Question 1

Why might raising the price of a good by a dollar lead to higher profits?

Accepted Answer

If the extra profit margin mad

Question 2

Most private firms seek to

Accepted Answer

A) maximize revenue. 
B) maximize profit. 
C) minimize headcount. 
D) maximize employee salaries. 
A) maximize revenue. 
B) maximize profit. 
C) minimize headcount. 
D) maximize employee salaries.

Question 3

Normative analysis offers decision makers the most valuable information when choosing among alternatives.

Accepted Answer

A) True 
 B)False

Question 4

Economic models are most useful in

Accepted Answer

A) explaining outcomes resulting from management decisions. 
B) predicting the direction of the stock market. 
C) explaining the future with the past. 
D) generating untestable hypotheses. 
A) explaining outcomes resulting from management decisions. 
B) predicting the direction of the stock market. 
C) explaining the future with the past. 
D) generating untestable hypotheses.

Question 5

The purpose of making assumptions in economic model building is to

Accepted Answer

A) force the model to yield the correct answer. 
B) minimize the amount of work an economist must do. 
C) simplify the model while keeping important details. 
D) express the relationship mathematically. 
A) force the model to yield the correct answer. 
B) minimize the amount of work an economist must do. 
C) simplify the model while keeping important details. 
D) express the relationship mathematically.

Question 6

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

Accepted Answer

A) Since this food is bad for you, you should not consume it. 
B) If this food is bad for you, you should not consume it. 
C) If you consume this food, you will get sick. 
D) None of the above. 
A) Since this food is bad for you, you should not consume it. 
B) If this food is bad for you, you should not consume it. 
C) If you consume this food, you will get sick. 
D) None of the above.

Question 7

In a market,

Accepted Answer

A) the primary participants are consumers and firms. 
B) government policies play a very small part. 
C) decision makers always maximize. 
D) the goods sold are not closely related. 
A) the primary participants are consumers and firms. 
B) government policies play a very small part. 
C) decision makers always maximize. 
D) the goods sold are not closely related.

Question 8

Legislators argue that a minimum wage law is instituted to help poor people. Economists can attack the minimum wage law on two fronts. First, some argue that government should not help the poor. Second, some argue that minimum wage laws actually hurt the poor because it creates unemployment. Which argument is normative and which is positive?

Accepted Answer

An opinion about the role of g

Question 9

A microeconomic model CANNOT be used to

Accepted Answer

A) evaluate the impact of a price change on a firm's revenue. 
B) predict the impact of an increase in the minimum wage on unemployment. 
C) evaluate the fairness of a proposal to nationalize health insurance. 
D) evaluate the effect of an increase in stadium size on the price of a sport team's tickets. 
A) evaluate the impact of a price change on a firm's revenue. 
B) predict the impact of an increase in the minimum wage on unemployment. 
C) evaluate the fairness of a proposal to nationalize health insurance. 
D) evaluate the effect of an increase in stadium size on the price of a sport team's tickets.

Question 10

Firms face trade-offs because

Accepted Answer

A) managers don't know which inputs to use. 
B) inputs are scarce. 
C) markets set prices of goods they sell. 
D) marginal reasoning leads to uncertainty. 
A) managers don't know which inputs to use. 
B) inputs are scarce. 
C) markets set prices of goods they sell. 
D) marginal reasoning leads to uncertainty.

Question 11

Why might raising the price of a good by a dollar lead to lower profits?

Accepted Answer

If the extra profit margin mad

Question 12

Economists tend to judge a model based upon

Accepted Answer

A) the reality of its assumptions. 
B) the accuracy of its predictions. 
C) its simplicity. 
D) its complexity. 
A) the reality of its assumptions. 
B) the accuracy of its predictions. 
C) its simplicity. 
D) its complexity.

Question 13

Explain why a model that delivers good enough approximations is a good model.

Accepted Answer

Models make simplifying assumptions in o

Question 14

CEOs should focus on

Accepted Answer

A) beating their competitors. 
B) maximizing firm profits. 
C) getting the best pay package for the senior management team. 
D) minimizing costs. 
A) beating their competitors. 
B) maximizing firm profits. 
C) getting the best pay package for the senior management team. 
D) minimizing costs.

Question 15

Society faces trade-offs because of

Accepted Answer

A) government regulations. 
B) the profit motive. 
C) price setting by firms. 
D) scarcity. 
A) government regulations. 
B) the profit motive. 
C) price setting by firms. 
D) scarcity.

Question 16

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

Accepted Answer

A) A higher price for a good causes people to want to buy less of that good. 
B) A lower price for a good causes people to want to buy more of that good. 
C) To make the good available to more people, a lower price should be set. 
D) If you decrease the amount of sugar in soda drinks, sales to children will decrease. 
A) A higher price for a good causes people to want to buy less of that good. 
B) A lower price for a good causes people to want to buy more of that good. 
C) To make the good available to more people, a lower price should be set. 
D) If you decrease the amount of sugar in soda drinks, sales to children will decrease.

Question 17

If a model fits reality but doesn't generate testable predictions, it is of little value to economists.

Accepted Answer

A) True 
 B)False

Question 18

Einstein was quoted saying "Everything should be made as simple as possible, but not simpler." When it comes to economic models this means that

Accepted Answer

A) models shouldn't be too complex. 
B) models shouldn't be too simple. 
C) models should have a level of abstraction appropriate to the topic investigated. 
D) All of the above. 
A) models shouldn't be too complex. 
B) models shouldn't be too simple. 
C) models should have a level of abstraction appropriate to the topic investigated. 
D) All of the above.

Question 19

Microeconomics studies the allocation of

Accepted Answer

A) decision makers. 
B) scarce resources. 
C) models. 
D) unlimited resources. 
A) decision makers. 
B) scarce resources. 
C) models. 
D) unlimited resources.

Question 20

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

Accepted Answer

A) Since this food is bad for you, you should not consume it. 
B) This food has negative health effects. 
C) If you consume this food, you will get sick. 
D) People usually get sick after consuming this food. 
A) Since this food is bad for you, you should not consume it. 
B) This food has negative health effects. 
C) If you consume this food, you will get sick. 
D) People usually get sick after consuming this food.

Why might raising the price of a good by a dollar lead to higher profits?

Most private firms seek to

Normative analysis offers decision makers the most valuable information when choosing among alternatives.

Economic models are most useful in

The purpose of making assumptions in economic model building is to

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

In a market,

A microeconomic model CANNOT be used to

Firms face trade-offs because

Why might raising the price of a good by a dollar lead to lower profits?

Economists tend to judge a model based upon

Explain why a model that delivers good enough approximations is a good model.

CEOs should focus on

Society faces trade-offs because of

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

If a model fits reality but doesn't generate testable predictions, it is of little value to economists.

Einstein was quoted saying "Everything should be made as simple as possible, but not simpler." When it comes to economic models this means that

Microeconomics studies the allocation of

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

Supply and Demand

Empirical Methods for Demand Analysis

Consumer Choice

Production

Costs

Firm Organization and Market Structure

Competitive Firms and Markets

Monopoly

Pricing With Market Power

Oligopoly and Monopolistic Competition

Game Theory and Business Strategy

Strategies Over Time

Managerial Decision-Making Under Uncertainty

Asymmetric Information

Government and Business

Global Business

Filters

Exam 1: Introduction

Why might raising the price of a good by a dollar lead to higher profits?

Most private firms seek to

Normative analysis offers decision makers the most valuable information when choosing among alternatives.

Economic models are most useful in

The purpose of making assumptions in economic model building is to

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

In a market,

A microeconomic model CANNOT be used to

Firms face trade-offs because

Why might raising the price of a good by a dollar lead to lower profits?

Economists tend to judge a model based upon

Explain why a model that delivers good enough approximations is a good model.

CEOs should focus on

Society faces trade-offs because of

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

If a model fits reality but doesn't generate testable predictions, it is of little value to economists.

Einstein was quoted saying "Everything should be made as simple as possible, but not simpler." When it comes to economic models this means that

Microeconomics studies the allocation of

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

Supply and Demand

Empirical Methods for Demand Analysis

Consumer Choice

Production

Costs

Firm Organization and Market Structure

Competitive Firms and Markets

Monopoly

Pricing With Market Power

Oligopoly and Monopolistic Competition

Game Theory and Business Strategy

Strategies Over Time

Managerial Decision-Making Under Uncertainty

Asymmetric Information

Government and Business

Global Business

Filters