Question 1

When classifying factors of production, capital refers to:

Accepted Answer

A)   stocks, bonds, and money
B)   machinery and equipment to produce goods and services
C)   the financial payments by an entrepreneur to start a business.
D)   all of the above

Question 2

What is efficiency, and why does scarcity make efficiency an important goal for an economy?

Accepted Answer

Efficiency occurs when an economy is abl...

Question 3

An increase in production costs at a Ford automobile plant, and an increase in the general level of prices in the U.S. economy are examples of:

Accepted Answer

A)   microeconomic problems.
B)   macroeconomic problems.
C)   a microeconomic problem and a macroeconomic problem, respectively.
D)   a macroeconomic problem and a microeconomic problem, respectively.

Question 4

Economics is about how people use:

Accepted Answer

A)   limited resources to satisfy limited material wants and needs.
B)   limited resources to satisfy unlimited material wants and needs.
C)   unlimited resources to satisfy limited material wants and needs.
D)   unlimited resources to satisfy unlimited material wants and needs.

Question 5

If the quantity of prerecorded CDs demanded is equal to 600 - 10 (price of the CD) , at a price of $16 each, the number of CDs demanded would be:

Accepted Answer

A)   16.
B)   160.
C)   440.
D)   574.

Question 6

Income received for labor is called ____________; income received by owners of land resources is called _____________; income received by owners of capital is called
____________; and income received by persons engaged in entrepreneurial activity is called ___________.

Accepted Answer

wages; ren...

Question 7

The statement "inverse relationships graph as upward-sloping lines" is:

Accepted Answer

A)   true
B)   false.
C)   true only when two variables move in the same direction.
D)   true only when variables increase; it is not true when they decrease.

Question 8

When graphing an inverse relationship between two variables, the line on the graph will be:

Accepted Answer

A)   vertical.
B)   horizontal.
C)   upward sloping.
D)   downward sloping.

Question 9

Which of the following is NOT a general rule for constructing a graph?

Accepted Answer

A)   Use equal spaces along an axis for equal amounts.
B)   Make the horizontal and vertical axes of equal length.
C)   Use zero where the vertical and horizontal axes meet.
D)   Work up the number scale as you move out along the vertical axis and the horizontal axis.

Question 10

Which of the following steps in constructing a graph would result in a faulty graph?

Accepted Answer

A)   Use a zero at the origin where the vertical and horizontal axes meet.
B)   When assigning numbers, use equal spaces for equal amounts.
C)   When assigning numbers to the horizontal axis, work from right to left along the axis so that the largest number is at the origin.
D)   Plot data points that reflect specific combinations of the two variables, and connect the points.

Question 11

A direct relationship means that two variables move in the opposite direction of each other.

Accepted Answer

A) True 
 B)False

Question 12

Economic theory is:

Accepted Answer

A)   a set of conditions which are held to be true.
B)   an action taken to change economic conditions.
C)   a formal explanation of the relationship between economic variables.
D)   the statistical techniques used to determine the relationship between economic variables.

Question 13

The opportunity cost of a purchase or decision is measured by what is given up to make the purchase or decision.

Accepted Answer

A) True 
 B)False

Question 14

An economic theory:

Accepted Answer

A)   provides a formal explanation of the relationship between economic variables.
B)   is an action taken to change an economic condition.
C)   usually requires no assumptions to be made.
D)   cannot be tested using data.

Question 15

The cost of a purchase or decision measured by what is given up to make the purchase or carry out the decision is its:

Accepted Answer

A)   sunk cost.
B)   hidden cost.
C)   overhead cost.
D)   opportunity cost.

Question 16

The factor of production that organizes economic activity and bears the risk of success or failure in a business venture is:

Accepted Answer

A)   labor.
B)   capital.
C)   entrepreneurship.
D)   all of the above.

Question 17

Which of the following statements is FALSE?

Accepted Answer

A)   A graph is a picture illustrating the relationship between variables.
B)   Two variables that are inversely related are represented by a downward-sloping line on a graph.
C)   If two points on a graph are $10 and 20 items, and $20 and 10 items, the relationship being graphed is direct.
D)   One problem with graphs is that the appearance of the relationship between two variables can be altered by the choice of numbers on a graph's axes.

Question 18

If an economy can gain more of good A without giving up some of good B, the economy is operating on its production possibilities curve for goods A and B.

Accepted Answer

A) True 
 B)False

Question 19

An economist developing a production possibilities model of an economy operating at peak capacity at a specific point in time would assume:

Accepted Answer

A)   resources are fully employed.
B)   production technology is held constant.
C)   the number of available resources is held constant.
D)   all of the above.

Question 20

An economy experiencing growth can be represented by a shift of the economy's production possibilities curve to the right.

Accepted Answer

A) True 
 B)False

Exam 1: Introduction to Economics

An economist developing a production possibilities model of an economy operating at peak capacity at a specific point in time would assume:

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Which of the following statements is FALSE?

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The opportunity cost of a purchase or decision is measured by what is given up to make the purchase or decision.

Correct AnswerverifiedShow Answer

Income received for labor is called ____________; income received by owners of land resources is called _____________; income received by owners of capital is called ____________; and income received by persons engaged in entrepreneurial activity is called ___________.

Correct Answerverifiedwages; ren...View AnswerShow Answer

What is efficiency, and why does scarcity make efficiency an important goal for an economy?

Correct AnswerverifiedEfficiency occurs when an economy is abl...View AnswerShow Answer

The factor of production that organizes economic activity and bears the risk of success or failure in a business venture is:

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When classifying factors of production, capital refers to:

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An economy experiencing growth can be represented by a shift of the economy's production possibilities curve to the right.

Correct AnswerverifiedShow Answer

An economic theory:

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Economics is about how people use:

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Economic theory is:

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A direct relationship means that two variables move in the opposite direction of each other.

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Which of the following steps in constructing a graph would result in a faulty graph?

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The cost of a purchase or decision measured by what is given up to make the purchase or carry out the decision is its:

Correct AnswerverifiedShow Answer

Which of the following is NOT a general rule for constructing a graph?

Correct AnswerverifiedShow Answer

When graphing an inverse relationship between two variables, the line on the graph will be:

Correct AnswerverifiedShow Answer

An increase in production costs at a Ford automobile plant, and an increase in the general level of prices in the U.S. economy are examples of:

Correct AnswerverifiedShow Answer

If the quantity of prerecorded CDs demanded is equal to 600 - 10 (price of the CD) , at a price of $16 each, the number of CDs demanded would be:

Correct AnswerverifiedShow Answer

If an economy can gain more of good A without giving up some of good B, the economy is operating on its production possibilities curve for goods A and B.

Correct AnswerverifiedShow Answer

The statement "inverse relationships graph as upward-sloping lines" is:

Correct AnswerverifiedShow Answer

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Income received for labor is called ______; income received by owners of land resources is called _; income received by owners of capital is called ; and income received by persons engaged in entrepreneurial activity is called _____.

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wages; ren...
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Efficiency occurs when an economy is abl...
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