Question 1

You should decide to go to a movie

Accepted Answer

A)  if the marginal cost of the movie exceeds its marginal benefit.
B)  if the marginal benefit of the movie exceeds its marginal cost.
C)  if your income will allow you to buy a ticket.
D)  because movies are enjoyable.E) All of the above
F) A) and B)

Question 2

The economizing problem is one of deciding how to make the best use of

Accepted Answer

A)  virtually unlimited resources to satisfy virtually unlimited wants.
B)  limited resources to satisfy virtually unlimited wants.
C)  unlimited resources to satisfy limited wants.
D)  limited resources to satisfy limited wants.E) B) and C)
F) A) and C)

Question 3

(Last Word)  The post hoc, ergo propter hoc fallacy suggests that

Accepted Answer

A)  positive statements are always followed by normative judgments.
B)  positive statements can never be proven true or false.
C)  if one acts on one's expectations, those expectations will always be fulfilled.
D)  cause and effect can be determined merely by observing the sequence of events.E) B) and C)
F) C) and D)

Question 4

Scarcity

Accepted Answer

A)  persists only because countries have failed to achieve continuous full employment.
B)  persists because economic wants exceed available resources.
C)  has been solved in all industrialized nations.
D)  has been eliminated in affluent societies such as the United States and Canada.E) A) and B)
F) A) and C)

Question 5

Which of the following indicates an inverse relationship between x and y?

Accepted Answer

A)  y = -3 + 5x
B)  y = 6.2x
C)  y = 7 - 0.9x
D)  y = -50E) B) and C)
F) A) and B)

Question 6

A nation's production possibilities curve is bowed out from the origin because

Accepted Answer

A)  resources are not generally equally efficient in producing every good.
B)  opportunity costs of producing a good tend to fall as more of the good is produced.
C)  resources are scarce.
D)  wants are virtually unlimited.E) All of the above
F) A) and B)

Question 7

The slope of a graph relating two variables is -5.This indicates that as one variable decreases, the other variable also decreases.

Accepted Answer

A) True 
 B)False

Question 8

If a nation is initially on its production possibilities curve, then it can increase its production of one good only by

Accepted Answer

A)  decreasing the production of the other good.
B)  increasing the production of the other good.
C)  holding constant the production of the other good.
D)  decreasing the price of the other good.E) B) and C)
F) None of the above

Question 9

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

Question 10

Economists contend that most economic decisions are

Accepted Answer

A)  random.
B)  chaotic.
C)  spontaneous.
D)  purposeful.E) A) and D)
F) All of the above

Question 11

The role of the entrepreneur in society is to

Accepted Answer

A)  provide capital to the firm, which the management combines with labor.
B)  bring the factors of production together and take the risks of producing output.
C)  control the land upon which all production takes place and to get the most rent.
D)  regulate what products are considered safe to market.E) All of the above
F) A) and C)

Question 12

An economy will always operate at some point on its production possibilities curve.Difficulty: 02 Medium
Learning Objective: 01-07 Explain how economic growth and international trade increase consumption possibilities.

Accepted Answer

A) True 
 B)False

Question 13

Economics is a social science that studies how individuals, institutions, and society may

Accepted Answer

A)  expand the amount of resources available to them.
B)  attain a minimum level of production.
C)  best use resources to maximize satisfaction of economic wants.
D)  reduce the amount of goods and services they need.E) C) and D)
F) A) and B)

Question 14

Which of the following is a positive statement?

Accepted Answer

A)  A humidity level of 90 percent is too high.
B)  It is too hot to run outside when the temperature exceeds 80 degrees.
C)  The temperature is 92 degrees today.
D)  Summer evenings are nice when it cools off to around 70 degrees.E) A) and D)
F) B) and D)

Question 15

Which of the following is not considered by economists to be an economic resource?

Accepted Answer

A)  money
B)  factory workers
C)  computers at a retail store.
D)  a forestE) C) and D)
F) None of the above

Question 16

Which of the following is a normative economic statement?

Accepted Answer

A)  The poverty rate hit a new high last year and income distribution also worsened.
B)  Health care accounts for roughly a third of total spending in the economy.
C)  The government needs to revamp the Social Security program to make it sustainable.
D)  Retail sales are expected to continue on their downward trend in the next three quarters.E) A) and B)
F) A) and C)

Question 17

In constructing the demand graph to show how the price of a good price affects how much of it the buyers will buy, the convention that economists follow is to measure price on the

Accepted Answer

A)  horizontal axis because it is the independent variable.
B)  vertical axis because it is the dependent variable.
C)  vertical axis even though it is the independent variable.
D)  horizontal axis even though it is the dependent variable.E) A) and C)
F) A) and B)

Question 18

Which question is an illustration of a macroeconomic question?

Accepted Answer

A)  Is a corporation unresponsive to the demands of its customers?
B)  Is a consumer boycott an effective means of reducing a product's price?
C)  How will the government's budget deficit be affected by public infrastructure projects?
D)  Are oil companies ripping off consumers by charging exorbitantly high prices for gasoline?E) A) and C)
F) None of the above

Question 19

Which of the following statements, if any, is correct for a nation that is producing only consumer and capital goods?

Accepted Answer

A)  Other things equal, the more consumer goods a nation produces, the greater will be its future growth rate.
B)  Other things equal, the more capital goods a nation produces, the greater will be its future growth rate.
C)  There is no general relationship between the current division of output between consumer and capital goods and the future growth rate.
D)  None of these statements are correct.E) All of the above
F) C) and D)

Question 20

In a graph of the relationship between income and saving, economists generally consider

Accepted Answer

A)  income to be the independent variable and place it on the vertical axis.
B)  income to be the dependent variable and place it on the horizontal axis.
C)  saving to be the dependent variable and place it on the vertical axis.
D)  saving to be the independent variable and place it on the vertical axis.E) B) and D)
F) A) and B)

Exam 1: Limits, Alternatives, and Choices

Scarcity

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If a nation is initially on its production possibilities curve, then it can increase its production of one good only by

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You should decide to go to a movie

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Which question is an illustration of a macroeconomic question?

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The slope of a graph relating two variables is -5.This indicates that as one variable decreases, the other variable also decreases.

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Which of the following is not considered by economists to be an economic resource?

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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

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Which of the following indicates an inverse relationship between x and y?

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An economy will always operate at some point on its production possibilities curve.Difficulty: 02 Medium Learning Objective: 01-07 Explain how economic growth and international trade increase consumption possibilities.

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Which of the following statements, if any, is correct for a nation that is producing only consumer and capital goods?

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The economizing problem is one of deciding how to make the best use of

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Economics is a social science that studies how individuals, institutions, and society may

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The role of the entrepreneur in society is to

Correct AnswerverifiedShow Answer

A nation's production possibilities curve is bowed out from the origin because

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Which of the following is a normative economic statement?

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In constructing the demand graph to show how the price of a good price affects how much of it the buyers will buy, the convention that economists follow is to measure price on the

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In a graph of the relationship between income and saving, economists generally consider

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Which of the following is a positive statement?

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Economists contend that most economic decisions are

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(Last Word) The post hoc, ergo propter hoc fallacy suggests that

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