Question 1

Economists would classify all of the following as "land," except:

Accepted Answer

A)   Two thousand acres of virgin forest
B)   A hydroelectric dam
C)   Crude oil reserves
D)   Iron ore depositsE) A) and C)
F) All of the above

Question 2

Which question is an illustration of a microeconomic question?

Accepted Answer

A)   Is the volume of wine produced in one year dependent upon the price of wine?
B)   Does government spending influence interest rates in the economy?
C)   Is the purchasing power of the dollar higher or lower today than it was in 2008?
D)   Which economic system is better for consumers and firms?E) A) and D)
F) B) and C)

Question 3

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 nationE) All of the above
F) C) and D)

Question 4

A point or product-combination to the left of and 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 lineE) None of the above
F) All of the above

Question 5

Refer to the above production possibilities curves. Curve (a)  is the initial curve for the economy. If the economy's production possibilities then shift to curve (b) , then:

Accepted Answer

A)   Point N would still indicate a case of full production and full employment of resources
B)   Point P would still indicate a case of full production and full employment of resources
C)   Point N would indicate some unemployment or underemployment of resources
D)   Point L would indicate some unemployment or underemployment of resourcesE) A) and D)
F) A) and B)

Question 6

A nation can produce two products: steel and wheat. The table below is the nation's production possibilities schedule:  Refer to the above table. A change from combination C to B means that:

Accepted Answer

A)   1 unit of steel is given up to get 75 units of wheat
B)   2 units of steel are given up to get 75 units of wheat
C)   1 unit of steel is given up to get 15 more units of wheat
D)   2 units of steel are given up to get 15 more units of wheatE) A) and C)
F) C) and D)

Question 7

Which of the following is the fallacy in the fallacy of composition?

Accepted Answer

A)   Whatever goes up must come down
B)   Facts are more important than theories
C)   What is true for the part is necessarily also true for the whole
D)   If event B occurs after event A, event A must have caused event BE) All of the above
F) A) and B)

Question 8

Macroeconomics is concerned with the study of the nation-wide market for specific goods like oranges.

Accepted Answer

A) True 
 B)False

Question 9

If you knew that the vertical intercept for a straight line was 15, that the slope was -.5, and that the independent variable had a value of 8, the value of the dependent variable would be:

Accepted Answer

A)   8
B)   9
C)   10
D)   11E) None of the above
F) B) and D)

Question 10

Refer to the above production possibilities curves. Curve (a)  is the initial curve for the economy, and the nation is initially producing combination P. A shift from curve (a)  to curve (b)  suggests that the economy can then increase its production of capital goods:

Accepted Answer

A)   Only if it reduces its production of consumer goods
B)   So as to produce the combination L
C)   And consumer goods simultaneously
D)   But will have to hold constant its production of consumer goodsE) B) and C)
F) All of the above

Question 11

Which of the following is a positive economic statement?

Accepted Answer

A)   Government must maintain the current level of defense spending to keep the nation safe
B)   The minimum wage should be increased to give people a decent wage
C)   Americans should buy American products in order to boost the national economy
D)   Stock prices rose to a new record last month for the fourth month in a rowE) All of the above
F) A) and B)

Question 12

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

Question 13

The economizing problem faced by a society is:

Accepted Answer

A)   To achieve a more equitable distribution of income in the society
B)   A consequence of the fact that productive resources are scarce relative to economic wants
C)   To establish prices which are fair for both producers and consumers
D)   That product prices often rise more rapidly than incomes of consumersE) None of the above
F) B) and D)

Question 14

In a curved graph that is dome-shaped, the tangent line at it maximum or highest point has an infinite slope.

Accepted Answer

A) True 
 B)False

Question 15

In line (2)  on the above graph, the variables x and y are:

Accepted Answer

A)   Nonlinearly related
B)   Directly related
C)   Not correlated
D)   Inversely relatedE) C) and D)
F) A) and B)

Question 16

The basic truth that underlies the study of economics is the fact that we all face:

Accepted Answer

A)   Death
B)   Taxes
C)   Risk
D)   ScarcityE) All of the above
F) A) and B)

Question 17

Which situation would most likely cause a nation's production possibilities curve to shift inward?

Accepted Answer

A)   An increase in unemployment
B)   An increase in the amount of imports
C)   An increase in the number of skilled immigrant workers
D)   The destruction caused by bombing and warfare in a losing military conflictE) None of the above
F) A) and D)

Question 18

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 studyingE) None of the above
F) A) and D)

Question 19

Suppose that a nation can only make two products: defense goods and civilian goods. In a graph of the marginal benefit (MB)  and marginal cost (MC)  of defense goods, a leftward shift of the MB curve will cause the optimal quantity of:

Accepted Answer

A)   Civilian goods to decrease
B)   Both civilian goods and defense goods to decrease
C)   Defense goods to decrease
D)   Defense goods to increaseE) B) and D)
F) C) and D)

Question 20

Refer to the above graph. From the economists' perspective, which is the independent variable and which is the dependent variable?

Accepted Answer

A)   Price is the independent variable and quantity demanded is the dependent variable
B)   Price is the dependent variable and quantity demanded is the independent variable
C)   Both price and quantity demanded are independent variables
D)   Both price and quantity demanded are dependent variablesE) B) and D)
F) A) and D)

Exam 1: Limits, Alternatives, and Choices

The economizing problem faced by a society is:

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

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Refer to the above production possibilities curves. Curve (a) is the initial curve for the economy. If the economy's production possibilities then shift to curve (b) , then:

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Economists would classify all of the following as "land," except:

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Refer to the above production possibilities curves. Curve (a) is the initial curve for the economy, and the nation is initially producing combination P. A shift from curve (a) to curve (b) suggests that the economy can then increase its production of capital goods:

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Which of the following is a positive economic statement?

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Macroeconomics is concerned with the study of the nation-wide market for specific goods like oranges.

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Refer to the above graph. From the economists' perspective, which is the independent variable and which is the dependent variable?

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Suppose that a nation can only make two products: defense goods and civilian goods. In a graph of the marginal benefit (MB) and marginal cost (MC) of defense goods, a leftward shift of the MB curve will cause the optimal quantity of:

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The basic truth that underlies the study of economics is the fact that we all face:

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In a curved graph that is dome-shaped, the tangent line at it maximum or highest point has an infinite slope.

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Which question is an illustration of a microeconomic question?

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In line (2) on the above graph, the variables x and y are:

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A point or product-combination to the left of and inside a budget line:

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If you knew that the vertical intercept for a straight line was 15, that the slope was -.5, and that the independent variable had a value of 8, the value of the dependent variable would be:

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

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:

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Which situation would most likely cause a nation's production possibilities curve to shift inward?

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Which of the following is the fallacy in the fallacy of composition?

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A nation can produce two products: steel and wheat. The table below is the nation's production possibilities schedule: Refer to the above table. A change from combination C to B means that:

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