Question 1

An entrepreneur is a(n)

Accepted Answer

A) individual who has much education 
B) organizer who seeks profitable opportunities and is willing to accept risks 
C) business organization that uses inputs to produce output 
D) administrator who runs an enterprise without accepting any risk of financial loss 
E) depot or storehouse for commercial products 
A) individual who has much education 
B) organizer who seeks profitable opportunities and is willing to accept risks 
C) business organization that uses inputs to produce output 
D) administrator who runs an enterprise without accepting any risk of financial loss 
E) depot or storehouse for commercial products

Question 2

The behavior of the entertainment industry in Detroit is a microeconomictopic.

Accepted Answer

A) True 
 B)False

Question 3

The association­causation fallacy is the error of assuming that what is truefor one member of a group must be true for the group.

Accepted Answer

A) True 
 B)False

Question 4

In an economic model of consumer behavior, rational self­interest wouldlikely be

Accepted Answer

A) a key variable 
B) the hypothesis of the model 
C) a behavioral assumption 
D) a prediction of the model 
E) a method of testing the model 
A) a key variable 
B) the hypothesis of the model 
C) a behavioral assumption 
D) a prediction of the model 
E) a method of testing the model

Question 5

Economic decision makers will continue to acquire information only as longas the expected additional benefit exceeds the expected additional cost ofthe information.

Accepted Answer

A) True 
 B)False

Question 6

As a scientist, an economist's main professional objective is to

Accepted Answer

A) become wealthy 
B) control the government's decision­making processes 
C) understand how the economy works 
D) discover which stock prices will decrease 
E) understand the psychology of participants in markets 
A) become wealthy 
B) control the government's decision­making processes 
C) understand how the economy works 
D) discover which stock prices will decrease 
E) understand the psychology of participants in markets

Question 7

Economics is as much art as it is science.

Accepted Answer

A) True 
 B)False

Question 8

Elijah, a basketball fan, reasons that because his favorite team has threesuperstars on it, the team must be a great team and will win thechampionship.Elijah is committint the

Accepted Answer

A) fallacy of composition 
B) fallacy that association is causation 
C) fallacy of segmentation 
D) mistake of ignoring secondary effects 
E) mistake of ignoring the obvious 
A) fallacy of composition 
B) fallacy that association is causation 
C) fallacy of segmentation 
D) mistake of ignoring secondary effects 
E) mistake of ignoring the obvious

Question 9

Economics is the study of

Accepted Answer

A) how to get rich by playing the stock market 
B) the best ways to reduce people's wants, given the scarcity of resources 
C) how rational government officials determine what goods should be produced 
D) money and why it is good 
E) how people use limited resources to try to satisfy unlimited wants 
A) how to get rich by playing the stock market 
B) the best ways to reduce people's wants, given the scarcity of resources 
C) how rational government officials determine what goods should be produced 
D) money and why it is good 
E) how people use limited resources to try to satisfy unlimited wants

Question 10

Alicia makes the statement that everytime she eats chocolate, it gives heracne.By ignoring the possibility that there may be another factor thatcauses Alicia to eat chocolate and which also causes her acne, Alicia iscommiting the

Accepted Answer

A) fallacy of composition 
B) fallacy that association is causation 
C) fallacy of segmentation 
D) mistake of ignoring secondary effects 
E) mistake of looking beyond the obvious 
A) fallacy of composition 
B) fallacy that association is causation 
C) fallacy of segmentation 
D) mistake of ignoring secondary effects 
E) mistake of looking beyond the obvious

Question 11

The labor market is an example of a

Accepted Answer

A) government market 
B) classified market 
C) communication market 
D) resource market 
E) product market 
A) government market 
B) classified market 
C) communication market 
D) resource market 
E) product market

Question 12

Because people's wants are unlimited but resources are scarce,

Accepted Answer

A) only the rich get everything they want 
B) choices must be made 
C) there will be more services produced than goods 
D) people search for spiritual fulfillment rather than material fulfillment 
E) poor people never get anything they want 
A) only the rich get everything they want 
B) choices must be made 
C) there will be more services produced than goods 
D) people search for spiritual fulfillment rather than material fulfillment 
E) poor people never get anything they want

Question 13

The basic purpose of economic models is to

Accepted Answer

A) construct simplifying assumptions about the real world 
B) explain reality in all its complexity 
C) collect empirical data to support the facts 
D) construct situations where controlled experiments can be carried out 
E) provide explanations for, and predictions of, economic events 
A) construct simplifying assumptions about the real world 
B) explain reality in all its complexity 
C) collect empirical data to support the facts 
D) construct situations where controlled experiments can be carried out 
E) provide explanations for, and predictions of, economic events

Question 14

Economists tell stories

Accepted Answer

A) in order to breathe life into economic theory and personalize abstract ideas 
B) because economics is an art, not a science 
C) as a way of rigorously testing economic theory 
D) because doing so is a required part of the scientific method 
E) to show how their theory can predict at least one real­world situation 
A) in order to breathe life into economic theory and personalize abstract ideas 
B) because economics is an art, not a science 
C) as a way of rigorously testing economic theory 
D) because doing so is a required part of the scientific method 
E) to show how their theory can predict at least one real­world situation

Question 15

Economists classify all of the following as capital, except one.Which oneis not capital?

Accepted Answer

A) a $20 bill in a firm's petty cash drawer 
B) the building where our economics class meets 
C) a plumber's wrench 
D) a railroad car 
E) a factory 
A) a $20 bill in a firm's petty cash drawer 
B) the building where our economics class meets 
C) a plumber's wrench 
D) a railroad car 
E) a factory

Question 16

A marginal adjustment only refers to a minor change.

Accepted Answer

A) True 
 B)False

Question 17

Economics

Accepted Answer

A) studies human behavior when scarcity exists and choices must be made 
B) provides the only reasonable explanation of how people make decisions 
C) can accurately explain all human behavior since it is based on the assumption of rationality 
D) is better at showing the way things ought to be than the other social sciences are 
E) is the only social science that can explain the existence and behavior of public institutions 
A) studies human behavior when scarcity exists and choices must be made 
B) provides the only reasonable explanation of how people make decisions 
C) can accurately explain all human behavior since it is based on the assumption of rationality 
D) is better at showing the way things ought to be than the other social sciences are 
E) is the only social science that can explain the existence and behavior of public institutions

Question 18

Economic theory allows us to predict the behavior of a specific person orfirm.

Accepted Answer

A) True 
 B)False

Question 19

The assumption that individuals act rationally implies that

Accepted Answer

A) people think only of themselves and disregard the well­being of others 
B) people undertake all those activities that yield benefits to themselves 
C) people only consider the costs of an activity to decide whether it is worthwhile 
D) the greater the cost of a charitable deed to a benefactor, the more likely he or she is to perform that
Deed 
E) people implicitly calculate the costs and benefits of an activity to decide if it is worthwhile 
A) people think only of themselves and disregard the well­being of others 
B) people undertake all those activities that yield benefits to themselves 
C) people only consider the costs of an activity to decide whether it is worthwhile 
D) the greater the cost of a charitable deed to a benefactor, the more likely he or she is to perform that
Deed 
E) people implicitly calculate the costs and benefits of an activity to decide if it is worthwhile

Question 20

Which of the following is not a part of the scientific method in economics?

Accepted Answer

A) normative statements 
B) comparing predictions to evidence 
C) formulating a hypothesis 
D) a hypothesis 
E) behavioral assumptions 
A) normative statements 
B) comparing predictions to evidence 
C) formulating a hypothesis 
D) a hypothesis 
E) behavioral assumptions

Exam 1: The Art and Science of Economic Analysis

An entrepreneur is a(n)

The behavior of the entertainment industry in Detroit is a microeconomictopic.

The association­causation fallacy is the error of assuming that what is truefor one member of a group must be true for the group.

In an economic model of consumer behavior, rational self­interest wouldlikely be

Economic decision makers will continue to acquire information only as longas the expected additional benefit exceeds the expected additional cost ofthe information.

As a scientist, an economist's main professional objective is to

Economics is as much art as it is science.

Elijah, a basketball fan, reasons that because his favorite team has threesuperstars on it, the team must be a great team and will win thechampionship.Elijah is committint the

Economics is the study of

Alicia makes the statement that everytime she eats chocolate, it gives heracne.By ignoring the possibility that there may be another factor thatcauses Alicia to eat chocolate and which also causes her acne, Alicia iscommiting the

The labor market is an example of a

Because people's wants are unlimited but resources are scarce,

The basic purpose of economic models is to

Economists tell stories

Economists classify all of the following as capital, except one.Which oneis not capital?

A marginal adjustment only refers to a minor change.

Economics

Economic theory allows us to predict the behavior of a specific person orfirm.

The assumption that individuals act rationally implies that

Which of the following is not a part of the scientific method in economics?

Economic Tools and Economics Systems

Economic Decision Makers

Demand Supply and Markets

Elasticity of Demand and Supply

Consumer Choice and Demand

Production and Cost in the Firm

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Resource Markets

Labor Markets and Labor Unions

Capital Interest Entrepreneurship and Corporate Finance

Transaction Costs Imperfect Information and Behavioral Economics

Economic Regulation and Antitrust Policy

Public Goods and Public Choice

Externalities and the Environment

Income Distribution and Poverty

International Trade

International Finance

Economic Development

Filters

The associationcausation fallacy is the error of assuming that what is truefor one member of a group must be true for the group.

In an economic model of consumer behavior, rational selfinterest wouldlikely be