Question 1

Variables X and Z in the above table are:

Accepted Answer

A)   Positively related
B)   Negatively related
C)   Independent
D)   Nonlinearly relatedE) A) and B)
F) B) and C)

Question 2

The graph above shows the production possibilities curve for an economy producing two goods, X and Y. All of the following may allow the economy to produce combination D in the future, except?

Accepted Answer

A)   Lower unemployment
B)   Increasing labor supply
C)   Economic growth
D)   Technological advancesE) A) and C)
F) A) and D)

Question 3

On a production possibilities curve, the single optimal or best combination of output for any society:

Accepted Answer

A)   Is at a point near the top of the curve
B)   Is at the precise midpoint of the curve
C)   Is at a point near the bottom of the curve
D)   Depends upon the preferences of societyE) B) and D)
F) All of the above

Question 4

A reduction in the level of unemployment would have which effect with respect to the nation's production possibilities curve?

Accepted Answer

A)   It would shift the curve to the right
B)   It would shift the curve to the left
C)   It would not shift the curve; it would be represented by a movement from a point inside the curve toward a point on the curve
D)   It would not shift the curve; it would be represented by a movement from a point on the curve to a point outside the curveE) B) and C)
F) C) and D)

Question 5

Refer to the above graph. Which curve shows a direct relationship between price and quantity?

Accepted Answer

A)   A
B)   B
C)   C
D)   DE) B) and C)
F) A) and D)

Question 6

In a graph with "crop yield" on the vertical axis and "rainfall" on the horizontal axis, the vertical intercept refers to the:

Accepted Answer

A)   Steepness or flatness of the graph
B)   Amount of rainfall when "crop yield" is zero
C)   Amount of crop yield when "rainfall" is zero
D)   Total crop yield during a given period of timeE) B) and C)
F) A) and D)

Question 7

The question below are based on the following four sets of data-pairs: (1)  A and B, (2)  C and D, (3)  E and F, and (4)  G and H. In each set, the independent variable is in the left column and the dependent variable is in the right column.  The vertical intercept is 12 in which of the above data sets?

Accepted Answer

A)   1
B)   2
C)   3
D)   4E) None of the above
F) A) and D)

Question 8

The individual who brings together economic resources and assumes the risk of business ventures in a capitalist economy is called the:

Accepted Answer

A)   Manager
B)   Entrepreneur
C)   Stockbroker
D)   BankerE) C) and D)
F) A) and D)

Question 9

A nation can produce two products: tanks and autos. The table below is the nation's production possibilities:  Refer to the above table. The marginal opportunity cost of the fourth unit of tanks is:

Accepted Answer

A)   4 units of tanks
B)   300 units of autos
C)   350 units of autos
D)   1000 units of autosE) All of the above
F) None of the above

Question 10

If society has over-allocated resources to a particular activity, then the marginal benefits of the activity would be less than the marginal costs.

Accepted Answer

A) True 
 B)False

Question 11

If two variables are completely unrelated to each other, then graphing these two variables will yield a line that is:

Accepted Answer

A)   Always vertical
B)   Always horizontal
C)   Not a line, but only a single point
D)   Either vertical or horizontalE) A) and D)
F) A) and C)

Question 12

The scientific method does not apply to economics because economics studies human behavior which cannot be generalized.

Accepted Answer

A) True 
 B)False

Question 13

Suppose that a consumer purchases just two goods, X and Y. The ratio of the price of good X to the price of good Y is the:

Accepted Answer

A)   Intercept on the Y axis of the budget line
B)   Intercept on the X axis of the budget line
C)   Size of the shift in the budget line
D)   Slope of the budget lineE) All of the above
F) A) and B)

Question 14

The slope of a graph measures the rate of change in one variable as the other variable changes.

Accepted Answer

A) True 
 B)False

Question 15

An increase in the labor supply due to immigration would shift the production possibilities curve to the left.

Accepted Answer

A) True 
 B)False

Question 16

If the production possibilities curve is a straight line, then:

Accepted Answer

A)   The opportunity cost of producing one good is zero
B)   The law of increasing opportunity costs does not apply
C)   The society can produce more of both goods simultaneously
D)   The society is capable of producing only one of the goods and not the otherE) B) and C)
F) B) and D)

Question 17

Which of the following exemplifies a microeconomic question?

Accepted Answer

A)   What is the current national rate of unemployment?
B)   Is the economy experiencing a decline in the rate of inflation?
C)   Will a new type of electronic reader or tablet increase the number of buyers?
D)   Is the aggregate output in the economy greater this year than last year?E) A) and B)
F) C) and D)

Question 18

Which of the following is one of the simplifying assumptions made in constructing a production possibilities curve?

Accepted Answer

A)   The state of technology is constantly changing
B)   A wide variety of products are produced
C)   Resources are fully employed and are used in least-cost methods of production
D)   Quantities of available resources in the economy vary from one point to anotherE) B) and D)
F) A) and D)

Question 19

As a consequence of the problem of scarcity:

Accepted Answer

A)   There is never enough of anything
B)   Individuals have to make choices from among alternatives
C)   Only some people can "have it all"
D)   Things which are plentiful have relatively high pricesE) B) and D)
F) B) and C)

Question 20

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

Exam 1: Limits, Alternatives, and Choices

Suppose that a consumer purchases just two goods, X and Y. The ratio of the price of good X to the price of good Y is the:

Correct AnswerverifiedShow Answer

The slope of a graph measures the rate of change in one variable as the other variable changes.

Correct AnswerverifiedShow Answer

If the production possibilities curve is a straight line, then:

Correct AnswerverifiedShow Answer

Which of the following is one of the simplifying assumptions made in constructing a production possibilities curve?

Correct AnswerverifiedShow Answer

On a production possibilities curve, the single optimal or best combination of output for any society:

Correct AnswerverifiedShow Answer

A reduction in the level of unemployment would have which effect with respect to the nation's production possibilities curve?

Correct AnswerverifiedShow Answer

If two variables are completely unrelated to each other, then graphing these two variables will yield a line that is:

Correct AnswerverifiedShow Answer

Variables X and Z in the above table are:

Correct AnswerverifiedShow Answer

The individual who brings together economic resources and assumes the risk of business ventures in a capitalist economy is called the:

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

In a graph with "crop yield" on the vertical axis and "rainfall" on the horizontal axis, the vertical intercept refers to the:

Correct AnswerverifiedShow Answer

The question below are based on the following four sets of data-pairs: (1) A and B, (2) C and D, (3) E and F, and (4) G and H. In each set, the independent variable is in the left column and the dependent variable is in the right column. The vertical intercept is 12 in which of the above data sets?

Correct AnswerverifiedShow Answer

If society has over-allocated resources to a particular activity, then the marginal benefits of the activity would be less than the marginal costs.

Correct AnswerverifiedShow Answer

As a consequence of the problem of scarcity:

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A nation can produce two products: tanks and autos. The table below is the nation's production possibilities: Refer to the above table. The marginal opportunity cost of the fourth unit of tanks is:

Correct AnswerverifiedShow Answer

The graph above shows the production possibilities curve for an economy producing two goods, X and Y. All of the following may allow the economy to produce combination D in the future, except?

Correct AnswerverifiedShow Answer

Which of the following exemplifies a microeconomic question?

Correct AnswerverifiedShow Answer

The scientific method does not apply to economics because economics studies human behavior which cannot be generalized.

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Refer to the above graph. Which curve shows a direct relationship between price and quantity?

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An increase in the labor supply due to immigration would shift the production possibilities curve to the left.

Correct AnswerverifiedShow Answer

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