1.

When economists say that people act rationally in their self interest, they mean that
individuals:
a. look for and pursue opportunities to increase their utility
2. A person should consume more of something when its marginal:
a. A person should consume more of something when its marginal:
3. Answer the next question(s) on the basis of the data given in the following production
possibilities table:

Refer to the above table. A total output of 3 units of capital goods and 4 units of consumer goods:
a. Refer to the above table. A total output of 3 units of capital goods and 4 units of
consumer goods
4. Answer the next question(s) on the basis of the data given in the following production
possibilities table:

Refer to the above table. For these data the law of increasing opportunity costs is reflected in the
fact that:
a. larger and larger amounts of capital goods must be sacrificed to get additional

units of consumer goods.

5. Suppose that an economy is producing on its production possibilities curve, but is not
producing quantities of each good where the marginal benefit equals the marginal cost for each
good. This economy:
a. larger and larger amounts of capital goods must be sacrificed to

get additional units of consumer goods.

6. Which of the following will shift the production possibilities curve to the right?
a. larger and larger amounts of capital goods must be sacrificed to

get additional units of consumer goods.

7. An economic system:
a. is a particular set of institutional arrangements and a coordinating

mechanism used to respond to the economizing problem.

8. A fundamental difference between the command system and the market system is that, in
command systems:
a. A fundamental difference between the command system and the market
system is that, in command systems:
9. Specialization-the division of labor-enhances productivity and efficiency by:
a. A fundamental difference between the command system and the market
system is that, in command systems:

10. Given the above information and assuming trade occurs between the three states
we can expect:
a. money to flow counterclockwise from Michigan to Texas to

Washington.
11. If competitive industry Y is incurring substantial losses, output will:
a. If a competitive industry is neither expanding nor contracting, we would
expect
12. If a competitive industry is neither expanding nor contracting, we would expect:
a. If a competitive industry is neither expanding nor contracting, we would
expect
13. Answer the next question(s) on the basis of the following information: Suppose 30 units
of product A can be produced by employing just labor and capital in the four ways shown below.
Assume the prices of labor and capital are $2 and $3 respectively.

Refer to the above information. Which technique is economically most efficient in producing A?
a. IV
14. The market system's answer to the fundamental question "Who will get the goods and
services?" is essentially:
a. Those willing and able to pay for them."
15. Which of the following is not one of the five fundamental questions?
a. What prices will be charged for goods and services?
16. The market system:
a. effectively harnesses the incentives of workers and entrepreneurs
17. "Under central planning, some group has to decide how to get the necessary inputs
produced in the right amounts and delivered to the right places at the right time. This is a nearly
impossible task without markets and profits." This quotation best identifies the:
a. coordination problem under central planning
18. Money functions as a medium of exchange by eliminating the need for a coincidence of
wants.
a. True
19. Continued losses in an industry will cause some firms to reduce output or eventually
leave the industry.
a. True
20. Central planning in the Soviet Union and pre-reform China emphasized the expansion of
the production of consumer goods to raise the domestic standard of living.
a. False
21. The demand curve shows the relationship between:

a. price and quantity demanded

22. An increase in the price of a product will reduce the amount of it purchased because:
a. consumers will substitute other products for the one whose price has
risen
23. If the demand for steak (a normal good) shifts to the left, the most likely reason is that:
a. consumer incomes have fallen.
24. An inferior good is:
a. not accurately defined by any of these statements.
25. A market is in equilibrium:
a. if the amount producers want to sell is equal to the amount

consumers want to buy

26. If we say that a price is too high to clear the market, we mean that:
a. quantity supplied exceeds quantity demanded.
27. Camille's Creations and Julia's Jewels both sell beads in a competitive market. If at the
market price of $5, both are running out of beads to sell (they can't keep up with the quantity
demanded at that price), then we would expect both Camille's and Julia's to:
a. raise their price and increase their quantity supplied.
28. Other things equal, an excise tax on a product will:
a. increase its price
29. Which of the following statements is correct?
a. If supply increases and demand decreases, equilibrium price will

fall
30. If the supply and demand curves for a product both decrease, then equilibrium:
a. quantity must decline, but equilibrium price may rise, fall, or

remain unchanged
31. What would you say are the three most difficult challenges that the U.S. Economy is
facing today?
a. http://www.aei.org/article/economics/five-challenges-facing-the-americaneconomy-in-2014/