Question 1

Goods and services are limited in supply because:

Accepted Answer

A)  people are greedy. 
B)  they are produced using scarce resources. 
C)  people have limited wants. 
D)  they are produced by firms that seek profits. 
E)  the government wants to maintain its power over the economy. 
A)  people are greedy. 
B)  they are produced using scarce resources. 
C)  people have limited wants. 
D)  they are produced by firms that seek profits. 
E)  the government wants to maintain its power over the economy.

Question 2

Resources can be divided into _____.

Accepted Answer

A)  people, money, and machines 
B)  savings, spending, investment, and capital 
C)  human resources, technology, and government 
D)  natural resources, labor, capital, and entrepreneurial ability 
E)  income, interest, and expenditure 
A)  people, money, and machines 
B)  savings, spending, investment, and capital 
C)  human resources, technology, and government 
D)  natural resources, labor, capital, and entrepreneurial ability 
E)  income, interest, and expenditure

Question 3

An economist would classify 100 shares of Apple Computers as capital.

Accepted Answer

A) True 
 B)False

Question 4

Entrepreneurial ability is rewarded by _____.

Accepted Answer

A)  profit 
B)  wages 
C)  rent 
D)  dividends 
E)  interest 
A)  profit 
B)  wages 
C)  rent 
D)  dividends 
E)  interest

Question 5

The ceteris paribus assumption is a behavioral assumption.

Accepted Answer

A) True 
 B)False

Question 6

Exhibit 1.1
  
-Refer to the circular-flow model in Exhibit 1.1. If A represents product markets, and D represents firms, then the flow from A to D is:

Accepted Answer

A)  revenue. 
B)  expenditures. 
C)  labor, capital, and natural resources. 
D)  goods and services. 
E)  wages, interest, rent, and profit. 
A)  revenue. 
B)  expenditures. 
C)  labor, capital, and natural resources. 
D)  goods and services. 
E)  wages, interest, rent, and profit.

Question 7

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

Accepted Answer

A)  Workers with families should be paid at least the minimum wage. 
B)  If crime rates were reduced, the world would be a better place to live. 
C)  Marginal tax rates should be reduced for individuals in the highest tax bracket. 
D)  An increase in the price of gasoline will cause a reduction in the amount of gasoline purchased. 
E)  Corrupt politicians ought to be voted out of office. 
A)  Workers with families should be paid at least the minimum wage. 
B)  If crime rates were reduced, the world would be a better place to live. 
C)  Marginal tax rates should be reduced for individuals in the highest tax bracket. 
D)  An increase in the price of gasoline will cause a reduction in the amount of gasoline purchased. 
E)  Corrupt politicians ought to be voted out of office.

Question 8

Which of the following is not an example of the fallacy of composition?

Accepted Answer

A)  If I can get to work fastest by taking the interstate, so can everyone else. 
B)  If I can only get away from it all by going to Fairbanks, everyone who needs to get away should go to Fairbanks. 
C)  Every time I play with my dog, it rains; therefore, playing with my dog brings rain. 
D)  If a Couch Potato antenna gives me the best TV reception, then everyone should have a Couch Potato antenna. 
E)  If I can get a better view by standing up at the baseball game, then everyone can get a better view by standing up. 
A)  If I can get to work fastest by taking the interstate, so can everyone else. 
B)  If I can only get away from it all by going to Fairbanks, everyone who needs to get away should go to Fairbanks. 
C)  Every time I play with my dog, it rains; therefore, playing with my dog brings rain. 
D)  If a Couch Potato antenna gives me the best TV reception, then everyone should have a Couch Potato antenna. 
E)  If I can get a better view by standing up at the baseball game, then everyone can get a better view by standing up.

Question 9

Economics is the only social science and the only business discipline for which the Nobel Prize is awarded.

Accepted Answer

A) True 
 B)False

Question 10

The _____ is the incorrect idea that if two variables are associated in time, one must necessarily cause the other.

Accepted Answer

A)  the association-is-causation fallacy. 
B)  the fallacy of composition. 
C)  a primary effect. 
D)  a secondary effect. 
E)  a behavioral assumption. 
A)  the association-is-causation fallacy. 
B)  the fallacy of composition. 
C)  a primary effect. 
D)  a secondary effect. 
E)  a behavioral assumption.

Question 11

The expression "there's no such thing as a free lunch" means that:

Accepted Answer

A)  services may be free, but goods are never free. 
B)  even if a good or service has a price of zero, it has a cost. 
C)  charitable organizations should not serve free lunches to the poor. 
D)  poor people are really the ones who pay for their allegedly free lunches. 
E)  someone has to pay the market price for a good or service. 
A)  services may be free, but goods are never free. 
B)  even if a good or service has a price of zero, it has a cost. 
C)  charitable organizations should not serve free lunches to the poor. 
D)  poor people are really the ones who pay for their allegedly free lunches. 
E)  someone has to pay the market price for a good or service.

Question 12

An economic theory seeks to:

Accepted Answer

A)  distort reality in order to improve forecasting ability. 
B)  predict phenomena without explaining them. 
C)  explain phenomena without predicting them. 
D)  include every detail and interrelation among variables that are being analyzed. 
E)  capture the important elements of the problem under study. 
A)  distort reality in order to improve forecasting ability. 
B)  predict phenomena without explaining them. 
C)  explain phenomena without predicting them. 
D)  include every detail and interrelation among variables that are being analyzed. 
E)  capture the important elements of the problem under study.

Question 13

When economists refer to human capital, they refer to:

Accepted Answer

A)  income earned by capitalists. 
B)  skills used in production. 
C)  dividends earned by investors. 
D)  bonds held by the public. 
E)  bank loans given to the public. 
A)  income earned by capitalists. 
B)  skills used in production. 
C)  dividends earned by investors. 
D)  bonds held by the public. 
E)  bank loans given to the public.

Question 14

Economic theories are:

Accepted Answer

A)  useful because they are as precise as theories in the physical sciences. 
B)  useless because they are based on abstractions. 
C)  useful because they allow us to make predictions. 
D)  complex to understand because they do not make assumptions. 
E)  useful in predicting events only if their assumptions are realistic. 
A)  useful because they are as precise as theories in the physical sciences. 
B)  useless because they are based on abstractions. 
C)  useful because they allow us to make predictions. 
D)  complex to understand because they do not make assumptions. 
E)  useful in predicting events only if their assumptions are realistic.

Question 15

Secondary effects are consequences of economic actions that develop slowly over time as people react to events.

Accepted Answer

A) True 
 B)False

Question 16

The behavior of the entertainment industry in a city is a microeconomics topic.

Accepted Answer

A) True 
 B)False

Question 17

Profit is the payment made for land resources.

Accepted Answer

A) True 
 B)False

Question 18

Patrick decided to go to class today instead of going to the movies. He made this decision because the additional benefit of going to:

Accepted Answer

A)  class exceeded the additional cost of going to class. 
B)  the movies exceeded the additional cost of going to class. 
C)  class exceeded the additional cost of going to the movies. 
D)  the movies exceeded the additional cost of going to the movies. 
E)  class equaled the additional cost of going to the movies. 
A)  class exceeded the additional cost of going to class. 
B)  the movies exceeded the additional cost of going to class. 
C)  class exceeded the additional cost of going to the movies. 
D)  the movies exceeded the additional cost of going to the movies. 
E)  class equaled the additional cost of going to the movies.

Question 19

If a firm produces and sells only one unit of a good, its profit would be equal to the:

Accepted Answer

A)  market price of the good. 
B)  revenue from the item sold minus the cost of the resources used to produce the good. 
C)  difference between the interest paid by the firm on its outstanding loans and the rate of depreciation. 
D)  sum of the price of the good and the wages paid to labor. 
E)  product of the wages paid to labor and the market price of the good. 
A)  market price of the good. 
B)  revenue from the item sold minus the cost of the resources used to produce the good. 
C)  difference between the interest paid by the firm on its outstanding loans and the rate of depreciation. 
D)  sum of the price of the good and the wages paid to labor. 
E)  product of the wages paid to labor and the market price of the good.

Question 20

To say that people make decisions at the margin means that:

Accepted Answer

A)  they usually wait until the last minute before making any decision. 
B)  they weigh the additional costs and the additional benefits of various activities before they make a decision. 
C)  most people just barely get by on the incomes they earn and live in poverty. 
D)  if given a choice, most people would prefer to make their own decisions concerning the things that affect their lives. 
E)  they consider the total cost and the total benefit of various activities before they make a purchase. 
A)  they usually wait until the last minute before making any decision. 
B)  they weigh the additional costs and the additional benefits of various activities before they make a decision. 
C)  most people just barely get by on the incomes they earn and live in poverty. 
D)  if given a choice, most people would prefer to make their own decisions concerning the things that affect their lives. 
E)  they consider the total cost and the total benefit of various activities before they make a purchase.

Goods and services are limited in supply because:

Resources can be divided into _____.

An economist would classify 100 shares of Apple Computers as capital.

Entrepreneurial ability is rewarded by _____.

The ceteris paribus assumption is a behavioral assumption.

Exhibit 1.1 -Refer to the circular-flow model in Exhibit 1.1. If A represents product markets, and D represents firms, then the flow from A to D is:

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

Which of the following is not an example of the fallacy of composition?

Economics is the only social science and the only business discipline for which the Nobel Prize is awarded.

The _____ is the incorrect idea that if two variables are associated in time, one must necessarily cause the other.

The expression "there's no such thing as a free lunch" means that:

An economic theory seeks to:

When economists refer to human capital, they refer to:

Economic theories are:

Secondary effects are consequences of economic actions that develop slowly over time as people react to events.

The behavior of the entertainment industry in a city is a microeconomics topic.

Profit is the payment made for land resources.

Patrick decided to go to class today instead of going to the movies. He made this decision because the additional benefit of going to:

If a firm produces and sells only one unit of a good, its profit would be equal to the:

To say that people make decisions at the margin means that:

Economic Tools and Economic Systems.

Economic Decision Makers.

Demand, Supply, and Markets.

Introduction to Macroeconomics.

Tracking the U. S. Economy.

Unemployment and Inflation.

Productivity and Growth.

Aggregate Demand.

Aggregate Supply.

Fiscal Policy.

Federal Budgets and Public Policy.

Money and the Financial System.

Banking and the Money Supply.

Monetary Theory and Policy.

Macro Policy Debate: Active or Passive?

International Trade.

International Finance.

Economic Development.

Filters

Exam 1: The Art and Science of Economic Analysis.

Goods and services are limited in supply because:

Resources can be divided into _____.

An economist would classify 100 shares of Apple Computers as capital.

Entrepreneurial ability is rewarded by _____.

The ceteris paribus assumption is a behavioral assumption.

Exhibit 1.1 -Refer to the circular-flow model in Exhibit 1.1. If A represents product markets, and D represents firms, then the flow from A to D is:

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

Which of the following is not an example of the fallacy of composition?

Economics is the only social science and the only business discipline for which the Nobel Prize is awarded.

The _____ is the incorrect idea that if two variables are associated in time, one must necessarily cause the other.

The expression "there's no such thing as a free lunch" means that:

An economic theory seeks to:

When economists refer to human capital, they refer to:

Economic theories are:

Secondary effects are consequences of economic actions that develop slowly over time as people react to events.

The behavior of the entertainment industry in a city is a microeconomics topic.

Profit is the payment made for land resources.

Patrick decided to go to class today instead of going to the movies. He made this decision because the additional benefit of going to:

If a firm produces and sells only one unit of a good, its profit would be equal to the:

To say that people make decisions at the margin means that:

Economic Tools and Economic Systems.

Economic Decision Makers.

Demand, Supply, and Markets.

Introduction to Macroeconomics.

Tracking the U. S. Economy.

Unemployment and Inflation.

Productivity and Growth.

Aggregate Demand.

Aggregate Supply.

Fiscal Policy.

Federal Budgets and Public Policy.

Money and the Financial System.

Banking and the Money Supply.

Monetary Theory and Policy.

Macro Policy Debate: Active or Passive?

International Trade.

International Finance.

Economic Development.

Filters