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# ECON 201

Refer to the provided graph. From the economists' perspective, which is the independent variable and which is the dependent variable?

A. Price is the independent variable, and quantity demanded is the dependent variable.

Price is the dependent variable, and quantity demandedis the independent variable.

Both price and quantity demanded are independent variables.

Both price and quantity demanded are dependent variables.

AACSB: Knowledge Application

Blooms: Understand Difficulty: 02 Medium

Learning Objective: 01-08 Appendix:Understand graphs,curves, and slopes as they relate to economics.

Test Bank: II Topic:Appendix: Graphs and Their Meaning

480.

In line (2) on the providedgraph, the variables x and y are

nonlinearly related.

directly related.

C. not correlated.

D. inversely related.

AACSB: Knowledge Application

Blooms: Understand Difficulty: 02 Medium

Learning Objective: 01-08 Appendix: Understand graphs,curves, and slopesas they relate to economics.

Test Bank: II Topic: Appendix: Graphs and Their Meaning

481.

The slope of line (2) on the provided graph is

A. 0. B. 12. C. 18.

D. infinite.

AACSB: Knowledge Application

Blooms: Understand Difficulty: 02 Medium

Learning Objective: 01-08 Appendix: Understand graphs,curves, and slopesas they relate to economics.

Test Bank: II Topic: Appendix: Graphs and Their Meaning

482.

The linear equation for line (1) on the provided graph is

A. y = 8 + 2x. B. y = 8 + .5x. C. x= 8 + .5y. D. y = 8 - 2x.

AACSB: Knowledge Application

Blooms: Understand Difficulty: 02 Medium

Learning Objective: 01-08 Appendix: Understand graphs,curves, and slopesas they relate to economics.

Test Bank: II Topic: Appendix: Graphs and Their Meaning

483.

The vertical interceptof line (3) on the provided graph is

A. 16.

B. 24/16, or 1.5.

C. 24.

D. -24/16, or -1.5.

AACSB: Knowledge Application

Blooms: Understand Difficulty: 02 Medium

Learning Objective: 01-08 Appendix: Understand graphs,curves, and slopesas they relate to economics.

Test Bank: II Topic: Appendix: Graphs and Their Meaning

484. If a linear relation is described by the equation C = 35 - 5D, then the vertical intercept of the graph (whereC is on the vertical axis) is

A. 35.

B. -5.

C. 30.

D. not known.

AACSB: Knowledge Application Accessibility: Keyboard Navigation

Blooms: Understand Difficulty: 02 Medium

Learning Objective: 01-08 Appendix:Understand graphs,curves, and slopes as they relate to economics.

Test Bank: II Topic: Appendix: Graphs and Their Meaning

485. If you knew that the vertical intercept for a straight line was 15, that the slope was -.5, and that the independent variable had a value of 8, the value of the dependent variable would be

8.

9. C. 10. D. 11.

AACSB: Knowledge Application Accessibility: Keyboard Navigation

Blooms: Understand Difficulty: 02 Medium

Learning Objective: 01-08 Appendix:Understand graphs,curves, and slopes as they relate to economics.

Test Bank: II Topic: Appendix: Graphs and Their Meaning

486. If you knew that the vertical intercept for a straight line was 150 and that the slope of the line was 4, then the dependent variablewould be 250 when the value of the independent variable is

A. 15.

B. 20.

C. 25.

D. 30.

AACSB: Knowledge Application Accessibility: Keyboard Navigation

Blooms: Understand Difficulty: 02 Medium

Learning Objective: 01-08 Appendix:Understand graphs,curves, and slopes as they relate to economics.

Test Bank: II Topic:Appendix: Graphs and Their Meaning

487.

Refer to the provided graph. The slope of the line tangentto the curve at point A is

A. 0.

B. .5.

2.

4.

AACSB: Knowledge Application

Blooms: Understand Difficulty: 02 Medium

Learning Objective: 01-08 Appendix:Understand graphs,curves, and slopes as they relate to economics.

Test Bank: II Topic:Appendix: Graphs and Their Meaning

488.

Refer to the provided graph. The slope of the line tangent to the curve at point B is

A. 0.5.

3.

6.

D. 2.0.

AACSB: Knowledge Application

Blooms: Understand Difficulty: 02 Medium

Learning Objective: 01-08 Appendix:Understand graphs,curves, and slopes as they relate to economics.

Test Bank: II Topic:Appendix: Graphs and Their Meaning

489.

Refer to the provided graph. As we move along the curve from point B to A to C, the slope of the tangentline is

A. increasing in algebraic value.

B. decreasing in algebraic value.

becoming more positive.

becoming less negative.

AACSB: Knowledge Application

Blooms: Understand Difficulty: 02 Medium

Learning Objective: 01-08 Appendix: Understand graphs,curves, and slopesas they relate to economics.

Test Bank: II Topic: Appendix: Graphs and Their Meaning

Given: the intercept for a straight line is 12. If the value of the independent variableis 3, then the value of the dependent variable would be 18. The slope of this line is

A. 1.

B. 2.

3.

4.

AACSB: Knowledge Application Accessibility: Keyboard Navigation

Blooms: Understand Difficulty: 02 Medium

Learning Objective: 01-08 Appendix: Understand graphs,curves, and slopesas they relate to economics.

Test Bank: II Topic: Appendix: Graphs and Their Meaning

In a linear equation relating income and consumption, you know that the intercept is \$1,000 and the slope of the line is 4. If income is \$20,000, then consumptionis A. \$8,000.

B. \$9,000.

C. \$10,000. D. \$11,000.

AACSB: Knowledge Application Accessibility: Keyboard Navigation

Blooms: Understand Difficulty: 02 Medium

Learning Objective: 01-08 Appendix: Understand graphs,curves, and slopesas they relate to economics.

Test Bank: II Topic:Appendix: Graphs and Their Meaning

True / False Questions

If two sets of data are inversely related, they will appear on a graph as an upward-sloping line.

FALSE

AACSB: Knowledge Application Accessibility: Keyboard Navigation

Blooms: Understand Difficulty: 02 Medium

Learning Objective: 01-08 Appendix:Understand graphs,curves, and slopes as they relate to economics.

Test Bank: II Topic:Appendix: Graphs and Their Meaning

If A is the dependent variable and B is the independent variable, then a change in A results in a change in B.

FALSE

AACSB: Knowledge Application Accessibility: Keyboard Navigation

Blooms: Understand Difficulty: 02 Medium

Learning Objective: 01-08 Appendix: Understand graphs,curves, and slopesas they relate to economics.

Test Bank: II Topic:Appendix: Graphs and Their Meaning

A linear relationship only refers to one whose graph is eithervertical or horizontal.

FALSE

AACSB: Knowledge Application Accessibility: Keyboard Navigation

Blooms: Understand Difficulty: 02 Medium

Learning Objective: 01-08 Appendix: Understand graphs,curves, and slopesas they relate to economics.

Test Bank: II Topic: Appendix: Graphs and Their Meaning

In graphing a relationship between two variables, economists alwaysfollow the mathematical convention. Thus, if price is the independent variable then it is measured on the horizontal axis.

FALSE

AACSB: Knowledge Application Accessibility: Keyboard Navigation

Blooms: Understand Difficulty: 02 Medium

Learning Objective: 01-08 Appendix: Understand graphs,curves, and slopesas they relate to economics.

Test Bank: II Topic: Appendix: Graphs and Their Meaning

An assumption is usually made in a two-axes(or two-dimensional) graph that, aside from the two variables under study, the influence of all other variables or factors is assumed to be constant.

TRUE

AACSB: Knowledge Application Accessibility: Keyboard Navigation

Blooms: Understand Difficulty: 02 Medium

Learning Objective: 01-08 Appendix:Understand graphs,curves, and slopes as they relate to economics.

Test Bank: II Topic:Appendix: Graphs and Their Meaning

The slope of a graph measures the rate of change in one variableas the other variablechanges.

TRUE

AACSB: Knowledge Application Accessibility: Keyboard Navigation

Blooms: Understand Difficulty: 02 Medium

Learning Objective: 01-08 Appendix:Understand graphs,curves, and slopes as they relate to economics.

Test Bank: II Topic:Appendix: Graphs and Their Meaning

The slope of a graph relatingtwo variables is -5. This indicates that as one variabledecreases, the other variable also decreases.

FALSE

AACSB: Knowledge Application Accessibility: Keyboard Navigation

Blooms: Understand Difficulty: 02 Medium

Learning Objective: 01-08 Appendix: Understand graphs,curves, and slopesas they relate to economics.

Test Bank: II Topic:Appendix: Graphs and Their Meaning

In the graph for the linearequation S = 15 - 5T, with T on the horizontal axis,the vertical intercept of the graph is -5.

FALSE

AACSB: Knowledge Application Accessibility: Keyboard Navigation

Blooms: Understand Difficulty: 02 Medium

Learning Objective: 01-08 Appendix: Understand graphs,curves, and slopesas they relate to economics.

Test Bank: II Topic:Appendix: Graphs and Their Meaning

In a curved graph that is dome-shaped,the tangent line at its maximum,or highest point, has an infinite slope.

FALSE

AACSB: Knowledge Application Accessibility: Keyboard Navigation

Blooms: Understand Difficulty: 02 Medium

Learning Objective: 01-08 Appendix: Understand graphs,curves, and slopesas they relate to economics.

Test Bank: II Topic: Appendix: Graphs and Their Meaning

Chapter 02 The Market System and the Circular Flow Answer Key

Multiple Choice Questions

Which of the following is a distinguishingfeature of a command system?

private ownership of all capital

B. central planning

heavy reliance on markets

AACSB: Analytical Thinking Accessibility: Keyboard Navigation

Blooms: Analyze

Difficulty: 03 Hard LearningObjective: 02-01 Differentiate between laissez-faire capitalism, the command system, and the marketsystem.

Test Bank: I Topic: EconomicSystems

Which of the following is a distinguishingfeature of laissez-faire capitalism?

public ownership of all capital

central planning

C. minimal government intervention

D. a circularflow of goods, resources, and money

AACSB: Analytical Thinking Accessibility: Keyboard Navigation

Blooms: Analyze

Difficulty: 03 Hard LearningObjective: 02-01 Differentiate between laissez-faire capitalism, the command system, and the marketsystem.

Test Bank: ITopic: EconomicSystems

Examples of command economies are

the United States andJapan.

Sweden and Norway.

Mexico and Brazil.

D. Cuba and North Korea.

Blooms: Analyze Difficulty: 03 Hard

Learning Objective: 02-01 Differentiate between laissez-faire capitalism, the command system, and the market system.

Test Bank: ITopic: EconomicSystems

Of the following countries, which one best exhibits the characteristics of a market economy?

Cuba

North Korea

Belarus

AACSB: Analytical Thinking Accessibility: Keyboard Navigation

Blooms: Analyze Difficulty: 03 Hard

Learning Objective: 02-01 Differentiate between laissez-faire capitalism, the command system, and the market system.

Test Bank: ITopic: EconomicSystems

The French term "laissez-faire" means

"there is no free lunch."

B. "let it be."

"circular flow."

"public ownership."

Blooms: Analyze Difficulty: 03 Hard

Learning Objective: 02-01 Differentiate between laissez-faire capitalism, the command system, and the marketsystem.

Test Bank: ITopic: Economic Systems

An economic system

requires a grouping of private markets linkedto one another.

B. is a particular set of institutional arrangements and a coordinating mechanism used to respondto the economizing problem.

requires some sort of centralized authority (such as government) to coordinate economic activity.

is a plan or scheme that allows a firm tomake money at some otherfirm's expense.

Blooms: Analyze Difficulty: 03 Hard

Learning Objective: 02-01 Differentiate between laissez-faire capitalism, the command system, and the marketsystem.

Test Bank: I Topic: EconomicSystems

The term "laissez-faire" suggests that

land and other natural resources should be privately owned, but capitalshould be publiclyowned.

land and other natural resources should be publicly owned, but capital should be privately owned.

C. government should not interfere with the operation of the economy.

D. government action is absolutely necessary if the economy is to achieve full employment and full production.

AACSB: Analytical Thinking Accessibility: Keyboard Navigation

Blooms: Analyze Difficulty: 03 Hard

Learning Objective: 02-01 Differentiate between laissez-faire capitalism, the command system, and the marketsystem.

Test Bank: ITopic: EconomicSystems

Economic systems differ according to which two main characteristics?

who owns the factors of production and the methods used to coordinate economic activity

the technology used in production and the quantity and quality of natural resources

how goods are producedand who gets them

the political system in place and the degree of scarcity facing the economy

AACSB: Analytical Thinking Accessibility: Keyboard Navigation

Blooms: Analyze

Difficulty: 03 Hard Learning Objective: 02-01 Differentiate between laissez-faire capitalism, the command system, and the marketsystem.

Test Bank: ITopic: Economic Systems

Command systems are also known as

market systems.

pure capitalism.

laissez-faire capitalism.

D. communism.

AACSB: Analytical Thinking Accessibility: Keyboard Navigation

Blooms: Analyze

Difficulty: 03 Hard LearningObjective: 02-01 Differentiate between laissez-faire capitalism, the command system, and the marketsystem.

Test Bank: I Topic: EconomicSystems

A fundamental difference between the commandsystem and laissez-faire capitalism is that, in command systems,

the division of output is decided by central planning rather than by individuals operating freely throughmarkets.

all economic decisions are made by the government, whereas there is no government in laissez-faire capitalism.

scarcity does not exist, whereasit does in laissez-faire capitalism.

money is not used, whereas it is in laissez-faire capitalism.

AACSB: Analytical Thinking Accessibility: Keyboard Navigation

Blooms: Analyze Difficulty: 03 Hard

Learning Objective: 02-01 Differentiate between laissez-faire capitalism, the command system, and the marketsystem.

Test Bank: ITopic: Economic Systems

Which of the following is not a typicalcharacteristic of a market system?

private property

freedom of enterprise

C. government ownership of most property resources

D. competition in product and resource markets

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