Question 1

If the output of product X is such that marginal benefit equals marginal cost,

Accepted Answer

A)  the correct amount of resources is being allocated to X's production. 
B)  the value of producing X exceeds the value of producing alternative products with the available resources. 
C)  there can be a net gain to society by allocating either more or less resources to producing X. 
D)  resources are overallocated to the production of X. 
A)  the correct amount of resources is being allocated to X's production. 
B)  the value of producing X exceeds the value of producing alternative products with the available resources. 
C)  there can be a net gain to society by allocating either more or less resources to producing X. 
D)  resources are overallocated to the production of X.

Question 2

Purposeful behavior implies that everyone will make identical choices.

Accepted Answer

A) True 
 B)False

Question 3

The resource category called "land" includes forests, animals, and water resources.

Accepted Answer

A) True 
 B)False

Question 4

Answer the question on the basis of the following data.   The data suggest that

Accepted Answer

A)  a policy of tax reduction will increase consumption. 
B)  a policy of tax increases will increase consumption. 
C)  tax changes will have no impact on consumption. 
D)  after-tax income should be lowered to increase consumption. 
A)  a policy of tax reduction will increase consumption. 
B)  a policy of tax increases will increase consumption. 
C)  tax changes will have no impact on consumption. 
D)  after-tax income should be lowered to increase consumption.

Question 5

Suppose that an economy is producing on its production possibilities curve but is not producing quantities of each good where the marginal benefit equals the marginal cost for each good. This economy

Accepted Answer

A)  should not change its production, because it cannot improve its allocation by shifting resources. 
B)  can improve its allocation by lowering the unemployment rate. 
C)  can improve its allocation by producing more of one good and less of the other. 
D)  can improve its allocation by producing more of both goods. 
A)  should not change its production, because it cannot improve its allocation by shifting resources. 
B)  can improve its allocation by lowering the unemployment rate. 
C)  can improve its allocation by producing more of one good and less of the other. 
D)  can improve its allocation by producing more of both goods.

Question 6

Which of the following is a correct statement?

Accepted Answer

A)  Economic concepts or laws that are valid during recessions are necessarily valid during prosperity. 
B)  Although they are generalizations, economic laws are useful because they allow us to predict and therefore influence or adjust to events. 
C)  Economists use the scientific method. Therefore, economic laws are as quantitatively precise as the laws of physics or chemistry. 
D)  Because economics is primarily concerned with questions of "ought," it is a branch of applied ethics and not scientific. 
A)  Economic concepts or laws that are valid during recessions are necessarily valid during prosperity. 
B)  Although they are generalizations, economic laws are useful because they allow us to predict and therefore influence or adjust to events. 
C)  Economists use the scientific method. Therefore, economic laws are as quantitatively precise as the laws of physics or chemistry. 
D)  Because economics is primarily concerned with questions of "ought," it is a branch of applied ethics and not scientific.

Question 7

Answer the question on the basis of the following five data sets, wherein it is assumed that the variable shown on the left is the independent variable and the one on the right is the dependent variable. Assume in graphing these data that the independent variable is shown on the horizontal axis and the dependent variable on the vertical axis.   Refer to the data sets. The vertical intercept is positive for

Accepted Answer

A)  all five data sets. 
B)  data sets 1 and 3 only. 
C)  data sets 1, 3, and 5 only. 
D)  data set 2 only. 
A)  all five data sets. 
B)  data sets 1 and 3 only. 
C)  data sets 1, 3, and 5 only. 
D)  data set 2 only.

Question 8

The distinction between microeconomics and macroeconomics is

Accepted Answer

A)  that microeconomics examines the beach, while macroeconomics looks at the sand, individual rocks, and shells, so to speak. 
B)  so clear-cut that every topic can be readily labeled as either macro or micro. 
C)  that microeconomics studies the behavior of individual consumers, workers, and firms, while macroeconomics studies the economy as a whole. 
D)  that microeconomics seeks to obtain an overview, while macroeconomics observes the details of individual components. 
A)  that microeconomics examines the beach, while macroeconomics looks at the sand, individual rocks, and shells, so to speak. 
B)  so clear-cut that every topic can be readily labeled as either macro or micro. 
C)  that microeconomics studies the behavior of individual consumers, workers, and firms, while macroeconomics studies the economy as a whole. 
D)  that microeconomics seeks to obtain an overview, while macroeconomics observes the details of individual components.

Question 9

The opportunity cost of constructing a new public highway is the

Accepted Answer

A)  money cost of hiring contractors and construction workers for the new highway. 
B)  value of other goods and services that are sacrificed in order to construct the new highway. 
C)  expected cost of constructing the new highway in a future year. 
D)  value of shorter driving times and distances when the new highway is completed. 
A)  money cost of hiring contractors and construction workers for the new highway. 
B)  value of other goods and services that are sacrificed in order to construct the new highway. 
C)  expected cost of constructing the new highway in a future year. 
D)  value of shorter driving times and distances when the new highway is completed.

Question 10

Economic growth is shown as an increase in production from inside the production possibilities curve out toward a point on the possibilities curve.

Accepted Answer

A) True 
 B)False

Question 11

460. In a relationship between two variables, the "independent variable" refers to the

Accepted Answer

A)  one measured on the vertical axis, in the convention of mathematics. 
B)  one whose value is assumed constant. 
C)  effect or outcome. 
D)  cause or source variable. 
A)  one measured on the vertical axis, in the convention of mathematics. 
B)  one whose value is assumed constant. 
C)  effect or outcome. 
D)  cause or source variable.

Question 12

An economy will always operate at some point on its production possibilities curve.

Accepted Answer

A) True 
 B)False

Question 13

In a linear equation relating income and consumption, you know that the intercept is $1,000 and the slope of the line is 4. If income is $20,000, then consumption is

Accepted Answer

A)  $8,000. 
B)  $9,000. 
C)  $10,000. 
D)  $11,000. 
A)  $8,000. 
B)  $9,000. 
C)  $10,000. 
D)  $11,000.

Question 14

Suppose there are two economies, Alpha and Beta, which have the same production possibilities curves. If Beta devotes more resources to produce capital goods than consumer goods as compared to Alpha, then in the future

Accepted Answer

A)  Alpha will experience greater economic growth than Beta. 
B)  Beta will experience greater economic growth than Alpha. 
C)  Alpha will not be able to achieve full employment or productive efficiency. 
D)  Beta will not be able to achieve full employment or productive efficiency. 
A)  Alpha will experience greater economic growth than Beta. 
B)  Beta will experience greater economic growth than Alpha. 
C)  Alpha will not be able to achieve full employment or productive efficiency. 
D)  Beta will not be able to achieve full employment or productive efficiency.

Question 15

Which pitfall to sound economic reasoning is reflected in a person's view that "pharmaceutical and oil companies are price-gouging the consumers"?

Accepted Answer

A)  faulty definition 
B)  post hoc fallacy 
C)  loaded terminology 
D)  confusing correlation and causation 
A)  faulty definition 
B)  post hoc fallacy 
C)  loaded terminology 
D)  confusing correlation and causation

Question 16

The main function of the entrepreneur is to

Accepted Answer

A)  make routine pricing decisions. 
B)  innovate. 
C)  purchase capital. 
D)  create market demand. 
A)  make routine pricing decisions. 
B)  innovate. 
C)  purchase capital. 
D)  create market demand.

Question 17

Assume that a consumer has a given budget or income of $12 and that she can buy only two goods, apples or bananas. The price of an apple is $1.50 and the price of a banana is $0.75. If the consumer spent all of her budget on just apples or just bananas, how many apples or bananas maximum would she be able to buy?

Accepted Answer

A)  12 apples or 8 bananas 
B)  8 apples or 12 bananas 
C)  16 apples or 12 bananas 
D)  8 apples or 16 bananas 
A)  12 apples or 8 bananas 
B)  8 apples or 12 bananas 
C)  16 apples or 12 bananas 
D)  8 apples or 16 bananas

Question 18

An increase in money income

Accepted Answer

A)  shifts the consumer's budget line to the right. 
B)  shifts the consumer's budget line to the left. 
C)  increases the slope of the budget line. 
D)  has no effect on the budget line. 
A)  shifts the consumer's budget line to the right. 
B)  shifts the consumer's budget line to the left. 
C)  increases the slope of the budget line. 
D)  has no effect on the budget line.

Question 19

The point on the production possibilities curve that is most desirable can be found by

Accepted Answer

A)  estimating the marginal costs of both products in real or physical terms. 
B)  comparing marginal benefits and marginal costs. 
C)  determining where least-cost production occurs. 
D)  calculating where economic growth will be greatest. 
A)  estimating the marginal costs of both products in real or physical terms. 
B)  comparing marginal benefits and marginal costs. 
C)  determining where least-cost production occurs. 
D)  calculating where economic growth will be greatest.

Question 20

A relationship illustrated by an upward-sloping graph means that a(n)

Accepted Answer

A)  increase in the value of one variable causes the value of the other to decrease. 
B)  decrease in the value of one variable causes the value of the other to decrease. 
C)  decrease in the value of one variable causes the value of the other to increase. 
D)  increase in the value of one variable causes no change in the other variable. 
A)  increase in the value of one variable causes the value of the other to decrease. 
B)  decrease in the value of one variable causes the value of the other to decrease. 
C)  decrease in the value of one variable causes the value of the other to increase. 
D)  increase in the value of one variable causes no change in the other variable.

Exam 1: Limits, Alternatives, and Choices

If the output of product X is such that marginal benefit equals marginal cost,

Purposeful behavior implies that everyone will make identical choices.

The resource category called "land" includes forests, animals, and water resources.

Answer the question on the basis of the following data. The data suggest that

Suppose that an economy is producing on its production possibilities curve but is not producing quantities of each good where the marginal benefit equals the marginal cost for each good. This economy

Which of the following is a correct statement?

The distinction between microeconomics and macroeconomics is

The opportunity cost of constructing a new public highway is the

Economic growth is shown as an increase in production from inside the production possibilities curve out toward a point on the possibilities curve.

460. In a relationship between two variables, the "independent variable" refers to the

An economy will always operate at some point on its production possibilities curve.

In a linear equation relating income and consumption, you know that the intercept is $1,000 and the slope of the line is 4. If income is $20,000, then consumption is

Suppose there are two economies, Alpha and Beta, which have the same production possibilities curves. If Beta devotes more resources to produce capital goods than consumer goods as compared to Alpha, then in the future

Which pitfall to sound economic reasoning is reflected in a person's view that "pharmaceutical and oil companies are price-gouging the consumers"?

The main function of the entrepreneur is to

An increase in money income

The point on the production possibilities curve that is most desirable can be found by

A relationship illustrated by an upward-sloping graph means that a(n)

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Governments Role and Government Failure

Elasticity

Utility Maximization

Behavioral Economics

Businesses and the Costs of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Technology, Rd, and Efficiency

The Demand for Resources

Wage Determination

Rent, Interest, and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Antitrust Policy and Regulation

Agriculture: Economics and Policy

Income Inequality, Poverty, and Discrimination

Health Care

Immigration

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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