Deck 1: Getting Started

Question 1

A curve with a positive but decreasing slope represents a relationship where, every time the variable measured along the horizontal axis increases by one unit, the variable measured along the vertical axis

A)increases by a constant amount.
B)does not change by much.
C)increases by a decreasing amount.
D)decreases.
E)increases by an increasing amount.

Answer 1

C

Question 2

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)positively sloped line.
C)negatively sloped line.
D)curve with a maximum.
E)vertical line.

Answer 2

A

Question 3

A choice made by comparing all relevant alternatives systematically and incrementally is

A)a sunk cost.
B)a choice made in the social interest.
C)an opportunity cost.
D)a choice on the margin.
E)a benefit.

Answer 3

D

Question 4

As part of its proposal to win the 2012 Olympics, London developed a carbon offset plan to reduce the Games' impact on the environment. In 2011, the organizers decided to drop this plan to reduce emissions. We can conclude that

A)there are no incentives to reduce carbon emissions.
B)the organizers are not making a rational decision.
C)the organizers are ignoring a sunk cost.
D)it is difficult to calculate the cost of reducing emissions.
E)the marginal cost of reducing emissions exceeded the marginal benefits of reducing emissions.

Question 5

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)trend-section diagram.
B)time-series graph.
C)linear graph.
D)scatter diagram.
E)cross-section graph

Question 6

Macroeconomics is the study of

A)national or global economies.
B)how ceteris paribus affects causation.
C)the actions of individual consumers.
D)the government.
E)the actions of individual businesses.

Question 7

In the above figure, no relationship between x and y is shown in Figure

A)A.
B)B.
C)C.
D)D.
E)A and Figure B.

Question 8

A scatter diagram can be used to see

A)the value of a variable for different groups in a population.
B)whether a variable is positively or negatively related to itself.
C)if the value of a variable is rising or falling.
D)how a variable behaves over time.
E)if a relationship exists between two variables.

Question 9

Of the three major economic questions, which of the following is the best example of a "How?" question?

A)Should we produce more heavy fleece coats?
B)Should we spend more on health care?
C)Should we collect tolls on turnpikes using human toll collectors or mechanized toll machines?
D)Should we eat more oatmeal?
E)Should we build log homes or build factories from bricks?

Question 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)sunk
C)benefit's
D)explicit
E)opportunity

Question 11

The figure above shows the relationship between the price of a dozen roses and the quantity of roses a florist can sell. The slope between points A and B is

A)2.
B)20.
C)16.
D)4
E)nonexistent because at point A, no roses are sold.

Question 12

The graph shows

A)a cross-section relationship.
B)a relationship with a maximum.
C)no relationship.
D)a relationship with a minimum.
E)a relationship that becomes less steep.

Question 13

In the above figure, the diagram shows

A)a two-variable scatter diagram.
B)a scatter diagram.
C)a cross-section graph between x and time.
D)a downward trend in x.
E)an upward trend in x.

Question 14

Which type of economic graph reveals trends in data?

A)scatter diagram
B)time-series graph
C)cross-section graph
D)Answers A and C are correct.
E)Answers A, B, and C are all correct.

Question 15

Suppose you take a trip during Spring Break. To determine the benefit of taking the trip, you

A)measure what you are willing to give up to take the trip.
B)calculate the opportunity cost of the trip.
C)calculate the value of the next best alternative foregone.
D)must measure what the trip is worth to you and then subtract the cost of the trip.
E)determine the sunk cost of taking the trip.

Question 16

When two variables in a graph are related to a third, changing the third causes

A)a movement along the curve.
B)no change in the curve because the third variable isn't on the axes.
C)a shift of the curve.
D)either a shift or a movement in the curve but more information is needed to determine which occurs.
E)None of the above answers is correct.

Question 17

As a person increases his or her caloric intake, the person's weight increases, ceteris paribus. The relationship between the person's caloric intake and the person's weight is an example of

A)a positive relationship.
B)a trended relationship.
C)a single point on a graph.
D)unrelated variables.
E)a negative relationship.

Question 18

Economics is best defined as the social science that studies

A)the way to eliminate choices in our decisions.
B)how a person can get everything he or she wants.
C)the choices that societies, and the people and institutions that make up societies, make in dealing with the issue of scarcity.
D)how choices made in the social interest must conflict with choices made in the self-interest.
E)the reason money exists.

Question 19

Demonstrating how an economic variable changes from one year to the next is best illustrated by a

A)Venn diagram.
B)linear graph.
C)cross-section graph.
D)scatter diagram.
E)time-series graph.

Question 20

Mothers Against Drunk Drivers (MADD)campaigned to increase the legal penalties of drunk driving. This successful campaign_{--------------------} of drunk driving.

A)decreased the marginal cost
B)decreased the marginal benefit
C)increased the marginal cost
D)increased the marginal benefit
E)had no effect on the marginal cost or marginal benefit but did affect the total benefit

Question 21

Which of the following is a macroeconomic issue?

A)The number of jobs and production in Zimbabwe increase.
B)Utilities are required to install more anti-pollution devices.
C)The price of a ticket to Walt Disney World in Orlando is increased.
D)The Iowa corn harvest is smaller than normal.
E)The National Football League signs a new television contract.

Question 22

If the change in y = 10 and the change in x = 3, there is

A)a negative relationship between y and x.
B)a positive relationship between y and x.
C)a +0.33 relationship between the two variables.
D)no relationship between y and x.
E)an independent relationship between y and x.

Question 23

The figure above shows the relationship between the price of a dozen roses and the quantity of roses a florist can sell. The slope between points B and C equals

A)4.
B)8.
C)14.
D)16.
E)2.

Question 24

Making choices on the margin means

A)scribbling on the edges of your notebook paper.
B)comparing all relevant alternatives systematically and incrementally.
C)taking account of all marginal benefits, all opportunity costs, and all sunk costs.
D)making decisions in the largest possible increments.
E)making a decision based on emotions.

Question 25

Choices that are best for the society as a whole are choices in pursuit of

A)the social interest.
B)incentives.
C)answering the "how" question.
D)self interest.
E)answering the "for whom" question.

Question 26

The marginal cost of an activity _{--------------------}as you do more of it.

A)changes only if the marginal benefit of the activity does not change
B)doesn't change
C)changes only if the marginal benefit of the activity changes
D)increases
E)decreases

Question 27

A time series graph

A)is not useful if the goal is to determine a variable's trend.
B)shows how a certain variable changes over time.
C)uses bars rather than lines.
D)depicts a series of good economic times a nation had.
E)shows points that are scattered.

Question 28

The slope of the line shown in the above figure is

A)5/2.
B)2/5.
C)2/3.
D)5.
E)2.

Question 29

In the figure above, ceteris paribus, an increase in x is associated with

A)no change in either y or z.
B)an increase in y.
C)a decrease in y.
D)an increase in z.
E)a random change in z.

Question 30

If a small change in the x variable results in a large change in the y variable, the curve will be

A)flat.
B)trended.
C)negatively sloped.
D)positively sloped.
E)steep.

Question 31

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)zero because he enjoys the Mountain Dew.
C)the Pepsi because it is a drink, as is the Mountain Dew.
D)the Mountain Dew.
E)the Pepsi or the bag of chips, whichever the highest-valued alternative forgone.

Question 32

To economists, scarcity means that

A)a person looking for work is not able to find work.
B)there can never be answers to the what, how or for whom questions.
C)limited wants cannot be satisfied by the unlimited resources.
D)the number of people without jobs rises when economic times are bad.
E)unlimited wants cannot be satisfied by the limited resources.

Question 33

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 value of the trip.
C)the wages you would have earned from working and the lower grade earned by not studying.
D)the lower grade earned by not studying.
E)We cannot determine what the opportunity cost is without knowing which alternative, working or studying, you would have preferred.

Question 34

Which of the following is true regarding this statement? "The president's decision to spend more money on national defense is smart."

A)This topic would be studied in microeconomics.
B)Ceteris paribus does not apply to the government.
C)The federal government does not face scarcity.
D)This is a normative statement.
E)Social interest must always be more important than self-interest.

Question 35

A time-series graph measures

A)time on the x-axis and the variable or variables in which we are interested on the y-axis.
B)the value of one variable against the value of another variable.
C)time on the y-axis and the variable or variables in which we are interested on the x-axis.
D)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.
E)the value of an economic variable for different groups in a population at a point in time.

Question 36

If a curve rises and then falls, it has a

A)constant slope relationship.
B)slope that is negative and then positive.
C)maximum.
D)linear relationship.
E)minimum.

Question 37

When analyzing graphically the relationship between more than two variables, which of the following must be used?

A)assumption of little change
B)positive slope assumption
C)negative slope assumption
D)the assumption that only relevant factors change
E)ceteris paribus

Question 38

Normative statements
I. describe how the world is.
Ii. describe how the world ought to be.
Iii. depend on people's values and cannot be tested.

A)i only.
B)ii only.
C)i and iii.
D)iii only.
E)ii and iii.

Question 39

In the above figure, while drawing the line showing the relationship between the price of a pound of peanuts and the quantity sold, the

A)price of a pound of pecans does not change.
B)the quantity of peanuts that farmers supply does not change.
C)price of a pound of peanuts does not change.
D)Both answers A and B are correct.
E)Both answers B and C are correct.

Question 40

In order to make a rational choice, people must

A)decide quickly without wasting time.
B)compare marginal costs and marginal benefits.
C)determine what is in the social interest.
D)only know what they want.
E)be able to afford the choice decided upon.

Question 41

Suppose you decide to attend summer school and that this is considered a rational choice. When making this choice,

A)you must ignore the problem of scarcity.
B)you have made a positive statement.
C)you considered the marginal cost and marginal benefit of your choice.
D)you must have considered the social interest.
E)you have used the ceteris paribus assumption.

Question 42

A positive statement

A)might be right or wrong.
B)cannot be negative.
C)cannot be tested.
D)depends on someone's value judgment.
E)must always be right.

Question 43

An independent relationship between two variables is shown in a graph by

A)any straight line curve.
B)a downward-sloping line.
C)an upward-sloping line.
D)a steeply sloped line.
E)a horizontal or a vertical line.

Question 44

A rational choice is one that

A)always turns out for the best for the decision maker.
B)creates no costs for the decision maker.
C)uses the available resources to most effectively satisfy the wants of the person making the choice.
D)must be made with perfect information.
E)is made in the social interest rather than the self-interest.

Question 45

Scarcity exists because

A)some individuals have low income.
B)some people make bad economic decisions.
C)people take too much leisure time.
D)the costs of production are high.
E)human wants exceed the resources available to satisfy them.

Question 46

On a graph showing the relationship between x and y, the ceteris paribus condition implies that

A)no other variables are related to x and y.
B)the value of x is held constant.
C)other variables not shown are held constant.
D)the value of x and the value of y are held constant.
E)the value of y is held constant.

Question 47

Most economic graphs have two lines perpendicular to each other. Where these lines meet is called the

A)origin.
B)variable.
C)point of beginning.
D)y-axis.
E)x-axis.

Question 48

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)limit the cost and the benefits you can gain.
B)are making a choice on the margin.
C)are not making a rational choice.
D)do not face an opportunity cost.
E)must have made a choice in the social interest.

Question 49

When people make rational choices, they

A)weigh the costs and benefits of their options and act to satisfy their wants.
B)are necessarily making the best decision.
C)behave selfishly.
D)do not consider their emotions.
E)necessarily make a decision in the social interest.

Question 50

Choices that are best for the individuals that make them are choices in pursuit of

A)efficiency.
B)the social interest.
C)equity.
D)incentives.
E)self interest.

Question 51

When a home builder decides to computerize all of its production schedule, it directly answers the _{--------------------}question.

A)where
B)what
C)how
D)for whom
E)why

Question 52

The benefit of a one-unit increase in an activity

A)is always greater than the opportunity cost of that activity.
B)is called rational-choice benefit.
C)is called marginal cost.
D)decreases as you do more of it.
E)is measured by what you must give up.

Question 53

To show how a variable _{--------------------}, we typically use a_{--------------------} .

A)changes over time; cross section graph
B)relates to another variable; pie chart
C)changes over time; time series graph
D)relates to another variable; time series graph
E)changes over time; cross time chart

Question 54

The above figure shows the relationship between the price of a slice of pizza and how many slices of pizza Ricardo buys in a week. Between points A and B, the slope of the line is_{--------------------} the slope of the line between points B and C.

A)not comparable to
B)greater than
C)unrelated to
D)equal to
E)less than

Question 55

Which of the following is true?
I. A rational choice is made on the margin.
Ii. Microeconomics is the study of the national economy while macroeconomics is the study of the global economy.
Iii. Economists try to understand how the economic world works by testing normative statements.

A)i and ii
B)only ii
C)only iii
D)only i
E)i and iii

Question 56

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 and ii
B)ii and iii
C)ii only
D)i, ii and iii
E)i only

Question 57

When a landscaping company decides to use drafting software and computers instead of hiring designers to draw design plans by hand, it is answering the_{--------------------} question.

A)opportunity cost
B)why
C)what
D)for whom
E)how

Question 58

The question "Should we produce LCD televisions or computer monitors?" is an example of a_{--------------------}question.

A)what
B)where
C)for whom
D)how
E)why

Question 59

In the above figure, a negative relationship between x and y is shown in Figure

A)A.
B)B.
C)C.
D)D.
E)B and Figure C.

Question 60

In a graph, a straight line has a negative slope if the line

A)is vertical.
B)is horizontal.
C)rises from left to right.
D)shows a trend.
E)falls from left to right.

Question 61

An incentive is

A)what you must give up to get something.
B)a good or service that satisfies wants.
C)when people make rational choices by comparing costs and benefits.
D)a reward or a penalty that encourages or discourages an action.
E)a choice is made on the margin.

Question 62

In the above figure, which of the figures shows a relationship between x and y with a negative slope?

A)Figure A
B)Figure B
C)Figure C
D)Figure D
E)Both Figure A and Figure B

Question 63

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, studying for an economics exam, and answering his e-mail
B)studying for an economics exam
C)going to the concert because that is what John choose to do
D)answering his e-mail
E)attending a movie

Question 64

The above figure shows the relationship between the price of a slice of pizza and how many slices of pizza Ricardo buys in a week. Between points A and B, the slope of the line equals

A)-4.
B)-3.
C)-2
D)-5.
E)-1.

Question 65

The additional benefit of increasing some activity by one-unit is called the

A)opportunity cost.
B)scarcity.
C)unit cost/benefit.
D)marginal benefit.
E)total benefit.

Question 66

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)the opportunity cost of working is negative.
B)workers are irrational.
C)workers make decisions based on the social interest.
D)workers make decisions based on the marginal benefit of each hour worked compared to the marginal cost of work.
E)the marginal cost of each additional work hour is not important to most workers.

Question 67

The opportunity cost of a one-unit increase in an activity

A)is measured by what the person is willing to give up to get one more unit of the activity.
B)is called marginal cost.
C)decreases as you do more of it.
D)is greater than the marginal benefit.
E)is called rational cost.

Question 68

A time series graph reveals whether there is a_{--------------------} , which represents_{--------------------} .

A)relationship between two variables; a cross-section relationship
B)trends in two variables; unrelated variables
C)trend in a variable; a general tendency for the variable to rise or fall
D)relationship between two variables; a trend in a variable
E)cross-section relationship; a general tendency for the variables to rise or fall

Question 69

What is the slope of the line in the figure above?

A)1.33
B)0.75
C)Zero
D)-0.75
E)-1.33

Question 70

In the figure above, an increase in z leads to a

A)leftward shift of the line showing the relationship between x and y.
B)rightward shift of the line showing the relationship between x and y.
C)movement down along one of the lines showing the relationship between x and y.
D)movement up along one of the lines showing the relationship between x and y.
E)trend change in both x and y.

Question 71

Whenever one variable increases, another variable decreases. The two variables are

A)definitely related through a third variable.
B)positively related.
C)negatively related.
D)unrelated to each other.
E)related but whether positively or negatively related depends on which variable is plotted on the vertical axis.

Question 72

In the figure above, suppose the price of a pound of pecans is negatively related to the quantity of peanuts that farmers are willing to supply. If the price of pecans increases,

A)the curve will shift leftward.
B)the curve will shift rightward.
C)the curve will be unaffected.
D)there is a movement along the curve.
E)None of the above answers is correct because the graph assumes that the price of pecans does not change.

Question 73

The question of "How are goods and services produced?" most closely addresses which of the following issues?

A)Should Ford use expensive industrial robots or inexpensive Mexican autoworkers to produce SUVs?
B)Should Ford build SUVs or luxury cars?
C)Should contractors building residential housing or shopping malls?
D)Why are Christmas trees popular only in December?
E)Is income distributed fairly in the United States?

Question 74

To graph a relationship that involves more than two variables, we use

A)a direct relationship.
B)a positive relationship.
C)a negative relationship.
D)ceteris paribus.
E)movement up along one of the lines showing the relationship between x and y.

Question 75

Which of the following is a positive statement?

A)Social Security must be reformed.
B)If we reduce welfare payments given to the poor, they will find jobs.
C)Everyone should have some knowledge of economics.
D)The rich should pay more in taxes.
E)Taxes on gasoline should be lower so that gasoline is more affordable to the poor.

Question 76

A change in a marginal benefit or cost will

A)increase sunk costs.
B)cause an individual to make a rational choice.
C)increase consumption.
D)change incentives.
E)decrease production.

Question 77

In the above, in which figure(s)is the slope the same at every point?

A)Figures A and C
B)Figure A only
C)Figure B only
D)Figures A, C, and D
E)Figures C and D

Question 78

In the diagram above, which figure(s)show(s)an inverse relationship between the variables?

A)only D
B)only C
C)both B and C
D)both A and C
E)only B

Question 79

A statement that "All children should receive free health care" is an example of what kind of statement?

A)a positive statement
B)a normative statement
C)a fair statement
D)a statement on the margin
E)a natural experiment statement

Question 80

The figure above shows the relationship between the price of a dozen roses and the quantity of roses a florist can sell. The slope between points C and D equals

A)2.
B)4.
C)12
D)8.
E)1.