Question 1

(Last Word) Which of the following best illustrates the post hoc, ergo propter hoc fallacy?

Accepted Answer

A) Because it was 90 degrees today, I worked up a sweat playing tennis. 
B) I took the day off work to go to the beach, and that's why it rained. 
C) Because it rained at the football game, my new sweater got wet. 
D) Because I have studied diligently this semester, my grade average has improved. 
A) Because it was 90 degrees today, I worked up a sweat playing tennis. 
B) I took the day off work to go to the beach, and that's why it rained. 
C) Because it rained at the football game, my new sweater got wet. 
D) Because I have studied diligently this semester, my grade average has improved.

Question 2

A point or product-combination to the left of (or inside) a budget line

Accepted Answer

A) is attainable, but a combination or point to the right of the line is unattainable. 
B) is unattainable, but a combination or point to the right of the line is attainable. 
C) costs more than a combination or point on the budget line. 
D) costs more than a combination or point outside the budget line. 
A) is attainable, but a combination or point to the right of the line is unattainable. 
B) is unattainable, but a combination or point to the right of the line is attainable. 
C) costs more than a combination or point on the budget line. 
D) costs more than a combination or point outside the budget line.

Question 3

The production possibilities curve

Accepted Answer

A) shows all of those levels of production that are consistent with a stable price level. 
B) indicates that any combination of goods lying outside the curve is economically inefficient. 
C) is a frontier between all combinations of two goods that can be produced and those combinations that cannot be produced. 
D) shows all of those combinations of two goods that are most preferred by society. 
A) shows all of those levels of production that are consistent with a stable price level. 
B) indicates that any combination of goods lying outside the curve is economically inefficient. 
C) is a frontier between all combinations of two goods that can be produced and those combinations that cannot be produced. 
D) shows all of those combinations of two goods that are most preferred by society.

Question 4

(Consider This) At fast-food restaurants

Accepted Answer

A) consumers enjoy complete and accurate information. 
B) decisions are usually made by trial and error. 
C) decisions entail comparisons of marginal costs and marginal benefits. 
D) benefits always exceed costs. 
A) consumers enjoy complete and accurate information. 
B) decisions are usually made by trial and error. 
C) decisions entail comparisons of marginal costs and marginal benefits. 
D) benefits always exceed costs.

Question 5

If the marginal benefits are greater than the marginal cost of an activity, then society should allocate fewer resources to this activity.

Accepted Answer

A) True 
 B)False

Question 6

Joe sold gold coins for $1,000 that he bought a year ago for $1,000.He says, "At least I didn't lose any money on my financial investment." His economist friend points out that in effect he did lose money because he could have received a 3 percent return on the $1,000 if he had bought a bank certificate of deposit instead of the coins.The economist's analysis in this case incorporates the idea of

Accepted Answer

A) opportunity costs. 
B) marginal benefits that exceed marginal costs. 
C) imperfect information. 
D) normative economics. 
A) opportunity costs. 
B) marginal benefits that exceed marginal costs. 
C) imperfect information. 
D) normative economics.

Question 7

Economists would classify all of the following as "land," except

Accepted Answer

A) two thousand acres of virgin forest. 
B) a hydroelectric dam. 
C) crude oil reserves. 
D) iron ore deposits. 
A) two thousand acres of virgin forest. 
B) a hydroelectric dam. 
C) crude oil reserves. 
D) iron ore deposits.

Question 8

If the output of product X is such that marginal benefit equals marginal cost,

Accepted Answer

A) the correct amount of resources is being allocated to X's production. 
B) the value of producing X exceeds the value of producing alternative products with the available resources. 
C) there can be a net gain to society by allocating either more or less resources to producing X. 
D) resources are overallocated to the production of X. 
A) the correct amount of resources is being allocated to X's production. 
B) the value of producing X exceeds the value of producing alternative products with the available resources. 
C) there can be a net gain to society by allocating either more or less resources to producing X. 
D) resources are overallocated to the production of X.

Question 9

(Last Word) The post hoc fallacy and the correlation problem both relate to

Accepted Answer

A) the calculation of marginal costs and marginal benefits of any economic activity. 
B) the issue of determining causation. 
C) the frequent inability of households and businesses to behave rationally. 
D) the trade-off problem associated with competing goals. 
A) the calculation of marginal costs and marginal benefits of any economic activity. 
B) the issue of determining causation. 
C) the frequent inability of households and businesses to behave rationally. 
D) the trade-off problem associated with competing goals.

Question 10

The post hoc, ergo propter hoc fallacy consists of

Accepted Answer

A) using an example to "prove" a different point. 
B) inferring causality from chronological sequence. 
C) jumping to conclusions from an inadequate number of cases. 
D) arguing for or against a person's character rather than his view or opinion. 
A) using an example to "prove" a different point. 
B) inferring causality from chronological sequence. 
C) jumping to conclusions from an inadequate number of cases. 
D) arguing for or against a person's character rather than his view or opinion.

Question 11

A movement from one point to another along the production possibilities curve would imply that

Accepted Answer

A) the labor force available to society has grown. 
B) productivity has increased over time. 
C) productivity has declined over time. 
D) society is producing a different combination of outputs. 
A) the labor force available to society has grown. 
B) productivity has increased over time. 
C) productivity has declined over time. 
D) society is producing a different combination of outputs.

Question 12

Which of the following is considered to be an entrepreneur?

Accepted Answer

A) a self-employed person 
B) an MBA graduate hired by a firm to be its CEO 
C) a production-line worker 
D) a customer of a firm 
A) a self-employed person 
B) an MBA graduate hired by a firm to be its CEO 
C) a production-line worker 
D) a customer of a firm

Question 13

A budget line is a graph that shows the various combinations of two products that a

Accepted Answer

A) consumer can buy with a given amount of money income. 
B) business firm can produce with a given budget. 
C) household can produce with a given amount of resources. 
D) nation can trade with another nation. 
A) consumer can buy with a given amount of money income. 
B) business firm can produce with a given budget. 
C) household can produce with a given amount of resources. 
D) nation can trade with another nation.

Question 14

A reduction in the unemployment rate will cause the nation's production possibilities curve to shift outward.

Accepted Answer

A) True 
 B)False

Question 15

If we are considering the relationship between two variables and release one of the other-things-equal assumptions, we would expect

Accepted Answer

A) the relationship to change from direct to inverse. 
B) the line representing that relationship on a graph to shift. 
C) the data points to have a tighter fit to the line representing the relationship. 
D) the relationship to change from inverse to direct. 
A) the relationship to change from direct to inverse. 
B) the line representing that relationship on a graph to shift. 
C) the data points to have a tighter fit to the line representing the relationship. 
D) the relationship to change from inverse to direct.

Question 16

Economic models do not reflect the full complexity of reality, but instead are based on

Accepted Answer

A) simplifications. 
B) trade-offs. 
C) value judgments. 
D) predictions. 
A) simplifications. 
B) trade-offs. 
C) value judgments. 
D) predictions.

Question 17

What is the best economic explanation for why a person would drop out of college in order to start a business?

Accepted Answer

A) The person has a good idea for starting a business. 
B) The person has to pay a higher tuition to attend college. 
C) The expected future benefits from starting a business now are greater than the costs. 
D) The opportunity cost of starting a business is high now but will be low later in life. 
A) The person has a good idea for starting a business. 
B) The person has to pay a higher tuition to attend college. 
C) The expected future benefits from starting a business now are greater than the costs. 
D) The opportunity cost of starting a business is high now but will be low later in life.

Question 18

The role of an assumption in an economic theory is to

Accepted Answer

A) add realism. 
B) prove the theory. 
C) cover special cases. 
D) simplify the complex reality. 
A) add realism. 
B) prove the theory. 
C) cover special cases. 
D) simplify the complex reality.

Question 19

The quantity or supply of land resources available to a nation is pretty much fixed and cannot increase over time.

Accepted Answer

A) True 
 B)False

Question 20

When firms give away "freebies" like free apps, free checking accounts, free maps, or free toothbrushes, they are contradicting economists' contention that "there is no free lunch."

Accepted Answer

A) True 
 B)False

Exam 1: Limits, Alternatives, and Choices

(Last Word) Which of the following best illustrates the post hoc, ergo propter hoc fallacy?

A point or product-combination to the left of (or inside) a budget line

The production possibilities curve

(Consider This) At fast-food restaurants

If the marginal benefits are greater than the marginal cost of an activity, then society should allocate fewer resources to this activity.

Economists would classify all of the following as "land," except

If the output of product X is such that marginal benefit equals marginal cost,

(Last Word) The post hoc fallacy and the correlation problem both relate to

The post hoc, ergo propter hoc fallacy consists of

A movement from one point to another along the production possibilities curve would imply that

Which of the following is considered to be an entrepreneur?

A budget line is a graph that shows the various combinations of two products that a

A reduction in the unemployment rate will cause the nation's production possibilities curve to shift outward.

If we are considering the relationship between two variables and release one of the other-things-equal assumptions, we would expect

Economic models do not reflect the full complexity of reality, but instead are based on

What is the best economic explanation for why a person would drop out of college in order to start a business?

The role of an assumption in an economic theory is to

The quantity or supply of land resources available to a nation is pretty much fixed and cannot increase over time.

When firms give away "freebies" like free apps, free checking accounts, free maps, or free toothbrushes, they are contradicting economists' contention that "there is no free lunch."

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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