Chapter 1 Quiz ECON 2301

If a consumer has an income of $200, the price of X is $5, and the price of Y is $10 the maximum quantity of X the consumer is able to purchase is: A. 40 B. 5 C. 20 D. 10

A. 40

The assertion that "there is no free lunch" means that: A. All production involves the use of scarce resources and thus the sacrifice of alternative goods. B. choices need not be made if behavior is rational. C. there are always trade-offs between economic goals. D. marginal analysis is used in economic reasoning.

A. All production involves the use of scarce resources and thus the sacrifice of alternative goods.

Matt observes that "there is a high correlation between educational attainment and the level of income." Jean concurs and adds that "high school graduates should proceed to college." A. Matt's statement is positive, while Jean's statement is normative. B. Both Matt's and Jean's statements are normative. C. Both Matt's and Jean's statements are positive. D. Matt's statement is normative. while Jean's statement is positive.

A. Matt's statement is positive, while Jean's statement is normative.

Camille is at the candy store with Grandma Mary, who offers to buy her $6 worth of candy. If lollipops are $1 each and candy bars are $2 each, what combination of candy can Camille's Grandma Mary buy her? A. Two lollipops and two candy bars B. six lollipops and three candy bars C. three lollipops and two candy bars D. one lollipop and three candy bars

A. Two lollipops and two candy bars

A normative statement is one that A. is based on value judgments. B. is based on the law of averages. C. applies only to macroeconomics. D> applies only to microeconomics.

A. is based on value judgments.

from an economic perspective, when consumers leave a fast-food restaurant because the lines to be served re too long, they have concluded that the A. marginal cost for waiting is greater than the marginal benefit of eating in that restaurant. B. management is exhibiting irrational behavior by not considering the marginal cost and the marginal benefit of standing in the line by the customer. C. management is making an assumption that other things are equal. D. marginal cost of waiting is less than the marginal benefit of eating in that restaurant.

A. marginal cost for waiting is greater than the marginal benefit of eating in that restaurant.

The Latin term "ceteris paribus" means A. other things equal B. that if event A precedes event B, A has caused B. C. prosperity inevitably follows recession. D. that economics deals with facts, not values.

A. other things equal

Which one of the following expressions best states the idea of opportunity cost? A. "All the glitter is not gold" B. "There is no such thing as a free lunch" C. "He who hesitates is lost" D. "A penny saved is a penny earned"

B. "There is no such thing as a free lunch"

Which of the following is a microeconomic statement? A. The real domestic output increased by 1.6 percent last year. B. The price of smartphones declined 2.8 percent last year. C. Unemployment was 5.2 percent of the labor force last year. D. The general price level increased by 1.1 percent last year.

B. The price of smartphones declined 2.8 percent last year.

The law of increasing opportunity cost explains why the shape of the production possibilities curve is: A. a straight line parallel to the horizontal axis. B. bowed out (concave) from the origin of the graph. C. bowed inward (convex) to the origin of the graph. D. a straight line from one axis to the other.

B. bowed out (concave) from the origin of the graph.

The four factors of production are A. labor, capital, technology, and entrepreneurial ability. B. land, labor, capital, and entrepreneurial ability. C. labor, capital, entrepreneurial ability, and money. D. land, labor, capital, and money.

B. land, labor, capital, and entrepreneurial ability.

opportunity cost is best defined as: A. marginal cost minus marginal benefit. B. the value of the best forgone alternative. C. the time spent on an economic activity. D. the money cost of n economic decision.

B. the value of the best forgone alternative.

The satisfaction of pleasure one gets from consuming a good or service is called: A. consumption B. utility C. price D. preferences

B. utility

A basic assumption used n most economic theories is that: A. as price decreases, quantity demanded will decrease. B. whatever goes up must come down. C. all other things remain the same. D. what is true for a part of the whole must also be true for the whole.

C. all other things remain the same.

Huey has eaten two hamburgers and is considering the 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.

C. just the third hamburger.

Which of the following is a land resource? A. a machine for detecting earthquakes B. a farmer C. natural gas D. an oil drilling rig

C. natural gas

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.

C. we make choices in the face of scarcity.

Refer to the diagram. This economy will experience unemployment if it produces at point A. A C. C D. D E. E

D. D

Which of the following is associated with macroeconomics? A. a study of the trend of pecan prices since the second World War B. an examination of the incomes of professional athletes C. a case study of pricing and production in the textbook industry D. an empirical investigation of the general price level and unemployment rates since 1990

D. an empirical investigation of the general price level and unemployment rates since 1990

Capital is a factor of production. An example of capital as a factor of production is A. money. B. stocks. C. bonds. D. machines. E. education.

D. machines.

An increase in money income A. has no effect on he budget line. B. shifts he consumer's budget line to the left. C. increases the slope of the budget line. D. shifts he consumer's budget line to the right.

D. shifts he consumer's budget line to the right.

Which of the following is not considered one of the factors of production? A. land B. labor C. capital D. technology E. entrepreneurship

D. technology

Macroeconomics approaches the study of economics from the viewpoint of A. governmental units. B. the operation of specific product and resource markets. C. individual forms. D. the entire economy.

D. the entire economy.

Henry wants to buy a book. The economic perspective suggests that Henry will buy the book if: A. the book will give him utility B. his income is high C. the marginal cost of the book is greater than its marginal benefit D. the marginal benefit of the book is greater than its marginal cost

D. the marginal benefit of the book is greater than its marginal cost

To economist, 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.

E. unlimited wants cannot be satisfied by the limited resources.