Question 1

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) All of the above

Question 2

Normative statements are expressions of facts.

Accepted Answer

A) True 
 B)False

Question 3

Suppose that a consumer purchases just two goods, X and Y. The Y-intercept of the budget line in this case would indicate the

Accepted Answer

A)   maximum dollar amount of budget that the consumer has for good Y.
B)   price that the consumer has to pay for each unit of good Y.
C)   maximum quantity of good Y that the consumer could buy with a given budget.
D)   quantity of good Y that the consumer would want to buy.E) None of the above
F) All of the above

Question 4

Rational behavior implies that different people faced with similar choices will make the same decisions.

Accepted Answer

A) True 
 B)False

Question 5

Purposeful behavior suggests that

Accepted Answer

A)   everyone will make identical choices.
B)   resource availability exceeds economic wants.
C)   individuals may make different choices because of different desired outcomes.
D)   an individual's economic goals cannot involve trade-offs.E) B) and D)
F) A) and B)

Question 6

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. For this consumer, the opportunity cost of buying one more apple is

Accepted Answer

A)   0.5 of a banana.
B)   0.8 of a banana.
C)   1 banana.
D)   2 bananas.E) B) and D)
F) A) and C)

Question 7

Economists contend that most economic decisions are

Accepted Answer

A)   random.
B)   chaotic.
C)   spontaneous.
D)   purposeful.E) A) and D)
F) All of the above

Question 8

The production possibilities curve shows various combinations of two products that an economy can produce when achieving full employment.

Accepted Answer

A) True 
 B)False

Question 9

When studying human behavior, economists assume rational self-interest. This means that

Accepted Answer

A)   people make decisions based on some desired outcome.
B)   people are quite selfish and are not concerned about others.
C)   people always make the right decisions.
D)   people have all the information they need to make a decision.E) A) and B)
F) B) and D)

Question 10

The assertion that "there is no free lunch" means that

Accepted Answer

A)   there are always trade-offs between economic goals.
B)   all production involves the use of scarce resources and thus the sacrifice of alternative goods.
C)   marginal analysis is used in economic reasoning.
D)   choices need not be made if behavior is rational.E) B) and C)
F) A) and D)

Question 11

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 D)
F) None of the above

Question 12

Which of the following indicates an inverse relationship between x and y?

Accepted Answer

A)   y = -3 + 5x
B)   y = 6.2x
C)   y = 7 - 0.9x
D)   y = -50E) A) and D)
F) None of the above

Question 13

If two sets of data are inversely related, they will appear on a graph as an upward-sloping line.

Accepted Answer

A) True 
 B)False

Question 14

The basic difference between consumer goods and capital goods is that

Accepted Answer

A)   consumer goods are produced in the private sector and capital goods are produced in the public sector.
B)   an economy that commits a relatively large proportion of its resources to capital goods must accept a lower growth rate.
C)   the production of capital goods is not subject to the law of increasing opportunity costs.
D)   consumer goods satisfy wants directly, while capital goods satisfy wants indirectly.E) A) and B)
F) A) and D)

Question 15

The following graph is the production possibilities curve of a nation.  The total opportunity cost of nine drill presses is

Accepted Answer

A)   1 unit of bread.
B)   1 unit of drill presses.
C)   3 units of bread.
D)   10 units of drill presses.E) A) and B)
F) A) and C)

Question 16

A person should consume more of something when its marginal

Accepted Answer

A)   benefit exceeds its marginal cost.
B)   cost exceeds its marginal benefit.
C)   cost equals its marginal benefit.
D)   benefit is still better.E) A) and B)
F) C) and D)

Question 17

A point or product-combination to the left of (or inside)  a budget line

Accepted Answer

A)   is attainable, but a combination or point to the right of the line is unattainable.
B)   is unattainable, but a combination or point to the right of the line is attainable.
C)   costs more than a combination or point on the budget line.
D)   costs more than a combination or point outside the budget line.E) A) and B)
F) B) and C)

Question 18

Imagine an ideal scenario where world peace prevails and all nations are led by peace-minded leaders. In such a world, the

Accepted Answer

A)   MB for defense goods would shift left.
B)   MB for defense goods would shift right.
C)   MC for defense goods would shift left.
D)   MC for defense goods would shift right.E) C) and D)
F) None of the above

Question 19

When an economy is operating under conditions of full employment, the production of more of commodity A will mean the production of less of commodity B because

Accepted Answer

A)   of the law of increasing opportunity costs.
B)   economic wants are insatiable.
C)   resources are limited.
D)   resources are specialized and only imperfectly substitutable.E) B) and C)
F) A) and B)

Question 20

Answer the question on the basis of the following five data sets, wherein it is assumed that the variable shown on the left is the independent variable and the one on the right is the dependent variable. Assume in graphing these data that the independent variable is shown on the horizontal axis and the dependent variable on the vertical axis.  Refer to the data sets. For which data set(s)  is the vertical intercept zero?

Accepted Answer

A)   data set 4
B)   data set 5
C)   data sets 2 and 3
D)   data sets 1, 2, 4, and 5E) B) and C)
F) A) and B)

Exam 1: Limits, Alternatives, and Choices

When an economy is operating under conditions of full employment, the production of more of commodity A will mean the production of less of commodity B because

Correct Answer
verified

If two sets of data are inversely related, they will appear on a graph as an upward-sloping line.

Correct Answer
verified

Correct Answer
verified

The assertion that "there is no free lunch" means that

Correct Answer
verified

A person should consume more of something when its marginal

Correct Answer
verified

Rational behavior implies that different people faced with similar choices will make the same decisions.

Correct Answer
verified

Purposeful behavior suggests that

Correct Answer
verified

The basic difference between consumer goods and capital goods is that

Correct Answer
verified

Which of the following exemplifies a microeconomic question?

Correct Answer
verified

The following graph is the production possibilities curve of a nation. The total opportunity cost of nine drill presses is

Correct Answer
verified

Which of the following indicates an inverse relationship between x and y?

Correct Answer
verified

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. For this consumer, the opportunity cost of buying one more apple is

Correct Answer
verified

Imagine an ideal scenario where world peace prevails and all nations are led by peace-minded leaders. In such a world, the

Correct Answer
verified

Economists contend that most economic decisions are

Correct Answer
verified

When studying human behavior, economists assume rational self-interest. This means that

Correct Answer
verified

Suppose that a consumer purchases just two goods, X and Y. The Y-intercept of the budget line in this case would indicate the

Correct Answer
verified

The production possibilities curve shows various combinations of two products that an economy can produce when achieving full employment.

Correct Answer
verified

Normative statements are expressions of facts.

Correct Answer
verified

A point or product-combination to the left of (or inside) a budget line

Correct Answer
verified

An economic hypothesis

Correct Answer
verified

Exam 1: Limits, Alternatives, and Choices

When an economy is operating under conditions of full employment, the production of more of commodity A will mean the production of less of commodity B because

Correct AnswerverifiedShow Answer

If two sets of data are inversely related, they will appear on a graph as an upward-sloping line.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The assertion that "there is no free lunch" means that

Correct AnswerverifiedShow Answer

A person should consume more of something when its marginal

Correct AnswerverifiedShow Answer

Rational behavior implies that different people faced with similar choices will make the same decisions.

Correct AnswerverifiedShow Answer

Purposeful behavior suggests that

Correct AnswerverifiedShow Answer

The basic difference between consumer goods and capital goods is that

Correct AnswerverifiedShow Answer

Which of the following exemplifies a microeconomic question?

Correct AnswerverifiedShow Answer

The following graph is the production possibilities curve of a nation. The total opportunity cost of nine drill presses is

Correct AnswerverifiedShow Answer

Which of the following indicates an inverse relationship between x and y?

Correct AnswerverifiedShow Answer

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. For this consumer, the opportunity cost of buying one more apple is

Correct AnswerverifiedShow Answer

Imagine an ideal scenario where world peace prevails and all nations are led by peace-minded leaders. In such a world, the

Correct AnswerverifiedShow Answer

Economists contend that most economic decisions are

Correct AnswerverifiedShow Answer

When studying human behavior, economists assume rational self-interest. This means that

Correct AnswerverifiedShow Answer

Suppose that a consumer purchases just two goods, X and Y. The Y-intercept of the budget line in this case would indicate the

Correct AnswerverifiedShow Answer

The production possibilities curve shows various combinations of two products that an economy can produce when achieving full employment.

Correct AnswerverifiedShow Answer

Normative statements are expressions of facts.

Correct AnswerverifiedShow Answer

A point or product-combination to the left of (or inside) a budget line

Correct AnswerverifiedShow Answer

An economic hypothesis

Correct AnswerverifiedShow Answer

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