Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
d.
bad.
e.
none of the above
70. A good provides __________ and a bad provides __________.
a.
utility; satisfaction
b.
disutility; utility
c.
dissatisfaction; satisfaction
d.
utility; disutility
e.
satisfaction; utility
71. Which of the following statements is false?
a.
To an economist, the resource land includes natural resources such as minerals, forests, water and unimproved
land.
b.
To an economist, the resource capital consists of unproduced goods that can be turned into produced goods.
c.
To an economist, the resource labor consists of the physical and mental talents people contribute to the
production process.
d.
To an economist, the resource entrepreneurship refers to a particular talent that some people have for
organizing the resources of land, labor, and capital to produce goods, seek new business opportunities, and
develop new ways of doing things.
72. A person goes into a store and buys a computer for $1,210. In this case, price is acting as a
a.
resource.
b.
good.
c.
rationing device.
d.
capital instrument.
e.
factor of production.
73. If people want more cars than there are cars available, then it is necessarily true that
a.
cars are scarce.
b.
there is a surplus of cars.
c.
there is a decreased supply of cars.
d.
none of the above
74. Why do societies need rationing devices?
a.
Because people have too many needs and not enough wants.
b.
Because price exists.
c.
Because scarcity exists.
d.
Because people have opportunity costs.
75. How is scarcity related to competition?
a.
Competition is an effect of scarcity.
b.
Scarcity is an effect of competition.
c.
Both scarcity and competition are effects of a rationing device.
d.
Both scarcity and competition are effects of opportunity cost.
e.
Scarcity produces disutility and competition produces utility.
76. Every time you make a __________, you incur a(n) __________.
a.
decision; efficient effect
b.
choice; opportunity cost
c.
competitive move; price
d.
decision; mistake
e.
none of the above
77. "If you hadn't gone to dinner with your friends, you would have stayed home and watched television." It follows that
a.
watching television is the opportunity cost of having dinner with your friends.
b.
the price of having dinner with your friends is more than the price you would have had to pay to watch
television.
c.
the opportunity cost of having dinner with your friends is lower than the opportunity cost of watching
television.
d.
it is less costly to watch television than to have dinner with your friends.
78. The __________ the opportunity cost of doing something, the __________ likely a person will do that something.
a.
lower; less
b.
lower; more
c.
higher; more
d.
higher; less
e.
b and d
79. If scarcity didn't exist, neither would
a.
rationing devices.
b.
competition.
c.
labor.
d.
capital.
e.
a and b
80. The cost of building a new interstate highway system is reported to be high at $25 billion. Does it necessarily follow
that the interstate highway is not worth building?
a.
Yes, because it is better to spend $25 billion on ending poverty than on building another interstate highway
system.
b.
No, because building a new interstate highway system promotes economic growth, which helps everyone.
c.
No, because the benefits of building a new interstate highway system may be greater than $25 billion.
d.
Yes, because the benefits of building a new interstate highway system may be greater than $25 billion.
81. Which of the following statements is true?
a.
Oil is classified as part of the resource category land.
b.
A person working for a company is classified as part of the resource category capital.
c.
A machine in a factory is classified as part of the resource category land.
d.
A person with the particular talent for organizing the resources of land, labor, and capital to produce goods,
seek new business opportunities, and develop new ways of doing things is classified as part of the resource
category labor.
e.
a and d
82. Saying "the marginal costs are greater than the marginal benefits" is the same as saying
a.
the average costs are greater than the average benefits.
b.
the total costs are greater than the average benefits.
c.
the benefits are greater than the costs.
d.
the additional costs are greater than the additional benefits.
e.
the costs minus the benefits equal the net costs.
83. What does it mean if a person makes a "decision at the margin"?
a.
The person compares additional benefits and additional costs when deciding what to do.
b.
The person weighs the good against the bad and then decides what to do.
c.
The person is more likely to say yes than to say no.
d.
The person compares marginal benefits and total costs and then decides what to do.
e.
The person makes a decision based on a condition.
84. Is it possible for mandatory seatbelt laws to increase vehicle fatalities?
a.
Yes, if the number of accidents increases by a greater percentage than the number of deaths per accident
decreases.
b.
No, because wearing seatbelts decreases the number of deaths per accident.
c.
No, because wearing seatbelts decreases the number of accidents.
d.
There is not enough information to answer the question.
85. Which of the following is a positive economic statement?
a.
We should raise the minimum wage in order to provide a decent wage for more people.
b.
Consumers bought fewer cars when the relative price of cars increased.
c.
The budget deficit has been rising in recent years.
d.
Federal government spending ought to be curtailed.
e.
b and c
86. Which of the following statements is false?
a.
Microeconomics is the branch of economics that deals with human behavior and choices as they relate to
relatively small units-an individual, a firm, an industry, and a single market.
b.
Macroeconomics is the branch of economics that deals with human behavior and choices as they relate to
highly aggregate markets.
c.
Positive economics attempts to determine what is.
d.
Normative economics addresses what should be.
e.
Positive and normative economics both address what should be.
87. Which of the following is least likely to be an effect of scarcity?
a.
rationing device
b.
choice
c.
opportunity cost
d.
dollar price
e.
utility
88. How are changes in opportunity cost predicted to affect behavior?
a.
The lower the opportunity cost of doing X, the less likely X will be done.
b.
The higher the opportunity cost of doing X, the less likely X will be done.
c.
The lower the opportunity cost of doing X, the more likely X will be done.
d.
a and c
e.
b and c
89. In most societies, dollar price acts as the main rationing device. If dollar price weren't the main rationing device,
would there still be a need for some rationing device to take its place?
a.
No, because with dollar price there would be no scarcity, although shortages would still exist.
b.
Yes, because there is a need for a rationing device as long as scarcity exists.
c.
Yes, because there is a need for a rationing device as long as the world's population is so large.
d.
No, because dollar price creates scarcity and without money price scarcity wouldn't exist.
e.
none of the above
90. Which of the following statements is false?
a.
Capital consists of produced goods that can be used as inputs for further production.
b.
The terms resources, inputs, and factors of production are synonyms.
c.
Labor consists of the physical, but not mental, talents of people who contribute to the production process.
d.
Entrepreneurship is one of the four categories of resources.
e.
The resource category land includes natural resources, such as minerals, forests, water, and unimproved land.
91. Making a decision at the margin is __________ an all-or-nothing decision.
a.
consistent with
b.
inconsistent with
c.
the same as making
d.
conditioned upon making
92. Which of the following is most likely to be an unintended effect of placing safety caps on medicines?
a.
It is now harder for people to open their medicine containers.
b.
People leave their medicine containers open more often, which ends up making it easier for children to get into
the medicine.
c.
Fewer people get sick and need medicine.
d.
Medicine prices fall sharply.
93. In general, there is a ______________ relationship between the number of hours spent studying for a test and the
grade earned on the test.
a.
independent
b.
direct
c.
inverse
d.
smooth
94. Variables X and Y are independent of each other. If we plot X on the horizontal axis and Y on the vertical axis, the
line that connects combinations of X and Y in a two-variable diagram is
a.
parallel to the horizontal axis.
b.
downward-sloping (left to right).
c.
parallel to the vertical axis.
d.
upward-sloping (left to right).
e.
a or c
95. Variables A and B are inversely related. If we plot A on the horizontal axis and B on the vertical axis, the line that
connects combinations of A and B in a two-variable diagram is
a.
parallel to the horizontal axis.
b.
downward-sloping (left to right).
c.
parallel to the vertical axis.
d.
upward-sloping (left to right).
e.
a or c
96. Variables A and B are directly related. If we plot A on the horizontal axis and B on the vertical axis, the line that
connects combinations of A and B in a two-variable diagram is
a.
parallel to the horizontal axis.
b.
downward-sloping (left to right).
c.
parallel to the vertical axis.
d.
upward-sloping (left to right).
e.
a or c
97. The coordinates of point A are 20 units of X and 36 units of Y. The coordinates of point B are 22 units of X and 30
units of Y. With X on the horizontal axis and Y on the vertical axis, the slope of the line between points A and B is
a.
+ 3.00
b.
+ .20
c.
+ 0.33
d.
- 0.33
e.
- 3.00
98. A line is parallel to the vertical axis. The slope of the line is
a.
zero.
b.
infinite.
c.
indicative of an inverse relationship between two variables.
d.
indicative of a direct relationship between two variables.
e.
b and d
99. A line is parallel to the horizontal axis. The slope of the line is
a.
infinite.
b.
indicative of an inverse relationship between two variables.
c.
indicative of a direct relationship between two variables.
d.
zero.
e.
b and d
100. By looking at the different slices of a pie chart, and comparing one slice to another, it is possible to quickly estimate
a.
relative relationships.
b.
absolute relationships.
c.
the slope of a line.
d.
the slope of a curve.
e.
none of the above
101. A characteristic of a 45-degree line is that
a.
any point on the line is equidistant from the two axes.
b.
it bisects a right angle.
c.
its slope is 1.
d.
a and c
e.
a, b, and c
102. The answer is, "This is principally used to exhibit changes in data over time." The question is,
a.
What is a pie chart?
b.
What is a 45-degree line?
c.
What is a tangent line?
d.
What is a line graph?
e.
b and d
103. Which of the following is a possible rationing device?
a.
dollar price
b.
first-come-first-served
c.
brute force
d.
a and b
e.
a, b, and c
Exhibit 1-1
104. Refer to Exhibit 1-1. The student whose study habits are illustrated here will maximize the net benefits of studying
when she has studied
a.
2 hours
b.
4 hours
c.
6 hours
d.
8 hours
105. Refer to Exhibit 1-1. If the student whose study habits are illustrated here is currently studying for the 8th hour, she
should
a.
cut back on the number of hours she is studying because the marginal benefit of studying for the 8th hour is
less than the marginal cost of doing so.
b.
cut back on the number of hours she is studying because the marginal benefit of studying for the 8th is greater
than the marginal cost of doing so.
c.
increase the number of hours she is studying because the marginal benefit of studying for the 8th hour is less
than the marginal cost of doing so.
d.
increase the number of hours she is studying because the marginal benefit of studying for the 8th hour is
greater than the marginal cost of doing so.
106. Refer to Exhibit 1-1. If the student whose study habits are illustrated here is currently studying for the 2nd hour she
should
a.
cut back on the number of hours she is studying because the marginal benefit of studying for the 2nd hour is
less than the marginal cost of doing so.
b.
cut back on the number of hours she is studying because the marginal benefit of studying for the 2nd hour is
greater than the marginal cost of doing so.
c.
increase the number of hours she is studying because the marginal benefit of studying for the 2nd hour is less
than the marginal cost of doing so.
d.
increase the number of hours she is studying because the marginal benefit of studying for the 2ndhour is
greater than the marginal cost of doing so.
107. To an economist, utility means:
a.
additional.
b.
usefulness.
c.
satisfaction.
d.
marginal.
108. According to economists, competition exists because of
a.
scarcity.
b.
capitalism.
c.
money.
d.
unintended effects.
109. Many people buy one newspaper per day, but rarely do they buy two of the same newspapers on the same day. What
is the economic justification for this behavior?
a.
The marginal benefit of purchasing the second newspaper exceeds the marginal cost of purchasing that paper.
b.
The marginal cost of purchasing the second newspaper exceeds the marginal benefit of purchasing that paper.
c.
The marginal benefit of purchasing the second newspaper equals the marginal cost of purchasing that paper.
d.
none of the above is an appropriate economic justification for this behavior.
Exhibit 1-2
Point
X
Y
A
10
100
B
20
120
C
30
145
D
40
185
110. Refer to Exhibit 1-2. According to the data provided in this table, what is the slope of the line between points A and
B, if these data were graphed with X on the horizontal axis and Y on the vertical axis?
a.
-2.00
b.
-0.50
c.
2.00
d.
0.50
111. Refer to Exhibit 1-2. According to the data provided in this table, what is the slope of the line between points C and
D, if these data were graphed with X on the horizontal axis and Y on the vertical axis?
a.
-4.00
b.
-0.25
c.
4.00
d.
0.25
e.
none of the above
112. Refer to Exhibit 1-2. Based on the data provided in this table, if these data were plotted in a two-variable diagram
the result would be a ______________ sloping ____________________.
a.
downward; (nonlinear) curve.
b.
downward; (straight) line.
c.
upward; (nonlinear) curve.
d.
upward; (straight) line.
e.
none of the above
113. Refer to Exhibit 1-2. Based on the data provided in this table, what type of relationship exists between variables X
and Y?
a.
inverse
b.
direct
c.
independent
d.
There is no relationship between variables X and Y.
Exhibit 1-3
Point
X
Y
A
5
8
B
10
6
C
15
4
D
20
2
114. Refer to Exhibit 1-3. According to the data provided in this table, what is the slope of the line between points C and
D (if these data were graphed with X on the horizontal axis and Y on the vertical axis)?
a.
-0.40
b.
-2.50
c.
0.40
d.
2.50
e.
none of the above
115. Refer to Exhibit 1-3. According to the data provided in this table, what is the slope of the line between points A and
B, if these data were graphed with X on the horizontal axis and Y on the vertical axis?
a.
-0.40
b.
-2.50
c.
0.40
d.
2.50
e.
none of the above
116. Refer to Exhibit 1-3. Based on the data provided in this table, if these data were plotted in a two-variable diagram
the result would be a ______________ sloping
a.
downward; (nonlinear) curve.
b.
downward; (straight) line.
c.
upward; (nonlinear) curve.
d.
upward; (straight) line.
e.
none of the above
117. Refer to Exhibit 1-3. Based on the data provided in this table, what type of relationship exists between variables X
and Y?
a.
inverse
b.
direct
c.
independent
