Question 1

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

Accepted Answer

A)  the labor force available to society has grown.
B)  productivity has increased over time.
C)  productivity has declined over time.
D)  society is producing a different combination of outputs.E) All of the above
F) None of the above

Question 2

A point or product-combination to the left of (or inside)  a budget line

Accepted Answer

A)  is attainable, but a combination or point to the right of the line is unattainable.
B)  is unattainable, but a combination or point to the right of the line is attainable.
C)  costs more than a combination or point on the budget line.
D)  costs more than a combination or point outside the budget line.E) A) and D)
F) A) and C)

Question 3

Joe sold gold coins for $1,000 that he bought a year ago for $1,000.He says, "At least I didn't lose any money on my financial investment." His economist friend points out that in effect he did lose money because he could have received a 3 percent return on the $1,000 if he had bought a bank certificate of deposit instead of the coins.The economist's analysis in this case incorporates the idea of

Accepted Answer

A)  opportunity costs.
B)  marginal benefits that exceed marginal costs.
C)  imperfect information.
D)  normative economics.E) A) and D)
F) A) and C)

Question 4

(Consider This)  At fast-food restaurants

Accepted Answer

A)  consumers enjoy complete and accurate information.
B)  decisions are usually made by trial and error.
C)  decisions entail comparisons of marginal costs and marginal benefits.
D)  benefits always exceed costs.E) B) and C)
F) C) and D)

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

Economic models do not reflect the full complexity of reality, but instead are based on

Accepted Answer

A)  simplifications.
B)  trade-offs.
C)  value judgments.
D)  predictions.E) B) and C)
F) A) and D)

Question 7

The role of an assumption in an economic theory is to

Accepted Answer

A)  add realism.
B)  prove the theory.
C)  cover special cases.
D)  simplify the complex reality.E) A) and D)
F) None of the above

Question 8

Which of the following is considered to be an entrepreneur?

Accepted Answer

A)  a self-employed person
B)  an MBA graduate hired by a firm to be its CEO
C)  a production-line worker
D)  a customer of a firmE) All of the above
F) A) and B)

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

If the output of product X is such that marginal benefit equals marginal cost,

Accepted Answer

A)  the correct amount of resources is being allocated to X's production.
B)  the value of producing X exceeds the value of producing alternative products with the available resources.
C)  there can be a net gain to society by allocating either more or less resources to producing X.
D)  resources are overallocated to the production of X.E) A) and D)
F) None of the above

Question 11

A reduction in the unemployment rate will cause the nation's production possibilities curve to shift outward.

Accepted Answer

A) True 
 B)False

Question 12

A budget line is a graph that shows the various combinations of two products that a

Accepted Answer

A)  consumer can buy with a given amount of money income.
B)  business firm can produce with a given budget.
C)  household can produce with a given amount of resources.
D)  nation can trade with another nation.E) A) and B)
F) A) and C)

Question 13

The post hoc, ergo propter hoc fallacy consists of

Accepted Answer

A)  using an example to "prove" a different point.
B)  inferring causality from chronological sequence.
C)  jumping to conclusions from an inadequate number of cases.
D)  arguing for or against a person's character rather than his view or opinion.E) B) and D)
F) A) and D)

Question 14

What is the best economic explanation for why a person would drop out of college in order to start a business?

Accepted Answer

A)  The person has a good idea for starting a business.
B)  The person has to pay a higher tuition to attend college.
C)  The expected future benefits from starting a business now are greater than the costs.
D)  The opportunity cost of starting a business is high now but will be low later in life.E) All of the above
F) A) and C)

Question 15

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

Accepted Answer

A)  two thousand acres of virgin forest.
B)  a hydroelectric dam.
C)  crude oil reserves.
D)  iron ore deposits.E) None of the above
F) All of the above

Question 16

(Last Word)  The post hoc fallacy and the correlation problem both relate to

Accepted Answer

A)  the calculation of marginal costs and marginal benefits of any economic activity.
B)  the issue of determining causation.
C)  the frequent inability of households and businesses to behave rationally.
D)  the trade-off problem associated with competing goals.E) All of the above
F) A) and B)

Question 17

If we are considering the relationship between two variables and release one of the other-things-equal assumptions, we would expect

Accepted Answer

A)  the relationship to change from direct to inverse.
B)  the line representing that relationship on a graph to shift.
C)  the data points to have a tighter fit to the line representing the relationship.
D)  the relationship to change from inverse to direct.E) A) and D)
F) B) and C)

Question 18

(Last Word)  Which of the following best illustrates the post hoc, ergo propter hoc fallacy?

Accepted Answer

A)  Because it was 90 degrees today, I worked up a sweat playing tennis.
B)  I took the day off work to go to the beach, and that's why it rained.
C)  Because it rained at the football game, my new sweater got wet.
D)  Because I have studied diligently this semester, my grade average has improved.E) None of the above
F) A) and D)

Question 19

The production possibilities curve

Accepted Answer

A)  shows all of those levels of production that are consistent with a stable price level.
B)  indicates that any combination of goods lying outside the curve is economically inefficient.
C)  is a frontier between all combinations of two goods that can be produced and those combinations that cannot be produced.
D)  shows all of those combinations of two goods that are most preferred by society.E) None of the above
F) B) and D)

Question 20

When firms give away "freebies" like free apps, free checking accounts, free maps, or free toothbrushes, they are contradicting economists' contention that "there is no free lunch."

Accepted Answer

A) True 
 B)False

Exam 1: Limits, Alternatives, and Choices

The production possibilities curve

Correct Answer
verified

(Last Word) The post hoc fallacy and the correlation problem both relate to

Correct Answer
verified

Which of the following is considered to be an entrepreneur?

Correct Answer
verified

If we are considering the relationship between two variables and release one of the other-things-equal assumptions, we would expect

Correct Answer
verified

(Consider This) At fast-food restaurants

Correct Answer
verified

A point or product-combination to the left of (or inside) a budget line

Correct Answer
verified

The role of an assumption in an economic theory is to

Correct Answer
verified

When firms give away "freebies" like free apps, free checking accounts, free maps, or free toothbrushes, they are contradicting economists' contention that "there is no free lunch."

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

A budget line is a graph that shows the various combinations of two products that a

Correct Answer
verified

A reduction in the unemployment rate will cause the nation's production possibilities curve to shift outward.

Correct Answer
verified

What is the best economic explanation for why a person would drop out of college in order to start a business?

Correct Answer
verified

The post hoc, ergo propter hoc fallacy consists of

Correct Answer
verified

If the output of product X is such that marginal benefit equals marginal cost,

Correct Answer
verified

(Last Word) Which of the following best illustrates the post hoc, ergo propter hoc fallacy?

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

Economic models do not reflect the full complexity of reality, but instead are based on

Correct Answer
verified

Exam 1: Limits, Alternatives, and Choices

The production possibilities curve

Correct AnswerverifiedShow Answer

(Last Word) The post hoc fallacy and the correlation problem both relate to

Correct AnswerverifiedShow Answer

Which of the following is considered to be an entrepreneur?

Correct AnswerverifiedShow Answer

If we are considering the relationship between two variables and release one of the other-things-equal assumptions, we would expect

Correct AnswerverifiedShow Answer

(Consider This) At fast-food restaurants

Correct AnswerverifiedShow Answer

A point or product-combination to the left of (or inside) a budget line

Correct AnswerverifiedShow Answer

The role of an assumption in an economic theory is to

Correct AnswerverifiedShow Answer

When firms give away "freebies" like free apps, free checking accounts, free maps, or free toothbrushes, they are contradicting economists' contention that "there is no free lunch."

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A budget line is a graph that shows the various combinations of two products that a

Correct AnswerverifiedShow Answer

A reduction in the unemployment rate will cause the nation's production possibilities curve to shift outward.

Correct AnswerverifiedShow Answer

What is the best economic explanation for why a person would drop out of college in order to start a business?

Correct AnswerverifiedShow Answer

The post hoc, ergo propter hoc fallacy consists of

Correct AnswerverifiedShow Answer

If the output of product X is such that marginal benefit equals marginal cost,

Correct AnswerverifiedShow Answer

(Last Word) Which of the following best illustrates the post hoc, ergo propter hoc fallacy?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Economic models do not reflect the full complexity of reality, but instead are based on

Correct AnswerverifiedShow Answer

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