Question 1

Which of the following is most consistent with economizing behavior?

Accepted Answer

A)  If you get the same satisfaction from a hamburger and a fish sandwich, you should purchase the one that costs the most. 
B)  Even if you know how to paint, hiring someone to do the job is consistent with economizing behavior, if your opportunity cost is high enough. 
C)  If the government provides a good free to citizens, the opportunity cost of the good is zero. 
D)  If you get the same satisfaction from going to the opera and going to an art museum, it makes no difference which you choose. 
A)  If you get the same satisfaction from a hamburger and a fish sandwich, you should purchase the one that costs the most. 
B)  Even if you know how to paint, hiring someone to do the job is consistent with economizing behavior, if your opportunity cost is high enough. 
C)  If the government provides a good free to citizens, the opportunity cost of the good is zero. 
D)  If you get the same satisfaction from going to the opera and going to an art museum, it makes no difference which you choose. B

Question 2

If you win the lottery this would be great for you, but if everyone simultaneously won the lottery this wouldn't be nearly as good, why?

Accepted Answer

A)  association is not causation 
B)  it is a violation of ceteris paribus 
C)  the fallacy of composition 
D)  what appear to be positive outcomes in society are actually normative. 
A)  association is not causation 
B)  it is a violation of ceteris paribus 
C)  the fallacy of composition 
D)  what appear to be positive outcomes in society are actually normative. C

Question 3

Which of the following is consistent with the implications of the economic guidepost that information is costly to acquire?

Accepted Answer

A)  Most people do not know the names of their legislators in the U.S. Congress, but those same individuals are likely to know the names of all the cast members on a popular TV show. 
B)  In considering purchases, people are more likely to purchase a consumer ratings magazine that reviews new automobiles before buying a car, but are unlikely to purchase a consumer ratings magazine that reviews pens and pencils before buying a pen or pencil. 
C)  When shopping for something like a new calculator, people will generally not spend the time to do price comparisons at all of the stores in town that sell calculators. 
D)  All of the above are consistent with the economic way of thinking. 
A)  Most people do not know the names of their legislators in the U.S. Congress, but those same individuals are likely to know the names of all the cast members on a popular TV show. 
B)  In considering purchases, people are more likely to purchase a consumer ratings magazine that reviews new automobiles before buying a car, but are unlikely to purchase a consumer ratings magazine that reviews pens and pencils before buying a pen or pencil. 
C)  When shopping for something like a new calculator, people will generally not spend the time to do price comparisons at all of the stores in town that sell calculators. 
D)  All of the above are consistent with the economic way of thinking. D

Question 4

The basic difference between macroeconomics and microeconomics is that

Accepted Answer

A)  macroeconomics is concerned with the forest (aggregate markets), while microeconomics is concerned with the individual trees (subcomponents). 
B)  macroeconomics is concerned with policy decisions, while microeconomics applies only to theory. 
C)  microeconomics is concerned with the forest (aggregate markets), while macroeconomics is concerned with the trees (subcomponents). 
D)  opportunity cost is applicable to macroeconomics, and the fallacy of composition relates to microeconomics. 
A)  macroeconomics is concerned with the forest (aggregate markets), while microeconomics is concerned with the individual trees (subcomponents). 
B)  macroeconomics is concerned with policy decisions, while microeconomics applies only to theory. 
C)  microeconomics is concerned with the forest (aggregate markets), while macroeconomics is concerned with the trees (subcomponents). 
D)  opportunity cost is applicable to macroeconomics, and the fallacy of composition relates to microeconomics.

Question 5

When economists say an individual has made a rational choice, they mean the individual has

Accepted Answer

A)  made the choice by weighing their own subjective costs and benefits. 
B)  made a "good" decision, one that reasonable outside observers would have also made. 
C)  neglected to consider the unintended consequences arising from their decision. 
D)  ignored their own personal interests and made the choice that is best for society. 
A)  made the choice by weighing their own subjective costs and benefits. 
B)  made a "good" decision, one that reasonable outside observers would have also made. 
C)  neglected to consider the unintended consequences arising from their decision. 
D)  ignored their own personal interests and made the choice that is best for society.

Question 6

Which of the following is the best definition of economics?

Accepted Answer

A)  An investigation of the quantities and prices of the various goods produced by the nations of the world. 
B)  A study of why inflation and unemployment periodically plague the U.S. economy. 
C)  An analysis of how individuals and societies deal with the problem of scarcity. 
D)  An examination of the role that money plays in the economy. 
E)  A study of how goods and services are distributed throughout the world. 
A)  An investigation of the quantities and prices of the various goods produced by the nations of the world. 
B)  A study of why inflation and unemployment periodically plague the U.S. economy. 
C)  An analysis of how individuals and societies deal with the problem of scarcity. 
D)  An examination of the role that money plays in the economy. 
E)  A study of how goods and services are distributed throughout the world.

Question 7

William observes that a car in 1925 sold for an average of $500 versus $20,000 for a 2005 model. He concludes that 2005 cars must be 40 times better than 1925 cars. What's wrong with this way of thinking?

Accepted Answer

Poor William has made several errors. Fi

Question 8

People are more likely to purchase a consumer ratings magazine that reviews new automobiles before buying a new car than they are to purchase a consumer ratings magazine that reviews pens and pencils before buying a new pen or pencil. Which of the following best explains this behavior?

Accepted Answer

A)  Because the consumer ratings magazine must have a higher price for the issue reviewing pens and pencils. 
B)  Because the value of the information, in terms of avoiding a mistake on the purchase, is much higher for an automobile than for a pen or pencil, it is more worthwhile to gather this information. 
C)  Because people generally do not know which products are reviewed by these consumer magazines. 
D)  None of the above explain this behavior. 
A)  Because the consumer ratings magazine must have a higher price for the issue reviewing pens and pencils. 
B)  Because the value of the information, in terms of avoiding a mistake on the purchase, is much higher for an automobile than for a pen or pencil, it is more worthwhile to gather this information. 
C)  Because people generally do not know which products are reviewed by these consumer magazines. 
D)  None of the above explain this behavior.

Question 9

Economic theory

Accepted Answer

A)  is a set of definitions, postulates, and principles assembled in a manner that helps make cause-and-effect relationships clear in economics. 
B)  is like a guidebook in that it points out what to look for. 
C)  provides economists with a common language and way of thinking about how the world works. 
D)  is all of the above. 
A)  is a set of definitions, postulates, and principles assembled in a manner that helps make cause-and-effect relationships clear in economics. 
B)  is like a guidebook in that it points out what to look for. 
C)  provides economists with a common language and way of thinking about how the world works. 
D)  is all of the above.

Question 10

Economists make assumptions in order to

Accepted Answer

A)  mimic the methodologies employed by other scientists. 
B)  minimize the number of experiments that yield no useful data. 
C)  minimize the likelihood that some aspect of the problem at hand is being overlooked. 
D)  focus their thinking on the essence of the problem at hand. 
A)  mimic the methodologies employed by other scientists. 
B)  minimize the number of experiments that yield no useful data. 
C)  minimize the likelihood that some aspect of the problem at hand is being overlooked. 
D)  focus their thinking on the essence of the problem at hand.

Question 11

Which of the following is most consistent with economizing behavior?

Accepted Answer

A)  If you derive the same satisfaction from eating pizza and eating ice cream, it makes no difference which one of the two you choose. 
B)  Before voting, you should invest the time and energy to become fully informed on all of the issues and candidates. 
C)  It never makes sense to hire someone to do something for you that you could do yourself. 
D)  If you get the same satisfaction from a chicken sandwich and a salad, you should purchase the one that costs the least. 
A)  If you derive the same satisfaction from eating pizza and eating ice cream, it makes no difference which one of the two you choose. 
B)  Before voting, you should invest the time and energy to become fully informed on all of the issues and candidates. 
C)  It never makes sense to hire someone to do something for you that you could do yourself. 
D)  If you get the same satisfaction from a chicken sandwich and a salad, you should purchase the one that costs the least.

Question 12

In economics, the term "scarcity" refers to the fact that

Accepted Answer

A)  everything really worthwhile costs money. 
B)  even in wealthy countries like the United States, some people are poor. 
C)  no society can produce enough to satisfy fully the desires of people for goods and services. 
D)  sometimes shortages of a good arise when its price is set below the market equilibrium. 
A)  everything really worthwhile costs money. 
B)  even in wealthy countries like the United States, some people are poor. 
C)  no society can produce enough to satisfy fully the desires of people for goods and services. 
D)  sometimes shortages of a good arise when its price is set below the market equilibrium.

Question 13

Rational choice requires that opportunity cost be

Accepted Answer

A)  ignored in making a decision. 
B)  considered for individual choices, but not for societal choices. 
C)  computed, but not actually used in making a decision. 
D)  considered as part of making a decision. 
E)  used as the sole decision criterion. 
A)  ignored in making a decision. 
B)  considered for individual choices, but not for societal choices. 
C)  computed, but not actually used in making a decision. 
D)  considered as part of making a decision. 
E)  used as the sole decision criterion.

Question 14

Ex-London School of Economics student Mick Jagger sang, "You can't always get what you want, but if you try sometime, you just might find you can get what you need." Another statement of the basic economic principle expressed in this lyric is that

Accepted Answer

A)  rational decisions are not always possible. 
B)  you can allocate your resources to what gives you the highest value. 
C)  you can create the supply to meet your own demand. 
D)  you can maximize social welfare by making optimal decisions. 
A)  rational decisions are not always possible. 
B)  you can allocate your resources to what gives you the highest value. 
C)  you can create the supply to meet your own demand. 
D)  you can maximize social welfare by making optimal decisions.

Question 15

Capital is a term economists use to refer to

Accepted Answer

A)  man-made resources used to produce other goods and services. 
B)  resources that are available in nature such as mineral deposits. 
C)  money that is used to consume goods and services, to distinguish it from money that is saved. 
D)  the value of the best alternative to an action. 
A)  man-made resources used to produce other goods and services. 
B)  resources that are available in nature such as mineral deposits. 
C)  money that is used to consume goods and services, to distinguish it from money that is saved. 
D)  the value of the best alternative to an action.

Question 16

Which of the following best illustrates the fallacy of composition?

Accepted Answer

A)  If Jamal had more money, he could afford to buy more goods. 
B)  If Aisha stood up at a basketball game, she could get a better view of the game; if everyone stood up at a basketball game, everyone could have a better view of the game. 
C)  If the price of bread rose, consumers would buy less; if consumers bought less bread, the price of bread would rise. 
D)  High housing prices cause people to buy less housing, but an increase in income might cause them to buy more housing. 
A)  If Jamal had more money, he could afford to buy more goods. 
B)  If Aisha stood up at a basketball game, she could get a better view of the game; if everyone stood up at a basketball game, everyone could have a better view of the game. 
C)  If the price of bread rose, consumers would buy less; if consumers bought less bread, the price of bread would rise. 
D)  High housing prices cause people to buy less housing, but an increase in income might cause them to buy more housing.

Question 17

The unintended consequences of an economic change that are not immediately identifiable but are felt only with time are known in economics as

Accepted Answer

A)  opportunity costs. 
B)  marginal effects. 
C)  secondary effects. 
D)  scarcity constraints. 
A)  opportunity costs. 
B)  marginal effects. 
C)  secondary effects. 
D)  scarcity constraints.

Question 18

The benefit (or satisfaction) that an individual expects to derive from an activity is called

Accepted Answer

A)  opportunity cost. 
B)  utility. 
C)  marginal cost. 
D)  scarcity. 
A)  opportunity cost. 
B)  utility. 
C)  marginal cost. 
D)  scarcity.

Question 19

Which of the following most clearly distinguishes between positive and normative economics?

Accepted Answer

A)  Positive economics is the study of what ought to be; normative economics is concerned with the facts. 
B)  Positive economics is the study of the facts; normative economics is concerned with what ought to be. 
C)  Positive economics is the study of supply and demand in narrowly defined markets such as the market for shoes; normative economics focuses on highly aggregated markets such as the market for all consumer products. 
D)  Positive economics is the study of goods that are scarce; normative economics is concerned with goods that are not scarce. 
A)  Positive economics is the study of what ought to be; normative economics is concerned with the facts. 
B)  Positive economics is the study of the facts; normative economics is concerned with what ought to be. 
C)  Positive economics is the study of supply and demand in narrowly defined markets such as the market for shoes; normative economics focuses on highly aggregated markets such as the market for all consumer products. 
D)  Positive economics is the study of goods that are scarce; normative economics is concerned with goods that are not scarce.

Question 20

When a society cannot produce all the goods and services people wish to have, it is said that the economy is experiencing

Accepted Answer

A)  scarcity. 
B)  shortages. 
C)  inefficiencies. 
D)  inequities. 
A)  scarcity. 
B)  shortages. 
C)  inefficiencies. 
D)  inequities.

Which of the following is most consistent with economizing behavior?

If you win the lottery this would be great for you, but if everyone simultaneously won the lottery this wouldn't be nearly as good, why?

Which of the following is consistent with the implications of the economic guidepost that information is costly to acquire?

The basic difference between macroeconomics and microeconomics is that

When economists say an individual has made a rational choice, they mean the individual has

Which of the following is the best definition of economics?

William observes that a car in 1925 sold for an average of $500 versus $20,000 for a 2005 model. He concludes that 2005 cars must be 40 times better than 1925 cars. What's wrong with this way of thinking?

People are more likely to purchase a consumer ratings magazine that reviews new automobiles before buying a new car than they are to purchase a consumer ratings magazine that reviews pens and pencils before buying a new pen or pencil. Which of the following best explains this behavior?

Economic theory

Economists make assumptions in order to

Which of the following is most consistent with economizing behavior?

In economics, the term "scarcity" refers to the fact that

Rational choice requires that opportunity cost be

Ex-London School of Economics student Mick Jagger sang, "You can't always get what you want, but if you try sometime, you just might find you can get what you need." Another statement of the basic economic principle expressed in this lyric is that

Capital is a term economists use to refer to

Which of the following best illustrates the fallacy of composition?

The unintended consequences of an economic change that are not immediately identifiable but are felt only with time are known in economics as

The benefit (or satisfaction) that an individual expects to derive from an activity is called

Which of the following most clearly distinguishes between positive and normative economics?

When a society cannot produce all the goods and services people wish to have, it is said that the economy is experiencing

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Taking the Nations Economic Pulse

Economic Fluctuations, Unemployment, and Inflation

An Introduction to Basic Macroeconomic Markets

Dynamic Change, Economic Fluctuations, and the Ad--As Model

Fiscal Policy: The Keynesian View and the Historical Development of Macroeconomics

Fiscal Policy: Incentives, and Secondary Effects

Money and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, Output, and Employment

Creating an Environment for Growth and Prosperity

Institutions, Policies, and Cross-Country Differences in Income and Growth

Gaining From International Trade

International Finance and the Foreign Exchange Market

Special Topics

Filters

Exam 1: The Economic Approach

Which of the following is most consistent with economizing behavior?

If you win the lottery this would be great for you, but if everyone simultaneously won the lottery this wouldn't be nearly as good, why?

Which of the following is consistent with the implications of the economic guidepost that information is costly to acquire?

The basic difference between macroeconomics and microeconomics is that

When economists say an individual has made a rational choice, they mean the individual has

Which of the following is the best definition of economics?

William observes that a car in 1925 sold for an average of $500 versus $20,000 for a 2005 model. He concludes that 2005 cars must be 40 times better than 1925 cars. What's wrong with this way of thinking?

People are more likely to purchase a consumer ratings magazine that reviews new automobiles before buying a new car than they are to purchase a consumer ratings magazine that reviews pens and pencils before buying a new pen or pencil. Which of the following best explains this behavior?

Economic theory

Economists make assumptions in order to

Which of the following is most consistent with economizing behavior?

In economics, the term "scarcity" refers to the fact that

Rational choice requires that opportunity cost be

Ex-London School of Economics student Mick Jagger sang, "You can't always get what you want, but if you try sometime, you just might find you can get what you need." Another statement of the basic economic principle expressed in this lyric is that

Capital is a term economists use to refer to

Which of the following best illustrates the fallacy of composition?

The unintended consequences of an economic change that are not immediately identifiable but are felt only with time are known in economics as

The benefit (or satisfaction) that an individual expects to derive from an activity is called

Which of the following most clearly distinguishes between positive and normative economics?

When a society cannot produce all the goods and services people wish to have, it is said that the economy is experiencing

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Taking the Nations Economic Pulse

Economic Fluctuations, Unemployment, and Inflation

An Introduction to Basic Macroeconomic Markets

Dynamic Change, Economic Fluctuations, and the Ad--As Model

Fiscal Policy: The Keynesian View and the Historical Development of Macroeconomics

Fiscal Policy: Incentives, and Secondary Effects

Money and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, Output, and Employment

Creating an Environment for Growth and Prosperity

Institutions, Policies, and Cross-Country Differences in Income and Growth

Gaining From International Trade

International Finance and the Foreign Exchange Market

Special Topics

Filters