Exam

Name___________________________________

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

1) The reasons to study economics include which of the following? 1)A) to learn a way of thinkingB) to examine the debate about the role of governmentC) to understand society and global affairsD) all of the above

Answer: D

2) Marginalism is 2)A) the study of how societies choose to use scarce resourcesB) a market situation in which profit opportunities are eliminated almost instantaneously.C) the process of analyzing the additional costs or benefits arising from a decision.D) the best alternative that we forego when making a decision.

Answer: C

3) Economics is best defined as the study of 3)A) financial decision-making.B) inflation, unemployment, and economic growth.C) choices made by people faced with scarcity.D) how consumers make purchasing decisions.

Answer: C

4) The Industrial Revolution refers to the rise of the modern factory system in ________ during thelate eighteenth and early nineteenth centuries.

4)

A) England B) FranceC) the United States D) Germany

Answer: A

5) Which of the following statements is correct? 5)A) If poverty was eliminated there would be no reason to study economics.B) Economic analysis can be used to explain how societies, but not individuals, make decisions.C) In large measure, economics is the study of how people make choices.D) Economics is a natural science.

Answer: C

6) Economics is the study of 6)A) how society uses limited resources.B) the role of money in markets.C) how government officials decide which goods and services are produced.D) how to invest in the stock market.

Answer: A

7) Costs that cannot be avoided, because they have already been incurred are known as 7)A) differential costs. B) sunk costs.C) opportunity costs. D) marginal costs.

Answer: B

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8) Suppose that two weeks ago you purchased a ticket to the symphony for $40. Last week someoneinvited you to go camping on the same night as the symphony concert. You would much rather gocamping than go to the symphony. You have tried unsuccessfully to sell the symphony concertticket. Which of the following statements regarding this situation is correct?

8)

A) The $40 symphony ticket should be irrelevant in your decision making, because it representsthe marginal cost of going camping.

B) The $40 you paid for the symphony ticket should be irrelevant in your decision making,because it is a sunk cost.

C) You should base your decision on whether or not going camping will provide you with morethan $40 in satisfaction.

D) The $40 you paid for the symphony ticket is relevant to the decision, as this represents theopportunity cost of going camping.

Answer: B

9) You have decided that you want to attend a renaissance fair as King Henry VIII. You estimate thatit will cost $80 to assemble your costume. After spending $80 on the costume, you realize that theadditional pieces you need will cost you $20 more. The marginal cost of completing the costume is

9)

A) $20. B) $60. C) $80. D) $100.Answer: A

10) The concept of opportunity cost can be applied to the analysis of ________ decision-makingprocesses.

10)

A) any B) only globalC) only-small-scale D) only economy-wide

Answer: A

11) That which we forgo, or give up, when we make a choice or a decision is known as 11)A) correlation. B) causation.C) equity. D) opportunity cost.

Answer: D

12) Scarce resources give rise to the concept of 12)A) positive economics. B) laissez-faire.C) efficient markets. D) opportunity costs.

Answer: D

13) Which of the following is an opportunity cost of attending college? 13)A) the cost of the food that you consume while you are attending collegeB) the cost of your apartment or dormC) the education you gain from attending collegeD) the income you could have earned if you didn't attend college

Answer: D

14) If your tuition is $2,000 this semester, your books cost $400, you can only work 10 rather than 40hours per week during the 15 weeks you are taking classes and you make $12 per hour, and yourroom and board is $4,000 this semester, then your opportunity cost of attending college thissemester is

14)

A) $2,400. B) $2,760. C) $7,800. D) $11,800.Answer: C

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15) If your tuition is $20,000 this semester, your books cost $2,000, you can only work 10 rather than 40hours per week during the 15 weeks you are taking classes and you make $15 per hour, and yourroom and board is $8,000 this semester, then your opportunity cost of attending college thissemester is

15)

A) $22,000. B) $22,150. C) $28,750. D) $36,750.Answer: C

16) If you own a condo and you decide to lease it to your cousin 16)A) there is an opportunity cost of leasing the condo because you could have chosen to live in it.B) there is no opportunity cost of leasing the condo because you collect rent from your cousin.C) there is no opportunity cost of leasing the condo because you own it.D) the only cost relevant to this decision is the price you paid for the condo.

Answer: A

17) You own The Wedding Crasher on DVD. The opportunity cost of watching this DVD for the fourthtime

17)

A) is zero, since you own it.B) must be the same as the opportunity cost of watching it the first time.C) is the value of the alternative use of the time you spend watching the DVD.D) is one-fourth the cost of the DVD, as this is the fourth time you have watched it.

Answer: C

18) Opportunity cost is 18)A) what we give up to get something else. B) the same as real cost.C) marginal cost divided by sunk cost. D) all of the above

Answer: A

19) Sunk costs 19)A) are costs which cannot be avoided but have yet to be incurred.B) the sum of all opportunity costs.C) are costs which have been incurred.D) the sum of all marginal costs.

Answer: C

20) If you can download 10 ring tones for your cell phone for $10 or you could download 11 ring tonesfor your cell phone for $10.50, then the marginal cost of the eleventh ring tone is

20)

A) $0.50. B) $10.00. C) $10.50. D) $20.50.Answer: A

21) If you eat at a Las Vegas casino that charges $12 for its all you can eat buffet, then the marginal costof your third trip to the buffet is

21)

A) zero. B) $4. C) $12. D) $36.Answer: A

22) An efficient market is a market 22)A) in which profit opportunities are eliminated almost instantaneously.B) in which long-term profits are guaranteed.C) in which there are no opportunity costs.D) that deals in unlimited resources.

Answer: A

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23) If information is more costly and less easily available, then usually this 23)A) decreases profit opportunities.B) makes markets less efficient.C) makes markets more efficient.D) decreases the opportunity cost of acquiring more information.

Answer: B

24) The common way of expressing the efficient market concept is 24)A) "once an efficient market, always an efficient market."B) "the only true market is a profitable market."C) "only without government interference can a market survive."D) "there's no such thing as a free lunch."

Answer: D

25) Related to the Economics in Practice on p. 6: An example of a sunk cost to Apple in its production ofthe iPod is

25)

A) the cost of the hard drive produced in Japan by Toshiba.B) the cost of conception and design of the iPod.C) the distribution and production costs for the iPod.D) the roughly 80 percent of the retail price captured by the United States.

Answer: B

26) Related to the Economics in Practice on p. 6: The opportunity cost to Apple of having hard driveproduced in Japan by Toshiba is

26)

A) having the hard drive produced by the next best available company.B) the components of the hard drive which are not produced by Toshiba.C) the value-added captured by Apple in the United States.D) the wages paid to Japanese workers.

Answer: A

TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.

27) Resources are limited in both wealthy and poor societies. 27)Answer: True False

28) The value of the best alternative foregone is the sunk cost of making a decision. 28)Answer: True False

29) Opportunity costs arise because resources are limited. 29)Answer: True False

30) Sunk costs affect marginal decision making. 30)Answer: True False

31) Sunk costs are those that cannot be recaptured. 31)Answer: True False

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MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

32) Microeconomics is best described as the study of 32)A) inflation, unemployment, gross national product, and the nation's economy as a whole.B) the choices made by individual households, firms, and governments.C) how markets interact in the aggregate economy.D) marginal changes in the economy.

Answer: B

33) Macroeconomics is best described as the study of 33)A) the choices made by individual households, firms, and governments.B) very large issues.C) the relationship between inflation and wage inequality.D) the nation's economy as a whole.

Answer: D

34) Which of the following is a microeconomics question? 34)A) Should the government attempt to influence the interest rate to lower inflation?B) Should Congress and the president take action to reduce global warming?C) Is it sensible for a government to subsidize tobacco production?D) Why do some countries grow faster than others?

Answer: C

35) Which of the following is a macroeconomics question? 35)A) Why does a firm decide to enter a particular market?B) Should the government put a tax on alcohol in an attempt to reduce highway fatalities?C) Should we have a constitutional amendment to balance the federal budget?D) Should the government prevent the merger of two large firms?

Answer: C

36) We can use macroeconomic analysis to 36)A) learn how to balance a checkbook.B) understand marginal changes in the macroeconomy.C) study the choices made by households.D) understand why economies grow.

Answer: D

37) Related to the Economics in Practice on p. 9: The study on trust and gender found that men trustmore than women, and women are more trustworthy than men. If you conclude from that resultthat women are more trustworthy than men because men trust more than women, you havecommitted what error?

37)

A) the ceteris paribus error B) the post hoc, ergo prompter hoc fallacyC) the fallacy of composition D) the fallacy of inductive reasoning.

Answer: B

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38) Related to the Economics in Practice on p. 9: The study on trust and gender found that men trustmore than women, and women are more trustworthy than men. All of the following are examplesof positive statements concerning this study EXCEPT

38)

A) men trust more than women.B) men should only trust women who are trustworthy.C) there is a link between trust and gender.D) women are more trustworthy than men.

Answer: B

TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.

39) The rate of unemployment is a topic of microeconomics. 39)Answer: True False

40) The rate of inflation is a topic of macroeconomics. 40)Answer: True False

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

41) Which of the following is an example of a normative question? 41)A) How will an increase in the price of diesel fuel affect truck drivers?B) How will an increase in the minimum wage affect migrant workers?C) Should the government provide free prescription drugs to lower-income citizens?D) What fraction of an income-tax rebate check will be spent on consumer goods?

Answer: C

42) The compilation of data that describe phenomena and facts is referred to as 42)A) descriptive economics. B) an economic model.C) Marxist ideology. D) a normative statement.

Answer: A

43) The amount of exercise that one gets is an important factor in the determination of his general stateof health. This is best described as

43)

A) a positive statement. B) descriptive economics.C) Marxist ideology. D) a normative statement.

Answer: A

44) Opportunity cost is 44)A) the cost of production which cannot be recaptured.B) the total cost incurred from the consumption of additional output.C) the cost involved when choosing between alternatives.D) the additional cost incurred from the consumption of one more unit of output.

Answer: C

45) An approach to economics that applies statistical techniques and data to economic problems iscalled

45)

A) normative economics. B) Ockham's razor.C) positive economics. D) laissez-faire economics.

Answer: C

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46) Normative economics 46)A) is the focus of most modern economic reasoning.B) predicts the consequences of alternative actions.C) answers the question "What ought to be?"D) answers the question "What is?"

Answer: C

47) Which of the following is a question answered with normative economic reasoning? 47)A) If the college provided more financial aid assistance, would more students benefit?B) Should the college cut tuition to stimulate enrollment?C) If the college increased tuition, would class size decline?D) If the college offers free parking for students, will more students drive to campus?

Answer: B

48) Which of the following is a question answered with positive economic analysis? 48)A) If the college increased tuition, will class size decline?B) Should the college cut tuition to stimulate enrollment?C) Should the college offers free parking for students?D) Should the college provide more financial aid assistance?

Answer: A

49) The reoccurrence of contagious diseases should be significantly lower in a technically advancednation such as the United States. This statement is best described as

49)

A) a positive statement. B) a normative statement.C) an implication of an efficient market. D) a descriptive economics statement.

Answer: B

50) There is great concern over the fact that global warming is causing permanent damage to the globalenvironment. A study of the costs and benefits of purchasing carbon offsets to combat globalwarming is an example of

50)

A) normative economics. B) labor economics.C) positive economics. D) laissez-faire economics.

Answer: C

51) The compilation of data that describe phenomena and facts refers to 51)A) collective economics. B) descriptive economics.C) laissez-faire economics. D) normative economics.

Answer: B

52) An economist collecting data on the employment benefits and salaries in the chemical engineeringindustry is an example of

52)

A) the post hoc fallacy. B) the fallacy of composition.C) ceteris paribus. D) descriptive economics.

Answer: D

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Refer to the information provided in Scenario 1.1 below to answer the following questions.

SCENARIO 1.1: A scientist wants to understand the relationship between automobile emissions and the level of globalwarming. The scientist collects data on the volume of automobile emissions and the levels of global warming over time. Thescientist concludes that a 1% increase in automobile emissions causes a 0.0003% increase in average global temperatures.From this information he concludes that the automobile emissions are harmful to the environment and should be reduced tostop the increase in global temperatures.

53) Refer to Scenario 1.1. The statement that a 1% increase in the automobile emissions causes a0.0003% increase in average global temperatures is an example of

53)

A) normative economics. B) Marxist economics.C) descriptive economics. D) positive economics.

Answer: D

54) Refer to Scenario 1.1. The statement, "automobile emissions are harmful to the environment andshould be reduced to stop the increase in global temperatures," is an example of

54)

A) normative economics. B) Marxist economics.C) positive economics. D) descriptive economics.

Answer: A

55) Refer to Scenario 1.1. The process of collecting data on automobile emissions and global warminglevels is an example of

55)

A) descriptive economics. B) econometrics.C) law and economics. D) economic history.

Answer: A

56) Refer to Scenario 1.1. The statement that an increase in automobile emissions causes an increase inglobal warming is an example of

56)

A) an economic theory. B) deductive reasoning.C) descriptive reasoning. D) normative economics.

Answer: A

57) Refer to Scenario 1.1. A graph of the volume of automobile emissions on one axis and the level ofaverage global temperatures on the other axis is an example of

57)

A) inductive reasoning. B) an economic model.C) a variable theory. D) an economic theory.

Answer: B

58) By invoking the assumption of ceteris paribus, economists 58)A) isolate the impact of one single variable while holding all other variables constant.B) consider the impact of all relevant factors.C) exclude irrelevant detail when analyzing a model.D) hold all variables constant when analyzing a model.

Answer: A

59) Ockham's razor is the principle that states 59)A) we must forego something when making a decision.B) irrelevant detail should not be included in a model.C) costs which have been incurred cannot be avoided.D) supply creates its own demand.

Answer: B

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60) The phrase ceteris paribus means 60)A) "scarcity is a fact of life." B) "all else equal."C) "everything affects everything else." D) "there is no such thing as a free lunch."

Answer: B

61) The Latin phrase ceteris paribus means that when a relationship between two variables is beingstudied

61)

A) neither of those two variables is allowed to change.B) we recognize that some factors are unknown.C) both are treated as unpredictable.D) all other variables are held fixed.

Answer: D

62) Isabel noted that whenever she wore her green contact lenses, the Chicago White Sox would winthat evening. Based on this observation, she developed the "green-eyes-for-White-Sox" theory ofwinning. It is most likely true that Isabel

62)

A) showed good reasoning for the reason the White Sox would win.B) was too quick to conclude that correlation implies causation.C) committed the fallacy of composition.D) committed the ceteris paribus error.

Answer: B

63) Whenever a former governor is elected president, the unemployment rate decreases; whenever aformer congressman is elected president, the inflation rate increases. This statement is an exampleof

63)

A) fallacy of composition. B) fallacy of inductive reasoning.C) ceteris paribus fallacy. D) post hoc, ergo prompter hoc fallacy.

Answer: D

64) The erroneous belief that what is true for a part is necessarily true for the whole is referred to as the 64)A) ceteris paribus fallacy. B) fallacy of composition.C) post hoc, ergo prompter hoc fallacy. D) fallacy of inductive reasoning.

Answer: B

65) The unemployment rate was falling during all of the years that I was a student, but as soon as Igraduated, the unemployment rate started to rise. Therefore, the job market was waiting until Istarted looking for employment to start to go bad. This statement is an example of

65)

A) post hoc, ergo prompter hoc fallacy. B) fallacy of composition.C) ceteris paribus fallacy. D) fallacy of inductive reasoning.

Answer: A

66) Research conducted in border states suggests that speaking a second language increases theprospects for employment. Therefore, we should require all citizens to speak a second language.This statement is an example of

66)

A) fallacy of inductive reasoning. B) ceteris paribus fallacy.C) post hoc, ergo prompter hoc fallacy. D) fallacy of composition.

Answer: D

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67) Salary caps are imposed when league officials believe some football team owners are takingadvantage of their deep pockets and buying more quality players than the other owners can affordto buy. Which of the following criteria are they using to guide their actions?

67)

A) efficiency B) stability C) growth D) equityAnswer: D

68) A government policy that tries to minimize inflation and unemployment can best be described astrying to achieve economic

68)

A) profitability. B) stability. C) equity. D) growth.Answer: B

69) The concept of equity would explain the redistribution from the rich to the poor which is achievedfrom a tax system that requires taxes to

69)

A) remain stable when income rises. B) fall when income rises.C) rise when income rises. D) be unrelated to income.

Answer: C

70) You know that the school parking lot gets very congested about 8:30 a.m. To avoid this congestion,you start arriving at school at 8:00 a.m. However many other students make the same decision, andnow the parking lot becomes very congested at 8:00 a.m. This is an example of the

70)

A) post hoc, ergo prompter hoc fallacy. B) ceteris paribus fallacy.C) fallacy of division. D) fallacy of composition.

Answer: D

71) You always have math problems to work in class whenever you forget to bring your calculator toschool. Concluding that forgetting your calculator causes your professor to assign math problems isan example of the

71)

A) fallacy of composition. B) post hoc, ergo prompter hoc fallacy.C) ceteris paribus conditions. D) fallacy of inductive reasoning.

Answer: B

72) At a NASCAR race, you stand up to see better. Everyone else stands up, as well. This is an exampleof

72)

A) Ockham's razor. B) ceteris paribus.C) the post hoc, ergo prompter hoc fallacy. D) the fallacy of composition.

Answer: D

73) You have observed that every time you get a new tattoo the day before you take an exam you getan A. You therefore conclude that to get an A on an exam, all you have to do is get a new tattoo theday before. You have committed the

73)

A) fallacy of composition. B) fallacy of division.C) post hoc, ergo prompter hoc fallacy. D) fallacy of inductive reasoning.

Answer: C

74) If you observe that Kelly Clarkson won American Idol 3 years before Carrie Underwood won, andyou conclude that Kelly Clarkson winning caused Carrie Underwood to win 3 years later, youwould be guilty of an error called the

74)

A) fallacy of composition. B) fallacy of inductive reasoning.C) fallacy of ceteris paribus. D) post hoc, ergo prompter hoc fallacy.

Answer: D

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75) Two variables are said to be correlated if 75)A) the first variable does not change when the second variable changes.B) the variables share no relation with each other.C) one variable changes when the other variable changes.D) the first variable changes when the second variable does not change.

Answer: C

76) The belief that what is true for a part is necessarily true for the whole describes the 76)A) fallacy of composition. B) fallacy of division.C) fallacy of inductive reasoning. D) post hoc, ergo prompter hoc fallacy.

Answer: A

77) Empirical economics refers to the 77)A) belief that what is true for a part is necessarily true for the whole.B) model of economics used prior to the Industrial Revolution.C) collection and use of data to test economic theories.D) exclusion of irrelevant data when analyzing a model.

Answer: C

78) A change in economic output is potentially efficient if the value of the resulting gains ________ thevalue of the resulting losses.

78)

A) is less than B) is equal to C) exceeds D) is unrelated toAnswer: C

79) An efficient economy is an economy that produces what ________ demand and does so at the________ possible cost.

79)

A) consumers; least B) the government; leastC) the government; highest D) consumers; highest

Answer: A

80) An efficient market is characterized by the fact that profit opportunities are 80)A) only provided to government-subsidized producers.B) guaranteed to everyone.C) available only to the most efficient producers.D) eliminated almost instantaneously.

Answer: D

81) The four criteria that are frequently used in judging the outcome of economic policy are efficiency,stability, economic growth, and

81)

A) equity. B) resolution. C) profitability. D) equality.Answer: A

82) You have noticed that there is an increase in the number of homeless people in your city and at thesame time you observe that there are a number of vacant apartments. You believe that if landlordswere required to rent their apartments for less than they are currently charging, the governmentcould reduce the number of homeless people. This policy recommendation would be motivated byconcerns over

82)

A) profitability. B) stability.C) equity. D) economic growth.

Answer: C

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83) Many economists argue that items such as food and clothing should be exempt from sales taxbecause low-income people spend a greater percentage of their income on these goods than dohigh-income individuals. This argument is motivated by concerns over

83)

A) efficiency. B) economic growth.C) economic stability. D) equity.

Answer: D

84) The statement "people should pollute as little as possible" is an example of a 84)A) factual statement. B) normative statement.C) positive statement. D) non-judgmental statement.

Answer: B

85) The statement "the unemployment rate is 5.1%" is an example of a 85)A) positive statement. B) value judgement.C) non-verifiable statement. D) normative statement.

Answer: A

TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.

86) Positive economics questions "What ought to be?" Normative economics predicts the consequencesof alternative actions, answering the questions "What is?" or "What will be?"

86)

Answer: True False

87) Normative economics questions "What ought to be?" Positive economics predicts the consequencesof alternative actions, answering the questions "What is?" or "What will be?"

87)

Answer: True False

88) An efficient economy is one that produces what the government demands and does so at the leastpossible cost.

88)

Answer: True False

89) Post hoc, ergo prompter hoc literally translated means, "all else equal." 89)Answer: True False

90) Normative economics seeks to understand behavior, but not make judgments. 90)Answer: True False

91) Stability implies a steady rate of economic growth regardless of the inflation rate. 91)Answer: True False

92) The compilation of data to describe phenomena and facts is known as empirical economics. 92)Answer: True False

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

93) If the slope of a straight line is -2. and if X (the variable on the horizontal axis) decreases by 8, thenY (the variable on the vertical axis) will

93)

A) increase by 16. B) decrease by 4. C) increase by 4. D) decrease by 16.Answer: A

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Refer to the information provided in Figure 1.1 below to answer the questions that follow.

Figure 1.1

94) Refer to Figure 1.1. The relationship between the daily temperature and the number of gallons ofice cream purchased demonstrates

94)

A) a zero slope. B) a positive slope.C) an infinite slope. D) a negative slope.

Answer: B

Refer to the information provided in Figure 1.2 below to answer the questions that follow.

Figure 1.2

95) Refer to Figure 1.2. The slope of the line between Points A and B is 95)A) negative and decreasing. B) negative and constant.C) positive and constant. D) positive and increasing.

Answer: C

96) Refer to Figure 1.2. The slope of the line between Points A and B is 96)A) 0.25. B) 4. C) -0.25. D) -4.

Answer: A

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Refer to the information provided in Figure 1.3 below to answer the questions that follow.

Figure 1.3

97) Refer to Figure 1.3. The slope of the line is 97)A) negative. B) positiveC) decreasing at an increasing rate. D) increasing at a decreasing rate.

Answer: B

98) Refer to Figure 1.3. The slope of the line between Points D and B is 98)A) 1.5. B) 0.67. C) -0.67. D) -1.5.

Answer: B

99) Refer to Figure 1.3. The slope of the line between Points A and B is 99)A) 1.5. B) 0.67. C) -0.67. D) -1.5.

Answer: B

100) Refer to Figure 1.3. If a 45 degree line were also graphed, it would ________ the line shown on thegraph.

100)

A) lie below B) lie aboveC) cross D) indeterminate from this information

Answer: B

101) Refer to Figure 1.3. At Point A, what is the value of Y? 101)A) 2 B) 4 C) 6 D) 8

Answer: D

102) Refer to Figure 1.3. At Point A the slope of the line is 0.67, so at Point C the slope would be 102)A) equal to 0.67. B) less than 0.67.C) greater than 0.67. D) indeterminate from this information.

Answer: A

14

Refer to the information provided in Figure 1.4 below to answer the questions that follow.

Figure 1.4

103) Refer to Figure 1.4. Panel A shows a curve which has a slope that is 103)A) first negative, then zero, and then positive.B) first positive, then zero, and then negative.C) zero throughout.D) infinite throughout.

Answer: A

104) Refer to Figure 1.4. Panel B shows a curve which has a slope that is 104)A) zero throughout. B) first negative and then positive.C) first positive and then negative. D) infinite throughout.

Answer: C

105) Refer to Figure 1.4. Panel C shows a curve which has a slope that is 105)A) infinite throughout. B) first negative and then positive.C) zero throughout. D) first positive and then negative.

Answer: C

106) Refer to Figure 1.4. Panel D shows a curve which has a slope that is 106)A) first positive and then negative. B) zero throughout.C) infinite throughout. D) first negative and then positive.

Answer: C

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107) Refer to Figure 1.4. At Point E in panel A, the slope is 107)A) infinite. B) zero.C) indeterminate from this information. D) negative.

Answer: B

108) The slope of a straight line 108)A) is constant. B) is always positive.C) is not constant. D) must first increase then decrease.

Answer: A

109) The slope of a vertical line is 109)A) negative. B) zero.C) infinite. D) continually changing.

Answer: C

110) If the slope of a straight line is 5 and if X (the variable on the horizontal axis) increases by 4, then Y(the variable on the vertical axis) will

110)

A) increase by 0.8. B) decrease by 0.8. C) decrease by 20. D) increase by 20.Answer: D

111) If the slope of a straight line is 6 and if Y (the variable on the vertical axis) decreases by 60, then X(the variable on the horizontal axis)

111)

A) increases by 10. B) increases by 600.C) decreases by 10. D) decreases by 600.

Answer: C

112) The slope of a horizontal line is 112)A) continually changing. B) zero.C) negative. D) infinite.

Answer: B

16

Refer to the information provided in Figure 1.5 below to answer the questions that follow.

Figure 1.5

113) Refer to Figure 1.5. Panel A shows a curve with a slope that is 113)A) negative and decreasing. B) negative and increasing.C) positive and increasing. D) positive and decreasing.

Answer: C

114) Refer to Figure 1.5. Panel B shows a curve with a slope that is 114)A) positive and decreasing. B) negative and decreasing.C) negative and increasing. D) positive and increasing.

Answer: A

115) Refer to Figure 1.5. As income decreases, consumption decreases by a decreasing amount. Ifconsumption is graphed on the vertical axis and income is graphed on the horizontal axis, therelationship between consumption and income would look like which of the following panels?

115)

A) A B) B C) C D) DAnswer: B

116) Refer to Figure 1.5. As firms produce additional units, average costs declines by a smaller andsmaller amount. If output is graphed on the horizontal axis and average costs are graphed on thevertical axis, the relationship between average costs and output would be like which of thefollowing panels?

116)

A) A B) B C) C D) DAnswer: D

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TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.

117) Dividing the change in quantity on the X axis by the change in quantity on the Y axis calculates theslope of a line.

117)

Answer: True False

118) A graph illustrating how two variables change over time is a Cartesian coordinate system. 118)Answer: True False

119) As the variable on the Y-axis rises the variable on the X-axis rises. The relationship between x andy is said to be direct.

119)

Answer: True False

120) As the variable on the Y-axis rises the variable on the X-axis falls. The relationship between X andY is said to be direct.

120)

Answer: True False

121) The slope of a curve is constant. 121)Answer: True False

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