Question 1

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

Accepted Answer

A) Since this food is bad for you, you should not consume it. 
B) This food has negative health effects. 
C) If you consume this food, you will get sick. 
D) People usually get sick after consuming this food. 
A) Since this food is bad for you, you should not consume it. 
B) This food has negative health effects. 
C) If you consume this food, you will get sick. 
D) People usually get sick after consuming this food.

Question 2

A microeconomic model CANNOT be used to

Accepted Answer

A) evaluate the impact of a price change on a firm's revenue. 
B) predict the impact of an increase in the minimum wage on unemployment. 
C) evaluate the fairness of a proposal to nationalize health insurance. 
D) evaluate the effect of an increase in stadium size on the price of a sport team's tickets. 
A) evaluate the impact of a price change on a firm's revenue. 
B) predict the impact of an increase in the minimum wage on unemployment. 
C) evaluate the fairness of a proposal to nationalize health insurance. 
D) evaluate the effect of an increase in stadium size on the price of a sport team's tickets.

Question 3

Profit is

Accepted Answer

A) maximized when the marketing department coordinates with the production department. 
B) maximized when revenue is maximized. 
C) used to beat a company's rivals. 
D) the difference between a firm's revenues and its costs. 
A) maximized when the marketing department coordinates with the production department. 
B) maximized when revenue is maximized. 
C) used to beat a company's rivals. 
D) the difference between a firm's revenues and its costs.

Question 4

Explain what the statement "We can't have everything we want" means.

Accepted Answer

Because resources are scarce,

Question 5

In a market

Accepted Answer

A) the primary participants are consumers and firms. 
B) government policies play a very small part. 
C) decision makers always maximize. 
D) the goods sold are always closely related. 
A) the primary participants are consumers and firms. 
B) government policies play a very small part. 
C) decision makers always maximize. 
D) the goods sold are always closely related.

Question 6

The purpose of making assumptions in economic model building is to

Accepted Answer

A) force the model to yield the correct answer. 
B) minimize the amount of work an economist must do. 
C) simplify the model while keeping important details. 
D) express the relationship mathematically. 
A) force the model to yield the correct answer. 
B) minimize the amount of work an economist must do. 
C) simplify the model while keeping important details. 
D) express the relationship mathematically.

Question 7

Legislators argue that a minimum wage law is instituted to help poor people. Economists can attack the minimum wage law on two fronts. First, some argue that government should not help the poor. Second, some argue that minimum wage laws actually hurt the poor because it creates unemployment. Which argument is normative and which is positive?

Accepted Answer

An opinion about the role of g

Question 8

Economic models are most often tested

Accepted Answer

A) using computer simulations. 
B) using data from the distant past. 
C) using data from the real world. 
D) using logic alone. 
A) using computer simulations. 
B) using data from the distant past. 
C) using data from the real world. 
D) using logic alone.

Question 9

If an important assumption is omitted from an economic model

Accepted Answer

A) the model's predictions will only be accurate 50% of the time. 
B) the model's predictions may be inaccurate. 
C) the model will not predict anything. 
D) the model is not simple enough. 
A) the model's predictions will only be accurate 50% of the time. 
B) the model's predictions may be inaccurate. 
C) the model will not predict anything. 
D) the model is not simple enough.

Question 10

Firms face tradeoffs because

Accepted Answer

A) managers don't know which inputs to use. 
B) inputs are scarce. 
C) markets set prices of goods they sell. 
D) marginal reasoning leads to uncertainty. 
A) managers don't know which inputs to use. 
B) inputs are scarce. 
C) markets set prices of goods they sell. 
D) marginal reasoning leads to uncertainty.

Question 11

Managers have to understand the decision making of others.

Accepted Answer

A) True 
 B)False

Question 12

Explain why economists might disagree on the content of a model.

Accepted Answer

Economists might hav

Question 13

Microeconomics studies the allocation of

Accepted Answer

A) decision makers. 
B) scarce resources. 
C) models. 
D) unlimited resources. 
A) decision makers. 
B) scarce resources. 
C) models. 
D) unlimited resources.

Question 14

Explain why a model that delivers good enough approximations is a good model.

Accepted Answer

Models make simplifying assumptions in o

Question 15

Managerial economics

Accepted Answer

A) describes how pay for managers is set. 
B) ensures managers always make good decisions. 
C) helps managers make decisions in the face of scarcity. 
D) explains which products consumers will buy. 
A) describes how pay for managers is set. 
B) ensures managers always make good decisions. 
C) helps managers make decisions in the face of scarcity. 
D) explains which products consumers will buy.

Question 16

What is profit?

Accepted Answer

Profit is the differ

Question 17

Microeconomic models are used to

Accepted Answer

A) make predictions. 
B) explain real-life phenomena. 
C) evaluate production alternatives. 
D) All of the above. 
A) make predictions. 
B) explain real-life phenomena. 
C) evaluate production alternatives. 
D) All of the above.

Question 18

If actual experience supports two competing theories, then both theories are proven to be true.

Accepted Answer

A) True 
 B)False

Question 19

Give an example of a tradeoff a pizza restaurant might face.

Accepted Answer

Whether to

Question 20

A market

Accepted Answer

A) always involves the personal exchange of goods for money. 
B) allows interactions between consumers and firms. 
C) always takes place at a physical location. 
D) has no influence on prices. 
A) always involves the personal exchange of goods for money. 
B) allows interactions between consumers and firms. 
C) always takes place at a physical location. 
D) has no influence on prices.

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

A microeconomic model CANNOT be used to

Profit is

Explain what the statement "We can't have everything we want" means.

In a market

The purpose of making assumptions in economic model building is to

Economic models are most often tested

If an important assumption is omitted from an economic model

Firms face tradeoffs because

Managers have to understand the decision making of others.

Explain why economists might disagree on the content of a model.

Microeconomics studies the allocation of

Explain why a model that delivers good enough approximations is a good model.

Managerial economics

What is profit?

Microeconomic models are used to

If actual experience supports two competing theories, then both theories are proven to be true.

Give an example of a tradeoff a pizza restaurant might face.

A market

Supply and Demand

Empirical Methods for Demand Analysis

Consumer Choice

Production

Costs

Firm Organization and Market Structure

Competitive Firms and Markets

Monopoly

Pricing With Market Power

Oligopoly and Monopolistic Competition

Game Theory and Business Strategy

Strategies Over Time

Managerial Decision-Making Under Uncertainty

Asymmetric Information

Government and Business

Global Business

Filters

Exam 1: Introduction

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

A microeconomic model CANNOT be used to

Profit is

Explain what the statement "We can't have everything we want" means.

In a market

The purpose of making assumptions in economic model building is to

Economic models are most often tested

If an important assumption is omitted from an economic model

Firms face tradeoffs because

Managers have to understand the decision making of others.

Explain why economists might disagree on the content of a model.

Microeconomics studies the allocation of

Explain why a model that delivers good enough approximations is a good model.

Managerial economics

What is profit?

Microeconomic models are used to

If actual experience supports two competing theories, then both theories are proven to be true.

Give an example of a tradeoff a pizza restaurant might face.

A market

Supply and Demand

Empirical Methods for Demand Analysis

Consumer Choice

Production

Costs

Firm Organization and Market Structure

Competitive Firms and Markets

Monopoly

Pricing With Market Power

Oligopoly and Monopolistic Competition

Game Theory and Business Strategy

Strategies Over Time

Managerial Decision-Making Under Uncertainty

Asymmetric Information

Government and Business

Global Business

Filters