Question 1

Another term for opportunity cost is ________ cost.

Accepted Answer

A)  irrelevant 
B)  unnecessary 
C)  normative 
D)  disappearing 
E)  alternative 
A)  irrelevant 
B)  unnecessary 
C)  normative 
D)  disappearing 
E)  alternative

Question 2

For this economy to produce 5 million units of consumer goods and 3 million units of defense goods

Accepted Answer

A)  resources must be used inefficiently. 
B)  the production possibilities curve must be pushed outward. 
C)  unemployment must grow. 
D)  income inequality must increase. 
E)  society's resources must shrink. 
A)  resources must be used inefficiently. 
B)  the production possibilities curve must be pushed outward. 
C)  unemployment must grow. 
D)  income inequality must increase. 
E)  society's resources must shrink.

Question 3

A basic task of any economic system is to

Accepted Answer

A)  ensure that producers and consumers have the maximum freedom of choice in their economic decisions. 
B)  increase the size of its population relative to its annual output. 
C)  estimate its per capita output annually. 
D)  promote the use of money for exchanging goods and services. 
E)  make decisions regarding the degree of economic egalitarianism. 
A)  ensure that producers and consumers have the maximum freedom of choice in their economic decisions. 
B)  increase the size of its population relative to its annual output. 
C)  estimate its per capita output annually. 
D)  promote the use of money for exchanging goods and services. 
E)  make decisions regarding the degree of economic egalitarianism.

Question 4

The existence of relative scarcity

Accepted Answer

A)  refers to the fact that people only desire what they cannot have. 
B)  is no longer relevant to the U.S. economy. 
C)  creates the need to choose how to allocate resources. 
D)  emphasizes the need to conserve free resources. 
E)  means that every country can produce enough to fully satisfy every citizen's wants. 
A)  refers to the fact that people only desire what they cannot have. 
B)  is no longer relevant to the U.S. economy. 
C)  creates the need to choose how to allocate resources. 
D)  emphasizes the need to conserve free resources. 
E)  means that every country can produce enough to fully satisfy every citizen's wants.

Question 5

A full-time college student could drop out in his senior year and get a job paying $19,500.By finishing school,he incurs an opportunity cost equal to

Accepted Answer

A)  the college degree he gave up to take the job. 
B)  the college tuition he would otherwise pay. 
C)  the difference between the cost of tuition and $19,500. 
D)  $19,500. 
E)  zero. 
A)  the college degree he gave up to take the job. 
B)  the college tuition he would otherwise pay. 
C)  the difference between the cost of tuition and $19,500. 
D)  $19,500. 
E)  zero.

Question 6

The idea that the pursuit of private self-interest by consumers and firms also promotes the public interest is called

Accepted Answer

A)  roundabout production. 
B)  the circular flow. 
C)  opportunity cost. 
D)  the invisible hand. 
E)  innovation. 
A)  roundabout production. 
B)  the circular flow. 
C)  opportunity cost. 
D)  the invisible hand. 
E)  innovation.

Question 7

Economics is best defined as the study of how

Accepted Answer

A)  to classify resources used to produce final goods and services. 
B)  resources are apportioned to satisfy human wants. 
C)  modern businesses have grown and prospered. 
D)  technology can be used to change scarce resources into free resources. 
E)  pure capitalism has become the best system for satisfying basic human wants. 
A)  to classify resources used to produce final goods and services. 
B)  resources are apportioned to satisfy human wants. 
C)  modern businesses have grown and prospered. 
D)  technology can be used to change scarce resources into free resources. 
E)  pure capitalism has become the best system for satisfying basic human wants.

Question 8

Which of the following is the best example of land?

Accepted Answer

A)  mineral deposits 
B)  human efforts 
C)  buildings and equipment that contribute to production 
D)  accounts receivable 
E)  goods and services purchased by households for their enjoyment 
A)  mineral deposits 
B)  human efforts 
C)  buildings and equipment that contribute to production 
D)  accounts receivable 
E)  goods and services purchased by households for their enjoyment

Question 9

A straight line fitted to an upward-sloping scatter of points in a graph represents

Accepted Answer

A)  the upper turning point. 
B)  economic growth. 
C)  the average relationship. 
D)  a long-run equilibrium. 
E)  an inverse function. 
A)  the upper turning point. 
B)  economic growth. 
C)  the average relationship. 
D)  a long-run equilibrium. 
E)  an inverse function.

Question 10

The following question are based on the following diagram illustrating the results of a study of food expenditures and income for a group of families:
  
-If a graph of two variables shows a downward-sloping relationship,that relationship is considered to be

Accepted Answer

A)  inverse. 
B)  positive. 
C)  normative. 
D)  variable. 
E)  independent. 
A)  inverse. 
B)  positive. 
C)  normative. 
D)  variable. 
E)  independent.

Question 11

When Adam Smith described the invisible hand,he was talking about

Accepted Answer

A)  the price system. 
B)  central planning. 
C)  opportunity cost. 
D)  the division of labor. 
E)  disguised unemployment. 
A)  the price system. 
B)  central planning. 
C)  opportunity cost. 
D)  the division of labor. 
E)  disguised unemployment.

Question 12

When evaluating the usefulness of an economic model,one should check to see whether the model

Accepted Answer

A)  is consistent with models in other social sciences. 
B)  is based on assumptions that are all close replicas of reality. 
C)  is intelligible to the average layperson. 
D)  predicts more accurately than any other model. 
E)  can be tested under carefully controlled conditions. 
A)  is consistent with models in other social sciences. 
B)  is based on assumptions that are all close replicas of reality. 
C)  is intelligible to the average layperson. 
D)  predicts more accurately than any other model. 
E)  can be tested under carefully controlled conditions.

Question 13

Measurement is necessary in economics to

Accepted Answer

A)  construct diagrams depicting economic models. 
B)  evaluate the predictions of economic models. 
C)  help distinguish positive from normative statements. 
D)  identify the tasks an economy must perform. 
E)  construct mathematical models of the economy. 
A)  construct diagrams depicting economic models. 
B)  evaluate the predictions of economic models. 
C)  help distinguish positive from normative statements. 
D)  identify the tasks an economy must perform. 
E)  construct mathematical models of the economy.

Question 14

Which of the following is the best example of capital?

Accepted Answer

A)  mineral deposits 
B)  human effort 
C)  buildings and equipment that contribute to production 
D)  accounts receivable 
E)  goods and services purchased by households for their enjoyment 
A)  mineral deposits 
B)  human effort 
C)  buildings and equipment that contribute to production 
D)  accounts receivable 
E)  goods and services purchased by households for their enjoyment

Question 15

Normative economics frequently plays a valid role when

Accepted Answer

A)  making an economic forecast. 
B)  formulating economic theory. 
C)  gathering data. 
D)  considering economic policy questions. 
E)  testing an economic model. 
A)  making an economic forecast. 
B)  formulating economic theory. 
C)  gathering data. 
D)  considering economic policy questions. 
E)  testing an economic model.

Question 16

Society's pool of knowledge concerning the industrial arts is called

Accepted Answer

A)  labor. 
B)  land. 
C)  capital. 
D)  opportunity cost. 
E)  technology. 
A)  labor. 
B)  land. 
C)  capital. 
D)  opportunity cost. 
E)  technology.

Question 17

One of the four basic tasks any economic system must perform is

Accepted Answer

A)  measuring the size of its production possibilities curve. 
B)  conducting a population census. 
C)  eliminating free resources. 
D)  classifying economic resources. 
E)  determining the kinds of goods to be produced and the amount of each. 
A)  measuring the size of its production possibilities curve. 
B)  conducting a population census. 
C)  eliminating free resources. 
D)  classifying economic resources. 
E)  determining the kinds of goods to be produced and the amount of each.

Question 18

An improvement in technology or an increase in the amount of capital goods will

Accepted Answer

A)  result in movement along a fixed production possibilities curve. 
B)  diminish the society's production potential. 
C)  increase the opportunity costs of all goods. 
D)  cause the production possibilities curve to become vertical. 
E)  shift the production possibilities curve outward. 
A)  result in movement along a fixed production possibilities curve. 
B)  diminish the society's production potential. 
C)  increase the opportunity costs of all goods. 
D)  cause the production possibilities curve to become vertical. 
E)  shift the production possibilities curve outward.

Question 19

The intersection of the horizontal and vertical axes of a graph is called the

Accepted Answer

A)  equilibrium. 
B)  origin. 
C)  elbow. 
D)  solution. 
E)  nib. 
A)  equilibrium. 
B)  origin. 
C)  elbow. 
D)  solution. 
E)  nib.

Question 20

Which of the following is the best example of labor?

Accepted Answer

A)  eating a Big Mac 
B)  attending a rock concert 
C)  watching a late-night TV show 
D)  planning a corporate merger 
E)  sleeping in Economics class 
A)  eating a Big Mac 
B)  attending a rock concert 
C)  watching a late-night TV show 
D)  planning a corporate merger 
E)  sleeping in Economics class

Exam 1: What is Economics

Another term for opportunity cost is ________ cost.

For this economy to produce 5 million units of consumer goods and 3 million units of defense goods

A basic task of any economic system is to

The existence of relative scarcity

A full-time college student could drop out in his senior year and get a job paying $19,500.By finishing school,he incurs an opportunity cost equal to

The idea that the pursuit of private self-interest by consumers and firms also promotes the public interest is called

Economics is best defined as the study of how

Which of the following is the best example of land?

A straight line fitted to an upward-sloping scatter of points in a graph represents

The following question are based on the following diagram illustrating the results of a study of food expenditures and income for a group of families: -If a graph of two variables shows a downward-sloping relationship,that relationship is considered to be

When Adam Smith described the invisible hand,he was talking about

When evaluating the usefulness of an economic model,one should check to see whether the model

Measurement is necessary in economics to

Which of the following is the best example of capital?

Normative economics frequently plays a valid role when

Society's pool of knowledge concerning the industrial arts is called

One of the four basic tasks any economic system must perform is

An improvement in technology or an increase in the amount of capital goods will

The intersection of the horizontal and vertical axes of a graph is called the

Which of the following is the best example of labor?

Markets and Prices

The Business Firm: Organization,motivation,and Optimal Input Decisions

Getting Behind the Demand and Supply Curves

Market Demand and Price Elasticity

Economic Efficiency,market Supply,and Perfect Competition

Monopoly and Its Regulation

Monopolistic Competition,oligopoly,and Antitrust Policy

Pollution and the Environment

The Supply and Demand for Labor

Interest,rent,and Profit

Poverty,income Inequality,and Discrimination

Economic Growth

Public Goods and the Role of the Government

National Income and Product

Business Fluctuations and Unemployment

The Determination of National Output and the Keynesian Multiplier

Fiscal Policy and National Output

Inflation

Money and the Banking System

The Federal Reserve and Monetary Policy

Supply Shocks and Inflation

Productivity,growth,and Technology Policy

Surpluses,deficits,public Debt,and the Federal Budget

Monetary Policy,interest Rates,and Economic Activity

Controversies Over Stabilization Policy

International Trade

Exchange Rates and the Balance of Payments

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