Question 1

The economizing problem faced by society is essentially one of deciding how to make the best use of

Accepted Answer

A)  limited economic resources to satisfy limited wants.
B)  unlimited economic resources to satisfy unlimited wants.
C)  unlimited economic resources to satisfy limited wants.
D)  limited economic resources to satisfy unlimited economic wants.E) None of the above
F) A) and B)

Question 2

A nation's consumption is strictly limited by its production possibilities, even with specialization and international trade.

Accepted Answer

A) True 
 B)False

Question 3

The distinction between microeconomics and macroeconomics is

Accepted Answer

A)  that microeconomics examines the beach, while macroeconomics looks at the sand, individual rocks, and shells, so to speak.
B)  so clear-cut that every topic can be readily labeled as either macro or micro.
C)  that microeconomics studies the behavior of individual consumers, workers, and firms, while macroeconomics studies the economy as a whole.
D)  that microeconomics seeks to obtain an overview, while macroeconomics observes the details of individual components.E) None of the above
F) All of the above

Question 4

The slope of a graph measures the rate of change in one variable as the other variable changes.

Accepted Answer

A) True 
 B)False

Question 5

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) None of the above
F) A) and D)

Question 6

If the equation y = -10 + 2.5x was plotted,

Accepted Answer

A)  the vertical intercept would be -10.
B)  the slope would be -7.5.
C)  it would graph as a downsloping line.
D)  the slope would be -10.E) C) and D)
F) A) and B)

Question 7

The slope of a straight line can be determined by

Accepted Answer

A)  comparing the absolute horizontal change to the absolute vertical change between two points on the line.
B)  comparing the absolute vertical change to the absolute horizontal change between two points on the line.
C)  taking the reciprocal of the vertical intercept.
D)  comparing the percentage vertical change to the percentage horizontal change between two points on the line.E) A) and B)
F) B) and C)

Question 8

The comment that "taxes must be reduced for the good of the economy" is an example of a normative economic statement.

Accepted Answer

A) True 
 B)False

Question 9

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 10

Which situation would most likely cause a nation's production possibilities curve to shift inward?

Accepted Answer

A)  an increase in unemployment
B)  an increase in the amount of imports
C)  an increase in the number of skilled immigrant workers
D)  the destruction caused by bombing and warfare in a losing military conflictE) All of the above
F) C) and D)

Question 11

Any point inside the production possibilities curve indicates

Accepted Answer

A)  the presence of technological change.
B)  that resources are imperfectly substitutable among alternative uses.
C)  the presence of inflationary pressures.
D)  that more output could be produced with the available resources.E) B) and C)
F) A) and D)

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

The "other things equal" assumption is employed when

Accepted Answer

A)  the graph of a given relationship is shifting up or down.
B)  economists draw a two-dimensional (or two-axes)  graph.
C)  the relationship is direct, but not when it is inverse.
D)  the relationship is inverse, but not when it is direct.E) B) and D)
F) A) and D)

Question 14

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) A) and B)
F) B) and C)

Question 15

Purposeful behavior implies that everyone will make identical choices.

Accepted Answer

A) True 
 B)False

Question 16

The opportunity cost of constructing a new public highway is the

Accepted Answer

A)  money cost of hiring contractors and construction workers for the new highway.
B)  value of other goods and services that are sacrificed in order to construct the new highway.
C)  expected cost of constructing the new highway in a future year.
D)  value of shorter driving times and distances when the new highway is completed.E) None of the above
F) All of the above

Question 17

Economics may best be defined as the

Accepted Answer

A)  interaction between macro and micro considerations.
B)  social science concerned with how individuals, institutions, and society make optimal choices under conditions of scarcity.
C)  empirical testing of value judgments through the use of logic.
D)  study of why people are rational.E) A) and B)
F) A) and C)

Question 18

An increase in immigration would shift the production possibilities curve to the left.

Accepted Answer

A) True 
 B)False

Question 19

The production possibilities curve is a graph of

Accepted Answer

A)  the maximum amounts of labor and capital resources available for production.
B)  various combinations of goods and services among which consumers are indifferent in terms of preference.
C)  the maximum combinations of products that can be produced with the available resources.
D)  the maximum amount of capital and labor that the economy can employ.E) None of the above
F) A) and B)

Question 20

Which of the following is considered a firm's "factor of production"?

Accepted Answer

A)  money or cash balances of the firm
B)  the firm's shares of common stock
C)  U.S.Treasury bonds owned by the firm
D)  the office building occupied by the firmE) A) and B)
F) C) and D)

Exam 1: Limits, Alternatives, and Choices

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

Correct AnswerverifiedShow Answer

Purposeful behavior implies that everyone will make identical choices.

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If the equation y = -10 + 2.5x was plotted,

Correct AnswerverifiedShow Answer

The economizing problem faced by society is essentially one of deciding how to make the best use of

Correct AnswerverifiedShow Answer

The slope of a graph measures the rate of change in one variable as the other variable changes.

Correct AnswerverifiedShow Answer

The slope of a straight line can be determined by

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

An increase in immigration would shift the production possibilities curve to the left.

Correct AnswerverifiedShow Answer

Any point inside the production possibilities curve indicates

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The "other things equal" assumption is employed when

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The production possibilities curve is a graph of

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

Which situation would most likely cause a nation's production possibilities curve to shift inward?

Correct AnswerverifiedShow Answer

A nation's consumption is strictly limited by its production possibilities, even with specialization and international trade.

Correct AnswerverifiedShow Answer

The comment that "taxes must be reduced for the good of the economy" is an example of a normative economic statement.

Correct AnswerverifiedShow Answer

Which of the following is a capital resource?

Correct AnswerverifiedShow Answer

The opportunity cost of constructing a new public highway is the

Correct AnswerverifiedShow Answer

Which of the following is considered a firm's "factor of production"?

Correct AnswerverifiedShow Answer

The distinction between microeconomics and macroeconomics is

Correct AnswerverifiedShow Answer

Economics may best be defined as the

Correct AnswerverifiedShow Answer

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