Question 1

The "other things equal" assumption is employed when

Accepted Answer

A)   the graph of a given relationship is shifting up or down.
B)   economists draw a two-dimensional (or two-axes)  graph.
C)   the relationship is direct, but not when it is inverse.
D)   the relationship is inverse, but not when it is direct.E) None of the above
F) A) and D)

Question 2

(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 3

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

Question 4

A nation's consumption is strictly limited by its production possibilities, even with specialization and international trade.

Accepted Answer

A) True 
 B)False

Question 5

Money is not considered to be an economic resource because

Accepted Answer

A)   as such it is not productive.
B)   money is not a free gift of nature.
C)   money is made by humans.
D)   idle money balances do not earn interest income.E) B) and C)
F) A) and B)

Question 6

In economics, the pleasure, happiness, or satisfaction received from a product is called

Accepted Answer

A)   marginal cost.
B)   rational outcome.
C)   status fulfillment.
D)   utility.E) A) and B)
F) C) and D)

Question 7

The construction of a production possibilities curve assumes

Accepted Answer

A)   the quantities of all resources are unlimited.
B)   technology is fixed.
C)   some resources are unemployed.
D)   there is no inflation in the economy.E) A) and B)
F) A) and C)

Question 8

Rosa works at a gelato shop and observes that the number of people buying gelato varies greatly from day to day. For a couple of weeks, she has recorded the number of people at the shop each day, as well as the daily temperature, and has observed a positive relationship between temperature and the number of customers. Based on her observations, Rosa should

Accepted Answer

A)   conclude definitively that people buy more gelato when the temperature rises.
B)   determine if there are other relevant factors and attempt to hold these constant before drawing conclusions.
C)   continue to gather data on the number of visitors and daily temperatures, because eventually other relevant variables will not matter.
D)   throw out the data if it does not show a perfect relationship between buying habits and temperature.E) A) and D)
F) B) and C)

Question 9

Suppose that a nation can only make two products: defense goods and civilian goods. In a graph of the marginal benefit (MB)  and marginal cost (MC)  of defense goods, a leftward shift of the MB curve will cause the optimal quantity of

Accepted Answer

A)   civilian goods to decrease.
B)   both civilian goods and defense goods to decrease.
C)   defense goods to decrease.
D)   defense goods to increase.E) A) and B)
F) A) and C)

Question 10

The basic purpose of the other-things-equal assumption is to

Accepted Answer

A)   allow one to reason about the relationship between variables X and Y without the intrusion of variable Z.
B)   allow one to focus upon micro variables by ignoring macro variables.
C)   allow one to focus upon macro variables by ignoring micro variables.
D)   determine whether X causes Y or vice versa.E) B) and C)
F) A) and B)

Question 11

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 12

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 B)
F) C) and D)

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. What is the slope of the budget line if the quantity of apples were measured on the horizontal axis and bananas on the vertical axis?

Accepted Answer

A)   -0.5
B)   -0.8
C)   -1.6
D)   -2.0E) B) and D)
F) A) and C)

Question 14

Economics may best be defined as the

Accepted Answer

A)   interaction between macro and micro considerations.
B)   social science concerned with how individuals, institutions, and society make optimal choices under conditions of scarcity.
C)   empirical testing of value judgments through the use of logic.
D)   study of why people are rational.E) None of the above
F) A) and B)

Question 15

The following graph is the production possibilities curve of a nation.  The marginal opportunity cost of the fourth unit of bread is

Accepted Answer

A)   0 unit of drill presses.
B)   1 unit of drill presses.
C)   3 units of drill presses.
D)   4 units of drill presses.E) A) and C)
F) B) and C)

Question 16

Macroeconomics approaches the study of economics from the viewpoint of

Accepted Answer

A)   the entire economy.
B)   governmental units.
C)   the operation of specific product and resource markets.
D)   individual firms.E) All of the above
F) C) and D)

Question 17

The slope of a graph with "income" on the horizontal axis and "saving" on the vertical axis is +0.2. This means that if

Accepted Answer

A)   income is $100, then saving is $20.
B)   income is 0.20, then saving is zero.
C)   income increases by $100, then saving will rise by $20.
D)   saving rises by $100, then income will rise by $20.E) B) and C)
F) A) and D)

Question 18

Which of the following is a positive economic statement?

Accepted Answer

A)   Government must maintain the current level of defense spending to keep the nation safe.
B)   The minimum wage should be increased to give people a decent wage.
C)   Americans should buy American products in order to boost the national economy.
D)   Stock prices rose to a new record last month for the fourth month in a row.E) A) and C)
F) B) and C)

Question 19

Other things equal, which of the following would shift an economy's production possibilities curve to the left?

Accepted Answer

A)   the discovery of a low-cost means of generating and storing solar energy
B)   the entrance of more women into the labor force
C)   a law requiring mandatory retirement from the labor force at age 55
D)   an increase in the proportion of total output that consists of capital or investment goodsE) None of the above
F) A) and B)

Question 20

Mia wants to buy a book. The economic perspective suggests that Mia will buy the book if

Accepted Answer

A)   she has enough money to pay for the marginal cost of the book.
B)   the marginal benefit of the book is a positive value.
C)   the marginal cost of the book is greater than its marginal benefit.
D)   the marginal benefit of the book is greater than its marginal cost.E) A) and B)
F) B) and C)

Exam 1: Limits, Alternatives, and Choices

The basic purpose of the other-things-equal assumption is to

Correct Answer
verified

Other things equal, which of the following would shift an economy's production possibilities curve to the left?

Correct Answer
verified

Money is not considered to be an economic resource because

Correct Answer
verified

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

Correct Answer
verified

The slope of a graph with "income" on the horizontal axis and "saving" on the vertical axis is +0.2. This means that if

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

In economics, the pleasure, happiness, or satisfaction received from a product is called

Correct Answer
verified

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

Correct Answer
verified

The "other things equal" assumption is employed when

Correct Answer
verified

The following graph is the production possibilities curve of a nation. The marginal opportunity cost of the fourth unit of bread is

Correct Answer
verified

Correct Answer
verified

Macroeconomics approaches the study of economics from the viewpoint of

Correct Answer
verified

Mia wants to buy a book. The economic perspective suggests that Mia will buy the book if

Correct Answer
verified

Correct Answer
verified

Suppose that a nation can only make two products: defense goods and civilian goods. In a graph of the marginal benefit (MB) and marginal cost (MC) of defense goods, a leftward shift of the MB curve will cause the optimal quantity of

Correct Answer
verified

A nation's consumption is strictly limited by its production possibilities, even with specialization and international trade.

Correct Answer
verified

Which of the following is a positive economic statement?

Correct Answer
verified

Economics may best be defined as the

Correct Answer
verified

The construction of a production possibilities curve assumes

Correct Answer
verified

Exam 1: Limits, Alternatives, and Choices

The basic purpose of the other-things-equal assumption is to

Correct AnswerverifiedShow Answer

Other things equal, which of the following would shift an economy's production possibilities curve to the left?

Correct AnswerverifiedShow Answer

Money is not considered to be an economic resource because

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The slope of a graph with "income" on the horizontal axis and "saving" on the vertical axis is +0.2. This means that if

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In economics, the pleasure, happiness, or satisfaction received from a product is called

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The "other things equal" assumption is employed when

Correct AnswerverifiedShow Answer

The following graph is the production possibilities curve of a nation. The marginal opportunity cost of the fourth unit of bread is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Macroeconomics approaches the study of economics from the viewpoint of

Correct AnswerverifiedShow Answer

Mia wants to buy a book. The economic perspective suggests that Mia will buy the book if

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose that a nation can only make two products: defense goods and civilian goods. In a graph of the marginal benefit (MB) and marginal cost (MC) of defense goods, a leftward shift of the MB curve will cause the optimal quantity of

Correct AnswerverifiedShow Answer

A nation's consumption is strictly limited by its production possibilities, even with specialization and international trade.

Correct AnswerverifiedShow Answer

Which of the following is a positive economic statement?

Correct AnswerverifiedShow Answer

Economics may best be defined as the

Correct AnswerverifiedShow Answer

The construction of a production possibilities curve assumes

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified