Question 1

Assume there is a relationship between two variables and the other-variables-held constant assumption (ceteris paribus) is relaxed. We would expect that the line representing this relationship would:
A) change from inverse to direct.
B) change from direct to inverse.
C) have a greater number of data points.
D) change its location.

Accepted Answer

When the ceteris paribus assumption is relaxed, allowing other variables to change, the original relationship between the two variables might be influenced by these additional factors. This can cause the line representing the relationship to shift its position to reflect the new influences, rather than merely changing the nature of the relationship (from inverse to direct or vice versa) or just adding more data points.

Question 2

Which of the following is used to illustrate an independent relationship between two variables?
A) An upward-sloping curve
B) A downward-sloping curve
C) A hill-shaped curve
D) A horizontal or vertical line

Accepted Answer

A horizontal or vertical line represents no relationship or independence between two variables.

Question 3

Exhibit 1A-8 Straight line relationship 
Which of the following would cause a shift in the relationship shown in Exhibit 1A-8?
A) A fall in household incomes.
B) A fall in the price of pizza.
C) A fall in the quantity of pizza that people wish to purchase.
D) A rise in the price of pizza.

Accepted Answer

The answer of Exhibit 1A-8 Straight line relationship 
Which of...

Question 4

Exhibit 1A-4 Straight line 
Straight line A-D in Exhibit 1A-4 shows that:
A) as the X value increases by 80, the Y value increases by 40 so the slope is 2.
B) as the Y value increases by 40, the X value increases by 80 so the slope is 1/2.
C) increasing values for X do not affect the value of Y.
D) increasing values for Y do not affect the value of X.

Accepted Answer

The answer of Exhibit 1A-4 Straight line 
Straight line A-D...

Question 5

When economists say goods are scarce, they mean:
A) consumers are too poor to afford the goods and services available.
B) consumers are unwilling to buy goods unless they have very low prices.
C) goods are generally freely available from nature in most countries.
D) the desire for goods and services exceeds our ability to produce them with the limited resources available.

Accepted Answer

When economists say goods are scarce, it means that the desire or demand for goods and services exceeds the availability or supply of them due to limited resources such as land, labor, and capital. This can lead to competition among consumers for goods, which drives prices up. Therefore, scarcity is a central economic problem that forces individuals, businesses, and governments to make choices about how to allocate resources efficiently.

Question 6

Exhibit 1A-1 Straight line 
In Exhibit 1A-1, the slope of straight line AB is:
A) positive.
B) zero.
C) negative.
D) variable.

Accepted Answer

Straight line AB is sloping upwards from left to right, indicating a positive slope.

Question 7

Exhibit 1A-2 Straight line 
In Exhibit 1A-2, explain the slope of straight line CD.
A) As the X value increases by 20, the Y value increases by 5, so the slope is 4.
B) As the Y value increases by 5, the X value increases by 20, so the slope is 1/4.
C) As the X value increases by 10, the Y value increases by 5, so the slope is 2.
D) As the Y value increases by 5, the X value increases by 10, so the slope is 1/2.

Accepted Answer

The slope of a line represents how much the Y value changes for every unit increase of the X value. In this case, as the Y value increases by 5, the X value increases by 10, so the slope is 1/2. Therefore, choice D is the correct answer.

Question 8

Scarcity is a problem:
A) measured by the amount of goods available.
B) of the poor, but not the rich.
C) because human wants are unlimited while resources are limited.
D) only in industrialized economies.

Accepted Answer

Scarcity is a problem because there are unlimited human wants but limited resources to fulfill those wants. This is a universal problem that affects all economies, not just industrialized ones.

Question 9

Exhibit 1A-9 Multi-curve graph 
Exhibit 1A-9 represents a three-variable relationship. As the annual income of consumers falls from $50,000 (line A) to $30,000 (line B), the result is a:
A) rightward movement along each curve.
B) leftward movement along each curve,.
C) leftward shift from curve A to curve B.
D) rightward shift from curve B to curve A.

Accepted Answer

The answer of Exhibit 1A-9 Multi-curve graph 
Exhibit 1A-9 represents...

Question 10

Exhibit 1A-1 Straight line 
As shown in Exhibit 1A-1, the slope of straight line AB:
A) decreases with increases in X.
B) increases with increases in X.
C) increases with decreases in X.
D) remains constant with changes in X.

Accepted Answer

The straight line AB is a horizontal line, which means its slope is zero and remains constant regardless of changes in X.

Question 11

Exhibit 1A-5 Straight line 
In Exhibit 1A-5, the slope for straight line CD is:
A) 5.
B) 1.
C) − 1.
D) − 5.

Accepted Answer

The answer of Exhibit 1A-5 Straight line 
In Exhibit 1A-5,...

Question 12

A shift in a curve represents a change in:
A) the variable on the horizontal axis.
B) the variable on the vertical axis.
C) a third variable that is not on either axis.
D) any variable that is relevant to the relationship being graphed.

Accepted Answer

A shift in a curve typically represents a change in a third variable that is not on either axis, affecting the relationship between the two variables plotted on the graph.

Question 13

Exhibit 1A-7 Straight line relationship 
Which of the following would cause a shift in the relationship shown in Exhibit 1A-7?
A) A rise in people's annual income.
B) A rise in people's expenditure on air travel.
C) A rise in the price of air travel.
D) Nothing will shift the line in the graph.

Accepted Answer

A rise in the price of air travel would cause a shift in the relationship, as it would decrease the quantity of air travel demanded for a given level of income. Option A and B would cause a movement along the existing line, but not a shift in the relationship. Option D is incorrect as external factors such as changes in price or consumer preferences can cause a shift in the relationship.

Question 14

Exhibit 1A-8 Straight line relationship 
For the relationship shown in Exhibit 1A-8, suppose the price of hamburgers increases and hamburgers are a substitute for pizza. What change would occur on the graph?
A) There will be a movement upward and to the left along the curve.
B) There will be a movement downward and to the right along the curve.
C) The curve will shift.
D) The slope of the curve will become steeper.

Accepted Answer

The answer of Exhibit 1A-8 Straight line relationship 
For the...

Question 15

Exhibit 1A-10 Multi-curve graph 
Exhibit 1A-10 represents a three-variable relationship. As the annual income of consumers rises from $20,000 (line A) to $40,000 (line B), the result is a:
A) rightward movement along each curve.
B) leftward movement along each curve.
C) leftward shift from curve B to curve A.
D) rightward shift from curve A to curve B.

Accepted Answer

The answer of Exhibit 1A-10 Multi-curve graph 
Exhibit 1A-10 represents...

Question 16

When economists say scarcity, they mean:
A) there are only a limited number of consumers who would be interested in purchasing goods.
B) human wants exceed the available supply of time, goods and resources.
C) most people in poorer countries do not have enough goods.
D) goods are so expensive that only the rich can afford it.

Accepted Answer

Scarcity in economics refers to the concept that there are limited resources to meet unlimited wants and needs. This means that human wants and needs exceed the available supply of time, goods, and resources.

Question 17

Scarcity:
A) is a problem only in industrialized economies.
B) is a condition measured by the quantity of goods available.
C) exists everywhere because human wants can never be satisfied.
D) is a problem only in poor economies.

Accepted Answer

Scarcity is the fundamental economic problem that arises due to unlimited human wants and limited resources to fulfill those wants. This problem exists everywhere irrespective of the level of economic development.

Question 18

Scarcity:
A) exists because resources are unlimited while human wants are limited.
B) means we are unable to have as many goods and services or as much time for activities as we would like to have.
C) will likely be eliminated as technology continues to expand.
D) is not an issue addressed in economics.

Accepted Answer

Scarcity exists because there are limited resources to fulfill unlimited human wants and needs. Therefore, we are unable to have as many goods and services or as much time for activities as we would like to have. While technology can sometimes increase efficiency, it cannot completely eliminate scarcity.

Question 19

Exhibit 1A-4 Straight line 
In Exhibit 1A-4, as X increases along the horizontal axis, corresponding to points A-D on the line, the Y value remains unchanged at 40 units. The relationship between the X and Y variables is:
A) direct.
B) inverse.
C) independent.
D) undefined.

Accepted Answer

The X and Y variables are independent, as changes in X do not lead to changes in Y. The fact that Y remains constant as X increases along the line shows that there is no relationship or correlation between the two variables.

Question 20

Exhibit 1A-7 Straight line relationship 
Using the relationship shown in Exhibit 1A-7, suppose the price of air travel increases. How would you revise the graph to show this change?
A) Draw a new point on the graph upward and to the left.
B) Draw a new point on the graph downward and to the right.
C) Draw a new line on the graph.
D) Change the current line so that its slope is flatter.

Accepted Answer

The answer of Exhibit 1A-7 Straight line relationship 
Using the...

Quiz 1: Introducing the Economic Way of Thinking

Assume there is a relationship between two variables and the other-variables-held constant assumption (ceteris paribus) is relaxed. We would expect that the line representing this relationship would:

Which of the following is used to illustrate an independent relationship between two variables?

Exhibit 1A-8 Straight line relationship Which of the following would cause a shift in the relationship shown in Exhibit 1A-8?

Exhibit 1A-4 Straight line Straight line A-D in Exhibit 1A-4 shows that:

When economists say goods are scarce, they mean:

Exhibit 1A-1 Straight line In Exhibit 1A-1, the slope of straight line AB is:

Exhibit 1A-2 Straight line In Exhibit 1A-2, explain the slope of straight line CD.

Scarcity is a problem:

Exhibit 1A-9 Multi-curve graph Exhibit 1A-9 represents a three-variable relationship. As the annual income of consumers falls from $50,000 (line A) to $30,000 (line B) , the result is a:

Exhibit 1A-1 Straight line As shown in Exhibit 1A-1, the slope of straight line AB:

Exhibit 1A-5 Straight line In Exhibit 1A-5, the slope for straight line CD is:

A shift in a curve represents a change in:

Exhibit 1A-7 Straight line relationship Which of the following would cause a shift in the relationship shown in Exhibit 1A-7?

Exhibit 1A-8 Straight line relationship For the relationship shown in Exhibit 1A-8, suppose the price of hamburgers increases and hamburgers are a substitute for pizza. What change would occur on the graph?

Exhibit 1A-10 Multi-curve graph Exhibit 1A-10 represents a three-variable relationship. As the annual income of consumers rises from $20,000 (line A) to $40,000 (line B) , the result is a:

When economists say scarcity, they mean:

Scarcity:

Scarcity:

Exhibit 1A-4 Straight line In Exhibit 1A-4, as X increases along the horizontal axis, corresponding to points A-D on the line, the Y value remains unchanged at 40 units. The relationship between the X and Y variables is:

Exhibit 1A-7 Straight line relationship Using the relationship shown in Exhibit 1A-7, suppose the price of air travel increases. How would you revise the graph to show this change?