Question 1

If you knew that the vertical intercept for a straight line was 150 and that the slope of the line was 4, then the dependent variable would be 250 when the value of the independent variable is

Accepted Answer

A)   15.
B)   20.
C)   25.
D)   30.E) A) and D)
F) All of the above

Question 2

The study of economics is not useful for consumers, because economic analysis focuses only on businesses and the economy.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is considered to be an entrepreneur?

Accepted Answer

A)   a self-employed person
B)   an MBA graduate hired by a firm to be its CEO
C)   a production-line worker
D)   a customer of a firmE) A) and D)
F) C) and D)

Question 4

From an economic perspective, when a consumer decides to buy more life insurance, the consumer has most likely concluded that the

Accepted Answer

A)   marginal cost of more insurance coverage is negative.
B)   marginal benefit of more insurance coverage is greater than zero.
C)   marginal benefit of more insurance coverage is greater than the marginal cost.
D)   marginal cost of more insurance coverage is equal to the payment for the extra coverage.E) All of the above
F) None of the above

Question 5

(Last Word)  Which of the following best illustrates the post hoc, ergo propter hoc fallacy?

Accepted Answer

A)   Because it was 90 degrees today, I worked up a sweat playing tennis.
B)   I took the day off work to go to the beach, and that's why it rained.
C)   Because it rained at the football game, my new sweater got wet.
D)   Because I have studied diligently this semester, my grade average has improved.E) C) and D)
F) A) and B)

Question 6

Which of the following statements regarding people's wants is true?

Accepted Answer

A)   Over time, people's wants tend to be stable and constant.
B)   As people consume more products, their wants will be reduced.
C)   Intangible services, just like tangible goods, may satisfy people's wants.
D)   People's wants do not include their basic needs.E) A) and B)
F) C) and D)

Question 7

If a linear relation is described by the equation C = 35 - 5D, then the vertical intercept of the graph (where C is on the vertical axis)  is

Accepted Answer

A)   35.
B)   -5.
C)   30.
D)   not known.E) B) and C)
F) None of the above

Question 8

Opportunity costs exist because

Accepted Answer

A)   the decision to engage in one activity means forgoing some other activity.
B)   wants are scarce relative to resources.
C)   households and businesses make rational decisions.
D)   most decisions do not involve sacrifices or trade-offs.E) A) and B)
F) None of the above

Question 9

Matt observes that "there is a high correlation between educational attainment and the level of income." Jean concurs and adds that "high school graduates should all proceed to college."

Accepted Answer

A)   Both Matt's and Jean's statements are positive.
B)   Both Matt's and Jean's statements are normative.
C)   Matt's statement is normative, while Jean's statement is positive.
D)   Matt's statement is positive, while Jean's statement is normative.E) A) and B)
F) None of the above

Question 10

Microeconomics is concerned with

Accepted Answer

A)   the aggregate or total levels of income, employment, and output.
B)   a detailed examination of specific economic units that make up the economic system.
C)   positive economics, but not normative economics.
D)   establishing an overall view of the operation of the economic system.E) A) and C)
F) B) and D)

Question 11

In a graph of the production possibilities curve, the two axes of the graph indicate the

Accepted Answer

A)   prices of the two products that a nation can produce.
B)   maximum quantities of the two resources that a nation possesses.
C)   price of the products on the vertical axis, and quantities on the horizontal.
D)   quantities of the two products that a nation can produce.E) A) and B)
F) A) and D)

Question 12

Other things equal, an increase in a consumer's money income

Accepted Answer

A)   increases the amount of utility a consumer receives from a given quantity of a good.
B)   shifts the individual's budget line rightward because she can now purchase more of both products.
C)   eliminates the individual's economizing problem.
D)   causes the consumer to choose a different combination of goods along a given budget line.E) A) and D)
F) B) and C)

Question 13

A nation can produce two products: steel and wheat. The table below is the nation's production possibilities schedule.  Which of the following output-combinations is unattainable?

Accepted Answer

A)   1 steel and 80 wheat
B)   4 steel and 55 wheat
C)   30 wheat and 3 steel
D)   95 wheat and 0 steelE) All of the above
F) C) and D)

Question 14

Economic growth may be represented by

Accepted Answer

A)   a movement from one end of the production possibilities curve to the other.
B)   an upward-sloping production possibilities curve.
C)   a movement from a point inside to a point on the production possibilities curve.
D)   a rightward shift of the production possibilities curve.E) A) and B)
F) C) and D)

Question 15

A budget line is a graph that shows the various combinations of two products that a

Accepted Answer

A)   consumer can buy with a given amount of money income.
B)   business firm can produce with a given budget.
C)   household can produce with a given amount of resources.
D)   nation can trade with another nation.E) A) and C)
F) All of the above

Question 16

When firms give away "freebies" like free apps, free checking accounts, free maps, or free toothbrushes, they are contradicting economists' contention that "there is no free lunch."

Accepted Answer

A) True 
 B)False

Question 17

The idea in economics that "there is no free lunch" means that

Accepted Answer

A)   businesses would go bankrupt if they offered free lunches.
B)   the thought of a free lunch is often better than the reality of consuming it.
C)   there are opportunity costs involved even in free lunches.
D)   free lunches used by businesses to attract customers are an inefficient marketing ploy.E) B) and D)
F) C) and D)

Question 18

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) B) and D)
F) A) and B)

Question 19

If a nation is operating at a point inside the production possibilities curve, it indicates that the nation could

Accepted Answer

A)   increase its production of both goods X and Y simultaneously.
B)   increase its production of one good, but only at the expense of reducing the other good.
C)   not produce any more of one of the goods X or Y.
D)   not employ any more resources, because all resources are now employed.E) B) and C)
F) All of the above

Question 20

Although sleeping in on a work day or school day has an opportunity cost, sleeping late on the weekend does not.

Accepted Answer

A) True 
 B)False

Exam 1: Limits, Alternatives, and Choices

Microeconomics is concerned with

Correct AnswerverifiedShow Answer

Matt observes that "there is a high correlation between educational attainment and the level of income." Jean concurs and adds that "high school graduates should all proceed to college."

Correct AnswerverifiedShow Answer

When firms give away "freebies" like free apps, free checking accounts, free maps, or free toothbrushes, they are contradicting economists' contention that "there is no free lunch."

Correct AnswerverifiedShow Answer

(Last Word) Which of the following best illustrates the post hoc, ergo propter hoc fallacy?

Correct AnswerverifiedShow Answer

From an economic perspective, when a consumer decides to buy more life insurance, the consumer has most likely concluded that the

Correct AnswerverifiedShow Answer

If you knew that the vertical intercept for a straight line was 150 and that the slope of the line was 4, then the dependent variable would be 250 when the value of the independent variable is

Correct AnswerverifiedShow Answer

If a nation is operating at a point inside the production possibilities curve, it indicates that the nation could

Correct AnswerverifiedShow Answer

If a linear relation is described by the equation C = 35 - 5D, then the vertical intercept of the graph (where C is on the vertical axis) is

Correct AnswerverifiedShow Answer

The study of economics is not useful for consumers, because economic analysis focuses only on businesses and the economy.

Correct AnswerverifiedShow Answer

Opportunity costs exist because

Correct AnswerverifiedShow Answer

The slope of the typical production possibilities curve

Correct AnswerverifiedShow Answer

Economic growth may be represented by

Correct AnswerverifiedShow Answer

The idea in economics that "there is no free lunch" means that

Correct AnswerverifiedShow Answer

A budget line is a graph that shows the various combinations of two products that a

Correct AnswerverifiedShow Answer

Other things equal, an increase in a consumer's money income

Correct AnswerverifiedShow Answer

Which of the following is considered to be an entrepreneur?

Correct AnswerverifiedShow Answer

Although sleeping in on a work day or school day has an opportunity cost, sleeping late on the weekend does not.

Correct AnswerverifiedShow Answer

In a graph of the production possibilities curve, the two axes of the graph indicate the

Correct AnswerverifiedShow Answer

Which of the following statements regarding people's wants is true?

Correct AnswerverifiedShow Answer

A nation can produce two products: steel and wheat. The table below is the nation's production possibilities schedule. Which of the following output-combinations is unattainable?

Correct AnswerverifiedShow Answer

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