Question 1

Which of the following is a correct statement?

Accepted Answer

A)  Economic concepts or laws that are valid during recessions are necessarily valid during prosperity.
B)  Although they are generalizations, economic laws are useful because they allow us to predict and therefore influence or adjust to events.
C)  Economists use the scientific method.Therefore, economic laws are as quantitatively precise as the laws of physics or chemistry.
D)  Because economics is primarily concerned with questions of "ought," it is a branch of applied ethics and not scientific.E) B) and D)
F) A) and D) B

Question 2

A nation can increase its production possibilities by

Accepted Answer

A)  shifting resources to produce more consumer goods and less investment goods.
B)  shifting resources from private goods to public goods.
C)  improving labor productivity.
D)  eliminating unemployment.E) A) and D)
F) None of the above

Question 3

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

Question 4

An economic hypothesis

Accepted Answer

A)  has the same meaning as an economic principle or economic law.
B)  is usually a normative statement.
C)  is a possible explanation of cause and effect.
D)  is a stronger generalization than an economic law.E) A) and B)
F) B) and C) C

Question 5

Which of the following terms implies the least degree of confidence in an economic generalization?

Accepted Answer

A)  hypothesis
B)  theory
C)  principle
D)  lawE) B) and C)
F) A) and C)

Question 6

Purposeful behavior means that

Accepted Answer

A)  people are selfish in their decision making.
B)  people weigh costs and benefits to make decisions.
C)  people are immune from emotions affecting their decisions.
D)  decision makers do not make mistakes when weighing costs and benefits.E) A) and B)
F) A) and C)

Question 7

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

Question 8

Suppose that a fully employed economy produces only two goods, hamburgers and flat-panel TVs.If the economy is currently producing more than the optimal quantity of hamburgers, then to attain the optimal allocation of resources, it should

Accepted Answer

A)  produce more hamburgers and fewer TVs.
B)  produce more TVs and fewer hamburgers.
C)  produce more of both goods.
D)  produce fewer of both goods.E) B) and D)
F) None of the above

Question 9

If a nation produces more consumer goods and less capital goods, then the nation will have

Accepted Answer

A)  more consumption now, but less consumption later.
B)  less consumption now, but more consumption later.
C)  more consumption now, with no effect on consumption later.
D)  less consumption later, with no effect on consumption now.E) A) and B)
F) C) and D)

Question 10

(Last Word)  The safest way for an individual to leave a burning theater is to run for the nearest exit; it is therefore also the best means of escape for a large audience.This assertion illustrates the

Accepted Answer

A)  "after this, therefore because of this" fallacy.
B)  correlation fallacy.
C)  fallacy of composition.
D)  fallacy of limited decisions.E) All of the above
F) B) and D)

Question 11

From an economic perspective, when a student decides to go to the movies instead of studying for a test, it indicates that in the student's thinking, the marginal

Accepted Answer

A)  benefit of studying is greater than the marginal cost of studying.
B)  cost of going to the movies is less than the marginal benefit of going to the movies.
C)  benefit of studying are greater than the marginal benefit of going to the movies.
D)  cost of going to the movies is greater than the marginal cost of studying.E) A) and B)
F) All of the above

Question 12

Economic analysis is primarily concerned with marginal changes from the status quo, as a result of a certain action or decision.

Accepted Answer

A) True 
 B)False

Question 13

(Last Word)  A caller to a radio talk show states that protesters against globalization are a collection of "anarchist punks, naïve college students, and trade union radicals." This is an example of

Accepted Answer

A)  the fallacy of composition.
B)  the economic perspective.
C)  loaded terminology.
D)  marginal analysis.E) None of the above
F) A) and B)

Question 14

If A decreases, then B will also decrease.The graph relating the two variables A and B is

Accepted Answer

A)  vertical.
B)  downward-sloping.
C)  upward-sloping.
D)  horizontal.E) B) and C)
F) C) and D)

Question 15

When a state government chooses to build more roads, the resources used are no longer available for public education programs.This dilemma illustrates the concept of

Accepted Answer

A)  production expenses.
B)  unemployment issues.
C)  unintended consequences.
D)  opportunity cost.E) None of the above
F) B) and C)

Question 16

The scientific method is

Accepted Answer

A)  not applicable to economics because economics deals with human beings.
B)  also known as the economic perspective.
C)  employed to form hypotheses out of existing laws and theories.
D)  used by economists and other social scientists, as well as by physical scientists and life scientists, to formulate and test hypotheses.E) A) and B)
F) All of the above

Question 17

Which of the following terms implies the greatest degree of confidence in an economic generalization?

Accepted Answer

A)  hypothesis
B)  comparison
C)  theory
D)  anomalyE) B) and C)
F) A) and D)

Question 18

If the opportunity cost of producing extra units of one good (expressed in terms of the amount of another good given up)  remains constant, then the shape of the production possibilities curve is

Accepted Answer

A)  a straight horizontal line.
B)  a straight downward-sloping line.
C)  an upward-sloping line.
D)  a vertical line.E) A) and B)
F) A) and D)

Question 19

Economists have difficulty applying the scientific method because

Accepted Answer

A)  economics has a short history.
B)  the scientific method does not really apply to economics.
C)  people are the focus of economics, and their behavior is highly predictable.
D)  controlled laboratory experiments in economics are often not feasible.E) B) and D)
F) B) and C)

Question 20

Assume that a change in government policy results in greater production of both consumer goods and investment goods.We can conclude that

Accepted Answer

A)  the economy was not employing all of its resources before the policy change.
B)  the economy's production possibilities curve has been shifted to the left as a result of the policy decision.
C)  this economy's production possibilities curve is convex (bowed inward)  to the origin.
D)  the law of increasing opportunity costs does not apply in this society.E) A) and B)
F) B) and C)

Exam 1: Limits, Alternatives, and Choices

Which of the following is a correct statement?

Correct AnswerverifiedB

A nation can increase its production possibilities by

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedD

An economic hypothesis

Correct AnswerverifiedC

Which of the following terms implies the least degree of confidence in an economic generalization?

Correct AnswerverifiedShow Answer

Purposeful behavior means that

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Suppose that a fully employed economy produces only two goods, hamburgers and flat-panel TVs.If the economy is currently producing more than the optimal quantity of hamburgers, then to attain the optimal allocation of resources, it should

Correct AnswerverifiedShow Answer

If a nation produces more consumer goods and less capital goods, then the nation will have

Correct AnswerverifiedShow Answer

(Last Word) The safest way for an individual to leave a burning theater is to run for the nearest exit; it is therefore also the best means of escape for a large audience.This assertion illustrates the

Correct AnswerverifiedShow Answer

From an economic perspective, when a student decides to go to the movies instead of studying for a test, it indicates that in the student's thinking, the marginal

Correct AnswerverifiedShow Answer

Economic analysis is primarily concerned with marginal changes from the status quo, as a result of a certain action or decision.

Correct AnswerverifiedShow Answer

(Last Word) A caller to a radio talk show states that protesters against globalization are a collection of "anarchist punks, naïve college students, and trade union radicals." This is an example of

Correct AnswerverifiedShow Answer

If A decreases, then B will also decrease.The graph relating the two variables A and B is

Correct AnswerverifiedShow Answer

When a state government chooses to build more roads, the resources used are no longer available for public education programs.This dilemma illustrates the concept of

Correct AnswerverifiedShow Answer

The scientific method is

Correct AnswerverifiedShow Answer

Which of the following terms implies the greatest degree of confidence in an economic generalization?

Correct AnswerverifiedShow Answer

If the opportunity cost of producing extra units of one good (expressed in terms of the amount of another good given up) remains constant, then the shape of the production possibilities curve is

Correct AnswerverifiedShow Answer

Economists have difficulty applying the scientific method because

Correct AnswerverifiedShow Answer

Assume that a change in government policy results in greater production of both consumer goods and investment goods.We can conclude that

Correct AnswerverifiedShow Answer

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B

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C

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