Question 1

A graph's origin is the point of intersection of all lines or curves in the graph.

Accepted Answer

A) True 
 B)False

Question 2

Opportunity cost can best be defined as the

Accepted Answer

A) value of what must be given up in order to acquire an item. 
B) money cost to the buyer to acquire a good or service. 
C) total value of all the other items that otherwise could be acquired. 
D) cost to the seller to produce an item. 
E) time cost to obtain the money to buy an item. 
A) value of what must be given up in order to acquire an item. 
B) money cost to the buyer to acquire a good or service. 
C) total value of all the other items that otherwise could be acquired. 
D) cost to the seller to produce an item. 
E) time cost to obtain the money to buy an item.

Question 3

Many believe that fairness calls for higher income taxes on the wealthy.Using one of the "Ideas for Beyond the Final Exam," explain how higher taxes on the wealthy will affect output.

Accepted Answer

Greater equality comes at the expense of

Question 4

Carefully define the following terms, and explain their importance in economics.
a.opportunity cost
b.abstraction
c.theory
d.model
e.marginal analysis

Accepted Answer

a.Opportunity cost for a decision is the

Question 5

Slope will vary along a curve (as opposed to a straight line).

Accepted Answer

A) True 
 B)False

Question 6

The use of chlorofluorocarbons in refrigerators and air conditioners is alleged to cause the destruction of the ozone layer that surrounds the earth.This layer protects humans from ultraviolet radiation, which causes skin cancer.Industry has been prohibited from using these substances in aerosol cans, but the government has been reluctant to ban their use altogether because of the serious economic consequences.Economists analyze such problems and refer to them as

Accepted Answer

A) issues of unfairness. 
B) examples of excess abstraction. 
C) externalities. 
D) comparative advantage issues. 
E) examples of trade-offs between output and equality. 
A) issues of unfairness. 
B) examples of excess abstraction. 
C) externalities. 
D) comparative advantage issues. 
E) examples of trade-offs between output and equality.

Question 7

Over the past century, the main factor responsible for rising living standards in the United States has been productivity growth.

Accepted Answer

A) True 
 B)False

Question 8

It is impossible for both nations to gain when trading with one other.

Accepted Answer

A) True 
 B)False

Question 9

In terms of the competing claims of equality and efficiency, in the United States we have

Accepted Answer

A) chosen greater wage inequality for lower unemployment. 
B) chosen higher unemployment for less wage inequality. 
C) both greater wage inequality and higher unemployment. 
D) not faced a trade-off between wage inequality and unemployment. 
E) been able to choose both less wage inequality and lower unemployment. 
A) chosen greater wage inequality for lower unemployment. 
B) chosen higher unemployment for less wage inequality. 
C) both greater wage inequality and higher unemployment. 
D) not faced a trade-off between wage inequality and unemployment. 
E) been able to choose both less wage inequality and lower unemployment.

Question 10

A vertical line always has a slope of one.

Accepted Answer

A) True 
 B)False

Question 11

Abstraction can lead to gross distortions of pertinent facts.

Accepted Answer

A) True 
 B)False

Question 12

People generally purchase less of a commodity as its price increases.This implies that the relationship between quantity purchased and the price of the commodity must have a

Accepted Answer

A) slope always equal to one. 
B) positive slope. 
C) zero slope. 
D) negative slope. 
A) slope always equal to one. 
B) positive slope. 
C) zero slope. 
D) negative slope.

Question 13

Figure 1-1
  
-The slope of the line in Figure 1-1 is

Accepted Answer

A) 0.5. 
B) 2.0. 
C) −0.5. 
D) −2.0. 
A) 0.5. 
B) 2.0. 
C) −0.5. 
D) −2.0.

Question 14

A theory is an abstraction used often by economists to

Accepted Answer

A) describe a problem. 
B) keep all assumptions in their proper places. 
C) explain why things work the way they do. 
D) describe a hierarchical ordering of facts. 
E) arrange variables into a graphical format. 
A) describe a problem. 
B) keep all assumptions in their proper places. 
C) explain why things work the way they do. 
D) describe a hierarchical ordering of facts. 
E) arrange variables into a graphical format.

Question 15

Which of the following is an example of a fiscal policy initiative?

Accepted Answer

A) Lowering of interest rates. 
B) Increase in reserve requirements. 
C) Reduction in taxes. 
D) Decrease in money supply. 
A) Lowering of interest rates. 
B) Increase in reserve requirements. 
C) Reduction in taxes. 
D) Decrease in money supply.

Question 16

The opportunity cost of any good or service is the

Accepted Answer

A) actual dollar cost of doing or making it. 
B) highest price that a seller can get for the item. 
C) value of the next best alternative. 
D) cost associated with a value judgment. 
E) cost of producing the good or service. 
A) actual dollar cost of doing or making it. 
B) highest price that a seller can get for the item. 
C) value of the next best alternative. 
D) cost associated with a value judgment. 
E) cost of producing the good or service.

Question 17

In the United States the distribution of income is relatively unequal, and output is relatively high, while in the former Soviet Union the distribution of income was more equal and output per worker was much lower.Give one possible explanation for this phenomenon.

Accepted Answer

This problem illustrates the trade-off b

Question 18

The term opportunity cost refers to the

Accepted Answer

A) value of what is gained when a choice is made. 
B) difference between the value of what is gained and the value of what is forgone when a choice is made. 
C) value of what is forgone when a choice is made. 
D) direct costs involved in making a choice. 
A) value of what is gained when a choice is made. 
B) difference between the value of what is gained and the value of what is forgone when a choice is made. 
C) value of what is forgone when a choice is made. 
D) direct costs involved in making a choice.

Question 19

Opportunity cost is the value of the next best alternative to a given choice.

Accepted Answer

A) True 
 B)False

Question 20

Inaccurate prediction generally invalidates the use of theory in economics.

Accepted Answer

A) True 
 B)False

Exam 1: What Is Economics

A graph's origin is the point of intersection of all lines or curves in the graph.

Opportunity cost can best be defined as the

Many believe that fairness calls for higher income taxes on the wealthy.Using one of the "Ideas for Beyond the Final Exam," explain how higher taxes on the wealthy will affect output.

Carefully define the following terms, and explain their importance in economics. a.opportunity cost b.abstraction c.theory d.model e.marginal analysis

Slope will vary along a curve (as opposed to a straight line).

Over the past century, the main factor responsible for rising living standards in the United States has been productivity growth.

It is impossible for both nations to gain when trading with one other.

In terms of the competing claims of equality and efficiency, in the United States we have

A vertical line always has a slope of one.

Abstraction can lead to gross distortions of pertinent facts.

People generally purchase less of a commodity as its price increases.This implies that the relationship between quantity purchased and the price of the commodity must have a

Figure 1-1 -The slope of the line in Figure 1-1 is

A theory is an abstraction used often by economists to

Which of the following is an example of a fiscal policy initiative?

The opportunity cost of any good or service is the

In the United States the distribution of income is relatively unequal, and output is relatively high, while in the former Soviet Union the distribution of income was more equal and output per worker was much lower.Give one possible explanation for this phenomenon.

The term opportunity cost refers to the

Opportunity cost is the value of the next best alternative to a given choice.

Inaccurate prediction generally invalidates the use of theory in economics.

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: an Initial Look

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: the Importance of Marginal Analysis

Securities: Business Finance and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

Monopoly

Between Competition and Monopoly

Limiting Market Power: Regulation and Antitrust

The Case for Free Markets: the Price System

The Shortcomings of Free Markets

Externalities, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

Is Useconomic Leadership Threatened

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation

Bringing in the Supply Side: Unemployment and Inflation

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

He Financial Crisis and the Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade-Off Between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder

Exchange Rates and the Macroeconomy

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