Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

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.E) B) and C)
F) A) and C)

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

The main function of the entrepreneur is to

Accepted Answer

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

Question 5

Purposeful behavior implies that everyone will make identical choices.

Accepted Answer

A) True 
 B)False

Question 6

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.E) C) and D)
F) B) and D)

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.E) A) and B)
F) A) and C)

Question 8

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.E) A) and B)
F) A) and C)

Question 9

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.E) A) and B)
F) None of the above

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

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.E) A) and C)
F) B) and D)

Question 12

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.E) None of the above
F) B) and C)

Question 13

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 bananasE) A) and B)
F) A) and C)

Question 14

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.E) B) and C)
F) None of the above

Question 15

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.E) A) and B)
F) B) and C)

Question 16

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.E) C) and D)
F) B) and D)

Question 17

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.E) A) and B)
F) B) and D)

Question 18

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.E) None of the above
F) A) and B)

Question 19

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 causationE) B) and D)
F) B) and C)

Question 20

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.E) B) and D)
F) B) and C)

Exam 1: Limits, Alternatives, and Choices

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

Correct Answer
verified

The distinction between microeconomics and macroeconomics is

Correct Answer
verified

_460.In a relationship between two variables, the "independent variable" refers to the

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

The main function of the entrepreneur is to

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

The opportunity cost of constructing a new public highway is the

Correct Answer
verified

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

Correct Answer
verified

Which of the following is a correct statement?

Correct Answer
verified

An increase in money income

Correct Answer
verified

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

Correct Answer
verified

Purposeful behavior implies that everyone will make identical choices.

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

Exam 1: Limits, Alternatives, and Choices

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

Correct AnswerverifiedShow Answer

The distinction between microeconomics and macroeconomics is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The main function of the entrepreneur is to

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The opportunity cost of constructing a new public highway is the

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following is a correct statement?

Correct AnswerverifiedShow Answer

An increase in money income

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Purposeful behavior implies that everyone will make identical choices.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
verified

_460.In a relationship between two variables, the "independent variable" refers to the

Correct Answer
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