Name: ________________________ Class: ___________________ Date: __________

ID: A

Quiz 1
Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. ____ 1. The principle that "people face tradeoffs" applies to a. individuals. b. families. c. societies. d. All of the above are correct. 2. When the government attempts to improve equity in an economy the result is often a. an increase in overall output in the economy. b. additional government revenue since overall income will increase. c. a reduction in equity. d. a reduction in efficiency. 3. When you calculate your true costs of going to college, what portion of your room-and-board expenses should be included? a. Your full room-and-board expenses should always be included. b. None of your room-and-board expenses should ever be included. c. You should include only the amount by which your room-and-board expenses exceed the income you earn while attending college. d. You should include only the amount by which your room-and-board expenses exceed the expenses for rent and food if you were not in college. 4. A rational decision maker takes an action only if the a. marginal benefit is less than the marginal cost. b. marginal benefit is greater than the marginal cost. c. average benefit is greater than the average cost. d. marginal benefit is greater than both the average cost and the marginal cost. 5. Which of the following statements is true? a. Few economic models incorporate assumptions. b. Different economic models employ different sets of assumptions. c. Good economic models should attempt to mimic reality as closely as possible. d. Economic models, to be accepted, must be tested by conducting experiments.

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Name: ________________________

ID: A

Figure 3-1

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6. Refer to Figure 3-1. Suppose Paul must work 2 hours to produce each bushel of corn. Then Pauls production possibilities frontier is based on how many hours of work? a. 0.2 hours b. 5 hours c. 10 hours d. 20 hours These figures illustrate the production possibilities available to Barney and Betty with 8 hours of labor in their bakery. Figure 3-4

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7. Refer to Figure 3-4. Which of the following is true? a. Barney takes less time than Betty to make each good . b. Betty has an absolute advantage in making bread only. c. Betty has an absolute advantage in making pies only. d. Betty has an absolute advantage in making both goods.

Name: ________________________ ____ 8. Which markets are represented in the simple circular-flow diagram? a. markets for goods and services and markets for financial assets b. markets for factors of production and markets for financial assets c. markets for goods and services and markets for factors of production d. markets for goods and services and markets for imports and exports Figure 2-7

ID: A

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9. Refer to Figure 2-7. Which of the following would most likely have caused the production possibilities frontier to shift outward from A to B? a. an increase in the availability of capital-producing resources b. a technological advance in the consumer-goods industries c. a general technological advance d. a decrease in unemployment ____ 10. In the simple circular-flow diagram, a. households own the factors of production. b. households buy all the goods and services that firms produce. c. land, labor, and capital flow from households to firms. d. All of the above are correct.

ID: A

Quiz 1 Answer Section

MULTIPLE CHOICE 1. ANS: MSC: 2. ANS: MSC: 3. ANS: MSC: 4. ANS: MSC: 5. ANS: MSC: 6. ANS: MSC: 7. ANS: MSC: 8. ANS: MSC: 9. ANS: TOP: 10. ANS: MSC: D DIF: 1 REF: 1-1 Applicative D DIF: 2 REF: 1-1 Interpretive D DIF: 2 REF: 1-1 Applicative B DIF: 2 REF: 1-1 Interpretive B DIF: 2 REF: 2-1 Interpretive D DIF: 2 REF: 3-2 Applicative D DIF: 2 REF: 3-2 Applicative C DIF: 1 REF: 2-1 Definitional C DIF: 2 REF: 2-1 Production possibilities frontier, Technology D DIF: 2 REF: 2-1 Interpretive TOP: Tradeoffs TOP: Government, Efficiency, Equity TOP: Opportunity cost TOP: Marginal changes TOP: Economic models, Assumptions TOP: Production possibilities frontier TOP: Opportunity cost TOP: Circular-flow diagram

MSC: Applicative TOP: Circular-flow diagram