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)   30E) A) and D)
F) B) and C) C

Question 2

Because of increasing opportunity costs, the production possibility curve:

Accepted Answer

A)   Is bowed out from (or concave to)  the origin
B)   Can be either downward- or upward-sloping
C)   At first rises, then falls eventually
D)   Is a straight downward-sloping lineE) None of the above
F) A) and B)

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

Question 4

If economic resources are perfectly interchangeable between the two products shown on a production possibilities graph:

Accepted Answer

A)   The economy will always be at full employment
B)   More of one product can be produced without producing less of the other product
C)   The production possibilities curve would be a straight line
D)   The two products are of equal value to the economyE) A) and B)
F) A) and C)

Question 5

When a nation is under-allocating resources to the production of a good, then the:

Accepted Answer

A)   Marginal benefit is greater than the marginal cost of the good
B)   Marginal benefit is less than the marginal cost of the good
C)   Marginal cost of producing the good is decreasing
D)   Marginal benefit of producing the good is increasingE) All of the above
F) B) and C)

Question 6

Economics is the social science concerned with the best use of scarce resources to achieve maximum satisfaction of economic wants.

Accepted Answer

A) True 
 B)False

Question 7

The slope of a graph with "income" on the horizontal axis and "saving" on the horizontal axis is +0.2. This means that if: (BOTH SAY HORIZONTAL)

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 $20E) All of the above
F) B) and C)

Question 8

What is a major opportunity cost of going to college on a full-time basis?

Accepted Answer

A)   The cost of transportation to college instead of to a job
B)   The cost of living expenses (room and board)  to attend college
C)   The foregone income that could be earned working full-time job
D)   The greater income that will be earned from having a college degreeE) B) and D)
F) B) and C)

Question 9

A nation can produce two products: tanks and autos. The table below is the nation's production possibilities:  Given the production possibilities schedule above, a combination of 3 tanks and 350 autos:

Accepted Answer

A)   Illustrates the tradeoff between tanks and autos
B)   Is attainable but entails some unemployment or inefficient use of society's resources
C)   Cannot be produced by society, given its current resources and production technology
D)   Is not attainable because this combination is not listed in the scheduleE) A) and B)
F) A) and D)

Question 10

Which of the following is a normative economic statement?

Accepted Answer

A)   The Federal budget deficit rose by 120 billion dollars
B)   The unemployment rate is expected to fall next month
C)   A trade surplus of 200 billion dollars should be our policy goal
D)   The federal funds rate was reduced by half a percentage pointE) A) and B)
F) A) and D)

Question 11

The linear equation for line (1)  on the above graph is:

Accepted Answer

A)   y = 8 + 2x
B)   y = 8 + .5x
C)   x = 8 + .5y
D)   y = 8 - 2xE) A) and B)
F) A) and C)

Question 12

The comment that "taxes must be reduced for the good of the economy" is an example of a normative economic statement.

Accepted Answer

A) True 
 B)False

Question 13

Economic analysis assumes "purposeful behavior", which means that people will pursue decisions or actions:

Accepted Answer

A)   That will increase their well-being
B)   Always based on full or complete information
C)   With minimal consideration for their emotions
D)   Without any logical faultsE) B) and C)
F) A) and C)

Question 14

Which question is an example of a microeconomic question?

Accepted Answer

A)   What should the Federal government do to reduce the trade deficit with Japan?
B)   Will the merger of two airlines likely lead to higher cost of air travel in the economy?
C)   What factors are contributing to the steep rise in the federal government's total debt?
D)   Will the inflation rate remain relatively stable this year?E) B) and C)
F) A) and B)

Question 15

The economic perspective focuses largely on marginal analysis, which means analyzing:

Accepted Answer

A)   Peripheral elements of a given issue or action
B)   The minor aspects of a given issue or decision
C)   The changes in the situation that would result from a given action
D)   Emotional and psychological facets of a given actionE) B) and C)
F) A) and B)

Question 16

Which point or output-combination in the above graph could the nation produce only if it experienced economic growth?

Accepted Answer

A)   Combination F
B)   Combination G
C)   Combination C
D)   Combination EE) C) and D)
F) B) and C)

Question 17

In a relationship between two variables, the "independent variable" refers to the:

Accepted Answer

A)   One measured on the vertical axis, in the convention of mathematics
B)   One whose value is assumed constant
C)   Effect or outcome
D)   Cause or source variableE) B) and C)
F) A) and B) D

Question 18

If you knew that the intercept for a straight line was 12, and that if the value of the independent variable was 3 the value of the dependent variable would be 18, then the slope of the line would be:

Accepted Answer

A)   1
B)   2
C)   3
D)   4E) A) and B)
F) A) and C)

Question 19

The following graph is the production possibilities curve of a nation:  Refer to the above graph. The combination "5 drill presses and 2 bread" indicates:

Accepted Answer

A)   An unattainable combination for the nation
B)   Some resources in the nation are unemployed
C)   An ideal combination for the nation
D)   A combination produced when the nation is at full employmentE) B) and C)
F) A) and C)

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 costE) A) and B)
F) A) and C)

Exam 1: Limits, Alternatives, and Choices

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 AnswerverifiedC

Because of increasing opportunity costs, the production possibility curve:

Correct AnswerverifiedShow Answer

Which of the following is considered to be an entrepreneur?

Correct AnswerverifiedA

If economic resources are perfectly interchangeable between the two products shown on a production possibilities graph:

Correct AnswerverifiedShow Answer

When a nation is under-allocating resources to the production of a good, then the:

Correct AnswerverifiedShow Answer

Economics is the social science concerned with the best use of scarce resources to achieve maximum satisfaction of economic wants.

Correct AnswerverifiedShow Answer

The slope of a graph with "income" on the horizontal axis and "saving" on the horizontal axis is +0.2. This means that if: (BOTH SAY HORIZONTAL)

Correct AnswerverifiedShow Answer

What is a major opportunity cost of going to college on a full-time basis?

Correct AnswerverifiedShow Answer

A nation can produce two products: tanks and autos. The table below is the nation's production possibilities: Given the production possibilities schedule above, a combination of 3 tanks and 350 autos:

Correct AnswerverifiedShow Answer

Which of the following is a normative economic statement?

Correct AnswerverifiedShow Answer

The linear equation for line (1) on the above graph is:

Correct AnswerverifiedShow Answer

The comment that "taxes must be reduced for the good of the economy" is an example of a normative economic statement.

Correct AnswerverifiedShow Answer

Economic analysis assumes "purposeful behavior", which means that people will pursue decisions or actions:

Correct AnswerverifiedShow Answer

Which question is an example of a microeconomic question?

Correct AnswerverifiedShow Answer

The economic perspective focuses largely on marginal analysis, which means analyzing:

Correct AnswerverifiedShow Answer

Which point or output-combination in the above graph could the nation produce only if it experienced economic growth?

Correct AnswerverifiedShow Answer

In a relationship between two variables, the "independent variable" refers to the:

Correct AnswerverifiedD

If you knew that the intercept for a straight line was 12, and that if the value of the independent variable was 3 the value of the dependent variable would be 18, then the slope of the line would be:

Correct AnswerverifiedShow Answer

The following graph is the production possibilities curve of a nation: Refer to the above graph. The combination "5 drill presses and 2 bread" indicates:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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