Question 1

What are scarce resources? Why are economic agents concerned with the allocation of these resources?

Accepted Answer

Scarce resources are resources for which

Question 2

Which of the following is a feature of a good theory?

Accepted Answer

A)  A good theory does not rely on data. 
B)  A good theory cannot be tested with data. 
C)  A good theory is free from approximations. 
D)  A good theory closely predicts actual behavior. 
A)  A good theory does not rely on data. 
B)  A good theory cannot be tested with data. 
C)  A good theory is free from approximations. 
D)  A good theory closely predicts actual behavior.

Question 3

Wendy has to decide between taking a flight and driving to California.Air tickets cost $800 and will get her to California in 2 hours.If she decides to drive,she would need $300 worth of gasoline and 10 hours to reach her destination.Suppose Wendy's opportunity cost of time is $20 per hour.
a)Assuming that there are no other costs involved,use cost-benefit analysis to decide whether she should fly or drive to California.
b)If Wendy has an important business meeting to attend and this increases her opportunity cost of time to $200 per hour,will her optimum decision change? Explain.

Accepted Answer

a)Cost-benefit analysis is a calculation

Question 4

If Tom spends 4 hours a day on Facebook,and the minimum wage in his country is $7 per hour.
a)What is his opportunity cost of spending time on Facebook?
b)Given that spending time on Facebook has an opportunity cost,does this analysis suggest that Tom should work rather than spend his time on social networking?

Accepted Answer

a)Opportunity cost refers to the best al

Question 5

Economics is primarily the study of ________.

Accepted Answer

A)  the relationship between matter and its motion 
B)  agents' choices and their impact on society 
C)  events of the past and how these events affect present human behavior 
D)  the different types of governments and the impact of their policies on a nation 
A)  the relationship between matter and its motion 
B)  agents' choices and their impact on society 
C)  events of the past and how these events affect present human behavior 
D)  the different types of governments and the impact of their policies on a nation

Question 6

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

Accepted Answer

A)  A cut in the tax rate will lead to an increase in consumption. 
B)  Relaxation of import duties will encourage imports. 
C)  An increase in subsidies to farmers will boost agricultural production. 
D)  An increase in social security benefits will increase the welfare of all economic agents. 
A)  A cut in the tax rate will lead to an increase in consumption. 
B)  Relaxation of import duties will encourage imports. 
C)  An increase in subsidies to farmers will boost agricultural production. 
D)  An increase in social security benefits will increase the welfare of all economic agents.

Question 7

The impact of carbon taxes on the energy usage of individual households and firms is studied under ________.

Accepted Answer

A)  microeconomics 
B)  macroeconomics 
C)  normative economics 
D)  positive economics 
A)  microeconomics 
B)  macroeconomics 
C)  normative economics 
D)  positive economics

Question 8

Which of the following statements is true?

Accepted Answer

A)  All rational economic agents attempt to maximize their income. 
B)  A rational consumer makes his decisions depending on what the majority chooses. 
C)  A budget constraint is an economic tool that quantifies the trade-off between the consumption of two goods. 
D)  A trade-off refers to the exchange of goods between economic agents through the barter system or mutual exchange. 
A)  All rational economic agents attempt to maximize their income. 
B)  A rational consumer makes his decisions depending on what the majority chooses. 
C)  A budget constraint is an economic tool that quantifies the trade-off between the consumption of two goods. 
D)  A trade-off refers to the exchange of goods between economic agents through the barter system or mutual exchange.

Question 9

Which of the following statements is true?

Accepted Answer

A)  Data help establish whether theories match reality. 
B)  Data are not an integral part of optimization analysis. 
C)  Empiricism is not an integral part of optimization analysis. 
D)  Empiricism refers to the testing of ideas without using data. 
A)  Data help establish whether theories match reality. 
B)  Data are not an integral part of optimization analysis. 
C)  Empiricism is not an integral part of optimization analysis. 
D)  Empiricism refers to the testing of ideas without using data.

Question 10

The term "free riders" refers to people who ________.

Accepted Answer

A)  don't contribute but still benefit from others' actions 
B)  make economic decisions randomly and are not rational 
C)  selflessly pay for others' consumption of goods and services 
D)  haggle over the prices of the goods and services that they buy 
A)  don't contribute but still benefit from others' actions 
B)  make economic decisions randomly and are not rational 
C)  selflessly pay for others' consumption of goods and services 
D)  haggle over the prices of the goods and services that they buy

Question 11

Classify the following as positive economics statements or normative economics statements.
a)An increase in an individual's income increases consumption,but by an amount less than the increase in income.
b)The government should undertake the responsibility of providing healthcare to all its citizens.
c)The government should fund infrastructure projects to foster economic development.
d)An increase in net exports has a positive effect on a country's national income.
e)The gross domestic product of India is increasing at 5 percent annually.

Accepted Answer

a)Positive economic statement

Question 12

How does microeconomics differ from macroeconomics?

Accepted Answer

Microeconomics is the study of how indiv

Question 13

Which of the following is NOT a key principle of economics?

Accepted Answer

A)  Optimization 
B)  Equilibrium 
C)  Empiricism 
D)  Substitution 
A)  Optimization 
B)  Equilibrium 
C)  Empiricism 
D)  Substitution

Question 14

Which of the following statements is true?

Accepted Answer

A)  Rational economic agents maximize more than just monetary income. 
B)  An individual does not require information to make optimal decisions. 
C)  The principle of optimization is only accurate when it comes to making monetary decisions. 
D)  It is not necessary to consider the risks of alternatives while making an optimal decision. 
A)  Rational economic agents maximize more than just monetary income. 
B)  An individual does not require information to make optimal decisions. 
C)  The principle of optimization is only accurate when it comes to making monetary decisions. 
D)  It is not necessary to consider the risks of alternatives while making an optimal decision.

Question 15

Suppose the market for pizza slices is in equilibrium at a price of $1 per slice.What conditions are likely to be satisfied in the pizza slice market?

Accepted Answer

The conditions that will be satisfied wh

Question 16

Cost-benefit analysis requires ________.

Accepted Answer

A)  choosing the alternative with the least net benefit 
B)  that all costs and benefits be measured in the same unit 
C)  evaluating the budget constraint before making a choice 
D)  that the risks associated with different alternatives be ignored 
A)  choosing the alternative with the least net benefit 
B)  that all costs and benefits be measured in the same unit 
C)  evaluating the budget constraint before making a choice 
D)  that the risks associated with different alternatives be ignored

Question 17

The net benefit of a particular alternative equals ________.

Accepted Answer

A)  the benefits received from the alternative plus the costs incurred when choosing the alternative 
B)  the benefits received from the alternative divided by the costs incurred when choosing the alternative 
C)  the costs incurred when choosing the alternative divided by the benefits received from the alternative 
D)  the benefits received from the alternative minus the costs incurred when choosing the alternative 
A)  the benefits received from the alternative plus the costs incurred when choosing the alternative 
B)  the benefits received from the alternative divided by the costs incurred when choosing the alternative 
C)  the costs incurred when choosing the alternative divided by the benefits received from the alternative 
D)  the benefits received from the alternative minus the costs incurred when choosing the alternative

Question 18

If a particular choice that an individual faces gives him a benefit of $20 but costs $30,the net benefit from making this choice equals ________.

Accepted Answer

A)  $20 
B)  $10 
C)  −$10 
D)  −$30 
A)  $20 
B)  $10 
C)  −$10 
D)  −$30

Question 19

If a job pays a wage of $50 per hour,but has a non-wage cost valued at $20 per hour,the net benefit of taking the job equals ________.

Accepted Answer

A)  $2.5 per hour 
B)  $20 per hour 
C)  $30 per hour 
D)  $70 per hour 
A)  $2.5 per hour 
B)  $20 per hour 
C)  $30 per hour 
D)  $70 per hour

Question 20

Which of the following statements is true?

Accepted Answer

A)  Positive economics describes what people ought to do. 
B)  Normative economics describes what people actually do. 
C)  Positive economics generates objective descriptions that can be verified with data. 
D)  Normative economics is free from the value judgments, tastes, and preferences of economic agents. 
A)  Positive economics describes what people ought to do. 
B)  Normative economics describes what people actually do. 
C)  Positive economics generates objective descriptions that can be verified with data. 
D)  Normative economics is free from the value judgments, tastes, and preferences of economic agents.

What are scarce resources? Why are economic agents concerned with the allocation of these resources?

Which of the following is a feature of a good theory?

Economics is primarily the study of ________.

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

The impact of carbon taxes on the energy usage of individual households and firms is studied under ________.

Which of the following statements is true?

Which of the following statements is true?

The term "free riders" refers to people who ________.

How does microeconomics differ from macroeconomics?

Which of the following is NOT a key principle of economics?

Which of the following statements is true?

Suppose the market for pizza slices is in equilibrium at a price of $1 per slice.What conditions are likely to be satisfied in the pizza slice market?

Cost-benefit analysis requires ________.

The net benefit of a particular alternative equals ________.

If a particular choice that an individual faces gives him a benefit of $20 but costs $30,the net benefit from making this choice equals ________.

If a job pays a wage of $50 per hour,but has a non-wage cost valued at $20 per hour,the net benefit of taking the job equals ________.

Which of the following statements is true?

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

What are scarce resources? Why are economic agents concerned with the allocation of these resources?

Which of the following is a feature of a good theory?

Economics is primarily the study of ________.

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

The impact of carbon taxes on the energy usage of individual households and firms is studied under ________.

Which of the following statements is true?

Which of the following statements is true?

The term "free riders" refers to people who ________.

How does microeconomics differ from macroeconomics?

Which of the following is NOT a key principle of economics?

Which of the following statements is true?

Suppose the market for pizza slices is in equilibrium at a price of $1 per slice.What conditions are likely to be satisfied in the pizza slice market?

Cost-benefit analysis requires ________.

The net benefit of a particular alternative equals ________.

If a particular choice that an individual faces gives him a benefit of $20 but costs $30,the net benefit from making this choice equals ________.

If a job pays a wage of $50 per hour,but has a non-wage cost valued at $20 per hour,the net benefit of taking the job equals ________.

Which of the following statements is true?

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