ECON 201-02 Ch 1 - 5
24. A graph showing the values of an economic variable for different groups in a population at a point in time is called a A) cross-section graph. B) time-series graph. C) scatter diagram. D) Venn diagram. E) None of the above answers is correct.
Answer: A Topic: Cross-section graph Skill: Level 1: Definition Section: Chapter 1 Appendix - Checkpoint 1 Status: Old AACSB: Analytical thinking
28. You have data for sales of pizza for each of the 50 states in 2011. The type of graph to best display these data would be a A) cross-section graph. B) time-series graph. C) scatter diagram. D) multi-variable time-series graph. E) trend-line diagram.
Answer: A Topic: Cross-section graph Skill: Level 3: Using models Section: Chapter 1 Appendix - Checkpoint 1 Status: Old AACSB: Analytical thinking
64) Which of the following is an example of a normative statement? A) If cars become more expensive, fewer people will buy them. B) Car prices should be affordable. C) If wages increase, firms will fire some workers. D) Fewer people die in larger cars than in smaller cars. E) Cars emit pollution.
Answer: B
69) Jamie has enough money to buy either a Mountain Dew, or a Pepsi, or a bag of chips. He chooses to buy the Mountain Dew. The opportunity cost of the Mountain Dew is A) the Pepsi and the bag of chips. B) the Pepsi or the bag of chips, whichever is the highest-valued alternative forgone. C) the Mountain Dew. D) the Pepsi because it is a drink, as is the Mountain Dew. E) zero because he enjoys the Mountain Dew.
Answer: B
72) The benefit of an activity is A) purely objective and measured in dollars. B) the gain or pleasure that it brings. C) the value of its opportunity cost. D) measured by what must be given up to get one more unit of the activity. E) not measurable on the margin.
Answer: B
9) If Jessie studies economics for two hours instead of going to the movies with her friends, then A) the benefit of studying is the missed movie. B) the opportunity cost of studying is the missed movie. C) Jesse definitely is making a rational choice. D) Jessie is ignoring a sunk cost. E) Jessie is not responding to any incentives.
Answer: B
10) The study of economics is best described as a study of A) the factors that influence the stock and bond markets. B) capitalism. C) the choices made in producing goods and services. D) coping with scarcity, and choices made as a result of scarcity in a society. E) how people earn a living.
Answer: D Topic: Definition of economics Skill: Level 1: Definition Section: Checkpoint 1.1 Status: Old AACSB: Reflective thinking
17) Mothers Against Drunk Drivers (MADD) campaigned to increase the legal penalties of drunk driving. This successful campaign ________ of drunk driving. A) increased the marginal benefit B) decreased the marginal benefit C) increased the marginal cost D) decreased the marginal cost E) had no effect on the marginal cost or marginal benefit but did affect the total benefit
Answer: C
20) The benefit of a one-unit increase in an activity A) is called marginal cost. B) is always greater than the opportunity cost of that activity. C) decreases as you do more of it. D) is measured by what you must give up. E) is called rational-choice benefit.
Answer: C
21) Huey has eaten two hamburgers and is considering a third. The marginal benefit in his decision is the pleasure from consuming A) the two previous hamburgers. B) all three hamburgers. C) just the third hamburger. D) just the second hamburger. E) the third hamburger minus the pleasure from consuming zero hamburgers.
Answer: C
26) Decision making on the margin involves A) comparing the marginal cost and marginal benefits when making a decision. B) comparing the total cost and the total benefit when making a decision. C) eliminating the additional cost when making a decision. D) determining the total benefits of a decision. E) comparing the benefits from the social interest to the benefits from the personʹs self-interest.
Answer: A
76) The additional benefit of increasing some activity by one-unit is called the A) marginal benefit. B) opportunity cost. C) total benefit. D) scarcity. E) unit cost/benefit.
Answer: A
1) Scarcity exists because A) human wants exceed the resources available to satisfy them. B) some individuals have low income. C) the costs of production are high. D) some people make bad economic decisions. E) people take too much leisure time.
Answer: A
11) Ali decides to attend the one-hour review session for microeconomics instead of working at his job. His job pays him $10 per hour. Aliʹs opportunity cost of attending the review session is A) the $10 he could have earned at his job. B) the value of the session minus the $10 he could have earned at his job. C) nothing, because the review session does not cost anything. D) equal to the benefit he gets from the review session. E) the one-hour review session.
Answer: A
18) The marginal cost of an activity ________ as you do more of it. A) increases B) decreases C) doesnʹt change D) changes only if the marginal benefit of the activity does not change E) changes only if the marginal benefit of the activity changes
Answer: A
19) A professor changes the penalty for cheating on exams from getting a 0 on the exam to getting an F in the course. The professor has A) increased the marginal cost of cheating. B) decreased the marginal benefit of cheating. C) made all the students act in the social interest. D) recognized that students donʹt respond to incentives. E) recognized that students donʹt make rational choices.
Answer: A
2) Scarcity A) is the inability to satisfy all our wants. B) leads to higher prices. C) applies only to people living in poverty. D) is not something that affects very rich people. E) used to exist everywhere but has been eliminated in advanced economies.
Answer: A
23) Suppose you eat two hamburgers for lunch. The marginal benefit of the first burger is ________ of the second burger. A) larger than the marginal benefit B) smaller than the marginal benefit C) equal to the marginal benefit D) not related to the marginal benefit E) equal to the marginal cost and the marginal benefit
Answer: A
27) In making your decision whether to take a trip during spring break, you compare all the other activities you could undertake. As a result, you A) are making a choice on the margin. B) limit the cost and the benefits you can gain. C) are not making a rational choice. D) do not face an opportunity cost. E) must have made a choice in the social interest.
Answer: A
28) To make a rational choice, a person A) compares the extra benefits of one more unit to the extra costs of one more unit. B) adds the total benefits and the total costs and then compares the two totals. C) adds the total benefits to determine if the total is large enough. D) adds the total costs to determine if the total is small enough. E) takes account of all benefits and all opportunity costs, including both marginal costs and sunk costs.
Answer: A
29) In order to determine whether to major in economics, a rational individual compares the of the decision. A) marginal benefit and marginal cost B) opportunity cost and the sunk cost C) positive benefits and normative costs D) normative benefits and positive costs E) self-interest and social-interest
Answer: A
33) As part of its proposal to win the 2012 Olympics, London developed a carbon offset plan to reduce the Gamesʹ impact on the environment. In 2011, the organizers decided to drop this plan to reduce emissions. We can conclude that A) the marginal cost of reducing emissions exceeded the marginal benefits of reducing emissions. B) the organizers are not making a rational decision. C) the organizers are ignoring a sunk cost. D) there are no incentives to reduce carbon emissions. E) it is difficult to calculate the cost of reducing emissions.
Answer: A
34) Going skiing will cost Adam $80 a day. He also loses $40 per day in wages because he has to take time off from work. Adam still decides to go skiing. A) His decision is rational if Adamʹs marginal benefit of spending a day skiing is greater than his marginal cost. B) The $80 price of skiing is not an opportunity cost and so did not affect Adamʹs decision. C) He loses a total of $120 per day, so his decision is irrational. D) Adamʹs lost $40 per day in wages is not an opportunity cost and so did not affect his decision. E) Adam is definitely making a decision that is in the social interest.
Answer: A
36) An incentive is A) an inducement to take a particular action. B) the marginal cost of some course of action. C) the marginal benefit of some course of action. D) the net gain of some course of action. E) a constraint that society imposes on those who make self-interested choices.
Answer: A
37) An incentive is A) a reward or a penalty that encourages or discourages an action. B) when people make rational choices by comparing costs and benefits. C) what you must give up to get something. D) a choice is made on the margin. E) a good or service that satisfies wants.
Answer: A
4) In economics, cost is measured as ________, and benefit is measured as ________. A) what you must give up to get something; what you are willing to give up to get it B) what you are willing to give up to get it; what you must give up to get something C) the amount of money that you pay for something; the amount of money that someone else is willing to pay you D) what you are willing to pay on the margin; what the government pays you when you are unemployed or retired E) the amount of money that you pay on the margin; the amount of money that you receive on the margin
Answer: A
41) If the marginal benefit of getting a college degree rises, rational people will A) attend college in greater numbers. B) drop out of college. C) not change their behavior. D) require that college get easier. E) raise the marginal cost of attending college.
Answer: A
48) Scarcity results from the fact that A) peopleʹs wants exceed the resources available to satisfy them. B) not all goals are desirable. C) we cannot answer the major economic questions. D) choices made in self-interest are not always in the social interest. E) the population keeps growing.
Answer: A
5) Because human wants are insatiable and unlimited while available resources are limited, people are said to face the problem of A) scarcity. B) why to produce. C) macroeconomics. D) microeconomics. E) social interest versus self interest.
Answer: A
57) A normative statement A) depends on someoneʹs values. B) cannot use the word ʺshould.ʺ C) says what is currently believed about the way the world operates. D) must be tested to determine if it is correct. E) can be tested to determine if it is correct.
Answer: A
60) Which of the following is a normative statement? A) Flood victims should pay for their own rebuilding. B) When the price of kiwi fruit increases, fewer people eat kiwi fruit. C) An increase in the supply of computers has caused computer prices to fall. D) Recessions lead to increases in the unemployment rate. E) Hurricanes strike mainly Florida and North Carolina.
Answer: A
61) Which of the following is an example of a normative economic statement? A) Universal access to quality health insurance is the most important domestic policy issue of our time. B) Extending the time in which laid-off workers are eligible to receive government unemployment compensation has increased the unemployment rate. C) Lowering marginal income tax rates depresses consumer spending. D) Prices rise when the government prints too much money. E) Interest rates rise when the government runs persistent budget deficits.
Answer: A
65) Which of the following statements is a normative statement? A) Every American household should have health care insurance coverage. B) Military spending as a percent of government spending decreased by 5 percent in the 1990s. C) Welfare reform has decreased the amount the government spends on welfare. D) The price of computers fell last year. E) Fewer people are unemployed this year than last year.
Answer: A
66) Congress and the President passed a national health care policy. This is an example of A) the government using economic tools to make policy decisions. B) answering the ʺhowʺ question. C) increasing the marginal cost of health care. D) increasing the marginal benefit of health care. E) normative versus positive economics.
Answer: A
68) John has two hours of free time this evening. He ranked his alternatives, first go to a concert, second go to a movie, third study for an economics exam, and fourth answer his e -mail. What is the opportunity cost of attending the concert for John? A) attending a movie B) studying for an economics exam C) answering his e-mail D) attending a movie, studying for an economics exam, and answering his e-mail E) going to the concert because that is what John chooses to do
Answer: A
77) If the marginal benefit of the next slice of pizza exceeds the marginal cost, you will A) eat the slice of pizza. B) not eat the slice of pizza. C) be unable to choose between eating or not eating. D) eat half the slice. E) More information is needed about how much the marginal benefit exceeds the marginal cost to determine if you will or will not eat the slice.
Answer: A
3. The vertical axis in a graph A) is named the y-axis. B) is named the x-axis. C) measures time in a cross-section and time series graph. D) has no origin. E) measures time only in a time series graph.
Answer: A Topic: Axes Skill: Level 1: Definition Section: Chapter 1 Appendix - Checkpoint 1 Status: Old AACSB: Analytical thinking
32. A graph that shows how the amount of advertising expenditure differs among various industries can be shown A) by a cross-section graph. B) by a time-series graph. C) as a trend. D) by a scatter diagram. E) by a trend-section graph.
Answer: A Topic: Cross-section graph Skill: Level 3: Using models Section: Chapter 1 Appendix - Checkpoint 1 Status: Old AACSB: Analytical thinking
17) Which of the following is a microeconomic issue? A) The price of gasoline increases in the United States this year. B) The Brazilian economy experiences rapid economic growth. C) The unemployment rate soars in Spain. D) Inflation skyrockets in Russia. E) The U.S. government cuts taxes to combat a recession.
Answer: A Topic: Microeconomics Skill: Level 2: Using definitions Section: Checkpoint 1.1 Status: Old AACSB: Reflective thinking
20) Which of the following is a microeconomic topic? A) Northwest Airlines analyzes the benefits of adding one more flight to Salt Lake City. B) Unemployment soars as taxes increase. C) The government leaves interest rates unchanged as the economy improves. D) Germanyʹs government increases taxes to avoid a budget deficit. E) Chinese economic growth slows.
Answer: A Topic: Microeconomics Skill: Level 2: Using definitions Section: Checkpoint 1.1 Status: Old AACSB: Reflective thinking
21) Which of the following is a microeconomic topic? i. Gas prices increase after a hurricane hits the gulf coast. ii. Xavier starts a new business designing web pages. iii. Abby decides to practice an extra hour of soccer instead of studying. A) i, ii and iii B) i only C) ii and iii D) ii only E) i and ii
Answer: A Topic: Microeconomics Skill: Level 2: Using definitions Section: Checkpoint 1.1 Status: Old AACSB: Reflective thinking
44. ʺAs the price of gasoline increases, fewer people buy cars that are gas guzzlers.ʺ A graph showing this relationship would A) have a negative slope. B) have a positive relationship. C) have a direct relationship. D) be a horizontal line. E) be a vertical line.
Answer: A Topic: Negative relationship Skill: Level 2: Using definitions Section: Chapter 1 Appendix - Checkpoint 2 Status: Old AACSB: Analytical thinking
4. Most economic graphs have two lines perpendicular to each other. Where these lines meet is called the A) origin. B) y-axis. C) x-axis. D) variable. E) point of beginning.
Answer: A Topic: Origin Skill: Level 1: Definition Section: Chapter 1 Appendix - Checkpoint 1 Status: Old AACSB: Analytical thinking
37. If there is a positive relationship between two variables, A) the graph of the relationship will be upward sloping. B) the graph of the relationship will be downward sloping. C) the slope of the line graphing the relationship will be negative. D) Both answers A and C are correct. E) Both answers B and C are correct.
Answer: A Topic: Positive relationship Skill: Level 2: Using definitions Section: Chapter 1 Appendix - Checkpoint 2 Status: Old AACSB: Analytical thinking
38. If the change in y = 10 and the change in x = 3, there is A) a positive relationship between y and x. B) a negative relationship between y and x. C) an independent relationship between y and x. D) no relationship between y and x. E) a + 0.33 relationship between the two variables.
Answer: A Topic: Positive relationship Skill: Level 2: Using definitions Section: Chapter 1 Appendix - Checkpoint 2 Status: Old AACSB: Analytical thinking
39. Whenever peopleʹs incomes increase, they buy more guitars. Hence a scatter diagram shows that the relationship between income and guitars purchased is A) a positive relationship. B) a linear relationship. C) a negative relationship. D) some sort of relationship, but whether it is positive or negative depends on whether income is plotted on the vertical or horizontal axis. E) a U-shaped relationship.
Answer: A Topic: Positive relationship Skill: Level 2: Using definitions Section: Chapter 1 Appendix - Checkpoint 2 Status: Old AACSB: Analytical thinking
7) Scarcity forces people to A) choose among available alternatives. B) cheat and steal. C) be unwilling to help others. D) live at a low standard of living. E) consume as much as they can as quickly as they can.
Answer: A Topic: Scarcity Skill: Level 2: Using definitions Section: Checkpoint 1.1 Status: Old AACSB: Reflective thinking
11. A time series graph A) shows how a variable changes over time. B) uses bars rather than lines. C) shows points in a scatter diagram. D) is similar to a cross-section graph because both can show trends over time. E) is in the shape of a pie.
Answer: A Topic: Time-series graph Skill: Level 1: Definition Section: Chapter 1 Appendix - Checkpoint 1 Status: Old AACSB: Analytical thinking
14. A time series graph A) shows how a certain variable changes over time. B) uses bars rather than lines. C) shows points that are scattered. D) depicts a series of good economic times a nation had. E) is not useful if the goal is to determine a variableʹs trend.
Answer: A Topic: Time-series graph Skill: Level 1: Definition Section: Chapter 1 Appendix - Checkpoint 1 Status: Old AACSB: Analytical thinking
15. A time-series graph displays the price of gold. The slope of the line is negative for periods when the A) price of gold is falling. B) price of gold is rising. C) quantity of gold is falling. D) price of gold is low and not changing. E) price of gold fluctuates.
Answer: A Topic: Time-series graph Skill: Level 3: Using models Section: Chapter 1 Appendix - Checkpoint 1 Status: Old AACSB: Analytical thinking
18. A time series graph reveals whether there is a , which represents . A) trend in a variable; a general tendency for the variable to rise or fall B) relationship between two variables; a cross-section relationship C) trends in two variables; unrelated variables D) relationship between two variables; a trend in a variable E) cross-section relationship; a general tendency for the variables to rise or fall
Answer: A Topic: Trend Skill: Level 1: Definition Section: Chapter 1 Appendix - Checkpoint 1 Status: Old AACSB: Analytical thinking
20. In the above figure, the diagram shows A) a downward trend in x. B) an upward trend in x. C) a scatter diagram. D) a two-variable scatter diagram. E) a cross-section graph between x and time.
Answer: A Topic: Trend Skill: Level 1: Definition Section: Chapter 1 Appendix - Checkpoint 1 Status: Old AACSB: Analytical thinking
51. A graph shows the price of a pound of cucumbers on the vertical axis and the quantity of new cars sold by Honda on the horizontal axis. The price of a pound of cucumbers remains constant as the quantity of new cars sold increases. The graph of these data is a A) horizontal line. B) vertical line. C) curve with a maximum. D) positively sloped line. E) negatively sloped line.
Answer: A Topic: Unrelated variables Skill: Level 2: Using definitions Section: Chapter 1 Appendix - Checkpoint 2 Status: Old AACSB: Analytical thinking
52. Matt pays a $50 a month membership fee at Brunoʹs Gym. He can exercise at the gym as many times as he wishes. If the membership fee is measured along the vertical axis and the number of times he exercises is measured along the horizontal axis, the graph between his membership fee and the number of times he exercises will A) be a horizontal line. B) be positively sloped. C) be negatively sloped. D) be a vertical line. E) start out positively sloped and then, as Matt loses interest, become negatively sloped.
Answer: A Topic: Unrelated variables Skill: Level 3: Using models Section: Chapter 1 Appendix - Checkpoint 2 Status: Old AACSB: Analytical thinking
49. If two variables are unrelated, their graph is A) either a horizontal or a vertical line. B) a downward-sloping line. C) an upward-sloping line. D) a curved line. E) None of the above answers is correct because it is not possible to graph unrelated variables.
Answer: A Topic: Unrelated variables Skill: Level 1: Definition Section: Chapter 1 Appendix - Checkpoint 2 Status: Old AACSB: Analytical thinking
14) Suppose you take a trip during spring break. To determine the benefit of taking the trip, you A) calculate the opportunity cost of the trip. B) measure what you are willing to give up to take the trip. C) determine the sunk cost of taking the trip. D) calculate the value of the next best alternative foregone. E) must measure what the trip is worth to you and then subtract the cost of the trip.
Answer: B
24) A choice made by comparing all relevant alternatives systematically and incrementally is A) an opportunity cost. B) a choice on the margin. C) a benefit. D) a sunk cost. E) a choice made in the social interest.
Answer: B
25) Making choices on the margin means A) scribbling on the edges of your notebook paper. B) comparing all relevant alternatives systematically and incrementally. C) making a decision based on emotions. D) making decisions in the largest possible increments. E) taking account of all marginal benefits, all opportunity costs, and all sunk costs.
Answer: B
32) When Gabriel made a rational choice to spend his entire allowance on candy bars, he did so by comparing the A) benefits of the candy bars to the desires he had for the candy bars. B) marginal benefits of the candy bars to the marginal costs of the candy bars. C) opportunity costs of the candy bars to the scarcity of the candy bars. D) benefits of the candy bars to the scarcity candy bars. E) self-interest to the social interest.
Answer: B
39) Proponents of cuts in income tax rates argue that when income tax rates are cut, workers have an incentive to increase their work hours. This argument is based on the assumption that A) workers are irrational. B) workers make decisions based on the marginal benefit of each hour worked compared to the marginal cost of work. C) the opportunity cost of working is negative. D) the marginal cost of each additional work hour is not important to most workers. E) workers make decisions based on the social interest.
Answer: B
44) In examining two variables, we find that as one variable changes, the other changes. These variables are said to be A) independent. B) correlated. C) statistics. D) significantly related. E) casually related.
Answer: B
45) When economists use the term ʺcorrelation,ʺ they are referring to A) cause and effect relationships between variables. B) how two variables move together in a predictable way. C) positive economics. D) normative economics. E) economic policy.
Answer: B
47) A positive statement i. makes a statement about how the world operates. ii. is a true statement. iii. can be tested against the facts. A) i and ii B) i and iii C) ii and iii D) i, ii and iii E) i only
Answer: B
48) Which of the following is a positive statement? A) An increase in college tuition is not fair to students. B) A recession leads to higher enrollments at universities. C) University bookstore prices are too high. D) Parking tickets on campus impose an excessive fee. E) The school needs more parking for students.
Answer: B
49) The statement that ʺincreases in the tax on gasoline increase the price of gasolineʺ is an example of a A) normative statement. B) positive statement. C) macroeconomic statement. D) rational-decision statement. E) marginal statement.
Answer: B
51) People must make choices because A) most people enjoy shopping. B) of scarcity. C) there are many goods available. D) the question ʺWhat goods and services are produced?ʺ is not adequately answered. E) making choices is in the social interest.
Answer: B
53) Microeconomics includes the study of A) how countries decide to fund their budget deficits. B) the choices that individuals and businesses make. C) how a nation promotes economic growth. D) the effect on the national economy of the choices that individuals make. E) the overall amount of production within the economy.
Answer: B
54) Increasing income tax rates will solve the ʺSocial Security time bomb issueʺ is an example of A) business economic policy. B) a positive economic statement. C) marginal cost exceeding marginal benefit. D) answering the ʺhowʺ question. E) globalization.
Answer: B
58) The important characteristic of normative statements is that they A) explain what really exists. B) are based on somebodyʹs values and cannot be tested. C) explain what normally happens in the real world. D) help guide us to what will normally occur if some economic variable changes its value. E) do not use the ceteris paribus assumption.
Answer: B
59) A normative statement i. can be tested as to whether it is true or false. ii. is considered negative. iii. depends on a personʹs values. A) i only B) iii only C) i and iii D) ii and iii E) i, ii, and iii
Answer: B
6) Economists measure opportunity cost A) only when it is on the margin. B) as the best thing given up. C) as the sum of all forgone opportunities. D) as the same as marginal benefit. E) as equal to the sum of all the sunk costs.
Answer: B
63) Which of the following statements is a normative statement? A) Inflation has been at an all-time low this year. B) The minimum wage should be increased to $8.50 per hour. C) Unemployment this month has increased by less than 0.5 percentage point.. D) Additional spending on education has not produced any rise in test scores. E) Pepsi is less expensive than Coke this week.
Answer: B
71) If there is no scarcity, A) the opportunity cost of an action would be greater than its sunk cost. B) an action would have zero opportunity cost. C) choices are no longer rational. D) marginal cost of an action is greater than its marginal benefit. E) all marginal benefits would equal zero.
Answer: B
73) The of something is the gain or pleasure that it brings. A) opportunity cost B) benefit C) marginal cost D) rational choice E) rational margin
Answer: B
74) The cost of a one-unit increase in an activity A) is called the total one-unit cost. B) is called the marginal cost. C) decreases as more of the activity is done. D) is called the marginal benefit/cost. E) is called the unit cost.
Answer: B
80) When the Dallas Cowboys score more than 30 points in a game, they win the game. This is an example of A) an economic theory. B) a correlation. C) an incentive to win the game. D) a normative statement. E) a statement on the margin.
Answer: B
12) Which of the following best defines economics? A) Economics teaches how to limit our wants. B) Economics studies how to choose the best alternative when coping with scarcity. C) Economics helps you earn as much money as possible. D) Economics analyzes all aspects of human behavior in general. E) Economics is concerned with prices and quantities of goods and services, both at the individual level and at the industry level.
Answer: B Topic: Definition of economics Skill: Level 1: Definition Section: Checkpoint 1.1 Status: Old AACSB: Reflective thinking
2. Most economic graphs have two lines perpendicular to each other. The vertical line is called the A) origin. B) y-axis. C) x-axis. D) variable. E) time axis.
Answer: B Topic: Axes Skill: Level 1: Definition Section: Chapter 1 Appendix - Checkpoint 1 Status: Old AACSB: Analytical thinking
21. A cross-section graph A) is divided into different sections. B) shows the values of an economic variable for different groups in a population at a point in time. C) measures time on the x-axis and the variable in which we are interested on the y-axis. D) Both answers A and C are correct. E) Both answers A and B are correct.
Answer: B Topic: Cross-section graph Skill: Level 1: Definition Section: Chapter 1 Appendix - Checkpoint 1 Status: Old AACSB: Analytical thinking
26. A cross-section graph A) is divided into different sections. B) shows values of an economic variable for different groups in a population at a point in time. C) measures time on the x-axis and the variable in which we are interested on the y-axis. D) Both answers A and C are correct. E) Both answers B and C are correct.
Answer: B Topic: Cross-section graph Skill: Level 1: Definition Section: Chapter 1 Appendix - Checkpoint 1 Status: Old AACSB: Analytical thinking
16) The primary focus of microeconomics is A) to examine the operation of the entire (aggregate) economy. B) to examine the behavior and operation of the individual units or sectors that make up the economy. C) our governmentʹs monetary policy. D) the levels of employment and inflation. E) to study how we managed to eliminate scarcity.
Answer: B Topic: Microeconomics Skill: Level 1: Definition Section: Checkpoint 1.1 Status: Old AACSB: Reflective thinking
42. Whenever one variable increases, another variable decreases. The two variables are A) definitely related through a third variable. B) negatively related. C) positively related. D) unrelated to each other. E) related but whether positively or negatively related depends on which variable is plotted on the vertical axis.
Answer: B Topic: Negative relationship Skill: Level 1: Definition Section: Chapter 1 Appendix - Checkpoint 2 Status: Old AACSB: Analytical thinking
40. Which of the following statements is correct? A) When a line slopes downwards moving to the right, the variable measured on the x-axis and the variable measured on the y-axis are directly related. B) When a line slopes upwards moving to the right, the variable measured on the x-axis and the variable measured on the y-axis are directly related. C) The higher the temperature, the more ice cream people consume. Thus the temperature and ice cream consumption are inversely related. D) If two variables are directly related, a graph of the two variables has a negative slope. E) None of the above statements is correct.
Answer: B Topic: Positive and negative relationships Skill: Level 1: Definition Section: Chapter 1 Appendix - Checkpoint 2 Status: Old AACSB: Analytical thinking
36. As a person increases his or her caloric intake, the personʹs weight increases, ceteris paribus. The relationship between the personʹs caloric intake and the personʹs weight is an example of A) unrelated variables. B) a positive relationship. C) a negative relationship. D) a single point on a graph. E) a trended relationship.
Answer: B Topic: Positive relationship Skill: Level 2: Using definitions Section: Chapter 1 Appendix - Checkpoint 2 Status: Old AACSB: Analytical thinking
8. Which type of graph is most useful in determining if two variables are correlated? A) time-series B) scatter diagram C) cross-section D) variable-correlation figure E) None of the above answers is correct.
Answer: B Topic: Scatter diagrams Skill: Level 1: Definition Section: Chapter 1 Appendix - Checkpoint 1 Status: Old AACSB: Analytical thinking
9. The figure above shows a A) time-series graph. B) scatter diagram. C) cross-section graph. D) slope. E) trend diagram.
Answer: B Topic: Scatter diagrams Skill: Level 1: Definition Section: Chapter 1 Appendix - Checkpoint 1 Status: Old AACSB: Analytical thinking
13. Which type of economic graph reveals trends in data? A) cross-section graph B) time-series graph C) scatter diagram D) Answers A and C are correct. E) Answers A, B, and C are all correct.
Answer: B Topic: Time-series graph Skill: Level 1: Definition Section: Chapter 1 Appendix - Checkpoint 1 Status: Old AACSB: Analytical thinking
30. Demonstrating how an economic variable changes from one year to the next is best illustrated by a A) scatter diagram. B) time-series graph. C) linear graph. D) cross-section graph. E) Venn diagram.
Answer: B Topic: Time-series graph Skill: Level 1: Definition Section: Chapter 1 Appendix - Checkpoint 1 Status: Old AACSB: Analytical thinking
16. A graph shows the wage rate of factory workers. The slope of the line is positive for periods when the wage rate is A) falling. B) rising. C) high and not changing. D) low and falling. E) high and falling.
Answer: B Topic: Time-series graph Skill: Level 3: Using models Section: Chapter 1 Appendix - Checkpoint 1 Status: Old AACSB: Analytical thinking
17. A trend is A) a measure of closeness on a scatter diagram. B) a general tendency for a variable to rise or fall. C) the maximum value of a variable. D) the minimum value of a variable. E) the difference between the maximum value of a variable and the minimum value of the variable.
Answer: B Topic: Trend Skill: Level 1: Definition Section: Chapter 1 Appendix - Checkpoint 1 Status: Old AACSB: Analytical thinking
48. An independent relationship between two variables is shown in a graph by A) an upward-sloping line. B) a horizontal or a vertical line. C) a downward-sloping line. D) a steeply sloped line. E) any straight line curve.
Answer: B Topic: Unrelated variables Skill: Level 1: Definition Section: Chapter 1 Appendix - Checkpoint 2 Status: Old AACSB: Analytical thinking
50. Consider a diagram in which the variable measured on the y-axis remains constant while the variable measured on the x-axis increases. The graph of these two variables is A) a vertical line. B) a horizontal line. C) a line that has positive slope. D) a line that has a negative slope. E) non-existent because the two variables are not related.
Answer: B Topic: Unrelated variables Skill: Level 2: Using definitions Section: Chapter 1 Appendix - Checkpoint 2 Status: Old AACSB: Analytical thinking
10) The value of the best thing that a person must give up when making a decision is known as the ________ cost. A) direct B) benefit C) opportunity D) explicit E) sunk
Answer: C
13) The benefit from a good or service that you purchase is measured by A) the dollar amount that is paid for the good or service. B) the dollar amount you can get by selling the good or service. C) what you are willing to give up to obtain the good or service. D) how strong the incentives were that lead to buying the good or service. E) None of the above answers is correct because there is no way to measure the benefit you receive from purchasing a good or service.
Answer: C
15) The cost of a one-unit increase in an activity is called the A) opportunity benefit. B) rational cost. C) marginal cost. D) marginal benefit. E) margin.
Answer: C
31) Instead of studying for an additional two hours for the economics final, Leann decides to watch a movie. Leann is making A) a decision that does not involve an opportunity cost. B) a rational decision if her marginal cost from the movie is greater than her marginal benefit. C) a rational decision if her marginal benefit from the movie is greater than her marginal cost. D) an irrational decision because studying is more important than watching a movie. E) a decision that is not on the margin because she will see the entire movie.
Answer: C
35) The decision to go to graduate school is a rational one for a college student if the A) cost is not too great. B) marginal cost exceeds the marginal benefit of graduate school. C) marginal benefit of graduate school exceeds the marginal cost. D) opportunity cost of graduate school equals zero. E) student carefully compared the social benefits of this decision.
Answer: C
4) Scarcity means that A) what we can produce with our resources is greater than our material wants. B) resources are unlimited. C) wants are greater than what we can produce with our resources. D) governments must make up for shortages in resources. E) choices made in self interest cannot be the same as those made in the social interest.
Answer: C
43) Correlation means A) holding everything else constant. B) after this, therefore because of this. C) the values of two variables move in a predictable and related way. D) making statements about how the world should be. E) the same as causation.
Answer: C
5) An opportunity cost is A) the dollar amount that is paid. B) anything the decision maker believes costs to be. C) the benefits of the highest-valued alternative forgone. D) whatever is paid out and cannot be reduced or reversed. E) another term for all the sunk costs.
Answer: C
50) ʺLower ticket prices would lead to more people attending ballgames.ʺ This statement is a A) statement assessing the social interest versus the private interest. B) normative statement. C) positive statement. D) macroeconomic statement. E) statement that confuses marginal cost and sunk cost.
Answer: C
52) Which of the following is a microeconomic issue? A) Why has unemployment risen nationwide? B) Why has economic growth been rapid in China? C) What is the impact on the quantity of Pepsi purchased if consumersʹ tastes change in favor of non-carbonated drinks? D) Why is the average income lower in Africa than in Latin America? E) Why did overall production increase within the United States last year?
Answer: C
6) Which of the following statements best describes the study of economics? Economics studies how A) to organize production so that scarcity does not occur. B) firms make profits. C) we make choices in the face of scarcity. D) to create incentives so that scarcity does not exist. E) businesses reach decisions.
Answer: C
62) A statement that ʺAll children should receive free health careʺ is an example of what kind of statement? A) a fair statement B) a natural experiment statement C) a normative statement D) a positive statement E) a statement on the margin
Answer: C
67) Opportunity cost is best defined as A) how much money is paid for something. B) how much money and time it takes to consume something. C) the value of the highest-valued alternative that is forgone in making a choice. D) the total of all other alternatives that are forgone in making a choice. E) the sunk cost of any decision.
Answer: C
7) The opportunity cost of a decision is measured in terms of A) time. B) the price of the alternative we choose. C) the next best thing given up. D) the price of a new opportunity that arises. E) sunk cost.
Answer: C
70) Amy can study for an hour or spend that hour sleeping or going out for dinner. If she decides to study for the hour, the opportunity cost of the hour spent studying is A) definitely going to sleep. B) studying, since this is the choice she opted for. C) sleeping or going out for dinner, whichever she would have preferred the most. D) sleeping and going out for dinner. E) definitely going out to dinner because she must eat at some time.
Answer: C
78) When people make rational choices, they A) behave selfishly. B) do not consider their emotions. C) weigh the costs and benefits of their options and act to satisfy their wants. D) necessarily make a decision in the social interest. E) are necessarily making the best decision.
Answer: C
79) By donating $1,000 to the Salvation Army, Caroline reduces her taxable income. To Caroline, the reduction in her taxable income is A) a marginal benefit. B) an opportunity cost. C) an incentive. D) a marginal cost. E) the margin.
Answer: C
81) A positive statement A) must always be right. B) cannot be tested. C) might be right or wrong. D) depends on someoneʹs value judgment. E) cannot be negative.
Answer: C
82) Which of the following is a positive statement? A) Taxes should be lower because then people get to keep more of what they earn, so they will work more. B) My economics class should last for two terms because it is my favorite class. C) A 10 percent increase in income leads to a 4 percent increase in the consumption of beef. D) Given their negative impact on productivity, the government should eliminate labor unions. E) The class average on this test should be more than 80 percent.
Answer: C
83) Which of the following is NOT a normative economic statement? A) States should reduce the tax on heating fuel oil during the winter. B) People over the age of 75 should not be allowed to drive cars. C) Teenagers are responsible for most driving fatalities. D) We donʹt spend enough money on anti-smoking campaigns. E) The price of gasoline is too high.
Answer: C
25. shows the values of a variable for different groups in the population at a certain point in time. A) A time-series graph B) The origin C) A cross-section graph D) A scatter plot E) A trend-line graph
Answer: C Topic: Cross-section graph Skill: Level 1: Definition Section: Chapter 1 Appendix - Checkpoint 1 Status: Old AACSB: Analytical thinking
23. A graph shows the average wage of various demographic groups in 2012. The kind of graph used to show these data would be a A) scatter diagram. B) time-series graph. C) cross-section graph. D) Venn diagram. E) fixed-year figure.
Answer: C Topic: Cross-section graph Skill: Level 3: Using models Section: Chapter 1 Appendix - Checkpoint 1 Status: Old AACSB: Analytical thinking
27. You have data for the amount of rainfall in 50 cities for the month of June. The type of graph to best display these data would be a A) time-series graph. B) multi-variable time series graph. C) cross-section graph. D) scatter diagram. E) trend-line diagram.
Answer: C Topic: Cross-section graph Skill: Level 3: Using models Section: Chapter 1 Appendix - Checkpoint 1 Status: Old AACSB: Analytical thinking
29. A graph shows the average SAT scores for males and females in 2012. The kind of graph used to show these data would be a A) scatter diagram. B) time-series graph. C) cross-section graph. D) time-stationary graph. E) trend figure.
Answer: C Topic: Cross-section graph Skill: Level 3: Using models Section: Chapter 1 Appendix - Checkpoint 1 Status: Old AACSB: Analytical thinking
11) Which of the following statements best describes the study of economics? Economics studies how A) to organize production so that scarcity does not occur. B) firms make profits. C) we make choices in the face of scarcity. D) to create incentives so that scarcity does not exist. E) businesses reach decisions.
Answer: C Topic: Definition of economics Skill: Level 1: Definition Section: Checkpoint 1.1 Status: Old AACSB: Reflective thinking
15) Microeconomics includes the study of the A) aggregate effects on the national economy. B) recessions and inflation in the global economy. C) choices made by individuals and businesses. D) reasons why the government changes interest rates. E) nationwide unemployment rate.
Answer: C Topic: Microeconomics Skill: Level 1: Definition Section: Checkpoint 1.1 Status: Old AACSB: Reflective thinking
43. If x increases and as a result y decreases, then x and y are A) not related because the relationship is a causal one. B) positively related. C) negatively related. D) directly related. E) trend-line related.
Answer: C Topic: Negative relationship Skill: Level 1: Definition Section: Chapter 1 Appendix - Checkpoint 2 Status: Old AACSB: Analytical thinking
47. If the change in y = -4 and the change in x = 2, there is A) an independent relationship between y and x. B) a positive relationship between y and x. C) a negative relationship between y and x. D) no relationship between y and x. E) a relationship between x and y but more information is needed to determine if it is a negative or positive relationship.
Answer: C Topic: Negative relationship Skill: Level 2: Using definitions Section: Chapter 1 Appendix - Checkpoint 2 Status: Old AACSB: Analytical thinking
34. A positive relationship exists between two variables if A) one variable has ʺpositivelyʺ no effect on the other variable. B) a decrease in one variable is associated with an increase in the other variable. C) a decrease in one variable is associated with a decrease in the other variable. D) an increase in one variable is associated with both a decrease and an increase in the other variable. E) None of the above answers is correct.
Answer: C Topic: Positive relationship Skill: Level 1: Definition Section: Chapter 1 Appendix - Checkpoint 2 Status: Old AACSB: Analytical thinking
35. If two variables are positively related, then A) one variable causes the other. B) an increase in one variable is accompanied by a decrease in the other. C) an increase in one variable is accompanied by an increase in the other. D) they change together, but not necessarily in the same direction. E) neither variable can be positively related to any other variable.
Answer: C Topic: Positive relationship Skill: Level 1: Definition Section: Chapter 1 Appendix - Checkpoint 2 Status: Old AACSB: Analytical thinking
8) Scarcity means we must A) consume less. B) produce less. C) make choices. D) earn more. E) work more.
Answer: C Topic: Scarcity Skill: Level 1: Definition Section: Checkpoint 1.1 Status: Old AACSB: Reflective thinking
6. A scatter diagram can be used to see A) if the value of a variable is rising or falling. B) the value of a variable for different groups in a population. C) if a relationship exists between two variables. D) how a variable behaves over time. E) whether a variable is positively or negatively related to itself.
Answer: C Topic: Scatter diagrams Skill: Level 1: Definition Section: Chapter 1 Appendix - Checkpoint 1 Status: Old AACSB: Analytical thinking
7. To show how a variable , we typically use a . A) relates to another variable; time series graph B) relates to another variable; pie chart C) changes over time; time series graph D) changes over time; cross section graph E) changes over time; cross time chart
Answer: C Topic: Scatter diagrams Skill: Level 1: Definition Section: Chapter 1 Appendix - Checkpoint 1 Status: Old AACSB: Analytical thinking
12. A steep slope in a time series graph means the variable is A) high. B) falling. C) rising or falling quickly. D) rising or falling slowly. E) very close to its trend point.
Answer: C Topic: Time-series graph Skill: Level 1: Definition Section: Chapter 1 Appendix - Checkpoint 1 Status: Old AACSB: Analytical thinking
10. A time-series graph measures A) the value of one variable against the value of another variable. B) the value of an economic variable for different groups in a population at a point in time. C) time on the x-axis and the variable or variables in which we are interested on the y-axis. D) time on the y-axis and the variable or variables in which we are interested on the x-axis. E) time on both the x-axis and y-axis and the variable or variables in which we are interested in the rest of the figure.
Answer: C Topic: Time-series graph Skill: Level 1: Definition Section: Chapter 1 Appendix - Checkpoint 1 Status: Old AACSB: Analytical thinking
12) Suppose that, instead of taking this test, you could either have worked and earned income or partied and had a pleasurable time. Your opportunity cost of taking the test is the A) forgone work. B) forgone party. C) forgone working and partying. D) forgone working or partying, depending on which was your next best choice. E) test because you are taking it.
Answer: D
16) The opportunity cost of a one-unit increase in an activity A) is greater than the marginal benefit. B) is called rational cost. C) decreases as you do more of it. D) is called marginal cost. E) is measured by what the person is willing to give up to get one more unit of the activity.
Answer: D
22) What typically happens to benefits as the amount of an activity is increased? A) Total benefits remain constant. B) Marginal benefit increases. C) Marginal benefit remains constant. D) Marginal benefit decreases. E) The marginal benefit changes only if the marginal cost changes.
Answer: D
30) In order to make a rational choice, people must A) only know what they want. B) be able to afford the choice decided upon. C) decide quickly without wasting time. D) compare marginal costs and marginal benefits. E) determine what is in the social interest.
Answer: D
40) Your economics professor offers 10 points extra credit if you attend a review session before your next exam. This extra credit is an example of A) a decrease in marginal benefit to attend the review session. B) an increase in marginal cost to attend the review session. C) a rational choice. D) an incentive to attend the review session. E) None of the above answers is correct.
Answer: D
42) Correlation means A) ʺafter this, therefore because of this.ʺ B) other things remaining the same. C) a natural experiment has been conducted. D) the tendency for the values of two variables to move in a predictable and related way. E) ʺon the margin.ʺ
Answer: D
46) The tendency for the values of two variables to move in a predictable and related way is known as A) a natural experiment. B) a normative relationship. C) an economic model. D) correlation. E) a policy relationship.
Answer: D
47) All economic questions and problems arise from A) the fact that society has more than it needs. B) turmoil in the stock market. C) the unequal distribution of income. D) a societyʹs wants exceeding what its scarce resources can produce. E) the difference between self-interest and social interest.
Answer: D
50) Which of the following statements is true regarding scarcity? A) Scarcity affects poorer countries only. B) An economy experiences scarcity only when the incomes of its citizens decline. C) Poor people experience scarcity more often than do rich people. D) All citizens in a wealthy economy experience scarcity. E) Scarcity could be overcome if people would make all choices in the social interest.
Answer: D
51) A statement that argues that ʺif taxes on gasoline increase, gasoline consumption will decreaseʺ is an example of what kind of statement? A) a marginal statement B) a macroeconomic statement C) a normative statement D) a positive statement E) a statement that violates rational choice
Answer: D
52) Which of the following statements is a positive statement? A) Our country must increase military spending. B) There should be a computer in every elementary school classroom. C) We need to spend less on luxury items for the wealthy, and more on necessities for the less fortunate. D) Online shopping increased by 50 percent this Christmas season. E) Too many people are unemployed.
Answer: D
53) Which of the following is an example of a positive economic statement? A) Voter ID laws should be strictly enforced in all states. B) Illegal immigration is the biggest threat to national security that we face today. C) Medicare recipients should only be allowed to visit a doctor for non-emergency reasons on Mondays, Wednesdays, and Fridays. D) The death penalty is a strong deterrent to violent criminal activity. E) The Affordable Care Act should be repealed.
Answer: D
55) Which of the following is a positive statement? A) The rich should pay more in taxes. B) Everyone should have some knowledge of economics. C) Taxes on gasoline should be lower so that gasoline is more affordable to the poor. D) If we reduce welfare payments given to the poor, they will find jobs. E) Social Security must be reformed.
Answer: D
56) Normative statements i. describe how the world is. ii. describe how the world ought to be. iii. depend on peopleʹs values and cannot be tested. A) i only. B) ii only. C) iii only. D) ii and iii. E) i and iii.
Answer: D
75) The marginal benefit of an activity is i. the benefit from a one-unit increase in the activity. ii. the benefit of a small, unimportant activity. iii. measured by what the person is willing to give up to get one additional unit of the activity. A) i only B) ii only C) iii only D) i and iii E) ii and iii
Answer: D
1. The horizontal axis in a graph A) measures time on a scatter diagram. B) measures the quality of a variable. C) is named the y-axis. D) is named the x-axis. E) is called the origin.
Answer: D Topic: Axes Skill: Level 1: Definition Section: Chapter 1 Appendix - Checkpoint 1 Status: Old AACSB: Analytical thinking
22. A graph that shows the value of an economic variable for different groups in a population at a given time is called a A) scatter diagram. B) time-series graph. C) pie chart. D) cross-section graph. E) fixed-time diagram.
Answer: D Topic: Cross-section graph Skill: Level 1: Definition Section: Chapter 1 Appendix - Checkpoint 1 Status: Old AACSB: Analytical thinking
31. To show the values of an economic variable for different groups in a population at a point in time, it is best to use a A) scatter diagram. B) time-series graph. C) linear graph. D) cross-section graph. E) trend-section diagram.
Answer: D Topic: Cross-section graph Skill: Level 1: Definition Section: Chapter 1 Appendix - Checkpoint 1 Status: Old AACSB: Analytical thinking
13) Economics is the social science that studies A) the real reasons people buy goods and services. B) the psychology of individuals and businesses. C) whether a nation has enough natural resources. D) how people make choices to cope with scarcity. E) how choices made in the social interest could eliminate scarcity.
Answer: D Topic: Definition of economics Skill: Level 1: Definition Section: Checkpoint 1.1 Status: Old AACSB: Reflective thinking
14) Economics is best defined as the social science that studies A) how a person can get everything he or she wants. B) the reason money exists. C) the way to eliminate choices in our decisions. D) the choices that societies, and the people and institutions that make up societies, make in dealing with the issue of scarcity. E) how choices made in the social interest must conflict with choices made in the self-interest.
Answer: D Topic: Definition of economics Skill: Level 1: Definition Section: Checkpoint 1.1 Status: Old AACSB: Reflective thinking
33. A linear relationship A) when graphed, is a straight line. B) when graphed, is a line whose slope changes. C) can be a positive or a negative relationship. D) Both answers A and C are correct. E) Both answers A and B are correct.
Answer: D Topic: Linear relationship Skill: Level 1: Definition Section: Chapter 1 Appendix - Checkpoint 2 Status: Old AACSB: Analytical thinking
18) Which of the following is a microeconomic issue? A) Growth in the U.S. economy slowed. B) Increased federal government expenditures have lowered the unemployment rate. C) The inflation rate fell this year. D) The quantity of wheat grown in the United States increases this year. E) The U.S. government cuts taxes to combat a recession.
Answer: D Topic: Microeconomics Skill: Level 2: Using definitions Section: Checkpoint 1.1 Status: Old AACSB: Reflective thinking
46. As the price of home heating oil rises, families buy less home heating oil. Hence a scatter diagram with the price of home heating oil on the vertical axis and the quantity purchased on the horizontal axis reveals a relationship. A) positive B) linear C) time-series D) negative E) cross-sectional
Answer: D Topic: Negative relationship Skill: Level 2: Using definitions Section: Chapter 1 Appendix - Checkpoint 2 Status: Old AACSB: Analytical thinking
41. If x increases whenever y decreases, then x and y are A) not related. B) positively related. C) directly related. D) negatively related. E) related but whether positively or negatively related depends on whether the x variable or the y variable is plotted on the vertical axis.
Answer: D Topic: Negative relationship Skill: Level 1: Definition Section: Chapter 1 Appendix - Checkpoint 2 Status: Old AACSB: Analytical thinking
9) What is the reason that all economic issues and problems occur? A) All nations use some form of money to buy and sell goods and services. B) Humans are always wasteful and inefficient in production and consumption. C) Powerful governments are able to control production and consumption. D) Human wants exceed the resources available to satisfy them. E) People seek only their own self-interest.
Answer: D Topic: Scarcity Skill: Level 2: Using definitions Section: Checkpoint 1.1 Status: Old AACSB: Reflective thinking
5. A graph of the value of one variable against the value of another variable is known as a A) two-dimensional graph. B) three-dimensional graph. C) time-series graph. D) scatter diagram. E) two-variable graph.
Answer: D Topic: Scatter diagrams Skill: Level 1: Definition Section: Chapter 1 Appendix - Checkpoint 1 Status: Old AACSB: Analytical thinking
19. Trend refers to A) the scale used on the x- and y-axes. B) increases but not decreases of a variable. C) decreases but not increases of a variable. D) a general tendency for a variable to rise or fall. E) the difference between the maximum value of the variable and the minimum value of the variable.
Answer: D Topic: Trend Skill: Level 1: Definition Section: Chapter 1 Appendix - Checkpoint 1 Status: Old AACSB: Analytical thinking
3) Scarcity requires that we A) produce efficiently. B) learn to limit our wants. C) have the most rapid economic growth possible. D) have unlimited resources. E) make choices about what goods and services to produce.
Answer: E
38) A change in a marginal benefit or cost will A) increase consumption. B) decrease production. C) cause an individual to make a rational choice. D) increase sunk costs. E) change incentives.
Answer: E
49) To economists, scarcity means that A) limited wants cannot be satisfied by the unlimited resources. B) a person looking for work is not able to find work. C) the number of people without jobs rises when economic times are bad. D) there can never be answers to the what, how or for whom questions. E) unlimited wants cannot be satisfied by the limited resources.
Answer: E
8) You have chosen to take a trip during spring break. If you had not gone, you would either have worked at a temporary job or studied for exams. The opportunity cost of your trip is A) the wages you would have earned from working. B) the lower grade earned by not studying. C) the wages you would have earned from working and the lower grade earned by not studying. D) the value of the trip. E) We cannot determine what the opportunity cost is without knowing which alternative, working or studying, you would have preferred.
Answer: E
19) Which of the following is a microeconomic topic? i. K-Martʹs decision to close stores that are not making a profit ii. Home Depotʹs choice to hire more full-time employees because its sales increased iii. Delta Airlines changes its fares. A) i only B) ii only C) i and iii D) ii and iii E) i, ii, and iii
Answer: E Topic: Microeconomics Skill: Level 2: Using definitions Section: Checkpoint 1.1 Status: Old AACSB: Reflective thinking
45. As the number of days without rain increases, the amount of wheat grown per acre declines. A graph showing this relationship shows A) a horizontal line. B) a vertical line. C) a positive relationship. D) a line with a positive slope. E) None of the above answers is correct.
Answer: E Topic: Negative relationship Skill: Level 2: Using definitions Section: Chapter 1 Appendix - Checkpoint 2 Status: Old AACSB: Analytical thinking