Chapter 1 - m_c - Economics.pdf

12/22/2014 Chapter 1 m/c Economics

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Economics

OCC - ECON 101

4_US ECONOMY

CHAPTER 1 - M/C

CHAPTER 1 - M/C(SET2)

CHAPTER 1 -PROBLEMS

CHAPTER 1 -SOLUTIONS

CHAPTER 1 - T/F

CHAPTER 1 - T/F (SET2)

CHAPTER 10

CHAPTER 10

CHAPTER 11

CHAPTER 11

CHAPTER 12

CHAPTER 12

CHAPTER 13

CHAPTER 13

CHAPTER 14

CHAPTER 14

CHAPTER 15

CHAPTER 15

CHAPTER 16

CHAPTER 16

CHAPTER 17

CHAPTER 17

CHAPTER 18

CHAPTER 18

CHAPTER 19

CHAPTER 19

OCC - ECON 101 >

Chapter 1 - m/c

Chapter 01 Limits, Alternatives, andChoices (+ Appendix) Answer Key

Multiple Choice Questions

1. For economists, the word "utility"means: A. versatility and flexibility.B. rationality.C. pleasure or satisfaction.D. purposefulness.

AACSB: AnalyticBloom's: Level 1 RememberDifficulty: 1 EasyLearning Objective: 01-01 Defineeconomics and the features of theeconomic perspective.Topic: Economics; economicperspective

2. In economics, the pleasure,happiness, or satisfaction receivedfrom a product is called: A. marginal cost.B. rational outcome.C. status fulfillment.D. utility.

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https://sites.google.com/site/usaprofmontanoeconomics/home/chapter-1---solutions

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https://sites.google.com/site/usaprofmontanoeconomics/home/tf


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CHAPTER 2 - MARKETSYSTEM

CHAPTER 2 - MARKETSYSTEM

CHAPTER 2 - MARKETSYSTEM (PROBS/ANS)

CHAPTER 2 - MARKETSYSTEM (SET 2)

CHAPTER 2 -MULTIPLE/CHOICE (SET2)

CHAPTER 2 -PROBLEMS

CHAPTER 20

CHAPTER 20

CHAPTER 20

CHAPTER 21

CHAPTER 21

CHAPTER 21

CHAPTER 22

CHAPTER 22

CHAPTER 22

CHAPTER 23 (37)

CHAPTER 26

CHAPTER 27

CHAPTER 28

CHAPTER 29

CHAPTER 3

CHAPTER 3 - DEMAND& SUPPLY

CHAPTER 3 - SET2

CHAPTER 3 - T/F

CHAPTER 30

CHAPTER 31

CHAPTER 32

CHAPTER 33

CHAPTER 34

CHAPTER 35

CHAPTER 35

CHAPTER 36


3. When economists say thatpeople act rationally in their selfinterest, they mean thatindividuals: A. look for and pursueopportunities to increase theirutility.B. generally disregard the interestsof others.C. are mainly creatures of habit.D. are usually impulsive andunpredictable.

AACSB: Reflective ThinkingBloom's: Level 2 UnderstandDifficulty: 2 MediumLearning Objective: 01-01 Defineeconomics and the features of theeconomic perspective.Topic: Economics; economicperspective

4. According to Emerson: "Want is agrowing giant whom the coat ofHave was never large enough tocover." According to economists,"Want" exceeds "Have" because: A. people are greedy.B. productive resources are limited.C. human beings are inherentlyinsecure.D. people are irrational.


https://sites.google.com/site/usaprofmontanoeconomics/home/mc31


https://sites.google.com/site/usaprofmontanoeconomics/home/tf3












https://sites.google.com/site/usaprofmontanoeconomics/home/tf2a









https://sites.google.com/site/usaprofmontanoeconomics/home/chapter-2


https://sites.google.com/site/usaprofmontanoeconomics/home/m27

https://sites.google.com/site/usaprofmontanoeconomics/home/m26







CHAPTER 36

CHAPTER 37

CHAPTER 37

CHAPTER 38

CHAPTER 38

CHAPTER 39

CHAPTER 39

CHAPTER 4

CHAPTER 4

CHAPTER 5

CHAPTER 5

CHAPTER 5

CHAPTER 5 - SET2

CHAPTER 6

CHAPTER 6

CHAPTER 7

CHAPTER 7

CHAPTER 8

CHAPTER 8

CHAPTER 9

CHAPTER 9

MC23A

MC38A

MC6A

MC6AA

SOL10

SOL8

TF1

TF2

TF4

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5. According to economists,economic self-interest: A. is a reality that underlieseconomic behavior.B. has the same meaning asselfishness.C. is more characteristic of menthan of women.D. is usually self-defeating.


6. Joe sold gold coins for $1000 thathe bought a year ago for $1000. Hesays, "At least I didn't lose anymoney on my financial investment."His economist friend points outthat in effect he did lose money,because he could have received a 3percent return on the $1000 if hehad bought a bank certificate ofdeposit instead of the coins. Theeconomist's analysis in this caseincorporates the idea of: A. opportunity costs.B. marginal benefits that exceedmarginal costs.C. imperfect information.






https://sites.google.com/site/usaprofmontanoeconomics/home/mc6aa


https://sites.google.com/site/usaprofmontanoeconomics/home/sol8-1

https://sites.google.com/site/usaprofmontanoeconomics/home/sol37_23








https://sites.google.com/site/usaprofmontanoeconomics/home/tf39aaa






















TF6

TF6

CHAPTER 1

CHAPTER 10

CHAPTER 10

CHAPTER 10

CHAPTER 10

CHAPTER 10

CHAPTER 11

CHAPTER 11

CHAPTER 11

CHAPTER 11

CHAPTER 11

CHAPTER 12

CHAPTER 12

CHAPTER 12

CHAPTER 12

CHAPTER 13

CHAPTER 13

CHAPTER 13

CHAPTER 13

CHAPTER 13

CHAPTER 14

CHAPTER 14

CHAPTER 14

CHAPTER 14

CHAPTER 15

CHAPTER 15

CHAPTER 15

CHAPTER 15

CHAPTER 16

CHAPTER 16

CHAPTER 16

CHAPTER 16

CHAPTER 17

CHAPTER 17

CHAPTER 17

D. normative economics.

AACSB: AnalyticBloom's: Level 3 ApplyDifficulty: 2 MediumLearning Objective: 01-01 Defineeconomics and the features of theeconomic perspective.Topic: Economics; economicperspective

7. A person should consume moreof something when its marginal: A. benefit exceeds its marginal cost.B. cost exceeds its marginal benefit.C. cost equals its marginal benefit.D. benefit is still positive.


8. Economics may best be definedas the: A. interaction between macro andmicro considerations.B. social science concerned withhow individuals, institutions, andsociety make optimal choices underconditions of scarcity.C. empirical testing of valuejudgments through the use of logic.D. use of policy to refute facts andhypotheses.

AACSB: AnalyticBloom's: Level 1 Remember

https://sites.google.com/site/usaprofmontanoeconomics/mc13

https://sites.google.com/site/usaprofmontanoeconomics/tf15a

https://sites.google.com/site/usaprofmontanoeconomics/chapter10---mc--oligopoly

https://sites.google.com/site/usaprofmontanoeconomics/mc11a


https://sites.google.com/site/usaprofmontanoeconomics/tf12-1

https://sites.google.com/site/usaprofmontanoeconomics/chapter16---public-finance

https://sites.google.com/site/usaprofmontanoeconomics/13-wages


https://sites.google.com/site/usaprofmontanoeconomics/chapter14---rentinterestprofit


https://sites.google.com/site/usaprofmontanoeconomics/chapter1

https://sites.google.com/site/usaprofmontanoeconomics/chapter12---resource-demand

https://sites.google.com/site/usaprofmontanoeconomics/chapter11---mc--oligopoly


https://sites.google.com/site/usaprofmontanoeconomics/chapter15---land--energy





















https://sites.google.com/site/usaprofmontanoeconomics/chapter17---public-issues



CHAPTER 17

CHAPTER 18

CHAPTER 18

CHAPTER 18

CHAPTER 18

CHAPTER 19

CHAPTER 19

CHAPTER 19

CHAPTER 19

CHAPTER 2

CHAPTER 20

CHAPTER 20

CHAPTER 20

CHAPTER 20

CHAPTER 21

CHAPTER 21

CHAPTER 21

CHAPTER 21

CHAPTER 22

CHAPTER 22

CHAPTER 22

CHAPTER 22

CHAPTER 23

CHAPTER 23

CHAPTER 23

CHAPTER 23

CHAPTER 23

CHAPTER 24

CHAPTER 24

CHAPTER 24

CHAPTER 24

CHAPTER 24

CHAPTER 25

CHAPTER 25

CHAPTER 25

CHAPTER 25

CHAPTER 25

Difficulty: 1 EasyLearning Objective: 01-01 Defineeconomics and the features of theeconomic perspective.Topic: Economics; economicperspective

9. The study of economics isprimarily concerned with: A. keeping private businesses fromlosing money.B. demonstrating that capitalisticeconomies are superior tosocialistic economies.C. choices that are made in seekingthe best use of resources.D. determining the most equitabledistribution of society's output.

AACSB: AnalyticBloom's: Level 2 UnderstandDifficulty: 2 MediumLearning Objective: 01-01 Defineeconomics and the features of theeconomic perspective.Topic: Economics; economicperspective

10. The economic perspectiveentails: A. irrational behavior by individualsand institutions.B. a comparison of marginalbenefits and marginal costs indecision making.C. short-term but not long-termthinking.D. rejection of the scientificmethod.

AACSB: AnalyticBloom's: Level 2 UnderstandDifficulty: 2 Medium




https://sites.google.com/site/usaprofmontanoeconomics/chapter23---macroeconomics


https://sites.google.com/site/usaprofmontanoeconomics/chapter24---output--income



https://sites.google.com/site/usaprofmontanoeconomics/chapter20---income-inequality

https://sites.google.com/site/usaprofmontanoeconomics/chapter22---immigration









https://sites.google.com/site/usaprofmontanoeconomics/chapter18---antitrust-policy



https://sites.google.com/site/usaprofmontanoeconomics/chapter21---health-care





https://sites.google.com/site/usaprofmontanoeconomics/chapter19---agriculture




https://sites.google.com/site/usaprofmontanoeconomics/chapter25---economic-growth

https://sites.google.com/site/usaprofmontanoeconomics/chapter2---market-system--circular-flow








CHAPTER 26

CHAPTER 26

CHAPTER 26

CHAPTER 26

CHAPTER 27

CHAPTER 27

CHAPTER 27

CHAPTER 27

CHAPTER 28

CHAPTER 28

CHAPTER 28

CHAPTER 28

CHAPTER 29

CHAPTER 29

CHAPTER 29

CHAPTER 3

CHAPTER 3

CHAPTER 3

CHAPTER 30

CHAPTER 30

CHAPTER 30

CHAPTER 31

CHAPTER 31

CHAPTER 31

CHAPTER 32

CHAPTER 32

CHAPTER 32

CHAPTER 33

CHAPTER 33

CHAPTER 33

CHAPTER 33

CHAPTER 34

CHAPTER 34

CHAPTER 34

CHAPTER 35

CHAPTER 35

CHAPTER 35

Learning Objective: 01-01 Defineeconomics and the features of theeconomic perspective.Topic: Economics; economicperspective

11. Purposeful behavior suggeststhat: A. everyone will make identicalchoices.B. resource availability exceedseconomic wants.C. individuals may make differentchoices because of differentdesired outcomes.D. an individual's economic goalscannot involve tradeoffs.


12. Purposeful behavior meansthat: A. people are selfish in theirdecision-making.B. people weigh costs and benefitsto make decisions.C. people are immune fromemotions affecting their decisions.D. decision-makers do not makemistakes when weighing costs andbenefits.

AACSB: AnalyticBloom's: Level 1 RememberDifficulty: 1 EasyLearning Objective: 01-01 Define

https://sites.google.com/site/usaprofmontanoeconomics/chapter27---macro-relationships

https://sites.google.com/site/usaprofmontanoeconomics/chapter28---ae-model



https://sites.google.com/site/usaprofmontanoeconomics/chapter35---as---extended

https://sites.google.com/site/usaprofmontanoeconomics/chapter31---banking











https://sites.google.com/site/usaprofmontanoeconomics/chapter29---ad--as



https://sites.google.com/site/usaprofmontanoeconomics/chapter32---money-creation



https://sites.google.com/site/usaprofmontanoeconomics/chapter34---financial-economics


https://sites.google.com/site/usaprofmontanoeconomics/chapter26---business-cycles



https://sites.google.com/site/usaprofmontanoeconomics/chapter-3---demand--supply

https://sites.google.com/site/usaprofmontanoeconomics/chapter33---monetary-policy







https://sites.google.com/site/usaprofmontanoeconomics/chapter30---fiscal-policy




CHAPTER 36

CHAPTER 36

CHAPTER 37

CHAPTER 37

CHAPTER 37

CHAPTER 37

CHAPTER 38

CHAPTER 38

CHAPTER 39

CHAPTER 39

CHAPTER 39

CHAPTER 4

CHAPTER 4

CHAPTER 4

CHAPTER 5

CHAPTER 5

CHAPTER 5

CHAPTER 6

CHAPTER 6

CHAPTER 6

CHAPTER 6

CHAPTER 7

CHAPTER 7

CHAPTER 7

CHAPTER 7

CHAPTER 7

CHAPTER 8

CHAPTER 8

CHAPTER 8

CHAPTER 8

CHAPTER 9

CHAPTER 9

CHAPTER 9

CHAPTER 9

CHAPTER 9

EOC1

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economics and the features of theeconomic perspective.Topic: Economics; economicperspective

13. Economics involves marginalanalysis because: A. most decisions involve changesfrom the present situation.B. marginal benefits always exceedmarginal costs.C. marginal costs always exceedmarginal benefits.D. much economic behavior isirrational.


14. You should decide to go to amovie: A. if the marginal cost of the movieexceeds its marginal benefit.B. if the marginal benefit of themovie exceeds its marginal cost.C. if your income will allow you tobuy a ticket.D. because movies are enjoyable.

AACSB: Reflective ThinkingBloom's: Level 3 ApplyDifficulty: 2 MediumLearning Objective: 01-01 Defineeconomics and the features of theeconomic perspective.Topic: Economics; economicperspective








https://sites.google.com/site/usaprofmontanoeconomics/eoc10

https://sites.google.com/site/usaprofmontanoeconomics/chapter-8




https://sites.google.com/site/usaprofmontanoeconomics/chapter5---market-failures

https://sites.google.com/site/usaprofmontanoeconomics/chapter9---pure-competitionlr


https://sites.google.com/site/usaprofmontanoeconomics/chapter4---elasticity


https://sites.google.com/site/usaprofmontanoeconomics/chapter36---macro-issues


https://sites.google.com/site/usaprofmontanoeconomics/chapter38---bop--exchange


https://sites.google.com/site/usaprofmontanoeconomics/chapter7---businesses


https://sites.google.com/site/usaprofmontanoeconomics/chapter37---intl-trade



https://sites.google.com/site/usaprofmontanoeconomics/chapter8---pure-competitionsr

https://sites.google.com/site/usaprofmontanoeconomics/chapter6---consumers




https://sites.google.com/site/usaprofmontanoeconomics/chapter39---dev-countries








EOC11

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15. Marginal costs exist because: A. the decision to engage in oneactivity means forgoing some otheractivity.B. wants are scarce relative toresources.C. households and businessesmake rational decisions.D. most decisions do not involvesacrifices or tradeoffs.


16. The assertion that "There is nofree lunch" means that: A. there are always tradeoffsbetween economic goals.B. all production involves the use ofscarce resources and thus thesacrifice of alternative goods.C. marginal analysis is not used ineconomic reasoning.D. choices need not be made ifbehavior is rational.


17. Consumers spend their incomes








https://sites.google.com/site/usaprofmontanoeconomics/ess15








https://sites.google.com/site/usaprofmontanoeconomics/eoc9-1
















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to get the maximum benefit orsatisfaction from the goods andservices they purchase. This is areflection of: A. resource scarcity and thenecessity of choice.B. purposeful behavior.C. marginal costs that exceedmarginal benefits.D. the tradeoff problem that existsbetween competing goals.

AACSB: Reflective ThinkingBloom's: Level 1 RememberDifficulty: 1 EasyLearning Objective: 01-01 Defineeconomics and the features of theeconomic perspective.Topic: Economics; economicperspective

18. If someone produced too muchof a good, this would suggest that: A. rational choice cannot be appliedto many economic decisions.B. the good was produced to thepoint where its marginal costexceeded its marginal benefit.C. certain goods and services suchas education and health care areinherently desirable and should beproduced regardless of costs andbenefits.D. the good was produced to thepoint where its marginal benefitexceeded its marginal cost.

AACSB: Reflective ThinkingBloom's: Level 2 UnderstandDifficulty: 2 MediumLearning Objective: 01-01 Defineeconomics and the features of theeconomic perspective.Topic: Economics; economic



























https://sites.google.com/site/usaprofmontanoeconomics/essay2













ESSAY2

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perspective

19. Even though local newspapersare very inexpensive, people rarelybuy more than one of them eachday. This fact: A. is an example of irrationalbehavior.B. implies that reading should betaught through phonics rather thanthe whole language method.C. contradicts the economicperspective.D. implies that, for most people, themarginal benefit of reading asecond newspaper is less than themarginal cost.


20. In deciding whether to study foran economics quiz or go to a movie,one is confronted by the idea(s) of: A. scarcity and opportunity costs.B. money and real capital.C. complementary economic goals.D. full production.


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INFO5

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MC15A

MC34A

MC36A

MC38A

MC6A

MC6A

MC8A

P1

QUIZ1

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21. Which one of the followingexpressions best states the idea ofopportunity cost? A. "A penny saved is a pennyearned."B. "He who hesitates is lost."C. "There is no such thing as a freelunch."D. "All that glitters is not gold."


22. Suppose that a universitydecides to spend $1 million toupgrade personal computers andscientific equipment for facultyrather than spend $1 million toexpand parking for students. Thisexample illustrates: A. distorted priorities.B. opportunity costs.C. increasing opportunity costs.D. productive efficiency.

AACSB: AnalyticBloom's: Level 3 ApplyDifficulty: 2 MediumLearning Objective: 01-01 Defineeconomics and the features of theeconomic perspective.Topic: Economics; economicperspective

23. Which of the following mostclosely relates to the idea of

https://sites.google.com/site/usaprofmontanoeconomics/quiz27




https://sites.google.com/site/usaprofmontanoeconomics/p1


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QUIZ31

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opportunity costs? A. tradeoffs.B. economic growth.C. technological change.D. capitalism.


24. Economists contend that mosteconomic decisions are: A. randomB. chaoticC. spontaneousD. purposeful


25. Alex sees that his neighbors'lawns all need mowing. He offers toprovide the service in exchange fora wage of $20 per hour. Someneighbors accept Alex's offer andothers refuse. Economists woulddescribe Alex's behavior as: A. rational self-interest, because heattempting to increase his ownincome by identifying and satisfyingsomeone else's wants.B. greedy, because he is asking for


https://sites.google.com/site/usaprofmontanoeconomics/tf14






































TF29

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SITEMAP

a high wage.C. selfish, because he is asking for awage that is higher than othersmight charge.D. irrational, because someneighbors refused his offer.


26. Kara was out jogging anddespite being tired, decided to runone more mile. Based on heractions, economists wouldconclude that Kara: A. must be an avid runner.B. decided that the marginal benefitof running one more mile wouldoutweigh the cost of the additionalmile.C. decided that the marginal cost ofrunning one more mile wouldoutweigh the benefit of theadditional mile.D. was not very tired, so themarginal cost of the extra mile wasvery low.
























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27. An economic hypothesis: A. has the same meaning as aneconomic principle or economiclaw.B. is usually a normative statement.C. is a possible explanation of causeand effect.D. is a stronger generalization thanan economic law.

AACSB: AnalyticBloom's: Level 1 RememberDifficulty: 1 EasyLearning Objective: 01-02 Describethe role of economic theory ineconomics.Topic: Theories, principles, andmodels

28. Which of the following termsimplies the least degree ofconfidence in an economicgeneralization? A. a hypothesis.B. a theory.C. a principle.D. a law.


29. Which of the following termsimplies the greatest degree ofconfidence in an economicgeneralization? A. a hypothesis.B. a comparison.C. a principle.



D. an anomaly.


30. A well-tested economic theory isoften called: A. an hypothesis.B. a prototype.C. a principle.D. an anomaly.


31. The scientific method is: A. not applicable to economics,because economics deals withhuman beings.B. also known as the economicperspective.C. analysis that moves from broadgeneralizations called laws totheories and then to hypotheses.D. used by economists and othersocial scientists, as well as byphysical scientists and lifescientists.




32. The process by whicheconomists test hypotheses againstfacts to develop theories, principles,and models is called: A. the economic perspective.B. the scientific method.C. policy economics.D. microeconomics.


33. Economic theories: A. are useless because they are notbased on laboratoryexperimentation.B. that are true for individualeconomic units are never true forthe economy as a whole.C. are generalizations based on acareful observation of facts.D. are abstractions and therefore ofno application to real situations.

AACSB: AnalyticBloom's: Level 1 RememberDifficulty: 1 EasyLearning Objective: 01-02 Describe



the role of economic theory ineconomics.Topic: Theories, principles, andmodels

34. Which of the following is acorrect statement? A. Economic concepts or laws thatare valid during depression arenecessarily valid during prosperity.B. Although they aregeneralizations, economic laws areuseful because they allow us topredict and therefore control oradjust to events.C. Economics is as scientific as arephysics and chemistry becauseeconomic laws are as quantitativelyprecise as the laws of physics orchemistry.D. Because economics is concernedwith questions of "ought," it is abranch of applied ethics and notscientific.

AACSB: AnalyticBloom's: Level 2 UnderstandDifficulty: 2 MediumLearning Objective: 01-02 Describethe role of economic theory ineconomics.Topic: Theories, principles, andmodels

35. In constructing models,economists: A. make simplifying assumptions.B. include all available information.C. must use mathematicalequations.D. attempt to duplicate the realworld.

AACSB: Analytic



Bloom's: Level 2 UnderstandDifficulty: 2 MediumLearning Objective: 01-02 Describethe role of economic theory ineconomics.Topic: Theories, principles, andmodels

36. The Latin term "ceteris paribus"means: A. that if event A precedes event B,A has caused B.B. that economics deals with facts,not values.C. other things equal.D. prosperity inevitably followsrecession.


37. The basic purpose of the other-things-equal assumption is to: A. allow one to reason about therelationship between variables Xand Y without the intrusion ofvariable Z.B. allow one to focus upon microvariables by ignoring macrovariables.C. allow one to focus upon macrovariables by ignoring microvariables.D. determine whether X causes Y orvice versa.

AACSB: Analytic




38. Suppose an economist says that"Other things equal, the lower theprice of bananas, the greater theamount of bananas purchased."This statement indicates that: A. the quantity of bananaspurchased determines the price ofbananas.B. all factors other than the price ofbananas (for example, consumertastes and incomes) are assumedto be constant.C. economists can conductcontrolled laboratory experiments.D. one cannot generalize about therelationship between the price ofbananas and the quantitypurchased.

AACSB: Reflective ThinkingBloom's: Level 3 ApplyDifficulty: 2 MediumLearning Objective: 01-02 Describethe role of economic theory ineconomics.Topic: Theories, principles, andmodels

39. The term "other things equal"means that: A. the associated statement isnormative.B. many variables affect thevariable under consideration.C. a number of relevant variablesare assumed to be constant.D. when variable X increases sodoes related variable Y.




40. Kelly works at an ice creamshop and observes that the numberof people buying ice cream variesgreatly from day to day. For acouple of weeks she has recordedthe number of people at the shopeach day, as well as the dailytemperature. If Kelly is using thescientific method to betterunderstand ice cream buyinghabits, her next step is to: A. conclude definitively that peoplebuy more ice cream when thetemperature rises.B. state her findings as a well-testedeconomic principle.C. use the observed data to form anhypothesis about ice cream buyingbehavior.D. throw out the data if it does notshow a perfect relationshipbetween buying habits and theother information she hascollected.

AACSB: Reflective ThinkingBloom's: Level 2 UnderstandDifficulty: 2 MediumLearning Objective: 01-02 Describethe role of economic theory ineconomics.Topic: Theories, principles, andmodels

41. Macroeconomics approachesthe study of economics from the



viewpoint of: A. the entire economy.B. governmental units.C. the operation of specific productand resource markets.D. individual firms.

AACSB: AnalyticBloom's: Level 1 RememberDifficulty: 1 EasyLearning Objective: 01-03 Distinguishmicroeconomics frommacroeconomics and positiveeconomics from normativeeconomics.Topic: Microeconomics andmacroeconomics

42. Which of the following isassociated with macroeconomics? A. an examination of the incomesof Harvard Business SchoolgraduatesB. an empirical investigation of thegeneral price level andunemployment rates since 1990C. a study of the trend of pecanprices since the Second World WarD. a case study of pricing andproduction in the textbook industry

AACSB: Reflective ThinkingBloom's: Level 2 UnderstandDifficulty: 2 MediumLearning Objective: 01-03 Distinguishmicroeconomics frommacroeconomics and positiveeconomics from normativeeconomics.Topic: Microeconomics andmacroeconomics

43. The problems of aggregate



inflation and unemployment are: A. major topics of macroeconomics.B. not relevant to the U.S. economy.C. major topics of microeconomics.D. peculiar to commandeconomies.


44. Which of the followingstatements pertains tomacroeconomics? A. Because the minimum wage wasraised, Mrs. Olsen decided to enterthe labor force.B. A decline in the price of soybeanscaused farmer Wanek to plantmore land in wheat.C. National income grew by 2.7percent last year.D. The Pumpkin Center State Bankincreased its interest rate onconsumer loans by 1 percentagepoint.

AACSB: AnalyticBloom's: Level 2 UnderstandDifficulty: 2 MediumLearning Objective: 01-03 Distinguishmicroeconomics frommacroeconomics and positiveeconomics from normativeeconomics.Topic: Microeconomics andmacroeconomics



45. Macroeconomics can best bedescribed as the: A. analysis of how a consumer triesto spend income.B. study of the large aggregates ofthe economy or the economy as awhole.C. analysis of how firms attempt tomaximize their profits.D. study of how supply anddemand determine prices inindividual markets.


46. Microeconomics is concernedwith: A. the aggregate or total levels ofincome, employment, and output.B. a detailed examination ofspecific economic units that makeup the economic system.C. positive economics, but notnormative economics.D. the establishing of an overallview of the operation of theeconomic system.

AACSB: AnalyticBloom's: Level 1 RememberDifficulty: 1 EasyLearning Objective: 01-03 Distinguishmicroeconomics frommacroeconomics and positive



economics from normativeeconomics.Topic: Microeconomics andmacroeconomics

47. Microeconomics: A. is the basis for the "after this,therefore because of this" fallacy.B. is not concerned with details, butonly with the overall big picture ofthe economy.C. is concerned with individualeconomic units and specificmarkets.D. describes the aggregate flows ofoutput and income.

AACSB: Reflective ThinkingBloom's: Level 2 UnderstandDifficulty: 2 MediumLearning Objective: 01-03 Distinguishmicroeconomics frommacroeconomics and positiveeconomics from normativeeconomics.Topic: Microeconomics andmacroeconomics

48. Which of the following is amicroeconomic statement? A. The real domestic outputincreased by 2.5 percent last year.B. Unemployment was 6.8 percentof the labor force last year.C. The price of personal computersdeclined last year.D. The general price level increasedby 4 percent last year.

AACSB: Reflective ThinkingBloom's: Level 3 ApplyDifficulty: 2 MediumLearning Objective: 01-03 Distinguish



microeconomics frommacroeconomics and positiveeconomics from normativeeconomics.Topic: Microeconomics andmacroeconomics

49. Which of the followingstatements is true? A. Microeconomics focuses onspecific decision-making units ofthe economy; macroeconomicsexamines the economy as a whole.B. Macroeconomics focuses onspecific decision-making units ofthe economy; microeconomicsexamines the economy as a whole.C. Every topic in economics is eithera microeconomic or amacroeconomic issue; a topiccannot be both.D. Topics in microeconomics havepublic policy implications; topics inmacroeconomics do not.


50. A normative statement is onethat: A. is based on the law of averages.B. applies only to microeconomics.C. applies only to macroeconomics.D. is based on value judgments.

AACSB: Analytic



Bloom's: Level 1 RememberDifficulty: 1 EasyLearning Objective: 01-03 Distinguishmicroeconomics frommacroeconomics and positiveeconomics from normativeeconomics.Topic: Positive and normativestatements

51. A positive statement is onewhich is: A. derived by induction.B. derived by deduction.C. subjective and is based on avalue judgment.D. objective and is based on facts.

AACSB: AnalyticBloom's: Level 2 UnderstandDifficulty: 2 MediumLearning Objective: 01-03 Distinguishmicroeconomics frommacroeconomics and positiveeconomics from normativeeconomics.Topic: Positive and normativestatements

52. Which of the following is apositive statement? A. The humidity is too high today.B. It is too hot to jog today.C. The temperature is 92 degreestoday.D. Summer evenings are nice whenit cools off.

AACSB: Reflective ThinkingBloom's: Level 3 ApplyDifficulty: 2 MediumLearning Objective: 01-03 Distinguishmicroeconomics from



macroeconomics and positiveeconomics from normativeeconomics.Topic: Positive and normativestatements

53. Normative statements areconcerned primarily with: A. facts and theories.B. what ought to be.C. what is.D. rational choice involving costsand benefits.

AACSB: AnalyticBloom's: Level 1 RememberDifficulty: 1 EasyLearning Objective: 01-03 Distinguishmicroeconomics frommacroeconomics and positiveeconomics from normativeeconomics.Topic: Positive and normativestatements

54. A positive statement isconcerned primarily with: A. some goal that is desirable tosociety.B. what should be.C. what is.D. the formulation of economicpolicy.

AACSB: AnalyticBloom's: Level 1 RememberDifficulty: 1 EasyLearning Objective: 01-03 Distinguishmicroeconomics frommacroeconomics and positiveeconomics from normativeeconomics.Topic: Positive and normative



statements

55. "Economics is concerned withhow individuals, institutions, andsociety make optimal choices underconditions of scarcity." Thisstatement is: A. positive, but incorrect.B. positive and correct.C. normative, but incorrect.D. normative and correct.

AACSB: Reflective ThinkingBloom's: Level 2 UnderstandDifficulty: 2 MediumLearning Objective: 01-03 Distinguishmicroeconomics frommacroeconomics and positiveeconomics from normativeeconomics.Topic: Positive and normativestatements

56. Ben says that "An increase inthe tax on beer will raise its price."Holly argues that "Taxes should beincreased on beer because collegestudents drink too much." We canconclude that: A. Ben's statement is normative,but Holly's is positive.B. Holly's statement is normative,but Ben's is positive.C. Both statements are normative.D. Both statements are positive.

AACSB: Reflective ThinkingBloom's: Level 3 ApplyDifficulty: 2 MediumLearning Objective: 01-03 Distinguishmicroeconomics frommacroeconomics and positiveeconomics from normativeeconomics.



Topic: Positive and normativestatements

57. "Macroeconomics is the part ofeconomics concerned withindividual units such as a person, ahousehold, a firm, or an industry."This statement is: A. positive, but incorrect.B. positive and correct.C. normative, but incorrect.D. normative and correct.

AACSB: Reflective ThinkingBloom's: Level 3 ApplyDifficulty: 2 MediumLearning Objective: 01-03 Distinguishmicroeconomics frommacroeconomics and positiveeconomics from normativeeconomics.Topic: Positive and normativestatements

58. Brinley says that "Gas prices arerising because there aren't enoughoil refineries." Katie argues that"Gas prices are rising because ofthe growing demand for gasolinefrom China and India." We canconclude that: A. Brinley's statement is positive;Katie's statement is normative.B. Brinley's statement is normative;Katie's statement is positive.C. Both statements are positive.D. Both statements are normative.

AACSB: Reflective ThinkingBloom's: Level 3 ApplyDifficulty: 2 MediumLearning Objective: 01-03 Distinguishmicroeconomics from



macroeconomics and positiveeconomics from normativeeconomics.Topic: Positive and normativestatements

59. The economizing problem is: A. the need to make choicesbecause economic wants exceedeconomic means.B. how to distribute resourcesequally amongst all members ofsociety.C. that people's means oftenexceed their wants.D. that people do not know how torationally allocate resources.

AACSB: AnalyticBloom's: Level 1 RememberDifficulty: 1 EasyLearning Objective: 01-04 List thecategories of scarce resources anddelineate the nature of theeconomizing problem.Topic: Individual's economizingproblem -- budget lines

60. The economizing problem isone of deciding how to make thebest use of: A. virtually unlimited resources tosatisfy virtually unlimited wants.B. limited resources to satisfyvirtually unlimited wants.C. unlimited resources to satisfylimited wants.D. limited resources to satisfylimited wants.

AACSB: AnalyticBloom's: Level 1 RememberDifficulty: 1 Easy



Learning Objective: 01-04 List thecategories of scarce resources anddelineate the nature of theeconomizing problem.Topic: Individual's economizingproblem -- budget lines

61. The scarcity problem: A. persists only because countrieshave failed to achieve continuousfull employment.B. persists because economic wantsexceed available productiveresources.C. has been solved in allindustrialized nations.D. has been eliminated in affluentsocieties such as the United Statesand Canada.

AACSB: AnalyticBloom's: Level 2 UnderstandDifficulty: 2 MediumLearning Objective: 01-04 List thecategories of scarce resources anddelineate the nature of theeconomizing problem.Topic: Individual's economizingproblem -- budget lines

62. The alternative combinations oftwo goods which a consumer canpurchase with a given moneyincome is shown by: A. a production possibilities curve.B. a demand curve.C. consumer expenditure line.D. a budget line.

AACSB: AnalyticBloom's: Level 1 RememberDifficulty: 1 EasyLearning Objective: 01-04 List thecategories of scarce resources and



delineate the nature of theeconomizing problem.Topic: Individual's economizingproblem -- budget lines

63. The budget line shows: A. the amount of product A that aconsumer is willing to give up toobtain one more unit of product B.B. all possible combinations of twogoods that can be purchased, givenmoney income and the prices ofthe goods.C. the minimum amount of twogoods that a consumer canpurchase with a given moneyincome.D. all possible combinations of twogoods that yield the same level ofutility to the consumer.




64. Refer to the budget line shownin the diagram above. If theconsumer's money income is $20,the: A. prices of C and D cannot bedetermined.B. price of C is $2 and the price of Dis $4.C. consumer can obtain acombination of 5 units of both Cand D.D. price of C is $4 and the price of Dis $2.

AACSB: Reflective ThinkingBloom's: Level 3 ApplyDifficulty: 2 MediumLearning Objective: 01-04 List thecategories of scarce resources anddelineate the nature of theeconomizing problem.Topic: Individual's economizingproblem -- budget linesType: Graph

65. Refer to the budget line shownin the diagram above. If theconsumer's money income is $20,which of the followingcombinations of goods isunattainable? A. 4 units of C, and 6 units of D.B. 5 units of C, and no units of D.C. 1 unit of C, and 8 units of D.D. 2 units of C, and 6 units of D.

AACSB: AnalyticBloom's: Level 4 AnalyzeDifficulty: 3 HardLearning Objective: 01-04 List the



categories of scarce resources anddelineate the nature of theeconomizing problem.Topic: Individual's economizingproblem -- budget linesType: Graph

66. Refer to the budget line shownin the diagram above. The absolutevalue of the slope of the budget lineis: A. MUC/MUD.B. one-half.C. PD/PC.D. PC/PD.

AACSB: AnalyticBloom's: Level 3 ApplyDifficulty: 2 MediumLearning Objective: 01-04 List thecategories of scarce resources anddelineate the nature of theeconomizing problem.Topic: Individual's economizingproblem -- budget linesType: Graph

67. In moving along a given budgetline: A. the prices of both products andmoney income are assumed to beconstant.B. each point on the line will beequally satisfactory to consumers.C. money income varies, but theprices of the two goods areconstant.D. the prices of both products areassumed to vary, but moneyincome is constant.

AACSB: AnalyticBloom's: Level 2 Understand



Difficulty: 2 MediumLearning Objective: 01-04 List thecategories of scarce resources anddelineate the nature of theeconomizing problem.Topic: Individual's economizingproblem -- budget lines

68. An increase in money income: A. shifts the consumer's budget lineto the right.B. shifts the consumer's budget lineto the left.C. increases the slope of the budgetline.D. has no effect on the budget line.


69.

The shift of the budget line from cdto ab in the above figure isconsistent with:



A. decreases in the prices of both Mand N.B. an increase in the price of M anda decrease in the price of N.C. a decrease in money income.D. an increase in money income.


70. Any combination of goods lyingoutside of the budget line: A. implies that the consumer is notspending all his income.B. yields less utility than any pointon the budget line.C. yields less utility than any pointinside the budget line.D. is unattainable, given theconsumer's income.


71.



Suppose you have a money incomeof $10, all of which you spend onCoke and popcorn. In the abovediagram, the prices of Coke andpopcorn respectively are: A. $.50 and $1.00.B. $1.00 and $.50.C. $1.00 and $2.00.D. $.40 and $.50.


72. Other things equal, an increasein a consumer's money income: A. increases the amount of utility aconsumer receives from a givenquantity of a good.B. shifts her budget line rightwardbecause she can now purchasemore of both products.C. eliminates the individual'seconomizing problem.D. causes the consumer to choosea different combination of goodsalong a given budget line.




73. The slope of a budget linereflects the: A. desirability of the two products.B. price ratio of the two products.C. amount of the consumer'sincome.D. utility ratio of the two products.


74.



Suppose Elroy's budget line is asshown on the above diagram. If histastes change in favor of Coke andagainst popcorn, the budget linewill: A. become steeper.B. become flatter.C. shift rightward.D. be unaffected.

AACSB: AnalyticBloom's: Level 2 UnderstandDifficulty: 2 MediumLearning Objective: 01-04 List thecategories of scarce resources anddelineate the nature of theeconomizing problem.Topic: Individual's economizingproblem -- budget linesType: Graph

75. Assume the price of product Y(the quantity of which is on thevertical axis) is $15 and the price ofproduct X (the quantity of which ison the horizontal axis) is $3. Alsoassume that money income is $60.The absolute value of the slope ofthe resulting budget line: A. is 5.B. is 1/5.C. is 4.D. is 20.

AACSB: AnalyticBloom's: Level 3 ApplyDifficulty: 2 MediumLearning Objective: 01-04 List thecategories of scarce resources anddelineate the nature of theeconomizing problem.Topic: Individual's economizingproblem -- budget lines



76. Refer to the above graphs.Assume that pizza is measured inslices and beer in pints. In which ofthe graphs is the opportunity costof a pint of beer equal to one sliceof pizza? A. graph AB. graph BC. graph CD. graph D


77. Refer to the above graphs.Assume that pizza is measured inslices and beer in pints. In which ofthe graphs is the opportunity costof a pint of beer the lowest? A. graph A



B. graph BC. graph CD. graph D


78. Suppose that Julia receives a$20 gift card for the local coffeeshop, where she only buys lattesand muffins. If the price of a latte is$4 and the price of a muffin is $2,then we can conclude that Julia: A. should only buy muffins.B. should only buy lattes.C. can buy 5 lattes or 10 muffins ifshe chooses to buy only one of thetwo goods.D. can buy 5 lattes and 10 muffinswith her $20 gift card.


79. Camille is at the candy storewith her grandmother, who offersto buy her $6 worth of candy. Iflollipops are $1 each, and candy



bars are $2 each, what combinationof candy can Camille's grandmotherbuy for her? A. Six lollipops and three candybarsB. Two lollipops and two candy barsC. Three lollipops and two candybarsD. One lollipop and three candybars

AACSB: AnalyticBloom's: Level 3 ApplyDifficulty: 2 MediumLearning Objective: 01-04 List thecategories of scarce resources anddelineate the nature of theeconomizing problem.Topic: Individual's economizingproblem -- budget lines

80. Which of the following is a laborresource? A. a computer programmerB. a computerC. silicon (sand) used to makecomputer chipsD. a piece of software used by afirm

AACSB: AnalyticBloom's: Level 1 RememberDifficulty: 1 EasyLearning Objective: 01-04 List thecategories of scarce resources anddelineate the nature of theeconomizing problem.Topic: Society's economizing problem

81. Which of the following is acapital resource? A. a computer programmerB. a corporate bond issued by acomputer manufacturer



C. silicon (sand) used to makecomputer chipsD. a piece of software used by afirm


82. The four factors of productionare: A. land, labor, capital, and moneyB. land, labor, capital, andentrepreneurial abilityC. labor, capital, technology, andentrepreneurial abilityD. labor, capital, entrepreneurialability, and money


83. Which of the following is a landresource? A. a farmerB. an oil drilling rigC. a machine for detectingearthquakesD. natural gas




84. Which of the following listsincludes only capital resources (andtherefore no labor or landresources)? A. an ice arena; a professionalhockey player; hockey uniforms.B. the owner of a new startup firm;a chemistry lab; a researcher.C. a hydroelectric dam; waterbehind the dam; power lines.D. autos owned by a car rental firm;computers at the car rental agency;the vans that shuffle rentalcustomers to and from the airport.

AACSB: AnalyticBloom's: Level 2 UnderstandDifficulty: 2 MediumLearning Objective: 01-04 List thecategories of scarce resources anddelineate the nature of theeconomizing problem.Topic: Society's economizing problem

85. Money is not an economicresource because: A. money, as such, does notproduce anything.B. idle money balances do not earninterest income.C. it is not scarce.D. money is not a free gift ofnature.



AACSB: AnalyticBloom's: Level 2 UnderstandDifficulty: 2 MediumLearning Objective: 01-04 List thecategories of scarce resources anddelineate the nature of theeconomizing problem.Topic: Society's economizing problem

86. Economic resources are alsocalled: A. free gifts of nature.B. consumption goods.C. units of money capital.D. factors of production.


87. Which of the following doeconomists consider to be capital? A. a pair of stockingsB. a construction craneC. a savings accountD. a share of IBM stock


88. The main function of the



entrepreneur is to: A. make routine pricing decisions.B. innovate.C. purchase capital.D. create market demand.


89. Which of the following is not amain function of the entrepreneur? A. make routine pricing decisions.B. innovate.C. assume the risk of economiclosses.D. make strategic businessdecisions.


90. The process of producing andaccumulating capital goods iscalled: A. money capital.B. depreciation.C. investment.D. consumption.

AACSB: Analytic



Bloom's: Level 1 RememberDifficulty: 1 EasyLearning Objective: 01-04 List thecategories of scarce resources anddelineate the nature of theeconomizing problem.Topic: Society's economizing problem

91. Which of the following is notconsidered by economists to be aneconomic resource? A. moneyB. factory workersC. computers at a retail storeD. a forest


92. Which of the following wouldnot be classified as an economicresource by economists? A. a professional soccer playerB. water in a town's reservoirC. money in a business checkingaccountD. the manager of the localhamburger restaurant




93. The production possibilitiescurve illustrates the basic principlethat: A. the production of more of anyone good will in time requiresmaller and smaller sacrifices ofother goods.B. an economy will automaticallyobtain full employment of itsresources.C. if all the resources of aneconomy are in use, more of onegood can be produced only if lessof another good is produced.D. an economy's capacity toproduce increases in proportion toits population size.

AACSB: AnalyticBloom's: Level 2 UnderstandDifficulty: 2 MediumLearning Objective: 01-05 Applyproduction possibilities analysis;increasing opportunity costs; andeconomic growth.Topic: Production possibilities model

94. Which of the following will notproduce an outward shift of theproduction possibilities curve? A. an upgrading of the quality of anation's human resourcesB. the reduction of unemploymentC. an increase in the quantity of asociety's labor forceD. the improvement of a society'stechnological knowledge

AACSB: AnalyticBloom's: Level 3 ApplyDifficulty: 2 MediumLearning Objective: 01-05 Apply



production possibilities analysis;increasing opportunity costs; andeconomic growth.Topic: Production possibilities model

95. Unemployment: A. causes the productionpossibilities curve to shift outward.B. can exist at any point on aproduction possibilities curve.C. is illustrated by a point outsidethe production possibilities curve.D. is illustrated by a point inside theproduction possibilities curve.

AACSB: AnalyticBloom's: Level 1 RememberDifficulty: 1 EasyLearning Objective: 01-05 Applyproduction possibilities analysis;increasing opportunity costs; andeconomic growth.Topic: Production possibilities model

96. If the production possibilitiescurve is a straight line: A. the two products will sell at thesame market prices.B. economic resources are perfectlysubstitutable between theproduction of the two products.C. the two products are equallyimportant to consumers.D. equal quantities of the twoproducts will be produced at eachpossible point on the curve.

AACSB: AnalyticBloom's: Level 2 UnderstandDifficulty: 2 MediumLearning Objective: 01-05 Applyproduction possibilities analysis;increasing opportunity costs; andeconomic growth.



Topic: Production possibilities model

97. A production possibilities curveillustrates: A. scarcity.B. market prices.C. consumer preferences.D. the distribution of income.


98. A production possibilities curveshows: A. that resources are unlimited.B. that people prefer one of thegoods more than the other.C. the maximum amounts of twogoods that can be produced,assuming the full use of availableresources.D. combinations of capital andlabor necessary to produce specificlevels of output.


99. A nation's productionpossibilities curve is bowed out



from the origin because: A. resources are not generallyequally efficient in producing everygood.B. the originator of the idea drew itthis way and modern economistsfollow this convention.C. resources are scarce.D. wants are virtually unlimited.


Answer the question on the basisof the data given in the followingproduction possibilities table:

100. Refer to the above table. If theeconomy is producing atproduction alternative C, theopportunity cost of the tenth unit ofconsumer goods will be: A. 4 units of capital goods.B. 2 units of capital goods.C. 3 units of capital goods.

D. 1/3 of a unit of capital goods.

AACSB: Reflective ThinkingBloom's: Level 3 Apply



Difficulty: 2 MediumLearning Objective: 01-05 Applyproduction possibilities analysis;increasing opportunity costs; andeconomic growth.Topic: Production possibilities modelType: Table

101. Refer to the above table. Ascompared to production alternativeD, the choice of alternative Cwould: A. tend to generate a more rapidgrowth rate.B. be unattainable.C. entail unemployment.D. tend to generate a slower growthrate.

AACSB: Reflective ThinkingBloom's: Level 4 AnalyzeDifficulty: 3 HardLearning Objective: 01-05 Applyproduction possibilities analysis;increasing opportunity costs; andeconomic growth.Topic: Production possibilities modelType: Table

102. Refer to the above table. Atotal output of 3 units of capitalgoods and 4 units of consumergoods: A. is irrelevant because theeconomy is capable of producing alarger total output.B. will result in the maximum rateof growth available to thiseconomy.C. would involve an inefficient useof the economy's scarce resources.D. is unobtainable in this economy.



AACSB: Reflective ThinkingBloom's: Level 2 UnderstandDifficulty: 2 MediumLearning Objective: 01-05 Applyproduction possibilities analysis;increasing opportunity costs; andeconomic growth.Topic: Production possibilities modelType: Table

103. Refer to the above table. Forthis economy to produce a totaloutput of 3 units of capital goodsand 13 units of consumer goods itmust: A. achieve economic growth.B. use its resources more efficientlythan the data in the table nowindicate.C. allocate its available resourcesmost efficiently among alternativeuses.D. achieve the full employment ofavailable resources.


104. Refer to the above table. Forthese data the law of increasingopportunity costs is reflected in thefact that: A. the amount of consumer goodsthat must be sacrificed to get morecapital goods diminishes beyond apoint.B. larger and larger amounts ofcapital goods must be sacrificed toget additional units of consumergoods.



C. the production possibilities datawould graph as a straightdownsloping line.D. the economy's resources arepresumed to be scarce.


105. When an economy is operatingunder conditions of fullemployment, the production ofmore of commodity A will mean theproduction of less of commodity Bbecause: A. of the law of increasingopportunity costs.B. economic wants are insatiable.C. resources are limited.D. resources are specialized andonly imperfectly substitutable.

AACSB: Reflective ThinkingBloom's: Level 3 ApplyDifficulty: 2 MediumLearning Objective: 01-05 Applyproduction possibilities analysis;increasing opportunity costs; andeconomic growth.Topic: Production possibilities model

106. Assume that a change ingovernment policy results ingreater production of bothconsumer goods and investmentgoods. We can conclude that:



A. the economy was not employingall of its resources before the policychange.B. the economy's productionpossibilities curve has been shiftedto the left as a result of the policydecision.C. this economy's productionpossibilities curve is convex (bowedinward) to the origin.D. the law of increasing opportunitycosts does not apply in this society.

AACSB: Reflective ThinkingBloom's: Level 4 AnalyzeDifficulty: 3 HardLearning Objective: 01-05 Applyproduction possibilities analysis;increasing opportunity costs; andeconomic growth.Topic: Production possibilities model

107. The production possibilitiescurve: A. shows all of those levels ofproduction that are consistent witha stable price level.B. indicates that any combination ofgoods lying outside the curve iseconomically inefficient.C. is a frontier between allcombinations of two goods that canbe produced and thosecombinations that cannot beproduced.D. shows all of those combinationsof two goods that are mostpreferred by society.

AACSB: AnalyticBloom's: Level 1 RememberDifficulty: 1 EasyLearning Objective: 01-05 Applyproduction possibilities analysis;increasing opportunity costs; andeconomic growth.




108. Any point inside theproduction possibilities curveindicates: A. the presence of technologicalchange.B. that resources are imperfectlysubstitutable among alternativeuses.C. the presence of inflationarypressures.D. that more output could beproduced with available resources.


109. Refer to the above diagram.Other things equal, this economywill achieve the most rapid rate of



growth if: A. the ratio of capital to consumergoods is minimized.B. it chooses point C.C. it chooses point B.D. it chooses point A.

AACSB: Reflective ThinkingBloom's: Level 4 AnalyzeDifficulty: 3 HardLearning Objective: 01-05 Applyproduction possibilities analysis;increasing opportunity costs; andeconomic growth.Topic: Production possibilities modelType: Graph

110. Refer to the above diagram.This economy will experienceunemployment if it produces atpoint: A. A.B. B.C. C.D. D.

AACSB: Reflective ThinkingBloom's: Level 2 UnderstandDifficulty: 2 MediumLearning Objective: 01-05 Applyproduction possibilities analysis;increasing opportunity costs; andeconomic growth.Topic: Production possibilities modelType: Graph

111. Which of the following isassumed in constructing a typicalproduction possibilities curve? A. the economy is using itsresources inefficiently.B. resources are perfectly shiftableamong alternative uses.



C. production technology is fixed.D. the economy is engaging ininternational trade.


112. The typical productionpossibilities curve is: A. an upsloping line that is bowedout from the origin.B. a downsloping line that is bowedin toward the origin.C. a downsloping line that is bowedout from the origin.D. a straight upsloping line.


113. The slope of the typicalproduction possibilities curve: A. is positive.B. increases as one movessoutheast along the curve.C. is constant as one moves downthe curve.D. decreases as one movessoutheast along the curve.




114. Assume an economy isincurring unemployment. The effectof resolving this problem will be to: A. move the level of actual outputon to the economy's productionpossibilities curve.B. create a less equal distribution ofincome.C. shift its production possibilitiescurve to the left.D. shift its production possibilitiescurve to the right.




115. Refer to the above tables.Suppose that the amount andquality of resources are the same inboth countries. We can concludethat: A. Duckistan is technologicallybetter than Herbania at producingmilitary goods.B. Herbania is technologically betterthan Herbania at producing bothmilitary goods and civilian goods.C. the total opportunity cost ofproducing 4 units of military goodsis the same in both countries.D. Herbania is technologicallysuperior to Duckistan in producingcivilian goods.


116. Refer to the above tables.Suppose that technology and thequality of resources are the same inboth countries. We can concludethat: A. Duckistan has more resourcesthan Herbania.B. Herbania has more resourcesthan Duckistan.C. Duckistan has greateropportunity costs than Herbania.D. Prices are twice as high inHerbania as in Duckistan.

AACSB: Reflective ThinkingBloom's: Level 2 UnderstandDifficulty: 2 MediumLearning Objective: 01-05 Apply



production possibilities analysis;increasing opportunity costs; andeconomic growth.Topic: Production possibilities modelType: Table

117. Refer to the above tables.Opportunity costs of producingmilitary goods are: A. increasing in Duckistan butconstant in Herbania.B. constant in both Duckistan andHerbania.C. larger in Duckistan than inHerbania.D. smaller in Duckistan thanHerbania.


118. Refer to the above tables.Opportunity costs are: A. constant in both Duckistan andHerbania.B. larger in Duckistan than inHerbania.C. increasing in both Duckistan andHerbania.D. increasing in Duckistan andconstant in Herbania.

AACSB: Reflective ThinkingBloom's: Level 2 UnderstandDifficulty: 2 MediumLearning Objective: 01-05 Apply



production possibilities analysis;increasing opportunity costs; andeconomic growth.Topic: Production possibilities modelType: Table

119. Refer to the above tables.Suppose that Duckistan andHerbania are each producing 14units of civilian goods and 2 unit ofmilitary goods. Then: A. Duckistan is fully employing itsresources but Herbania is not.B. both Duckistan and Herbania arefully employing their resources.C. Herbania is fully employing itsresources but Duckistan is not.D. neither Duckistan nor Herbaniaare fully employing their resources.


120.



In the figure above are two linearproduction possibilities curves forcountries Alpha and Beta. We canconclude that: A. different value systems make itimpossible to compare opportunitycosts in the two countries.B. the opportunity cost of shelter isgreater in Beta than it is in Alpha.C. the opportunity cost of food isgreater in Alpha than it is in Beta.D. the opportunity cost of shelter isgreater in Alpha than it is in Beta.


121. Which of the following is notcorrect? A typical productionpossibilities curve: A. indicates how much of twoproducts a society can produce.B. reveals how much eachadditional unit of one product willcost in terms of the other product.C. specifies how much of eachproduct society should produce.D. indicates that to produce moreof one product society must forgolarger and larger amounts of theother product.

AACSB: AnalyticBloom's: Level 1 RememberDifficulty: 1 EasyLearning Objective: 01-05 Applyproduction possibilities analysis;increasing opportunity costs; andeconomic growth.




122. Refer to the above diagram.This production possibilities curveis constructed so that: A. resources are presumed to beperfectly shiftable between breadand tractors.B. the opportunity cost of breaddiminishes as more bread isproduced.C. the opportunity cost of tractorsincreases as more bread isproduced.D. the opportunity cost of bothbread and tractors increases asmore of each is produced.




123. Refer to the above diagram.Which of the following is anormative statement? A. Point C is superior to point Bbecause it is important to enhancethe future of society.B. If society is initially at point C, itmust sacrifice 6 units of bread toobtain one more unit of tractors.C. If society produces 2 units oftractors and 12 units of bread, it isnot using its available resourceswith maximum efficiency.D. Other things equal, thecombination of outputsrepresented by point D will result inmore rapid economic growth thanwill the combination representedby point C.

AACSB: AnalyticBloom's: Level 2 UnderstandDifficulty: 2 MediumLearning Objective: 01-03 Distinguishmicroeconomics frommacroeconomics and positiveeconomics from normativeeconomics.Learning Objective: 01-05 Applyproduction possibilities analysis;increasing opportunity costs; andeconomic growth.Topic: Production possibilities model;positive and normative economicsType: Graph

124. Refer to the above diagram.Which of the following is a positivestatement? A. A point inside the productionpossibilities curve is superior to apoint on the curve because theformer requires less work effort.B. Because any society shouldstress economic growth as its major



goal, point D is superior to point C.C. Point B is preferable to point Cbecause the ultimate goal ofeconomic activity is to maximizeconsumption.D. Given its resources andtechnology, this society is incapableof simultaneously producing 3 unitsof tractors and 15 units of bread.

AACSB: AnalyticBloom's: Level 2 UnderstandDifficulty: 2 MediumLearning Objective: 01-03 Distinguishmicroeconomics frommacroeconomics and positiveeconomics from normativeeconomics.Learning Objective: 01-05 Applyproduction possibilities analysis;increasing opportunity costs; andeconomic growth.Topic: Production possibilities model;positive and normative economicsType: Graph

125. Refer to the above diagram.Starting at point A, the opportunitycost of producing each successiveunit of tractors is: A. a constant 2 units of bread.B. 2, 4, 6, and 8 units of bread.C. 8, 6, 4, and 2 units of bread.D. the reciprocal of the output oftractors.




Type: Graph

126. Refer to the above diagram.Starting at point E, the productionof successive units of bread willcost: A. a constant 8 units of tractors.B. a constant 6 units of tractors.

C. 1/8, 1/6, 1/4, and 1/2 units oftractors.

D. 1/2, 1/4, 1/6, and 1/8 units oftractors.

AACSB: Reflective ThinkingBloom's: Level 3 ApplyDifficulty: 2 MediumLearning Objective: 01-05 Applyproduction possibilities analysis;increasing opportunity costs; andeconomic growth.Topic: Production possibilities modelType: Graph

127. Refer to the above productionpossibilities curve. At the onset ofthe Second World War the United



States had large amounts of idlehuman and property resources. Itseconomic adjustment frompeacetime to wartime can best bedescribed by the movement frompoint: A. c to point b.B. b to point c.C. a to point b.D. c to point d.


128. Refer to the above productionpossibilities curve. At the onset ofthe Second World War the SovietUnion was already at fullemployment. Its economicadjustment from peacetime towartime can best be described bythe movement from point: A. c to point b.B. b to point c.C. a to point b.D. c to point d.




129. The production possibilitiescurve shows: A. the various combinations of twogoods that can be produced whensociety employs all of its scarceresources.B. the minimum outputs of twogoods that will sustain a society.C. the various combinations of twogoods that can be produced whensome resources are unemployed.D. the ideal, but unattainable,combinations of two goods thatwould maximize consumersatisfactions.


130. The negative slope of theproduction possibilities curve is agraphical way of indicating that: A. any economy "can have its cakeand eat it too."B. to produce more of one productwe must do with less of another.C. the principle of increasingopportunity costs applies to onlyparts of the economy.D. consumers buy more whenprices are low than when prices arehigh.

AACSB: AnalyticBloom's: Level 2 UnderstandDifficulty: 2 MediumLearning Objective: 01-05 Applyproduction possibilities analysis;increasing opportunity costs; andeconomic growth.




131. If an economy is operating onits production possibilities curve forconsumer goods and capital goods,this means that: A. it is impossible to produce moreconsumer goods.B. resources cannot be reallocatedbetween the two goods.C. it is impossible to produce morecapital goods.D. more consumer goods can onlybe produced at the cost of fewercapital goods.


132. The construction of aproduction possibilities curveassumes: A. the quantities of all resources areunlimited.B. technology is fixed.C. some resources are unemployed.D. there is no inflation in theeconomy.




133. A typical concave (bowed outfrom the origin) productionpossibilities curve implies: A. that economic resources areunlimited.B. that society must choose amongvarious attainable combinations ofgoods.C. decreasing opportunity costs.D. that society is using a marketsystem to allocate resources.


134. The production possibilitiescurve tells us: A. the specific combination of twoproducts that is most desired bysociety.B. that costs do not change associety varies its output.C. costs are irrelevant in a societythat has fixed resources.D. the combinations of two goodsthat can be produced with society'savailable resources.




135. The production possibilitiescurve has: A. a positive slope that increases aswe move along it from left to right.B. a negative slope that increasesas we move along it from left toright.C. a negative slope that decreasesas we move along it from left toright.D. a negative slope that is constantas we move along it from left toright.


Answer the question on the basisof the following productionpossibilities tables for twocountries, North Cantina and SouthCantina:

136. Refer to the above tables. IfSouth Cantina is producing at



production alternative D, theopportunity cost of the third unit ofcapital goods will be: A. 3 units of consumer goods.B. 4 units of consumer goods.C. 5 units of consumer goods.D. 6 units of consumer goods.

AACSB: Reflective ThinkingBloom's: Level 3 ApplyDifficulty: 2 MediumLearning Objective: 01-05 Applyproduction possibilities analysis;increasing opportunity costs; andeconomic growth.Topic: Production possibilities modelType: Table

137. Refer to the above tables. IfNorth Cantina is producing atproduction alternative B, theopportunity cost of the eleventhunit of consumer goods will be: A. 10 units of capital goods.

B. 1/4 of a unit of capital goods.C. 8 units of capital goods.

D. 1/8 of a unit of capital goods.

AACSB: Reflective ThinkingBloom's: Level 3 ApplyDifficulty: 2 MediumLearning Objective: 01-05 Applyproduction possibilities analysis;increasing opportunity costs; andeconomic growth.Topic: Production possibilities modelType: Table

138. Refer to the above tables.Suppose that North Cantina isproducing 2 units of capital goodsand 17 units of consumer goodswhile South Cantina is producing 2



units of capital goods and 21 unitsof consumer goods. We canconclude that: A. North Cantina is fully andefficiently using its resources, butSouth Cantina is not.B. South Cantina is fully andefficiently using its resources, butNorth Cantina is not.C. neither South Cantina nor NorthCantina are fully and efficientlyusing their resources.D. both South Cantina and NorthCantina are fully and efficientlyusing their resources.


139. Refer to the above tables.Suppose that resources in NorthCantina and South Cantina areidentical in quantity and quality. Wecan conclude that: A. South Cantina has bettertechnology than North Cantina inproducing both capital andconsumer goods.B. North Cantina has bettertechnology than South Cantina inproducing both capital andconsumer goods.C. North Cantina is growing morerapidly than South Cantina.D. North Cantina has bettertechnology than South Cantina inproducing consumer goods, but notcapital goods.




140. Refer to the above tables. Theopportunity cost of the fifth unit ofcapital goods: A. is higher in North Cantina than inSouth Cantina.B. is the same in North Cantina andSouth Cantina.C. is lower in North Cantina than inSouth Cantina.D. cannot be determined from theinformation provided.


141. If an economy is operatinginside its production possibilitiescurve for consumer goods andcapital goods, it: A. can only produce moreconsumer goods by producingfewer capital goods.B. can only produce more capitalgoods by producing fewerconsumer goods.C. can produce more of bothconsumer goods and capital goodsby using resources that arecurrently idle.



D. must improve its technology toproduce more output.

AACSB: Reflective ThinkingBloom's: Level 2 UnderstandDifficulty: 2 MediumLearning Objective: 01-05 Applyproduction possibilities analysis;increasing opportunity costs; andeconomic growth.Topic: Production possibilities model

142. Refer to the above diagram.Points A, B, C, D, and E show: A. that the opportunity cost ofbicycles increases, while that ofcomputers is constant.B. combinations of bicycles andcomputers that society can produceby using its resources efficiently.C. that the opportunity cost ofcomputers increases, while that ofbicycles is constant.D. that society's demand forcomputers is greater than itsdemand for bicycles.

AACSB: Analytic



Bloom's: Level 2 UnderstandDifficulty: 2 MediumLearning Objective: 01-05 Applyproduction possibilities analysis;increasing opportunity costs; andeconomic growth.Topic: Production possibilities modelType: Graph

143. Refer to the above diagram. Ifsociety is currently producing 9units of bicycles and 4 units ofcomputers and it now decides toincrease computer output to 6, thecost: A. will be 4 units of bicycles.B. will be 2 units of bicycles.C. will be zero because unemployedresources are available.D. of doing so cannot bedetermined from the informationgiven.


144. Refer to the above diagram.The combination of computers andbicycles shown by point G is: A. attainable, but too costly.B. unattainable, given currentlyavailable resources and technology.C. attainable, but involvesunemployment.D. irrelevant because it isinconsistent with consumerpreferences.



AACSB: AnalyticBloom's: Level 2 UnderstandDifficulty: 2 MediumLearning Objective: 01-05 Applyproduction possibilities analysis;increasing opportunity costs; andeconomic growth.Topic: Production possibilities modelType: Graph

145. Refer to the above diagram. Ifsociety is currently producing thecombination of bicycles andcomputers shown by point D, theproduction of 2 more units ofbicycles: A. cannot be achieved becauseresources are fully employed.B. will cost 1 unit of computers.C. will cost 2 units of computers.D. will cause some resources tobecome unemployed.


146. Refer to the above diagram.The combination of computers andbicycles shown by point F: A. is unattainable, given currentlyavailable resources and technology.B. is attainable, but implies that theeconomy is not using all itsresources.C. is irrelevant because it isinconsistent with consumerpreferences.D. suggests that opportunity costs



are constant.


147. Refer to the above diagram.The movement down theproduction possibilities curve frompoint A to point E suggests that theproduction of: A. computers, but not bicycles, issubject to increasing opportunitycosts.B. bicycles, but not computers, issubject to increasing opportunitycosts.C. both bicycles and computers aresubject to constant opportunitycosts.D. both bicycles and computers aresubject to increasing opportunitycosts.




148. Refer to the above diagram. Asit relates to production possibilitiesanalysis, the law of increasingopportunity cost is reflected incurve: A. AB. BC. CD. D


149. Refer to the above diagram.Curve B is a: A. production possibilities curveindicating constant opportunitycosts.B. production possibilities curveindicating increasing opportunitycosts.C. demand curve indicating that thequantity of consumer goods



demanded increases as the price ofcapital falls.D. technology frontier curve.


150. Refer to the above diagram. Allother things equal, curve C A. reflects increasing opportunitycosts because the slope of thecurve becomes less steep as onemoves down along the curve.B. is a less desirable productionpossibilities curve for an economythan curve B.C. is a more desirable productionpossibilities curve for an economythan curve A.D. has a steeper slope throughoutthan curve B.


151. The fact that the slope of theproduction possibilities curvebecomes steeper as we move downalong the curve indicates that: A. the principle of increasing



opportunity costs is relevant.B. society's resources are limited.C. the opportunity cost ofproducing each product is constant.D. resources are perfectly shiftablebetween alternative uses.


152. The law of increasingopportunity costs states that: A. if society wants to produce moreof a particular good, it mustsacrifice larger and larger amountsof another good to do so.B. the sum of the costs ofproducing a particular good cannotrise above the current market priceof that good.C. if the sum of the costs ofproducing a particular good rises bya specified percent, the price of thatgood must rise by a greater relativeamount.D. if the prices of all the resourcesused to produce goods increase,the cost of producing any particulargood will increase at the same rate.




153. The concept of opportunitycost: A. is irrelevant in socialisticeconomies because of centralplanning.B. suggests that the use ofresources in any particular line ofproduction means that alternativeoutputs must be forgone.C. is irrelevant if the productionpossibilities curve is shifting to theright.D. suggests that insatiable wantscan be fulfilled.

AACSB: Reflective ThinkingBloom's: Level 2 UnderstandDifficulty: 2 MediumLearning Objective: 01-05 Applyproduction possibilities analysis;increasing opportunity costs; andeconomic growth.Topic: Production possibilities model

154. The law of increasingopportunity costs is reflected in aproduction possibilities curve thatis: A. an upsloping straight line.B. a downsloping straight line.C. bowed out from the origin.D. bowed in toward the origin.

AACSB: AnalyticBloom's: Level 1 RememberDifficulty: 1 EasyLearning Objective: 01-05 Applyproduction possibilities analysis;increasing opportunity costs; andeconomic growth.Status: NewTopic: Production possibilities model



155. The point on the productionpossibilities curve that is mostdesirable can be found by: A. estimating the marginal costs ofboth products in real or physicalterms.B. comparing marginal benefits andmarginal costs.C. determining where least-costproduction occurs.D. calculating where economicgrowth will be greatest.


156. The optimal point on aproduction possibilities curve isachieved where: A. the smallest physical amounts ofinputs are used to produce eachgood.B. each good is produced at a levelwhere marginal benefits equalmarginal costs.C. large amounts of capital goodsare produced relative to consumergoods.D. large amounts of consumergoods are produced relative tocapital goods.

AACSB: AnalyticBloom's: Level 1 RememberDifficulty: 1 EasyLearning Objective: 01-05 Applyproduction possibilities analysis;



increasing opportunity costs; andeconomic growth.Topic: Production possibilities model

157. The marginal benefit curve is: A. upsloping because of increasingmarginal opportunity costs.B. upsloping because successiveunits of a specific product yield lessand less extra benefit.C. downsloping because ofincreasing marginal opportunitycosts.D. downsloping because successiveunits of a specific product yield lessand less extra benefit.


158. The marginal cost curve is: A. upsloping because of increasingmarginal opportunity costs.B. upsloping because successiveunits of a specific product yield lessand less extra utility.C. downsloping because ofincreasing marginal opportunitycosts.D. downsloping because successiveunits of a specific product yield lessand less extra utility.

AACSB: AnalyticBloom's: Level 1 RememberDifficulty: 1 EasyLearning Objective: 01-05 Apply



production possibilities analysis;increasing opportunity costs; andeconomic growth.Topic: Production possibilities model

159. The output of MP3 playersshould be: A. reduced if marginal benefitsexceed marginal costs.B. reduced if marginal costs exceedmarginal benefits.C. increased if marginal costsexceed marginal benefits.D. reduced to zero if their unit costsexceed the unit costs of alternativeproducts.


160. If the output of product X issuch that marginal benefit equalsmarginal cost: A. the correct amount of resourcesis being allocated to X's production.B. the value of producing X exceedsthe value of producing alternativeproducts with the availableresources.C. there can be a net gain to societyby allocating either more or lessresources to producing X.D. resources are overallocated tothe production of X.

AACSB: Reflective ThinkingBloom's: Level 2 UnderstandDifficulty: 2 Medium



Learning Objective: 01-05 Applyproduction possibilities analysis;increasing opportunity costs; andeconomic growth.Topic: Production possibilities model

161. Refer to the above diagram forathletic shoes. The optimal outputof shoes is: A. Q1.B. Q2.C. Q3.D. greater than Q3.


162. Refer to the above diagram for



athletic shoes. If the current outputof shoes is Q1, then: A. society would consideradditional units of shoes to bemore valuable than alternative usesof those resources.B. society would consider additionalunits of shoes to be less valuablethan alternative uses of thoseresources.C. society would experience a netloss by producing more shoes.D. resources are being allocatedefficiently to the production ofshoes.


163. Refer to the above diagram forathletic shoes. If the current outputof shoes is Q3, then: A. resources are being allocatedefficiently to the production ofshoes.B. society would consider additionalunits of shoes to be more valuablethan alternative products.C. society would consider additionalunits of shoes to be less valuablethan alternative products.D. society would experience a netgain by producing more shoes.

AACSB: Reflective ThinkingBloom's: Level 4 AnalyzeDifficulty: 3 HardLearning Objective: 01-05 Apply



production possibilities analysis;increasing opportunity costs; andeconomic growth.Topic: Production possibilities modelType: Graph

164. Refer to the above diagram forathletic shoes. If the current outputof shoes is Q3, then: A. society should produce fewershoes to achieve the optimalallocation of resources.B. society should produce moreshoes to achieve the optimalallocation of resources.C. resources are being allocatedefficiently to the production ofshoes.D. shoes are more valuable tosociety than alternative products.


165. Suppose that a fully-employedeconomy produces only two goods,hamburgers and flat-panel TVs. Ifthe economy is currently producingmore than the optimal quantity ofhamburgers, then to attain theoptimal allocation of resources itshould: A. produce more hamburgers andfewer TVs.B. produce more TVs and fewerhamburgers.C. produce more of both goods.D. produce fewer of both goods.



AACSB: AnalyticBloom's: Level 4 AnalyzeDifficulty: 3 HardLearning Objective: 01-05 Applyproduction possibilities analysis;increasing opportunity costs; andeconomic growth.Topic: Production possibilities model

166. Suppose that an economy isproducing on its productionpossibilities curve, but is notproducing quantities of each goodwhere the marginal benefit equalsthe marginal cost for each good.This economy: A. should not change its productionbecause it cannot improve itsallocation by shifting resources.B. can improve its allocation bylowering the unemployment rate.C. can improve its allocation byproducing more of one good andless of the other.D. can improve its allocation byproducing more of both goods.

AACSB: Reflective ThinkingBloom's: Level 4 AnalyzeDifficulty: 3 HardLearning Objective: 01-05 Applyproduction possibilities analysis;increasing opportunity costs; andeconomic growth.Topic: Production possibilities model

167. The optimal allocation ofresources is found: A. where MB = MC.B. at every point along a productionpossibilities curve.C. where the marginal benefit is atits greatest.D. where the marginal cost is at itslowest.




168. Refer to the above diagram.Technological advance in producingboth capital goods and consumergoods is shown by the shift of theproduction possibilities curve fromAB to: A. CD.B. EB.C. AF.D. GH.

AACSB: Reflective ThinkingBloom's: Level 4 AnalyzeDifficulty: 3 HardLearning Objective: 01-05 Applyproduction possibilities analysis;increasing opportunity costs; and



economic growth.Topic: Unemployment, growth, andthe futureType: Graph

169. Refer to the above diagram.Technological advance thatimproves the ability to producecapital goods but not consumergoods is shown by the shift of theproduction possibilities curve fromAB to: A. CD.B. BE.C. AF.D. GH.

AACSB: Reflective ThinkingBloom's: Level 4 AnalyzeDifficulty: 3 HardLearning Objective: 01-05 Applyproduction possibilities analysis;increasing opportunity costs; andeconomic growth.Topic: Unemployment, growth, andthe futureType: Graph

170. Refer to the above diagram.Technological advance that is usefulin producing consumer goods butnot in producing capital goods isshown by the shift of theproduction possibilities curve fromAB to: A. CD.B. EB.C. AF.D. GH.

AACSB: Reflective ThinkingBloom's: Level 4 AnalyzeDifficulty: 3 Hard



Learning Objective: 01-05 Applyproduction possibilities analysis;increasing opportunity costs; andeconomic growth.Topic: Unemployment, growth, andthe futureType: Graph

171. The basic difference betweenconsumer goods and capital goodsis that A. consumer goods are produced inthe private sector and capital goodsare produced in the public sector.B. an economy that commits arelatively large proportion of itsresources to capital goods mustaccept a lower growth rate.C. the production of capital goods isnot subject to the law of increasingopportunity costs.D. consumer goods satisfy wantsdirectly while capital goods satisfywants indirectly.

AACSB: AnalyticBloom's: Level 1 RememberDifficulty: 1 EasyLearning Objective: 01-05 Applyproduction possibilities analysis;increasing opportunity costs; andeconomic growth.Topic: Unemployment, growth, andthe future

172. Which of the following will shiftthe production possibilities curve tothe right? A. an increase in theunemployment rate from 6 to 8percentB. a decline in the efficiency withwhich the present labor force isallocatedC. a decrease in the unemploymentrate from 8 to 6 percent



D. a technological advance thatallows farmers to produce moreoutput from given inputs

AACSB: AnalyticBloom's: Level 2 UnderstandDifficulty: 2 MediumLearning Objective: 01-05 Applyproduction possibilities analysis;increasing opportunity costs; andeconomic growth.Topic: Unemployment, growth, andthe future

173. Other things equal, which ofthe following would shift aneconomy's production possibilitiescurve to the left? A. the discovery of a low-costmeans of generating and storingsolar energyB. the entrance of more womeninto the labor forceC. a law requiring mandatoryretirement from the labor force atage 55D. an increase in the proportion oftotal output that consists of capitalor investment goods

AACSB: Reflective ThinkingBloom's: Level 4 AnalyzeDifficulty: 3 HardLearning Objective: 01-05 Applyproduction possibilities analysis;increasing opportunity costs; andeconomic growth.Topic: Unemployment, growth, andthe future



174. Refer to the above diagram.The concave shape of eachproduction possibilities curveindicates that: A. resources are perfectlysubstitutable.B. wants are virtually unlimited.C. prices are constant.D. resources are not equally suitedfor alternative uses.

AACSB: AnalyticBloom's: Level 2 UnderstandDifficulty: 2 MediumLearning Objective: 01-05 Applyproduction possibilities analysis;increasing opportunity costs; andeconomic growth.Topic: Unemployment, growth, andthe futureType: Graph

175. Refer to the above diagram.The concept of opportunity cost isbest represented by the: A. shift of the productionpossibilities curve from PP1 to PP2.B. move from B on PP1 to E on PP2.C. move from B on PP1 to C on PP1.



D. move from D inside PP1 to B onPP1.

AACSB: AnalyticBloom's: Level 2 UnderstandDifficulty: 2 MediumLearning Objective: 01-05 Applyproduction possibilities analysis;increasing opportunity costs; andeconomic growth.Topic: Unemployment, growth, andthe futureType: Graph

176. Refer to the above diagram.Other things equal, which of thefollowing positions relative to PP1

would be the most likely to result ina future production possibilitiescurve of PP3, rather than PP2? A. A.B. B.C. C.D. D.


177. Refer to the above diagram. Animprovement in technology will: A. shift the production possibilitiescurve from PP1 to PP2.B. shift the production possibilitiescurve from PP2 to PP1.C. move the economy from A to C



along PP1.D. move the economy from A, B, orC on PP1 to D.


178. Refer to the above diagram.Which one of the following wouldshift the production possibilitiescurve from PP1 to PP2? A. worsening of the AIDS epidemicB. immigration of skilled workersinto the economyC. an increase in consumer pricesD. a reduction in hourly wages


179. Which of the followingstatements, if any, is correct for anation that is producing onlyconsumer and capital goods? A. Other things equal, the moreconsumer goods a nation produces,the greater will be its future growthrate.



B. Other things equal, the morecapital goods a nation produces,the greater will be its future growthrate.C. There is no general relationshipbetween the current division ofoutput between consumer andcapital goods and the future growthrate.D. None of these statements iscorrect.


180. All of the following couldimmediately or eventually lead toan inward shift of a nation'sproduction possibilities curve,except: A. emigration of skilled workersfrom the nation.B. a decline in the birth rate.C. an increase in the average skilllevel of all occupational groups.D. depletion and reducedavailability of major energyresources.

AACSB: Reflective ThinkingBloom's: Level 3 ApplyDifficulty: 2 MediumLearning Objective: 01-05 Applyproduction possibilities analysis;increasing opportunity costs; andeconomic growth.Topic: Unemployment, growth, and



the future

181. A nation's productionpossibilities curve might shift to theleft (inward) as a result of: A. technological advance.B. increases in the size of the laborforce.C. the depletion of its soil fertilitydue to overplanting andovergrazing.D. investing in more capital goods.


182. Which of the following willenable a nation to obtain acombination of consumer goodsand capital goods outside itsproduction possibilities curve? A. full employment.B. international specialization andtrade.C. full production.D. productive efficiency.

AACSB: AnalyticBloom's: Level 1 RememberDifficulty: 1 EasyLearning Objective: 01-06 Explain howeconomic growth and internationaltrade increase consumptionpossibilities.Topic: Unemployment, growth, andthe future



183. Suppose that Scoobania, whichhas full employment, can obtain 1unit of capital goods by sacrificing 2units of consumer goodsdomestically, but can obtain 1 unitof capital goods from anothercountry by trading 1 unit ofconsumer goods for it. This realityillustrates: A. a rightward (outward) shift of theproduction possibilities curve.B. increasing opportunity costs.C. achieving points beyond theproduction possibilities curvethrough international specializationand trade.D. productive efficiency.

AACSB: Reflective ThinkingBloom's: Level 4 AnalyzeDifficulty: 3 HardLearning Objective: 01-06 Explain howeconomic growth and internationaltrade increase consumptionpossibilities.Topic: Unemployment, growth, andthe future

184. Through specialization andinternational trade a nation: A. can attain some combination ofgoods lying outside its productionpossibilities curve.B. can move from a highconsumption-low investment to ahigh investment-low consumptionpoint on its production possibilitiescurve.C. will only attain somecombination of goods lying withinits production possibilities curve.D. will cause its productionpossibilities curve to shift leftward.




185. Some agricultural sub-Saharannations of Africa have overfarmedand overgrazed their land to theextent that significant portions of ithave turned into desert. Thissuggests that: A. the production possibilitiescurves of such nations are morebowed out from the origin.B. the production possibilitiescurves of such nations have shiftedinward.C. the production possibilitiescurves of such nations have shiftedoutward.D. these nations are operating atsome point outside of theirproduction possibilities curves.

AACSB: Reflective ThinkingBloom's: Level 3 ApplyDifficulty: 2 MediumLearning Objective: 01-06 Explain howeconomic growth and internationaltrade increase consumptionpossibilities.Topic: Unemployment, growth, andthe future

186. If all discrimination in theUnited States were eliminated, theeconomy would: A. have a less concave productionpossibilities curve.



B. produce at some point closer toits production possibilities curve.C. be able to produce at some pointoutside of its productionpossibilities curve.D. produce more consumer goodsand fewer investment goods.

AACSB: Reflective ThinkingBloom's: Level 3 ApplyDifficulty: 2 MediumLearning Objective: 01-05 Applyproduction possibilities analysis;increasing opportunity costs; andeconomic growth.Topic: Unemployment, growth, andthe future

187. A country can achieve somecombination of goods outside itsproduction possibilities curve by: A. idling some of its resources.B. specializing and engaging ininternational trade.C. buying the debt (bonds andstocks) of foreign nations.D. producing more capital goodsand fewer consumer goods.


188. In recent years the economy ofJapan has grown, despite the factthat the population of Japan hasdeclined. Which of the followingwould best explain Japan's



economic growth despite having asmaller population? A. Immigration of new workers intoJapan.B. Advancements in technology thatmake labor more productive.C. Reduced employment of capitalbecause fewer workers areavailable to use it.D. Greater consumption of goodsimported from other countries.

AACSB: Reflective ThinkingBloom's: Level 3 ApplyDifficulty: 2 MediumLearning Objective: 01-05 Applyproduction possibilities analysis;increasing opportunity costs; andeconomic growth.Topic: Unemployment, growth, andthe future

189. (Consider This) Free productsoffered by firms: A. may or may not be free tosociety, but are never free toindividuals.B. may or may not be free toindividuals, but are never free tosociety.C. are produced and distributed atno cost to society.D. usually are items nobody wants.




190. (Consider This) The assertionby economists that "there is no freelunch": A. is contradicted by the presenceof free goods offered by firms.B. applies to goods that have prices,not to goods given away free byfirms.C. remains true even for goodsgiven away free by firms.D. applies to agricultural goods, butnot to manufactured goods.


191. (Consider This) The economicperspective used in customerdecision making at fast-foodrestaurants is reflected in: A. customers selecting the shortestline.B. decisions for which marginalcosts exceed marginal benefits.C. all customer lines tending to beof different length.D. irrational purchasing of high-fat-content food.




192. (Consider This) At fast-foodrestaurants: A. consumers enjoy complete andaccurate information.B. decisions are usually made bytrial and error.C. decisions entail comparisons ofmarginal costs and marginalbenefits.D. benefits always exceed costs.


193. (Consider This) Consumersmight leave a fast-food restaurantwithout being served because: A. they are misinformed about themarginal cost and marginal benefitsof the food being served.B. they conclude that the marginalcost (monetary plus time costs)exceeds the marginal benefit.C. the environment is not conduciveto a rational choice.D. the lines waiting for service arenot of equal length.


194. (Consider This) A direct cost of



going to college is: A. tuition, while an indirect cost(opportunity cost) is books andother supplies.B. forgone income while in college,while an indirect cost (opportunitycost) is tuition.C. tuition, while an indirect cost(opportunity cost) is forgoneincome while in college.D. books and supplies, while anindirect cost (opportunity cost) isfood and housing.


195. (Consider This) An exception tothe advice "go to college, stay incollege, and earn a degree" occurswhen: A. tuition expenses are high andrising.B. the opportunity cost of attendingcollege is extraordinarily high.C. the price of textbooks is high andrising.D. the economy is growing rapidlyand jobs are plentiful.




196. (Consider This) Refer to theabove diagram. The directeconomic impact of the destructionand loss of lives caused by theterrorist attacks of September 11,2001 is illustrated by the: A. shift of the productionpossibilities curve from CD to AB.B. shift of the productionpossibilities curve from AB to CD.C. move from x to y on productionpossibilities curve AB.D. move from y to x on productionpossibilities curve AB.


197. (Consider This) Refer to the



above diagram. The U.S. responseto the events of September 11,2001, is illustrated by the: A. shift of the productionpossibilities curve from CD to AB.B. shift of the productionpossibilities curve from AB to CD.C. move from x to y on productionpossibilities curve AB.D. move from y to x on productionpossibilities curve AB.


198. (Consider This) Refer to theabove diagram. Suppose that pointy represents the optimalcombination of civilian goods anddefense goods. We can concludethat at y the marginal benefit ofdefense goods: A. exceeds the marginal cost ofdefense goods.B. equals the marginal cost ofdefense goods.C. is zero.D. is negative.




199. (Consider This) In response tothe terrorist attacks of September11, 2001, the government decidedto allocate more resources towarddefense goods. The government'sdecision reflects their assessmentthat: A. the marginal benefits ofadditional defense goodsoutweighed the marginal cost.B. the marginal cost of additionaldefense goods outweighed themarginal benefit.C. there cannot be too manydefense goods.D. civilian goods are not worthproducing.


200. (Last Word) The fallacy ofcomposition states that: A. because economic systems arecomposed of so many diverseeconomic units, economic laws arenecessarily inexact.B. the anticipation of a particularevent can affect the composition ofthat event when it occurs.C. what is true for the individualmust necessarily be true for thegroup.D. because event A precedes eventB, A is necessarily the cause of B.

AACSB: AnalyticBloom's: Level 1 Remember



Difficulty: 1 EasyLearning Objective: 01-02 Describethe role of economic theory ineconomics.Topic: Theories, principles, andmodels

201. (Last Word) The "after this,therefore because of this" fallacystates that: A. because event A precedes eventB, A is necessarily the cause of B.B. the very attempt to accomplish acertain objective may createconditions that prohibit theachievement of that goal.C. events may drastically alterplans; one's intentions and actualaccomplishments may differconsiderably.D. generalizations that are accurateat the level of microeconomics maybe inaccurate at the level ofmacroeconomics.


202. (Last Word) The safest way foran individual to leave a burningtheater is to run for the nearestexit; it is therefore also the bestmeans of escape for a largeaudience. This assertion illustratesthe: A. "after this, therefore because ofthis" fallacy.B. correlation fallacy.C. fallacy of composition.D. fallacy of limited decisions.




203. (Last Word) The post hoc, ergopropter hoc fallacy suggests that: A. positive statements are alwaysfollowed by normative judgments.B. positive statements can never beproven true or false.C. if one acts on one's expectations,those expectations will always befulfilled.D. cause and effect can bedetermined merely by observingthe sequence of events.


204. (Last Word) Which of thefollowing has to do with theproblem of distinguishing causeand effect in economic reasoning? A. the law of large numbers.B. the law of averages.C. the post hoc, ergo propter hocfallacy.D. the fallacy of composition.




205. (Last Word) Which of thefollowing best illustrates the posthoc, ergo propter hoc fallacy? A. Because it was 90 degrees today,I worked up a sweat playing tennis.B. I took the day off work to go tothe beach and that's why it rained.C. Because it rained at the footballgame, my new sweater got wet.D. Because I have studied diligentlythis semester, my grade averagehas improved.


206. (Last Word) The fallacy ofcomposition is essentially the errorof: A. omitting relevant variables inconstructing a model.B. reasoning from the general tothe particular.C. confusing cause and effect ineconomic relationships.D. generalizing from the particularto the general.




207. (Last Word) The post hoc fallacyand the correlation problem bothrelate to: A. the calculation of marginal costsand marginal benefits of anyeconomic activity.B. the issue of determiningcausation.C. the frequent inability ofhouseholds and businesses tobehave rationally.D. the tradeoff problem associatedwith competing goals.


208. (Last Word) If variables X and Yare positively correlated, thismeans that: A. X is the cause of Y.B. Y is the cause of X.C. causation necessarily exists, butwe don't know whether X or Y is thecause.D. causation may or may not existbetween X and Y.

AACSB: Analytic




209. (Last Word) "The governmentderegulated the electricity industryin California and a shortage ofelectricity soon occurred. It is clearthat the deregulation caused theshortage." This statement needscareful analysis because it mayreflect the: A. the fallacy of composition.B. post hoc, ergo propter hoc fallacy.C. use of loaded terminology.D. the law of averages.


210. (Last Word) A caller to a radiotalk show states that oil companiesare "greedy price gougers." This isan example of: A. loaded terminology.B. the "after this, therefore becauseof this fallacy."C. the fallacy of composition.D. the economic perspective.

AACSB: Reflective ThinkingBloom's: Level 3 ApplyDifficulty: 2 Medium



Learning Objective: 01-02 Describethe role of economic theory ineconomics.Topic: Theories, principles, andmodels

211. (Last Word) A caller to a radiotalk show states that protestersagainst globalization are acollection of "anarchist punks, naïvecollege students, and trade unionradicals." This is an example of: A. the fallacy of composition.B. the economic perspective.C. loaded terminology.D. marginal analysis.


212. (Last Word) A study found thatthe incidence of skin cancerincreases along with the amount oftime people work under fluorescentlight, leading some people toconclude that fluorescent lighting isa cause of skin cancer. But furtheranalysis found that people whowork in offices, where fluorescentlight is common, suffer moresunburn on their vacations thanother workers. The sunburns, notthe fluorescent light, were thecause of the higher incidence ofskin cancer. The original conclusionillustrates: A. the fallacy of composition.B. confusion of correlation andcausation.C. identifying marginal costs and



marginal benefits.D. biases and loaded terminology.

AACSB: Reflective ThinkingBloom's: Level 3 ApplyDifficulty: 2 MediumLearning Objective: 01-02 Describethe role of economic theory ineconomics.Topic: Theories, principles, andmodelsMultiple Choice Questions

237. If we say that two variables aredirectly related, this means that: A. the relationship between the twois purely random.B. an increase in one variable isassociated with a decrease in theother variable.C. an increase in one variable isassociated with an increase in theother variable.D. the two graph as a downslopingline.

AACSB: AnalyticBloom's: Level 1 RememberDifficulty: 1 EasyLearning Objective: 01-07 (Appendix)Understand graphs; curves; andslopes as they relate to economics.Topic: Graphs and their meaning

238. If we say that two variables areinversely related, this means that: A. the two graph as an upslopingline.B. an increase in one variable isassociated with a decrease in theother.C. an increase in one variable isassociated with an increase in theother.



D. the resulting relationship can beportrayed by a straight line parallelto the horizontal axis.


239. Economists: A. always put the independentvariable on the horizontal axis andthe dependent variable on thevertical axis.B. always put the dependentvariable on the horizontal axis andthe independent variable on thevertical axis.C. are somewhat arbitrary inassigning independent anddependent variables to thehorizontal and vertical axes.D. measure the slope of a linedifferently than do mathematicians.


240. Which of the followingstatements is correct? A. The value of the independentvariable is determined by the valueof the dependent variable.B. The value of the dependentvariable is determined by the value



of the independent variable.C. The dependent variabledesignates the "cause" and theindependent variable the "effect."D. Dependent variables graph asupsloping lines; independentvariables graph as downslopinglines.


241. Refer to the above diagram.Which line(s) show(s) a positiverelationship between x and y? A. A only.B. A and D only.C. C. A, B, and D.D. both C and E.




Difficulty: 2 MediumLearning Objective: 01-07 (Appendix)Understand graphs; curves; andslopes as they relate to economics.Topic: Graphs and their meaningType: Graph

242. Refer to the above diagram.Which line(s) show(s) a negativerelationship between x and y? A. A only.B. both A and D.C. A, B, and D.D. both C and E.

AACSB: AnalyticBloom's: Level 2 UnderstandDifficulty: 2 MediumLearning Objective: 01-07 (Appendix)Understand graphs; curves; andslopes as they relate to economics.Topic: Graphs and their meaningType: Graph

243. Refer to the above diagram.Which line(s) show(s) a positivevertical intercept? A. A and D only.B. B and C only.C. A, D, and E.D. A, D, and B.


244. Refer to the above diagram.



Which line(s) show(s) a negativevertical intercept? A. C only.B. both C and E.C. B, C, and E.D. both B and C.


245. If two variables are inverselyrelated, then as the value of onevariable: A. increases, the value of the othermay either increase or decrease.B. decreases, the value of the otherdecreases.C. increases, the value of the otherdecreases.D. increases, the value of the otherincreases.


246. If a positive relationship existsbetween x and y: A. an increase in x will cause y todecrease.B. a decrease in x will cause y toincrease.C. the relationship will graph as anupsloping line.



D. the vertical intercept must bepositive.

AACSB: AnalyticBloom's: Level 2 UnderstandDifficulty: 2 MediumLearning Objective: 01-07 (Appendix)Understand graphs; curves; andslopes as they relate to economics.Topic: Graphs and their meaning

247. Answer on the basis of therelationships shown in the abovefour figures. The amount of Y isdirectly related to the amount of Xin: A. both 1 and 3.B. both 1 and 2.C. 2 only.D. 1 only.


248. Answer on the basis of therelationships shown in the abovefour figures. The amount of Y is



inversely related to the amount of Xin: A. 2 only.B. both 1 and 3.C. 3 only.D. 1 only.


249. If price (P) and quantity (Q) aredirectly related, this means that: A. a change in Q will alter P, but achange in P will not alter Q.B. if P increases, Q will decrease.C. if P increases, Q will alsoincrease.D. an increase in P will cause Q tochange, but the direction in which Qchanges cannot be predicted.


Answer the question on the basisof the following information.Assume that if the interest rate thatbusinesses must pay to borrowfunds were 20 percent, it would beunprofitable for businesses toinvest in new machinery and



equipment, so investment would bezero. But if the interest rate were 16percent, businesses would find itprofitable to invest $10 billion. Ifthe interest rate were 12 percent,$20 billion would be invested.Assume that total investmentcontinues to increase by $10 billionfor each successive 4 percentagepoint decline in the interest rate.

250. Refer to the aboveinformation. Which of the followingis an accurate verbal statement ofthe described relationship? A. There is no regular ordependable relationship betweenbusiness investment and theinterest rate.B. The amount of businessinvestment is unaffected bychanges in the interest rate.C. Investment spending bybusinesses varies inversely with theinterest rate.D. Investment spending bybusinesses varies directly with theinterest rate.

AACSB: AnalyticBloom's: Level 3 ApplyDifficulty: 2 MediumLearning Objective: 01-07 (Appendix)Understand graphs; curves; andslopes as they relate to economics.Topic: Graphs and their meaning

251. Refer to the aboveinformation. Using i and I toindicate the interest rate andinvestment (in billions of dollars)respectively, which of the followingis the correct tabular presentationof the described relationship?



A. Option AB. Option BC. Option CD. Option D

AACSB: AnalyticBloom's: Level 2 UnderstandDifficulty: 2 MediumLearning Objective: 01-07 (Appendix)Understand graphs; curves; andslopes as they relate to economics.Topic: Graphs and their meaningType: Table

252. Refer to the aboveinformation. Which of the followingcorrectly expresses the indicatedrelationship as an equation? A. i = 20 - 4I.B. i = 20 - .4I.C. i = 24 - .4I.D. i = 20 - 10I.

AACSB: AnalyticBloom's: Level 3 ApplyDifficulty: 2 MediumLearning Objective: 01-07 (Appendix)Understand graphs; curves; andslopes as they relate to economics.



Topic: Graphs and their meaningType: Table

253.

Assume that if the interest rate thatbusinesses must pay to borrowfunds were 20 percent, it would beunprofitable for businesses toinvest in new machinery andequipment, so investment would bezero. But if the interest rate were 16percent, businesses would find itprofitable to invest $10 billion. Ifthe interest rate were 12 percent,$20 billion would be invested.Assume that total investmentcontinues to increase by $10 billionfor each successive 4 percentagepoint decline in the interest rate.Refer to the above graph. Which ofthe following is the correctgraphical presentation of theindicated relationship? A. line DB. line CC. line BD. line A

AACSB: AnalyticBloom's: Level 2 UnderstandDifficulty: 2 MediumLearning Objective: 01-07 (Appendix)



Understand graphs; curves; andslopes as they relate to economics.Topic: Graphs and their meaningType: Graph

Answer the question on the basisof the following data:

254. The above data suggest that: A. consumption varies inverselywith after-tax income.B. consumption varies directly withafter-tax income.C. consumption and after-taxincome are unrelated.D. a tax increase will increaseconsumption.


255. The above data indicate that: A. consumers spend 80 percent oftheir after-tax incomes.B. consumers spend 90 percent oftheir after-tax incomes.C. a tax reduction will reduceconsumption.D. the relationship betweenconsumption and after-tax income



is random.

AACSB: AnalyticBloom's: Level 3 ApplyDifficulty: 2 MediumLearning Objective: 01-07 (Appendix)Understand graphs; curves; andslopes as they relate to economics.Topic: Graphs and their meaningType: Table

256. The above data suggest that: A. a policy of tax reduction willincrease consumption.B. a policy of tax increases willincrease consumption.C. tax changes will have no impacton consumption.D. after-tax income should belowered to increase consumption.

AACSB: Reflective ThinkingBloom's: Level 4 AnalyzeDifficulty: 3 HardLearning Objective: 01-07 (Appendix)Understand graphs; curves; andslopes as they relate to economics.Topic: Graphs and their meaningType: Table

257. The slope of a straight line canbe determined by: A. comparing the absolutehorizontal change to the absolutevertical change between two pointson the line.B. comparing the absolute verticalchange to the absolute horizontalchange between two points on theline.C. taking the reciprocal of thevertical intercept.D. comparing the percentage



vertical change to the percentagehorizontal change between twopoints on the line.


258. Refer to the above diagram.The variables X and Y are: A. inversely related.B. directly related.C. unrelated.D. negatively related.




259. Refer to the above diagram.The vertical intercept: A. is 40.B. is 50.C. is 60.D. cannot be determined from theinformation given.


260. Refer to the above diagram.The slope of the line:

A. is - 1/4.

B. is + 1/4.C. is .40.D. cannot be determined from theinformation given.

AACSB: AnalyticBloom's: Level 3 ApplyDifficulty: 2 MediumLearning Objective: 01-07 (Appendix)Understand graphs; curves; andslopes as they relate to economics.Topic: Graphs and their meaningType: Graph

261. Refer to the above diagram.The equation that shows therelationship between Y and X is:

A. Y = 50 + 1/4 X.

B. X = 1/4 Y.C. Y = .4X.

D. Y = 1/4 X - 50.




262. Refer to the above graph.Which of the following statementsis correct? A. Quantity demanded and quantitysupplied are independent of price.B. Price and quantity demanded aredirectly related.C. Price and quantity supplied aredirectly related.D. Price and quantity supplied areinversely related.

AACSB: AnalyticBloom's: Level 2 UnderstandDifficulty: 2 MediumLearning Objective: 01-07 (Appendix)




263. Refer to the above graph.Which of the following schedulescorrectly reflects "demand"?



264. Refer to the above graph.Which of the following schedulescorrectly reflects "supply"?





265. Refer to the above graph.Using Qd for quantity demandedand P for price, which of thefollowing equations correctly statesthe demand for this product? A. P = Qd/10.B. P = 50 - P/2.C. P = 10 - .2Qd.D. P = 10 - 2Qd.




Topic: Graphs and their meaningType: Graph

266. Refer to the above graph.Using Qs for quantity supplied andP for price, which of the followingequations correctly states thesupply of this product? A. P = 4 + .2Qs.B. P = 60/Qs.C. P = 10Qs - 2P.D. P = 2 + .2Qs.


267. Assume a household wouldconsume $100 worth of goods andservices per week if its weeklyincome were zero and would spendan additional $80 per week for each$100 of additional income. Letting Crepresent consumption and Yrepresent income, the equationthat summarizes this relationshipis: A. C = 80 + 100Y.B. C = 100 + .8Y.C. C = 100 + 80Y.D. C = 80 + .1Y.




Topic: Graphs and their meaning

Answer the question on the basisof the following five data setswherein it is assumed that thevariable shown on the left is theindependent variable and the oneon the right is the dependentvariable. Assume in graphing thesedata that the independent variableis shown on the horizontal axis andthe dependent variable on thevertical axis.

268. Refer to the above data sets.The variables are directly relatedin: A. all five data sets.B. in none of the data sets.C. in data sets 1, 2, and 3 only.D. in data sets 1, 2, and 5 only.


269. Refer to the above data sets.The vertical intercept is positive



for: A. all five data sets.B. data sets 1 and 3 only.C. data sets 1, 3, and 5 only.D. data set 2 only.


270. Refer to the above data sets.The vertical intercept is negativefor: A. none of the data sets.B. data sets 1 and 3 only.C. data sets 2 and 4 only.D. data sets 1 and 5 only.


271. Refer to the above data sets.The equation for data set 3 is: A. P = 90 - .5N.B. P = 90 + .5N.C. P = .5N.D. P = 40 + .5N.

AACSB: AnalyticBloom's: Level 3 Apply



Difficulty: 2 MediumLearning Objective: 01-07 (Appendix)Understand graphs; curves; andslopes as they relate to economics.Topic: Graphs and their meaningType: Table

272. Refer to the above data sets.For which data set(s) is the verticalintercept zero? A. data set 4.B. data set 5.C. data sets 2 and 3.D. data set 1.


273. Refer to the above data sets.The equation for data set 5 is: A. V = .5Y.B. U =-.5V.C. U = V.D. V = 2U.

AACSB: AnalyticBloom's: Level 3 ApplyDifficulty: 2 MediumLearning Objective: 01-07 (Appendix)Understand graphs; curves; andslopes as they relate to economics.Topic: Graphs and their meaningType: Table

274. Refer to the above data sets.Which of the data sets would graph



as an upsloping line? A. 1 only.B. 1, 2, and 3 only.C. 4 and 5 only.D. 1, 2, and 5 only.


275. If the equation y = 15 - 4x wasplotted, the: A. vertical intercept would be -4.B. vertical intercept would be +4.C. vertical intercept would be +9.D. slope would be -4.

AACSB: AnalyticBloom's: Level 2 UnderstandDifficulty: 2 MediumLearning Objective: 01-07 (Appendix)Understand graphs; curves; andslopes as they relate to economics.Topic: Graphs and their meaning

276. If the equation y = -10 + 2.5xwas plotted: A. the vertical intercept would be-10.B. the slope would be -7.5.C. it would graph as a downslopingline.D. the slope would be -10.




Difficulty: 2 MediumLearning Objective: 01-07 (Appendix)Understand graphs; curves; andslopes as they relate to economics.Topic: Graphs and their meaning

277.

The movement from line A to line A'represents a change in: A. the slope only.B. the intercept only.C. both the slope and the intercept.D. neither the slope nor theintercept.




278. In the above diagram variablesx and y are: A. both dependent variables.B. directly related.C. inversely related.D. unrelated.


279. In the above diagram thevertical intercept and slope are:

A. 4 and -11/3 respectively.

B. 3 and -11/3 respectively.

C. 3 and + 3/4 respectively.

D. 4 and + 3/4 respectively.

AACSB: AnalyticBloom's: Level 3 ApplyDifficulty: 2 MediumLearning Objective: 01-07 (Appendix)




280. In the above diagram theequation for this line is:

A. y = 4 - 11/3 x.

B. y = 3 + 3/4 x.

C. y = 4 - 3/4 x.

D. y = 4 + 11/3 x.


281. If we are considering therelationship between two variablesand release one of the other-things-equal assumptions, we wouldexpect: A. the relationship to change fromdirect to inverse.B. the line representing thatrelationship on a graph to shift.C. the data points to have a tighterfit to the line representing therelationship.D. the relationship to change frominverse to direct.

AACSB: Reflective ThinkingBloom's: Level 2 UnderstandDifficulty: 2 MediumLearning Objective: 01-07 (Appendix)Understand graphs; curves; andslopes as they relate to economics.



Topic: Graphs and their meaning

282. The amount of pizzas thatconsumers want to buy per week isreflected in the equation P = 15 -.02Qd, where Qd is the amount ofpizzas purchased per week and P isthe price of pizzas. On the basis ofthis information we can say that: A. if pizzas were free, people wouldconsume 800 per week.B. more pizzas will be purchased ata high price than at a low price.C. if the price of pizzas is $6, then150 will be purchased.D. 50 fewer pizzas will bepurchased per week for every $1increase in price.

AACSB: AnalyticBloom's: Level 3 ApplyDifficulty: 2 MediumLearning Objective: 01-07 (Appendix)Understand graphs; curves; andslopes as they relate to economics.Topic: Graphs and their meaning



283. Refer to the above diagram.The slope of curve ZZ at point A isapproximately: A. +2.

B. +21/2.

C. -21/2.D. +4.


284. Refer to the above diagram.The slope of curve ZZ at point B is: A. infinity.B. zero.C. +1.D. -1.


285. Refer to the above diagram.The slope of curve ZZ at point C isapproximately: A. -4.B. -2.

C. -22/5.D. +3.




286. The slope of a line parallel tothe vertical axis is: A. zero.B. one.C. infinite.D. one-half.


287. The slope of a line parallel tothe horizontal axis is: A. zero.B. one.C. infinite.D. one-half.


288. Slopes of lines are especiallyimportant in economics because:



A. they measure marginal changes.B. they always tell us somethingabout profits.C. positive slopes are alwayspreferred to negative slopes.D. they always relate to resourceand output scarcity.


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