Question 1

"It is impossible to represent a three variable relationship in a two-dimensional graph." Is this statement true or false? Explain your answer.

Accepted Answer

The answer of "It is impossible to represent a three...

Question 2

Which of the following is a macroeconomic issue?

Accepted Answer

A)  how a rise in the price of sugar affects the market for sodas 
B)  how federal government budget deficits affect interest rates 
C)  what determines the amount a firm will produce 
D)  the cause of a decline in the price of peanut butter

Question 3

Suppose that for the past two months, you have studied economics one hour a day. You now decide to study economics two hours a day. For the past two months

Accepted Answer

A)  your marginal cost of studying economics for an hour must have exceeded its marginal benefit. 
B)  the marginal cost of studying economics must have fallen. 
C)  your marginal benefit from studying economics an hour must have been greater than its marginal cost. 
D)  the opportunity cost of studying economics must have risen.

Question 4

U.S. producers decide to produce more compact cars and fewer SUVs as the price of gasoline rises. Producers are answering the ________ part of one of the two big economic questions.

Accepted Answer

A)  "what" 
B)  "how" 
C)  "when" 
D)  "how many"

Question 5

If there is an inverse relationship between variable x and variable y, then an increase in the value of variable x will be accompanied by

Accepted Answer

A)  an increase in the value of variable y. 
B)  a decrease in the value of variable y. 
C)  no change in the value of variable y. 
D)  variable y reaching its maximum value.

Question 6

On a graph, an upward-sloping curve that is flatter as you move away from the origin indicates a

Accepted Answer

A)  positive relationship with an increasing slope. 
B)  positive relationship with a decreasing slope. 
C)  negative relationship with an increasing slope. 
D)  negative relationship with a decreasing slope.

Question 7

-The relationship in the above figure suggests that when the interest rate is 5 percent

Accepted Answer

A)  a decrease in income will be associated with a decrease in expenditures. 
B)  a decrease in income will be associated with an increase in expenditures. 
C)  an increase in income will be associated with a decrease in expenditures. 
D)  there is no relationship between expenditures and income.

Question 8

What does the slope of a straight line equal? How is the slope of a curved line calculated at a point on the curve?

Accepted Answer

The answer of What does the slope of a straight...

Question 9

The night before a midterm exam, you decide to go to the movies instead of studying for the exam. You score 60 percent on your exam. If you had studied the night before, you'd have scored 70 percent. What was the opportunity cost of your evening at the movies?

Accepted Answer

A)  10 percent off your grade 
B)  60 percent 
C)  70 percent 
D)  zero

Question 10

Factors of production are grouped into four categories

Accepted Answer

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

Question 11

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 12

-The above table shows data on two variables. If these data were graphed, the slope of the line would be

Accepted Answer

A)  3/5. 
B)  3. 
C)  5/3. 
D)  impossible to determine from the information given.

Question 13

-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 14

Which of the following is a positive statement?

Accepted Answer

A)  The United States should fight inflation even if it raises unemployment. 
B)  What to do with Social Security is the most important economic issue today. 
C)  A 5 percent increase in income leads to a 3 percent increase in the consumption of orange juice. 
D)  Because they decrease productivity, labor unions should be eliminated.

Question 15

Consider the following events: I. Samsung hires associates to market their HDTV sets to Best Buy.
II. The Dallas Cowboys build a new football stadium.
III. Ebay fires 10 percent of its workforce.
IV. Ten million stocks were traded on the New York Stock Exchange in one day.
V. Pennsylvania builds a new state park.
Which of the events describe use of factors of production?

Accepted Answer

A)  i, II, III, and v 
B)  II, iv, and v 
C)  i and III only 
D)  iv only

Question 16

Which of the following questions is a macroeconomic issue?

Accepted Answer

A)  How many more pounds of cookies will a consumer purchase if the price of cookies decreases? 
B)  What effect would a cure for Mad Cow Disease have on the market for beef? 
C)  What is the future growth prospect for an economy? 
D)  How many workers should the owner of a business hire?

Question 17

An economic system in which the government decides what, how, and for whom to produce, directs workers to jobs, and owns all the land and capital is

Accepted Answer

A)  centrally planned socialism. 
B)  market capitalism. 
C)  mixed economy. 
D)  supported by economists as the best system available.

Question 18

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 19

-In the above figure, when income is zero, household expenditures equal

Accepted Answer

A)  0. 
B)  $1000. 
C)  $4000. 
D)  $8000.

Question 20

When the government chooses to use resources to build a dam, these sources are no longer available to build a highway. This choice illustrates the concept of

Accepted Answer

A)  a market mechanism. 
B)  macroeconomics. 
C)  opportunity cost. 
D)  a fallacy of composition.

Exam 1: What Is Economics