Question 1

Should students accept the predictions of economic models?

Accepted Answer

It is healthy to examine critically economic theories and laboratory experiments designed to test these theories. The consulting reports in the textbook demonstrate the fragility of economic models and their underlying assumptions. Economics is not a dead science in which all known problems have solutions, nor are all existing solutions effective.

Question 2

Conventions developed by a society to help it resolve recurrent economic problems are called economic models.

Accepted Answer

A) True 
 B)False  False

Question 3

Which of the following questions is an example of institutional arrangements?

Accepted Answer

A)  Why does the government allow only one utility company to deliver electricity in an area? 
B)  Why do most committees make their decisions by a simple majority vote? 
C)  Why can't consumers in Washington state buy locally grown apples? 
D)  All of the answers is correct 
E)  None of the answers is correct 
A)  Why does the government allow only one utility company to deliver electricity in an area? 
B)  Why do most committees make their decisions by a simple majority vote? 
C)  Why can't consumers in Washington state buy locally grown apples? 
D)  All of the answers is correct 
E)  None of the answers is correct D

Question 4

The type of economics that deals with descriptive statements is

Accepted Answer

A)  welfare 
B)  positive 
C)  normative 
A)  welfare 
B)  positive 
C)  normative

Question 5

A natural monopoly is a situation that occurs

Accepted Answer

A)  when an exotic plant kills off locals plants 
B)  in industries where the cheapest way to obtain a given quantity of output is to have only one firm produce it 
C)  Both answers are correct 
A)  when an exotic plant kills off locals plants 
B)  in industries where the cheapest way to obtain a given quantity of output is to have only one firm produce it 
C)  Both answers are correct

Question 6

Why begin the study of market structures with perfect competition?

Accepted Answer

Although an entrepreneur arising from a

Question 7

Economic institutions are

Accepted Answer

A)  sets of rules created to govern athletic games 
B)  a society's conventions that help resolve recurrent economic problems 
C)  abstract representations of reality that economists use in their studies 
A)  sets of rules created to govern athletic games 
B)  a society's conventions that help resolve recurrent economic problems 
C)  abstract representations of reality that economists use in their studies

Question 8

A type of economic model is a(n)

Accepted Answer

A)  mathematical model 
B)  analogy 
C)  Both answers are correct 
A)  mathematical model 
B)  analogy 
C)  Both answers are correct

Question 9

The type of economics that deals with prescriptive statements is

Accepted Answer

A)  positive 
B)  medical 
C)  normative (welfare) 
A)  positive 
B)  medical 
C)  normative (welfare)

Question 10

What are the advantages of using analogies as economic models?

Accepted Answer

For most students, narrative analogies a

Question 11

How do individuals, in an attempt to maximize their own self-interest, create a set of economic institutions that structure their daily lives is a question for

Accepted Answer

A)  macroeconomics 
B)  fiscal policy economics 
C)  microeconomics 
A)  macroeconomics 
B)  fiscal policy economics 
C)  microeconomics

Question 12

Which of the following is not an institution?

Accepted Answer

A)  the practice of tipping the person who cuts your hair 
B)  a set of mathematical equations to represent each segment of an economy 
C)  the set of rules that specifying how your state legislature makes decisions 
A)  the practice of tipping the person who cuts your hair 
B)  a set of mathematical equations to represent each segment of an economy 
C)  the set of rules that specifying how your state legislature makes decisions

Question 13

Incremental happiness is

Accepted Answer

A)  an example of normative economics 
B)  impossible to achieve 
C)  the optimal economic way for parents to allocate their funds between their children 
A)  an example of normative economics 
B)  impossible to achieve 
C)  the optimal economic way for parents to allocate their funds between their children

Question 14

If producers and consumers are not fully knowledgeable about the characteristics of all products produced and consumed in the economy, the people suffer from

Accepted Answer

A)  incomplete information 
B)  total ignorance 
C)  perfect information 
A)  incomplete information 
B)  total ignorance 
C)  perfect information

Question 15

Equations that represent each segment of an economy and the interaction of the equations is known as a(n)

Accepted Answer

A)  analogy 
B)  mathematical model 
C)  economic institution 
A)  analogy 
B)  mathematical model 
C)  economic institution

Question 16

To understand how Sony, Toshiba, and Panasonic use prices to compete in the consumer electronics market, economists might use

Accepted Answer

A)  game theory 
B)  physics 
C)  international diplomacy 
A)  game theory 
B)  physics 
C)  international diplomacy

Question 17

A statement that we should increase the minimum wage is an example of positive economics.

Accepted Answer

A) True 
 B)False

Question 18

Abstract representations of reality used by economists to study economic and social phenomena are called

Accepted Answer

A)  fashion models 
B)  economic models 
C)  model homes 
A)  fashion models 
B)  economic models 
C)  model homes

Question 19

Which of the following is not an example of an institution that shapes the life of an executive?

Accepted Answer

A)  expressways 
B)  happiness 
C)  insurance companies 
A)  expressways 
B)  happiness 
C)  insurance companies

Question 20

If social agents find all the food they need growing on trees and the only decision that the agents must make is is how much time to spend picking fruit versus relaxing, the agents live in a(n)

Accepted Answer

A)  primitive state of confusion 
B)  primitive state of nature 
C)  industrialized state of nature 
A)  primitive state of confusion 
B)  primitive state of nature 
C)  industrialized state of nature

Exam 1: Economics and Institutions: a Shift of Emphasis

Should students accept the predictions of economic models?

Conventions developed by a society to help it resolve recurrent economic problems are called economic models.

Which of the following questions is an example of institutional arrangements?

The type of economics that deals with descriptive statements is

A natural monopoly is a situation that occurs

Why begin the study of market structures with perfect competition?

Economic institutions are

A type of economic model is a(n)

The type of economics that deals with prescriptive statements is

What are the advantages of using analogies as economic models?

How do individuals, in an attempt to maximize their own self-interest, create a set of economic institutions that structure their daily lives is a question for

Which of the following is not an institution?

Incremental happiness is

If producers and consumers are not fully knowledgeable about the characteristics of all products produced and consumed in the economy, the people suffer from

Equations that represent each segment of an economy and the interaction of the equations is known as a(n)

To understand how Sony, Toshiba, and Panasonic use prices to compete in the consumer electronics market, economists might use

A statement that we should increase the minimum wage is an example of positive economics.

Abstract representations of reality used by economists to study economic and social phenomena are called

Which of the following is not an example of an institution that shapes the life of an executive?

If social agents find all the food they need growing on trees and the only decision that the agents must make is is how much time to spend picking fruit versus relaxing, the agents live in a(n)

Consumers and Their Preferences

Utilities Indifference Curves

Demand and Behavior in Markets

Some Applications of Consumer Demand, and Welfare Analysis

Uncertainty and the Emergence of Insurance

Uncertainty Applications and Criticisms

The Discovery of Production and Its Technology

Cost and Choice

Cost Curves

Game Theory and the Tools of Strategic Business Analysis

Decision Making Over Time

The Internal Organization of the Firm

Perfectly Competitive Markets: Short-Run Analysis

Competitive Markets in the Long Run

Market Institutions and Auctions

The Age of Entrepreneurship: Monopoly

Natural Monopoly and the Economics of Regulation

The World of Oligopoly: Preliminaries to Successful Entry

Market Entry and the Emergence of Perfect Competition

The Problem of Exchange

General Equilibrium and the Origins of the Free Market and Interventionist Ideologies

Moral Hazard and Adverse Selection: Informational Market Failures

Externalities: the Free Market Interventionist Battle Continues

Public Goods, the Consequences of Strategic Voting Behavior, and the Role of Government

Input Markets and the Origins of Class Conflict

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