Question 1

Which of the following statements is true?

Accepted Answer

A)   Microeconomics focuses on specific decision-making units of the economy; macroeconomics examines the economy as a whole.
B)   Macroeconomics focuses on specific decision-making units of the economy; microeconomics examines the economy as a whole.
C)   Every topic in economics is either a microeconomic or a macroeconomic issue; a topic cannot be both.
D)   Topics in microeconomics have public policy implications; topics in macroeconomics do not.E) B) and D)
F) A) and C)

Question 2

Entrepreneurship refers to a new college graduate who is looking for a job with a large company.

Accepted Answer

A) True 
 B)False

Question 3

Economics involves marginal analysis because

Accepted Answer

A)   most decisions involve changes from the present situation.
B)   marginal benefits always exceed marginal costs.
C)   marginal costs always exceed marginal benefits.
D)   much economic behavior is irrational.E) All of the above
F) B) and D)

Question 4

The economizing problem for individuals arises from the conflict between having relatively unlimited time and relatively limited jobs to do.

Accepted Answer

A) True 
 B)False

Question 5

Assume that a consumer purchases only two products and there is a decrease in the consumer's income. The prices of the two products stay constant. The decrease in income will result in

Accepted Answer

A)   a shift of the budget line inward to the left.
B)   a shift of the budget line outward to the right.
C)   a decrease in the slope of the budget line.
D)   an increase in the slope of the budget line.E) A) and B)
F) C) and D)

Question 6

A nation's production possibilities curve might shift to the left (inward)  as a result of

Accepted Answer

A)   technological advance.
B)   increases in the size of the labor force.
C)   the depletion of its soil fertility due to overplanting and overgrazing.
D)   investing in more capital goods.E) B) and D)
F) A) and D)

Question 7

A nation that devotes more of its resources to the production of capital goods rather than consumer goods is likely to

Accepted Answer

A)   cause its production possibilities curve to shift outward.
B)   cause its production possibilities curve to shift inward.
C)   increase the slope of its production possibilities curve.
D)   decrease the slope of its production possibilities curve.E) A) and D)
F) A) and B)

Question 8

The typical production possibilities curve is

Accepted Answer

A)   an upsloping line that is bowed out from the origin.
B)   a downsloping line that is bowed in toward the origin.
C)   a downsloping line that is bowed out from the origin.
D)   a straight upsloping line.E) All of the above
F) C) and D)

Question 9

Economic growth is a result of

Accepted Answer

A)   a reduction in the unemployment rate.
B)   an increase in the opportunity costs of production.
C)   a decrease in the demand for resources.
D)   an increase in the supply of resources.E) A) and D)
F) None of the above

Question 10

What is a major opportunity cost of going to college on a full-time basis?

Accepted Answer

A)   the cost of transportation to college instead of to a job
B)   the cost of living expenses (room and board)  to attend college
C)   the forgone income that would have been earned working in a full-time job
D)   the greater income that will be earned from having a college degreeE) A) and B)
F) None of the above

Question 11

Suppose that a consumer purchases just two goods, X and Y. The ratio of the price of good X to the price of good Y is the

Accepted Answer

A)   intercept on the Y axis of the budget line.
B)   intercept on the X axis of the budget line.
C)   size of the shift in the budget line.
D)   slope of the budget line.E) A) and B)
F) A) and C)

Question 12

A nation's production possibilities curve shows the maximum combinations of resources that a nation can use.

Accepted Answer

A) True 
 B)False

Question 13

According to economists, economic self-interest

Accepted Answer

A)   is a reality that underlies economic behavior.
B)   has the same meaning as selfishness.
C)   means that people never make wrong decisions.
D)   is usually self-defeating.E) All of the above
F) A) and C)

Question 14

If the marginal benefits are greater than the marginal cost of an activity, then society should allocate fewer resources to this activity.

Accepted Answer

A) True 
 B)False

Question 15

The post hoc, ergo propter hoc fallacy consists of

Accepted Answer

A)   using an example to "prove" a different point.
B)   inferring causality from chronological sequence.
C)   jumping to conclusions from an inadequate number of cases.
D)   arguing for or against a person's character rather than his view or opinion.E) None of the above
F) B) and D)

Question 16

Choices entail marginal costs because resources are scarce.

Accepted Answer

A) True 
 B)False

Question 17

When economists say that people act rationally in their self-interest, they mean that individuals

Accepted Answer

A)   look for and pursue opportunities to increase their utility.
B)   generally disregard the interests of others.
C)   are mainly creatures of habit.
D)   are usually impulsive and unpredictable.E) A) and B)
F) A) and C)

Question 18

The production possibilities curve illustrates the basic principle that

Accepted Answer

A)   the production of more of any one good will in time require smaller and smaller sacrifices of other goods.
B)   an economy will automatically obtain full employment of its resources.
C)   if all the resources of an economy are in use, more of one good can be produced only if less of another good is produced.
D)   an economy's capacity to produce increases in proportion to its population size.E) A) and B)
F) None of the above

Question 19

A nation can produce two products: tanks and autos. The table below is the nation's production possibilities schedule.  If the nation produces more and more tanks, the opportunity cost of each additional tank in terms of autos

Accepted Answer

A)   remains constant.
B)   falls.
C)   increases.
D)   cannot be measured.E) All of the above
F) B) and C)

Question 20

A movement from one point to another along the production possibilities curve would imply that

Accepted Answer

A)   the labor force available to society has grown.
B)   productivity has increased over time.
C)   productivity has declined over time.
D)   society is producing a different combination of outputs.E) C) and D)
F) A) and D)

Exam 1: Limits, Alternatives, and Choices

Economic growth is a result of

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According to economists, economic self-interest

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If the marginal benefits are greater than the marginal cost of an activity, then society should allocate fewer resources to this activity.

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The typical production possibilities curve is

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When economists say that people act rationally in their self-interest, they mean that individuals

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What is a major opportunity cost of going to college on a full-time basis?

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Entrepreneurship refers to a new college graduate who is looking for a job with a large company.

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Which of the following statements is true?

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The post hoc, ergo propter hoc fallacy consists of

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The production possibilities curve illustrates the basic principle that

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A nation's production possibilities curve might shift to the left (inward) as a result of

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Choices entail marginal costs because resources are scarce.

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A nation's production possibilities curve shows the maximum combinations of resources that a nation can use.

Correct AnswerverifiedShow Answer

Economics involves marginal analysis because

Correct AnswerverifiedShow Answer

A nation that devotes more of its resources to the production of capital goods rather than consumer goods is likely to

Correct AnswerverifiedShow Answer

A movement from one point to another along the production possibilities curve would imply that

Correct AnswerverifiedShow Answer

Assume that a consumer purchases only two products and there is a decrease in the consumer's income. The prices of the two products stay constant. The decrease in income will result in

Correct AnswerverifiedShow Answer

The economizing problem for individuals arises from the conflict between having relatively unlimited time and relatively limited jobs to do.

Correct AnswerverifiedShow Answer

Suppose that a consumer purchases just two goods, X and Y. The ratio of the price of good X to the price of good Y is the

Correct AnswerverifiedShow Answer

A nation can produce two products: tanks and autos. The table below is the nation's production possibilities schedule. If the nation produces more and more tanks, the opportunity cost of each additional tank in terms of autos

Correct AnswerverifiedShow Answer

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