AP ECONOMICS CHAPTER 1 STUDY GUIDE



AP ECONOMICS CHAPTER 1 STUDY GUIDE

1. One major feature of the economic perspective is:

A) that scarcity is more important than choice.

B) that costs are more important than benefits.

C) the assumption of rational self-interest by individuals.

D) the recognition of economic resources in the economy.

2. From an economic perspective, when a consumer decides to buy more life insurance, the consumer has most likely concluded that the:

A) marginal costs of more insurance coverage have decreased.

B) marginal benefits of more insurance coverage have increased.

C) marginal benefits of more insurance coverage are greater than the marginal costs.

D) opportunity costs of more insurance coverage are greater than the payment for more insurance coverage.

3. The concept of "rational behavior" suggests that:

A) positive economics is more important then normative economics.

B) normative economics is more important than positive economics.

C) people make different choices because their circumstances and information differ.

D) there is a logical fallacy of composition that affects microeconomic thinking but not macroeconomic thinking.

4. When an economist states that "there is no free lunch," the economist means that:

A) the marginal cost is greater than the marginal benefit.

B) the marginal benefit is greater than the marginal cost.

C) there is a foregone opportunity from resource use.

D) there is a tradeoff between cost and benefit.

5. Which economist made the statement: "Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist"?

A) Karl Marx B) Adam Smith C) David Ricardo D) John Maynard Keynes

6. Another description for ceteris paribus is:

A) other things equal.

B) loaded terminology.

C) the fallacy of composition.

D) post hoc, ergo propter hoc.

7. Which economic goal would be the most difficult to measure or to quantify?

A) economic growth

B) economic freedom

C) full employment

D) balance of trade

8. A tradeoff exists between two economic goals, X and Y. This tradeoff means that:

A) X causes Y.

B) X and Y are equal.

C) getting more of X requires getting more of Y.

D) getting more of X requires getting less of Y.

9. Which question is an example of a microeconomic question?

A) What should the Federal government do to reduce the trade deficit with Japan?

B) Will the merger of two airlines likely lead to higher airline ticket prices?

C) What factors are contributing to the rise of unemployment in the economy?

D) Will the inflation rate remain relatively stable this year?

10. Microeconomics focuses on:

A) the workings of the whole economy or large sectors of it.

B) the individual units that make up the whole of the economy.

C) issues such as unemployment and inflation.

D) total output and the general level of prices.

11. Which question is an illustration of a macroeconomic question?

A) Is a business unresponsive to the demands of consumers?

B) Is a consumer boycott an effective means of reducing product prices?

C) Is the level of employment in the economy sensitive to the quantity of consumer spending?

D) Are oil companies engaging in a rip-off of the consumer by charging exorbitantly high prices for gasoline?

12. Clara states that "there is a high correlation between the level of people's education and the level of their income." Ellie replies that the correlation occurs because "more education is the best way to earn more income in this country."

A) Both Clara's and Ellie's statements are positive.

B) Both Clara's and Ellie's statements are normative.

C) Clara's statement is normative and Ellie's statement is positive.

D) Clara's statement is positive and Ellie's statement is normative.

13. The comment that "the minimum wage should be raised to give working people in this country a fair wage" is an example of:

A) a normative economic statement.

B) a positive economic statement.

C) the fallacy of composition.

D) the after this, therefore because of this, fallacy.

14. Which of the following would be a positive economic statement?

A) Rents for apartments in this city are too high and must be controlled by city government to keep landlords from making too much profit.

B) Bankers are now charging higher interest rates on credit cards to cover the increased cost of loaning funds to consumers.

C) The United States should be more aggressive in its trade negotiations with its major trading partners to help reduce the trade deficit.

D) More money should be allocated by the Federal government to social programs and less money to national defense.

15. Which statement best illustrates the fallacy of composition?

A) If the average price I pay for food rises, the purchasing power of my income has fallen.

B) If I stand up, I will see better at a football game; therefore, if all the football spectators stand up, they will see better.

C) If I attend more classes, I will learn more.

D) If I buy more gasoline each week, my gasoline consumption has increased; therefore, if all gasoline consumers buy more gasoline each week, gasoline consumption has increased.

16. The post hoc, ergo propter hoc fallacy consists of:

A) jumping to conclusions from an inadequate number of cases.

B) inferring causality from chronological sequence.

C) arguing for or against the person rather than the position being supported.

D) using an example to "prove" a different point.

17. (Last Word) From an economic perspective, when consumers leave a fast-food restaurant because the lines to be served are too long, they have concluded that the:

A) marginal cost of waiting is less than the marginal benefit of being served.

B) marginal cost of waiting is greater than the marginal benefit of being served.

C) management is exhibiting irrational behavior by not maximizing profits.

D) management is making an assumption that other things are equal.

18. In a two-variable graph, the horizontal line is the:

A) x-axis and the vertical line is the z-axis.

B) y-axis and the vertical line is the z-axis.

C) y-axis and the vertical line is the x-axis.

D) x-axis and the vertical line is the y-axis.

19. If two sets of data are inversely related they will always graph as:

A) a straight line. B) a downsloping line. C) an upsloping line. D) parallel lines.

SG 1 TB1

Use the following to answer questions 20-26:

Answer the next question(s) on the basis of the following five data sets wherein it is assumed that the variable shown on the left is the independent variable and the one on the right is the dependent variable. Assume in graphing these data that the independent variable is shown on the horizontal axis and the dependent variable on the vertical axis.

[pic]

20. Refer to the above data sets. The variables are directly related in:

A) all five data sets.

B) in none of the data sets.

C) in data sets 1, 2, and 3 only.

D) in data sets 1, 2, and 5 only.

21. Refer to the above data sets. The vertical intercept is positive for:

A) all five data sets.

B) data sets 1 and 3 only.

C) data sets 1, 3, and 5 only.

D) data set 2 only.

22. Refer to the above data sets. The vertical intercept is negative for:

A) none of the data sets.

B) data sets 1 and 3 only.

C) data sets 2 and 4 only.

D) data sets 1 and 5 only.

23. Refer to the above data sets. The equation for data set 3 is:

A) P = 90 - .5N .

B) P = 90 + .5N .

C) P = .5N .

D) P = 40 + .5N .

E) P =

24. Refer to the above data sets. For which data set(s) is the vertical intercept zero?

A) data set 4

B) data set 5

C) data sets 2 and 3

D) data set 1

25. Refer to the above data sets. The equation for data set 5 is:

A) V = .5Y .

B) U = -.5V .

C) U = V .

D) V = 2U .

26. Refer to the above data sets. Which of the data sets would graph as an upsloping line?

A) 1 only

B) 1, 2, and 3 only

C) 4 and 5 only

D) 1, 2, and 5 only

27. If the equation y = 5 + 6x was graphed, the:

A) slope would be -5.

B) slope would be +5.

C) slope would be +.6.

D) vertical intercept would be +.6.

28. If the equation y = 15 - 4x was plotted, the:

A) vertical intercept would be -4.

B) vertical intercept would be +4.

C) vertical intercept would be +9.

D) slope would be -4.

29. If the equation y = -10 + 2.5x was plotted:

A) the vertical intercept would be -10.

B) the slope would be -7.5.

C) it would graph as a downsloping line.

D) the slope would be -10.

Use the following to answer questions 30-32:

[pic]

30. In the above diagram variables x and y are:

A) both dependent variables.

B) directly related.

C) inversely related.

D) unrelated.

E) positively related.

31. In the above diagram the vertical intercept and slope are:

A) 4 and -11/3 respectively.

B) 3 and -11/3 respectively.

C) 3 and + 3/4 respectively.

D) 4 and + 3/4 respectively.

32. In the above diagram the equation for this line is:

A) y = 4 - 11/3 x.

B) y = 3 + 3/4 x.

C) y = 4 - 3/4 x.

D) y = 4 + 11/3 x.

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