Quiz 1 In Tutorial Library
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TITLE: Quiz 1
UNIVERSITY / INSTITUTE: Purdue University
CLASS / COURSE: ECON 25100: Microeconomics
QUESTION DESCRIPTION:
Quiz 1 (Chapter 1)
1. When economists say that people act rationally in their self interest, they mean that individuals:
A. look for and pursue opportunities to increase their utility.
B. generally disregard the interests of others.
C. are mainly creatures of habit.
D. are usually impulsive and unpredictable.
2. 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:
A. people are greedy.
B. productive resources are limited.
C. human beings are inherently insecure.
D. people are irrational.
3. Even though local newspapers are very inexpensive, people rarely buy more than one of them each day. This fact:
A. is an example of irrational behavior.
B. implies that reading should be taught through phonics rather than the whole language method.
C. contradicts the economic perspective.
D. implies that, for most people, the marginal benefit of reading a second newspaper is less than the marginal cost.
4. A well-tested economic theory is often called:
A. an hypothesis.
B. a prototype.
C. a principle.
D. an anomaly.
5. Kelly works at an ice cream shop and observes that the number of people buying ice cream varies greatly from day to day. For a couple of weeks she has recorded the number of people at the shop each day, as well as the daily temperature. If Kelly is using the scientific method to better understand ice cream buying habits, her next step is to:
A. conclude definitively that people buy more ice cream when the temperature rises.
B. state her findings as a well-tested economic principle.
C. use the observed data to form an hypothesis about ice cream buying behavior.
D. throw out the data if it does not show a perfect relationship between buying habits and the other information she has collected.
6. Which of the following statements pertains to macroeconomics?
A. Because the minimum wage was raised, Mrs. Olsen decided to enter the labor force.
B. A decline in the price of soybeans caused farmer Wanek to plant more land in wheat.
C. National income grew by 2.7 percent last year.
D. The Pumpkin Center State Bank increased its interest rate on consumer loans by 1 percentage point.
7. Normative statements are concerned primarily with:
A. facts and theories.
B. what ought to be.
C. what is.
D. rational choice involving costs and benefits.
8. "Economics is concerned with how individuals, institutions, and society make optimal choices under conditions of scarcity." This statement is:
A. positive, but incorrect.
B. positive and correct.
C. normative, but incorrect.
D. normative and correct.
9. The economizing problem is:
A. the need to make choices because economic wants exceed economic means.
B. how to distribute resources equally amongst all members of society.
C. that people's means often exceed their wants.
D. that people do not know how to rationally allocate resources.
10. An increase in money income:
A. shifts the consumer's budget line to the right. 100%
B. shifts the consumer's budget line to the left.
C. increases the slope of the budget line.
D. has no effect on the budget line.
11. Suppose you have a money income of $10, all of which you spend on Coke and popcorn. In the above diagram, the prices of Coke and popcorn respectively are:
A. $.50 and $1.00.
B. $1.00 and $.50.
C. $1.00 and $2.00.
D. $.40 and $.50.
12. Assume the price of product Y (the quantity of which is on the vertical axis) is $15 and the price of product X (the quantity of which is on the horizontal axis) is $3. Also assume that money income is $60. The absolute value of the slope of the resulting budget line:
A. is 5.
B. is 1/5.
C. is 4.
D. is 20.
13. Refer to the above 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 equal to one slice of pizza?
A. graph A
B. graph B
C. graph C
D. graph D
14. Refer to the above 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?
A. graph A
B. graph B
C. graph C
D. graph D
15. The four factors of production are:
A. land, labor, capital, and money
B. land, labor, capital, and entrepreneurial ability
C. labor, capital, technology, and entrepreneurial ability
D. labor, capital, entrepreneurial ability, and money
16. Unemployment:
A. causes the production possibilities curve to shift outward.
B. can exist at any point on a production possibilities curve.
C. is illustrated by a point outside the production possibilities curve.
D. is illustrated by a point inside the production possibilities curve.
17. Answer the question on the basis of the data given in the following production possibilities table:
Refer to the above table. As compared to production alternative D, the choice of alternative C would:
A. tend to generate a more rapid growth rate.
B. be unattainable.
C. entail unemployment.
D. tend to generate a slower growth rate.
18. When an economy is operating under conditions of full employment, the production of more of commodity A will mean the production of less of commodity B because:
A. of the law of increasing opportunity costs.
B. economic wants are insatiable.
C. resources are limited.
D. resources are specialized and only imperfectly substitutable.
19. Refer to the above production possibilities curve. At the onset of the Second World War the Soviet Union was already at full employment. Its economic adjustment from peacetime to wartime can best be described by the movement from point:
A. c to point b.
B. b to point c.
C. a to point b.
D. c to point d.
20. Refer to the above diagram. If society is currently producing 9 units of bicycles and 4 units of computers and it now decides to increase computer output to 6, the cost:
A. will be 4 units of bicycles.
B. will be 2 units of bicycles.
C. will be zero because unemployed resources are available.
D. of doing so cannot be determined from the information given.
21. The fact that the slope of the production possibilities curve becomes steeper as we move down along the curve indicates that:
A. the principle of increasing opportunity costs is relevant.
B. society's resources are limited.
C. the opportunity cost of producing each product is constant.
D. resources are perfectly shiftable between alternative uses.
22. Refer to the above diagram. Which one of the following would shift the production possibilities curve from PP1 to PP2?
A. worsening of the AIDS epidemic
B. immigration of skilled workers into the economy
C. an increase in consumer prices
D. a reduction in hourly wages
23. Suppose that Scoobania, which has full employment, can obtain 1 unit of capital goods by sacrificing 2 units of consumer goods domestically, but can obtain 1 unit of capital goods from another country by trading 1 unit of consumer goods for it. This reality illustrates:
A. a rightward (outward) shift of the production possibilities curve.
B. increasing opportunity costs.
C. achieving points beyond the production possibilities curve through international specialization and trade.
D. productive efficiency.
24. (Consider This) An exception to the advice "go to college, stay in college, and earn a degree" occurs when:
A. tuition expenses are high and rising.
B. the opportunity cost of attending college is extraordinarily high.
C. the price of textbooks is high and rising.
D. the economy is growing rapidly and jobs are plentiful.
25. (Consider This) Refer to the above diagram. The direct economic impact of the destruction and loss of lives caused by the terrorist attacks of September 11, 2001 is illustrated by the:
A. shift of the production possibilities curve from CD to AB.
B. shift of the production possibilities curve from AB to CD.
C. move from x to y on production possibilities curve AB.
D. move from y to x on production possibilities curve AB.
26. (Consider This) Refer to the above diagram. The U.S. response to the events of September 11, 2001, is illustrated by the:
A. shift of the production possibilities curve from CD to AB.
B. shift of the production possibilities curve from AB to CD.
C. move from x to y on production possibilities curve AB.
D. move from y to x on production possibilities curve AB.
27. Refer to the above diagram. Which line(s) show(s) a negative relationship between x and y?
A. A only.
B. both A and D.
C. A, B, and D.
D. both C and E.
28. Answer the question on the basis of the following information. Assume that if the interest rate that businesses must pay to borrow funds were 20 percent, it would be unprofitable for businesses to invest in new machinery and equipment, so investment would be zero. But if the interest rate were 16 percent, businesses would find it profitable to invest $10 billion. If the interest rate were 12 percent, $20 billion would be invested. Assume that total investment continues to increase by $10 billion for each successive 4 percentage point decline in the interest rate.
Refer to the above information. Using i and I to indicate the interest rate and investment (in billions of dollars) respectively, which of the following is the correct tabular presentation of the described relationship?
A. Option A
B. Option B
C. Option C
D. Option D
29. The slope of a straight line can be determined by:
A. comparing the absolute horizontal change to the absolute vertical change between two points on the line.
B. comparing the absolute vertical change to the absolute horizontal change between two points on the line.
C. taking the reciprocal of the vertical intercept.
D. comparing the percentage vertical change to the percentage horizontal change between two points on the line.
30. Refer to the above diagram. The slope of the line:
A. is - 1/4.
B. is + 1/4.
C. is .40.
D. cannot be determined from the information given.
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SUBJECTS / CATEGORIES:
1. Business Economics
2. Economics
3. Microeconomics
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