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A cost due to an increase in activity is called


A) a negative marginal benefit.
B) an incentive loss.
C) a marginal cost.
D) the total cost.

E) C) and D)
F) A) and B)

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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) "what"
B) "where"
C) "for whom"
D) "when"

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

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Because we face scarcity, every choice involves


A) the question "what?".
B) an opportunity cost.
C) giving up something for nothing.
D) money.

E) A) and D)
F) A) and C)

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-The above figure plots income and consumption in a nation. In 2007 A) consumption was equal to $28,000 and income was equal to $25,000. B) consumption was equal to $25,000 and income was equal to $25,000. C) consumption was equal to $27,000 and income was equal to $31,000. D) consumption was equal to $25,000 and income was equal to $28,000. -The above figure plots income and consumption in a nation. In 2007


A) consumption was equal to $28,000 and income was equal to $25,000.
B) consumption was equal to $25,000 and income was equal to $25,000.
C) consumption was equal to $27,000 and income was equal to $31,000.
D) consumption was equal to $25,000 and income was equal to $28,000.

E) A) and D)
F) A) and C)

Correct Answer

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Ceteris paribus when graphing a relationship refers to


A) letting all the variables change at once.
B) changing the origin of the graph.
C) rescaling the coordinates.
D) holding constant all but two variables.

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

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Samantha goes to college to become an engineer. This is an example of an


A) increase in entrepreneurship.
B) increase in labour.
C) investment in human capital.
D) investment in physical capital.

E) B) and C)
F) C) and D)

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Which of the following is NOT part of the first big economic question?


A) Why do incentives affect only marginal costs?
B) For whom are goods and services produced?
C) What goods and services are produced?
D) How are goods and services produced?

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

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Scarcity can be eliminated through


A) exploration that helps us find new resources.
B) wise use of our resources.
C) the use of market mechanisms.
D) None of the above because scarcity cannot be eliminated.

E) B) and D)
F) B) and C)

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Which of the following is an example of a positive statement?


A) Households are the primary source of saving.
B) Government should not redistribute income.
C) Business firms ought to contribute more to charities.
D) The foreign sector should be more tightly controlled.

E) B) and C)
F) C) and D)

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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.


A) "when"
B) "why"
C) "for whom"
D) "how"

E) None of the above
F) C) and D)

Correct Answer

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Along a straight line, the value of y is always equal to the value of x. The slope of the line is


A) - 1.
B) 1.
C) 0.
D) infinite.

E) C) and D)
F) A) and D)

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-In the above figure, when income is zero, household expenditures equal A) $8,000. B) $4,000. C) $1,000. D) $0. -In the above figure, when income is zero, household expenditures equal


A) $8,000.
B) $4,000.
C) $1,000.
D) $0.

E) A) and D)
F) C) and D)

Correct Answer

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In evaluating a relationship between x and y, ceteris paribus means other variables


A) are not changing while x and y change.
B) are not relevant to x and y.
C) move in opposite directions to x and y.
D) move in the same direction as x and y.

E) None of the above
F) A) and B)

Correct Answer

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Keeping in mind economists' definition of factors of production, which of the following is NOT a factor of production?


A) Money
B) An engineer
C) Coal
D) Low- skilled labour

E) A) and B)
F) None of the above

Correct Answer

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An art museum decides to offer tours by having visitors listen to cassette tapes rather than have tour guides. The museum is answering the ________ part of one of the two big economic questions.


A) "why"
B) "scarcity"
C) "how"
D) "what"

E) A) and D)
F) B) and C)

Correct Answer

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