Question 1

Which of the following is a correct statement?

Accepted Answer

A) Economic concepts or laws that are valid during recessions are necessarily valid during prosperity. 
B) Although they are generalizations, economic laws are useful because they allow us to predict and therefore influence or adjust to events. 
C) Economists use the scientific method.Therefore, economic laws are as quantitatively precise as the laws of physics or chemistry. 
D) Because economics is primarily concerned with questions of "ought," it is a branch of applied ethics and not scientific. 
A) Economic concepts or laws that are valid during recessions are necessarily valid during prosperity. 
B) Although they are generalizations, economic laws are useful because they allow us to predict and therefore influence or adjust to events. 
C) Economists use the scientific method.Therefore, economic laws are as quantitatively precise as the laws of physics or chemistry. 
D) Because economics is primarily concerned with questions of "ought," it is a branch of applied ethics and not scientific. B

Question 2

An economic hypothesis

Accepted Answer

A) has the same meaning as an economic principle or economic law. 
B) is usually a normative statement. 
C) is a possible explanation of cause and effect. 
D) is a stronger generalization than an economic law. 
A) has the same meaning as an economic principle or economic law. 
B) is usually a normative statement. 
C) is a possible explanation of cause and effect. 
D) is a stronger generalization than an economic law. C

Question 3

In a graph of the production possibilities curve, the two axes of the graph indicate the

Accepted Answer

A) prices of the two products that a nation can produce. 
B) maximum quantities of the two resources that a nation possesses. 
C) price of the products on the vertical axis, and quantities on the horizontal. 
D) quantities of the two products that a nation can produce. 
A) prices of the two products that a nation can produce. 
B) maximum quantities of the two resources that a nation possesses. 
C) price of the products on the vertical axis, and quantities on the horizontal. 
D) quantities of the two products that a nation can produce. D

Question 4

The scientific method is

Accepted Answer

A) not applicable to economics because economics deals with human beings. 
B) also known as the economic perspective. 
C) employed to form hypotheses out of existing laws and theories. 
D) used by economists and other social scientists, as well as by physical scientists and life scientists, to formulate and test hypotheses. 
A) not applicable to economics because economics deals with human beings. 
B) also known as the economic perspective. 
C) employed to form hypotheses out of existing laws and theories. 
D) used by economists and other social scientists, as well as by physical scientists and life scientists, to formulate and test hypotheses.

Question 5

Economic analysis is primarily concerned with marginal changes from the status quo, as a result of a certain action or decision.

Accepted Answer

A) True 
 B)False

Question 6

(Last Word) A caller to a radio talk show states that protesters against globalization are a collection of "anarchist punks, naïve college students, and trade union radicals." This is an example of

Accepted Answer

A) the fallacy of composition. 
B) the economic perspective. 
C) loaded terminology. 
D) marginal analysis. 
A) the fallacy of composition. 
B) the economic perspective. 
C) loaded terminology. 
D) marginal analysis.

Question 7

(Last Word) The safest way for an individual to leave a burning theater is to run for the nearest exit; it is therefore also the best means of escape for a large audience.This assertion illustrates the

Accepted Answer

A) "after this, therefore because of this" fallacy. 
B) correlation fallacy. 
C) fallacy of composition. 
D) fallacy of limited decisions. 
A) "after this, therefore because of this" fallacy. 
B) correlation fallacy. 
C) fallacy of composition. 
D) fallacy of limited decisions.

Question 8

Economists have difficulty applying the scientific method because

Accepted Answer

A) economics has a short history. 
B) the scientific method does not really apply to economics. 
C) people are the focus of economics, and their behavior is highly predictable. 
D) controlled laboratory experiments in economics are often not feasible. 
A) economics has a short history. 
B) the scientific method does not really apply to economics. 
C) people are the focus of economics, and their behavior is highly predictable. 
D) controlled laboratory experiments in economics are often not feasible.

Question 9

Assume that a change in government policy results in greater production of both consumer goods and investment goods.We can conclude that

Accepted Answer

A) the economy was not employing all of its resources before the policy change. 
B) the economy's production possibilities curve has been shifted to the left as a result of the policy decision. 
C) this economy's production possibilities curve is convex (bowed inward) to the origin. 
D) the law of increasing opportunity costs does not apply in this society. 
A) the economy was not employing all of its resources before the policy change. 
B) the economy's production possibilities curve has been shifted to the left as a result of the policy decision. 
C) this economy's production possibilities curve is convex (bowed inward) to the origin. 
D) the law of increasing opportunity costs does not apply in this society.

Question 10

A nation can increase its production possibilities by

Accepted Answer

A) shifting resources to produce more consumer goods and less investment goods. 
B) shifting resources from private goods to public goods. 
C) improving labor productivity. 
D) eliminating unemployment. 
A) shifting resources to produce more consumer goods and less investment goods. 
B) shifting resources from private goods to public goods. 
C) improving labor productivity. 
D) eliminating unemployment.

Question 11

From an economic perspective, when a student decides to go to the movies instead of studying for a test, it indicates that in the student's thinking, the marginal

Accepted Answer

A) benefit of studying is greater than the marginal cost of studying. 
B) cost of going to the movies is less than the marginal benefit of going to the movies. 
C) benefit of studying are greater than the marginal benefit of going to the movies. 
D) cost of going to the movies is greater than the marginal cost of studying. 
A) benefit of studying is greater than the marginal cost of studying. 
B) cost of going to the movies is less than the marginal benefit of going to the movies. 
C) benefit of studying are greater than the marginal benefit of going to the movies. 
D) cost of going to the movies is greater than the marginal cost of studying.

Question 12

Purposeful behavior means that

Accepted Answer

A) people are selfish in their decision making. 
B) people weigh costs and benefits to make decisions. 
C) people are immune from emotions affecting their decisions. 
D) decision makers do not make mistakes when weighing costs and benefits. 
A) people are selfish in their decision making. 
B) people weigh costs and benefits to make decisions. 
C) people are immune from emotions affecting their decisions. 
D) decision makers do not make mistakes when weighing costs and benefits.

Question 13

When a state government chooses to build more roads, the resources used are no longer available for public education programs.This dilemma illustrates the concept of

Accepted Answer

A) production expenses. 
B) unemployment issues. 
C) unintended consequences. 
D) opportunity cost. 
A) production expenses. 
B) unemployment issues. 
C) unintended consequences. 
D) opportunity cost.

Question 14

If the opportunity cost of producing extra units of one good (expressed in terms of the amount of another good given up) remains constant, then the shape of the production possibilities curve is

Accepted Answer

A) a straight horizontal line. 
B) a straight downward-sloping line. 
C) an upward-sloping line. 
D) a vertical line. 
A) a straight horizontal line. 
B) a straight downward-sloping line. 
C) an upward-sloping line. 
D) a vertical line.

Question 15

Suppose that a fully employed economy produces only two goods, hamburgers and flat-panel TVs.If the economy is currently producing more than the optimal quantity of hamburgers, then to attain the optimal allocation of resources, it should

Accepted Answer

A) produce more hamburgers and fewer TVs. 
B) produce more TVs and fewer hamburgers. 
C) produce more of both goods. 
D) produce fewer of both goods. 
A) produce more hamburgers and fewer TVs. 
B) produce more TVs and fewer hamburgers. 
C) produce more of both goods. 
D) produce fewer of both goods.

Question 16

Which of the following terms implies the least degree of confidence in an economic generalization?

Accepted Answer

A) hypothesis 
B) theory 
C) principle 
D) law 
A) hypothesis 
B) theory 
C) principle 
D) law

Question 17

In economics, the pleasure, happiness, or satisfaction received from a product is called

Accepted Answer

A) marginal cost. 
B) rational outcome. 
C) status fulfillment. 
D) utility. 
A) marginal cost. 
B) rational outcome. 
C) status fulfillment. 
D) utility.

Question 18

Which of the following terms implies the greatest degree of confidence in an economic generalization?

Accepted Answer

A) hypothesis 
B) comparison 
C) theory 
D) anomaly 
A) hypothesis 
B) comparison 
C) theory 
D) anomaly

Question 19

If a nation produces more consumer goods and less capital goods, then the nation will have

Accepted Answer

A) more consumption now, but less consumption later. 
B) less consumption now, but more consumption later. 
C) more consumption now, with no effect on consumption later. 
D) less consumption later, with no effect on consumption now. 
A) more consumption now, but less consumption later. 
B) less consumption now, but more consumption later. 
C) more consumption now, with no effect on consumption later. 
D) less consumption later, with no effect on consumption now.

Question 20

If A decreases, then B will also decrease.The graph relating the two variables A and B is

Accepted Answer

A) vertical. 
B) downward-sloping. 
C) upward-sloping. 
D) horizontal. 
A) vertical. 
B) downward-sloping. 
C) upward-sloping. 
D) horizontal.

Exam 1: Limits, Alternatives, and Choices

Which of the following is a correct statement?

An economic hypothesis

In a graph of the production possibilities curve, the two axes of the graph indicate the

The scientific method is

Economic analysis is primarily concerned with marginal changes from the status quo, as a result of a certain action or decision.

(Last Word) A caller to a radio talk show states that protesters against globalization are a collection of "anarchist punks, naïve college students, and trade union radicals." This is an example of

(Last Word) The safest way for an individual to leave a burning theater is to run for the nearest exit; it is therefore also the best means of escape for a large audience.This assertion illustrates the

Economists have difficulty applying the scientific method because

Assume that a change in government policy results in greater production of both consumer goods and investment goods.We can conclude that

A nation can increase its production possibilities by

From an economic perspective, when a student decides to go to the movies instead of studying for a test, it indicates that in the student's thinking, the marginal

Purposeful behavior means that

When a state government chooses to build more roads, the resources used are no longer available for public education programs.This dilemma illustrates the concept of

If the opportunity cost of producing extra units of one good (expressed in terms of the amount of another good given up) remains constant, then the shape of the production possibilities curve is

Suppose that a fully employed economy produces only two goods, hamburgers and flat-panel TVs.If the economy is currently producing more than the optimal quantity of hamburgers, then to attain the optimal allocation of resources, it should

Which of the following terms implies the least degree of confidence in an economic generalization?

In economics, the pleasure, happiness, or satisfaction received from a product is called

Which of the following terms implies the greatest degree of confidence in an economic generalization?

If a nation produces more consumer goods and less capital goods, then the nation will have

If A decreases, then B will also decrease.The graph relating the two variables A and B is

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Governments Role and Government Failure

Elasticity

Utility Maximization

Behavioral Economics

Businesses and the Costs of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Technology, Rd, and Efficiency

The Demand for Resources

Wage Determination

Rent, Interest, and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Antitrust Policy and Regulation

Agriculture: Economics and Policy

Income Inequality, Poverty, and Discrimination

Health Care

Immigration

An Introduction to Macroeconomics

Measuring Domestic Output and National Income

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

Fiscal Policy, Deficits, and Debt

Money, Banking, and Financial Institutions

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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