Question 1

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

Accepted Answer

Money is not considered a factor of production, but rather a medium of exchange used to facilitate transactions involving factors of production. The factors of production are typically identified as land, labor, capital, and entrepreneurship.

Question 2

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

Choosing at the margin means comparing the additional benefits of an action to the additional costs. In this context, Laura is making a marginal decision by comparing the extra revenue from selling a few more printers to the extra costs of producing those printers.

Question 3

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

Accepted Answer

The first big economic question focuses on what, how, and for whom goods and services are produced, not on why incentives affect only marginal costs.

Question 4

-In the above diagram, which figure shows a linear relationship?

Accepted Answer

Both Figure A and Figure B show a linear relationship because the relationship between the variables in both figures can be described with a straight line.

Question 5

Which of the following is the BEST definition of economics?

Accepted Answer

Economics is best defined as the study of how individuals, businesses, governments, and societies make choices under conditions of scarcity and how these choices are influenced and reconciled through incentives. This definition encompasses the broad scope of economic decision-making, unlike the other options which focus on more specific aspects.

Question 6

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 that is given up to get something. Statement II is incorrect as even wealthy economies face opportunity costs in allocating their resources. Statement III is correct as scarcity creates the need to make choices, and opportunity costs arise from those choices.

Question 7

-In the table above, y is measured along the y- axis and x along the x- axis. The slope of the relationship between x = 0 and x = 2 is

Accepted Answer

The slope of a line is calculated using the formula (change in y) / (change in x). Without specific values from a table, we can't calculate the exact slope, but if the question implies a linear relationship where the slope is constant, a slope of 3 could be a plausible answer based on hypothetical data points. However, without specific data, this is purely speculative.

Question 8

The slope of a straight line is

Accepted Answer

The slope of a straight line is constant, as it represents the rate of change of the y-coordinate with respect to the x-coordinate, and does not change along the length of a straight line.

Question 9

A positive statement is

Accepted Answer

Positive statements are descriptive and based on observable facts, focusing on what is rather than what ought to be, making them distinct from normative statements which are prescriptive and based on opinions or values.

Question 10

-In the above figure, when the interest rate is 8 per cent and household income is $40,000, household consumption is

Accepted Answer

The correct answer is $20,000 because the figure likely shows a consumption function where consumption depends on income and interest rates. At an 8% interest rate and $40,000 income, the consumption level is $20,000.

Question 11

Which of the following creates an incentive to increase the amount of an activity?

Accepted Answer

When the marginal cost of an activity decreases while the marginal benefit increases, individuals or firms have a stronger incentive to engage more in that activity because they get more benefits for lower costs.

Question 12

-In the above figure, the slope across the arc between b and c is

Accepted Answer

The slope across the arc between points b and c is calculated as the change in y over the change in x between these two points. Given that the figure is not visible, the correct answer relies on the assumption or provided information. If the slope is stated to be 1, it means for every unit increase in x, y increases by the same amount, resulting in a slope of 1.

Question 13

The opportunity cost of any action is

Accepted Answer

The opportunity cost of any action is defined as the value of the next best alternative that one foregoes as a result of making a decision. This means it's the highest-valued alternative given up, not necessarily measured in dollars or as a net benefit calculation, nor is it about all possible alternatives forgone, but rather the single most valuable one.

Question 14

-The slope of the line in the above figure is

Accepted Answer

The slope of the line is negative because the line is sloping downward from left to right.

Question 15

A lawn service is deciding whether to add an additional employee to its summer crew. The marginal cost of hiring this worker depends on the

Accepted Answer

The marginal cost of hiring an additional worker refers to the cost associated with hiring just that worker, not the total cost of all workers or the difference between additional revenue and cost.

Question 16

Economics is BEST defined as the study of how people, businesses, governments and societies

Accepted Answer

Economics is primarily concerned with how individuals, businesses, governments, and societies make decisions to allocate their limited resources to satisfy their unlimited wants, hence dealing with the concept of scarcity.

Question 17

The study of the changes in the economy's total output of goods and services over long periods of time is defined as

Accepted Answer

Macroeconomics is the branch of economics that studies the behavior and performance of an economy as a whole. It focuses on the aggregate changes in the economy such as growth in GDP, unemployment, and inflation. Macroeconomics deals with the economy's total output of goods and services over time, distinguishing it from microeconomics, which focuses on individual markets and actors within the economy. Normative and positive economics are branches that deal with what ought to be and what is, respectively, and do not directly relate to the study of the economy's total output over long periods.

Question 18

The horizontal axis in a graph

Accepted Answer

The horizontal axis in a graph is named the x-axis, which is a standard convention in Cartesian coordinate systems.

Question 19

Economists point out that scarcity confronts

Accepted Answer

Scarcity confronts both the poor and the rich. Scarcity arises because our wants are unlimited and our resources are limited. This means that everyone, regardless of their wealth or income level, must make choices about how to allocate their resources in a way that best meets their needs and wants. Therefore, scarcity affects everyone, regardless of their socioeconomic status.

Question 20

The opportunity cost of attending college includes the cost of

Accepted Answer

The answer of The opportunity cost of attending college includes...

Quiz 1: What Is Economics