practice-w1d1.pdfpractice-w1d2.pdfpractice-w1d3.pdfpractice-w1d4.pdf1Practice Questions - Week 1 Day 1____ 1. Economics isa. exclusively the study of the markets for stocks and bondsb. the study of choice under conditions of scarcityc. exclusively the study of business firmsd. fundamentally the same as sociologye. applicable only when scarcity is not a problem____ 2. Scarcity is a situation in whicha. available resources cannot satisfy all potential uses for the resourcesb. there are unlimited wantsc. resources outnumber the potential uses for resources in societyd. there is a surplus, since buyers cannot obtain all of the goods that they wante. society's productive capital is publicly owned____ 3. Individuals must make choices becausea. resources are scarce and wants are limitedb. resources and wants are unlimitedc. assets and wealth are distributed unevenlyd. resources are scarce and wants are unlimitede. inflation usually outpaces income growth____ 4. The four main categories of resources area. labor, money, capital, and inputsb. capital, land, raw materials, and entrepreneurshipc. raw materials, money, labor, and capitald. land, capital, labor, natural resources, and entrepreneurshipe. human capital, physical capital, labor, and natural resources____ 5. The term capital, as used by economists, refers toa. moneyb. the physical space in which production occursc. the time allocated to producing goods and servicesd. financial securities such as stocks and bondse. something that is long-lasting and used to produce goods and services____ 6. An entrepreneur is best described asa. someone that is hired to work in a firmb. someone who creates human capitalc. someone with the ability to combine other resources in a productive enterprised. anyone who owns productive enterprisee. anyone who produces long-lived physical capital____ 7. Microeconomicsa. addresses scarcity from a global perspectiveb. examines how individuals, households, and firms make economic decisionsc. is purely theoretical and has little value in explaining real-world phenomenad. focuses on what is happening in the economy as a wholee. answers the fundamental economic questions of how, when, where, and why2____ 8. The study of how consumers and producers interact in individual markets isa. macroeconomicsb. labor economicsc. microeconomicsd. econometricse. development economics____ 9. Suppose that the following headlines appeared in a newspaper. Which would most clearly represent a macroeconomic issue?a. "Central Bank Raises Interest Rates"b. "Auto Dealership to Cut Prices"c. "Fanny's Freeze Dried Prunes to Lay Off 50 Workers"d. "United Workers Union to Strike April 15"e. "Brazilian Coffee Bean Crop Falls by 10 Percent"____ 10. An economist claims that "the evidence suggests that high rates of inflation are associated with slow long-term economic growth." This is an example ofa. positive economicsb. normative economicsc. negative economicsd. a simplifying assumptione. microeconomic analysis____ 11. Which of the following is a normative statement?a. Fifteen percent of Americans go without health insurance in a year.b. The Consumer Price Index rose three-tenths of one percent in May.c. An increase in the minimum wage will increase teenage unemployment.d. American would be better served by single-payer health care system.e. The French trade deficit reached an all-time high last year.____ 12. An economic model can be described asa. an abstract representation of realityb. a detailed description of some economic phenomenonc. something that is often more complex than the real-world phenomenon it representsd. a vehicle for making positive economic statementse. a vehicle for making normative economic statements____ 13. Consider an economic model designed to analyze the purchasing decisions of households. An assumption that a household chooses between only two goods would be an example of aa. simplifying assumptionb. critical assumptionc. macroeconomic assumptiond. financial assumptione. positive assumption____ 14. A critical assumption differs from a simplifying assumption in that a critical assumptiona. is a means of getting rid of extraneous details in the modelb. cannot affect the conclusions of the modelc. can affect the conclusions of the modeld. is rarely used in economic modelse. is never a fundamental assumptionID: A1Practice Questions - Week 1 Day 1Answer SectionMULTIPLE CHOICE 1. B 2. A 3. D 4. D 5. E 6. C 7. B 8. C 9. A 10. A 11. D 12. A 13. A 14. C1Practice Questions - Week 1 Day 2Short Answer 1. Graph the line given by the equation y=15-5x, with y on the vertical axis.a) what is the slope of this line? what would be the slope if you put x on the vertical axis?b) Are x and y positively or negatively related?c) On the same graph, show the line given by the equation y=12-4x.d) What is the slope of this line? e) Is this line steeper or flatter than the first?f) Solve algebraically for the value of x where these two lines cross.g) Write the equation for the line with the same slope as the one in part c, but having a y-intercept that is 4 units higher. Graph this line along with the others. 2. A survey of high school students generated the following data.Hour Spent Studying Avg. SAT Score0 90020 105040 117560 127580 1350100 1400a) Graph the data with SAT score on the vertical axis and Hours on the horizontal axis.b) What is the slope of the relationship between hours spent studying and SAT score in the range of 40 to 60 hours?c) Does the slope increase of decrease as the number of hours is increased. Interpret this in everday language. 3. A newspaper, USA-Yesterday, prints the same number of pages every day. Readers like the news and photographs in the paper, but dislike advertising. As a result, as the number of pages devoted to ads increases, the number of readers declines. This relationship is described by the equation R=140-5A, where R is the number of readers (in thousands) and A is the number of pages of advertising. a) At what level of A will the number of readers hit zero?b) At what level of A is the number of readers maximized?ID: A1Practice Questions - Week 1 Day 2Answer SectionSHORT ANSWER 1. a) -5; -1/5.b) negatively related.c) see lecture notes.d) -4e) steeperf) x=3g) y=16-4x 2. a) see lecture notes.b) 5.c) decrease. 3. a) 28; see graph in lecture notes.b) 01Practice Questions Week 1 Day 3____ 1. Suppose your friends take you out for dinner on your birthday and you have a
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