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Title: Introduction to Microeconomics problems, test bank
Description: Introduction to Microeconomics problems, test bank. This will help you to review your introduction to Microeconomics course exams.
Description: Introduction to Microeconomics problems, test bank. This will help you to review your introduction to Microeconomics course exams.
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Microeconomics, 11e (Parkin)
Chapter 1 What Is Economics?
1 Definition of Economics
1) All economic questions are about
A) how to make money
...
C) how to cope with scarcity
...
Answer: C
Topic: Scarcity
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
2) All economic questions arise because we
A) want more than we can get
...
C) have an abundance of resources
...
Answer: A
Topic: Scarcity
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
3) Economics is best defined as the study of how people, businesses, governments, and societies
A) choose abundance over scarcity
...
C) use their infinite resources
...
Answer: B
Topic: Scarcity
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
4) Scarcity is a situation in which
A) people cannot satisfy all their wants
...
C) people can satisfy all their wants
...
Answer: A
Topic: Scarcity
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
1
Copyright © 2014 Pearson Education, Inc
...
B) the poor but not the rich
...
D) both the poor and the rich
...
B) a situation that exists during economic recessions but not during economic booms
...
D) an economic problem only for poor people
...
B) ability of society to consume all that it produces
...
D) ability of society to continually make technological breakthroughs and increase production
...
B) turmoil in the stock market
...
D) our wants exceeding our scarce resources
...
9) Scarcity exists because
A) society and people are greedy and wasteful
...
C) of the inefficient choices we make
...
Answer: B
Topic: Scarcity
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
10) Scarcity can be eliminated through
A) the use of market mechanisms
...
C) wise use of our resources
...
Answer: D
Topic: Scarcity
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
11) As an economic concept, scarcity applies to
A) both money and time
...
C) time but not money
...
Answer: A
Topic: Scarcity
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
12) In every economic system, choices must be made because resources are ________ and our wants are
________
...
13) The problem of ʺscarcityʺ applies
A) only in industrially developed countries because resources are scarce in these countries
...
C) only in economic systems that are just beginning to develop because specialized resources are scarce
...
Answer: D
Topic: Scarcity
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
14) Scarcity requires that people must
A) cooperate
...
C) trade
...
Answer: D
Topic: Scarcity
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
15) People must make choices because
A) most people enjoy shopping
...
C) there are many goods available
...
Answer: B
Topic: Scarcity
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
16) An incentive
A) could be a reward but could not be a penalty
...
C) could be either a reward or a penalty
...
Answer: C
Topic: Incentive
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
4
Copyright © 2014 Pearson Education, Inc
...
B) the marginal cost
...
D) an incentive
...
B) making choices from an unlimited supply of goods and services
...
D) controlling a budget for a household
...
B) arises from the fact that our wants exceed available resources
...
D) deals mainly with microeconomics
...
B) differences in needs
...
D) different economic systems
...
21) Economics is the study of
A) the distribution of surplus goods to those in need
...
C) the choices we make because of scarcity
...
Answer: C
Topic: Definition of Economics
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
22) The study of the choices made by individuals is part of the definition of
A) microeconomics
...
C) macroeconomics
...
Answer: A
Topic: Microeconomics and Macroeconomics
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
23) In part, microeconomics is concerned with
A) how a business firm decides upon the amount it produces and the price it sets
...
C) factors that explain changes in the unemployment rate over time
...
Answer: A
Topic: Microeconomics and Macroeconomics
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
24) The study of the decisions of individual units in the economy is known as
A) macroeconomics
...
C) the study of incentives
...
Answer: B
Topic: Microeconomics and Macroeconomics
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
6
Copyright © 2014 Pearson Education, Inc
...
B) negative economics
...
D) microeconomics
...
B) positive economics
...
D) normative economics
...
B) Comparing inflation rates across countries
...
D) How a tax rate increase will impact total production
...
29) Which of the following is an example of a microeconomic decision?
A) an individual deciding how to allocate the time he or she has for work and leisure
B) a small shoe factory deciding how much leather to purchase for the next quarterʹs production need
C) a multinational company deciding where to relocate its world headquarter
D) All of the above answers are correct
...
B) The reasons for a decline in average prices
...
D) The effect of the government budget deficit on inflation
...
B) savings by the household sector
...
S
...
D) the total employment within the U
...
economy
...
33) In part, microeconomics is concerned with the study of
A) unemployment and economic growth
...
C) the effect government regulation has on the price of a product
...
Answer: C
Topic: Microeconomics and Macroeconomics
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
34) The branch of economics that deals with the analysis of the whole economy is called
A) macroeconomics
...
C) microeconomics
...
Answer: A
Topic: Microeconomics and Macroeconomics
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
35) Macroeconomics is concerned with
A) individual consumers
...
C) economy‐wide variables
...
Answer: C
Topic: Microeconomics and Macroeconomics
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
36) Macroeconomics differs from microeconomics in that:
A) macroeconomics studies the decisions of individuals
...
C) macroeconomics studies the behavior of government while microeconomics looks at private
corporations
...
Answer: D
Topic: Microeconomics and Macroeconomics
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
9
Copyright © 2014 Pearson Education, Inc
...
B) microeconomics studies decisions of individual people and firms and macroeconomics studies the
entire national economy
...
D) microeconomics studies the effects of government taxes on the national unemployment rate
...
B) How federal government budget deficits affect interest rates
...
D) The cause of a decline in the price of peanut butter
...
41) Which of the following is a macroeconomic issue?
A) The purchasing decisions that an individual consumer makes
...
C) The hiring decisions that a business makes
...
Answer: B
Topic: Microeconomics and Macroeconomics
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
42) Macroeconomic topics include
A) total, nationwide employment
...
C) studying the determination of wages and production costs in the software industry
...
Answer: A
Topic: Microeconomics and Macroeconomics
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
43) The fact that wants cannot be fully satisfied with available resources reflects the definition of
A) the what tradeoff
...
C) the big tradeoff
...
Answer: B
Topic: Study Guide Question, Definition of Economics
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
44) Studying the effects choices have on the individual markets within the economy is part of
A) scarcity
...
C) macroeconomics
...
Answer: B
Topic: Study Guide Question, Macroeconomics
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
11
Copyright © 2014 Pearson Education, Inc
...
A) choices made by politicians
B) choices we make when we trade in markets
C) choices that we make as we cope with scarcity
D) choices made by households
Answer: C
Topic: MyEconLab Questions
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
46) Scarcity is a situation in which ________
...
A) the choices that individuals and businesses make
B) all aspects of scarcity
C) the global economy
D) the national economy
Answer: A
Topic: MyEconLab Questions
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
2 Two Big Economic Questions
1) When an economy produces more houses and fewer typewriters, it is answering the ________ part of
one of the two big economic questions
...
2) When firms in an economy start producing more computers and fewer televisions, they are answering
the ________ part of one of the two big economic questions
...
A) ʺwhatʺ
B) ʺwhyʺ
C) ʺwhenʺ
D) ʺscarcityʺ
Answer: C
Topic: What Goods and Services Are Produced?
Skill: Conceptual
Status: Modified 10th edition
AACSB: Reflective Thinking
4) When a farmer decides to raise hogs instead of cattle, the farmer is answering the ________ part of one
of the two big economic questions
...
A) ʺhowʺ
B) ʺwhatʺ
C) ʺdefenseʺ
D) ʺfor whomʺ
Answer: B
Topic: What Goods and Services Are Produced?
Skill: Conceptual
Status: Modified 10th edition
AACSB: Reflective Thinking
13
Copyright © 2014 Pearson Education, Inc
...
A) ʺhowʺ
B) ʺscarcityʺ
C) ʺwhatʺ
D) ʺfor whomʺ
Answer: C
Topic: What Goods and Services Are Produced?
Skill: Conceptual
Status: Modified 10th edition
AACSB: Reflective Thinking
7) U
...
producers decide to produce more compact cars and fewer SUVs as the price of gasoline rises
...
A) ʺwhatʺ
B) ʺhowʺ
C) ʺwhenʺ
D) ʺhow manyʺ
Answer: A
Topic: What Goods and Services Are Produced?
Skill: Conceptual
Status: Modified 10th edition
AACSB: Reflective Thinking
8) Which of the following statements is correct?
A) The United States produces more goods than services
...
C) The percentage of people producing goods in the United States has steadily increased over the last 60
years
...
Answer: B
Topic: Trends in Production
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
9) In the U
...
economy, which of the following statements is true?
A) More goods are produced than services
...
C) Production is divided evenly between goods and services
...
Answer: B
Topic: Trends in Production
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
14
Copyright © 2014 Pearson Education, Inc
...
A) goods; food and electronic equipment
B) goods; education and entertainment
C) services; trade and health care
D) services; textbooks and computers
Answer: C
Topic: Trends in Production
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
11) When China builds a dam using few machines and a great deal of labor, it is answering the ________
part of one of the two big economic questions
...
A) ʺwhatʺ
B) ʺhowʺ
C) ʺfor whomʺ
D) ʺwhereʺ
Answer: B
Topic: How Are Goods and Services Produced?
Skill: Conceptual
Status: Modified 10th edition
AACSB: Reflective Thinking
13) When a California farmer decides to harvest lettuce using machines instead of by migrant workers,
the farmer is answering the ________ part of one of the two big economic questions
...
14) An art museum decides to offer tours by having visitors listen to cassette tapes rather than have tour
guides
...
A) ʺscarcityʺ
B) ʺwhatʺ
C) ʺwhyʺ
D) ʺhowʺ
Answer: D
Topic: How Are Goods and Services Produced?
Skill: Conceptual
Status: Modified 10th edition
AACSB: Reflective Thinking
15) The fact that people with higher incomes get to consume more goods and services addresses the
________ part of one of the two big economic questions
...
Land
II
...
Capital
IV
...
18) Which of the following is correct? Factors of production are
A) land, labor, the price system, and capital
...
C) the fundamental source of abundance
...
Answer: B
Topic: Factors of Production
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
19) Factors of production include
A) the economic system
...
C) labor and capital (not land, which is fixed)
...
Answer: B
Topic: Factors of Production
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
20) Factors of production include all of the following EXCEPT
A) machines made in past years
...
C) entrepreneurship
...
Answer: B
Topic: Factors of Production
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
21) Factors of production are grouped into four categories:
A) land, labor, capital, entrepreneurship
...
C) land, capital, money, entrepreneurship
...
Answer: A
Topic: Factors of Production
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
17
Copyright © 2014 Pearson Education, Inc
...
A) capital; rent
B) entrepreneurship; wages
C) land; profit
D) entrepreneurship; profit
Answer: D
Topic: Factors of Production
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
18
Copyright © 2014 Pearson Education, Inc
...
B) The knowledge and skills that people obtain from education and use in production of goods and
services
...
D) Instruments, machines, and buildings used in production
...
B) land, mineral resources, and natureʹs other bounties
...
D) land used for agricultural and urban purposes
...
30) A natural resource, such as fishing territories, is considered an example of
A) both land and labor
...
C) land only
...
Answer: C
Topic: Land
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
31) The ʺgifts of natureʺ are included as part of which factor of production?
A) labor
B) land
C) capital
D) entrepreneurship
Answer: B
Topic: Land
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
32) Copper falls into which factor of production category?
A) land
B) labor
C) capital
D) entrepreneurship
Answer: A
Topic: Land
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
33) Overtime worked by a JCPenney associate is considered ________ and earns ________
...
34) The term human capital refers to
A) labor resources used to make capital equipment
...
C) peopleʹs knowledge and skill
...
Answer: C
Topic: Human Capital
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
35) Human capital is
A) all capital owned by individuals, but not by corporations or governments
...
C) machinery that meets or exceeds federal safety standards for use by humans
...
Answer: D
Topic: Human Capital
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
36) Joy is training to become a chef
...
A) human capital
B) physical capital
C) entrepreneurship
D) None of the above answers are correct
...
38) Samantha goes to college to become an engineer
...
B) investment in human capital
...
D) increase in labor
...
B) buildings and equipment
...
D) consumer goods
...
B) venture capital
...
D) productive capital
...
B) capital
...
D) land
...
42) Entrepreneurs do all of the following EXCEPT
A) organize labor, land, and capital
...
C) bear risk from business decisions
...
Answer: D
Topic: Entrepreneurship
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
43) Entrepreneurs directly do all of the following EXCEPT
A) create new ideas about what and how to produce
...
C) face risks that arise from making business decisions
...
Answer: D
Topic: Entrepreneurship
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
44) Differences in income are most directly related to which of the following economic question?
A) What goods and services are produced?
B) In what quantities are various goods and services produced?
C) How are goods and services produced?
D) Who consumes the goods and services that are produced?
Answer: D
Topic: For Whom Are Goods and Services Produced?
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
45) The fact that some people can afford to live in beautiful homes while others are homeless, is most
directly an example of an economy facing the ________ part of one of the two big economic questions
...
46) The fact that a rock star earns $5 million a year while a teacher earns $25,000 annually is most directly
an example of an economy answering the ________ part of one of the two big economic questions
...
What does this economist
mean?
A) Higher taxes on gas would benefit society as a whole
...
C) Higher taxes on gas would benefit everyone
...
Answer: A
Topic: Social Interest
Skill: Conceptual
Status: Modified 10th edition
AACSB: Reflective Thinking
48) An outcome is considered efficient if
A) it is not possible to make someone better off without making anyone else worse off
...
C) it results in fair shares for everyone involved
...
Answer: A
Topic: Self‐Interest and Social Interest
Skill: Definition
Status: New
AACSB: Reflective Thinking
49) Suppose Company Aʹs profits increase by $10 million and nobody is made worse off
...
This situation
A) is definitely efficient
...
C) is definitely not in the social interest
...
Answer: A
Topic: Self‐Interest and Social Interest
Skill: Conceptual
Status: New
AACSB: Analytical Skills
24
Copyright © 2014 Pearson Education, Inc
...
B) a shift towards more market capitalism
...
D) following the teachings of Adam Smith
...
B) market capitalism
...
D) supported by economists as the best system available
...
B) politicians are well‐equipped to regulate corporations and intervene in markets to improve market
outcomes
...
D) in a market transaction buyers can either get what they want for less than they would be willing to
pay or sellers can earn a profit, but both buyers and sellers canʹt gain simultaneously
...
This is an example of
A) a mixed economy
...
C) centrally planned socialism
...
Answer: A
Topic: At Issue: The Protest Against Market Capitalism
Skill: Conceptual
Status: New
AACSB: Analytical Skills
25
Copyright © 2014 Pearson Education, Inc
...
B) market capitalism is the best system available and any government intervention and regulation will
inevitably harm the social interest
...
D) centrally planned socialism and pure market capitalism are equally capable of promoting social
interest, but a mixed economy is an undesirable compromise between the two that will harm social
interest
...
B) tradeoffs allow us to avoid the problem of opportunity cost
...
D) None of the above answers is correct
...
B) the question ʺwhat
...
D) an opportunity cost
...
3) The term used to emphasize that making choices in the face of scarcity involves a cost is
A) substitution cost
...
C) utility cost
...
Answer: B
Topic: Opportunity Cost
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
4) The loss of the highest‐valued alternative defines the concept of
A) marginal benefit
...
C) entrepreneurship
...
Answer: D
Topic: Opportunity Cost
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
5) Opportunity cost means the
A) accounting cost minus the marginal cost
...
C) accounting cost minus the marginal benefit
...
Answer: B
Topic: Opportunity Cost
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
6) The opportunity cost of any action is
A) all the possible alternatives given up
...
C) the benefit from the action minus the cost of the action
...
Answer: B
Topic: Opportunity Cost
Skill: Recognition
Status: Modified 10th edition
AACSB: Reflective Thinking
27
Copyright © 2014 Pearson Education, Inc
...
B) the highest valued alternative you give up to get it
...
D) the amount of money you pay to get it
...
B) how much money is paid for something, taking inflation into account
...
D) all the alternatives that are given up to get something
...
The ʺhighest‐valued alternative given up to get somethingʺ is the opportunity cost
...
Wealthy economies donʹt experience opportunity costs
...
Scarcity creates opportunity costs
...
B) highest‐valued alternative given up
...
D) lowest‐valued alternative given up
...
11) You have the choice of going on vacation to Florida for one week, staying at work for the week, or
spending the week doing fix‐up projects around your house
...
B) working or doing fix‐up projects, depending on which you would have done otherwise
...
D) nothing
because you will enjoy the trip to Florida
...
You score 60 percent on your exam
...
What was the opportunity cost of your evening at the movies?
A) 10 percent off your grade
B) 60 percent
C) 70 percent
D) zero
Answer: A
Topic: Opportunity Cost
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
13) On Saturday morning, you rank your choices for activities in the following order: go to the library,
work out at the gym, have breakfast with friends, and sleep late
...
Your opportunity cost is
A) working out at the gym, having breakfast with friends, and sleeping late
...
C) zero because you do not have to pay money to use the library
...
Answer: B
Topic: Opportunity Cost
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
29
Copyright © 2014 Pearson Education, Inc
...
Both decide to see the same movie
...
B) both bear the same opportunity cost of seeing the movie because they are doing the same thing
...
D) the opportunity cost of seeing the movie is zero because the tickets were free
...
If you decide to go to Hawaii, the opportunity cost is
A) the value of working and skiing
...
C) working, because you would be giving up a weekʹs pay
...
Answer: B
Topic: Opportunity Cost
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
16) Today, Julie attended her 12:30 Economics class
...
She had other options; she could have worked or slept in
...
B) lunch she gave up
...
D) income, pleasure, and sleep she gave up
...
The opportunity cost of Joe
attending his morning class for one hour is
A) an hour of tennis given up
...
C) both the tennis given up and the sleep given up
...
Answer: B
Topic: Opportunity Cost
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
30
Copyright © 2014 Pearson Education, Inc
...
He ranked his alternatives, first go to a concert, second
go to a movie, third study for an economics exam, and fourth answer his e‐mail
...
While you are on vacation, you do not go
to work where you could have earned $750
...
B) $750
...
D) $1,250
Answer: C
Topic: Opportunity Cost
Skill: Conceptual
Status: Modified 10th edition
AACSB: Analytical Skills
20) The opportunity cost of attending college includes the cost of
A) the tuition but not the job at which you would otherwise have worked
...
C) the highest valued alternative to attending college plus the cost of tuition
...
Answer: C
Topic: Opportunity Cost
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
21) Misty has the option of purchasing one of three products: Brand A, Brand B, or Brand C
...
If she decides that Brand A meets her needs best, then the opportunity cost of this decision is
A) Brand B plus Brand C
...
C) Brand A
...
Answer: D
Topic: Opportunity Cost
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
31
Copyright © 2014 Pearson Education, Inc
...
B) Because David used all of his vacation time to paint his house, he was unable to visit the Caribbean last
year
...
D) By choosing to attend college, Jean was not able to continue working as an electrician; as a result, she
gave up more than $85,000 in earnings while she was in college
...
m
...
Suppose that Sam decides to attend the hockey match and thinks to herself that if she did not go to the
match she would go to the symphony
...
B) going to the symphony
...
D) three hours of time
...
00 a year
...
Of these two offers, you would have preferred the
job at Ernst and Young
...
25) Bill Bonecrusher graduates from college with a choice of playing professional football at $2 million a
year or coaching for $50,000 a year
...
His
opportunity cost of playing football at graduation was ________ and eight years later the opportunity cost
of making movies was ________
...
Your tuition cost
is $3,000 and books and supplies cost $1,300
...
B) $6,000
...
D) $3,300
...
B) not all individuals will make the most of lifeʹs opportunities because some will fail to achieve their
goals
...
D) any decision regarding the use of a resource involves a costly choice
...
28) When the government chooses to use resources to build a dam, these sources are no longer available
to build a highway
...
B) macroeconomics
...
D) a fallacy of composition
...
In deciding whether or not to
continue cleaning for another hour, she applies the economic principle of
A) scarcity
...
C) choosing at the margin
...
Answer: C
Topic: Choices at the Margin
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
30) Marginal benefit is the benefit
A) that your activity provides to someone else
...
C) that arises from the secondary effects of an activity
...
Answer: D
Topic: Marginal Benefit/Marginal Cost
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
31) A benefit from an increase in activity is called the
A) marginal benefit
...
C) total benefit
...
Answer: A
Topic: Marginal Benefit
Skill: Recognition
Status: Modified 10th edition
AACSB: Reflective Thinking
34
Copyright © 2014 Pearson Education, Inc
...
B) additional cost from one more unit of an activity
...
D) additional gain from one more unit of an activity minus the additional cost from one more unit of the
activity
...
B) the wages received for 5 days of work
...
D) None of the above answers is correct
...
The wage rate for each of the first forty hours will continue to
be the usual $15 per hour
...
00
C) $15
...
00
Answer: D
Topic: Marginal Benefit
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
35) A student is studying for an exam 2 hours a day and is debating whether to study an extra hour
...
B) is the benefit the student receives from studying all 3 hours
...
D) is greater than the studentʹs marginal cost
...
36) A student athlete is deciding whether to work out for an extra hour
...
B) is the benefit she receives from exercising the additional hour
...
D) depends on the cost of the workout
...
You want a higher grade and decide to study for an extra hour a day
...
Your marginal benefit is the
A) 5 point increase in your grade minus the opportunity cost to you of spending the hour studying
...
C) 5 point increase in your grade
...
Answer: C
Topic: Marginal Benefit
Skill: Conceptual
Status: Modified 10th edition
AACSB: Reflective Thinking
38) Marginal cost is the cost
A) that your activity imposes on someone else
...
C) of an activity that exceeds its benefit
...
Answer: B
Topic: Marginal Cost
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
39) A cost due to an increase in activity is called
A) an incentive loss
...
C) a negative marginal benefit
...
Answer: B
Topic: Marginal Cost
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
36
Copyright © 2014 Pearson Education, Inc
...
B) total cost of an activity
...
D) cost of all forgone alternatives
...
When Laura must decide whether to produce a few additional printers,
she is choosing at the margin when she compares
A) the total revenue from sales of printers to the total cost of producing all the printers
...
C) the extra revenue from selling a few additional printers to the average cost of producing the additional
printers
...
Answer: B
Topic: Marginal Analysis
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
42) A lawn service is deciding whether to add an additional employee to its summer crew
...
B) total amount paid to all previously hired workers
...
D) the additional revenue created by having an additional worker minus the cost of hiring the worker
...
B) the forgone alternativesʹ costs must be increased
...
D) the person must concentrate on the activityʹs total benefits
...
44) A store remains open from 8 a
...
to 4 p
...
each weekday
...
The ownerʹs marginal benefit
A) is the benefit the owner receives from staying open from 8 a
...
to 5 pm
...
C) must be greater than or equal to the ownerʹs marginal cost if the owner decides to stay open
...
m
...
Answer: C
Topic: Marginal Benefit/Marginal Cost
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
45) Which of the following creates an incentive to increase the amount of an activity?
A) an increase in the marginal cost of the activity and a decrease in the marginal benefit of the activity
B) a decrease in the marginal cost of the activity and an increase in the marginal benefit of the activity
C) constant marginal cost and constant marginal benefit of the activity
D) None of the above create an incentive to increase the amount of an activity
...
This policy on the part of the state constitutes
________, to make the ________ of the firm remaining in New York
...
There is an extra credit assignment that Jed can
complete that will raise his exam score by 20 percentage points
...
Jed will complete the assignment he values the
A) 20 percentage points more than the 10 hours of his time
...
C) 70 percentage points more than the 10 hours of his time
...
Answer: A
Topic: Incentives, Marginal Cost and Marginal Benefit
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
38
Copyright © 2014 Pearson Education, Inc
...
M
...
M
...
Suppose that Susan
decides to go to the movie but thinks that, if she hadnʹt, she would otherwise have talked with friends
...
B) studying
...
D) two hours of time
...
This choice illustrates the concept of
A) an incentive
...
C) opportunity cost
...
Answer: C
Topic: Study Guide Question, Opportunity Cost
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
50) When the government chooses to spend the tax dollars that it collects on homeland security, its choice
________
...
Answer: A
Topic: MyEconLab Questions
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
51) Making a choice at the margin means ________
...
52) Suppose that for the past two months, you have studied economics one hour a day
...
For the past two months, ________
...
Answer: C
Topic: MyEconLab Questions
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
4 Economics as Social Science and Policy Tool
1) In economics, positive statements are about
A) the way things ought to be
...
C) macroeconomics, not microeconomics
...
Answer: B
Topic: Positive and Normative
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
2) A positive statement is
A) about what ought to be
...
C) the result of a modelʹs normative assumptions
...
Answer: B
Topic: Positive and Normative
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
3) A positive statement is
A) about what ought to be
...
C) always true
...
Answer: B
Topic: Positive and Normative
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
40
Copyright © 2014 Pearson Education, Inc
...
They describe what ʺought to be
...
They describe what is believed about how the world appears
...
They can be tested as to their truthfulness
...
B) normative statements can be tested, whereas positive statements cannot
...
ʺ
D) normative statements never use the word ʺshould
...
B) are related only to microeconomics
...
D) cannot be tested against the facts
...
B) Unemployment is a more important problem than inflation
...
D) Unemployment and inflation are equally important problems
...
8) Which of the following is a positive statement?
A) The United States should fight inflation even if it raises unemployment
...
C) A 5 percent increase in income leads to a 3 percent increase in the consumption of orange juice
...
Answer: C
Topic: Positive and Normative
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
9) Which of the following is a positive statement?
A) People buy more of a good or service when its price falls
...
C) The government ought to provide health care to everyone
...
Answer: A
Topic: Positive and Normative
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
10) Which of the following is an example of a positive statement?
A) Government should not redistribute income
...
C) Households are the primary source of saving
...
Answer: C
Topic: Positive and Normative
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
11) Which of the following is an example of a positive statement?
A) We should cut back on our use of carbon‐based fuels such as coal and oil
...
C) Every American should have equal access to health care
...
Answer: B
Topic: Positive and Normative
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
42
Copyright © 2014 Pearson Education, Inc
...
B) My economics class should last for two terms because it is my favorite class
...
D) Given their negative impact on productivity, the government should eliminate labor unions
...
B) A minimum wage of $7
...
C) Both of these statements are positive
...
Answer: A
Topic: Positive and Normative
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
14) Which of the following is a positive statement?
A) The government must lower the price of a pizza so that more students can afford to buy it
...
C) My economics class should last for two terms because it is my favorite class
...
Answer: D
Topic: Positive and Normative
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
15) Which of the following is a positive statement?
A) Low rents decrease the amount of housing landlords make available for rent
...
C) Housing costs too much
...
Answer: A
Topic: Positive and Normative
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
43
Copyright © 2014 Pearson Education, Inc
...
B) making a positive statement
...
D) facing the standard of living tradeoff
...
B) Increased prison sentences are the best way to reduce the crime rate
...
D) Inflation is a more serious problem than is deflation
...
B) a positive statement
...
D) an ethical statement
...
B) a positive statement
...
D) a scientific statement
...
20) The statement ʺThe unemployment rate for teens is higher than that for adultsʺ is
A) a political statement
...
C) a normative statement
...
Answer: B
Topic: Positive and Normative
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
21) Which of the following is NOT a normative statement?
A) People buy more of a good or service when its price falls
...
C) The government ought to provide health care to everyone
...
Answer: A
Topic: Positive and Normative
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
22) A normative statement concerns
A) what is provable
...
C) what is incorrect
...
Answer: D
Topic: Positive and Normative
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
23) Normative economic statements
A) describe what ought to be
...
C) describe the process of economic policy‐making
...
Answer: A
Topic: Positive and Normative
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
45
Copyright © 2014 Pearson Education, Inc
...
B) is a normative statement
...
D) provides a basis for predicting which type of ice cream will exhibit the most sales
...
B) a normative statement
...
D) an assumption
...
B) normative statements
...
D) implications
...
B) quantities
...
D) what ought to be
...
28) A normative statement is
A) about what ought to be
...
C) always true
...
Answer: A
Topic: Positive and Normative
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
29) In economics, normative statements are about
A) the way things ought to be
...
C) marginal benefits, not marginal costs
...
Answer: A
Topic: Positive and Normative
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
30) Which of the following is a normative statement?
A) The price of candy bars is $1
...
B) Candy bars are more expensive than newspapers
...
D) Popcorn and candy are sold in movie theaters
...
B) Forty percent of the public believes that the unemployment rate is too high
...
D) None of the above are normative statements
...
32) Which of the following is a normative statement?
A) The United States has a comparative advantage compared to the European Union in the production of
wheat
...
C) Both these statements are normative
...
Answer: B
Topic: Positive and Normative
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
33) ʺGovernment should act to reduce poverty levels
...
B) This statement is a positive statement
...
D) This statement is an example of the post hoc fallacy
...
B) making a positive statement
...
D) not dealing with scarcity
...
B) positive statement
...
D) theoretical statement
...
36) Which of the following is a normative statement?
A) Studying more hours leads to an increase in your GPA
...
C) Taking extra vitamin C prevents catching a cold
...
Answer: D
Topic: Positive and Normative
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
37) Which of the following is a normative statement?
A) Low rents will restrict the supply of housing
...
C) Housing costs are rising
...
Answer: B
Topic: Positive and Normative
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
38) Which of the following is a normative statement?
A) Next yearʹs inflation rate will be under 4 percent
...
C) The governmentʹs cuts in welfare spending impose an unfair hardship on the poor
...
Answer: C
Topic: Positive and Normative
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
39) Economic models
A) are essentially different from those used in other sciences
...
C) simplify reality
...
Answer: C
Topic: Model Building
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
49
Copyright © 2014 Pearson Education, Inc
...
B) includes all those features of the world that can be described numerically
...
D) should not include more than two variables
...
B) a description of some aspect of the economic world that includes only those features of the world that
are needed for the purpose at hand
...
D) a collection of facts that describe the real world
...
B) about what is
...
D) one that is based on an economic experiment
...
B) The government should spend more on education
...
D) An increase in the price of pizza will lead fewer students to buy pizza
...
44) An economic model includes
A) only normative statements
...
C) all known details in order to increase its accuracy
...
Answer: D
Topic: Study Guide Question, Economic Model
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
45) The statement that ________ is a positive statement
...
This choice reflects the
A) fact that Bernanke faces scarcity
...
C) fact that Bernanke responds to incentives
D) use of capital
...
B) a microeconomic topic
...
D) the big tradeoff
...
3) When Ben Bernanke, Chairman of the Federal Reserve, addresses Congress regarding the United States
role in the world economy, he is discussing
A) a macroeconomic topic
...
C) scarcity
...
Answer: A
Topic: Microeconomics and Macroeconomics
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
4) Dell Computers decides to produce PCs and sell them directly over the Internet and via Best Buy
...
B) a microeconomic decision
...
D) scarcity
...
Samsung hires associates to market their HDTV sets to Best Buy
...
The Dallas Cowboys build a new football stadium
...
eBay fires 10 percent of its workforce
...
Ten million stocks were traded on the New York Stock Exchange in one day
...
Pennsylvania builds a new state park
...
6) Panasonic sends its HDTV salespeople to training sessions
...
B) scarcity
...
Answer: C
Topic: Human Capital
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
7) ʺWhen OPEC increases the supply of oil to the market, the price of gasoline falls
...
B) the failure of opportunity cost to determine prices
...
D) a macroeconomic statement
...
This
policy will result in an increase in the inflation rate
...
B) a normative statement
...
D) an economic model
...
ʺ This is an example of
A) a positive statement
...
C) opportunity costs
...
Answer: D
Topic: Positive and Normative
Skill: Conceptual
Status: Modified 10th edition
AACSB: Reflective Thinking
53
Copyright © 2014 Pearson Education, Inc
...
ʺ This is an
example of
A) a normative statement
...
C) a decision at the margin
...
Because peopleʹs wants are effectively infinite—it is always possible to imagine more good
things to want to have—wants will always exceed what can be produced with the available resources,
and so scarcity will always be present
...
Answer: A person faces scarcity whenever his or her wants exceed what he or she can obtain using his or
her resources
...
The same results hold true for a
society
...
Because of this fact, societies must make
choices about which (and whose) wants will be satisfied and which (and whose) wants will remain
unsatisfied
...
3) Why do economists say that even very rich people face scarcity?
Answer: A person faces scarcity whenever his or her wants exceed what he or she can obtain using his or
her resources
...
An older rich person, for
instance, might want to have all of his or her youthful energy, but medical science cannot (yet) provide
this service
...
But, such a want is impossible
...
However, he did not win every piece of art that he bid upon at auctions
...
Forbes was
very rich, he still passed on some art when the price got so high that he thought given his resources, the
price exceeded what he was willing to pay
...
Forbes wanted the art, but he was not willing to bid
higher in order to win it
...
Forbes faced scarcity
...
Answer: Scarcity exists when peopleʹs wants exceed their ability to satisfy the wants
...
Therefore, both rich
and poor experience scarcity
...
Poverty exists when availability is less
than people need
...
Topic: Scarcity
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Ethical Reasoning
6) Define economics and describe its branches of study
...
It has two branches, microeconomics and
macroeconomics
...
Macroeconomics is the
study of the aggregate (total) effects on the national economy and the global economy of the choices that
individuals, businesses, and governments make
...
7) What is the difference between microeconomics and macroeconomics?
Answer: Microeconomics studies the decisions of smaller economic actors, such as individual consumers
or individual firms, and how the government can affect these decisions, say through how it regulates an
industry
...
Macroeconomics also studies the aggregate effects of government policies, such
as the Federal Reserveʹs decisions to raise or lower interest rates
...
Answer: Essentially microeconomics studies individual units within the economy, such as the choices
made by individual consumers or individual firms
...
Microeconomics examines the factors that affect employment at an individual firm
...
Topic: Microeconomics and Macroeconomics
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Communication
9) Below is a studentʹs answer to the question ʺWhat is microeconomics?ʺ If you were the instructor, how
would you correct the studentʹs answer?
ʺMicroeconomics is the study of how government influences the choices made by individuals and
businesses and of the performance of the whole national economy
...
Microeconomics is the study of the choices that individuals and
businesses make, the way these choices interact in markets, and the influence of the government
...
Topic: Microeconomics and Macroeconomics
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Communication
10) Chinaʹs population is over 1
...
This fact means that China has much more human capital than the U
...
does
...
Answer: False
...
Thus, the population numbers in the
statement only tell us that China is likely to have more labor than the United States, but it does not
necessarily mean that it also has more human capital
...
11) Explain what entrepreneurship is and why it is considered a factor of production
...
Entrepreneurs organize the
other resources, land, labor, and capital
...
Topic: Entrepreneurship
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Communication
12) An analyst on a local news channel argues that the recent corporate scandals ʺdemonstrated very
clearly that self‐interest always contradicts social interest
...
Answer: You should disagree
...
But they donʹt prove that this is necessarily the case as we can find many real‐world
examples of how people guided by self‐interest promote societyʹs well‐being
...
And
countries such as the United States have proven to be more successful in promoting social interest than
were centrally planned, or communist, economies where peopleʹs self‐interest was suppressed and all
important economic decisions were made by government
...
Answer: A tradeoff occurs when one thing must be given up to get another
...
Topic: Tradeoffs
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Communication
14) What is opportunity cost?
Answer: Opportunity cost is the highest‐valued alternative given up when selecting an action
...
Topic: Opportunity Cost
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Communication
57
Copyright © 2014 Pearson Education, Inc
...
Therefore, the opportunity cost of attending class is the tennis and the movie she had to give up
...
Answer: Your friendʹs analysis is incorrect
...
Kikiʹs opportunity cost of studying for her exam is either
the tennis or the movie, whichever she would have done had she not studied
...
Your roommates applaud your decision
...
Is this roommateʹs comment correct?
Answer: Your first roommateʹs comment is incorrect
...
Hence the opportunity cost of fixing dinner at home is going out to
eat
...
Answer: Marginal cost is the opportunity cost of an increase in an activity
...
Topic: Marginal Benefit and Marginal Cost
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Communication
18) In New State, the bottling law requires that people get a refund of five cents when they return an
empty bottle or can
...
Answer: Policy makers know that people making choices respond to incentives
...
Thus policy makers have taken advantage of peopleʹs
decision making by increasing the marginal benefit of returning bottles in order to reduce litter and clean
the environment
...
19) If the government raises the tax on cigarettes, what is the effect on peopleʹs incentives and choices?
Answer: The government raises the tax on cigarettes to discourage smoking
...
The opportunity cost of smoking increases, which gives people incentive to cut their
consumption of cigarettes
...
Positive
statements can be tested to determine if they are correct or not, while normative statements use value
judgments and so cannot be tested
...
But they might disagree on the normative conclusion of whether the government should pursue
this policy
...
ʺ
Topic: Positive and Normative
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Communication
21) ʺThe difference between positive and normative statements is that a positive statement is always true
while a normative statement might or might not be true
...
Answer: False
...
A positive statement can be tested
against the facts and may be proved to be right or wrong, whereas a normative statement depends on
values and cannot be tested
...
22) Two economists can agree that raising the minimum wage creates unemployment yet one might
argue that raising the minimum wage is a good policy and the other that it is a bad policy
...
Answer: Positive statements are statements that describe how the world is
...
The statement
that ʺRaising the minimum wage creates unemploymentʺ is a positive statement and, on the basis of
repeated testing, most economists agree that it is a correct positive statement
...
Normative statements depend on
peopleʹs values and cannot be tested
...
Another economist might strongly differ because the second economist thinks that
the harm inflicted on people who lose their jobs more than outweighs any good from some workers being
paid more
...
Topic: Positive and Normative
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Ethical Reasoning
23) Explain whether the statement, ʺThere is life on Mars,ʺ is a normative or positive statement
...
Instead,
it is a statement that tries to describe ʺwhat isʺ and hence is testable
...
While it is difficult (!) at
present to actually carry out the test, nonetheless the statement is testable and hence is a positive
statement
...
Answer: The statement is a positive statement because it does not depend on a value judgment
...
Now, it is indeed the case that
Hillary Clinton was not elected president in 2012, so when we test the statement we discover that it is
incorrect
...
Thus, the statement ʺHillary Clinton was elected President in 2012ʺ is a positive, albeit
incorrect, statement
...
25) What is a normative statement? Give an example
...
It is a value judgment or opinion
and so cannot be proven true or false
...
ʺ
Topic: Positive and Normative
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Communication
26) Explain whether the statement ʺThe government should increase tariffs on Japanese cars to protect the
American car industry from competition,ʺ is a normative or positive statement
...
The statement is a normative statement because it depends on a
value judgment, namely that the government should protect the American car industry from competition
...
5
...
Your GPA now rises to 3
...
What
is your marginal benefit from studying for one additional night a week?
Answer: Marginal benefit is the benefit that arises from an increase in an activity
...
3 increase in your grade
...
8 grade because you already have the benefit from studying
for four nights a week and should not count this benefit as resulting from the decision you are now
making
...
1
...
His GPA now rises to 3
...
Had Jerry not decided to study an
extra night, he would have spent this night with his friends
...
Jerryʹs marginal benefit
is the 0
...
Marginal cost is the opportunity cost of an increase in an activity
...
Jerry decides to stud an extra night
because he values the marginal benefit from it (the 0
...
Topic: Marginal Benefit and Marginal Cost
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
61
Copyright © 2014 Pearson Education, Inc
...
Answer: TRUE
Topic: Scarcity
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
2) Scarcity affects only those who are in need
...
Answer: FALSE
Topic: Microeconomics
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
4) Macroeconomics is the study of aggregate variables such as national production and unemployment
...
Answer: FALSE
Topic: Human Capital
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
6) Most income in the United States is earned by business owners as profit
...
Answer: TRUE
Topic: Production Trends
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
62
Copyright © 2014 Pearson Education, Inc
...
00 movie ticket rather than two paperback books, the opportunity cost of going to
the movie is the two paperback books I did not buy
...
The cost of tuition and textbooks is $1,400 and housing,
board, and entertainment will cost you $500
...
Also, if you didnʹt go to school youʹd
work full time and could earn $8,000
...
a) What will the summer school cost you in terms of money explicitly paid?
b) What are the opportunity costs of going to summer school that you donʹt pay explicitly? Explain
...
Answer:
a) You explicitly pay the cost of tuition and textbooks ($1,400) and the cost of housing ($500), so your
total explicit costs are $1,900
...
You forego a fulltime job, at
which you would earn $8,000, in exchange for a part‐time job, where you earn $3,000, which means you
give up $5,000
...
c) First, your opportunity cost includes the cost that you pay explicitly ($1,900), which you have to pay
only if you go to school
...
Second, as explained in the previous part, you are also giving up
$5,000, although not paying this money explicitly
...
Topic: Opportunity Cost
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
63
Copyright © 2014 Pearson Education, Inc
...
The cost of tuition and textbooks is
$1,700 and housing and other expenses will cost her $600
...
Also, if Jane does not go
to summer school she could work fulltime
...
However, if she goes to summer
school, sheʹll have to spend 40 hours a week attending classes and studying
...
c) What is Janeʹs total opportunity cost of going to school this summer? Explain your answer
...
What
is Janeʹs marginal benefit of going to summer school?
e) Suppose Jane decides to go to school in the summer
...
Answer:
a) Jane explicitly pays the cost of tuition and textbooks ($1,700) and the cost of housing ($600), so her
total explicit costs are $2,300
...
In
this case she forgoes 40 hours per week of her free time, which she values more highly then the income
from the best job she could find
...
So for the eight
weeks, her free time has a value of $750 × 8 = $6,000
...
c) Janeʹs total opportunity cost includes the cost that she pays explicitly, $2,300, which she has to pay
only if she goes to school
...
Thus, her full opportunity cost of going to school is $2,300 + $6,000 = $8,300
...
For
instance, if the summer school allows her to graduate one semester earlier, she can start to work and earn
income earlier
...
e) Jane decides to go to school in the summer if her marginal benefit from this decision, the value of
extra income and work experience that she gets if she graduates earlier, is greater than the marginal cost
of her summer school, $8,300
...
3) Suppose Canon Inc
...
The company has already
invested 38 billion yen when the marketing department suddenly finds out that the introduction of a
similar camera by Sony will reduce Canonʹs expected additional sales to 30 billion yen
...
Canon hires you as an economic consultant
...
b) Canonʹs marginal benefit is the benefit that arises from the new product, the additional revenue from
sales, which in the changed situation is expected to be 30 billion yen
...
According to this principle, the amount of money
already spent is irrelevant to the decision you are making now
...
Now, if Canon goes
ahead, finishes the project and introduces the new camera, it will cost them additional 7 billion yen, but
they will gain additional sales of 30 billion yen
...
Notice also that if Canon abandons the project, there will be no
additional money costs, but the opportunity cost will be the additional sales (30 million yen) that the
company is potentially losing
...
Topic: Marginal Analysis
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
65
Copyright © 2014 Pearson Education, Inc
...
The universityʹs
Performing Arts Center is vacant on that day, so the association wants to rent it
...
You know that no one else wants to rent
the Center on that day and you think that the price that the manager charges is too high
...
Answer:
a) The universityʹs marginal cost is $170
...
The costs of building the Center,
insurance, and regular maintenance costs are not extra costs incurred because you rent the Center
...
Therefore these costs are not marginal costs of renting the
center to you
...
c) You should start negotiating from $171
...
If the manager is still not convinced, tell the manager that, since no one else wants to rent the
Center on that day, declining your offer is not cost free
...
In practice, of course, there are transaction costs, such as
the time spent by both parties to negotiate and sign the agreement, and accepting your offer will cost the
manager some extra time and organizational effort
...
On the other hand, you might want to support your university
...
Topic: Marginal Analysis
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
10 Appendix: Graphing Data
1) The horizontal axis in a graph
A) measures time in a scatter diagram
...
C) is named the y‐axis
...
Answer: D
Topic: Graphing Data
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
66
Copyright © 2014 Pearson Education, Inc
...
B) is named the x‐axis
...
D) has no origin
...
B) scalar
...
D) y‐axis
...
B) scalar
...
D) y‐axis
...
B) values increase from right to left
...
D) Both answers A and C are correct
...
6) In the above figure, the x‐coordinate of point b is
A) 1
...
C) 3
...
Answer: C
Topic: Graphing Data
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
7) In the above figure, the y‐coordinate of point b is
A) 1
...
C) 3
...
Answer: D
Topic: Graphing Data
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
68
Copyright © 2014 Pearson Education, Inc
...
B) $1000
...
D) $8000
...
9) In the figure above, the value on the x‐axis increases as we move from
A) point G to point A
...
C) point F to point A
...
Answer: A
Topic: Graphing Data
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
10) In the figure above, the value on the y‐axis decreases as we move from
A) point G to point A
...
C) point F to point A
...
Answer: D
Topic: Graphing Data
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
11) In the figure above, point B is
A) on the x‐axis
...
C) at the origin
...
Answer: A
Topic: Graphing Data
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
70
Copyright © 2014 Pearson Education, Inc
...
Answer: B
Topic: Graphing Data
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
13) Using the above figure, which of the following is true?
A) Axis 1 is typically called the y‐axis
...
C) Axis 2 is typically called the x‐axis
...
Answer: D
Topic: Graphing Data
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
71
Copyright © 2014 Pearson Education, Inc
...
B) change in one variable over time
...
D) evolution of a variable
...
B) in resolving a dispute over two normative assertions
...
D) All of the above are correct
...
This
observation indicates that
A) there must be false causality between interest rates and housing prices
...
C) a scatter diagram between interest rates and housing prices will show a negative relationship
...
Answer: C
Topic: Scatter Diagrams
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
72
Copyright © 2014 Pearson Education, Inc
...
In 2007
A) consumption was equal to $25,000 and income was equal to $28,000
...
C) consumption was equal to $25,000 and income was equal to $25,000
...
Answer: A
Topic: Scatter Diagrams
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
73
Copyright © 2014 Pearson Education, Inc
...
The graph shows the
variables are
A) strongly positively related
...
C) not related
...
Answer: C
Topic: Scatter Diagrams
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
74
Copyright © 2014 Pearson Education, Inc
...
A) 7
...
0 percent
B) 3
...
5 percent
C) 5
...
0 percent
D) 6
...
0 percent
Answer: C
Topic: Scatter Diagrams
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
75
Copyright © 2014 Pearson Education, Inc
...
B) that as household income increases the average household expenditure on automobiles decreases
...
D) All of the above are possible
...
21) In the above figure, the axis breaks are used
A) to create a misleading graph
...
C) to indicate that there are not enough data to be included in the graph
...
Answer: B
Topic: Breaks in the Axes
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
77
Copyright © 2014 Pearson Education, Inc
...
B) shows that there is no relationship between inflation and unemployment
...
D) implies that for the years covered in the figure, the inflation rate was always greater than 1 percent
...
B) means that changes in the variable measured along the y‐axis must cause changes in the variable
measured along the x‐axis
...
D) does NOT mean that a change in the variable measured along the x‐axis must cause a change in the
variable measured along the y‐axis
...
24) You notice that when the inflation rate increases, the interest rate tends to increase
...
B) higher inflation rates must cause a higher interest rate
...
D) the variables have an inverse relationship
...
11 Appendix: Graphs Used in Economic Models
1) If two variables are positively related, then
A) they move in opposite directions
...
C) they move in the same direction
...
Answer: C
Topic: Variables That Move in the Same Direction
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
2) If two variables both increase at the same time or decrease at the same time, they are
A) unrelated to each other
...
C) negatively related
...
Answer: B
Topic: Variables That Move in the Same Direction
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
3) If there is a direct relationship between two variables,
A) the graph of the relationship will be upward‐sloping
...
C) the slope of the line (or the slope of a tangent line to the curve) will be negative
...
Answer: A
Topic: Variables That Move in the Same Direction
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
4) The variable measured on the y‐axis increases whenever the variable measured on the x‐axis increases
...
B) have a slope of zero
...
D) be none of the above
...
5) A positive relationship exists between two variables if
A) one variable has ʺpositivelyʺ no effect on the other variable
...
C) a reduction in one variable is associated with a decrease in the other variable
...
Answer: C
Topic: Variables That Move in the Same Direction
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
6) If the slope of a line that graphs the relationship between variable x and variable y is positive, then we
know that
A) when the value of variable x increases, then the value of variable y decreases
...
C) the two variables are unrelated
...
Answer: B
Topic: Variables That Move in the Same Direction
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
7) For the Jones household it has been estimated that for every ten degrees increase in the outdoor
temperature the consumption of ice tea increases by 5 glasses
...
8) In the above figure, which curve shows a positive relationship between x and y?
A) Only curve A
...
C) Only curve C
...
Answer: D
Topic: Variables That Move in the Same Direction
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
9) In the above figure, which curve shows a negative relationship between x and y?
A) Only curve A
...
C) Only curve C
...
Answer: D
Topic: Variables That Move in the Same Direction
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
82
Copyright © 2014 Pearson Education, Inc
...
If the price of vacations to Mexico were
placed on the horizontal axis, and the price of vacations to California on the vertical axis, the relationship
would be
A) negative relationship, also called a direct relationship
...
C) positive relationship, also called a direct relationship
...
Answer: C
Topic: Variables That Move in the Same Direction
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
11) The figure above shows ________ relationship between the two variables
...
12) ʺAs you devote more hours to studying, your GPA increases
...
B) a direct relationship
...
D) Both answers A and B are correct
...
ʺ A graph displaying this relationship would show
A) an inverse relationship
...
C) a cross‐section graph
...
Answer: B
Topic: Variables That Move in the Same Direction
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
14) ʺIf you hire 1 worker, the worker can produce 20 pizzas a day
...
If you hire a 3rd worker, that worker can produce 2 more pizzas a day
...
B) an upward‐sloping curve that becomes less steep
...
D) a negatively‐sloped curve that becomes less steep
...
If you study for another 3
hours your score increases by 10 points
...
A graph displaying this relationship between the number of hours studied and your total
exam score would show
A) a positive linear relationship
...
C) a negative linear relationship
...
Answer: B
Topic: Variables That Move in the Same Direction
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
84
Copyright © 2014 Pearson Education, Inc
...
Total costs increase to $1100 when you
produce 15 bikes
...
A graph showing the
relationship between total costs and the number of bikes produced would be
A) a negatively‐sloped line that becomes steeper
...
C) a negatively‐sloped line that becomes flatter
...
Answer: B
Topic: Variables That Move in the Same Direction
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
Total household income Total consumption
(dollars)
(dollars)
30,000
27,000
40,000
35,000
50,000
38,000
17) The data in the table above shows the relationship between the Jonesesʹ total consumption and total
household income
...
B) independently of their total household income
...
D) negatively with their income
...
x
0
2
4
6
8
10
y
0
6
12
18
24
30
18) In the above table, when x increases from 4 units to 6 units, y changes by ________ units
...
B) inversely related
...
D) not related
...
x
0
1
2
3
4
5
y
2
5
8
11
14
17
20) Given the information in the above table, the relationship between x and y is
A) positive, and the curve becomes flatter as x increases
...
C) positive and linear
...
Answer: C
Topic: Variables That Move in the Same Direction
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
21) In the above figure, the relationship between x and y is
A) positive, and the curve becomes flatter as x increases
...
C) positive and linear
...
Answer: C
Topic: Variables That Move in the Same Direction
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
87
Copyright © 2014 Pearson Education, Inc
...
The figure illustrates that the Jonesesʹ total consumption varies
A) directly with their total household income
...
C) inversely with their total household income
...
Answer: A
Topic: Variables That Move in the Same Direction
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
88
Copyright © 2014 Pearson Education, Inc
...
B) a positive linear relationship
...
D) a positive becoming steeper relationship
...
The two variables are
A) definitely related through a third variable
...
C) positively related
...
Answer: B
Topic: Variables That Move in Opposite Directions
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
25) If variable x always increases when variable y decreases, x and y are said to be
A) positively related
...
C) unrelated
...
Answer: B
Topic: Variables That Move in Opposite Directions
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
89
Copyright © 2014 Pearson Education, Inc
...
B) a decrease in the value of variable y
...
D) variable y reaching its maximum value
...
B) will be downward‐sloping
...
D) will be upward‐sloping
...
B) an increase in the variable measured along the x‐axis is associated with an increase in the variable
measured along the y‐axis
...
D) the variable measured along the x‐axis and the variable measured along the y‐axis move in the same
direction
...
The curve showing this
relationship
A) might be horizontal
...
C) has a negative slope
...
Answer: C
Topic: Variables That Move in Opposite Directions
Skill: Recognition
Status: Modified 10th edition
AACSB: Analytical Skills
90
Copyright © 2014 Pearson Education, Inc
...
ʺ A graph showing this
relationship would have
A) a negative slope
...
C) a direct relationship
...
Answer: A
Topic: Variables That Move in Opposite Directions
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
31) A graph shows that as fees to use ATM machines increase, people use them less frequently
...
B) a negative relationship
...
D) Both answers A and B are correct
...
A graph
showing this relationship would have a curve
A) that is a horizontal line
...
C) showing a positive relationship
...
Answer: D
Topic: Variables That Move in Opposite Directions
Skill: Conceptual
Status: Modified 10th edition
AACSB: Analytical Skills
33) As a firm produces more and more CDs, the average cost of producing each CD falls
...
B) would be positively sloped
...
D) would be negatively sloped
...
34) Suppose that we find that student grades and time spent at parties move in opposite directions
...
B) upward and may be linear or nonlinear
...
D) downward and may be linear or nonlinear
...
Given this information, we say that an automobileʹs speed and mpg have
A) a direct relationship
...
C) a linear relationship
...
Answer: B
Topic: Variables That Move in Opposite Directions
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
36) If the quantity of wood purchased decreases when the price of wood rises, a graph representing these
variables would have
A) time on the vertical axis
...
C) a negative slope
...
Answer: C
Topic: Variables That Move in Opposite Directions
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
37) A scatter diagram with the price of peanut butter on the vertical axis and the price of jelly on the
horizontal axis shows a negative relationship
...
B) negative relationship, also called an inverse relationship
...
D) positive relationship, also called an inverse relationship
...
38) In the above figure, if there is a negative relationship between the variables x and y, which of the
graphs above can be used to indicate this?
A) Figure A
B) Figure B
C) Figure C
D) both Figure A and Figure C
Answer: D
Topic: Variables That Move in Opposite Directions
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
39) In the above figure, which of the graphs demonstrates a curve with a decreasing slope, that is, a slope
getting smaller in magnitude as x increases?
A) Figure A
B) Figure B
C) Figure C
D) Figure D
Answer: C
Topic: The Slope of a Relationship
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
93
Copyright © 2014 Pearson Education, Inc
...
41) The above figure depicts a
A) positive non‐linear relationship between age and the number of hamburgers purchased per year
...
C) positive linear relationship between age and the number of hamburgers purchased per year
...
Answer: D
Topic: Variables That Move in Opposite Directions
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
95
Copyright © 2014 Pearson Education, Inc
...
B) between point B and point C
...
D) nowhere along the curve
...
43) In the above, a positive relationship between price and quantity is shown in
A) Figure A
...
C) both Figure A and Figure B
...
Answer: B
Topic: Variables That Move in the Same Direction
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
44) In the above figure, a negative relationship between price and quantity is shown in
A) Figure A
...
C) Both Figure A and Figure B
...
Answer: A
Topic: Variables That Move in Opposite Directions
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
45) If a graph shows a negative relationship between two variables which then becomes a positive
relationship, this curve would
A) always be an upward‐sloping line
...
C) have a maximum point
...
Answer: B
Topic: Maximum and Minimum Points
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
97
Copyright © 2014 Pearson Education, Inc
...
Average cost and output have
A) a relationship with a minimum
...
C) no relationship
...
Answer: A
Topic: Variables That Have a Maximum or Minimum
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
47) In the above figure, the relationship between the tax rate and tax revenue is positive and becoming
less steep between tax rates of
A) 0 percent and 30 percent
...
C) 0 percent and 100 percent
...
Answer: A
Topic: Variables That Have a Maximum or Minimum
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
98
Copyright © 2014 Pearson Education, Inc
...
B) is constant
...
D) may increase or decrease
...
B) 30 percent
...
D) 100 percent
...
B) be negative, then positive after the maximum point
...
D) increase before and after the maximum point
...
51) In the figure above, the relationship between the x variable and the y variable
A) is positive
...
C) starts by being positive and then becomes negative
...
Answer: C
Topic: Variables That Have a Maximum or Minimum
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
100
Copyright © 2014 Pearson Education, Inc
...
B) a horizontal line
...
D) a linear relationship
...
B) minimum
...
D) constant slope relationship
...
B) a minimum
...
D) a constant slope relationship
...
55) When y changes, x stays the same
...
B) horizontal
...
D) linear with a positive slope
...
The curve on the graph is a
horizontal line
...
B) the value of y does not depend on the value of x
...
D) the slope of the line is not defined because y never changes
...
The curve on the graph is a vertical
line
...
B) the value of y is constant
...
D) the ratio of y to x is constant
...
This result indicates that x and y are
A) positively related
...
C) not related
...
Answer: C
Topic: Variables That Are Unrelated
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
102
Copyright © 2014 Pearson Education, Inc
...
The quantity of tomatoes remains constant as the quantity of coffee increases
...
B) a vertical line
...
D) a negatively sloped line
Answer: B
Topic: Variables That Are Unrelated
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
60) A graph shows the price of a pound of cucumbers on the vertical axis and the quantity of new cars
sold by GM on the horizontal axis
...
The graph of these data is
A) a horizontal line
...
C) a curve with a maximum
...
Answer: A
Topic: Variables That Are Unrelated
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
61) If two variables are unrelated, a scatter diagram of those variables will
A) be a vertical line
...
C) be either a vertical or horizontal line
...
Answer: C
Topic: Variables That Are Unrelated
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
103
Copyright © 2014 Pearson Education, Inc
...
There is no relationship between the price of an avocado and a studentʹs grade in economics
...
The value of variable measured on the y‐axis is constant as the variable measured on the x‐axis
increases
...
As a studentʹs grade in economics increases, the price of an avocado increases
...
63) In the above, as the y variable increases
A) the x variable is constant
...
C) the x variable decreases
...
Answer: A
Topic: Variables That Are Unrelated
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
105
Copyright © 2014 Pearson Education, Inc
...
B) There is a positive relationship between x and y
...
D) None of the above answers are correct
...
65) In the above figure, which curve indicates that the level of food production does not affect the
population growth rate?
A) F
B) G
C) H
D) I
Answer: C
Topic: Variables That Are Unrelated
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
107
Copyright © 2014 Pearson Education, Inc
...
B) negative
...
D) random
...
B) a decrease in income will be associated with an increase in expenditures
...
D) There is no relationship between expenditures and income
...
B) negative related
...
D) trend related
...
69) The term ʺdirect relationshipʺ means the same as
A) correlation
...
C) positive relationship
...
Answer: C
Topic: Study Guide Question, Variables That Move Same Direction
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
70) The relationship between income and consumption illustrated in the figure above is
A) positive and linear
...
C) negative and linear
...
Answer: A
Topic: Study Guide Question, Variables That Move Same Direction
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
109
Copyright © 2014 Pearson Education, Inc
...
B) a direct relationship
...
D) no relationship between the variables
...
Thus x and y are
A) positively correlated
...
C) not related
...
Answer: C
Topic: Study Guide Question, Variables That Are Unrelated
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
110
Copyright © 2014 Pearson Education, Inc
...
B) change in the variable measured along the y‐axis divided by the change in the variable measured along
the x‐axis
...
D) change in the variable measured along the x‐axis multiplied by the change in the variable measured
along the y‐axis
...
The
slope of the curve equals
A) y divided by x
...
C) the change in y divided by the change in x
...
Answer: C
Topic: The Slope of a Relationship
Skill: Recognition
Status: Modified 10th edition
AACSB: Analytical Skills
3) The slope of a line
A) can never equal zero
...
C) measures the ratio of the change in the value of the y‐axis variable relative to the change in the value of
the x‐axis variable
...
Answer: C
Topic: The Slope of a Relationship
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
111
Copyright © 2014 Pearson Education, Inc
...
B) undefined
...
D) constant as long as the relationship is nonlinear
...
B) As x increases, y decreases
...
D) As x increases, y equals a positive number
...
A) downward‐sloping; large
B) downward‐sloping; small
C) upward‐sloping; small
D) either downward or upward‐sloping; small
Answer: D
Topic: The Slope of a Relationship
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
7) Suppose we are considering the relationship between two variables y and x
...
Suppose that the
slope of the line is positive and is less than 1
...
B) a smaller change in y
...
D) an equal change in y
...
8) Suppose we are considering the relationship between two variables y and x
...
Suppose that the
slope of the line is equal to 1
...
B) a change in x is associated with a smaller change in y
...
D) a change in x is associated with an equal change in y
...
y is measured on the y‐axis
and x is measured on the x‐axis, and the relationship between then is a straight line
...
This slope means that
A) a change in x is associated with a bigger change in y
...
C) a change in x is associated with no change in y
...
Answer: A
Topic: The Slope of a Relationship
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
10) In which of the following cases is the slope of a line positive and less than infinity?
A) As the variable measured on the x‐axis decreases, the variable measured on the y‐axis decreases
...
C) As the variable measured on the y‐axis increases, the variable measured on the x‐axis does not change
...
Answer: A
Topic: The Slope of a Relationship
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
11) In a graph, a line has a negative slope if
A) the line is vertical
...
C) the line rises from right to left
...
Answer: C
Topic: The Slope of a Relationship
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
113
Copyright © 2014 Pearson Education, Inc
...
The curve has a ________ slope
...
5, then
A) savings and interest rates have a positive relationship
...
C) savings and interest rates have no relationship
...
Answer: A
Topic: The Slope of a Relationship
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
14) If an increase in x (the variable on the horizontal axis) from 6 to 8 units causes a decrease in y (the
variable on the vertical axis) from 4 to 3 units, the slope equals
A) 2
...
C) 1/2
...
Answer: D
Topic: The Slope of a Relationship
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
114
Copyright © 2014 Pearson Education, Inc
...
The slope of the relationship
between x = 0 and x = 2 is
A) ‐6
...
C) 3
...
Answer: C
Topic: The Slope of a Relationship
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
x
10
9
8
7
6
5
y
50
70
100
130
170
220
16) In the table above, y is measured along the y‐axis and x along the x‐axis
...
057
B) ‐19
...
Point
a
b
c
d
e
f
X
100
200
300
400
500
600
Y
50
75
100
100
75
50
17) In the table above, Y is measured along the y‐axis and X along the x‐axis
...
B) 4
...
25
...
25
...
The slope between points c
and d is
A) 100
...
C) 0
...
D) ‐4
...
The slope between points e
and f is
A) ‐25
...
C) 0
...
D) ‐0
...
Answer: D
Topic: The Slope of a Relationship
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
116
Copyright © 2014 Pearson Education, Inc
...
A) positive and becoming larger in magnitude
B) positive and becoming smaller in magnitude
C) negative and becoming larger in magnitude
D) negative and becoming smaller in magnitude
Answer: A
Topic: The Slope of a Relationship
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
117
Copyright © 2014 Pearson Education, Inc
...
A) positive and becoming larger in magnitude
B) positive and becoming smaller in magnitude
C) negative and becoming larger in magnitude
D) negative and becoming smaller in magnitude
Answer: C
Topic: The Slope of a Relationship
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
x
0
1
2
3
4
y
4
5
8
13
20
22) In the above table, the relationship between x and y is ________ and, with y measured on the vertical
axis, the slope between y = 5 and y = 8 is equal to ________
...
23) The slope of a straight line is
A) variable
...
C) decreasing
...
Answer: D
Topic: The Slope of a Straight Line
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
24) The slope of a straight line is
A) always equal to zero
...
C) constant
...
Answer: C
Topic: The Slope of a Straight Line
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
25) With y measured on the vertical axis and x measured on the horizontal axis, the slope of a straight line
is defined as
A) y/x
...
C) (change in y)/ (change in x)
...
Answer: C
Topic: The Slope of a Straight Line
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
26) Along a straight line, when x equals 90, then y equals 30
...
The
slope of the straight line is
A) 1/3
...
C) 3
...
Answer: A
Topic: The Slope of a Straight Line
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
119
Copyright © 2014 Pearson Education, Inc
...
The slope of the line is
A) ‐1
...
C) 1
...
Answer: C
Topic: The Slope of a Straight Line
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
x
0
1
2
3
4
5
y
0
3
6
9
12
15
28) Using the data in the table above, with y measured on the vertical axis, the slope of the line relating y
to x is
A) 1/3
...
C) 3
...
Answer: C
Topic: The Slope of a Straight Line
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
120
Copyright © 2014 Pearson Education, Inc
...
If these data were graphed, the slope of the line would
be
A) 3/5
...
C) 5/3
...
Answer: A
Topic: The Slope of a Straight Line
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
x‐variable
y‐variable
(on the horizontal axis) (on the vertical axis)
8
14
10
18
12
22
30) The above table gives data on two variables
...
B) ‐2
...
D) ‐4
...
If these data were graphed, their relationship would
A) be a straight line
...
C) show a negative relationship
...
Answer: A
Topic: The Slope of a Straight Line
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
121
Copyright © 2014 Pearson Education, Inc
...
If these data were graphed, the slope of the line would
be
A) 1/2
...
C) 2/3
...
Answer: D
Topic: The Slope of a Straight Line
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
Quantity
0
8
16
24
32
36
Price
50
40
30
20
10
5
33) Using the data in the above table,
A) the variables quantity and price are positively related
...
C) the variables quantity and price are neither positively nor negatively related
...
Answer: B
Topic: Variables That Move in Opposite Directions
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
34) If we use the numbers in the above table to draw a graph, with the price on the vertical axis and the
quantity on the horizontal axis, the line relating price and quantity has a slope of
A) 0
...
B) ‐8
...
C) ‐1
...
D) 8
...
Answer: C
Topic: The Slope of a Relationship
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
122
Copyright © 2014 Pearson Education, Inc
...
B) downward sloping
...
D) horizontal
...
2
...
4
...
5
...
5
...
x
100
200
300
400
y
500
300
100
‐100
37) Based on the information in the table above, what is the relationship between x and y?
A) direct
B) inverse
C) positive
D) No relationship exists between x and y
...
5
C) 2
D) ‐2
Answer: D
Topic: The Slope of a Straight Line
Skill: Analytical
Status: Modified 10th edition
AACSB: Analytical Skills
124
Copyright © 2014 Pearson Education, Inc
...
0?
A) Figure A
B) Figure B
C) both Figure A and Figure B
D) neither Figure A nor Figure B
Answer: A
Topic: The Slope of a Straight Line
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
125
Copyright © 2014 Pearson Education, Inc
...
B) ‐5
...
D) ‐3
...
42) The slope of the line shown in the above figure is
A) 5
...
C) 2/3
...
Answer: B
Topic: The Slope of a Straight Line
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
127
Copyright © 2014 Pearson Education, Inc
...
B) ‐1 2/3
...
25
...
80
...
44) The slope of the line shown in the above figure is
A) 2
...
75
...
25
...
Answer: B
Topic: The Slope of a Straight Line
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
129
Copyright © 2014 Pearson Education, Inc
...
90
...
5
...
11
...
Answer: A
Topic: The Slope of a Straight Line
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
130
Copyright © 2014 Pearson Education, Inc
...
B) ‐3
...
D) ‐1/3
...
47) The slope of the line in the above figure is
A) 8
...
05
...
125
...
10
...
48) The slope of the line in the above figure is
A) 2/5 = 0
...
B) 5/2 = 2
...
C) ‐2/5 = ‐0
...
D) ‐5/2 = ‐2
...
Answer: A
Topic: The Slope of a Straight Line
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
133
Copyright © 2014 Pearson Education, Inc
...
5
...
C) ‐1/2 = ‐0
...
D) ‐2
...
50) The slope of the line in the above figure is
A) ‐10
...
C) 5
...
Answer: D
Topic: The Slope of a Straight Line
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
135
Copyright © 2014 Pearson Education, Inc
...
B) ‐1 2/3
...
D) ‐0
...
Answer: D
Topic: The Slope of a Straight Line
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
136
Copyright © 2014 Pearson Education, Inc
...
B) 2/3
...
D) 1 3/4
...
53) In the above figure,
A) consumption expenditures are a linear function of labor income
...
9
...
D) All of the above answers are correct
...
54) The slope of the line in the above figure is
A) ‐4
...
5
...
0
...
0
...
B) positive relationship with a decreasing slope
...
D) negative relationship with a decreasing slope
...
56) In the above figure, the curveʹs slope is
A) positive and is becoming steeper
...
C) negative and is becoming steeper
...
Answer: B
Topic: Slope of a Curved Line
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
57) If the price of apples is on the vertical axis and the quantity of apples demanded is on the horizontal
axis, the slope between two points on the line describing the relationship between price and quantity is
A) the change in price multiplied by the change in quantity
...
C) the change in quantity divided by the change in price
...
Answer: B
Topic: The Slope of a Curved Line
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
140
Copyright © 2014 Pearson Education, Inc
...
B) a curved line
...
D) a negative relationship only
...
B) the inverse of the straight‐line method
...
D) the slope across an arc from one point on the curve to another point on the curve
...
60) In the above figure, the slope across the arc between c and d is
A) 1/2
...
C) 4/3
...
Answer: A
Topic: The Slope Across an Arc
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
61) In the above figure, the slope across the arc between b and c is
A) 1/2
...
C) 1
...
Answer: C
Topic: The Slope Across an Arc
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
62) In the above figure, the slope across the arc between a and b is
A) 2/5
...
C) 3/2
...
Answer: D
Topic: The Slope Across an Arc
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
142
Copyright © 2014 Pearson Education, Inc
...
B) 5/2
...
D) greater than 5/2
...
B) negative, with slope decreasing as x increases
...
D) positive, with slope increasing as x increases
...
B) negative and decreasing
...
D) positive and decreasing
...
66) In the above figure, using the slope across an arc, the slope of the curve between points b and c is
A) 1/3
...
C) 3
...
Answer: A
Topic: Slope Across an Arc
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
67) In the above figure, using the slope across an arc, the slope of the curve between points a and c is
A) ‐3/5
...
C) 5/3
...
Answer: B
Topic: Slope Across an Arc
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
144
Copyright © 2014 Pearson Education, Inc
...
B) ‐1/2
...
D) ‐2
...
B) 5/3
...
D) ‐5/3
...
70) In the above figure, the slope across the arc between a and b is
A) 1
...
C) 1/4
...
Answer: B
Topic: The Slope Across an Arc
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
146
Copyright © 2014 Pearson Education, Inc
...
B) 1/3
...
D) 6/5
...
B) equals 1
...
D) exceeds 2
...
B) 12/11
...
D) 4
...
74) In the above figure, the slope across the arc between a and b is
A) 3
...
C) 3/5
...
Answer: D
Topic: Slope Across an Arc
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
75) Along a curved line, the slope at the maximum
A) is greater than zero
...
C) is less than zero
...
Answer: B
Topic: Maximum and Minimum Points
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
76) Consider a diagram in which the variable measured on the y‐axis remains constant while the variable
measured on the x‐axis increases
...
B) line with slope equal to zero
...
D) line that has a negative slope
...
B) undefined
...
D) constant as long as the relationship is nonlinear
...
78) A linear relationship
A) always has a maximum
...
C) always slopes up to the right
...
Answer: B
Topic: Study Guide Question, The Slope of a Straight Line
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
79) In the above figure, between x = 2 and x = 3, what is the slope of the line?
A) 1
B) ‐1
C) 2
D) 3
Answer: A
Topic: Study Guide Question, The Slope of a Straight Line
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
149
Copyright © 2014 Pearson Education, Inc
...
B) The slope is greater between x = 2 and x = 3
...
D) The slope is not comparable
...
B) positive with a decreasing slope
...
D) negative with a decreasing slope
...
82) In the above figure, the slope across the arc between points a and b equals
A) 5
...
C) 2
...
Answer: C
Topic: Study Guide Question, The Slope Across an Arc
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
13 Appendix: Graphing Relationships Among More Than Two Variables
1) Ceteris paribus when graphing a relationship refers to
A) letting all the variables change at once
...
C) holding constant all but two variables
...
Answer: C
Topic: Graphing Relationships, Two+ Variables, Ceteris Paribus
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
2) In evaluating a relationship between x and y, ceteris paribus means other variables
A) are not relevant to x and y
...
C) are not changing while x and y change
...
Answer: C
Topic: Graphing Relationships, Two+ Variables, Ceteris Paribus
Skill: Conceptual
Status: Modified 10th edition
AACSB: Reflective Thinking
3) On a graph showing the relationship between x and y, the ceteris paribus condition implies that
A) no other variables are related to x and y
...
C) the value of y is held constant
...
Answer: D
Topic: Graphing Relationships, Two+ Variables, Ceteris Paribus
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
151
Copyright © 2014 Pearson Education, Inc
...
When graphing the relationship between the
price of a pizza and the quantity of pizza consumed,
A) the price of a pizza and the income of pizza consumers are the only variables that are allowed to
change
...
C) consumersʹ taste for pizza and the income of pizza purchasers are the only variables that are allowed
to change
...
Answer: B
Topic: Graphing Relationships, Two+ Variables, Ceteris Paribus
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
5) To graph a relationship among several variables, we hold all but ________ variable(s) constant and use
the ________ assumption
...
6) In the above figure, while moving along the line showing the relationship between household income
and expenditure,
A) household expenditures are held constant
...
C) the interest rate is held constant
...
Answer: C
Topic: Graphing Relationships Among More Than Two Variables
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
7) In the above figure, if the interest rate is negatively related to household expenditures for any given
level of household income, an increase in the interest rate will
A) shift the line vertically upward
...
C) make the line negatively sloped
...
Answer: B
Topic: Graphing Relationships Among More Than Two Variables
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
153
Copyright © 2014 Pearson Education, Inc
...
B) negative
...
D) independent
...
B) $20,000
...
000
...
Answer: B
Topic: Graphing Relationships Among More Than Two Variables
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
154
Copyright © 2014 Pearson Education, Inc
...
B) a decrease in household consumption leads to a decrease in interest rates
...
D) none of the above
Answer: D
Topic: Graphing Relationships Among More Than Two Variables
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
11) Household consumption depends on both income and interest rates
...
B) interest rates are held constant
...
D) no variable is held constant
...
B) shift the line leftward
...
D) cause a movement along the line
...
13) The above figure shows how many pounds of peanuts farmers are willing to sell at different prices
per pound of peanuts
...
B) 1000 pounds of peanuts
...
D) 4000 pounds of peanuts
...
B) price of a pound of peanuts is held constant
...
D) Both answers A and B are true
...
15) In the figure above, suppose the price of a pound of pecans is negatively related to the quantity of
peanuts that farmers are willing to supply
...
B) the curve will shift leftward
...
D) the curve will be unaffected
...
B) positively related to both y and z
...
D) negatively related to both y and z
...
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
157
Copyright © 2014 Pearson Education, Inc
...
B) a decrease in y
...
D) None of the above answers is correct
...
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
18) In the figure above, an increase in z leads to a
A) movement up along one of the lines showing the relationship between x and y
...
C) rightward shift of the line showing the relationship between x and y
...
Answer: C
Topic: Study Guide Question, Graphing Relationships Among 2+ Var
...
Graphs that plot variables together help economists understand if the variables are related and how they
are related
...
Indeed, many other disciplines use such visual models
...
Economistsʹ models do not reflect of
every detail of the real world, but the graphs that they use nonetheless are valuable because they help
clarify the linkages between the variables
...
What do these
relationships look like when they are graphed?
Answer: Variables can have two relationships: positive (or direct) and negative (or inverse)
...
A negative relationship occurs when the variables move in the opposite direction, so that
when one increases, the other decreases
...
When a negative relationship is graphed, the line slopes downward to the right
...
3) What is the difference between a positive and a negative relationship?
Answer: Two variables are positively related when an increase (decrease) in one is associated with an
increase (decrease) in the other
...
Two
variables are negatively related when an increase (decrease) in one is associated with a decrease
(increase) in the other
...
Topic: Relationships
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Communication
4) A graph of two variables is a vertical line
...
Topic: Unrelated Variables
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
5) What does the slope of a straight line equal? How is the slope of a curved line calculated at a point on
the curve?
Answer: The slope of a straight line is calculated between two points on the line
...
The
slope of a curved line calculated at a point on the curve is equal to the slope of a tangent straight line
...
Then,
calculate the slope of the straight line
...
Topic: Slope
Skill: Recognition
Status: Modified 10th edition
AACSB: Analytical Skills
6) ʺIt is impossible to represent a three variable relationship in a two‐dimensional graph
...
Answer: The statement is false because it is possible to represent a three variable relationship in a two
dimensional graph
...
Assume that the third variable
does not change (the ceteris paribus assumption) and then graph the relationship between the two
variables
...
When the third variable does change, then the entire relationship between the two graphed variables
changes
...
The shift in the line shows how the third variable influences the
other two
...
15 Appendix: Numeric and Graphing Questions
1) The figure above shows how the sales of the video game ʺTomb Raider—Lara Retiresʺ change when
the advertising spent on the game changes
...
Answer: The figure shows that there is a positive relationship between advertising and the number of
video games sold
...
Topic: Positive Relationship
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
160
Copyright © 2014 Pearson Education, Inc
...
Is the relationship between hours on the web and
the SAT score positive, negative, neither? Explain your answer
...
The relationship is negative because the two variables move in opposite directions: If
hours on the web increase, the SAT score decreases
...
3) A graph has a point that is either a maximum or a minimum
...
To the right of the point, the slope is negative
...
Answer:
The point is a maximum point
...
The slope of a curved line at any point equals
the slope of a straight line that touches the curved line at only that one point
...
The slope of the straight line that touches the curved line at only point A is
positive, so the slope of the relationship is positive
...
As the straight line shows, the slope of the relationship at point B is negative
...
Topic: Maximum
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
162
Copyright © 2014 Pearson Education, Inc
...
Topic: Slope
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
5) If two points on a line are x = 2, y = 5 and x = 7, y= 10, what is the slope of this line?
Answer: The slope equals the change in the y‐variable divided by the change in the x‐variable
...
00
...
Katieʹs income
(dollars per year)
50,000
70,000
90,000
110,000
Katieʹs purchases
(books per year)
14
16
18
20
6) The table above shows how the number of books Katie buys each year depends on her income
...
Measure income along the vertical axis and the number of books along the horizontal axis
...
c) What is the slope of the relationship between $50,000 and $70,000 of income?
d) What is the slope of the relationship between $90,000 and $110,000 of income?
e) Comment on the similarity or dissimilarity of your answers to parts (c) and (d)
...
Answer:
a) There is a positive relationship
...
b) The relationship is plotted in the figure above
...
Between $50,000 and $70,000 of income, the number of books purchased increases from 14 to 16
...
d) As with the previous answer, the slope equals the change in income divided by the change in books
...
Hence
income increases by $20,000 and the number of books increases by 2, so the slope equals $20,000/2 =
10,000
...
But, they must be equal because the relationship between
Katieʹs income and the number of books she purchases is linear
...
Topic: Slope of a Straight Line
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
165
Copyright © 2014 Pearson Education, Inc
...
Label the axes
...
Answer:
The figure labels the axes and graphs the relationship
...
b) The slope equals ‐2
...
Topic: Slope of a Straight Line
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
167
Copyright © 2014 Pearson Education, Inc
...
Answer:
A horizontal line has a slope of zero
...
Topic: Slope of a Straight Line
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
168
Copyright © 2014 Pearson Education, Inc
...
75
...
10) What does the slope of the line shown in the above figure equal?
Answer: The slope equals the change in variable on the y‐axis divided by the change in the variable on
the x‐axis, or (18 – 27)/(10 – 20) = 0
...
Topic: Slope of a Straight Line
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
170
Copyright © 2014 Pearson Education, Inc
...
0
...
12) What does the slope of the line shown in the above figure equal?
Answer: The slope equals the change in variable on the y‐axis divided by the change in the variable on
the x‐axis, or (5 – 10)/(60 – 100) = 0
...
Topic: Slope of a Straight Line
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
172
Copyright © 2014 Pearson Education, Inc
...
And, the slope of a straight line equals the change in variable on the y‐axis divided by the
change in the variable on the x‐axis
...
Thus the straight line has a slope of (30 – 0)/(10 – 15) = ‐6
...
Topic: Slope of a Curved Line
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
173
Copyright © 2014 Pearson Education, Inc
...
The table above shows how Jamieʹs score depends on the
number of hours a week Jamie studies
...
b) Is the relationship you plotted positive or negative?
c) What happens to the slope of the relationship as hours studied increase?
d) Suppose Jamie can enroll in an SAT prep course and, by so doing, for every possible number of hours
he studies, his score will be 100 points higher
...
e) How many variables are involved in the figure you just completed?
174
Copyright © 2014 Pearson Education, Inc
...
b) The relationship is positive: As Jamie increases the hours he studies, his SAT score increases
...
In the figure, the slope of the relationship decreases in size as the number of hours studied
increases
...
e) There are three variables: The number of hours Jamie studies, whether or not he takes an SAT
preparation course, and his SAT score
...
Answer: FALSE
Topic: Graphing Data
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
2) A scatter diagram plots the value of one economic variable against time
...
3) A cross‐section graph can show how economic variables for different groups of people vary over time
...
Answer: TRUE
Topic: Graphs Used in Economic Models
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
5) A graph cannot be used to show that two variables are unrelated
...
Answer: TRUE
Topic: Graphs Used in Economic Models
Skill: Recognition
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
7) The slope of a line is the change in the y‐axis variable divided by the change in the x‐axis variable
...
Answer: FALSE
Topic: The Slope of a Relationship
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
9) To calculate the slope of a curved line, you can calculate the slope at a point on the curve or across an
arc of the curve
...
10) If the change in the y‐axis variable is 4 and the change in the x‐axis variable is 2, the slope of this line
is 1/2
...
Answer: TRUE
Topic: The Slope of a Relationship
Skill: Analytical
Status: Previous edition, Chapter 1
AACSB: Analytical Skills
12) To graph a relationship that involves more than two variables, we use the ʺceteris paribusʺ assumption
...
Answer: FALSE
Topic: Graphing Relationships Among More Than Two Variables
Skill: Conceptual
Status: Previous edition, Chapter 1
AACSB: Reflective Thinking
177
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Title: Introduction to Microeconomics problems, test bank
Description: Introduction to Microeconomics problems, test bank. This will help you to review your introduction to Microeconomics course exams.
Description: Introduction to Microeconomics problems, test bank. This will help you to review your introduction to Microeconomics course exams.