Question 1

After purchasing a can of soda from a convenience store, David complained that the store had charged too much for the soda. Comment.

Accepted Answer

If David purchased the soda on a volunta

Question 2

A resource is not scarce if

Accepted Answer

A) there is more of it than people want. 
B) it can be found in any store. 
C) people have enough money to pay for it. 
D) it has a low opportunity cost. 
E) its supply exceeds its demand. 
A) there is more of it than people want. 
B) it can be found in any store. 
C) people have enough money to pay for it. 
D) it has a low opportunity cost. 
E) its supply exceeds its demand.

Question 3

Which of the following is held constant when constructing a production possibilities curve for the economy?

Accepted Answer

A) The opportunity cost 
B) The price level 
C) The amount of resources 
D) The combination of goods produced 
E) The costs of resources used in production 
A) The opportunity cost 
B) The price level 
C) The amount of resources 
D) The combination of goods produced 
E) The costs of resources used in production

Question 4

Choices are necessary only for individuals but not for the economy as a whole.

Accepted Answer

A) True 
 B)False

Question 5

Exhibit 1-5  
-Refer to Exhibit 1-5. The production possibilities curve representing the given schedule would be a

Accepted Answer

A) negatively sloped curve that bows outward. 
B) negatively sloped straight line. 
C) positively sloped curve that bows outward. 
D) positively sloped curve that bows inward. 
E) positively sloped straight line. 
A) negatively sloped curve that bows outward. 
B) negatively sloped straight line. 
C) positively sloped curve that bows outward. 
D) positively sloped curve that bows inward. 
E) positively sloped straight line.

Question 6

Josie has two classes: Biology and math. She finds out that the grades for both classes has improved without spending more time studying. Using the production possibilities curve, Josie's situation can be represented by

Accepted Answer

A) moving from a point on the production possibilities curve to a point inside the curve. 
B) a movement along the curve from the axis for biology to the axis for math. 
C) a movement along the curve from the axis for math to the axis for biology. 
D) an inward shift of the curve. 
E) an outward shift of the curve. 
A) moving from a point on the production possibilities curve to a point inside the curve. 
B) a movement along the curve from the axis for biology to the axis for math. 
C) a movement along the curve from the axis for math to the axis for biology. 
D) an inward shift of the curve. 
E) an outward shift of the curve.

Question 7

If an economy produces only smartphones and toys, then producing more and more smartphones will most likely require

Accepted Answer

A) giving up a decreasing amount of the production of toys. 
B) giving up an increasing amount of the production of toys. 
C) gaining an increasing amount of the production of toys. 
D) gaining a decreasing amount of the production of toys. 
E) no change in toy production. 
A) giving up a decreasing amount of the production of toys. 
B) giving up an increasing amount of the production of toys. 
C) gaining an increasing amount of the production of toys. 
D) gaining a decreasing amount of the production of toys. 
E) no change in toy production.

Question 8

Economics is the study of how individuals become wealthy.

Accepted Answer

A) True 
 B)False

Question 9

Exhibit 1-2  
-According to Exhibit 1-2, if Anne and Sam joined forces, the number of meals served would increase by

Accepted Answer

A)  8. 
B)  20. 
C)  12. 
D)  4. 
E)  5. 
A)  8. 
B)  20. 
C)  12. 
D)  4. 
E)  5.

Question 10

The production possibilities curve is immovable, meaning that it is fixed regardless of the availability of resources.

Accepted Answer

A) True 
 B)False

Question 11

Economics deals with how

Accepted Answer

A) individuals make decisions to use scarce resources in order to satisfy their unlimited wants. 
B) to run a business successfully. 
C) individuals become rich. 
D) society can eliminate scarcity. 
E) society creates more resources in order to raise its standard of living. 
A) individuals make decisions to use scarce resources in order to satisfy their unlimited wants. 
B) to run a business successfully. 
C) individuals become rich. 
D) society can eliminate scarcity. 
E) society creates more resources in order to raise its standard of living.

Question 12

The opportunity cost of a choice is the

Accepted Answer

A) benefit associated with making that choice. 
B) value of the next best activity not chosen. 
C) fair market price of whatever is chosen. 
D) dollar amount paid to purchase what is chosen. 
E) consequence associated with failure. 
A) benefit associated with making that choice. 
B) value of the next best activity not chosen. 
C) fair market price of whatever is chosen. 
D) dollar amount paid to purchase what is chosen. 
E) consequence associated with failure.

Question 13

James is a computer genius earning $2 million last year while working at a software company. He is also planning to enroll as an MBA student at Stanford University. What is his opportunity cost of earning the graduate MBA degree? How does it compare to your opportunity cost of a year in college?

Accepted Answer

One of the opportunity costs of one more

Question 14

Moving from a point on the production possibilities curve to another point on the same curve implies a gain in production efficiency.

Accepted Answer

A) True 
 B)False

Question 15

What does a market economy use to determine the "what is produced, how, and for whom" problems?

Accepted Answer

A) A price system 
B) The government 
C) An election 
D) A tax system 
E) Command and control 
A) A price system 
B) The government 
C) An election 
D) A tax system 
E) Command and control

Question 16

For an economy to attain what is currently impossible is

Accepted Answer

A) a problem involving choice and scarcity, the choice being between current consumption and investment. 
B) an economic problem but is never taken seriously. 
C) an economic problem of supply and demand. 
D) not an economic problem because one cannot choose something that does not exist. 
E) not an economic problem because future production is not a viable alternative to current production. 
A) a problem involving choice and scarcity, the choice being between current consumption and investment. 
B) an economic problem but is never taken seriously. 
C) an economic problem of supply and demand. 
D) not an economic problem because one cannot choose something that does not exist. 
E) not an economic problem because future production is not a viable alternative to current production.

Exam 1: The Central Idea

After purchasing a can of soda from a convenience store, David complained that the store had charged too much for the soda. Comment.

A resource is not scarce if

Which of the following is held constant when constructing a production possibilities curve for the economy?

Choices are necessary only for individuals but not for the economy as a whole.

Exhibit 1-5 -Refer to Exhibit 1-5. The production possibilities curve representing the given schedule would be a

Josie has two classes: Biology and math. She finds out that the grades for both classes has improved without spending more time studying. Using the production possibilities curve, Josie's situation can be represented by

If an economy produces only smartphones and toys, then producing more and more smartphones will most likely require

Economics is the study of how individuals become wealthy.

Exhibit 1-2 -According to Exhibit 1-2, if Anne and Sam joined forces, the number of meals served would increase by

The production possibilities curve is immovable, meaning that it is fixed regardless of the availability of resources.

Economics deals with how

The opportunity cost of a choice is the

James is a computer genius earning $2 million last year while working at a software company. He is also planning to enroll as an MBA student at Stanford University. What is his opportunity cost of earning the graduate MBA degree? How does it compare to your opportunity cost of a year in college?

Moving from a point on the production possibilities curve to another point on the same curve implies a gain in production efficiency.

What does a market economy use to determine the "what is produced, how, and for whom" problems?

For an economy to attain what is currently impossible is

Observing and Explaining the Economy

The Supply and Demand Model

Subtleties of the Supply and Demand Model

The Demand Curve and the Behavior of Consumers

The Supply Curve and the Behavior of Firms

The Efficiency of Markets

Costs and the Changes at Firms Over Time

The Rise and Fall of Industries

Monopoly

Product Differentiation, Monopolistic Competition, and Oligopoly

Antitrust Policy and Regulation

Labor Markets

Taxes, Transfers, and Income Distribution

Public Goods, Externalities, and Government Behavior

Capital and Financial Markets

Macroeconomics: the Big Picture

Measuring the Production, Income, and Spending of Nations

The Spending Allocation Model

Unemployment and Employment

Productivity and Economic Growth

Money and Inflation

The Nature and Causes of Economic Fluctuations

The Economic Fluctuations Model

Using the Economic Fluctuations Model

Fiscal Policy

Monetary Policy

Economic Growth Around the World

International Trade

International Finance

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