Question 1

_____ is how well resources are used and allocated.
A) Equity
B) Efficiency
C) Choice
D) Scarcity

Accepted Answer

Efficiency refers to how effectively resources are utilized and allocated. It is a key factor in determining economic growth and the standard of living in a society. By ensuring that resources are used in the most productive way possible, efficiency helps to minimize waste and maximize output, leading to increased prosperity and a higher quality of life for individuals and communities.

Question 2

(Figure: Interpreting Equations on a Graph) In the graph, if y stands for inflation and x stands for the money supply, then 
A) for every 1% increase in the money supply, inflation increases by 0.6%.
B) for every 1% increase in inflation, the money supply increases by 0.6%.
C) if the money supply increases by 14, then inflation goes up 0.6%.
D) if inflation increases by 14, then inflation goes up 0.6%.

Accepted Answer

The slope of the line represents the relationship between the money supply and inflation. Since the slope is 0.6, for every 1% increase in the money supply, inflation increases by 0.6%.

Question 3

Suppose an economist discovers that the relationship between grades and hours of tutoring is grade = 60 + 5(hours). Based on the equation, which statement is TRUE?
A) Tutoring is not worthwhile because each hour raises the grade by only 5 points.
B) If no tutoring is done, then the grade will be zero.
C) The expected grade with 5 hours of tutoring is 85.
D) The relationship between tutoring and grades is weak.

Accepted Answer

The equation suggests that for each hour of tutoring, the grade increases by 5 points. Therefore, if a student receives 5 hours of tutoring, the grade would be 85 (60 + 5(5)). Option A is false because any increase in grade is positive, and tutoring can still be beneficial regardless of the amount of increase. Option B is false because a grade of zero is not possible in this equation since there is a constant term of 60. Option D is false because the equation shows a clear and consistent relationship between tutoring and grades.

Question 4

(Figure: Graph Interpretation) In the graph, a negative relationship is depicted with a slope of -0.4.

Accepted Answer

The graph shows a downward sloping line, which indicates a negative relationship, and the slope is -0.4, indicating a moderate degree of negative association between the variables.

Question 5

Titles, labels for axes, and a statement of how the data are measured help with the interpretation of graphs.

Accepted Answer

Titles, labels for axes, and a statement of how the data are measured all provide important information to help interpret graphs accurately. This information can help clarify what the graph is showing and how to interpret the data. Without these elements, interpreting a graph can be more difficult and potentially misleading.

Question 6

Which topic is a microeconomic topic?
A) U.S. inflation rate in 2009
B) the price of an iPad sold by Apple
C) U.S. unemployment rate in March 2010
D) U.S. rate of growth in GDP for the first quarter in 2016

Accepted Answer

The price of an iPad sold by Apple is a microeconomic topic as it refers to the specific pricing decisions of a single company in a particular market. Options A, C, and D are macroeconomic topics as they involve overall economic indicators of a country.

Question 7

(Figure: Mileage and Speed by Car Weight) Which statement about the graph is CORRECT?  I. The heavier the vehicles, ceteris paribus, the lower the mileage. II. The higher the speed of the vehicle past 50 miles per hour, ceteris paribus, the lower the mileage.
III) Weight and speed have a linear relationship with mileage.
A) I only
B) II only
C) I and II
D) I, II, and III

Accepted Answer

From the graph, we can see that as the car weight increases, the mileage decreases. This supports statement I. Additionally, the graph shows that as the speed of the car increases over 50 miles per hour, the mileage decreases as well, supporting statement II. However, there is no evidence of a linear relationship between weight and speed with mileage, so statement III is not correct. Therefore, the correct choice is C - I and II are both correct.

Question 8

A pie chart is useful for business presentations but not for macroeconomic analysis.

Accepted Answer

A pie chart can be useful for macroeconomic analysis if it effectively represents the data and is accompanied by additional information or analysis. However, it may not be the best choice for complex macroeconomic data sets or for making comparisons between multiple variables.

Question 9

When goods are produced at the lowest possible cost, the economy is experiencing
A) allocative efficiency.
B) production efficiency.
C) equity.
D) deflation.

Accepted Answer

Production efficiency refers to producing goods at the lowest possible cost, which is a key factor in maximizing output and productivity in an economy. Allocative efficiency refers to the allocation of resources to meet the demands of consumers, while equity refers to fairness and equal distribution of resources. Deflation refers to a decrease in overall prices, which can have negative impacts on the economy such as reduced consumer spending and increased borrowing costs.

Question 10

Which topic is MOST likely to be studied in a microeconomics course?
A) energy policy
B) unemployment
C) inflation
D) recessions

Accepted Answer

Energy policy can be studied within microeconomics as it involves the analysis of specific markets and the impact of policies on supply, demand, and prices within those markets, which are core concepts in microeconomics.

Question 11

Linear relationships show the same slope between any two points on a line.

Accepted Answer

Linear relationships have a constant slope, which means that the slope between any two points on a line is always the same.

Question 12

The core problem in economics is
A) unemployment.
B) economic growth.
C) inflation.
D) scarcity.

Accepted Answer

Scarcity is the core problem of economics because resources are limited but human wants and needs are unlimited. As a result, scarcity forces individuals, businesses, and governments to make choices on how to allocate their resources efficiently in order to fulfill their needs and wants. This leads to the study of economics, which focuses on how individuals, businesses, and governments make decisions to allocate scarce resources in the most efficient way possible. Unemployment, economic growth, and inflation are all important issues in economics, but they are consequences of scarcity rather than its cause.

Question 13

Although the United States hardly produces any coffee, it is able to acquire various types of coffee from other countries to satisfy the desires of every American coffee drinker. This example best represents _____ efficiency.
A) production
B) allocative
C) Pareto
D) marginal

Accepted Answer

Allocative efficiency refers to the efficient allocation of resources to meet the desires and preferences of consumers. In this example, the United States is able to acquire various types of coffee from other countries to satisfy the desires of every American coffee drinker, indicating allocative efficiency in the coffee market. This does not necessarily relate to production efficiency, Pareto efficiency, or marginal efficiency.

Question 14

Macroeconomics does NOT deal with
A) recessions.
B) inflation.
C) job creation rates.
D) the market for semiconductor chips.

Accepted Answer

Macroeconomics focuses on the overall performance and behavior of the economy as a whole, including issues like GDP, inflation, and employment. The market for semiconductor chips is a microeconomic issue, as it deals with the behavior and interactions of individual firms and consumers in a particular market.

Question 15

Which statement about incentives is TRUE?
A) Each person is motivated by the same incentive.
B) Each person is motivated by different incentives.
C) Incentives can be manipulated with precision.
D) Price is the only relevant economic incentive.

Accepted Answer

Each person is motivated by different incentives. People have different needs, wants, and goals, which drive them to pursue certain incentives. For example, some people may be motivated by monetary incentives, while others may be motivated by recognition, personal satisfaction, or the desire to help others. It is important for organizations and policymakers to understand these differences in order to design effective incentive programs.

Question 16

Which question is NOT an example involving marginal analysis?
A) Should a university offer another section of a class?
B) Should a restaurant stay open another hour?
C) Should Kmart rebrand all of its stores to use the Sears name?
D) Should Boeing hire another assembly-line worker?

Accepted Answer

Marginal analysis involves analyzing the benefits and costs of incremental changes in order to make a decision. Questions A, B, and D all involve considering the marginal benefit and cost of adding another section of a class, staying open another hour, and hiring another assembly-line worker, respectively. However, the question about rebranding Kmart stores does not involve analyzing incremental changes, and therefore is not an example of marginal analysis.

Question 17

Because people make decisions at the margin, when deciding whether to purchase a second car, they would therefore compare the
A) dollar cost of having two cars with the potential income the two cars may generate.
B) additional benefit expected from a second car with the total cost of the two cars.
C) additional benefit expected from a second car with the additional costs of the second car.
D) None of the answers is correct.

Accepted Answer

The concept of making decisions at the margin involves comparing the additional benefits of an action to its additional costs. Therefore, when deciding whether to purchase a second car, individuals would compare the additional benefits expected from having a second car against the additional costs associated with purchasing and maintaining it.

Question 18

_____ is the fairness of various issues and policies.
A) Equity
B) Efficiency
C) Choice
D) Scarcity

Accepted Answer

Equity refers to the fairness, justice, and impartiality in the distribution of resources and opportunities among all individuals in society. It is concerned with ensuring that everyone has equal access to essential goods and services such as healthcare, education, and basic needs. Therefore, equity is the best choice as it directly relates to fairness in policies and issues.

Question 19

(Figure: Interpreting Equations on a Graph) The graph illustrates 
A) a nonlinear equation.
B) a linear equation.
C) the concept of efficiency.
D) a rectangular hyperbola.

Accepted Answer

The graph shows a straight line, indicating a linear equation.

Question 20

A graph of a business cycle that plots output on the vertical axis and quarters of the year on the horizontal axis is an example of a
A) bar chart.
B) pie chart.
C) scatter plot.
D) time series.

Accepted Answer

A graph that plots output over quarters of the year is tracking the changes in output over time, so it is a type of time series. Bar charts are used to compare different categories, pie charts show parts of a whole, and scatter plots chart the relationship between two variables.

Quiz 1: Exploring Economics

_____ is how well resources are used and allocated.

(Figure: Interpreting Equations on a Graph) In the graph, if y stands for inflation and x stands for the money supply, then

Suppose an economist discovers that the relationship between grades and hours of tutoring is grade = 60 + 5(hours) . Based on the equation, which statement is TRUE?

(Figure: Graph Interpretation) In the graph, a negative relationship is depicted with a slope of -0.4.

Titles, labels for axes, and a statement of how the data are measured help with the interpretation of graphs.

Which topic is a microeconomic topic?

A pie chart is useful for business presentations but not for macroeconomic analysis.

When goods are produced at the lowest possible cost, the economy is experiencing

Which topic is MOST likely to be studied in a microeconomics course?

Linear relationships show the same slope between any two points on a line.

The core problem in economics is

Although the United States hardly produces any coffee, it is able to acquire various types of coffee from other countries to satisfy the desires of every American coffee drinker. This example best represents _____ efficiency.

Macroeconomics does NOT deal with

Which statement about incentives is TRUE?

Which question is NOT an example involving marginal analysis?

Because people make decisions at the margin, when deciding whether to purchase a second car, they would therefore compare the

_____ is the fairness of various issues and policies.

(Figure: Interpreting Equations on a Graph) The graph illustrates

A graph of a business cycle that plots output on the vertical axis and quarters of the year on the horizontal axis is an example of a