Question 1

It is impossible for both nations to gain when trading with one other.

Accepted Answer

A) True 
 B)False  False

Question 2

The slope of a downward-sloping straight line can be calculated as the distance from the

Accepted Answer

A) horizontal intercept of the line to the origin divided by the distance from the origin to the vertical intercept of the line. 
B) origin to the horizontal intercept of the line minus the distance from the origin to the vertical intercept of the line. 
C) vertical intercept of the line to the origin divided by the distance from the origin to the horizontal intercept of the line. 
D) vertical intercept of the line to the origin minus the distance from the origin to the horizontal intercept of the line. 
A) horizontal intercept of the line to the origin divided by the distance from the origin to the vertical intercept of the line. 
B) origin to the horizontal intercept of the line minus the distance from the origin to the vertical intercept of the line. 
C) vertical intercept of the line to the origin divided by the distance from the origin to the horizontal intercept of the line. 
D) vertical intercept of the line to the origin minus the distance from the origin to the horizontal intercept of the line. C

Question 3

Economists may disagree about how to solve an economic problem because they

Accepted Answer

A) use different models to analyze the problem and its solutions. 
B) have different political and moral beliefs. 
C) disagree about the facts of the situation. 
D) All of these responses are correct. 
A) use different models to analyze the problem and its solutions. 
B) have different political and moral beliefs. 
C) disagree about the facts of the situation. 
D) All of these responses are correct. D

Question 4

You just purchased a lawn mower from your next-door neighbor. How can we measure the gains from this transaction?

Accepted Answer

A) The actual benefit that you receive plus the actual benefit to your neighbor 
B) The gains to your neighbor minus the amount that you paid her 
C) The gains to you minus the amount that your neighbor paid for the mower 
D) The gains to you cancel out the gains received by your neighbor 
E) Just the benefit to your neighbor 
A) The actual benefit that you receive plus the actual benefit to your neighbor 
B) The gains to your neighbor minus the amount that you paid her 
C) The gains to you minus the amount that your neighbor paid for the mower 
D) The gains to you cancel out the gains received by your neighbor 
E) Just the benefit to your neighbor

Question 5

Eliminating important details in economic analysis is necessary to understand the complexity of the economy.

Accepted Answer

A) True 
 B)False

Question 6

Two variables that systematically change together are correlated.

Accepted Answer

A) True 
 B)False

Question 7

If Japan is twice as good at producing cameras and three times as good at producing TV sets as the United States, Japan is said to have a comparative advantage in TV sets and the United States has a comparative advantage in cameras.

Accepted Answer

A) True 
 B)False

Question 8

An economic model can be defined as

Accepted Answer

A) a testable claim that can be evaluated with proper data. 
B) a representation of a theory or a part of a theory. 
C) another word for theory. 
D) a method to distinguish correlation from causation. 
E) All of these responses are correct. 
A) a testable claim that can be evaluated with proper data. 
B) a representation of a theory or a part of a theory. 
C) another word for theory. 
D) a method to distinguish correlation from causation. 
E) All of these responses are correct.

Question 9

Opportunity cost is the highest possible price you can receive when you sell an object.

Accepted Answer

A) True 
 B)False

Question 10

Economists probably agree more often than they disagree.

Accepted Answer

A) True 
 B)False

Question 11

The market mechanism provides a financial incentive for firms to minimize the pollution they create.

Accepted Answer

A) True 
 B)False

Question 12

A graph with a positive slope indicates that the variables depicted on the axes move in the same directions.

Accepted Answer

A) True 
 B)False

Question 13

Slope will vary along a curve (as opposed to a straight line).

Accepted Answer

A) True 
 B)False

Question 14

If trade between two countries is voluntary, one can expect that

Accepted Answer

A) one country's gain is necessarily the other's loss. 
B) one country will exploit the other one. 
C) neither country really gains from trade. 
D) the larger country will always gain at the expense of the smaller. 
E) both countries expect to gain something. 
A) one country's gain is necessarily the other's loss. 
B) one country will exploit the other one. 
C) neither country really gains from trade. 
D) the larger country will always gain at the expense of the smaller. 
E) both countries expect to gain something.

Question 15

Economic theory is necessary and extremely important because of its relationship to economic policy.

Accepted Answer

A) True 
 B)False

Question 16

People generally purchase less of a commodity as its price increases. This implies that the relationship between quantity purchased and the price of the commodity must have a

Accepted Answer

A) slope always equal to one. 
B) positive slope. 
C) zero slope. 
D) negative slope. 
A) slope always equal to one. 
B) positive slope. 
C) zero slope. 
D) negative slope.

Question 17

Many believe that fairness calls for higher income taxes on the wealthy. Using one of the "Ideas for Beyond the Final Exam," explain how higher taxes on the wealthy will affect output.

Accepted Answer

Greater equality comes at the expense of

Question 18

Abstraction is used in economics to omit unnecessary details and focus on the essence of the problem being studied.

Accepted Answer

A) True 
 B)False

Question 19

Attempts by the government to reduce the rate of inflation often result in higher unemployment in the short run.

Accepted Answer

A) True 
 B)False

Question 20

The slope of a curved line at a particular point is

Accepted Answer

A) always greater than the slope of a straight line at the same point. 
B) always smaller than the slope of a straight line at the same point. 
C) defined as the slope of the straight line representing the average values for the entire curve. 
D) defined as the slope of the straight line that is tangent to the curve at that point. 
A) always greater than the slope of a straight line at the same point. 
B) always smaller than the slope of a straight line at the same point. 
C) defined as the slope of the straight line representing the average values for the entire curve. 
D) defined as the slope of the straight line that is tangent to the curve at that point.

Exam 1: What Is Economics

It is impossible for both nations to gain when trading with one other.

The slope of a downward-sloping straight line can be calculated as the distance from the

Economists may disagree about how to solve an economic problem because they

You just purchased a lawn mower from your next-door neighbor. How can we measure the gains from this transaction?

Eliminating important details in economic analysis is necessary to understand the complexity of the economy.

Two variables that systematically change together are correlated.

If Japan is twice as good at producing cameras and three times as good at producing TV sets as the United States, Japan is said to have a comparative advantage in TV sets and the United States has a comparative advantage in cameras.

An economic model can be defined as

Opportunity cost is the highest possible price you can receive when you sell an object.

Economists probably agree more often than they disagree.

The market mechanism provides a financial incentive for firms to minimize the pollution they create.

A graph with a positive slope indicates that the variables depicted on the axes move in the same directions.

Slope will vary along a curve (as opposed to a straight line).

If trade between two countries is voluntary, one can expect that

Economic theory is necessary and extremely important because of its relationship to economic policy.

People generally purchase less of a commodity as its price increases. This implies that the relationship between quantity purchased and the price of the commodity must have a

Many believe that fairness calls for higher income taxes on the wealthy. Using one of the "Ideas for Beyond the Final Exam," explain how higher taxes on the wealthy will affect output.

Abstraction is used in economics to omit unnecessary details and focus on the essence of the problem being studied.

Attempts by the government to reduce the rate of inflation often result in higher unemployment in the short run.

The slope of a curved line at a particular point is

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: an Initial Look

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: the Importance of Marginal Analysis

The Financial Markets and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

The Case for Free Markets: the Price System

Monopoly

Between Competition and Monopoly

Limiting Market Power: Antitrust and Regulation

The Shortcomings of Free Markets

Externalities, Externaliteis, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

International Trade and Comparative Advantage

Contemporary Issues in the Us Economy

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