Question 1

Which of the following statements are correct?
I. The "highest- valued alternative given up to get something" is the opportunity cost.
II. Wealthy economies don't experience opportunity costs.
III. Scarcity creates opportunity costs.

Accepted Answer

A)   I only
B)   I and II
C)   I and III
D)   I, II and III

Question 2

Which of the following is NOT an investment in human capital?

Accepted Answer

A)   A computer science student takes a course on programming a laptop computer.
B)   A business student takes a seminar in using a laptop computer.
C)   A computer science student learns how to repair a laptop computer.
D)   A student purchases a laptop computer.

Question 3

When the government chooses to use resources to build a dam, these resources are no longer available to build a highway. This choice illustrates the concept of

Accepted Answer

A)   a fallacy of composition.
B)   opportunity cost.
C)   good governance.
D)   a market mechanism. B

Question 4

-In the above figure, the relationship between x and y is

Accepted Answer

A)   negative, with slope decreasing as x increases.
B)   negative, with slope increasing as x increases.
C)   positive, with slope decreasing as x increases.
D)   positive, with slope increasing as x increases.

Question 5

You notice that when interest rates increase, new residential housing prices tend to decrease. This observation indicates that

Accepted Answer

A)   a scatter diagram between interest rates and housing prices will show a direct relationship.
B)   there must be false causality between interest rates and housing prices.
C)   higher interest rates must cause low housing prices.
D)   a scatter diagram between interest rates and housing prices will show a negative relationship.

Question 6

Which of the following is a macroeconomic issue?

Accepted Answer

A)   The cause of a decline in the price of peanut butter
B)   How federal government budget deficits affect interest rates
C)   How a rise in the price of sugar affects the market for colas
D)   What determines the amount a firm will produce

Question 7

If the slope of the relationship between savings and interest rates is 0.5, then

Accepted Answer

A)   savings and interest rates have no relationship.
B)   savings and interest rates have an inverse relationship.
C)   savings and interest rates have a negative relationship.
D)   savings and interest rates have a positive relationship.

Question 8

When a farmer decides to raise pigs instead of cattle, the farmer is answering the _______ part of one of the two big economic questions.

Accepted Answer

A)   "for whom"
B)   "what"
C)   "how"
D)   "why"

Question 9

Laura is a manager for HP. When Laura must decide whether to produce a few additional printers, she is choosing at the margin when she compares

Accepted Answer

A)   the total revenue from sales of printers to the total cost of producing all the printers.
B)   the extra revenue from selling a few additional printers to the extra costs of producing the printers.
C)   HP's printers to printers from competing companies, such as Lexmark.
D)   the extra revenue from selling a few additional printers to the average cost of producing the additional printers.

Question 10

When Alice makes the statement, "The cost of living has increased 10 per cent over the past 10 years," she is

Accepted Answer

A)   making a normative statement.
B)   making a positive statement.
C)   facing the standard of living tradeoff.
D)   testing an economic model.

Question 11

The opportunity cost of any action is

Accepted Answer

A)   the dollars the action cost.
B)   the benefit from the action minus the cost of the action.
C)   the highest- valued alternative given up.
D)   all the possible alternatives given up.

Question 12

Which factor of production earns wages?

Accepted Answer

A)   Land
B)   Entrepreneurship
C)   Labour
D)   Human capital

Question 13

The study of the changes in the economy's total output of goods and services over long periods of time is defined as

Accepted Answer

A)   microeconomics.
B)   macroeconomics.
C)   normative economics.
D)   positive economics.

Question 14

The statement "Unemployment should be below 6 per cent" is

Accepted Answer

A)   a normative statement.
B)   a positive statement.
C)   an assumption.
D)   a prediction.

Question 15

Which of the following are considered factors of production used to produce goods and services?
I. Land
II. Labour
III. Capital
IV. Entrepreneurship

Accepted Answer

A)   I and II only
B)   I and III only
C)   I, II and III only
D)   I, II, III and IV

Question 16

The horizontal axis in a graph

Accepted Answer

A)   is named the y- axis.
B)   is named the x- axis.
C)   measures time in a scatter diagram.
D)   measures the quality of a variable.

Question 17

One economist says that raising taxes on gas would be in the social interest. What does this economist mean?

Accepted Answer

A)   Higher taxes on gas would benefit everyone.
B)   Higher taxes on gas would benefit society as a whole.
C)   Raising taxes on gas would benefit most of the people.
D)   Both answers A and C are correct. B

Question 18

-In the above figure, using the slope across an arc, the slope of the curve between points a and c is

Accepted Answer

A)   - 3/5.
B)   3/5.
C)   5/3.
D)   - 5/3.

Question 19

Misty has the option of purchasing one of three products: Brand A, Brand B or Brand C. Each costs ten dollars. If she decides that Brand A meets her needs best, then the opportunity cost of this decision is

Accepted Answer

A)   Brand B plus Brand C.
B)   Brand A.
C)   twenty dollars.
D)   Brand B or Brand C, depending on which is considered the highest- value alternative forgone.

Question 20

-In the above figure, the curve has a slope that is .

Accepted Answer

A)   negative and becoming larger in magnitude
B)   negative and becoming smaller in magnitude
C)   positive and becoming larger in magnitude
D)   positive and becoming smaller in magnitude A

Exam 1: What Is Economics

Which of the following statements are correct? I. The "highest- valued alternative given up to get something" is the opportunity cost. II. Wealthy economies don't experience opportunity costs. III. Scarcity creates opportunity costs.

Correct AnswerverifiedShow Answer

Which of the following is NOT an investment in human capital?

Correct AnswerverifiedShow Answer

When the government chooses to use resources to build a dam, these resources are no longer available to build a highway. This choice illustrates the concept of

Correct AnswerverifiedB

-In the above figure, the relationship between x and y is

Correct AnswerverifiedShow Answer

You notice that when interest rates increase, new residential housing prices tend to decrease. This observation indicates that

Correct AnswerverifiedShow Answer

Which of the following is a macroeconomic issue?

Correct AnswerverifiedShow Answer

If the slope of the relationship between savings and interest rates is 0.5, then

Correct AnswerverifiedShow Answer

When a farmer decides to raise pigs instead of cattle, the farmer is answering the _______ part of one of the two big economic questions.

Correct AnswerverifiedShow Answer

Laura is a manager for HP. When Laura must decide whether to produce a few additional printers, she is choosing at the margin when she compares

Correct AnswerverifiedShow Answer

When Alice makes the statement, "The cost of living has increased 10 per cent over the past 10 years," she is

Correct AnswerverifiedShow Answer

The opportunity cost of any action is

Correct AnswerverifiedShow Answer

Which factor of production earns wages?

Correct AnswerverifiedShow Answer

The study of the changes in the economy's total output of goods and services over long periods of time is defined as

Correct AnswerverifiedShow Answer

The statement "Unemployment should be below 6 per cent" is

Correct AnswerverifiedShow Answer

Which of the following are considered factors of production used to produce goods and services? I. Land II. Labour III. Capital IV. Entrepreneurship

Correct AnswerverifiedShow Answer

The horizontal axis in a graph

Correct AnswerverifiedShow Answer

One economist says that raising taxes on gas would be in the social interest. What does this economist mean?

Correct AnswerverifiedB

-In the above figure, using the slope across an arc, the slope of the curve between points a and c is

Correct AnswerverifiedShow Answer

Misty has the option of purchasing one of three products: Brand A, Brand B or Brand C. Each costs ten dollars. If she decides that Brand A meets her needs best, then the opportunity cost of this decision is

Correct AnswerverifiedShow Answer

-In the above figure, the curve has a slope that is .

Correct AnswerverifiedA

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B

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B

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A