Exam 1: What Is Economics

Microeconomics is the study of topics such as national production and unemployment.

Which of the following statements is CORRECT?

An incentive

-In the above figure, the slope across the arc between a and b is

The slope of a negative relationship is

Ceteris paribus when graphing a relationship refers to

-A scatter diagram shows the

A graph has a point that is either a maximum or a minimum. To the left of the point, the slope of relationship is positive. To the right of the point, the slope is negative. Is the point a maximum point or a minimum point? Be sure to draw a figure that supports your answer.

An example of a question that might be explored in microeconomics is to determine

-Jamie is preparing to take his SAT tests. The table above shows how Jamie's score depends on the number of hours a week Jamie studies. a) Plot the relationship in the figure, putting the hours studied on the horizontal axis. b) Is the relationship you plotted positive or negative? c) What happens to the slope of the relationship as hours studied increase? d) Suppose Jamie can enroll in an SAT prep course and, by so doing, for every possible number of hours he studies, his score will be 100 points higher. Plot the new relationship between the number of hours studied and Jamie's SAT score in the figure. e) How many variables are involved in the figure you just completed?

When a farmer decides to raise hogs instead of cattle, the farmer is answering the ________ part of one of the two big economic questions.

-Graphing the data in the above table with the number of workers on the horizontal axis and the average cost on the vertical axis, the graph would show

When a firm decides to produce more electric cars and conventional gas powered cars, it is most directly answering the ________ part of one of the two big economic questions.

-In the above figure, tax revenue is at a maximum when the tax rate is

Janet Yellen, Chair of the Federal Reserve, must choose whether tomorrow she meets with the Secretary of the Treasury or with the Congress regarding the financial crisis. This choice reflects the

Bill Bonecrusher graduates from college with a choice of playing professional football at $2 million a year or coaching for $50,000 a year. He decides to play football, but eight years later, though he could continue to play football at $2 million a year, he quits football to make movies for $3 million a year. His opportunity cost of playing football at graduation was ________ and eight years later the opportunity cost of making movies was ________.

A positive statement is

-Suppose you produce 10 bikes a day for a total cost of $1000. Total costs increase to $1100 when you produce 15 bikes. Finally, total costs increase to $1300 if you make 20 bikes. A graph showing the relationship between total costs and the number of bikes produced would be

The statement that ________ is a positive statement.

Explain whether the statement "The government should increase tariffs on Japanese cars to protect the American car industry from competition," is a normative or positive statement.