Question 1

If you own a building and you decide to use that building to open a book store,

Accepted Answer

A)  there is no opportunity cost of using this building for a book store because you own it. 
B)  there is an opportunity cost of using this building for a book store because it could have been used in other ways. 
C)  the opportunity costs equal the cost of inventory. 
D)  the only cost relevant to this decision is the price you paid for the building. 
A)  there is no opportunity cost of using this building for a book store because you own it. 
B)  there is an opportunity cost of using this building for a book store because it could have been used in other ways. 
C)  the opportunity costs equal the cost of inventory. 
D)  the only cost relevant to this decision is the price you paid for the building.

Question 2

Refer to the information provided in Figure 1.4 below to answer the question(s) that follow.   Figure 1.4
-Refer to Figure 1.4. Which of the Panels shows a curve or line that has an infinite slope throughout?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
A)  A 
B)  B 
C)  C 
D)  D

Question 3

Positive economics is an approach to economics that

Accepted Answer

A)  seeks to understand behavior and the operation of systems while making judgments about their usefulness to society. 
B)  analyzes outcomes of economic behavior, evaluates them as good or bad, and may prescribe preferred courses of action. 
C)  seeks to understand behavior and the operation of systems without making judgments. 
D)  examines the role of government in the economy. 
A)  seeks to understand behavior and the operation of systems while making judgments about their usefulness to society. 
B)  analyzes outcomes of economic behavior, evaluates them as good or bad, and may prescribe preferred courses of action. 
C)  seeks to understand behavior and the operation of systems without making judgments. 
D)  examines the role of government in the economy.

Question 4

You have observed that every time you get a new tattoo the day before you take an exam you get an A. You therefore conclude that to get an A on an exam, all you have to do is get a new tattoo the day before. You have committed the

Accepted Answer

A)  fallacy of division. 
B)  fallacy of inductive reasoning. 
C)  post hoc, ergo propter hoc fallacy. 
D)  Ockham's fallacy. 
A)  fallacy of division. 
B)  fallacy of inductive reasoning. 
C)  post hoc, ergo propter hoc fallacy. 
D)  Ockham's fallacy.

Question 5

Related to the Economics in Practice on p. 6: According to the Economics in Practice, ________ of the $10 retail value of a Barbie doll is captured in the United States.

Accepted Answer

A)  none 
B)  35 cents 
C)  $2 
D)  $8 
A)  none 
B)  35 cents 
C)  $2 
D)  $8

Question 6

The concept of equity would explain the redistribution from the rich to the poor which is achieved from a tax system that requires taxes to

Accepted Answer

A)  fall when income rises. 
B)  rise when income rises. 
C)  remain stable when income rises. 
D)  be unrelated to income. 
A)  fall when income rises. 
B)  rise when income rises. 
C)  remain stable when income rises. 
D)  be unrelated to income.

Question 7

The Latin phrase ceteris paribus means that when a relationship between two variables is being studied

Accepted Answer

A)  both are treated as unpredictable. 
B)  neither of those two variables is allowed to change. 
C)  all other variables are held fixed. 
D)  we recognize that some factors are unknown. 
A)  both are treated as unpredictable. 
B)  neither of those two variables is allowed to change. 
C)  all other variables are held fixed. 
D)  we recognize that some factors are unknown.

Question 8

The value of the best alternative foregone is the opportunity cost of making a decision.

Accepted Answer

A) True 
 B)False

Question 9

Stability implies a steady rate of economic growth with full employment of resources.

Accepted Answer

A) True 
 B)False

Question 10

If you own a condo and you decide to lease it to your cousin,

Accepted Answer

A)  there is no opportunity cost of leasing the condo because you own it. 
B)  there is an opportunity cost of leasing the condo because you could have chosen to live in it. 
C)  there is no opportunity cost of leasing the condo because you collect rent from your cousin. 
D)  the only cost relevant to this decision is the price you paid for the condo. 
A)  there is no opportunity cost of leasing the condo because you own it. 
B)  there is an opportunity cost of leasing the condo because you could have chosen to live in it. 
C)  there is no opportunity cost of leasing the condo because you collect rent from your cousin. 
D)  the only cost relevant to this decision is the price you paid for the condo.

Question 11

Refer to the information provided in Figure 1.6 below to answer the question(s) that follow.   Figure 1.6
-Refer to Figure 1.6. The slope of the line between Points A and B is

Accepted Answer

A)  0.25. 
B)  4. 
C)  -0.25. 
D)  -4. 
A)  0.25. 
B)  4. 
C)  -0.25. 
D)  -4.

Question 12

Refer to the information provided in Figure 1.4 below to answer the question(s) that follow.   Figure 1.4
-Refer to Figure 1.4. Which of the Panels shows a curve or line that has a zero slope throughout?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
A)  A 
B)  B 
C)  C 
D)  D

Question 13

The aggregate price level is a topic of macroeconomics.

Accepted Answer

A) True 
 B)False

Question 14

Normative economics ________ and positive economics ________.

Accepted Answer

A)  involves judgments; does not involve judgments 
B)  involves judgments; also involves judgments 
C)  does not involve judgments; involves judgments 
D)  does not involve judgments; also does not involve judgments 
A)  involves judgments; does not involve judgments 
B)  involves judgments; also involves judgments 
C)  does not involve judgments; involves judgments 
D)  does not involve judgments; also does not involve judgments

Question 15

The branch of economics that examines the functioning of individual industries and the behavior of individual decision-making units is

Accepted Answer

A)  positive economics. 
B)  normative economics. 
C)  macroeconomics. 
D)  microeconomics. 
A)  positive economics. 
B)  normative economics. 
C)  macroeconomics. 
D)  microeconomics.

Question 16

A basic understanding of economics is needed to be an informed citizen.

Accepted Answer

A) True 
 B)False

Question 17

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 collection and use of the data on minimum wage and teenage unemployment over time is an example of

Accepted Answer

A)  law and economics. 
B)  economic history. 
C)  econometrics. 
D)  empirical economics. 
A)  law and economics. 
B)  economic history. 
C)  econometrics. 
D)  empirical economics.

Question 18

Refer to the information provided in Figure 1.4 below to answer the question(s) that follow.   Figure 1.4
-Refer to Figure 1.4. At Point E in Panel A, the slope is

Accepted Answer

A)  zero. 
B)  infinite. 
C)  negative. 
D)  indeterminate from this information. 
A)  zero. 
B)  infinite. 
C)  negative. 
D)  indeterminate from this information.

Question 19

Which of the following is not one of the three fundamental concepts of economics?

Accepted Answer

A)  profit maximization 
B)  marginalism 
C)  opportunity cost 
D)  the working of efficient markets 
A)  profit maximization 
B)  marginalism 
C)  opportunity cost 
D)  the working of efficient markets

Question 20

Refer to the information provided in Figure 1.4 below to answer the question(s) that follow.   Figure 1.4
-Refer to Figure 1.4. Panel C shows a curve which has a slope that is

Accepted Answer

A)  first positive and then negative. 
B)  first negative and then positive. 
C)  infinite throughout. 
D)  zero throughout. 
A)  first positive and then negative. 
B)  first negative and then positive. 
C)  infinite throughout. 
D)  zero throughout.

Exam 1: The Scope and Method of Economics

If you own a building and you decide to use that building to open a book store,

Refer to the information provided in Figure 1.4 below to answer the question(s) that follow. Figure 1.4 -Refer to Figure 1.4. Which of the Panels shows a curve or line that has an infinite slope throughout?

Positive economics is an approach to economics that

You have observed that every time you get a new tattoo the day before you take an exam you get an A. You therefore conclude that to get an A on an exam, all you have to do is get a new tattoo the day before. You have committed the

Related to the Economics in Practice on p. 6: According to the Economics in Practice, ________ of the $10 retail value of a Barbie doll is captured in the United States.

The concept of equity would explain the redistribution from the rich to the poor which is achieved from a tax system that requires taxes to

The Latin phrase ceteris paribus means that when a relationship between two variables is being studied

The value of the best alternative foregone is the opportunity cost of making a decision.

Stability implies a steady rate of economic growth with full employment of resources.

If you own a condo and you decide to lease it to your cousin,

Refer to the information provided in Figure 1.6 below to answer the question(s) that follow. Figure 1.6 -Refer to Figure 1.6. The slope of the line between Points A and B is

Refer to the information provided in Figure 1.4 below to answer the question(s) that follow. Figure 1.4 -Refer to Figure 1.4. Which of the Panels shows a curve or line that has a zero slope throughout?

The aggregate price level is a topic of macroeconomics.

Normative economics ________ and positive economics ________.

The branch of economics that examines the functioning of individual industries and the behavior of individual decision-making units is

A basic understanding of economics is needed to be an informed citizen.

Refer to the information provided in Figure 1.4 below to answer the question(s) that follow. Figure 1.4 -Refer to Figure 1.4. At Point E in Panel A, the slope is

Which of the following is not one of the three fundamental concepts of economics?

Refer to the information provided in Figure 1.4 below to answer the question(s) that follow. Figure 1.4 -Refer to Figure 1.4. Panel C shows a curve which has 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

Filters

Normative economics and positive economics .