Economics primarily addresses the problems associated with

a) poverty.

b) money.

c) scarcity.

d) government policies.

e) shortages or surpluses.

Which of the following are the main ideas of economics?

a) Resources used to make goods and services desired by society are scarce.

b) Because resources are scarce we can not make all the goods and services society desires.

c) Because we can not make all the goods and services society desires, individuals must continually face trade-offs and make decisions

d) These decisions should be made in such a way as to stretch the available resources to their fullest and best use.

e)All the above represent main ideas of economics.

Why can’t we always have everything we want?

a) Because humans wants are unlimited.

b) Because the resources used to make goods and services are limited.

c) Because humans make illogical or impractical decisions.

d) All of the above are true.

e) Both a and b are true.

Physical capital is used by economists to mean

a) goods that are used to help make other goods and services.

b) the physical space (warehouse) where production occurs.

c) time allocated to producing goods and services.

d) the education and training of the workforce.

e) financial backing.

Human capital is used by economists to mean

a) the education of the workforce.

b) goods that are used to help make other goods.

c) training and on the job experience.

d) financial backing.

e) Both a and c are correct.

Tradeoffs are required in any decision because wants are ____ while resources are ____.

a) realistic; plentiful

b) scarce; efficient

c) unlimited; scarce

d) within reason; abundant

e) scarce; unlimited

Suppose that Ken spends 4 hours playing golf, paying green fees of $50, rather than working at his job that pays $10 hour. What is the economic cost of his decision to play golf?

a) $90

b) $60

c) $50

d) $40

e) nothing, since he enjoys golf much more than working anyway.

Which of the following issues are concerned with microeconomic issues?

a) Whether Home Depot hires 50 or 51 workers per shift.

b) How consumers respond to a 5% tax on gasoline.

c) How a 5% tax on gasoline affects the market for new cars.

d) How a firm responds to new pollution regulations on production.

e) All of the above are microeconomic in nature.

Which of the following statements is normative?

a) Printing money causes the price level to rise.

b) People work harder when the wage rate is higher.

c) The government should try to lower the unemployment level.

d) In the short run, inflation usually rises when unemployment falls.

e) A decrease in the capital gains tax by 5% will cause the economy to grow 1% faster.

An economic theory is valuable only if it

a) is complex.

b) can be tested.

c) is proven correct.

d) expresses good news.

e) is published in an important academic journal.

An economic model

a) can never be proven wrong

b) often omits crucial elements

c) simplifies reality in order to focus on crucial elements

d) uses equations to understand normative economic phenomena

e) produces poor predictions since they include unrealistic assumptions

Consider the following equation:

Y = 50 – 3X

In the above equation, Y is the ________ and X is the _______.

a) independent variable; dependent variable

b) dependent variable; independent variable

c) intercept variable; dependent variable

d) slope; intercept variable

e) independent variable; slope

Consider the following equation:

Y = 50 – 3X

From the equation above, we know that

a) X and Y are negatively related.

b) plotting Y on the vertical axis and X on the horizontal axis yields an upward sloping line.

c) the Y intercept is 3.

d) the slope of the line is 3.

e) Both b and d are correct.

Consider the following equation:

Y = 50 – 3X

The slope of the equation above

a) tells us how much X changes in response to changes in Y.

b) says that X and Y are negatively related.

c) says that if X increases by 1 unit, Y increases by 3 units.

d) says that plotting Y on the vertical axis and X on the horizontal axis yields a downward sloping line.

e) b and d are both correct

[image]

From the graph, how are X and Y related?

a) negatively related – Y increases when X increases

b) positively related – Y increases when X increases

c) negatively related – Y decreases when X increases

d) positively related – Y decreases when X increases

e) X and Y are unrelated

[image]

What is the slope of the graph above?

a) 2

b) -2

c) ½

d) -½

e) 1

[image]

What is the vertical or Y intercept of the graph?

a) 0

b) 10

c) 20

d) 40

e) 50

[image]

What is the appropriate equation that matches the graph above?

a) Y = 50 - ½ X

b) Y = 50 – 2X

c) Y = 50 + 2X

d) Y = 10 + 45X

e) Y = 30 - ½ X

The production possibilities frontier demonstrates the

a) problem of scarcity.

b) concept of tradeoffs.

c) concept of opportunity cost.

d) available, efficient choices to society.

e) All of the above are true.

Combinations of goods outside the production possibilities frontier curve (PPF)

a) are unattainable given society's technology and resources

b) are combinations of goods that have already been consumed

c) are luxury goods that are not necessary

d) result from not utilizing all available resources

e) are the result of economic recessions

Combination of goods that lie on the production possibilities frontier curve (PPF) are said to be

a) not feasible

b) possible, but inefficient

c) inefficient

d) efficient

e) a poor choice of resource use.

Combinations of goods that lie inside the production possibilities frontier curve (PPF) are said to be

a) not feasible.

b) luxury goods that aren’t necessary.

c) possible, but inefficient.

d) efficient.

e) the best choice sets for society.

On a PPF, economic growth is shown as a/an

a) movement along the curve from the top left towards the bottom right.

b) outward shift in the curve.

c) inward shift in the curve.

d) a rotation outward along one axis.

e) a movement from a point inside the curve to a point on the curve.

On a PPF, a technological advance in the production of one of the goods is shown as a/an

a) movement along the curve from the top left towards the bottom right.

b) outward shift in the entire curve.

c) inward shift in the entire curve.

d) a rotation outward along the axis of the good with the technological advance in production.

e) a movement from a point inside the curve to a point on the curve.

[image]

What is the opportunity cost of moving from point F to point C?

a) 5 Barrels

b) 2 Bathtubs

c) 15 Barrels

d) There is no cost associated with moving from F to C.

e) A and B are both correct

[image]

What is the opportunity cost of moving from point F to point B?

a) 5 Barrels

b) 15 Barrels

c) 10 Barrels

d) 8 Bathtubs

e) 6 Bathtubs

[image]

What is the opportunity cost of moving from point F to point D?

a) 10 Barrels

b) 15 Barrels

c) 4 Bathtubs

d) There is no cost associated with moving from F to D.

e) It is impossible for the economy to move to point D.

[image]

What is the opportunity cost of moving from point A to point B?

a) 30 Barrels

b) 20 Barrels

c) 10 Barrels

d) 8 Bathtubs

e) There is no cost associated with the move since both points are efficient.

[image]

Suppose the economy were at point B. If the country wanted to produce only Bathtubs, how much would each additional bathtub cost?

a) 14 Bathtubs

b) 2 Bathtubs

c) 10 Barrels

d) 5 Barrels

e) There is no cost associated with the move since both points are efficient.

In a typical market, the demand curve is composed of ___ and slopes ____.
a) sellers; downwards
b) buyers; downwards
c) buyers; upwards
d) sellers; upwards
e) buyers; horizontal

Along a typical downward sloping demand curve, what is NOT held constant?

a) price of related goods

b) number of buyers

c) preferences/tastes

d) price of the good itself

e) income

Along a typical downward sloping demand curve, what is held constant?

a) income

b) tastes/preferences

c) prices of related goods

d) future price expectations

e) All of the above are held constant.

Which of the following would shift the demand curve?

a) a change in the incomes of consumers

b) a change in the tastes or preferences of consumers

c) a change in the price of the good or service

d) All of the above are demand shifters.

e) Only a and b are correct.

When referring to a graph, a decrease in demand means that

a) the demand curve has shifted left.

b) the demand curve has shifted right.

c) there has been a movement down along the demand curve.

d) there has been a movement up along the demand curve.

e) Both a and c are correct.