Question 1

You should decide to go to a movie

Accepted Answer

A)   if the marginal cost of the movie exceeds its marginal benefit.
B)   if the marginal benefit of the movie exceeds its marginal cost.
C)   if your income will allow you to buy a ticket.
D)   because movies are enjoyable.E) A) and D)
F) B) and D)

Question 2

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 deposits.E) None of the above
F) A) and B)

Question 3

Even though local newspapers are very inexpensive, people rarely buy more than one of them each day. This fact

Accepted Answer

A)   is an example of irrational behavior.
B)   implies that electronic media sources are displacing print sources for many consumers.
C)   contradicts the economic perspective.
D)   implies that, for most people, the marginal benefit of reading a second newspaper is less than the marginal cost.E) B) and D)
F) A) and D)

Question 4

(Consider This)  In response to the terrorist attacks of September 11, 2001, the government decided to allocate more resources toward defense goods. The government's decision reflects their assessment that

Accepted Answer

A)   the marginal benefits of additional defense goods outweighed the marginal cost.
B)   the marginal cost of additional defense goods outweighed the marginal benefit.
C)   there cannot be too many defense goods.
D)   civilian goods are not worth producing.E) A) and B)
F) A) and D)

Question 5

The entrepreneur's sole function is to combine other resources (land, labor, and capital) in the production of some good or service.

Accepted Answer

A) True 
 B)False

Question 6

Economic principles are value judgments about what the economy should be like or the way the economic world ought to be.

Accepted Answer

A) True 
 B)False

Question 7

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 C)
F) B) and C)

Question 8

Answer the question on the basis of the following five data sets, wherein it is assumed that the variable shown on the left is the independent variable and the one on the right is the dependent variable. Assume in graphing these data that the independent variable is shown on the horizontal axis and the dependent variable on the vertical axis.  Refer to the data sets. The variables are directly related in

Accepted Answer

A)   all five data sets.
B)   none of the data sets.
C)   data sets 1, 2, and 3 only.
D)   data sets 1, 2, and 5 only.E) C) and D)
F) A) and B)

Question 9

The slope of a graph that shows a direct relationship is

Accepted Answer

A)   always positive.
B)   either positive or negative.
C)   possibly zero.
D)   either zero or infinite.E) None of the above
F) A) and D)

Question 10

Which of the following is a capital resource?

Accepted Answer

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

Question 11

(Last Word)  The fallacy of composition is essentially the error of

Accepted Answer

A)   omitting relevant variables in constructing a model.
B)   reasoning from the general to the particular.
C)   confusing cause and effect in economic relationships.
D)   generalizing from the particular to the general.E) B) and C)
F) A) and D)

Question 12

Marginal analysis means that decision makers compare the extra benefits with the extra costs of a specific choice.

Accepted Answer

A) True 
 B)False

Question 13

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 resources in North Cantina and South Cantina are identical in quantity and quality. We can conclude that

Accepted Answer

A)   South Cantina has better technology than North Cantina in producing both capital and consumer goods.
B)   North Cantina has better technology than South Cantina in producing both capital and consumer goods.
C)   North Cantina is growing more rapidly than South Cantina.
D)   North Cantina has better technology than South Cantina in producing consumer goods but not capital goods.E) All of the above
F) None of the above

Question 14

Which question is an example of a microeconomic question?

Accepted Answer

A)   What should the Federal government do to reduce the trade deficit with Japan?
B)   Will the merger of two airlines likely lead to a higher cost of air travel in the economy?
C)   What factors are contributing to the steep rise in the federal government's total debt?
D)   Will the inflation rate remain relatively stable this year?E) A) and B)
F) A) and D)

Question 15

The quantity or supply of land resources available to a nation is pretty much fixed and cannot increase over time.

Accepted Answer

A) True 
 B)False

Question 16

Assume that a consumer spends a given budget on only two goods and that the prices of the two goods are constant. The budget line in this case would

Accepted Answer

A)   definitely be a straight downward-sloping line.
B)   possibly be a straight upward-sloping line.
C)   be a curved graph bowed outward.
D)   be a curved bell-shaped graph.E) A) and C)
F) A) and B)

Question 17

Assume that a change in government policy results in greater production of both consumer goods and investment goods. We can conclude that

Accepted Answer

A)   the economy was not employing all of its resources before the policy change.
B)   the economy's production possibilities curve has been shifted to the left as a result of the policy decision.
C)   this economy's production possibilities curve is convex (bowed inward)  to the origin.
D)   the law of increasing opportunity costs does not apply in this society.E) All of the above
F) C) and D)

Question 18

For economists, the word "utility" means

Accepted Answer

A)   versatility and flexibility.
B)   rationality.
C)   pleasure or satisfaction.
D)   purposefulness.E) None of the above
F) All of the above

Question 19

Which of the following is assumed in constructing a typical production possibilities curve?

Accepted Answer

A)   The economy is using its resources inefficiently.
B)   Resources are perfectly shiftable among alternative uses.
C)   Production technology is fixed.
D)   The economy is engaging in international trade.E) A) and C)
F) B) and C)

Question 20

A nation can produce two products: tanks and autos. The table below is the nation's production possibilities schedule.  The total opportunity cost of three units of tanks is

Accepted Answer

A)   6 units of tanks.
B)   350 units of autos.
C)   650 units of autos.
D)   1,000 units of autos.E) B) and D)
F) C) and D)

Exam 1: Limits, Alternatives, and Choices

Marginal analysis means that decision makers compare the extra benefits with the extra costs of a specific choice.

Correct Answer
verified

The quantity or supply of land resources available to a nation is pretty much fixed and cannot increase over time.

Correct Answer
verified

Correct Answer
verified

Economic principles are value judgments about what the economy should be like or the way the economic world ought to be.

Correct Answer
verified

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 resources in North Cantina and South Cantina are identical in quantity and quality. We can conclude that

Correct Answer
verified

Which of the following is a capital resource?

Correct Answer
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Which of the following is assumed in constructing a typical production possibilities curve?

Correct Answer
verified

Which question is an example of a microeconomic question?

Correct Answer
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You should decide to go to a movie

Correct Answer
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Even though local newspapers are very inexpensive, people rarely buy more than one of them each day. This fact

Correct Answer
verified

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

Correct Answer
verified

Assume that a change in government policy results in greater production of both consumer goods and investment goods. We can conclude that

Correct Answer
verified

(Consider This) In response to the terrorist attacks of September 11, 2001, the government decided to allocate more resources toward defense goods. The government's decision reflects their assessment that

Correct Answer
verified

The entrepreneur's sole function is to combine other resources (land, labor, and capital) in the production of some good or service.

Correct Answer
verified

A nation can produce two products: tanks and autos. The table below is the nation's production possibilities schedule. The total opportunity cost of three units of tanks is

Correct Answer
verified

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

Correct Answer
verified

For economists, the word "utility" means

Correct Answer
verified

(Last Word) The fallacy of composition is essentially the error of

Correct Answer
verified

Assume that a consumer spends a given budget on only two goods and that the prices of the two goods are constant. The budget line in this case would

Correct Answer
verified

The slope of a graph that shows a direct relationship is

Correct Answer
verified

Exam 1: Limits, Alternatives, and Choices

Marginal analysis means that decision makers compare the extra benefits with the extra costs of a specific choice.

Correct AnswerverifiedShow Answer

The quantity or supply of land resources available to a nation is pretty much fixed and cannot increase over time.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Economic principles are value judgments about what the economy should be like or the way the economic world ought to be.

Correct AnswerverifiedShow Answer

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 resources in North Cantina and South Cantina are identical in quantity and quality. We can conclude that

Correct AnswerverifiedShow Answer

Which of the following is a capital resource?

Correct AnswerverifiedShow Answer

Which of the following is assumed in constructing a typical production possibilities curve?

Correct AnswerverifiedShow Answer

Which question is an example of a microeconomic question?

Correct AnswerverifiedShow Answer

You should decide to go to a movie

Correct AnswerverifiedShow Answer

Even though local newspapers are very inexpensive, people rarely buy more than one of them each day. This fact

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Assume that a change in government policy results in greater production of both consumer goods and investment goods. We can conclude that

Correct AnswerverifiedShow Answer

(Consider This) In response to the terrorist attacks of September 11, 2001, the government decided to allocate more resources toward defense goods. The government's decision reflects their assessment that

Correct AnswerverifiedShow Answer

The entrepreneur's sole function is to combine other resources (land, labor, and capital) in the production of some good or service.

Correct AnswerverifiedShow Answer

A nation can produce two products: tanks and autos. The table below is the nation's production possibilities schedule. The total opportunity cost of three units of tanks is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

For economists, the word "utility" means

Correct AnswerverifiedShow Answer

(Last Word) The fallacy of composition is essentially the error of

Correct AnswerverifiedShow Answer

Assume that a consumer spends a given budget on only two goods and that the prices of the two goods are constant. The budget line in this case would

Correct AnswerverifiedShow Answer

The slope of a graph that shows a direct relationship is

Correct AnswerverifiedShow Answer

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