ECON Ch. 1

When monthly total income is $5,000, the graph below predicts that monthly household spending will be equal to: (see image 1.3-8) a. $500. b. $4,500. c. $5,000. d. Monthly household spending cannot be predicted from the graph.

$5,000

According to the graph below, a $1,000 increase in monthly total income leads to a: (see image 1.3-6) a. $1,000 increase in monthly household spending so the slope of the function is 1. b. $1,000 increase in monthly household spending so the slope of the function is -0.1. c. $900 increase in monthly household spending so the slope of the function is .9. d. $900 increase in monthly household spending to the slope of the function is 1.

$900 increase in monthly household spending so the slope of the function is .9

The equation of the line graphed below is: (see image 1.3-7) a. C = 500 + 900(Y). b. C = 500 + 0.9(Y). c. Y = 500 + 0.9(Y). d. Y = 1,000 + 1(Y).

C=500+0.9(Y)

Which of the following statements is not true with respect to the economic factors of production? a. Capital includes shares of corporate stock and government bonds. b. Land includes all natural resources used in production. c. Labor is the physical and mental talents of people applied to production. d. Entrepreneurs are the risk-takers and innovators who combine inputs to produce an output.

capital includes shares of corporate stock and government bonds

To understand the relationship between two specific variables, economists use the: a. scarcity assumption. b. ceteris paribus assumption. c. post hoc fallacy. d. laissez-faire approach.

ceteris paribus assumption

Microeconomics studies the: a. reasons for unemployment and inflation in the entire country. b. annual growth of national income and the total production of output in the economy. c. decisions and behaviors of individuals and businesses. d. normative aspects of the economy while macroeconomics focuses on the positive aspects.

decisions and behaviors of individuals

A good economic theory or model a. is too complex to be presented in an introductory economics course. b. assumes all other things remain constant so it cannot be easily manipulated. c. incorporates as many variables as possible. d. does a good job explaining an economic relationship or predicting outcomes.

does a great job explaining an economic relationship or predicting outcomes

The assumption that because the economy as a whole is better off as a result of a trade treaty, each individual industry must also be better off as a result of the treaty is an example of the: a. ceteris paribus assumption. b. fallacy of false cause. c. fallacy of composition. d. fallacy of division.

fallacy of division

In a market economy: a. households are suppliers in resource markets and demanders in product markets. b. households are demanders in resource markets and supplies in product markets. c. firms are suppliers in resources markets and demanders in product markets. d. firms are suppliers in input markets and demanders in product markets.

households are suppliers in resource markets and demanders in product markets

One focus of macroeconomics is: a. why the fundamental problem of scarcity exists. b. why business firms pursue maximum profit instead of maximum revenue. c. how firms can achieve the goal of profit maximization. d. how the economy can achieve the goals of full employment, price stability, and economic growth.

how the economy can achieve the goals of full employment, price stability, and economic growth

Beth quit her job as a computer programmer for a large corporation to begin her own computer repair business in her garage. To do this, she took $10,000 out of her retirement fund and hired her brother, Will, on an hourly basis. As a factor of production, Will is best classified as: a. land b. labor c. capital d. an entrepreneur

labor

An example of a positive microeconomic statement is: a. People tend to buy more chicken when the price of beef increases. b. For the national tax system to be fair, the federal government should impose a tax on overall consumer spending rather than on total personal income. c. Large corporations have profit margins that are too high. d. No one should be unemployed in an advanced economy.

people tend to buy more chicken when the price of beef increases

When resources are not freely available in amounts sufficient to satisfy all desired uses for them a. the forces of supply and demand must be relied on to answer the questions of what output to produce, how to produce it, and who gets to consume it. b. scarcity exists and decisions must be made about how to allocate limited resources among competing uses. c. government is required to identify what areas of the economy are most deserving and direct resources and outputs to those areas. d. an economy is not able to operate at a point on its production possibilities frontier.

scarcity exists and decisions must be made about how to allocate limited resources among competing uses

The basic economic questions that must be addresses by society include a. what outputs should be produced? b. how should outputs be produced? c. who gets to consume the outputs produced? Scarcity forces society to address all of the above economic questions.

scarcity forces society to address all of the above economic questions

Assume an increase in the price of jean jackets leads to an increase in the quantity supplied of jean jackets. Ceteris paribus, the graph of the relationship between the price and quantity supplied of jean jackets a. slopes downward to the right illustrating an inverse relationship. b. slopes downward to the right illustrating a direct relationship. c. slopes upward to the right illustrating an inverse relationship. d. slopes upward to the right illustrating a direct relationship.

slopes upward to the right illustrating a direct relationship

Which of the following is a positive statement? a. It is not right that most colleges charge students to park on campus. b. Some parents do not have the financial resources to pay for their children to attend college. c. College should be free for all American citizens. d. Tuition and fees at elite institutions are too high.

some parents do not have the financial resources resources to pay for their children to attend college

Employees in the defense industry have greater job security and higher pay when the country is engaged in major military conflicts, therefore it is good for the country to be involved in military conflicts is an example of a. the fallacy of false cause. b. the post hoc fallacy. c. the fallacy of composition. d. the fallacy of division.

the fallacy of composition

An introductory course in macroeconomics is likely yo study a. the impact of an increase in federal government spending on households and businesses in the U.S. b. the pricing decisions of convenience store owners. c. how local governments react to the demand by pet owners for more public spaces that allow animals. d. why firms with monopoly power in a market have more control over the price charged for outputs than firms selling in highly competitive markets.

the impact of an increase in federal government spending on households and businesses in the U.S.

For the relationship graphed below, total income is: (view image 1.3-5) a. the independent variable and household spending is the dependent variable. b. the dependent variable and household spending is the independent variable. c. unrelated to household spending. d. an exogenous variable, or shift factor.

the independent variable and household spending is the dependent variable

If the equation of a line is Y=10 - 3X, then all of the following are true except: a. X and Y are positively related. b. the slope is -3 and the Y intercept is 10. c. the graph of the equation is a line that slopes downward to the right. d. when X is equal to 3, Y is equal to 1.

X and Y are positively related

The graph of a negative, or inverse, relationship between two variables is a: a. a horizontal line. b. a vertical line. c. a line that slopes upward to the right. d. a line that slopes downward to the right.

a line that slopes downward to the right

The federal government should provide basic health care services for all U.S. citizens is an example of a. the ceteris paribus assumption. b. a laissez-faire approach to government involvement in the economy. c. a normative macroeconomic statement. d. the post hoc fallacy.

a normative macroeconomic statement

Economics is: a. a social science concerned with the way governments determine how resources are created. b. the study of the law of decreasing cost and how it applies to all sectors of the economy. c. a social science that studies how choices are made and the consequences of those choices. d. the study of how all societies determine how, what, and for whom goods and services are produced by a centralized authority.

a social science that studies how choices are made and the consequences of those choices

Line 1 shifts right to Line 2 when: (see image 1.3-10) a. the value of the independent variable, X, increases. b. the value of the independent variable, Y, decreases. c. a variable other than X or Y that has a positive impact on the relationship changes. d. a variable other than X or Y that has negative impact on the relationship changes.

a variable other than X or Y that has a positive impact on the relationship changes

Beth quit her job as a computer programmer for a large corporation to begin her own computer repair business in her garage. To do this, she took $10,000 out of her retirement fund and hired her brother, Will, on an hourly basis. As a factor of production, Beth is best classified as: a. land b. labor c. capital d. an entrepreneur

an entrepreneur

In the circular flow of economic activity: a. firms supply final goods and services to output markets in exchange for sales revenue. b. firms supply factors of production in resource markets in exchange for income. c. households supply factors of production in resource markets in exchange for income. d. Both a. and c. are true with respect to the circular flow of economic activity.

both a. and c. are true with respect to the circular flow of economic activity

Suppose you are offered a coupon for a free dinner at a local restaurant, tip and drink included, if you attend a presentation for prospective renters at a new apartment complex in town. If you attend the presentation, then: a. the opportunity cost of using the coupon for the dinner is zero because the dinner is free. b. the opportunity cost of using the coupon for the dinner is higher for people who do not really plan to rent an apartment than for people who do plan to rent an apartment. c. the opportunity cost of using the coupon for the dinner is the best alternative use of the time you spent at the presentation. d. the opportunity cost of using the coupon for the dinner is the same for all presentation attendees because the dinner is free.

the opportunity cost of using the coupon for dinner is the best alternative use of the time you spent at the presentation

The graph of a relationship between two variables, X and Y, shifts when: a. the value of an endogenous variable, X or Y, changes. b. the value of an exogenous variable, X or Y, changes. c. the value of an endogenous variable, something other than X or Y, changes. d. the value of an exogenous variable, something other than X or Y, changes.

the value of an exogenous variable, something other than X or Y, changes

Opportunity cost is a. not relevant for macroeconomic decisions but is the main consideration in microeconomic decisions. b. the value of the best alternative that must be given up when a choice is made. c. minimized when the benefits of an activity outweigh the costs of an activity. d. higher for labor resources than for capital resources.

the value of the best alternative that must be given up when a choice is made

A movement from point B on Line 2 to point C on Line 2 occurs when: (see image 1.3-9) a. the value of the independent variable, X, increases. b. the value of the independent variable, Y, decreases. c. a variable other than X or Y that has a positive impact on the relationship increases. d. a variable other than X or Y that has positive impact on the relationship decreases

the value of the independent variable X, increases