Question 1

In recent years the economy of Japan has grown, despite the fact that the population of Japan has declined.Which of the following would best explain Japan's economic growth despite having a smaller population?

Accepted Answer

A)  immigration of new workers into Japan
B)  advancements in technology that make labor more productive
C)  reduced employment of capital because fewer workers are available to use it
D)  greater consumption of goods imported from other countriesE) All of the above
F) B) and D)

Question 2

A production possibilities curve shows

Accepted Answer

A)  that resources are unlimited.
B)  that people prefer one of the goods more than the other.
C)  the maximum amounts of two goods that can be produced, assuming the full use of available resources.
D)  combinations of capital and labor necessary to produce specific levels of output.E) C) and D)
F) B) and D)

Question 3

The process by which capital goods are accumulated is known as investment.

Accepted Answer

A) True 
 B)False

Question 4

The typical production possibilities curve is

Accepted Answer

A)  an upsloping line that is bowed out from the origin.
B)  a downsloping line that is bowed in toward the origin.
C)  a downsloping line that is bowed out from the origin.
D)  a straight upsloping line.E) None of the above
F) B) and C)

Question 5

If the production possibilities curve is a straight line, then

Accepted Answer

A)  the opportunity cost of producing one good is zero.
B)  the law of increasing opportunity costs does not apply.
C)  the society can produce more of both goods simultaneously.
D)  the society is capable of producing only one of the goods and not the other.E) All of the above
F) C) and D)

Question 6

If you knew that the vertical intercept for a straight line was 150 and that the slope of the line was 4, then the dependent variable would be 250 when the value of the independent variable is

Accepted Answer

A)  15.
B)  20.
C)  25.
D)  30.E) A) and B)
F) All of the above

Question 7

Rosa works at a gelato shop and observes that the number of people buying gelato varies greatly from day to day.For a couple of weeks, she has recorded the number of people at the shop each day, as well as the daily temperature, and has observed a positive relationship between temperature and the number of customers.Based on her observations, Rosa should

Accepted Answer

A)  conclude definitively that people buy more gelato when the temperature rises.
B)  determine if there are other relevant factors and attempt to hold these constant before drawing conclusions.
C)  continue to gather data on the number of visitors and daily temperatures, because eventually other relevant variables will not matter.
D)  throw out the data if it does not show a perfect relationship between buying habits and temperature.E) A) and C)
F) None of the above

Question 8

Economics is the social science concerned with the best use of scarce resources to achieve maximum satisfaction of economic wants.

Accepted Answer

A) True 
 B)False

Question 9

The notion of "purposeful behavior" in the economic perspective suggests that

Accepted Answer

A)  people will tend to stick with a particular choice for a long period of time.
B)  economic analysis will provide people with a single "right" way to behave.
C)  economists do not believe that people can sometimes behave impulsively.
D)  one person's choice may differ from another's if their circumstances and information differ.E) B) and D)
F) B) and C)

Question 10

Which of the following would not be classified as an economic resource by economists?

Accepted Answer

A)  a professional soccer player
B)  water in a town's reservoir
C)  money in a business checking account
D)  the manager of the local hamburger restaurantE) A) and D)
F) A) and C)

Question 11

Suppose an economist says that "other things equal, the lower the price of bananas, the greater the amount of bananas purchased." This statement indicates that

Accepted Answer

A)  the quantity of bananas purchased determines the price of bananas.
B)  all factors other than the price of bananas (for example, consumer tastes and incomes)  are assumed to be constant.
C)  everyone will buy more bananas when the price falls.
D)  one cannot generalize about the relationship between the price of bananas and the quantity purchased.E) A) and B)
F) None of the above

Question 12

The optimal point on a production possibilities curve is achieved where

Accepted Answer

A)  the smallest physical amounts of inputs are used to produce each good.
B)  each good is produced at a level where marginal benefits equal marginal costs.
C)  large amounts of capital goods are produced relative to consumer goods.
D)  large amounts of consumer goods are produced relative to capital goods.E) A) and B)
F) A) and C)

Question 13

Macroeconomics is concerned with the study of the nationwide market for specific goods like oranges.

Accepted Answer

A) True 
 B)False

Question 14

The production possibilities curve shows

Accepted Answer

A)  the various combinations of two goods that can be produced when society employs all of its scarce resources.
B)  the minimum outputs of two goods that will sustain a society.
C)  the various combinations of two goods that can be produced when some resources are unemployed.
D)  the ideal, but unattainable, combinations of two goods that would maximize consumer satisfaction.E) A) and D)
F) B) and C)

Question 15

Which question is an example of a microeconomic question?

Accepted Answer

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

Question 16

One basic difference between "land" and "capital" resources is that land is

Accepted Answer

A)  manufactured, while capital is created by humans.
B)  unlimited, while capital is limited.
C)  natural, while capital is created by humans.
D)  limited, while capital is unlimited.E) C) and D)
F) B) and D)

Question 17

Money is not considered to be an economic resource because

Accepted Answer

A)  as such it is not productive.
B)  money is not a free gift of nature.
C)  money is made by humans.
D)  idle money balances do not earn interest income.E) A) and D)
F) C) and D)

Question 18

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

Accepted Answer

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

Question 19

The assertion that "there is no free lunch" means that

Accepted Answer

A)  there are always trade-offs between economic goals.
B)  all production involves the use of scarce resources and thus the sacrifice of alternative goods.
C)  marginal analysis is used in economic reasoning.
D)  choices need not be made if behavior is rational.E) None of the above
F) A) and D)

Exam 1: Limits, Alternatives, and Choices

The typical production possibilities curve is

Correct Answer
verified

A production possibilities curve shows

Correct Answer
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Which of the following would not be classified as an economic resource by economists?

Correct Answer
verified

The process by which capital goods are accumulated is known as investment.

Correct Answer
verified

Correct Answer
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The optimal point on a production possibilities curve is achieved where

Correct Answer
verified

Suppose an economist says that "other things equal, the lower the price of bananas, the greater the amount of bananas purchased." This statement indicates that

Correct Answer
verified

If you knew that the vertical intercept for a straight line was 150 and that the slope of the line was 4, then the dependent variable would be 250 when the value of the independent variable is

Correct Answer
verified

Which question is an example of a microeconomic question?

Correct Answer
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The notion of "purposeful behavior" in the economic perspective suggests that

Correct Answer
verified

Money is not considered to be an economic resource because

Correct Answer
verified

The assertion that "there is no free lunch" means that

Correct Answer
verified

One basic difference between "land" and "capital" resources is that land is

Correct Answer
verified

If the production possibilities curve is a straight line, then

Correct Answer
verified

Economics is the social science concerned with the best use of scarce resources to achieve maximum satisfaction of economic wants.

Correct Answer
verified

Macroeconomics is concerned with the study of the nationwide market for specific goods like oranges.

Correct Answer
verified

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

Correct Answer
verified

The production possibilities curve shows

Correct Answer
verified

In recent years the economy of Japan has grown, despite the fact that the population of Japan has declined.Which of the following would best explain Japan's economic growth despite having a smaller population?

Correct Answer
verified

Exam 1: Limits, Alternatives, and Choices

The typical production possibilities curve is

Correct AnswerverifiedShow Answer

A production possibilities curve shows

Correct AnswerverifiedShow Answer

Which of the following would not be classified as an economic resource by economists?

Correct AnswerverifiedShow Answer

The process by which capital goods are accumulated is known as investment.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The optimal point on a production possibilities curve is achieved where

Correct AnswerverifiedShow Answer

Suppose an economist says that "other things equal, the lower the price of bananas, the greater the amount of bananas purchased." This statement indicates that

Correct AnswerverifiedShow Answer

If you knew that the vertical intercept for a straight line was 150 and that the slope of the line was 4, then the dependent variable would be 250 when the value of the independent variable is

Correct AnswerverifiedShow Answer

Which question is an example of a microeconomic question?

Correct AnswerverifiedShow Answer

The notion of "purposeful behavior" in the economic perspective suggests that

Correct AnswerverifiedShow Answer

Money is not considered to be an economic resource because

Correct AnswerverifiedShow Answer

The assertion that "there is no free lunch" means that

Correct AnswerverifiedShow Answer

One basic difference between "land" and "capital" resources is that land is

Correct AnswerverifiedShow Answer

If the production possibilities curve is a straight line, then

Correct AnswerverifiedShow Answer

Economics is the social science concerned with the best use of scarce resources to achieve maximum satisfaction of economic wants.

Correct AnswerverifiedShow Answer

Macroeconomics is concerned with the study of the nationwide market for specific goods like oranges.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The production possibilities curve shows

Correct AnswerverifiedShow Answer

In recent years the economy of Japan has grown, despite the fact that the population of Japan has declined.Which of the following would best explain Japan's economic growth despite having a smaller population?

Correct AnswerverifiedShow Answer

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