Question 1

If we say that two variables are directly related, this means that:

Accepted Answer

A)  the relationship between the two is purely random.
B)  an increase in one variable is associated with a decrease in the other variable.
C)  an increase in one variable is associated with an increase in the other variable.
D)  the two graph as a downsloping line.E) A) and B)
F) A) and C)

Question 2

Microeconomics is concerned with:

Accepted Answer

A)  the aggregate or total levels of income, employment, and output.
B)  a detailed examination of specific economic units which comprise the economic system.
C)  the concealing of detailed information about specific segments of the economy.
D)  the establishing of an overall view of the operation of the economic system.E) A) and B)
F) All of the above

Question 3

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

Question 4

The future location of the economy's production possibilities curve will be affected by:

Accepted Answer

A)  the current division of domestic output between consumption and capital goods.
B)  the rate of technological progress.
C)  the growth of the economy's supplies of resources.
D)  all of the above.E) A) and B)
F) A) and C)

Question 5

The above data suggest that:

Accepted Answer

A)  consumption varies inversely with after-tax income.
B)  consumption varies directly with after-tax income.
C)  consumption and after-tax income are unrelated.
D)  a tax increase will increase consumption.E) A) and B)
F) None of the above

Question 6

If we say that two variables are inversely related, this means that:

Accepted Answer

A)  the two graph as an upsloping line.
B)  an increase in one variable is associated with a decrease in the other.
C)  an increase in one variable is associated with an increase in the other.
D)  the resulting relationship can be portrayed by a straight line parallel to the horizontal axis.E) B) and C)
F) None of the above B

Question 7

Slope of lines are especially important in economics because:

Accepted Answer

A)  they measure marginal changes.
B)  they always tell us something about profits.
C)  positive slopes are always preferred to negative slopes.
D)  they always relate to resource and output scarcity.E) B) and C)
F) A) and D)

Question 8

The individuals and society both face an economic problem.This problem arises from the fact that:

Accepted Answer

A)  wants are limited but the resources are not.
B)  resources are scarce relative to individual's wants.
C)  individuals and institutions behave only in their self-interest.
D)  both wants and resources are unlimited.E) A) and B)
F) C) and D)

Question 9

The slope of a line parallel to the horizontal axis is:

Accepted Answer

A)  zero.
B)  one.
C)  infinite.
D)  one-half.E) A) and B)
F) None of the above A

Question 10

A typical concave production possibilities curve implies:

Accepted Answer

A)  that economic resources are scarce.
B)  that society must choose among various attainable combinations of goods.
C)  increasing opportunity costs.
D)  all of the above.E) A) and B)
F) All of the above

Question 11

A positive statement is concerned with:

Accepted Answer

A)  some goal which is desirable to society.
B)  what should be.
C)  what is.
D)  the formulation of economic policy.E) A) and B)
F) A) and C)

Question 12

The production possibilities curve below shows the hypothetical relationship between the production of capital goods and consumer goods in an economy.  Refer to the above table.What is the total opportunity cost of producing three units of capital goods?

Accepted Answer

A)  6 units of consumer goods
B)  7 units of consumer goods
C)  15 units of consumer goods
D)  22 units of consumer goodsE) A) and D)
F) All of the above

Question 13

The study of economics exists because:

Accepted Answer

A)  government interferes with the efficient allocation of scarce resources.
B)  resources are scarce in relation to human material wants.
C)  the market system is an obstacle to the efficient use of plentiful resources to satisfy constrained wants.
D)  resources are overly abundant as compared to wants; thus, an allocation problem exists.E) All of the above
F) B) and D)

Question 14

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 that 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 above information.Which of the following correctly expresses the indicated relationship as an equation?

Accepted Answer

A)  i = 20 - 4I.
B)  i = 20 -.4I.
C)  i = 24 -.4I.
D)  i = 20 - 10I.E) A) and D)
F) None of the above

Question 15

Assume an economy is incurring unemployment and failing to realize least-cost production.The immediate effect of resolving these problems will be to:

Accepted Answer

A)  move the level of actual output closer to the economy's production possibilities curve.
B)  create a less equal distribution of income.
C)  shift its production possibilities curve to the left.
D)  shift its production possibilities curve to the right.E) All of the above
F) B) and D) A

Question 16

Positive statements are expressions of value judgments.

Accepted Answer

A) True 
 B)False

Question 17

Certain inherently desirable products such as education and health care should be produced so long as resources are available.

Accepted Answer

A) True 
 B)False

Question 18

Refer to the diagram below.The concept of opportunity cost is best represented by the: 1 to PP2. B) move from B on PP1 to E on PP2. C) move from B on PP1 to C on PP1. D) move from D inside PP1 to B on PP1." class="answers-bank-image d-inline" rel="preload" >

Accepted Answer

A)  shift of the production possibilities curve from PP1 to PP2.
B)  move from B on PP1 to E on PP2.
C)  move from B on PP1 to C on PP1.
D)  move from D inside PP1 to B on PP1.E) A) and B)
F) C) and D)

Question 19

Refer to the above graph.Which of the following statements is correct?

Accepted Answer

A)  Quantity demanded and quantity supplied are independent of price.
B)  Price and quantity demanded are directly related.
C)  Price and quantity supplied are directly related.
D)  Price and quantity supplied are inversely related.E) C) and D)
F) A) and B)

Question 20

Production possibilities tables for two countries, North Cantina and South Cantina: North Cantina
Production possibilities (alternatives) 
 South Cantina
Production possibilities (alternatives) 
 Refer to the above tables.If South Cantina is producing at production alternative D, the opportunity cost of the third unit of capital goods is:

Accepted Answer

A)  3 units of consumer goods.
B)  4 units of consumer goods.
C)  5 units of consumer goods.
D)  6 units of consumer goods.E) A) and C)
F) A) and B)

Exam 1: Part B: Limits, Alternatives, and Choices

If we say that two variables are directly related, this means that:

Correct Answer
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Microeconomics is concerned with:

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
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The future location of the economy's production possibilities curve will be affected by:

Correct Answer
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The above data suggest that:

Correct Answer
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If we say that two variables are inversely related, this means that:

Correct Answer
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B

Slope of lines are especially important in economics because:

Correct Answer
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The individuals and society both face an economic problem.This problem arises from the fact that:

Correct Answer
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The slope of a line parallel to the horizontal axis is:

Correct Answer
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A

A typical concave production possibilities curve implies:

Correct Answer
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A positive statement is concerned with:

Correct Answer
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The production possibilities curve below shows the hypothetical relationship between the production of capital goods and consumer goods in an economy. Refer to the above table.What is the total opportunity cost of producing three units of capital goods?

Correct Answer
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The study of economics exists because:

Correct Answer
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Correct Answer
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Assume an economy is incurring unemployment and failing to realize least-cost production.The immediate effect of resolving these problems will be to:

Correct Answer
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A

Positive statements are expressions of value judgments.

Correct Answer
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Certain inherently desirable products such as education and health care should be produced so long as resources are available.

Correct Answer
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Refer to the diagram below.The concept of opportunity cost is best represented by the:

Correct Answer
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Refer to the above graph.Which of the following statements is correct?

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Exam 1: Part B: Limits, Alternatives, and Choices

If we say that two variables are directly related, this means that:

Correct AnswerverifiedShow Answer

Microeconomics is concerned with:

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 future location of the economy's production possibilities curve will be affected by:

Correct AnswerverifiedShow Answer

The above data suggest that:

Correct AnswerverifiedShow Answer

If we say that two variables are inversely related, this means that:

Correct AnswerverifiedB

Slope of lines are especially important in economics because:

Correct AnswerverifiedShow Answer

The individuals and society both face an economic problem.This problem arises from the fact that:

Correct AnswerverifiedShow Answer

The slope of a line parallel to the horizontal axis is:

Correct AnswerverifiedA

A typical concave production possibilities curve implies:

Correct AnswerverifiedShow Answer

A positive statement is concerned with:

Correct AnswerverifiedShow Answer

The production possibilities curve below shows the hypothetical relationship between the production of capital goods and consumer goods in an economy. Refer to the above table.What is the total opportunity cost of producing three units of capital goods?

Correct AnswerverifiedShow Answer

The study of economics exists because:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Assume an economy is incurring unemployment and failing to realize least-cost production.The immediate effect of resolving these problems will be to:

Correct AnswerverifiedA

Positive statements are expressions of value judgments.

Correct AnswerverifiedShow Answer

Certain inherently desirable products such as education and health care should be produced so long as resources are available.

Correct AnswerverifiedShow Answer

Refer to the diagram below.The concept of opportunity cost is best represented by the:

Correct AnswerverifiedShow Answer

Refer to the above graph.Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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B

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A

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A

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