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 be an informed voter 

B) 

to learn a way of thinking 

C) 

to understand society and global affairs 

D) 

all of the above 

2) 

Marginalism is 

2) 

_______ 

A) 

the best alternative that we forego when making a decision. 

B) 

the process of analyzing the additional costs or benefits arising from a decision. 

C) 

the study of how societies choose to use scarce resources 

D) 

a market situation in which profit opportunities are eliminated almost instantaneously. 

3) 

Economics is best defined as the study of 

3) 

_______ 

A) 

how consumers make purchasing decisions. 

B) 

financial decision-making. 

C) 

choices made by people faced with scarcity. 

D) 

inflation, unemployment, and economic growth. 

4) 

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

4) 

_______ 

A) 

France 

B) 

Germany 

C) 

England 

D) 

the United States 

5) 

Which of the following statements is correct? 

5) 

_______ 

A) 

In large measure, economics is the study of how people make choices. 

B) 

If poverty was eliminated there would be no reason to study economics. 

C) 

Economics is a natural science. 

D) 

Economic analysis can be used to explain how societies, but not individuals, make decisions. 

6) 

Economics is the study of 

6) 

_______ 

A) 

the role of money in markets. 

B) 

how government officials decide which goods and services are produced. 

C) 

how to invest in the stock market. 

D) 

how society uses limited resources. 

7) 

Costs that cannot be avoided, because they have already been incurred are known as 

7) 

_______ 

A) 

marginal costs. 

B) 

sunk costs. 

C) 

opportunity costs. 

D) 

differential costs. 

8) 

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

8) 

_______ 

A) 

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

B) 

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

C) 

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

D) 

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

9) 

You have decided that you want to attend a renaissance fair as King Henry VIII. You estimate that it will cost $80 to assemble your costume. After spending $80 on the costume, you realize that the additional 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. 

10) 

The concept of opportunity cost can be applied to the analysis of ________ decision-making processes. 

10) 

______ 

A) 

only-small-scale 

B) 

only global 

C) 

any 

D) 

only economy-wide 

11) 

That which we forgo, or give up, when we make a choice or a decision is known as 

11) 

______ 

A) 

equity. 

B) 

correlation. 

C) 

opportunity cost. 

D) 

causation. 

12) 

Scarce resources give rise to the concept of 

12) 

______ 

A) 

opportunity costs. 

B) 

positive economics. 

C) 

efficient markets. 

D) 

laissez-faire. 

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 college 

B) 

the cost of your apartment or dorm 

C) 

the education you gain from attending college. 

D) 

the income you could have earned if you didn't attend college 

14) 

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

14) 

______ 

A) 

$2,400. 

B) 

$2,760. 

C) 

$7,800. 

D) 

$11,800. 

15) 

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

15) 

______ 

A) 

$22,000. 

B) 

$22,150. 

C) 

$28,750. 

D) 

$36,750. 

16) 

If you own a condo and you decide to lease it to your cousin 

16) 

______ 

A) 

there is no opportunity cost of leasing the condo because you collect rent from your cousin. 

B) 

there is no opportunity cost of leasing the condo because you own it. 

C) 

the only cost relevant to this decision is the price you paid for the condo. 

D) 

there is an opportunity cost of leasing the condo because you could have chosen to live in it. 

17) 

You own The Wedding Crasher on DVD. The opportunity cost of watching this DVD for the fourth time 

17) 

______ 

A) 

is one-fourth the cost of the DVD, as this is the fourth time you have watched it. 

B) 

is zero, since you own it. 

C) 

is the value of the alternative use of the time you spend watching the DVD. 

D) 

must be the same as the opportunity cost of watching it the first time. 

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 

19) 

Sunk costs 

19) 

______ 

A) 

the sum of all opportunity costs. 

B) 

the sum of all marginal costs. 

C) 

are costs which cannot be avoided but have yet to be incurred. 

D) 

are costs which have been incurred. 

20) 

If you can download 10 ring tones for your cell phone for $10 or you could download 11 ring tones for 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. 

21) 

If you eat at a Las vegas casino that charges $12 for its all you can eat buffet, then the marginal cost of your third trip to the buffet is 

21) 

______ 

A) 

zero. 

B) 

$4. 

C) 

$12. 

D) 

$36. 

22) 

An efficient market is a market 

22) 

______ 

A) 

in which long-term profits are guaranteed. 

B) 

in which profit opportunities are eliminated almost instantaneously. 

C) 

in which there are no opportunity costs. 

D) 

that deals in unlimited resources. 

23) 

If information is more costly and less easily available, then usually this 

23) 

______ 

A) 

decreases the opportunity cost of acquiring more information. 

B) 

makes markets more efficient. 

C) 

decreases profit opportunities. 

D) 

makes markets less efficient. 

24) 

The common way of expressing the efficient market concept is 

24) 

______ 

A) 

"the only true market is a profitable market." 

B) 

"once an efficient market, always an efficient market." 

C) 

"there's no such thing as a free lunch." 

D) 

"only without government interference can a market survive." 

25) 

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

25) 

______ 

A) 

the cost of conception and design of the iPod. 

B) 

the $80 value-added received by Apple. 

C) 

the $73 cost of the Toshiba hard drive. 

D) 

the cost of all of the 451 components needed to produce the iPod. 

26) 

Related to the Economics in Practice on p. 6 The opportunity cost to Apple of having its 30-gigabyte video iPod assembled in China is 

26) 

______ 

A) 

the $4 per unit cost of assembly in China. 

B) 

the low wages paid to Chinese workers. 

C) 

the value-added received by Apple. 

D) 

having the iPod assembled in the next best available location. 

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) 

______ 

28) 

The value of the best alternative foregone is the sunk cost of making a decision. 

28) 

______ 

29) 

Opportunity costs arise because resources are limited. 

29) 

______ 

30) 

Sunk costs affect marginal decision making. 

30) 

______ 

31) 

Sunk costs are those that cannot be recaptured. 

31) 

______ 

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) 

how markets interact in the aggregate economy. 

B) 

marginal changes in the economy. 

C) 

inflation, unemployment, gross national product, and the nation's economy as a whole. 

D) 

the choices made by individual households, firms, and governments. 

33) 

Macroeconomics is best described as the study of 

33) 

______ 

A) 

the choices made by individual households, firms, and governments. 

B) 

the nation's economy as a whole. 

C) 

the relationship between inflation and wage inequality. 

D) 

very large issues. 

34) 

Which of the following is a microeconomics question? 

34) 

______ 

A) 

Should Congress and the president take action to reduce global warming? 

B) 

Is it sensible for a government to subsidize tobacco production? 

C) 

Should the government attempt to influence the interest rate to lower inflation? 

D) 

Why do some countries grow faster than others? 

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 the government prevent the merger of two large firms? 

D) 

Should we have a constitutional amendment to balance the federal budget? 

36) 

We can use macroeconomic analysis to 

36) 

______ 

A) 

study the choices made by households. 

B) 

understand why economies grow. 

C) 

learn how to balance a checkbook. 

D) 

understand marginal changes in the macroeconomy. 

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

37) 

The rate of unemployment is a topic of microeconomics. 

37) 

______ 

38) 

The rate of inflation is a topic of macroeconomics. 

38) 

______ 

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

39) 

Which of the following is an example of a normative question? 

39) 

______ 

A) 

How will an increase in the minimum wage affect migrant workers? 

B) 

Should the government provide free prescription drugs to lower-income citizens? 

C) 

What fraction of an income-tax rebate check will be spent on consumer goods? 

D) 

How will an increase in the price of diesel fuel affect truck drivers? 

40) 

The compilation of data that describe phenomena and facts is referred to as 

40) 

______ 

A) 

descriptive economics. 

B) 

Marxist ideology. 

C) 

an economic model. 

D) 

a normative statement. 

41) 

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

41) 

______ 

A) 

descriptive economics. 

B) 

Marxist ideology. 

C) 

a normative statement. 

D) 

a positive statement. 

42) 

Opportunity cost is 

42) 

______ 

A) 

the cost of production which cannot be recaptured. 

B) 

the additional cost incurred from the consumption of one more unit of output. 

C) 

the cost involved when choosing between alternatives. 

D) 

the total cost incurred from the consumption of additional output. 

43) 

An approach to economics that applies statistical techniques and data to economic problems is called 

43) 

______ 

A) 

positive economics. 

B) 

Ockham's razor. 

C) 

normative economics. 

D) 

laissez-faire economics. 

44) 

Normative economics 

44) 

______ 

A) 

answers the question "What is?" 

B) 

predicts the consequences of alternative actions. 

C) 

is the focus of most modern economic reasoning. 

D) 

answers the question "What ought to be?" 

45) 

Which of the following is a question answered with normative economic reasoning? 

45) 

______ 

A) 

If the college offers free parking for students, will more students drive to campus? 

B) 

If the college increased tuition, would class size decline? 

C) 

Should the college cut tuition to stimulate enrollment? 

D) 

If the college provided more financial aid assistance, would more students benefit? 

46) 

Which of the following is a question answered with positive economic analysis? 

46) 

______ 

A) 

Should the college offers free parking for students? 

B) 

If the college increased tuition, will class size decline? 

C) 

Should the college cut tuition to stimulate enrollment? 

D) 

Should the college provide more financial aid assistance? 

47) 

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

47) 

______ 

A) 

a normative statement. 

B) 

a descriptive economics statement. 

C) 

a positive statement. 

D) 

an implication of an efficient market. 

48) 

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

48) 

______ 

A) 

positive economics. 

B) 

labor economics. 

C) 

laissez-faire economics. 

D) 

normative economics. 

49) 

The compilation of data that describe phenomena and facts refers to 

49) 

______ 

A) 

collective economics. 

B) 

normative economics. 

C) 

descriptive economics. 

D) 

laissez-faire economics. 

50) 

An economist collecting data on the employment benefits and salaries in the chemical engineering industry is an example of 

50) 

______ 

A) 

the fallacy of composition. 

B) 

ceteris paribus. 

C) 

the post hoc fallacy. 

D) 

descriptive economics. 

Refer to Scenario 1.1 below to answer the questions that follow.

SCENARIO 1.1 A scientist wants to understand the relationship between automobile emissions and the level of global warming. The scientist collects data on the volume of automobile emissions and the levels of global warming over time. The scientist 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 to stop the increase in global temperatures.

51) 

Refer to Scenario 1.1. The statement that a 1% increase in the automobile emissions causes a 0.0003% increase in average global temperatures is an example of 

51) 

______ 

A) 

normative economics. 

B) 

positive economics. 

C) 

descriptive economics. 

D) 

Marxist economics. 

52) 

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

52) 

______ 

A) 

positive economics. 

B) 

descriptive economics. 

C) 

Marxist economics. 

D) 

normative economics. 

53) 

Refer to Scenario 1.1. The process of collecting data on automobile emissions and global warming levels is an example of 

53) 

______ 

A) 

descriptive economics. 

B) 

law and economics. 

C) 

econometrics. 

D) 

economic history. 

54) 

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

54) 

______ 

A) 

deductive reasoning. 

B) 

normative economics. 

C) 

an economic theory. 

D) 

descriptive reasoning. 

55) 

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

55) 

______ 

A) 

inductive reasoning. 

B) 

an economic model. 

C) 

a variable theory. 

D) 

an economic theory. 

56) 

By invoking the assumption of ceteris paribus, economists 

56) 

______ 

A) 

consider the impact of all relevant factors. 

B) 

isolate the impact of one single variable while holding all other variables constant. 

C) 

hold all variables constant when analyzing a model. 

D) 

exclude irrelevant detail when analyzing a model. 

57) 

Ockham's razor is the principle that states 

57) 

______ 

A) 

irrelevant detail should not be included in a model. 

B) 

supply creates its own demand. 

C) 

costs which have been incurred cannot be avoided. 

D) 

we must forego something when making a decision. 

58) 

The phrase ceteris paribus means 

58) 

______ 

A) 

"everything affects everything else." 

B) 

"there is no such thing as a free lunch." 

C) 

"scarcity is a fact of life." 

D) 

"all else equal." 

59) 

The Latin phrase ceteris paribus means that when a relationship between two variables is being studied 

59) 

______ 

A) 

both are treated as unpredictable. 

B) 

we recognize that some factors are unknown. 

C) 

neither of those two variables is allowed to change. 

D) 

all other variables are held fixed. 

60) 

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

60) 

______ 

A) 

committed the fallacy of composition. 

B) 

committed the ceteris paribus error. 

C) 

showed good reasoning for the reason the White Sox would win. 

D) 

was too quick to conclude that correlation implies causation. 

61) 

Whenever a former governor is elected president, the unemployment rate decreases; whenever a former congressman is elected president, the inflation rate increases. This statement is an example of 

61) 

______ 

A) 

post hoc, ergo prompter hoc fallacy. 

B) 

fallacy of inductive reasoning. 

C) 

ceteris paribus fallacy. 

D) 

fallacy of composition. 

62) 

The erroneous belief that what is true for a part is necessarily true for the whole is referred to as the 

62) 

______ 

A) 

post hoc, ergo prompter hoc fallacy. 

B) 

fallacy of inductive reasoning. 

C) 

fallacy of composition. 

D) 

ceteris paribus fallacy. 

63) 

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

63) 

______ 

A) 

fallacy of composition. 

B) 

fallacy of inductive reasoning. 

C) 

post hoc, ergo prompter hoc fallacy. 

D) 

ceteris paribus fallacy. 

64) 

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

64) 

______ 

A) 

post hoc, ergo prompter hoc fallacy. 

B) 

fallacy of inductive reasoning. 

C) 

fallacy of composition. 

D) 

ceteris paribus fallacy. 

65) 

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

65) 

______ 

A) 

efficiency 

B) 

equity 

C) 

stability 

D) 

growth 

66) 

A government policy that tries to minimize inflation and unemployment can best be described as trying to achieve economic 

66) 

______ 

A) 

stability. 

B) 

equity. 

C) 

profitability. 

D) 

growth. 

67) 

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

67) 

______ 

A) 

remain stable when income rises. 

B) 

be unrelated to income. 

C) 

rise when income rises. 

D) 

fall when income rises. 

68) 

You know that the school parking lot gets very congested about 830 a.m. To avoid this congestion, you start arriving at school at 800 a.m. However many other students make the same decision, and now the parking lot becomes very congested at 800 a.m. This is an example of the 

68) 

______ 

A) 

ceteris paribus fallacy. 

B) 

fallacy of composition. 

C) 

fallacy of division. 

D) 

post hoc, ergo prompter hoc fallacy. 

69) 

You always have math problems to work in class whenever you forget to bring your calculator to school. Concluding that forgetting your calculator causes your professor to assign math problems is an example of the 

69) 

______ 

A) 

ceteris paribus conditions. 

B) 

post hoc, ergo prompter hoc fallacy. 

C) 

fallacy of composition. 

D) 

fallacy of inductive reasoning. 

70) 

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

70) 

______ 

A) 

Ockham's razor. 

B) 

ceteris paribus. 

C) 

the fallacy of composition. 

D) 

the post hoc, ergo prompter hoc fallacy. 

71) 

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

71) 

______ 

A) 

fallacy of inductive reasoning. 

B) 

fallacy of division. 

C) 

post hoc, ergo prompter hoc fallacy. 

D) 

fallacy of composition. 

72) 

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

72) 

______ 

A) 

fallacy of ceteris paribus. 

B) 

fallacy of inductive reasoning. 

C) 

fallacy of composition. 

D) 

post hoc, ergo prompter hoc fallacy. 

73) 

Two variables are said to be correlated if 

73) 

______ 

A) 

the first variable changes when the second variable does not change. 

B) 

one variable changes when the other variable changes. 

C) 

the first variable does not change when the second variable changes. 

D) 

the variables share no relation with each other. 

74) 

The belief that what is true for a part is necessarily true for the whole describes the 

74) 

______ 

A) 

fallacy of inductive reasoning. 

B) 

fallacy of composition. 

C) 

post hoc, ergo prompter hoc fallacy. 

D) 

fallacy of division. 

75) 

Empirical economics refers to the 

75) 

______ 

A) 

collection and use of data to test economic theories. 

B) 

model of economics used prior to the Industrial Revolution. 

C) 

belief that what is true for a part is necessarily true for the whole. 

D) 

exclusion of irrelevant data when analyzing a model. 

76) 

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

76) 

______ 

A) 

is unrelated to 

B) 

exceeds 

C) 

is equal to 

D) 

is less than 

77) 

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

77) 

______ 

A) 

consumers; least 

B) 

the government; least 

C) 

consumers; highest 

D) 

the government; highest 

78) 

An efficient market is characterized by the fact that profit opportunities are 

78) 

______ 

A) 

only provided to government-subsidized producers. 

B) 

guaranteed to everyone. 

C) 

eliminated almost instantaneously. 

D) 

available only to the most efficient producers. 

79) 

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

79) 

______ 

A) 

equity. 

B) 

equality. 

C) 

resolution. 

D) 

profitability. 

80) 

You have noticed that there is an increase in the number of homeless people in your city and at the same time you observe that there are a number of vacant apartments. You believe that if landlords were required to rent their apartments for less than they are currently charging, the government could reduce the number of homeless people . This policy recommendation would be motivated by concerns over 

80) 

______ 

A) 

stability. 

B) 

equity. 

C) 

profitability. 

D) 

economic growth. 

81) 

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

81) 

______ 

A) 

economic growth. 

B) 

efficiency. 

C) 

economic stability. 

D) 

equity. 

82) 

The statement "people should pollute as little as possible" is an example of a 

82) 

______ 

A) 

normative statement. 

B) 

positive statement. 

C) 

non-judgmental statement. 

D) 

factual statement. 

83) 

The statement "the unemployment rate is 5.1%" is an example of a 

83) 

______ 

A) 

positive statement. 

B) 

non-verifiable statement. 

C) 

normative statement. 

D) 

value judgement. 

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

84) 

Positive economics questions "What ought to be?" Normative economics predicts the consequences of alternative actions, answering the questions "What is?" or "What will be?" 

84) 

______ 

85) 

Normative economics questions "What ought to be?" Positive economics predicts the consequences of alternative actions, answering the questions "What is?" or "What will be?" 

85) 

______ 

86) 

An efficient economy is one that produces what the government demands and does so at the least possible cost. 

86) 

______ 

87) 

"Post hoc, ergo prompter hoc" literally translated means, "all else equal." 

87) 

______ 

88) 

Normative economics seeks to understand behavior, but not make judgments. 

88) 

______ 

89) 

Stability implies a steady rate of economic growth regardless of the inflation rate. 

89) 

______ 

90) 

The compilation of data to describe phenomena and facts is known as empirical economics. 

90) 

______ 

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

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

Figure 1.1

91) 

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

91) 

______ 

A) 

an infinite slope. 

B) 

a positive slope. 

C) 

a zero slope. 

D) 

a negative slope. 

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

Figure 1.2

92) 

Refer to Figure 1.2. The slope of the line between Points A and B is 

92) 

______ 

A) 

negative and decreasing. 

B) 

positive and increasing. 

C) 

negative and constant. 

D) 

positive and constant. 

93) 

Refer to Figure 1.2. If the slope of a straight line is -2. and if X (the variable on the horizontal axis) decreases by 8, then Y (the variable on the vertical axis) will 

93) 

______ 

A) 

increase by 4. 

B) 

decrease by 16. 

C) 

decrease by 4. 

D) 

increase by 16. 

94) 

Refer to Figure 1.2. The slope of the line between Points A and B is 

94) 

______ 

A) 

0.25. 

B) 

4. 

C) 

-0.25. 

D) 

-4. 

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

Figure 1.3

95) 

Refer to Figure 1.3. The slope of the line is 

95) 

______ 

A) 

positive 

B) 

decreasing at an increasing rate. 

C) 

increasing at a decreasing rate. 

D) 

negative. 

96) 

Refer to Figure 1.3. The slope of the line between Points D and B is 

96) 

______ 

A) 

-1.5. 

B) 

0.67. 

C) 

1.5. 

D) 

-0.67. 

97) 

Refer to Figure 1.3. The slope of the line between Points A and B is 

97) 

______ 

A) 

1.5. 

B) 

-1.5. 

C) 

-0.67. 

D) 

0.67. 

98) 

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

98) 

______ 

A) 

lie below 

B) 

indeterminant from this information 

C) 

lie above 

D) 

cross 

99) 

Refer to Figure 1.3. At Point C, what is the value of Y? 

99) 

______ 

A) 

2 

B) 

4 

C) 

6 

D) 

indeterminate from this information 

100) 

Refer to Figure 1.3. At Point A the slope of the line is 0.67, so at Point C the slope would be 

100) 

_____ 

A) 

equal to 0.67. 

B) 

indeterminate from this information. 

C) 

less than 0.67. 

D) 

greater than 0.67. 

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

Figure 1.4

101) 

Refer to Figure 1.4. Panel A shows a curve which has a slope that is 

101) 

_____ 

A) 

first positive, then zero, and then negative. 

B) 

infinite throughout. 

C) 

zero throughout. 

D) 

first negative, then zero, and then positive. 

102) 

Refer to Figure 1.4. Panel B shows a curve which has a slope that is 

102) 

_____ 

A) 

first negative and then positive. 

B) 

zero throughout. 

C) 

infinite throughout. 

D) 

first positive and then negative. 

103) 

Refer to Figure 1.4. Panel C shows a curve which has a slope that is 

103) 

_____ 

A) 

first positive and then negative. 

B) 

zero throughout. 

C) 

infinite throughout. 

D) 

first negative and then positive. 

104) 

Refer to Figure 1.4. Panel D shows a curve which has a slope that is 

104) 

_____ 

A) 

zero throughout. 

B) 

first negative and then positive. 

C) 

infinite throughout. 

D) 

first positive and then negative. 

105) 

Refer to Figure 1.4. At Point E in panel A, the slope is 

105) 

_____ 

A) 

indeterminate from this information. 

B) 

infinite. 

C) 

negative. 

D) 

zero. 

106) 

The slope of a straight line 

106) 

_____ 

A) 

is constant. 

B) 

is not constant. 

C) 

must first increase then decrease. 

D) 

is always positive. 

107) 

The slope of a vertical line is 

107) 

_____ 

A) 

continually changing. 

B) 

infinite. 

C) 

negative. 

D) 

zero. 

108) 

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 

108) 

_____ 

A) 

increase by 0.8. 

B) 

decrease by 20. 

C) 

increase by 20. 

D) 

decrease by 0.8. 

109) 

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) 

109) 

_____ 

A) 

decreases by 10. 

B) 

increases by 600. 

C) 

increases by 10. 

D) 

decreases by 600. 

110) 

The slope of a horizontal line is 

110) 

_____ 

A) 

negative. 

B) 

zero. 

C) 

continually changing. 

D) 

infinite. 

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

Figure 1.5

111) 

Refer to Figure 1.5. Panel A shows a curve with a slope that is 

111) 

_____ 

A) 

positive and decreasing. 

B) 

negative and increasing. 

C) 

negative and decreasing. 

D) 

positive and increasing. 

112) 

Refer to Figure 1.5. Panel B shows a curve with a slope that is 

112) 

_____ 

A) 

negative and increasing. 

B) 

negative and decreasing. 

C) 

positive and increasing. 

D) 

positive and decreasing. 

113) 

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

113) 

_____ 

A) 

A 

B) 

B 

C) 

C 

D) 

D 

114) 

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

114) 

_____ 

A) 

A 

B) 

B 

C) 

C 

D) 

D 

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

115) 

Dividing the change in quantity on the X axis by the change in quantity on the Y axis calculates the slope of a line. 

115) 

_____ 

116) 

A graph illustrating how two variables change over time is a Cartesian coordinate system. 

116) 

_____ 

117) 

As the variable on the Y-axis rises the variable on the X-axis rises. The relationship between x and y is said to be direct. 

117) 

_____ 

118) 

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

118) 

_____ 

119) 

The slope of a curve is constant. 

119) 

_____ 

 

1) 

D 

2) 

B 

3) 

C 

4) 

C 

5) 

A 

6) 

D 

7) 

B 

8) 

C 

9) 

A 

10) 

C 

11) 

C 

12) 

A 

13) 

D 

14) 

C 

15) 

C 

16) 

D 

17) 

C 

18) 

A 

19) 

D 

20) 

A 

21) 

A 

22) 

B 

23) 

D 

24) 

C 

25) 

A 

26) 

D 

27) 

TRUE 

28) 

FALSE 

29) 

TRUE 

30) 

FALSE 

31) 

TRUE 

32) 

D 

33) 

B 

34) 

B 

35) 

D 

36) 

B 

37) 

FALSE 

38) 

TRUE 

39) 

B 

40) 

A 

41) 

D 

42) 

C 

43) 

A 

44) 

D 

45) 

C 

46) 

B 

47) 

A 

48) 

A 

49) 

C 

50) 

D 

51) 

B 

52) 

D 

53) 

A 

54) 

C 

55) 

B 

56) 

B 

57) 

A 

58) 

D 

59) 

D 

60) 

D 

61) 

A 

62) 

C 

63) 

C 

64) 

C 

65) 

B 

66) 

A 

67) 

C 

68) 

B 

69) 

B 

70) 

C 

71) 

C 

72) 

D 

73) 

B 

74) 

B 

75) 

A 

76) 

B 

77) 

A 

78) 

C 

79) 

A 

80) 

B 

81) 

D 

82) 

A 

83) 

A 

84) 

FALSE 

85) 

TRUE 

86) 

FALSE 

87) 

FALSE 

88) 

FALSE 

89) 

FALSE 

90) 

FALSE 

91) 

B 

92) 

D 

93) 

D 

94) 

A 

95) 

A 

96) 

B 

97) 

D 

98) 

C 

99) 

B 

100) 

A 

101) 

D 

102) 

D 

103) 

B 

104) 

C 

105) 

D 

106) 

A 

107) 

B 

108) 

C 

109) 

A 

110) 

B 

111) 

D 

112) 

D 

113) 

B 

114) 

D 

115) 

FALSE 

116) 

TRUE 

117) 

TRUE 

118) 

FALSE 

119) 

FALSE