Question 1

Economic theory

Accepted Answer

A) expresses normative values 
B) invents imaginative and interesting stories 
C) predicts the behavior of a specific economic decision maker after an economic change 
D) predicts the average behavior of a group of similar economic decision makers after an economic change 
E) uses only perfect and complete information 
A) expresses normative values 
B) invents imaginative and interesting stories 
C) predicts the behavior of a specific economic decision maker after an economic change 
D) predicts the average behavior of a group of similar economic decision makers after an economic change 
E) uses only perfect and complete information D

Question 2

In an economic model of consumer behavior, rational self-interest would likely be

Accepted Answer

A) a key variable 
B) the hypothesis of the model 
C) a behavioral assumption 
D) a prediction of the model 
E) a method of testing the model 
A) a key variable 
B) the hypothesis of the model 
C) a behavioral assumption 
D) a prediction of the model 
E) a method of testing the model C

Question 3

The economic behavior of individual decision makers and the determination of price and output in specific markets are both studied in

Accepted Answer

A) microeconomics 
B) macroeconomics 
C) positive economics 
D) normative economics 
E) disequilibrium economics 
A) microeconomics 
B) macroeconomics 
C) positive economics 
D) normative economics 
E) disequilibrium economics A

Question 4

Because people's wants are unlimited but resources are scarce,

Accepted Answer

A) only the rich get everything they want 
B) choices must be made 
C) there will be more services produced than goods 
D) people search for spiritual fulfillment rather than material fulfillment 
E) poor people never get anything they want 
A) only the rich get everything they want 
B) choices must be made 
C) there will be more services produced than goods 
D) people search for spiritual fulfillment rather than material fulfillment 
E) poor people never get anything they want

Question 5

Economics

Accepted Answer

A) studies human behavior when scarcity exists and choices must be made 
B) provides the only reasonable explanation of how people make decisions 
C) can accurately explain all human behavior since it is based on the assumption of rationality 
D) is better at showing the way things ought to be than the other social sciences are 
E) is the only social science that can explain the existence and behavior of public institutions 
A) studies human behavior when scarcity exists and choices must be made 
B) provides the only reasonable explanation of how people make decisions 
C) can accurately explain all human behavior since it is based on the assumption of rationality 
D) is better at showing the way things ought to be than the other social sciences are 
E) is the only social science that can explain the existence and behavior of public institutions

Question 6

Someone who committed the association-is-causation fallacy might conclude that

Accepted Answer

A) event B, which follows event A, was caused by the event A 
B) event B, which follows event A, was not necessarily caused by event A 
C) the simplest model is the best predictor 
D) what is true for the individual is also true for the group 
E) what is true for the individual is not necessarily true for the group 
A) event B, which follows event A, was caused by the event A 
B) event B, which follows event A, was not necessarily caused by event A 
C) the simplest model is the best predictor 
D) what is true for the individual is also true for the group 
E) what is true for the individual is not necessarily true for the group

Question 7

Economics is the study of

Accepted Answer

A) how to get rich by playing the stock market 
B) the best ways to reduce people's wants, given the scarcity of resources 
C) how rational government officials determine what goods should be produced 
D) money and why it is good 
E) how people use limited resources to try to satisfy unlimited wants 
A) how to get rich by playing the stock market 
B) the best ways to reduce people's wants, given the scarcity of resources 
C) how rational government officials determine what goods should be produced 
D) money and why it is good 
E) how people use limited resources to try to satisfy unlimited wants

Question 8

Economists classify all of the following as capital, except one.Which one is not capital?

Accepted Answer

A) a $20 bill in a firm's petty cash drawer 
B) the building where our economics class meets 
C) a plumber's wrench 
D) a railroad car 
E) a factory 
A) a $20 bill in a firm's petty cash drawer 
B) the building where our economics class meets 
C) a plumber's wrench 
D) a railroad car 
E) a factory

Question 9

Secondary effects are consequences of economic actions that develop slowly over time as people react to events.

Accepted Answer

A) True 
 B)False

Question 10

According to a 2011 PayScale.com survey, the college majors that have the highest median earnings are ones that require quantitative and analytical skills.

Accepted Answer

A) True 
 B)False

Question 11

A resource is something that

Accepted Answer

A) is used to produce goods and services 
B) is provided by nature, not made by society 
C) exists in unlimited quantities 
D) must be produced by a firm 
E) consumes goods and services 
A) is used to produce goods and services 
B) is provided by nature, not made by society 
C) exists in unlimited quantities 
D) must be produced by a firm 
E) consumes goods and services

Question 12

Rational economic decision makers will make a change only if

Accepted Answer

A) the change is free of risk 
B) there are no costs involved 
C) their expectations are correct 
D) there is no uncertainty about the results of the change 
E) the expected marginal benefit exceeds expected marginal cost 
A) the change is free of risk 
B) there are no costs involved 
C) their expectations are correct 
D) there is no uncertainty about the results of the change 
E) the expected marginal benefit exceeds expected marginal cost

Question 13

The assumption of rational self-interest means that economic decision makers

Accepted Answer

A) have no concern for the welfare of others 
B) consider the welfare of others to be more important than their own happiness 
C) know with certainty which choice will have the best result 
D) make reasonable decisions based on their expectations of results 
E) do not make incorrect decisions or bad choices 
A) have no concern for the welfare of others 
B) consider the welfare of others to be more important than their own happiness 
C) know with certainty which choice will have the best result 
D) make reasonable decisions based on their expectations of results 
E) do not make incorrect decisions or bad choices

Question 14

Unlike a "service, " a "good"

Accepted Answer

A) is desirable 
B) uses resources to satisfy wants 
C) is physical and tangible 
D) is abundant and free 
E) is a resource 
A) is desirable 
B) uses resources to satisfy wants 
C) is physical and tangible 
D) is abundant and free 
E) is a resource

Question 15

Which of the following is a microeconomic topic?

Accepted Answer

A) the job search behavior of a college graduate 
B) the impact of policy on the unemployment rate 
C) the impact of policy on the inflation rate 
D) the national debt 
E) the balance of payments 
A) the job search behavior of a college graduate 
B) the impact of policy on the unemployment rate 
C) the impact of policy on the inflation rate 
D) the national debt 
E) the balance of payments

Question 16

You currently subscribe to two magazines and are trying to decide whether you should subscribe to a third.What should determine your decision, if you are rational?

Accepted Answer

A) the total cost of the magazines compared to the total satisfaction you would receive 
B) the total amount of satisfaction you would get from the magazines 
C) the enjoyment you would get from the third magazine 
D) the cost of the third magazine, including the time it takes to read it 
E) the cost of the third magazine compared to the additional enjoyment you would get from it 
A) the total cost of the magazines compared to the total satisfaction you would receive 
B) the total amount of satisfaction you would get from the magazines 
C) the enjoyment you would get from the third magazine 
D) the cost of the third magazine, including the time it takes to read it 
E) the cost of the third magazine compared to the additional enjoyment you would get from it

Question 17

If a business produces and sells only one unit of a good, its profit would be the

Accepted Answer

A) price received for the good 
B) price of the product minus the cost of the resources used to produce the product 
C) return paid to the firm's bank on its outstanding loans 
D) price of the product minus the wages paid for the labor used to produce it 
E) wages paid for the labor used to produce the product minus the price 
A) price received for the good 
B) price of the product minus the cost of the resources used to produce the product 
C) return paid to the firm's bank on its outstanding loans 
D) price of the product minus the wages paid for the labor used to produce it 
E) wages paid for the labor used to produce the product minus the price

Question 18

An economist would classify 100 shares of Apple Computer stock as capital.

Accepted Answer

A) True 
 B)False

Question 19

Considering both product markets and resource markets, most economic decision makers participate in the economy as both buyers and sellers.

Accepted Answer

A) True 
 B)False

Question 20

An economic model

Accepted Answer

A) always has a mathematical foundation 
B) can never be proven wrong 
C) can be constructed for an individual economic unit but not for the economy as a whole 
D) is a simplification of the real world 
E) can be constructed for the economy as a whole but not for an individual economic unit 
A) always has a mathematical foundation 
B) can never be proven wrong 
C) can be constructed for an individual economic unit but not for the economy as a whole 
D) is a simplification of the real world 
E) can be constructed for the economy as a whole but not for an individual economic unit

Exam 1: The Art and Science of Economic Analysis

Economic theory

In an economic model of consumer behavior, rational self-interest would likely be

The economic behavior of individual decision makers and the determination of price and output in specific markets are both studied in

Because people's wants are unlimited but resources are scarce,

Economics

Someone who committed the association-is-causation fallacy might conclude that

Economics is the study of

Economists classify all of the following as capital, except one.Which one is not capital?

Secondary effects are consequences of economic actions that develop slowly over time as people react to events.

According to a 2011 PayScale.com survey, the college majors that have the highest median earnings are ones that require quantitative and analytical skills.

A resource is something that

Rational economic decision makers will make a change only if

The assumption of rational self-interest means that economic decision makers

Unlike a "service, " a "good"

Which of the following is a microeconomic topic?

You currently subscribe to two magazines and are trying to decide whether you should subscribe to a third.What should determine your decision, if you are rational?

If a business produces and sells only one unit of a good, its profit would be the

An economist would classify 100 shares of Apple Computer stock as capital.

Considering both product markets and resource markets, most economic decision makers participate in the economy as both buyers and sellers.

An economic model

Appendix--Understanding Graphs

Economic Tools and Economics Systems

Economic Decision Makers

Demand, Supply, and Markets

Elasticity of Demand and Supply

Appendix--Price Elasticity and Tax Incidence

Consumer Choice and Demand

Appendix--Indifference Curves and Utility Maximization

Production and Cost in the Firm

A--Perfect Competition

B--Perfect Competition

A--Monopoly

B--Monopoly

Monopolistic Competition and Oligopoly

Resource Markets

Labor Markets and Labor Unions

Capital, Interest, and Corporate Finance

Transaction Costs, Imperfect Information, and Behavioral Economics

Economic Regulation and Antitrust Policy

Public Goods and Public Choice

Externalities and the Environment

Income Distribution and Poverty

International Trade

International Finance

Economic Development

Filters