Question 1

All of the following would affect the position and shape of a nation's production possibilities curve, except

Accepted Answer

A)  the amount of labor available.
B)  the level of unemployment.
C)  the amount of the capital resources.
D)  the rate of technological progress.E) A) and D)
F) None of the above

Question 2

Consider an economy that is producing inside its production possibilities curve.This economy could move closer toward its production possibilities curve by

Accepted Answer

A)  distributing incomes more equally.
B)  employing more of its available resources.
C)  increasing the levels of wages and prices.
D)  acquiring additional resources.E) A) and C)
F) B) and C)

Question 3

(Consider This)  An exception to the advice "go to college, stay in college, and earn a degree" occurs when

Accepted Answer

A)  tuition expenses are high and rising.
B)  the opportunity cost of attending college is extraordinarily high.
C)  the price of textbooks is high and rising.
D)  the economy is growing rapidly and jobs are plentiful.E) A) and C)
F) A) and B)

Question 4

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

Question 5

One basic difference between "labor" and "entrepreneur" is that

Accepted Answer

A)  labor is hired by a firm, whereas the entrepreneur owns the firm.
B)  an entrepreneur has high-level skills, whereas labor does not.
C)  labor performs manual work, whereas an entrepreneur performs mental work.
D)  education is important for an entrepreneur but not for labor.E) B) and C)
F) A) and B)

Question 6

(Last Word)  If variables X and Y are positively correlated, this means that

Accepted Answer

A)  X is the cause of Y.
B)  Y is the cause of X.
C)  causation necessarily exists, but we don't know whether X or Y is the cause.
D)  causation may or may not exist between X and Y.E) A) and B)
F) A) and C)

Question 7

Ben says that "an increase in the tax on beer will raise its price." Holly argues that "taxes should be increased on beer because college students drink too much." We can conclude that

Accepted Answer

A)  Ben's statement is normative, but Holly's is positive.
B)  Holly's statement is normative, but Ben's is positive.
C)  Both statements are normative.
D)  Both statements are positive.E) A) and B)
F) All of the above

Question 8

Suppose that a consumer purchases just two goods, X and Y.The slope of the budget line would indicate the

Accepted Answer

A)  opportunity cost of good Y in terms of good X given up for each unit of Y.
B)  opportunity cost of good X in terms of good Y given up for each unit of X.
C)  maximum quantity of good Y that the consumer could buy with a given budget.
D)  maximum quantity of good X that the consumer could buy with a given budget.E) C) and D)
F) None of the above

Question 9

Which of the following most closely relates to the idea of opportunity costs?

Accepted Answer

A)  trade-offs
B)  economic growth
C)  technological change
D)  capitalismE) A) and C)
F) A) and B)

Question 10

If an inverse relationship exists between two variables, then

Accepted Answer

A)  as one variable increases, the other decreases.
B)  as one variable increases, so does the other.
C)  the two variables are close substitutes for each other.
D)  both variables increase over time.E) A) and B)
F) B) and D)

Question 11

Suppose that Julia receives a $20 gift card for the local coffee shop, where she only buys lattes and muffins.If the price of a latte is $4 and the price of a muffin is $2, then we can conclude that Julia

Accepted Answer

A)  should only buy muffins.
B)  should only buy lattes.
C)  can buy 5 lattes or 10 muffins if she chooses to buy only one of the two goods.
D)  can buy 5 lattes and 10 muffins with her $20 gift card.E) C) and D)
F) All of the above

Question 12

The economizing problem is

Accepted Answer

A)  the need to make choices because economic wants exceed economic means.
B)  how to distribute resources equally among all members of society.
C)  that people's means often exceed their wants.
D)  that people do not know how to rationally allocate resources.E) C) and D)
F) A) and C)

Question 13

The production possibilities curve illustrates the basic principle that

Accepted Answer

A)  the production of more of any one good will in time require smaller and smaller sacrifices of other goods.
B)  an economy will automatically obtain full employment of its resources.
C)  if all the resources of an economy are in use, more of one good can be produced only if less of another good is produced.
D)  an economy's capacity to produce increases in proportion to its population size.E) A) and D)
F) A) and B)

Question 14

A nation's production possibilities curve shows the maximum combinations of resources that a nation can use.

Accepted Answer

A) True 
 B)False

Question 15

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

Question 16

Which of the following will enable a nation to obtain a combination of consumer goods and capital goods outside its production possibilities curve?

Accepted Answer

A)  full employment
B)  international specialization and trade
C)  full production
D)  productive efficiencyE) A) and B)
F) C) and D)

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) None of the above
F) A) and D)

Question 18

A well-tested economic theory is often called

Accepted Answer

A)  a hypothesis.
B)  a prototype.
C)  a principle.
D)  an anomaly.E) A) and B)
F) A) and C)

Question 19

The slope of the typical production possibilities curve

Accepted Answer

A)  is positive.
B)  increases as one moves southeast along the curve.
C)  is constant as one moves down the curve.
D)  decreases as one moves southeast along the curve.E) A) and D)
F) B) and C)

Question 20

An economic model is an ideal or utopian type of economy that society should strive to obtain through economic policy.

Accepted Answer

A) True 
 B)False

Exam 1: Limits, Alternatives, and Choices

One basic difference between "labor" and "entrepreneur" is that

Correct Answer
verified

The economizing problem is

Correct Answer
verified

The production possibilities curve illustrates the basic principle that

Correct Answer
verified

Correct Answer
verified

Consider an economy that is producing inside its production possibilities curve.This economy could move closer toward its production possibilities curve by

Correct Answer
verified

Suppose that a consumer purchases just two goods, X and Y.The slope of the budget line would indicate the

Correct Answer
verified

All of the following would affect the position and shape of a nation's production possibilities curve, except

Correct Answer
verified

(Consider This) An exception to the advice "go to college, stay in college, and earn a degree" occurs when

Correct Answer
verified

(Last Word) If variables X and Y are positively correlated, this means that

Correct Answer
verified

Suppose that Julia receives a $20 gift card for the local coffee shop, where she only buys lattes and muffins.If the price of a latte is $4 and the price of a muffin is $2, then we can conclude that Julia

Correct Answer
verified

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

Correct Answer
verified

If an inverse relationship exists between two variables, then

Correct Answer
verified

A well-tested economic theory is often called

Correct Answer
verified

A nation's production possibilities curve shows the maximum combinations of resources that a nation can use.

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
verified

Ben says that "an increase in the tax on beer will raise its price." Holly argues that "taxes should be increased on beer because college students drink too much." We can conclude that

Correct Answer
verified

Which of the following will enable a nation to obtain a combination of consumer goods and capital goods outside its production possibilities curve?

Correct Answer
verified

An economic model is an ideal or utopian type of economy that society should strive to obtain through economic policy.

Correct Answer
verified

Which of the following most closely relates to the idea of opportunity costs?

Correct Answer
verified

The slope of the typical production possibilities curve

Correct Answer
verified

Exam 1: Limits, Alternatives, and Choices

One basic difference between "labor" and "entrepreneur" is that

Correct AnswerverifiedShow Answer

The economizing problem is

Correct AnswerverifiedShow Answer

The production possibilities curve illustrates the basic principle that

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Consider an economy that is producing inside its production possibilities curve.This economy could move closer toward its production possibilities curve by

Correct AnswerverifiedShow Answer

Suppose that a consumer purchases just two goods, X and Y.The slope of the budget line would indicate the

Correct AnswerverifiedShow Answer

All of the following would affect the position and shape of a nation's production possibilities curve, except

Correct AnswerverifiedShow Answer

(Consider This) An exception to the advice "go to college, stay in college, and earn a degree" occurs when

Correct AnswerverifiedShow Answer

(Last Word) If variables X and Y are positively correlated, this means that

Correct AnswerverifiedShow Answer

Suppose that Julia receives a $20 gift card for the local coffee shop, where she only buys lattes and muffins.If the price of a latte is $4 and the price of a muffin is $2, then we can conclude that Julia

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If an inverse relationship exists between two variables, then

Correct AnswerverifiedShow Answer

A well-tested economic theory is often called

Correct AnswerverifiedShow Answer

A nation's production possibilities curve shows the maximum combinations of resources that a nation can use.

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Ben says that "an increase in the tax on beer will raise its price." Holly argues that "taxes should be increased on beer because college students drink too much." We can conclude that

Correct AnswerverifiedShow Answer

Which of the following will enable a nation to obtain a combination of consumer goods and capital goods outside its production possibilities curve?

Correct AnswerverifiedShow Answer

An economic model is an ideal or utopian type of economy that society should strive to obtain through economic policy.

Correct AnswerverifiedShow Answer

Which of the following most closely relates to the idea of opportunity costs?

Correct AnswerverifiedShow Answer

The slope of the typical production possibilities curve

Correct AnswerverifiedShow Answer

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