Question 1

Microeconomics is the study of ________.

Accepted Answer

A)   the choices that individuals and businesses make
B)   all aspects of scarcity
C)   the global economy
D)   the national economy A

Question 2

Opportunity cost means the

Accepted Answer

A)   accounting cost minus the marginal cost.
B)   highest-valued alternative forgone.
C)   accounting cost minus the marginal benefit.
D)   monetary costs of an activity. B

Question 3

-In the above figure, the slope across the arc between c and d is

Accepted Answer

A)   1/2.
B)   1.
C)   4/3.
D)   2. A

Question 4

-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

Accepted Answer

A)   a negatively-sloped line that becomes steeper.
B)   a positively-sloped line that becomes steeper.
C)   a negatively-sloped line that becomes flatter.
D)   a positively-sloped line that becomes flatter.

Question 5

-In the above figure, how does the slope of the line between x = 4 and x = 5 compare with the slope between x = 2 and x = 3?

Accepted Answer

A)   The slope is greater between x = 4 and x = 5.
B)   The slope is greater between x = 2 and x = 3.
C)   The slope is the same.
D)   The slope is not comparable.

Question 6

The term human capital refers to

Accepted Answer

A)   labor resources used to make capital equipment.
B)   buildings and machinery.
C)   people's knowledge and skill.
D)   entrepreneurship and risk-taking.

Question 7

Jane is deciding whether to go to school for 8 weeks this summer. The cost of tuition and textbooks is $1,700 and housing and other expenses will cost her $600. If she does not go to school, she will live in her parents' house for free and they will cover her food and other expenses for her. Also, if Jane does not go to summer school she could work fulltime. But the best job she can get pays only $600 per week, and Jane would only agree to give up her free time for no less than $750 per week. However, if she goes to summer school, she'll have to spend 40 hours a week attending classes and studying.
a) What will the summer school cost Jane in terms of money spent?
b) What are the opportunity costs of going to summer school that Jane does not pay explicitly? Explain.
c) What is Jane's total opportunity cost of going to school this summer? Explain your answer.
d) Suppose that if Jane does not go to summer school, she will eventually take the classes anyway. What is Jane's marginal benefit of going to summer school?
e) Suppose Jane decides to go to school in the summer. Explain her decision using the concepts of marginal cost and marginal benefit.

Accepted Answer

The answer of Jane is deciding whether to go to...

Question 8

Laura is a manager for HP. When Laura must decide whether to produce a few additional printers, she is choosing at the margin when she compares

Accepted Answer

A)   the total revenue from sales of printers to the total cost of producing all the printers.
B)   the extra revenue from selling a few additional printers to the extra costs of producing the printers.
C)   the extra revenue from selling a few additional printers to the average cost of producing the additional printers.
D)   HP's printers to printers from competing companies, such as Lexmark.

Question 9

The vertical axis in a graph

Accepted Answer

A)   is named the y-axis.
B)   is named the x-axis.
C)   is not used in a scatter diagram.
D)   has no origin.

Question 10

Factors of production include all of the following EXCEPT

Accepted Answer

A)   machines made in past years.
B)   money.
C)   entrepreneurship.
D)   a wheat field that is not irrigated.

Question 11

The economic resource that organizes the use of other economic resources is called

Accepted Answer

A)   labor.
B)   capital.
C)   entrepreneurship.
D)   land.

Question 12

Today, Julie attended her 12:30 Economics class. If she hadn't gone to class, Julie would have gone out to lunch with friends. She had other options; she could have worked or slept in. Julie's opportunity cost of going to class is the

Accepted Answer

A)   income she gave up.
B)   lunch she gave up.
C)   sleep she gave up.
D)   income, pleasure, and sleep she gave up.

Question 13

Below is a student's answer to the question "What is microeconomics?" If you were the instructor, how would you correct the student's answer?
"Microeconomics is the study of how government influences the choices made by individuals and businesses and of the performance of the whole national economy."

Accepted Answer

The answer of Below is a student's answer to the...

Question 14

"When OPEC increases the supply of oil to the market, the price of gasoline falls." This is an example of

Accepted Answer

A)   a normative statement.
B)   the failure of opportunity cost to determine prices.
C)   a positive statement.
D)   a macroeconomic statement.

Question 15

What is opportunity cost?

Accepted Answer

The answer of What is opportunity cost?...

Question 16

-The above figure reveals

Accepted Answer

A)   no relationship between household income and average household expenditure on automobiles.
B)   that as household income increases the average household expenditure on automobiles decreases.
C)   that as household income increases the average household expenditure on automobiles increases.
D)   All of the above are possible.

Question 17

-In the table above, Y is measured along the y-axis and X along the x-axis. The slope between points a and b is

Accepted Answer

A)   25.
B)   4.
C)   0.25.
D)   -0.25.

Question 18

Economic models

Accepted Answer

A)   are essentially different from those used in other sciences.
B)   always use graphs.
C)   simplify reality.
D)   include all relevant facts.

Question 19

When I buy an $8.00 movie ticket rather than two paperback books, the opportunity cost of going to the movie is the two paperback books I did not buy.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following best defines capital as a factor of production?

Accepted Answer

A)   The gifts of nature that businesses use to produce goods and services.
B)   The knowledge and skills that people obtain from education and use in production of goods and services.
C)   Financial assets used by businesses.
D)   Instruments, machines, and buildings used in production.

Exam 1: What Is Economics