement be

Question 14

Explain what entrepreneurship is and why it is considered a factor of production.

Accepted Answer

Entrepreneurship is the resource (the pe

Question 15

-On a graph showing the relationship between x and y, the ceteris paribus condition implies that

Accepted Answer

A)  no other variables are related to x and y. 
B)  the value of x is held constant. 
C)  the value of y is held constant. 
D)  other variables not shown are held constant. 
A)  no other variables are related to x and y. 
B)  the value of x is held constant. 
C)  the value of y is held constant. 
D)  other variables not shown are held constant.

Question 16

Suppose you plan to go to school this summer. The cost of tuition and textbooks is $1,400 and housing, board, and entertainment will cost you $500. If you didn't go to school, you'd live in your parents' house for free, but your other living expenses would be about the same. Also, if you didn't go to school you'd work full time and could earn $8,000. You can still work part time while attending the summer school, but you will earn only $3,000.
a) What will the summer school cost you in terms of money explicitly paid?
b) What are the opportunity costs of going to summer school that you don't pay explicitly? Explain.
c) What is your total opportunity costs of going to school this summer? Explain your answer.

Accepted Answer

a) You explicitly pay the cost of tuitio

Question 17

As a firm produces more and more CDs, the average cost of producing each CD falls. A curve showing the behavior of the average cost of a CD as more CDs are produced

Accepted Answer

A)  would be positively and then negatively-sloped. 
B)  would be positively sloped. 
C)  would be horizontal. 
D)  would be negatively sloped. 
A)  would be positively and then negatively-sloped. 
B)  would be positively sloped. 
C)  would be horizontal. 
D)  would be negatively sloped.

Question 18

-In the above figure, using the slope across an arc, the slope of the curve between points a and b is

Accepted Answer

A)  1/2. 
B)  -1/2. 
C)  2. 
D)  -2. 
A)  1/2. 
B)  -1/2. 
C)  2. 
D)  -2.

Question 19

A curve is plotted with y measured on the vertical axis and x measured on the horizontal axis. The slope of the curve equals

Accepted Answer

A)  y divided by x. 
B)  the change in y divided by x. 
C)  the change in y divided by the change in x. 
D)  y divided by the change in x. 
A)  y divided by x. 
B)  the change in y divided by x. 
C)  the change in y divided by the change in x. 
D)  y divided by the change in x.

Question 20

-In the figure above, the value on the y-axis decreases as we move from

Accepted Answer

A)  point G to point A. 
B)  point C to point A. 
C)  point F to point A. 
D)  point E to point A. 
A)  point G to point A. 
B)  point C to point A. 
C)  point F to point A. 
D)  point E to point A.

Exam 1: What Is Economics

Suppose that for the past two months, you have studied economics one hour a day. You now decide to study economics two hours a day. For the past two months, ________.

-In the above figure,

The tools, instruments, machines, and buildings that people use to produce goods and services are called human capital.

A positive statement is

-The above figure shows the relationship between the Joneses' total consumption and total household income. The figure illustrates that the Joneses' total consumption varies

In economics, normative statements are about

The statement "Unemployment should be below 6 percent" is

-In the above figure, when income is zero, household expenditures equal

-In evaluating a relationship between x and y, ceteris paribus means other variables

-What does the slope of the line shown in the above figure equal?

-In the above figure, the curve's slope is

The fact that wants cannot be fully satisfied with available resources reflects the definition of

Explain whether the statement, "Hillary Clinton was elected President of the United States in 2012," is a normative or positive statement.

Explain what entrepreneurship is and why it is considered a factor of production.

-On a graph showing the relationship between x and y, the ceteris paribus condition implies that

As a firm produces more and more CDs, the average cost of producing each CD falls. A curve showing the behavior of the average cost of a CD as more CDs are produced

-In the above figure, using the slope across an arc, the slope of the curve between points a and b is

A curve is plotted with y measured on the vertical axis and x measured on the horizontal axis. The slope of the curve equals

-In the figure above, the value on the y-axis decreases as we move from

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices and Public Goods

Externalities and the Environment

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Extension A: Review

Extension B: Review

Extension C: Review

Extension D: Review

Extension E: Review

Extension F: Review

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