1.

(01.01 LC) Which of the following must be true for a good for which there is demand and a limited supply? (2 points)

	The good has no utility.
	The good's producer enjoys a comparative advantage.
	Most consumers will find the good their optimal choice.
	The good is scarce.
	The production of the good will have a constant opportunity cost.

2.

(01.01 MC) Which of the following is an example of a non-rival good? (2 points)

	Fireworks for everyone in their sightline
	A toll road
	A glass of water
	Seats at a movie theater
	An unclaimed spot on a beach

3.

(01.02 MC) The government of country X owns the means of production, determines incomes and investment, and decides what goods should be produced and how they should be traded. What economic system does Country X have? (2 points)

	Command
	Capitalist
	Entrepreneurial
	Free Enterprise
	Mixed

4.

(01.02 MC) The government of Country Y does not regulate businesses in any way. It does not set minimum prices for any goods or regulate wages. It allows individuals to make independent decisions that impact the economy. What economic system best describes Country Y? (2 points)

	Command
	Free enterprise
	Market
	Mixed
	Indeterminate

5.

(01.03 LC) Which of the following economic models is designed to illustrate trade-offs and production that is efficient, is impossible, or fails to use all available resources? (2 points)

	Circular flow diagram
	Supply curve
	Demand curve
	Marginal cost curve
	Production possibility curve

6.

(01.03 MC) Use the graph to answer the prompt. (2 points) The market above could consume at point B with ________ but would need ________ in order to produce there.

	trade; economic growth
	more supply; more demand
	government intervention; alternative inputs
	inputs; outputs
	economic growth; trade

7.

(01.03 MC) Use the graph to answer the prompt. (2 points) Since the opportunity curve here is illustrated as a bow-like curve that connects the vertical axis and the horizontal axis of the graph, we know that

	there is an increasing opportunity cost of changing production from A to B or vice versa
	there is a decreasing opportunity cost of changing production from A to B or vice versa
	it would be inefficient to produce goods A and B at the same time
	all manufacturers are equally suited to produce good A and good B
	producing goods A and B at the same time would create national debt

8.

(01.03 MC) On a production possibilities curve (PPC), what does an outward shift imply? (2 points)

	There has been an increase in technology and/or resources.
	Government intervention has introduced alternative inputs.
	Inputs and outputs have balanced out to create an efficient market.
	Trade has increased to allow more resources to enter the market.
	There has been an increase in both supply and demand.

9.

(01.03 MC) How would economic growth be reflected on a production possibility curve? (2 points)

	Movement along the curve
	Not reflected on the PPC
	Shift outward of entire curve
	Shift inward of entire curve
	Stretching along a range of the curve

10.

(01.04 MC) A producer can produce a good at lower unit cost than any other producer. For that good, the producer must have (2 points)

	a comparative advantage
	diminishing marginal utility
	beneficial terms of trade to offer
	an absolute advantage
	more factors of production

11.

(01.04 HC) Using all of their resources, Company A can make either 100 computers or 50 cell phones while Company B can make either 200 computers or 150 cell phones. If both companies have the same quantity of resources, then ________ has an absolute advantage in computers while ________ has a comparative advantage in cell phones. (2 points)

	Neither; both
	Company A; Company B
	Company B; Company A
	Company A; Company A
	Company B; Company B

12.

(01.04 MC) Frank can grow 15 bushels of tomatoes and 5 bushels of corn in one growing season. Mary can grow 15 bushels of tomatoes and 15 bushels of corn. In which crops should Frank and Mary specialize? (2 points)

	Specialization would not benefit Mary or Frank.
	Neither Frank nor Mary should specialize in tomatoes.
	Frank should specialize in tomatoes and Mary in corn.
	Mary and Frank should both specialize in tomatoes and corn.
	Frank and Mary can benefit equally from specialization in corn.

13.

(01.05 HC) Use the production possibilities table below to answer the following question. Assume constant opportunity costs for Steven and Matthew.

	Units of Cheese in a Day	Fish in a Day
Steven	10	25
Matthew	30	10

Which of the following would be mutually beneficial terms of trade for both Stephen and Matthew? (2 points)

	Steven offers Matthew 1 fish for 2 units of cheese.
	Steven offers Matthew 1 unit of cheese for 2 fish.
	Matthew offers Steven 1 fish for 3 units of cheese.
	Matthew offers Steven 1 unit of cheese for 3 fish.
	They cannot benefit from trade.

14.

(01.05 MC) Roger can use his existing resources to produce the following combinations of goods.

Bicycles	Skateboards
0	10
1	8
2	5
3	0

Based on this information, which of the following statements is true? (2 points)

	The opportunity cost is constant for producing bicycles.
	Roger should specialize in bicycles.
	Roger should specialize in skateboards.
	The opportunity cost of the third bicycle is 5 skateboards.
	Roger enjoys an absolute advantage in the production of skateboards.

15.

(01.05 LC) The benefits to businesses are known as ________ and the benefits to consumers are known as ________. (2 points)

	revenues; utility
	profits, revenues
	incentives; revenues
	subsidies; taxes
	utility; profits

16.

(01.05 LC) According to economists, which of the following describes the optimal choice for a given set of options? (2 points)

	The choice that minimizes costs
	The choice that maximizes benefits regardless of costs
	The choice that maximizes net benefits
	The choice that equally distributes resources among all goods
	Any point that is productively efficient on a PPC

17.

(01.05 LC) Which of the following accurately defines total net benefits? (2 points)

	The difference between total benefits and total costs
	The sum of all benefits for a given choice
	The total benefits minus the sum of all other foregone alternatives
	The total benefits minus only implicit costs
	The sum of benefits for all alternative choices

18.

(01.05 MC) Johnson won a free ticket to tour around the world in one year, but he will have to resign from his job. Which of the following is correct if he does cost-benefit analysis? (2 points)

	The tour provides only benefits.
	The only cost will be paying for food.
	There is no opportunity cost to be considered.
	The cost of the lost income is equal to the benefit of the free ticket.
	The result may lead to a sub-optimal choice if opportunity costs are not considered.

19.

(01.06 LC) Consumers generally enjoy the last unit consumed of a good less than the first. This describes (2 points)

	scarcity
	the law of diminishing marginal returns
	the principle of constraints
	optimal choice
	the law of diminishing marginal utility

20.

(01.06 MC) Below shows the total utility Mike enjoys based on eating different quantities of miniature powdered donuts.

Miniature Powdered Donuts Consumed	Total utility (utils)
1	12
2	20
3	26
4	29
5	28
6	25

Based on the table above, what is the marginal utility of the fourth powdered donut? (2 points)

	3 utils
	12 utils
	20 utils
	26 utils
	29 utils

21.

(01.06 MC) Stephanie spends all her money on magazines and herbal tea. Her last magazine purchased cost $10 and gave her 20 utils and her last tea was $2 and gave her 4 utils. Based on this, which of the following is accurate? (2 points)

	Stephanie should purchase more magazines.
	Stephanie should purchase more tea.
	Stephanie should not change her consumption.
	Stephanie will increase her marginal utility with one more tea.
	Stephanie enjoys more utility per dollar from tea than from magazines.

22.

(01.06 HC) Below is the marginal utility that Chris gains from purchasing oil paints and canvases for his painting hobby.

Units of Oil Paints	Marginal Utility of Oil Paints	Units of Canvases	Marginal Utility of Canvases
1	10	1	25
2	7.5	2	20
3	5	3	15
4	2.5	4	10
5	1	5	5

Chris has $35 and spends it all on paints and canvases. If oil paints are $2.50 per unit and canvases are $25 per unit, Chris will maximize his utility by buying which of the following combinations of paints and canvases? (2 points)

	1 canvas and 1 paint
	1 canvas and 3 paints
	1 canvas and 4 paints
	2 canvases and 0 paints
	2 canvases and 1 paint

23.

(01.06 LC) According to rational consumer choice, what will happen to the optimal quantity of consumption for a good if the price decreases? (2 points)

	It will decrease along with total utility.
	It will decrease.
	It will increase.
	It will be unaffected.
	Insufficient data to determine

24.

(01.06 HC) Below is the total benefit Michelle estimates she would get for eating handfuls of dried cranberries in one sitting.

Number of Handfuls	Total Benefit (dollars)
1	$2.00
2	$3.50
3	$4.50
4	$5.00
5	$5.25
6	$5.00
7	$4.00

If a handful of dried cranberries costs $0.50, what is the optimal number of handfuls for Michelle to eat? (2 points)

	2
	3
	4
	5
	6

25.

(01.06 MC) Assume a consumer is trying to choose between four different restaurants which provide the same quality and style of food. Which of the following accurately describes the relief of hunger in this choice? (2 points)

	It is a benefit with marginally increasing returns.
	It is a variable cost of the meal because the consumer will eat varying amounts by restaurant.
	That benefit is constant because a meal at any of the four restaurants will relieve hunger.
	It is a rational factor to consider in the choice.
	It is not a part of the utility of any of the consumer's options.