Question 1

The statement, "Violent crime has decreased in the last five years," is:

Accepted Answer

A)  obviously wrong and, therefore, cannot be a positive statement. 
B)  normative since it can be answered by simply looking at the facts. 
C)  positive because it is testable. 
D)  not very interesting because all normative issues are of little importance. 
A)  obviously wrong and, therefore, cannot be a positive statement. 
B)  normative since it can be answered by simply looking at the facts. 
C)  positive because it is testable. 
D)  not very interesting because all normative issues are of little importance.

Question 2

A shift in a curve represents a change in:

Accepted Answer

A)  the variable on the horizontal axis. 
B)  the variable on the vertical axis. 
C)  a third variable that is not on either axis. 
D)  any variable that is relevant to the relationship being graphed. 
A)  the variable on the horizontal axis. 
B)  the variable on the vertical axis. 
C)  a third variable that is not on either axis. 
D)  any variable that is relevant to the relationship being graphed.

Question 3

The price of milk would be of particular interest to

Accepted Answer

A)  a microeconomist. 
B)  a macroeconomist. 
C)  neither a microeconomist nor a macroeconomist. 
D)  both a microeconomist and a macroeconomist. 
A)  a microeconomist. 
B)  a macroeconomist. 
C)  neither a microeconomist nor a macroeconomist. 
D)  both a microeconomist and a macroeconomist.

Question 4

To test the theory that if the price of pens rises, then pen purchases fall, an economist would

Accepted Answer

A)  analyze data on the price of pens and the price of pencils without holding other factors constant. 
B)  investigate whether people purchase more pens when their income rises. 
C)  analyze data on pen purchases linked to the price of pens, holding other factors constant. 
D)  ask his or her friends if they would buy fewer pens when the price rises. 
A)  analyze data on the price of pens and the price of pencils without holding other factors constant. 
B)  investigate whether people purchase more pens when their income rises. 
C)  analyze data on pen purchases linked to the price of pens, holding other factors constant. 
D)  ask his or her friends if they would buy fewer pens when the price rises.

Question 5

Which of the following is not an example of a capital input?

Accepted Answer

A)  A person's skills and abilities, which can be employed to produce valuable goods and services. 
B)  Factories and offices where goods and services are produced. 
C)  Tools and equipment. 
D)  Computers used by a company to record inventory, sales, and payroll. 
A)  A person's skills and abilities, which can be employed to produce valuable goods and services. 
B)  Factories and offices where goods and services are produced. 
C)  Tools and equipment. 
D)  Computers used by a company to record inventory, sales, and payroll.

Question 6

Exhibit 1A-2 Straight line  
In Exhibit 1A-2, explain the slope of straight line CD.

Accepted Answer

A)  As the X value increases by 20, the Y value increases by 5, so the slope is 4. 
B)  As the Y value increases by 5, the X value increases by 20, so the slope is 1/4. 
C)  As the X value increases by 10, the Y value increases by 5, so the slope is 2. 
D)  As the Y value increases by 5, the X value increases by 10, so the slope is 1/2. 
A)  As the X value increases by 20, the Y value increases by 5, so the slope is 4. 
B)  As the Y value increases by 5, the X value increases by 20, so the slope is 1/4. 
C)  As the X value increases by 10, the Y value increases by 5, so the slope is 2. 
D)  As the Y value increases by 5, the X value increases by 10, so the slope is 1/2.

Question 7

Which of the following is not an example of a factor of production?

Accepted Answer

A)  A forest. 
B)  A computer program. 
C)  A n assembly-line worker . 
D)  Dollars. 
A)  A forest. 
B)  A computer program. 
C)  A n assembly-line worker . 
D)  Dollars.

Question 8

Microeconomics deals with the analysis of all the following questions except how:

Accepted Answer

A)  the wages of carpenters are determined. 
B)  high did unemployment rise during the Great Depression. 
C)  does Ford decide how to price its cars. 
D)  does a college student decide how to spend her income. 
A)  the wages of carpenters are determined. 
B)  high did unemployment rise during the Great Depression. 
C)  does Ford decide how to price its cars. 
D)  does a college student decide how to spend her income.

Question 9

An entrepreneur is:

Accepted Answer

A)  an employee in a factory. 
B)  the manager of a factory. 
C)  the person who conceives and starts a business. 
D)  the person who does not assume any risk in business. 
A)  an employee in a factory. 
B)  the manager of a factory. 
C)  the person who conceives and starts a business. 
D)  the person who does not assume any risk in business.

Question 10

Assume there is a relationship between two variables and the other-variables-held constant assumption (ceteris paribus) is relaxed. We would expect that the line representing this relationship would:

Accepted Answer

A)  change from inverse to direct. 
B)  change from direct to inverse. 
C)  have a greater number of data points. 
D)  change its location. 
A)  change from inverse to direct. 
B)  change from direct to inverse. 
C)  have a greater number of data points. 
D)  change its location.

Question 11

Which of the following is an example of scarcity?

Accepted Answer

A)  Adam has more than enough food to eat each day. 
B)  Benito is wealthy so he has everything he could ever want. 
C)  Camden would like to have more designer clothes than he can afford. 
D)  Dennis takes as many vacations as he would like since he won the lottery. 
A)  Adam has more than enough food to eat each day. 
B)  Benito is wealthy so he has everything he could ever want. 
C)  Camden would like to have more designer clothes than he can afford. 
D)  Dennis takes as many vacations as he would like since he won the lottery.

Question 12

Natural resources are:

Accepted Answer

A)  not considered scarce because no one pays for them. 
B)  rarely used in production. 
C)  included in the category of resources called land. 
D)  available in unlimited quantities. 
A)  not considered scarce because no one pays for them. 
B)  rarely used in production. 
C)  included in the category of resources called land. 
D)  available in unlimited quantities.

Question 13

The finite nature of the economy's resource base:

Accepted Answer

A)  will be solved if only we would learn to conserve. 
B)  is only a problem in developing countries. 
C)  will be solved as technology advances. 
D)  will always be with us. 
A)  will be solved if only we would learn to conserve. 
B)  is only a problem in developing countries. 
C)  will be solved as technology advances. 
D)  will always be with us.

Question 14

The perpetual problem in economics is:

Accepted Answer

A)  our inability to work together effectively. 
B)  our inability to satisfy everyone's wants with the available resources. 
C)  likely to be solved in resource-rich countries. 
D)  our inability to utilize resources efficiently. 
A)  our inability to work together effectively. 
B)  our inability to satisfy everyone's wants with the available resources. 
C)  likely to be solved in resource-rich countries. 
D)  our inability to utilize resources efficiently.

Question 15

If individuals who sit in the back of the classroom receive lower grades on average than the rest of the class, does that mean that sitting in the back of a classroom causes one to perform poorly on exams?

Accepted Answer

A)  Not necessarily. The reoccurrence of a certain relationship between two variables does not necessarily imply causation. 
B)  The reccurrence of such a relationship is definitely caused by the variation of another variable. 
C)  The reccurrence of such a relationship is sufficient evidence that sitting in the back of a classroom will lead to lower grades. 
D)  The reoccurrence of such a relationship is sufficient evidence that students who receive low grades prefer to keep a low profile and always sit in the back of the classroom. 
A)  Not necessarily. The reoccurrence of a certain relationship between two variables does not necessarily imply causation. 
B)  The reccurrence of such a relationship is definitely caused by the variation of another variable. 
C)  The reccurrence of such a relationship is sufficient evidence that sitting in the back of a classroom will lead to lower grades. 
D)  The reoccurrence of such a relationship is sufficient evidence that students who receive low grades prefer to keep a low profile and always sit in the back of the classroom.

Question 16

If an economist finds that when consumer incomes increase, consumers buy more cars, Ceteris paribus , then  the economist is assuming

Accepted Answer

A)  the price of cars must be decreasing. 
B)  all other things remain constant. 
C)  the price of gas must be decreasing. 
D)  the interest rate on car loans must be decreasing. 
A)  the price of cars must be decreasing. 
B)  all other things remain constant. 
C)  the price of gas must be decreasing. 
D)  the interest rate on car loans must be decreasing.

Question 17

Relate the term scarcity to the action(s) it causes.

Accepted Answer

A)  Scarcity causes developed nations to have more material goods than developing nations. 
B)  Scarcity causes fewer technological advances. 
C)  Scarcity forces people to want more material goods. 
D)  Scarcity forces everyone to make choices. 
A)  Scarcity causes developed nations to have more material goods than developing nations. 
B)  Scarcity causes fewer technological advances. 
C)  Scarcity forces people to want more material goods. 
D)  Scarcity forces everyone to make choices.

Question 18

Select the normative statement that completes the following sentence: If the minimum wage is raised:

Accepted Answer

A)  cost per unit of output will rise. 
B)  workers will gain their rightful share of total income. 
C)  the rate of inflation will increase. 
D)  profits will fall. 
A)  cost per unit of output will rise. 
B)  workers will gain their rightful share of total income. 
C)  the rate of inflation will increase. 
D)  profits will fall.

Question 19

Suppose an economist tests the theory that when the price of leather increases, fewer pairs of shoes are produced. He observes more shoes being produced when the price of leather increases. At the same time, a new production technology allowed for more shoes to be produced in less time. He has

Accepted Answer

A)  has confused association and causation. 
B)  cannot test his theory because his observations violate the ceteris paribus assumption. 
C)  used normative economics to answer a positive question. 
D)  built a model with too many variables . 
A)  has confused association and causation. 
B)  cannot test his theory because his observations violate the ceteris paribus assumption. 
C)  used normative economics to answer a positive question. 
D)  built a model with too many variables .

Exam 1: Introducing the Economic Way of Thinking

The statement, "Violent crime has decreased in the last five years," is:

A shift in a curve represents a change in:

The price of milk would be of particular interest to

To test the theory that if the price of pens rises, then pen purchases fall, an economist would

Which of the following is not an example of a capital input?

Exhibit 1A-2 Straight line In Exhibit 1A-2, explain the slope of straight line CD.

Which of the following is not an example of a factor of production?

Microeconomics deals with the analysis of all the following questions except how:

An entrepreneur is:

Assume there is a relationship between two variables and the other-variables-held constant assumption (ceteris paribus) is relaxed. We would expect that the line representing this relationship would:

Which of the following is an example of scarcity?

Natural resources are:

The finite nature of the economy's resource base:

The perpetual problem in economics is:

If individuals who sit in the back of the classroom receive lower grades on average than the rest of the class, does that mean that sitting in the back of a classroom causes one to perform poorly on exams?

If an economist finds that when consumer incomes increase, consumers buy more cars, Ceteris paribus , then the economist is assuming

Relate the term scarcity to the action(s) it causes.

Select the normative statement that completes the following sentence: If the minimum wage is raised:

Suppose an economist tests the theory that when the price of leather increases, fewer pairs of shoes are produced. He observes more shoes being produced when the price of leather increases. At the same time, a new production technology allowed for more shoes to be produced in less time. He has

Production Possibilities Opportunity Cost and Economic Growth

Market Demand and Supply

Markets in Action

Price Elasticity of Demand and Supply

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets and Income Distribution

Gross Domestic Product

Business Cycles and Unemployment

Inflation

Aggregate Demand and Supply

Fiscal Policy

The Public Sector

Federal Deficits Surpluses and the National Debt

Money and the Federal Reserve System

Money Creation

Monetary Policy

International Trade and Finance

Economies in Transition

Growth and the Less Developed Countries

Filters