1) Economics is the study of
A) how to invest in the stock market.
B) how society uses limited resources.
C) the role of money in markets.
D) how government officials decide which goods and services areproduced.
Answer:
2) Deciding how a society’s products are distributed among itscitizens answers the economic question of
A) who consumes the products produced.
B) what products will be produced.
C) where will the products be consumed.
D) how will the products be produced.
Answer:
3) If the vertical variable increases by 12 and the horizontalvariable increases by 4, the slope of the line is
A) 3.
B) 4.
C) 12.
D) 48.
Answer:
4) Suppose that your tuition to attend college is $16,000 per yearand you spend $6,000 per year on room and board. If you wereworking full time, you could earn $20,000 per year. What is youropportunity cost of attending college for one year?
A) $22,000
B) $26,000
C) $36,000
D) $42,000
Answer:
5) The principle of diminishing returns implies that as one inputincreases while the other inputs are held fixed, output
A) increases at an increasing rate.
B) increases at a decreasing rate.
C) decreases at a decreasing rate.
D) decreases at an increasing rate.
Answer:
Bracelets /hour Pendants /hour
Celia 10 2
Sondra 4 1
6) Consider two individuals, Celia and Sondra, who producebracelets and pendants. Table 3.1 shows how much of each good Celiaand Sondra can produce in one hour. Sondra’s opportunity cost ofone pendant is
A) 2 bracelets.
B) 4 bracelets.
C) 5 bracelets.
D) 10 bracelets.
Answer:
7) The Law of Demand can be explained as
A) a lot of people wanting the same thing.
B) the higher the price, the smaller the quantity demanded, ceterisparibus.
C) people are willing to make limited sacrifices to acquireproducts.
D) legal reasons people make purchases in the marketplace.
Answer:
8) Figure 4.3 illustrates the demand for tacos. Assume tacos are aninferior good. An increase in income would bring about a movementfrom
A) point b to point c.
B) point b to point a.
C) D1 to D0.
D) D1 to D2.
Answer:
9) The price of pens increases from $2 to $2.20. At the same time,the quantity of pens demanded decreases from 100 to 90. Demand forpens is:
A) perfectly inelastic.
B) inelastic.
C) unitary elastic.
D) elastic.
Answer:
10) Draw the demand curve for a good whose price elasticity ofdemand is equal to zero. Be sure to label both axes. Explain whatthe graph represents.
Answer:
11) Suppose the price of a box of pop tarts is $3. If Michael iswilling to pay $4 for that box of pop tarts, his consumer surplusis:
A) $0.
B) $1.
C) $2.
D) $3.
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