Question 1

The phrase "there's no such thing as a free lunch" is a common way of expressing the concept of efficient markets.

Accepted Answer

A) True 
 B)False

Question 2

That which we forgo, or give up, when we make a choice or decision is called

Accepted Answer

A)  out-of-pocket cost. 
B)  marginal cost. 
C)  real cost. 
D)  opportunity cost. 
A)  out-of-pocket cost. 
B)  marginal cost. 
C)  real cost. 
D)  opportunity cost.

Question 3

Refer to the information provided in Figure 1.7 below to answer the question(s) that follow.   Figure 1.7
-Refer to Figure 1.7. The slope of the line between Points A and B is

Accepted Answer

A)  1.5. 
B)  0.67. 
C)  -0.67. 
D)  -1.5. 
A)  1.5. 
B)  0.67. 
C)  -0.67. 
D)  -1.5.

Question 4

A market is considered efficient if profit opportunities remain continually available.

Accepted Answer

A) True 
 B)False

Question 5

There is a possibility that a national sales tax will be implemented. Many economists argue that items such as food and clothing should be exempt from such a tax because low-income people spend a greater percentage of their income on these goods than do high-income individuals. This argument is motivated by concerns over

Accepted Answer

A)  economic growth. 
B)  economic stability. 
C)  efficiency. 
D)  equity. 
A)  economic growth. 
B)  economic stability. 
C)  efficiency. 
D)  equity.

Question 6

Related to the Economics in Practice on page 3: According to the Economics in Practice, when rural India is suffering from a drought where agricultural output is low, the opportunity cost of having someone out of the labor force, and therefore unable to work in agricultural production, is

Accepted Answer

A)  high 
B)  low. 
C)  infinite. 
D)  zero, because the person is out of the labor force. 
A)  high 
B)  low. 
C)  infinite. 
D)  zero, because the person is out of the labor force.

Question 7

Refer to the information provided in Figure 1.3 below to answer the question(s) that follow.   Figure 1.3
-Refer to Figure 1.3. If a 45-degree line were also graphed, the existing line shown on the graph would ________ it.

Accepted Answer

A)  lie above 
B)  lie below 
C)  cross 
D)  The answer is indeterminate from this information. 
A)  lie above 
B)  lie below 
C)  cross 
D)  The answer is indeterminate from this information.

Question 8

If as the variable on the Y-axis falls the variable on the X-axis rises, the relationship between X and Y is said to be a negative relationship.

Accepted Answer

A) True 
 B)False

Question 9

Positive economics seeks to understand behavior, but not make judgments.

Accepted Answer

A) True 
 B)False

Question 10

Whenever I go to the grocery store, I always stop at Starbucks on the way home. Therefore, going to the grocery store causes me to go to Starbucks. This statement is an example of the

Accepted Answer

A)  fallacy of logic. 
B)  post hoc, ergo propter hoc fallacy. 
C)  fallacy of inductive reasoning. 
D)  ceteris paribus fallacy. 
A)  fallacy of logic. 
B)  post hoc, ergo propter hoc fallacy. 
C)  fallacy of inductive reasoning. 
D)  ceteris paribus fallacy.

Question 11

You have decided that you want to attend a renaissance fair as King Henry VIII. You estimate that it will cost $80 to assemble your costume. After spending $80 on the costume, you realize that the additional pieces you need will cost you $20 more. The marginal cost of completing the costume is

Accepted Answer

A)  $20. 
B)  $60. 
C)  $80. 
D)  $100. 
A)  $20. 
B)  $60. 
C)  $80. 
D)  $100.

Question 12

Whenever a former governor is elected president, the unemployment rate decreases; whenever a former congressman is elected president, the inflation rate increases. This statement is an example of

Accepted Answer

A)  fallacy of logic. 
B)  post hoc, ergo propter hoc fallacy. 
C)  ceteris paribus fallacy. 
D)  fallacy of inductive reasoning. 
A)  fallacy of logic. 
B)  post hoc, ergo propter hoc fallacy. 
C)  ceteris paribus fallacy. 
D)  fallacy of inductive reasoning.

Question 13

A(n) ________ is a formal statement of a theory.

Accepted Answer

A)  model 
B)  empirical measure 
C)  positive statement 
D)  causal statement 
A)  model 
B)  empirical measure 
C)  positive statement 
D)  causal statement

Question 14

The collection and use of data to test economic theories is

Accepted Answer

A)  empirical economics. 
B)  descriptive economics. 
C)  normative economics. 
D)  positive economics. 
A)  empirical economics. 
B)  descriptive economics. 
C)  normative economics. 
D)  positive economics.

Question 15

The slope of a straight line

Accepted Answer

A)  is always positive. 
B)  must first increase then decrease. 
C)  is not constant. 
D)  is constant. 
A)  is always positive. 
B)  must first increase then decrease. 
C)  is not constant. 
D)  is constant.

Question 16

You have narrowed down your Friday night plans to either going bowling or playing billiards. If you choose to go bowling, then for you playing billiards is the ________ of going bowling.

Accepted Answer

A)  opportunity cost 
B)  marginal cost 
C)  empirical cost 
D)  variable cost 
A)  opportunity cost 
B)  marginal cost 
C)  empirical cost 
D)  variable cost

Question 17

There is great concern over the fact that global warming is causing permanent damage to the global environment. A study of the costs and benefits of purchasing carbon offsets to combat global warming is an example of

Accepted Answer

A)  labor economics. 
B)  normative economics. 
C)  positive economics. 
D)  laissez-faire economics. 
A)  labor economics. 
B)  normative economics. 
C)  positive economics. 
D)  laissez-faire economics.

Question 18

If the slope of a straight line is 5 and if X (the variable on the horizontal axis) increases by 4, then Y (the variable on the vertical axis) will

Accepted Answer

A)  decrease by 0.8. 
B)  decrease by 20. 
C)  increase by 0.8. 
D)  increase by 20. 
A)  decrease by 0.8. 
B)  decrease by 20. 
C)  increase by 0.8. 
D)  increase by 20.

Question 19

The study of how benefits are determined for city employees would be considered

Accepted Answer

A)  microeconomics. 
B)  macroeconomics. 
C)  descriptive economics. 
D)  institutional economics. 
A)  microeconomics. 
B)  macroeconomics. 
C)  descriptive economics. 
D)  institutional economics.

Question 20

Refer to the information provided in Figure 1.5 below to answer the question(s) that follow.   Figure 1.5
-Refer to Figure 1.5. Panel A shows a curve with a slope that is

Accepted Answer

A)  positive and increasing. 
B)  positive and decreasing. 
C)  negative and increasing. 
D)  negative and decreasing. 
A)  positive and increasing. 
B)  positive and decreasing. 
C)  negative and increasing. 
D)  negative and decreasing.

Exam 1: The Scope and Method of Economics

The phrase "there's no such thing as a free lunch" is a common way of expressing the concept of efficient markets.

That which we forgo, or give up, when we make a choice or decision is called

Refer to the information provided in Figure 1.7 below to answer the question(s) that follow. Figure 1.7 -Refer to Figure 1.7. The slope of the line between Points A and B is

A market is considered efficient if profit opportunities remain continually available.

Related to the Economics in Practice on page 3: According to the Economics in Practice, when rural India is suffering from a drought where agricultural output is low, the opportunity cost of having someone out of the labor force, and therefore unable to work in agricultural production, is

Refer to the information provided in Figure 1.3 below to answer the question(s) that follow. Figure 1.3 -Refer to Figure 1.3. If a 45-degree line were also graphed, the existing line shown on the graph would ________ it.

If as the variable on the Y-axis falls the variable on the X-axis rises, the relationship between X and Y is said to be a negative relationship.

Positive economics seeks to understand behavior, but not make judgments.

Whenever I go to the grocery store, I always stop at Starbucks on the way home. Therefore, going to the grocery store causes me to go to Starbucks. This statement is an example of the

You have decided that you want to attend a renaissance fair as King Henry VIII. You estimate that it will cost $80 to assemble your costume. After spending $80 on the costume, you realize that the additional pieces you need will cost you $20 more. The marginal cost of completing the costume is

Whenever a former governor is elected president, the unemployment rate decreases; whenever a former congressman is elected president, the inflation rate increases. This statement is an example of

A(n) ________ is a formal statement of a theory.

The collection and use of data to test economic theories is

The slope of a straight line

You have narrowed down your Friday night plans to either going bowling or playing billiards. If you choose to go bowling, then for you playing billiards is the ________ of going bowling.

There is great concern over the fact that global warming is causing permanent damage to the global environment. A study of the costs and benefits of purchasing carbon offsets to combat global warming is an example of

If the slope of a straight line is 5 and if X (the variable on the horizontal axis) increases by 4, then Y (the variable on the vertical axis) will

The study of how benefits are determined for city employees would be considered

Refer to the information provided in Figure 1.5 below to answer the question(s) that follow. Figure 1.5 -Refer to Figure 1.5. Panel A shows a curve with a slope that is

The Economic Problem: Scarcity and Choice

Demand, Supply, and Market Equilibrium

Demand and Supply Applications

Elasticity

Household Behavior and Consumer Choice

The Production Process: the Behavior of Profit-Maximizing Firms

Short-Run Costs and Output Decisions

Long-Run Costs and Output Decisions

Input Demand: the Labor and Land Markets

Input Demand: the Capital Market and the Investment Decision

General Equilibrium and the Efficiency of Perfect Competition

Monopoly and Antitrust Policy

Oligopoly

Monopolistic Competition

Externalities, Public Goods, and Common Resources

Uncertainty and Asymmetric Information

Income Distribution and Poverty

Public Finance: the Economics of Taxation

International Trade, Comparative Advantage, and Protectionism

Economic Growth in Developing Economies

Critical Thinking About Research

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