Question 1

(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) B) and C)

Question 2

Choices entail marginal costs because resources are scarce.

Accepted Answer

A) True 
 B)False

Question 3

If the equation y = 15 - 4x was plotted, the

Accepted Answer

A)  vertical intercept would be -4.
B)  vertical intercept would be +4.
C)  slope would be +15.
D)  slope would be -4.E) None of the above
F) C) and D)

Question 4

Although sleeping in on a work day or school day has an opportunity cost, sleeping late on the weekend does not.

Accepted Answer

A) True 
 B)False

Question 5

(Last Word)  A study found that the incidence of skin cancer increases along with the amount of time people work under fluorescent light, leading some people to conclude that fluorescent lighting is a cause of skin cancer.But further analysis found that people who work in offices, where fluorescent light is common, suffer more sunburn on their vacations than other workers.The sunburns, not the fluorescent light, were the cause of the higher incidence of skin cancer.The original conclusion illustrates

Accepted Answer

A)  the fallacy of composition.
B)  confusion of correlation and causation.
C)  identifying marginal costs and marginal benefits.
D)  biases and loaded terminology.E) None of the above
F) A) and D)

Question 6

The construction of a production possibilities curve assumes

Accepted Answer

A)  the quantities of all resources are unlimited.
B)  technology is fixed.
C)  some resources are unemployed.
D)  there is no inflation in the economy.E) All of the above
F) A) and C)

Question 7

(Consider This)  Free products offered by firms

Accepted Answer

A)  may or may not be free to society but are never free to individuals.
B)  may or may not be free to individuals but are never free to society.
C)  are produced and distributed at no cost to society.
D)  are usually items nobody wants.E) A) and D)
F) All of the above

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

The economic perspective focuses largely on marginal analysis, which means analyzing

Accepted Answer

A)  peripheral elements of a given issue or action.
B)  the minor aspects of a given issue or decision.
C)  the changes in the situation that would result from a given action.
D)  emotional and psychological facets of a given action.E) A) and B)
F) None of the above

Question 10

The purpose of the ceteris paribus assumption used in economic analysis is to

Accepted Answer

A)  avoid making normative statements.
B)  distinguish macroeconomics from microeconomics.
C)  make sure that all relevant factors are considered.
D)  focus on the effect of a single factor on a certain variable.E) All of the above
F) B) and C)

Question 11

Which question is an example of a macroeconomic question?

Accepted Answer

A)  What is the level of industrial concentration in the U.S.automobile industry?
B)  What economic incentives can be used to reduce the cost of health care in the nation?
C)  What policies would be recommended for stimulating national economic growth?
D)  What market conditions are expected for milk in the nation this year?E) A) and B)
F) A) and C)

Question 12

Mia wants to buy a book.The economic perspective suggests that Mia will buy the book if

Accepted Answer

A)  she has enough money to pay for the marginal cost of the book.
B)  the marginal benefit of the book is a positive value.
C)  the marginal cost of the book is greater than its marginal benefit.
D)  the marginal benefit of the book is greater than its marginal cost.E) A) and D)
F) B) and D)

Question 13

Suppose that a university decides to spend $1 million to upgrade personal computers and scientific equipment for faculty rather than spend $1 million to expand parking for students.This example illustrates

Accepted Answer

A)  distorted priorities.
B)  opportunity costs.
C)  increasing opportunity costs.
D)  productive efficiency.E) A) and C)
F) C) and D)

Question 14

The scientific method does not apply to economics, because economics studies human behavior, which cannot be generalized.

Accepted Answer

A) True 
 B)False

Question 15

Kelly works at an ice cream shop and observes that the number of people buying ice cream varies greatly from day to day.For a couple of weeks, she has recorded the number of people at the shop each day, as well as the daily temperature.If Kelly is using the scientific method to better understand ice cream buying habits, her next step is to

Accepted Answer

A)  conclude definitively that people buy more ice cream when the temperature rises.
B)  state her findings as a well-tested economic principle.
C)  use the observed data to form a hypothesis about ice cream buying behavior.
D)  throw out the data if it does not show a perfect relationship between buying habits and the other information she has collected.E) A) and D)
F) A) and C)

Question 16

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 C)
F) A) and D)

Question 17

The opportunity cost of doing or getting something is defined as

Accepted Answer

A)  the difference between the marginal cost and benefit of doing something.
B)  the materials used in doing or getting something.
C)  the value of the best alternative that is given up in order to do or get something.
D)  the money spent in doing or getting something.E) B) and C)
F) None of the above

Question 18

The opportunity cost to a consumer who smokes cigarettes consists of the

Accepted Answer

A)  costs imposed on others who inhale second-hand smoke.
B)  products that the consumer could have bought instead of cigarettes.
C)  amount of cigarette taxes paid by this consumer.
D)  cost of complementary products such as lighters, ashtrays, and cigarette holders.E) None of the above
F) A) and B)

Question 19

Which of the following statements is not correct?

Accepted Answer

A)  An increase in a nation's labor supply will cause its potential output to increase.
B)  Economic growth can be illustrated by an expansion of a nation's production possibilities curve.
C)  An increase in the quantity of a nation's resources will cause economic growth, but an increase in the quality of resources will not.
D)  New technologies or new ways of producing output can cause a nation's production possibilities curve to shift outward.E) B) and C)
F) A) and D)

Question 20

Which one of the following expressions best states the idea of opportunity cost?

Accepted Answer

A)  "A penny saved is a penny earned."
B)  "He who hesitates is lost."
C)  "There is no such thing as a free lunch."
D)  "All that glitters is not gold."E) A) and B)
F) A) and C)

Exam 1: Limits, Alternatives, and Choices

The scientific method does not apply to economics, because economics studies human behavior, which cannot be generalized.

Correct Answer
verified

The construction of a production possibilities curve assumes

Correct Answer
verified

Although sleeping in on a work day or school day has an opportunity cost, sleeping late on the weekend does not.

Correct Answer
verified

Suppose that a university decides to spend $1 million to upgrade personal computers and scientific equipment for faculty rather than spend $1 million to expand parking for students.This example illustrates

Correct Answer
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Which one of the following expressions best states the idea of opportunity cost?

Correct Answer
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The opportunity cost to a consumer who smokes cigarettes consists of the

Correct Answer
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(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

Correct Answer
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Mia wants to buy a book.The economic perspective suggests that Mia will buy the book if

Correct Answer
verified

Which of the following statements is not correct?

Correct Answer
verified

The purpose of the ceteris paribus assumption used in economic analysis is to

Correct Answer
verified

(Consider This) Free products offered by firms

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

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

Correct Answer
verified

The opportunity cost of doing or getting something is defined as

Correct Answer
verified

The basic difference between consumer goods and capital goods is that

Correct Answer
verified

If the equation y = 15 - 4x was plotted, the

Correct Answer
verified

Choices entail marginal costs because resources are scarce.

Correct Answer
verified

The economic perspective focuses largely on marginal analysis, which means analyzing

Correct Answer
verified

Exam 1: Limits, Alternatives, and Choices

The scientific method does not apply to economics, because economics studies human behavior, which cannot be generalized.

Correct AnswerverifiedShow Answer

The construction of a production possibilities curve assumes

Correct AnswerverifiedShow Answer

Although sleeping in on a work day or school day has an opportunity cost, sleeping late on the weekend does not.

Correct AnswerverifiedShow Answer

Suppose that a university decides to spend $1 million to upgrade personal computers and scientific equipment for faculty rather than spend $1 million to expand parking for students.This example illustrates

Correct AnswerverifiedShow Answer

Which one of the following expressions best states the idea of opportunity cost?

Correct AnswerverifiedShow Answer

The opportunity cost to a consumer who smokes cigarettes consists of the

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

Correct AnswerverifiedShow Answer

Mia wants to buy a book.The economic perspective suggests that Mia will buy the book if

Correct AnswerverifiedShow Answer

Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

The purpose of the ceteris paribus assumption used in economic analysis is to

Correct AnswerverifiedShow Answer

(Consider This) Free products offered by firms

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which question is an example of a macroeconomic question?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The opportunity cost of doing or getting something is defined as

Correct AnswerverifiedShow Answer

The basic difference between consumer goods and capital goods is that

Correct AnswerverifiedShow Answer

If the equation y = 15 - 4x was plotted, the

Correct AnswerverifiedShow Answer

Choices entail marginal costs because resources are scarce.

Correct AnswerverifiedShow Answer

The economic perspective focuses largely on marginal analysis, which means analyzing

Correct AnswerverifiedShow Answer

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