Question 1

(Consider This)  The economic perspective used in customer decision making at fast-food restaurants is reflected in

Accepted Answer

A)   customers selecting the shortest line.
B)   decisions for which marginal costs exceed marginal benefits.
C)   all customer lines tending to be of different lengths.
D)   irrational purchasing of high-fat-content food.E) A) and D)
F) All of the above

Question 2

Assume that a consumer has a given budget or income of $12 and that she can buy only two goods, apples or bananas. The price of an apple is $1.50 and the price of a banana is $0.75. If the consumer decides to buy 4 apples, how many bananas can she also buy with the remainder of her budget?

Accepted Answer

A)   8 bananas
B)   4 bananas
C)   6 bananas
D)   10 bananasE) A) and B)
F) A) and C)

Question 3

Assume that a consumer purchases only two products. Suppose that the consumer's money income doubles, and the prices of the two products also double. These changes in income and prices will result in

Accepted Answer

A)   a shift of the budget line inward to the left.
B)   a shift of the budget line outward to the right.
C)   no change in the budget line.
D)   an increase in the slope of the budget line.E) B) and C)
F) C) and D)

Question 4

An economy cannot produce at a point outside of its production possibilities curve because human economic wants are insatiable.

Accepted Answer

A) True 
 B)False

Question 5

A point outside (to the right of)  the production possibilities curve of a nation

Accepted Answer

A)   is not attainable for this nation.
B)   is easily attainable for this nation.
C)   implies that there are unemployed resources in this nation.
D)   implies that this nation is using its resources fully.E) B) and C)
F) A) and D)

Question 6

Economic models do not reflect the full complexity of reality, but instead are based on

Accepted Answer

A)   simplifications.
B)   trade-offs.
C)   value judgments.
D)   predictions.E) A) and D)
F) B) and D)

Question 7

If economic resources were perfectly adaptable to alternative uses, then there would be constant opportunity costs along the production possibilities curve.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following lists includes only capital resources (and therefore no labor or land resources) ?

Accepted Answer

A)   an ice arena, a professional hockey player, hockey uniforms
B)   the owner of a new start-up firm, a chemistry lab, a researcher
C)   a hydroelectric dam, water behind the dam, power lines
D)   autos owned by a car rental firm, computers at the car rental agency, vans used to shuttle rental customers to and from the airportE) A) and B)
F) A) and D)

Question 9

A linear relationship only refers to one whose graph is either vertical or horizontal.

Accepted Answer

A) True 
 B)False

Question 10

One major part of the opportunity costs of one's decision to go to college after high school graduation is the

Accepted Answer

A)   additional income that one can get if one had a college degree.
B)   education that one gets while in college.
C)   high-school diploma needed in order to apply for college.
D)   full-time job that one could have gotten instead of going to college.E) A) and B)
F) None of the above

Question 11

If the marginal benefit of a good is less than its marginal cost, then the nation should

Accepted Answer

A)   produce more of that good.
B)   Maintain the current level of production of that good.
C)   reduce the marginal benefit of that good.
D)   reduce the production of that good.E) B) and C)
F) C) and D)

Question 12

A country can achieve some combination of goods outside its production possibilities curve by

Accepted Answer

A)   idling some of its resources.
B)   specializing and engaging in international trade.
C)   buying the debt (bonds and stocks)  of foreign nations.
D)   producing more capital goods and fewer consumer goods.E) B) and C)
F) A) and D)

Question 13

If two variables are inversely related, then as the value of one variable

Accepted Answer

A)   increases, the value of the other may either increase or decrease.
B)   decreases, the value of the other decreases.
C)   increases, the value of the other decreases.
D)   increases, the value of the other increases.E) B) and C)
F) C) and D)

Question 14

In moving along a given budget line,

Accepted Answer

A)   the prices of both products and money income are assumed to be constant.
B)   each point on the line will be equally satisfactory to consumers.
C)   money income varies, but the prices of the two goods are constant.
D)   the prices of both products are assumed to vary, but money income is constant.E) B) and C)
F) A) and D)

Question 15

When a state government chooses to build more roads, the resources used are no longer available for public education programs. This dilemma illustrates the concept of

Accepted Answer

A)   production expenses.
B)   unemployment issues.
C)   unintended consequences.
D)   opportunity cost.E) All of the above
F) C) and D)

Question 16

From an economic perspective, when consumers leave a fast-food restaurant because the lines to be served are too long, they have concluded that the

Accepted Answer

A)   marginal cost of waiting is less than the marginal benefit of eating in that restaurant.
B)   marginal cost of waiting is greater than the marginal benefit of eating in that restaurant.
C)   management is exhibiting irrational behavior by not considering the marginal cost and the marginal benefit of standing in line by the consumer.
D)   management is making an assumption that other things are equal.E) B) and C)
F) A) and B)

Question 17

The economic perspective focuses largely on marginal analysis, which means analyzing

Accepted Answer

A)   peripheral elements of a given issue or action.
B)   the minor aspects of a given issue or decision.
C)   the changes in the situation that would result from a given action.
D)   emotional and psychological facets of a given action.E) A) and B)
F) A) and C)

Question 18

In recent years the economy of Japan has grown, despite the fact that the population of Japan has declined. Which of the following would best explain Japan's economic growth despite having a smaller population?

Accepted Answer

A)   immigration of new workers into Japan
B)   advancements in technology that make labor more productive
C)   reduced employment of capital because fewer workers are available to use it
D)   greater consumption of goods imported from other countriesE) A) and B)
F) A) and C)

Question 19

You observe that when stock prices rise, interest rates soon fall, and therefore conclude that higher stock prices lead to lower interest rates. This would be an example of

Accepted Answer

A)   the fallacy of composition.
B)   trade-off among economic goals.
C)   the post hoc fallacy.
D)   the use of loaded terminology.E) A) and C)
F) All of the above

Question 20

Which of the following is the best synonym for "marginal" in economics?

Accepted Answer

A)   scarce
B)   additional
C)   basic
D)   minorE) A) and C)
F) All of the above

Exam 1: Limits, Alternatives, and Choices

(Consider This) The economic perspective used in customer decision making at fast-food restaurants is reflected in

Correct AnswerverifiedShow Answer

A linear relationship only refers to one whose graph is either vertical or horizontal.

Correct AnswerverifiedShow Answer

One major part of the opportunity costs of one's decision to go to college after high school graduation is the

Correct AnswerverifiedShow Answer

An economy cannot produce at a point outside of its production possibilities curve because human economic wants are insatiable.

Correct AnswerverifiedShow Answer

Which of the following lists includes only capital resources (and therefore no labor or land resources) ?

Correct AnswerverifiedShow Answer

If economic resources were perfectly adaptable to alternative uses, then there would be constant opportunity costs along the production possibilities curve.

Correct AnswerverifiedShow Answer

Economic models do not reflect the full complexity of reality, but instead are based on

Correct AnswerverifiedShow Answer

You observe that when stock prices rise, interest rates soon fall, and therefore conclude that higher stock prices lead to lower interest rates. This would be an example of

Correct AnswerverifiedShow Answer

A country can achieve some combination of goods outside its production possibilities curve by

Correct AnswerverifiedShow Answer

Assume that a consumer has a given budget or income of $12 and that she can buy only two goods, apples or bananas. The price of an apple is $1.50 and the price of a banana is $0.75. If the consumer decides to buy 4 apples, how many bananas can she also buy with the remainder of her budget?

Correct AnswerverifiedShow Answer

The economic perspective focuses largely on marginal analysis, which means analyzing

Correct AnswerverifiedShow Answer

If two variables are inversely related, then as the value of one variable

Correct AnswerverifiedShow Answer

Which of the following is the best synonym for "marginal" in economics?

Correct AnswerverifiedShow Answer

From an economic perspective, when consumers leave a fast-food restaurant because the lines to be served are too long, they have concluded that the

Correct AnswerverifiedShow Answer

A point outside (to the right of) the production possibilities curve of a nation

Correct AnswerverifiedShow Answer

In moving along a given budget line,

Correct AnswerverifiedShow Answer

In recent years the economy of Japan has grown, despite the fact that the population of Japan has declined. Which of the following would best explain Japan's economic growth despite having a smaller population?

Correct AnswerverifiedShow Answer

If the marginal benefit of a good is less than its marginal cost, then the nation should

Correct AnswerverifiedShow Answer

When a state government chooses to build more roads, the resources used are no longer available for public education programs. This dilemma illustrates the concept of

Correct AnswerverifiedShow Answer

Assume that a consumer purchases only two products. Suppose that the consumer's money income doubles, and the prices of the two products also double. These changes in income and prices will result in

Correct AnswerverifiedShow Answer

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