Question 1

Ben says that "an increase in the tax on beer will raise its price." Holly argues that "taxes should be increased on beer because college students drink too much." We can conclude that

Accepted Answer

A)   Ben's statement is normative, but Holly's is positive.
B)   Holly's statement is normative, but Ben's is positive.
C)   Both statements are normative.
D)   Both statements are positive.E) B) and D)
F) None of the above

Question 2

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 D)
F) All of the above

Question 3

If someone produced too little of a good, this would suggest that

Accepted Answer

A)   rational choice cannot be applied to many economic decisions.
B)   the good was produced past the point where its marginal cost exceeded its marginal benefit.
C)   government should intervene to produce more of the good.
D)   the good was produced to the point where its marginal benefit exceeded its marginal cost.E) A) and B)
F) B) and C)

Question 4

Which of the following is a normative economic statement?

Accepted Answer

A)   The poverty rate hit a new high last year and income distribution also worsened.
B)   Health care accounts for roughly a third of total spending in the economy.
C)   The government needs to revamp the Social Security program to make it sustainable.
D)   Retail sales are expected to continue on their downward trend in the next three quarters.E) All of the above
F) B) and C)

Question 5

Answer the question on the basis of the following information. Assume that if the interest rate that businesses must pay to borrow funds were 20 percent, it would be unprofitable for businesses to invest in new machinery and equipment, so investment would be zero. But if the interest rate were 16 percent, businesses would find it profitable to invest $10 billion. If the interest rate were 12 percent, $20 billion would be invested. Assume that total investment continues to increase by $10 billion for each successive 4 percentage point decline in the interest rate.  Refer to the information. Using i and I to indicate the interest rate and investment (in billions of dollars)  respectively, which of the following is the correct tabular presentation of the described relationship?

Accepted Answer

A)   option A
B)   option B
C)   option C
D)   option DE) C) and D)
F) B) and C)

Question 6

Consumers spend their incomes to get the maximum benefit or satisfaction from the goods and services they purchase. This is a reflection of

Accepted Answer

A)   resource scarcity and the necessity of choice.
B)   purposeful behavior.
C)   marginal costs that exceed marginal benefits.
D)   the trade-off problem that exists between competing goals.E) B) and D)
F) None of the above

Question 7

Answer the question on the basis of the following production possibilities tables for two countries, North Cantina and South Cantina.  Refer to the tables. Suppose that North Cantina is producing 2 units of capital goods and 17 units of consumer goods, while South Cantina is producing 2 units of capital goods and 21 units of consumer goods. We can conclude that

Accepted Answer

A)   North Cantina is fully and efficiently using its resources, but South Cantina is not.
B)   South Cantina is fully and efficiently using its resources, but North Cantina is not.
C)   neither South Cantina nor North Cantina is fully and efficiently using its resources.
D)   both South Cantina and North Cantina are fully and efficiently using their resources.E) A) and B)
F) All of the above

Question 8

"The role of government in the economy should be kept to a minimum" is an example of a positive economic statement.

Accepted Answer

A) True 
 B)False

Question 9

The economizing problem for individuals is a consequence of the fact that

Accepted Answer

A)   economic means or incomes are greater than economic wants.
B)   economic wants are greater than economic means or incomes.
C)   positive economics is more important than normative economics.
D)   normative economics is more important than positive economics.E) A) and B)
F) A) and D)

Question 10

A nation can produce two products: steel and wheat. The table below is the nation's production possibilities schedule.  In moving from combination E to F, the opportunity cost of an additional unit of steel is

Accepted Answer

A)   5 units of steel.
B)   0 units of wheat.
C)   1 unit of steel.
D)   30 units of wheat.E) B) and D)
F) All of the above

Question 11

Which of the following is a labor resource?

Accepted Answer

A)   a computer programmer
B)   a computer
C)   silicon (sand)  used to make computer chips
D)   software used by a firmE) A) and B)
F) B) and C)

Question 12

Which question is an illustration of a macroeconomic question?

Accepted Answer

A)   Is a corporation unresponsive to the demands of its customers?
B)   Is a consumer boycott an effective means of reducing a product's price?
C)   How will the government's budget deficit be affected by public infrastructure projects?
D)   Are oil companies ripping off consumers by charging exorbitantly high prices for gasoline?E) All of the above
F) A) and B)

Question 13

(Consider This)  Consumers might leave a fast-food restaurant without being served because

Accepted Answer

A)   they are misinformed about the marginal cost and marginal benefits of the food being served.
B)   they conclude that the marginal cost (monetary plus time costs)  exceeds the marginal benefit.
C)   the environment is not conducive to a rational choice.
D)   the lines waiting for service are not of equal length.E) None of the above
F) All of the above

Question 14

One basic difference between "labor" and "entrepreneur" is that

Accepted Answer

A)   labor is hired by a firm, whereas the entrepreneur owns the firm.
B)   an entrepreneur has high-level skills, whereas labor does not.
C)   labor performs manual work, whereas an entrepreneur performs mental work.
D)   education is important for an entrepreneur but not for labor.E) B) and D)
F) B) and C)

Question 15

Unemployment

Accepted Answer

A)   causes the production possibilities curve to shift outward.
B)   can exist at any point on a production possibilities curve.
C)   is illustrated by a point outside the production possibilities curve.
D)   is illustrated by a point inside the production possibilities curve.E) A) and B)
F) All of the above

Question 16

Which of the following is considered an economic resource?

Accepted Answer

A)   the ice cream that kids buy at the ice cream parlor
B)   the HD-TV sets in people's homes
C)   the land that is designated as national parks by the government
D)   shoppers buying stuff at the mallE) A) and C)
F) A) and B)

Question 17

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 making any logical mistakes.E) A) and C)
F) A) and B)

Question 18

(Last Word)  "The government deregulated the electricity industry in California, and a shortage of electricity soon occurred. It is clear that the deregulation caused the shortage." This statement needs careful analysis because it may reflect the

Accepted Answer

A)   fallacy of composition.
B)   post hoc, ergo propter hoc fallacy.
C)   use of loaded terminology.
D)   law of averages.E) C) and D)
F) All of the above

Question 19

(Last Word)  The post hoc, ergo propter hoc fallacy suggests that

Accepted Answer

A)   positive statements are always followed by normative judgments.
B)   positive statements can never be proven true or false.
C)   if one acts on one's expectations, those expectations will always be fulfilled.
D)   cause and effect can be determined merely by observing the sequence of events.E) A) and C)
F) None of the above

Question 20

The four factors of production are

Accepted Answer

A)   land, labor, capital, and money.
B)   land, labor, capital, and entrepreneurial ability.
C)   labor, capital, technology, and entrepreneurial ability.
D)   labor, capital, entrepreneurial ability, and money.E) B) and C)
F) None of the above

Exam 1: Limits, Alternatives, and Choices

"The role of government in the economy should be kept to a minimum" is an example of a positive economic statement.

Correct Answer
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Which of the following is a labor resource?

Correct Answer
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A nation can produce two products: steel and wheat. The table below is the nation's production possibilities schedule. In moving from combination E to F, the opportunity cost of an additional unit of steel is

Correct Answer
verified

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

Correct Answer
verified

One basic difference between "labor" and "entrepreneur" is that

Correct Answer
verified

If someone produced too little of a good, this would suggest that

Correct Answer
verified

(Consider This) Consumers might leave a fast-food restaurant without being served because

Correct Answer
verified

(Last Word) "The government deregulated the electricity industry in California, and a shortage of electricity soon occurred. It is clear that the deregulation caused the shortage." This statement needs careful analysis because it may reflect the

Correct Answer
verified

The economizing problem for individuals is a consequence of the fact that

Correct Answer
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Which of the following is a normative economic statement?

Correct Answer
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Correct Answer
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Ben says that "an increase in the tax on beer will raise its price." Holly argues that "taxes should be increased on beer because college students drink too much." We can conclude that

Correct Answer
verified

The four factors of production are

Correct Answer
verified

Correct Answer
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Consumers spend their incomes to get the maximum benefit or satisfaction from the goods and services they purchase. This is a reflection of

Correct Answer
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Unemployment

Correct Answer
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Which of the following is considered an economic resource?

Correct Answer
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Which question is an illustration of a macroeconomic question?

Correct Answer
verified

(Last Word) The post hoc, ergo propter hoc fallacy suggests that

Correct Answer
verified

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

Correct Answer
verified

Exam 1: Limits, Alternatives, and Choices

"The role of government in the economy should be kept to a minimum" is an example of a positive economic statement.

Correct AnswerverifiedShow Answer

Which of the following is a labor resource?

Correct AnswerverifiedShow Answer

A nation can produce two products: steel and wheat. The table below is the nation's production possibilities schedule. In moving from combination E to F, the opportunity cost of an additional unit of steel is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

One basic difference between "labor" and "entrepreneur" is that

Correct AnswerverifiedShow Answer

If someone produced too little of a good, this would suggest that

Correct AnswerverifiedShow Answer

(Consider This) Consumers might leave a fast-food restaurant without being served because

Correct AnswerverifiedShow Answer

(Last Word) "The government deregulated the electricity industry in California, and a shortage of electricity soon occurred. It is clear that the deregulation caused the shortage." This statement needs careful analysis because it may reflect the

Correct AnswerverifiedShow Answer

The economizing problem for individuals is a consequence of the fact that

Correct AnswerverifiedShow Answer

Which of the following is a normative economic statement?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Ben says that "an increase in the tax on beer will raise its price." Holly argues that "taxes should be increased on beer because college students drink too much." We can conclude that

Correct AnswerverifiedShow Answer

The four factors of production are

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Consumers spend their incomes to get the maximum benefit or satisfaction from the goods and services they purchase. This is a reflection of

Correct AnswerverifiedShow Answer

Unemployment

Correct AnswerverifiedShow Answer

Which of the following is considered an economic resource?

Correct AnswerverifiedShow Answer

Which question is an illustration of a macroeconomic question?

Correct AnswerverifiedShow Answer

(Last Word) The post hoc, ergo propter hoc fallacy suggests that

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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