Question 1

As a consequence of the problem of scarcity,

Accepted Answer

A)  there is never enough of anything.
B)  individuals have to make choices from among alternatives.
C)  only some people can "have it all."
D)  things which are plentiful have relatively high prices.E) None of the above
F) C) and D)

Question 2

If the marginal benefits are greater than the marginal cost of an activity, then society should allocate fewer resources to this activity.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is a normative economic statement?

Accepted Answer

A)  The poverty rate hit a new high last year and income inequality also increased.
B)  Health care accounts for roughly a third of total spending in the economy.
C)  The government needs to revamp the Social Security program to make it sustainable.
D)  Retail sales are expected to continue on their downward trend in the next three quarters.E) A) and B)
F) A) and C)

Question 4

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?

Accepted Answer

A)  six lollipops and three candy bars
B)  two lollipops and two candy bars
C)  three lollipops and two candy bars
D)  one lollipop and three candy barsE) A) and C)
F) All of the above

Question 5

Assume that a consumer has a given budget or income of $10 and that she can buy only two goods, apples or bananas. The price of an apple is $1.00 and the price of a banana is $0.50. For this consumer, the opportunity cost of buying one more apple is

Accepted Answer

A)  0.5 of a banana.
B)  0.1 of a banana.
C)  1 banana.
D)  2 bananas.E) All of the above
F) B) and C)

Question 6

Rational behavior implies that different people faced with similar choices will make the same decisions.

Accepted Answer

A) True 
 B)False

Question 7

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) A) and B)
F) A) and C)

Question 8

Refer to the graphs. Assume that pizza is measured in slices and beer in pints. In which of the graphs is the opportunity cost of a pint of beer the lowest?

Accepted Answer

A)  graph A
B)  graph B
C)  graph C
D)  graph DE) All of the above
F) A) and B)

Question 9

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 10

Ben says that "an increase in the tax on beer will raise its price." Holly argues that "taxes should be increased on beer because college students drink too much." We can conclude that

Accepted Answer

A)  Ben's statement is normative, but Holly's is positive.
B)  Holly's statement is normative, but Ben's is positive.
C)  Both statements are normative.
D)  Both statements are positive.E) A) and D)
F) A) and C)

Question 11

"The role of government in the economy should be kept to a minimum" is an example of a positive economic statement.

Accepted Answer

A) True 
 B)False

Question 12

Assume that a consumer has a given budget or income of $10 and that she can buy only two goods, apples or bananas. The price of an apple is $2.00 and the price of a banana is $1.00. What is the slope of the budget line if the quantity of apples were measured on the horizontal axis and bananas on the vertical axis?

Accepted Answer

A)  -0.5
B)  -0.8
C)  -1.6
D)  -2E) B) and D)
F) A) and B)

Question 13

Answer the question on the basis of the following production possibilities table for two countries, North Cantina and South Cantina.  Refer to the table. If South Cantina is producing at production alternative C, the opportunity cost of the fourth unit of capital goods will be

Accepted Answer

A)  1/7 of a unit of consumer goods.
B)  3 units of consumer goods.
C)  19 units of consumer goods.
D)  7 units of consumer goods.E) B) and D)
F) B) and C)

Question 14

The purpose of the ceteris paribus assumption used in economic analysis is to

Accepted Answer

A)  avoid making normative statements.
B)  distinguish macroeconomics from microeconomics.
C)  make sure that all relevant factors are considered.
D)  focus on the effect of a single factor on a certain variable.E) A) and B)
F) A) and C)

Question 15

A nation can produce two products: steel and wheat. The table below is the nation's production possibilities schedule.  The opportunity cost of producing the 31st unit of wheat is approximately

Accepted Answer

A)  25 units of steel.
B)  0 units of steel.
C)  1 unit of steel.
D)  1/25 of a unit of steel.E) B) and C)
F) None of the above

Question 16

According to Emerson: "Want is a growing giant whom the coat of Have was never large enough to cover." According to economists, "Want" exceeds "Have" because

Accepted Answer

A)  people are greedy.
B)  productive resources are limited.
C)  human beings are inherently insecure.
D)  people are irrational.E) A) and B)
F) A) and C)

Question 17

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) B) and D)

Question 18

A nation's consumption is strictly limited by its production possibilities, even with specialization and international trade.

Accepted Answer

A) True 
 B)False

Question 19

Camille is at the candy store with Grandma Mary, who offers to buy her $12 worth of candy. If lollipops are $1 each and candy bars are $4 each, what combination of candy can Camille's Grandma Mary buy her?

Accepted Answer

A)  twelve lollipops and three candy bars
B)  four lollipops and two candy bars
C)  two lollipops and four candy bars
D)  two lollipop and three candy barsE) C) and D)
F) B) and C)

Question 20

A nation can produce two products: steel and wheat. The table below is the nation's production possibilities schedule.  The marginal opportunity cost of the first unit of steel is

Accepted Answer

A)  15 units of wheat.
B)  90 units of wheat.
C)  10 units of wheat.
D)  100 units of wheat.E) A) and C)
F) A) and B)

Exam 1: Limits, Alternatives, and Choices

"The role of government in the economy should be kept to a minimum" is an example of a positive economic statement.

Correct Answer
verified

A nation can produce two products: steel and wheat. The table below is the nation's production possibilities schedule. The opportunity cost of producing the 31st unit of wheat is approximately

Correct Answer
verified

Correct Answer
verified

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?

Correct Answer
verified

Camille is at the candy store with Grandma Mary, who offers to buy her $12 worth of candy. If lollipops are $1 each and candy bars are $4 each, what combination of candy can Camille's Grandma Mary buy her?

Correct Answer
verified

Rational behavior implies that different people faced with similar choices will make the same decisions.

Correct Answer
verified

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 Answer
verified

A nation's consumption is strictly limited by its production possibilities, even with specialization and international trade.

Correct Answer
verified

According to Emerson: "Want is a growing giant whom the coat of Have was never large enough to cover." According to economists, "Want" exceeds "Have" because

Correct Answer
verified

A nation can produce two products: steel and wheat. The table below is the nation's production possibilities schedule. The marginal opportunity cost of the first unit of steel is

Correct Answer
verified

Answer the question on the basis of the following production possibilities table for two countries, North Cantina and South Cantina. Refer to the table. If South Cantina is producing at production alternative C, the opportunity cost of the fourth unit of capital goods will be

Correct Answer
verified

If the marginal benefits are greater than the marginal cost of an activity, then society should allocate fewer resources to this activity.

Correct Answer
verified

Refer to the graphs. Assume that pizza is measured in slices and beer in pints. In which of the graphs is the opportunity cost of a pint of beer the lowest?

Correct Answer
verified

Ben says that "an increase in the tax on beer will raise its price." Holly argues that "taxes should be increased on beer because college students drink too much." We can conclude that

Correct Answer
verified

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 Answer
verified

Assume that a consumer has a given budget or income of $10 and that she can buy only two goods, apples or bananas. The price of an apple is $1.00 and the price of a banana is $0.50. For this consumer, the opportunity cost of buying one more apple is

Correct Answer
verified

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

Correct Answer
verified

The purpose of the ceteris paribus assumption used in economic analysis is to

Correct Answer
verified

Which of the following is a normative economic statement?

Correct Answer
verified

As a consequence of the problem of scarcity,

Correct Answer
verified

Exam 1: Limits, Alternatives, and Choices

"The role of government in the economy should be kept to a minimum" is an example of a positive economic statement.

Correct AnswerverifiedShow Answer

A nation can produce two products: steel and wheat. The table below is the nation's production possibilities schedule. The opportunity cost of producing the 31st unit of wheat is approximately

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

Camille is at the candy store with Grandma Mary, who offers to buy her $12 worth of candy. If lollipops are $1 each and candy bars are $4 each, what combination of candy can Camille's Grandma Mary buy her?

Correct AnswerverifiedShow Answer

Rational behavior implies that different people faced with similar choices will make the same decisions.

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 nation's consumption is strictly limited by its production possibilities, even with specialization and international trade.

Correct AnswerverifiedShow Answer

According to Emerson: "Want is a growing giant whom the coat of Have was never large enough to cover." According to economists, "Want" exceeds "Have" because

Correct AnswerverifiedShow Answer

A nation can produce two products: steel and wheat. The table below is the nation's production possibilities schedule. The marginal opportunity cost of the first unit of steel is

Correct AnswerverifiedShow Answer

Answer the question on the basis of the following production possibilities table for two countries, North Cantina and South Cantina. Refer to the table. If South Cantina is producing at production alternative C, the opportunity cost of the fourth unit of capital goods will be

Correct AnswerverifiedShow Answer

If the marginal benefits are greater than the marginal cost of an activity, then society should allocate fewer resources to this activity.

Correct AnswerverifiedShow Answer

Refer to the graphs. Assume that pizza is measured in slices and beer in pints. In which of the graphs is the opportunity cost of a pint of beer the lowest?

Correct AnswerverifiedShow Answer

Ben says that "an increase in the tax on beer will raise its price." Holly argues that "taxes should be increased on beer because college students drink too much." We can conclude that

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

Assume that a consumer has a given budget or income of $10 and that she can buy only two goods, apples or bananas. The price of an apple is $1.00 and the price of a banana is $0.50. For this consumer, the opportunity cost of buying one more apple is

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

The purpose of the ceteris paribus assumption used in economic analysis is to

Correct AnswerverifiedShow Answer

Which of the following is a normative economic statement?

Correct AnswerverifiedShow Answer

As a consequence of the problem of scarcity,

Correct AnswerverifiedShow Answer

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