Question 1

Which of the following is a land resource?

Accepted Answer

A)   A farmer.
B)   An oil drilling rig.
C)   A machine for detecting earthquakes.
D)   Natural gas.E) A) and D)
F) A) and C)

Question 2

(Last Word) A caller to a radio talk show states that protesters against globalization are a collection of "anarchist punks,naïve college students,and trade union radicals." This is an example of:

Accepted Answer

A)   the fallacy of composition.
B)   the economic perspective.
C)   loaded terminology.
D)   marginal analysis.E) All of the above
F) B) and D)

Question 3

The output of MP3 players should be:

Accepted Answer

A)   reduced if marginal benefits exceed marginal costs.
B)   reduced if marginal costs exceed marginal benefits.
C)   increased if marginal costs exceed marginal benefits.
D)   reduced to zero if their unit costs exceed the unit costs of alternative products.E) A) and C)
F) A) and B)

Question 4

A nation's production possibilities curve might shift to the left (inward) as a result of:

Accepted Answer

A)   technological advance.
B)   increases in the size of the labor force.
C)   the depletion of its soil fertility due to overplanting and overgrazing.
D)   investing in more capital goods.E) A) and B)
F) A) and C)

Question 5

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) B) and D)
F) All of the above

Question 6

Which of the following would not be classified as an economic resource by economists?

Accepted Answer

A)   A professional soccer player.
B)   Water in a town's reservoir.
C)   Money in a business checking account.
D)   The manager of the local hamburger restaurant.E) None of the above
F) A) and C)

Question 7

If we say that two variables are directly related,this means that:

Accepted Answer

A)   the relationship between the two is purely random.
B)   an increase in one variable is associated with a decrease in the other variable.
C)   an increase in one variable is associated with an increase in the other variable.
D)   the two graph as a downsloping line.E) A) and B)
F) A) and C)

Question 8

Which of the following is not a main function of the entrepreneur?

Accepted Answer

A)   To make routine pricing decisions.
B)   To innovate.
C)   To assume the risk of economic losses.
D)   To make strategic business decisions.E) B) and D)
F) B) and C)

Question 9

A normative statement is one that:

Accepted Answer

A)   is based on the law of averages.
B)   applies only to microeconomics.
C)   applies only to macroeconomics.
D)   is based on value judgments.E) None of the above
F) B) and C)

Question 10

Choices entail marginal costs because resources are scarce.

Accepted Answer

A) True 
 B)False

Question 11

Kara was out jogging and,despite being tired,decided to run one more mile.Based on her actions,economists would conclude that Kara:

Accepted Answer

A)   must be an avid runner.
B)   decided that the marginal benefit of running one more mile would outweigh the cost of the additional mile.
C)   decided that the marginal cost of running one more mile would outweigh the benefit of the additional mile.
D)   was not very tired,so the marginal cost of the extra mile was very low.E) None of the above
F) A) and D)

Question 12

The process of producing and accumulating capital goods is called:

Accepted Answer

A)   money capital.
B)   depreciation.
C)   investment.
D)   consumption.E) A) and C)
F) A) and B)

Question 13

Assume that a change in government policy results in greater production of both consumer goods and investment goods.We can conclude that:

Accepted Answer

A)   the economy was not employing all of its resources before the policy change.
B)   the economy's production possibilities curve has been shifted to the left as a result of the policy decision.
C)   this economy's production possibilities curve is convex (bowed inward) to the origin.
D)   the law of increasing opportunity costs does not apply in this society.E) B) and C)
F) None of the above

Question 14

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) None of the above
F) All of the above

Question 15

If price (P) and quantity (Q) are directly related,this means that:

Accepted Answer

A)   a change in Q will alter P,but a change in P will not alter Q.
B)   if P increases,Q will decrease.
C)   if P increases,Q will also increase.
D)   an increase in P will cause Q to change,but the direction in which Q changes cannot be predicted.E) A) and D)
F) B) and C)

Question 16

A positive statement is concerned primarily with:

Accepted Answer

A)   some goal that is desirable to society.
B)   what should be.
C)   what is.
D)   the formulation of economic policy.E) B) and C)
F) A) and C)

Question 17

Assume a household would consume $100 worth of goods and services per week if its weekly income were zero and would spend an additional $80 per week for each $100 of additional income.Letting C represent consumption and Y represent income,the equation that summarizes this relationship is:

Accepted Answer

A)   C = 80 + 100Y.
B)   C = 100 + .8Y.
C)   C = 100 + 80Y.
D)   C = 80 + .1Y.E) B) and C)
F) All of the above

Question 18

Which of the following statements is correct?

Accepted Answer

A)   The value of the independent variable is determined by the value of the dependent variable.
B)   The value of the dependent variable is determined by the value of the independent variable.
C)   The dependent variable designates the "cause" and the independent variable the "effect."
D)   Dependent variables graph as upsloping lines;independent variables graph as downsloping lines.E) B) and C)
F) A) and B)

Question 19

Which of the following terms implies the greatest degree of confidence in an economic generalization?

Accepted Answer

A)   Hypothesis.
B)   Comparison.
C)   Principle.
D)   Anomaly.E) None of the above
F) A) and D)

Question 20

Money is not an economic resource because:

Accepted Answer

A)   money,as such,does not produce anything.
B)   idle money balances do not earn interest income.
C)   it is not scarce.
D)   money is not a free gift of nature.E) A) and B)
F) A) and C)

Exam 1: Limits, Alternatives, and Choices

Money is not an economic resource because:

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A nation's production possibilities curve might shift to the left (inward) as a result of:

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Which of the following terms implies the greatest degree of confidence in an economic generalization?

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Which of the following is not a main function of the entrepreneur?

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Which of the following statements is correct?

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The process of producing and accumulating capital goods is called:

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If price (P) and quantity (Q) are directly related,this means that:

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Choices entail marginal costs because resources are scarce.

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A normative statement is one that:

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The output of MP3 players should be:

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Which of the following would not be classified as an economic resource by economists?

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(Last Word) A caller to a radio talk show states that protesters against globalization are a collection of "anarchist punks,naïve college students,and trade union radicals." This is an example of:

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Assume a household would consume $100 worth of goods and services per week if its weekly income were zero and would spend an additional $80 per week for each $100 of additional income.Letting C represent consumption and Y represent income,the equation that summarizes this relationship is:

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If we say that two variables are directly related,this means that:

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

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Which of the following is a land resource?

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An increase in money income:

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A positive statement is concerned primarily with:

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Kara was out jogging and,despite being tired,decided to run one more mile.Based on her actions,economists would conclude that Kara:

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Assume that a change in government policy results in greater production of both consumer goods and investment goods.We can conclude that:

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