1. The relationship between Variable X and Variable Y can be stated as Y = 5 + 2X. A graph of this relationship has a slope equal to:

a. 5.

b. 2/5.

c. 2.

d. 5/2.

2. Negative incentives, such as penalties, are supposed to:

a. promote marginal thinking.

b. promote a certain behavior.

c. estimulate irrational behavior.

d. reduce a certain behavior.

3. Studying how a firm divides work among its employees to maximize profit is an example of:

a. environmental economics.

b. public finance.

c. microeconomics.

d. macroeconomics.

4. If we wish to observe the effect that an increase in Variable X has on Variable Y as long as nothing else is changing, then we are making the assumption of:

a. ceteris paribus.

b. false cause.

c. positive economics.

d. normative economics.

5. In a market-based economy ________ what gets produced, how it is produced, and who consumes what is produced.

a. the behavior of buyers and sellers determines
b. consumers determine

c. the central government authority determines

d. community interest determines

6.Michelle spends her weekly income of $50 on two goods: cans of hairspray and bottles of nail polish. The price of a can of hairspray is $5 and the price of a bottle of nail polish is $4. If the price of a bottle of nail polish falls to $3:
a. the opportunity cost of nail polish rises.

b. the opportunity cost of hairspray falls.

c. the opportunity cost of hairspray rises.
d. both A and C