Question 1

Economic reasoning allows economic agents to make decisions ________.

Accepted Answer

A)  by random selection 
B)  by comparing the costs and benefits of various options 
C)  by replicating the choices made by other economic agents 
D)  solely on the basis of tastes and preferences for various options 
A)  by random selection 
B)  by comparing the costs and benefits of various options 
C)  by replicating the choices made by other economic agents 
D)  solely on the basis of tastes and preferences for various options

Question 2

Which of the following statements correctly differentiates between positive and normative economics?

Accepted Answer

A)  Positive economics is descriptive, whereas normative economics is advisory. 
B)  Positive economics describes what people ought to do, whereas normative economics describes what people actually do. 
C)  Positive economics is based on judgments, whereas normative economics is not. 
D)  Positive economics can only be applied to microeconomics, whereas normative economics can be applied to both microeconomics and macroeconomics. 
A)  Positive economics is descriptive, whereas normative economics is advisory. 
B)  Positive economics describes what people ought to do, whereas normative economics describes what people actually do. 
C)  Positive economics is based on judgments, whereas normative economics is not. 
D)  Positive economics can only be applied to microeconomics, whereas normative economics can be applied to both microeconomics and macroeconomics.

Question 3

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

Accepted Answer

A)  An increase in government expenditure will lead to an increase in well-being. 
B)  An increase in the money supply will lead to an increase in the inflation rate. 
C)  An increase in income is accompanied by an increase in savings. 
D)  An increase in income is accompanied by an increase in consumption. 
A)  An increase in government expenditure will lead to an increase in well-being. 
B)  An increase in the money supply will lead to an increase in the inflation rate. 
C)  An increase in income is accompanied by an increase in savings. 
D)  An increase in income is accompanied by an increase in consumption.

Question 4

Positive economics is descriptive because ________.

Accepted Answer

A)  it is based on ethical judgments. 
B)  its predictions cannot be verified with data. 
C)  it prescribes what an individual or society ought to do. 
D)  it explains what has happened or predicts what will happen. 
A)  it is based on ethical judgments. 
B)  its predictions cannot be verified with data. 
C)  it prescribes what an individual or society ought to do. 
D)  it explains what has happened or predicts what will happen.

Question 5

When a market is in equilibrium,both buyers and sellers do not perceive a benefit from changing their behavior.Why?

Accepted Answer

In most economic situations,an economic

Question 6

________ is a calculation that adds up the costs and benefits using a common unit of measurement,like dollar values.

Accepted Answer

A)  Cost-benefit analysis 
B)  Revenue-income analysis 
C)  Budget constraint analysis 
D)  Expenditure-income analysis 
A)  Cost-benefit analysis 
B)  Revenue-income analysis 
C)  Budget constraint analysis 
D)  Expenditure-income analysis

Question 7

Who among the following is an example of a free rider?

Accepted Answer

A)  An individual who sneaks into a music concert 
B)  A consumer who buys her groceries from a nearby store 
C)  A taxpayer who exercises in the public park near his house 
D)  A club member who makes voluntary contributions to the club 
A)  An individual who sneaks into a music concert 
B)  A consumer who buys her groceries from a nearby store 
C)  A taxpayer who exercises in the public park near his house 
D)  A club member who makes voluntary contributions to the club

Question 8

Which of the following correctly defines the term "equilibrium"?

Accepted Answer

A)  It refers to a situation in which data are used to arrive at conclusions. 
B)  It refers to a situation in which all economic agents are simultaneously optimizing. 
C)  It refers to a situation in which an optimizing decision is made by an individual economic agent. 
D)  It refers to a situation in which government intervention efficiently allocates scarce resources. 
A)  It refers to a situation in which data are used to arrive at conclusions. 
B)  It refers to a situation in which all economic agents are simultaneously optimizing. 
C)  It refers to a situation in which an optimizing decision is made by an individual economic agent. 
D)  It refers to a situation in which government intervention efficiently allocates scarce resources.

Question 9

Which of the following is true of equilibrium?

Accepted Answer

A)  Equilibrium refers to a situation where the government allocates resources among economic agents. 
B)  Equilibrium refers to a situation where all economic agents simultaneously optimize after considering one another's actions. 
C)  Equilibrium refers to a situation where all economic agents are making suboptimal choices and have an incentive to change their behavior. 
D)  Equilibrium refers to a situation where an economic agent can be made better off without making anyone else worse off. 
A)  Equilibrium refers to a situation where the government allocates resources among economic agents. 
B)  Equilibrium refers to a situation where all economic agents simultaneously optimize after considering one another's actions. 
C)  Equilibrium refers to a situation where all economic agents are making suboptimal choices and have an incentive to change their behavior. 
D)  Equilibrium refers to a situation where an economic agent can be made better off without making anyone else worse off.

Question 10

Which of the following statements is true?

Accepted Answer

A)  A budget constraint remains the same for a consumer at all levels of income. 
B)  A budget constraint quantifies the trade-offs that economic agents face while making decisions. 
C)  A budget constraint is a function of the income of the consumer and not of the prices of the goods and services available for consumption. 
D)  A budget constraint is based on the minimum amount of money that an economic agent can spend on goods and services. 
A)  A budget constraint remains the same for a consumer at all levels of income. 
B)  A budget constraint quantifies the trade-offs that economic agents face while making decisions. 
C)  A budget constraint is a function of the income of the consumer and not of the prices of the goods and services available for consumption. 
D)  A budget constraint is based on the minimum amount of money that an economic agent can spend on goods and services.

Question 11

Which of the following will hold true if the market for cameras is in equilibrium at a price of $40?

Accepted Answer

A)  Sellers of cameras will have an incentive to charge a price higher than $40. 
B)  The quantity of cameras produced will equal the quantity of cameras bought in the market. 
C)  Buyers of cameras will want to buy fewer cameras than they are purchasing at equilibrium. 
D)  If the cost of producing cameras falls below $40 per camera, all sellers will stop supplying cameras. 
A)  Sellers of cameras will have an incentive to charge a price higher than $40. 
B)  The quantity of cameras produced will equal the quantity of cameras bought in the market. 
C)  Buyers of cameras will want to buy fewer cameras than they are purchasing at equilibrium. 
D)  If the cost of producing cameras falls below $40 per camera, all sellers will stop supplying cameras.

Question 12

________ is analysis that generates objective descriptions or predictions about the world that can be verified with data.

Accepted Answer

A)  Positive economics 
B)  Negative economics 
C)  Microeconomics 
D)  Normative economics 
A)  Positive economics 
B)  Negative economics 
C)  Microeconomics 
D)  Normative economics

Question 13

Differentiate between positive and normative economics using examples.

Accepted Answer

Positive economics is analysis that gene

Question 14

Which of the following statements is true?

Accepted Answer

A)  Microeconomics is the study of an economy as a whole. 
B)  Macroeconomics studies how individuals make choices. 
C)  The study of the inflation rate is covered under microeconomics. 
D)  The study of the unemployment rate is covered under macroeconomics. 
A)  Microeconomics is the study of an economy as a whole. 
B)  Macroeconomics studies how individuals make choices. 
C)  The study of the inflation rate is covered under microeconomics. 
D)  The study of the unemployment rate is covered under macroeconomics.

Question 15

What is cost-benefit analysis? What are the steps involved in using cost-benefit analysis to make the optimal choice?

Accepted Answer

Cost-benefit analysis is a calculation t

Question 16

Which of the following is a topic studied by microeconomists?

Accepted Answer

A)  Energy consumption by a firm 
B)  Nationwide inflation rate 
C)  Economic growth as a means to alleviate poverty 
D)  Aggregate demand and aggregate supply in an economy 
A)  Energy consumption by a firm 
B)  Nationwide inflation rate 
C)  Economic growth as a means to alleviate poverty 
D)  Aggregate demand and aggregate supply in an economy

Question 17

Economics is primarily the study of ________.

Accepted Answer

A)  the mental functions and behavior of individuals and groups 
B)  the state, nation, government, and politics and policies of governments 
C)  the problems related to the existence and evolution of society 
D)  how agents choose to allocate scarce resources and how these choices affect society 
A)  the mental functions and behavior of individuals and groups 
B)  the state, nation, government, and politics and policies of governments 
C)  the problems related to the existence and evolution of society 
D)  how agents choose to allocate scarce resources and how these choices affect society

Question 18

Students in a class are discussing how a firm that does not face any competition in a market should decide how many units of output to supply in the market.Would this discussion be considered microeconomic or macroeconomic analysis?

Accepted Answer

Microeconomics is the study of how indiv

Question 19

Define economics.Who are economic agents?

Accepted Answer

Economics is the study of how

Question 20

Each member in a group might do what's best for himself or herself instead of behaving in a way that optimizes the well-being of the entire group.This gives rise to the problem of ________.

Accepted Answer

A)  Pareto inefficiency 
B)  free riding 
C)  irrational behavior 
D)  disequilibrium 
A)  Pareto inefficiency 
B)  free riding 
C)  irrational behavior 
D)  disequilibrium

Economic reasoning allows economic agents to make decisions ________.

Which of the following statements correctly differentiates between positive and normative economics?

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

Positive economics is descriptive because ________.

When a market is in equilibrium,both buyers and sellers do not perceive a benefit from changing their behavior.Why?

________ is a calculation that adds up the costs and benefits using a common unit of measurement,like dollar values.

Who among the following is an example of a free rider?

Which of the following correctly defines the term "equilibrium"?

Which of the following is true of equilibrium?

Which of the following statements is true?

Which of the following will hold true if the market for cameras is in equilibrium at a price of $40?

________ is analysis that generates objective descriptions or predictions about the world that can be verified with data.

Differentiate between positive and normative economics using examples.

Which of the following statements is true?

What is cost-benefit analysis? What are the steps involved in using cost-benefit analysis to make the optimal choice?

Which of the following is a topic studied by microeconomists?

Economics is primarily the study of ________.

Students in a class are discussing how a firm that does not face any competition in a market should decide how many units of output to supply in the market.Would this discussion be considered microeconomic or macroeconomic analysis?

Define economics.Who are economic agents?

Each member in a group might do what's best for himself or herself instead of behaving in a way that optimizes the well-being of the entire group.This gives rise to the problem of ________.

Economic Methods and Economic Questions

Optimization: Doing the Best You Can

Demand, Supply, and Equilibrium

The Wealth of Nations: Defining and Measuring Macroeconomic Aggregates

Aggregate Incomes

Economic Growth

Why Isn't the Whole World Developed?

Employment and Unemployment

Credit Markets

The Monetary System

Short-Run Fluctuations

Countercyclical Macroeconomic Policy

Macroeconomics and International Trade

Open Economy Macroeconomics

Filters

Exam 1: The Principles and Practice of Economics

Economic reasoning allows economic agents to make decisions ________.

Which of the following statements correctly differentiates between positive and normative economics?

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

Positive economics is descriptive because ________.

When a market is in equilibrium,both buyers and sellers do not perceive a benefit from changing their behavior.Why?

________ is a calculation that adds up the costs and benefits using a common unit of measurement,like dollar values.

Who among the following is an example of a free rider?

Which of the following correctly defines the term "equilibrium"?

Which of the following is true of equilibrium?

Which of the following statements is true?

Which of the following will hold true if the market for cameras is in equilibrium at a price of $40?

________ is analysis that generates objective descriptions or predictions about the world that can be verified with data.

Differentiate between positive and normative economics using examples.

Which of the following statements is true?

What is cost-benefit analysis? What are the steps involved in using cost-benefit analysis to make the optimal choice?

Which of the following is a topic studied by microeconomists?

Economics is primarily the study of ________.

Students in a class are discussing how a firm that does not face any competition in a market should decide how many units of output to supply in the market.Would this discussion be considered microeconomic or macroeconomic analysis?

Define economics.Who are economic agents?

Each member in a group might do what's best for himself or herself instead of behaving in a way that optimizes the well-being of the entire group.This gives rise to the problem of ________.

Economic Methods and Economic Questions

Optimization: Doing the Best You Can

Demand, Supply, and Equilibrium

The Wealth of Nations: Defining and Measuring Macroeconomic Aggregates

Aggregate Incomes

Economic Growth

Why Isn't the Whole World Developed?

Employment and Unemployment

Credit Markets

The Monetary System

Short-Run Fluctuations

Countercyclical Macroeconomic Policy

Macroeconomics and International Trade

Open Economy Macroeconomics

Filters