Question 1

On Saturday morning, you rank your choices for activities in the following order: go to the library, work out at the gym, have breakfast with friends, and sleep late. Suppose you decide to go to the library. Your opportunity cost is

Accepted Answer

A)  working out at the gym, having breakfast with friends, and sleeping late. 
B)  working out at the gym. 
C)  zero because you do not have to pay money to use the library. 
D)  not clear because not enough information is given.

Question 2

Marginal benefit is the benefit

Accepted Answer

A)  that your activity provides to someone else. 
B)  of an activity that exceeds its cost. 
C)  that arises from the secondary effects of an activity. 
D)  that arises from an increase in an activity.

Question 3

What is the difference between positive and normative statements?

Accepted Answer

The answer of What is the difference between positive and...

Question 4

Copper falls into which factor of production category?

Accepted Answer

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

Question 5

If there is an inverse relationship between two variables, the graph of this relationship

Accepted Answer

A)  will be a horizontal line. 
B)  will be downward-sloping. 
C)  might be horizontal. 
D)  will be upward-sloping.

Question 6

-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 7

The slope of a negative relationship is

Accepted Answer

A)  negative. 
B)  undefined. 
C)  positive to the right of the maximum point and negative to the left. 
D)  constant as long as the relationship is nonlinear.

Question 8

-The slope of the line shown in the above figure is

Accepted Answer

A)  2. 
B)  0.75. 
C)  0.25. 
D)  1 1/3.

Question 9

"As part of the financial crisis bailout plan in 2008, the Federal Reserve should not bail out banks that made risky loans." This is an example of

Accepted Answer

A)  a positive statement. 
B)  the Federal Reserve taking actions that are not at the margin. 
C)  opportunity costs. 
D)  a normative statement.

Question 10

Which of the following is NOT a normative statement?

Accepted Answer

A)  People buy more of a good or service when its price falls. 
B)  The distribution of income is fair. 
C)  The government ought to provide health care to everyone. 
D)  Corporations should be more socially responsible.

Question 11

The 2010 Patient Protection and Affordable Care Act (Obamacare) contains a provision that may require individuals to either purchase private health insurance or pay a tax. This is an example of

Accepted Answer

A)  a mixed economy. 
B)  market capitalism. 
C)  centrally planned socialism. 
D)  the invisible hand.

Question 12

Economics can be defined as the social science that explains the

Accepted Answer

A)  choices made by politicians. 
B)  choices we make when we trade in markets. 
C)  choices that we make as we cope with scarcity. 
D)  choices made by households.

Question 13

Scarcity affects only those who are in need.

Accepted Answer

A) True 
 B)False

Question 14

The graph of two variables, x and y, is a horizontal line. This result indicates that x and y are

Accepted Answer

A)  positively related. 
B)  negatively related. 
C)  not related. 
D)  falsely related.

Question 15

A positive statement is

Accepted Answer

A)  about what ought to be. 
B)  about what is. 
C)  the result of a model's normative assumptions. 
D)  valid only in the context of a model with simple assumptions.

Question 16

-In the above figure, the curve has a slope that is

Accepted Answer

A)  positive and becoming larger in magnitude. 
B)  positive and becoming smaller in magnitude. 
C)  negative and becoming larger in magnitude. 
D)  negative and becoming smaller in magnitude.

Question 17

Normative economic statements

Accepted Answer

A)  describe what ought to be. 
B)  describe what is rather than what ought to be. 
C)  describe the process of economic policy-making. 
D)  deal with economic hypotheses that are not well-established laws.

Question 18

If the quantity of wood purchased decreases when the price of wood rises, a graph representing these variables would have

Accepted Answer

A)  time on the vertical axis. 
B)  the slope on the vertical axis. 
C)  a negative slope. 
D)  a positive slope.

Question 19

A graph shows the price of a pound of cucumbers on the vertical axis and the quantity of new cars sold by GM on the horizontal axis. The price of a pound of cucumbers remains constant as the quantity of new cars sold increases. The graph of these data is

Accepted Answer

A)  a horizontal line. 
B)  a vertical line. 
C)  a curve with a maximum. 
D)  a positively-sloped line.

Question 20

-In the above figure, which curve indicates that the level of food production does not affect the population growth rate?

Accepted Answer

A)  F 
B)  G 
C)  H 
D)  I

Exam 1: What Is Economics