Question 1

A graph measures y on the vertical axis and x on the horizontal. The curve on the graph is a horizontal line. From this fact we know that

Accepted Answer

A horizontal line on a graph indicates that the value of y remains constant regardless of changes in x, meaning y does not depend on x.

Question 2

Which factor of production earns rent?

Accepted Answer

Land is the factor of production that earns rent as a return for its use.

Question 3

Which of the following statements are correct?
I. The "highest- valued alternative given up to get something" is the opportunity cost.
II. Wealthy economies don't experience opportunity costs.
III. Scarcity creates opportunity costs.

Accepted Answer

Statement I is correct as opportunity cost is defined as the highest-valued alternative given up to get something. Statement II is incorrect as wealthy economies also face scarcity and therefore experience opportunity costs. Statement III is correct as scarcity leads to the need to make a choice between various alternatives and the cost of choosing one alternative is the opportunity cost of not choosing the other alternatives.

Question 4

Suppose that the government of NSW promises to decrease taxes for a firm if it decides to stay in NSW instead of moving to Victoria. This policy on the part of the state constitutes________ , to make the________ of the firm remaining in NSW.

Accepted Answer

The government's promise to decrease taxes acts as an incentive, encouraging the firm to stay in NSW by increasing the marginal benefit of staying compared to moving.

Question 5

-In the above figure, the curve has a slope that is ________.

Accepted Answer

The slope of a curve is positive and becoming larger in magnitude when the curve is rising and steepening.

Question 6

The opportunity cost of any action is

Accepted Answer

The opportunity cost of any action is the highest-valued alternative given up.

Question 7

A positive statement is

Accepted Answer

A positive statement is objective and fact-based, describing what is, without any judgment or opinion.

Question 8

The night before a midterm exam, you decide to go to the movies instead of studying for the exam. You score 60 per cent on your exam. If you had studied the night before, you'd have scored 70 per cent. What was the opportunity cost of your evening at the movies?

Accepted Answer

The opportunity cost is the difference between the score you could have achieved (70%) and the score you actually achieved (60%), which is 10%.

Question 9

Which factor of production earns the most income in Australia?

Accepted Answer

Labour typically earns the most income in Australia, as wages and salaries paid to workers constitute a significant portion of the national income.

Question 10

Jill, an economics student, has already spent five hours cleaning her room. In deciding whether or not to continue cleaning for another hour, she applies the economic principle of

Accepted Answer

Jill is considering whether to spend an additional hour cleaning, which involves making a decision at the margin, weighing the additional benefits and costs of one more hour of cleaning.

Question 11

-In the above diagram, which figure shows a line with a slope of 1.0?

Accepted Answer

The answer of 
-In the above diagram, which figure shows...

Question 12

Which of the following is the BEST definition of economics?

Accepted Answer

Economics is broadly defined as the study of how various entities make choices under conditions of scarcity and the incentives that influence these choices.

Question 13

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

Accepted Answer

Samantha going to college to become an engineer is an investment in human capital because she is acquiring education and skills that will increase her productivity and value in the workforce.

Question 14

Laura is a manager for HP. When Laura must decide whether to produce a few additional printers, she is choosing at the margin when she compares

Accepted Answer

The marginal decision is to compare the extra revenue from selling a few additional printers to the extra costs of producing the printers.

Question 15

If the quantity of wood purchased decreases when the price of wood rises, a graph representing these variables would have

Accepted Answer

A negative slope indicates an inverse relationship between the two variables, which is consistent with the decrease in quantity purchased as the price increases.

Question 16

-In the above figure, using the slope across an arc, the slope of the curve between points b and c is

Accepted Answer

The answer of 
-In the above figure, using the slope...

Question 17

With y measured on the vertical axis and x measured on the horizontal axis, the slope of a straight line is defined as

Accepted Answer

The slope of a straight line is defined as the ratio of the change in y to the change in x.

Question 18

Bill Hogan graduates from college with a choice of playing professional football at $2 million a year or coaching for $50,000 a year. He decides to play football, but eight years later, even though he could continue to play football at $2 million a year, he quits football to make movies for $3 million a year. His opportunity cost of playing football at graduation was ________. and eight years later the opportunity cost of making movies was ________.

Accepted Answer

At graduation, the opportunity cost of playing football was the $50,000 he could have earned coaching. Eight years later, the opportunity cost of making movies was the $2 million he could have continued to earn playing football.

Question 19

-In the above figure, the relationship between x and y is

Accepted Answer

The relationship is positive, meaning as x increases, y also increases. However, the slope decreases as x increases, indicating a diminishing rate of increase.

Question 20

When Alice makes the statement, "The cost of living has increased 10 per cent over the past 10 years," she is

Accepted Answer

Alice is making a positive statement because she is stating a fact that can be tested or verified with data.

Quiz 1: What Is Economics