Exam 1: The Scope and Method of Economics

Salary caps are imposed when league officials believe some football team owners are taking advantage of their deep pockets and buying more quality players than the other owners can afford to buy. Which of the following criteria are they using to guide their actions?

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. In many industries, as firms produce additional units, average costs of production decline as the firm produces an additional unit, but average costs declines by a smaller and smaller amount as production continues to increase. If output is graphed on the horizontal axis and average costs are graphed on the vertical axis, the relationship between average costs and output would be like which of the following Panels?

Stability implies a steady rate of economic growth and low inflation.

The rate of inflation is a topic of macroeconomics.

Inflation and unemployment

You decide to go to LEGOLAND after you visit Disneyworld in Orlando. The cost of going to LEGOLAND after you visit Disneyworld is the ________ cost of getting from Disneyworld to LEGOLAND.

Opportunity costs arise due to scarce resources.

Refer to Scenario 1.1 below to answer the question(s) that follow. SCENARIO 1.1: An economist wants to understand the relationship between minimum wages and the level of teenage unemployment. The economist collects data on the values of the minimum wage and the levels of teenage unemployment over time. The economist concludes that a 1% increase in minimum wage causes a 0.2% increase in teenage unemployment. From this information he concludes that the minimum wage is harmful to teenagers and should be reduced or eliminated to increase employment among teenagers. -Refer to Scenario 1.1. The statement, "the minimum wage is harmful to teenagers and should be reduced or eliminated to increase employment among teenagers," is an example of

The four criteria that are frequently used in judging the outcome of economic policy are

The slope of a non-linear curve

The mistake of inferring causality from ________ is called the post hoc, ergo propter hoc fallacy.

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. As income decreases, consumption decreases by a decreasing amount. If consumption is graphed on the vertical axis and income is graphed on the horizontal axis, the relationship between consumption and income would look like which of the following Panels?

The post hoc, ergo propter hoc fallacy is the belief that

Rent control laws are imposed when city officials believe landlords have been exploiting tenants. Which of the following criteria are they using to guide their actions?

Which of the following is an example of a normative statement?

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. Which of the Panels shows a curve or line that has a slope that is positive and decreasing?

Positive economics looks at outcomes of economic behavior and evaluates them as good or bad.

If you observe that Event A happens before Event B happens, and you erroneously conclude that Event A caused Event B, you would be guilty of an error called the

Suppose that you sign up for a one-day cooking class at the local culinary school for $75. Once you arrive at the class, you discover that you must purchase an apron for an additional $5. In this situation, the additional $5 you pay for the apron is an example of

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. At Point A, what is the value of Y?