Question 1

What is the "reverse causality" problem in determining cause and effect?

Accepted Answer

A)  It is a problem that occurs when one concludes that a change in variable X caused a change in variable Y when in actual fact, it is a change in variable Z that caused a change in variable Y. 
B)  It is a problem that occurs when one observes that a change in variable X caused a change in variable Y which caused a change in variable Z and concludes that a change in variable X caused a change in variable Z. 
C)  It is a problem that occurs when one concludes that a change in variable X caused a change in variable Y when in actual fact, it is a change in variable Y that caused a change in variable X. 
D)  It is a problem that arises when two variables are inter-connected so that a change in variable X causes a change in variable Y, and a change in variable Y causes a change in variable X. 
A)  It is a problem that occurs when one concludes that a change in variable X caused a change in variable Y when in actual fact, it is a change in variable Z that caused a change in variable Y. 
B)  It is a problem that occurs when one observes that a change in variable X caused a change in variable Y which caused a change in variable Z and concludes that a change in variable X caused a change in variable Z. 
C)  It is a problem that occurs when one concludes that a change in variable X caused a change in variable Y when in actual fact, it is a change in variable Y that caused a change in variable X. 
D)  It is a problem that arises when two variables are inter-connected so that a change in variable X causes a change in variable Y, and a change in variable Y causes a change in variable X.

Question 2

Policies based on normative economic ideas tend to increase economic efficiency and improve equity.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is part of an economic model?

Accepted Answer

A)  preferences of economic agents 
B)  data 
C)  norms 
D)  opinions 
A)  preferences of economic agents 
B)  data 
C)  norms 
D)  opinions

Question 4

Since 1994,obesity rates in the United States

Accepted Answer

A)  have been on a slow and steady decline. 
B)  have increased in all 50 states. 
C)  have primarily increased in the Southeast and remained constant or slightly decreased in the remainder of the country. 
D)  have remained fairly constant throughout the country. 
A)  have been on a slow and steady decline. 
B)  have increased in all 50 states. 
C)  have primarily increased in the Southeast and remained constant or slightly decreased in the remainder of the country. 
D)  have remained fairly constant throughout the country.

Question 5

Which of the following contributes to the efficiency of markets?

Accepted Answer

A)  Governments play an active role in the day-to-day operations of markets. 
B)  Markets are able to bring about an equitable distribution of goods and services. 
C)  Markets promote equal standards of living. 
D)  Markets promote competition and voluntary exchange. 
A)  Governments play an active role in the day-to-day operations of markets. 
B)  Markets are able to bring about an equitable distribution of goods and services. 
C)  Markets promote equal standards of living. 
D)  Markets promote competition and voluntary exchange.

Question 6

When voluntary exchange takes place,neither party gains from the exchange.

Accepted Answer

A) True 
 B)False

Question 7

At a recent company meeting,Ravi Batra,sales manager of Life's a Beach,a surfboard producer announced,"We have increased our sales by 13 percent in just 9 months." Suppose 9 months ago,its sales amounted to $245,000,what is the value of its sales today?

Accepted Answer

A)  $31,850 
B)  $207,638 
C)  $276,850 
D)  $359,905 
A)  $31,850 
B)  $207,638 
C)  $276,850 
D)  $359,905

Question 8

Explain the economic assumption that "people are rational."

Accepted Answer

"People are rational" means that economi

Question 9

All economic questions arise from the fact that resources are scarce.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is motivated by an efficiency concern?

Accepted Answer

A)  In December 2006, the Bush administration restarted a short-term housing assistance program for victims of Hurricane Katrina. 
B)  Each year, the University of Notre Dame conducts a lottery to parcel out the 30,000 seats available to contributors, former athletes, and parents in the 80,000-seat stadium. 
C)  The United Network for Organ Sharing advocates a system of rationing scarce kidneys that would favor young patients over old in an effort to wring more life out of donated organs. 
D)  The federal government's housing choice voucher program assists very low-income families, the elderly, and the disabled to afford decent, safe, and sanitary housing in the private market. 
A)  In December 2006, the Bush administration restarted a short-term housing assistance program for victims of Hurricane Katrina. 
B)  Each year, the University of Notre Dame conducts a lottery to parcel out the 30,000 seats available to contributors, former athletes, and parents in the 80,000-seat stadium. 
C)  The United Network for Organ Sharing advocates a system of rationing scarce kidneys that would favor young patients over old in an effort to wring more life out of donated organs. 
D)  The federal government's housing choice voucher program assists very low-income families, the elderly, and the disabled to afford decent, safe, and sanitary housing in the private market.

Question 11

If the marginal cost for the state of Montana to increase the speed limit on its interstate highways to 100 mph is estimated to be $500 per day,then Montana should increase the speed limit to 100 mph

Accepted Answer

A)  only if the marginal benefit received each day is less than $500. 
B)  as long as the marginal benefit received each day is just equal to or greater than $500. 
C)  as long as the daily marginal cost is lower than it had been before the speed limit increase. 
D)  unless the marginal benefit received falls to zero. 
A)  only if the marginal benefit received each day is less than $500. 
B)  as long as the marginal benefit received each day is just equal to or greater than $500. 
C)  as long as the daily marginal cost is lower than it had been before the speed limit increase. 
D)  unless the marginal benefit received falls to zero.

Question 12

Which of the following is a positive economic statement?

Accepted Answer

A)  U.S. citizens should only buy products which are produced in the United States. 
B)  The government should ban the production and sale of incandescent light bulbs. 
C)  Raising the tax on gasoline raises the selling price of gasoline. 
D)  The government should revamp its immigration policies. 
A)  U.S. citizens should only buy products which are produced in the United States. 
B)  The government should ban the production and sale of incandescent light bulbs. 
C)  Raising the tax on gasoline raises the selling price of gasoline. 
D)  The government should revamp its immigration policies.

Question 13

The sales revenue a seller receives from the sale of an additional unit of goods is called the marginal cost.

Accepted Answer

A) True 
 B)False

Question 14

An economic model is a complex version of reality used to analyze real-world economic situations.

Accepted Answer

A) True 
 B)False

Question 15

________ occurs when economic benefits are distributed fairly.

Accepted Answer

A)  Productive efficiency 
B)  Allocative efficiency 
C)  Equality 
D)  Equity 
A)  Productive efficiency 
B)  Allocative efficiency 
C)  Equality 
D)  Equity

Question 16

Scenario 1-2
Suppose a hat manufacturer currently sells 2,000 hats per week and makes a profit of $5,000 per week. The plant owner observes, "Although the last 300 hats we produced and sold increased our revenue by $1,000 and our costs by $1,100, we are still making an overall profit of $5,000 per week so I think we're on the right track. We are producing the optimal number of hats."
-Refer to Scenario 1-2.Using marginal analysis terminology,another economic term for the incremental revenue received from the sale of the last 300 hats is

Accepted Answer

A)  gross earnings. 
B)  marginal revenue. 
C)  sales revenue. 
D)  gross profit. 
A)  gross earnings. 
B)  marginal revenue. 
C)  sales revenue. 
D)  gross profit.

Question 17

Figure 1-2
  
-Refer to Figure 1-2.Calculate the area of the triangle A.

Accepted Answer

A)  $1.3 million 
B)  $2.6 million 
C)  $3.4 million 
D)  $5.2 million 
A)  $1.3 million 
B)  $2.6 million 
C)  $3.4 million 
D)  $5.2 million

Question 18

Which of the following is a normative economic statement?

Accepted Answer

A)  The price of milk is too high. 
B)  The current high price of milk is the result of reduced worldwide supply. 
C)  When the price of milk rises, the quantity of milk purchased falls. 
D)  When the price of milk rises, the cost of milk-based products rises. 
A)  The price of milk is too high. 
B)  The current high price of milk is the result of reduced worldwide supply. 
C)  When the price of milk rises, the quantity of milk purchased falls. 
D)  When the price of milk rises, the cost of milk-based products rises.

Question 19

If it costs Danitra $225 to create 4 necklaces and $275 to create 5 necklaces,then the marginal cost of producing the 5th necklace is $50.

Accepted Answer

A) True 
 B)False

Question 20

Explain the difference between a firm's revenue and its profit.

Accepted Answer

A firm's revenue is the total amount rec

What is the "reverse causality" problem in determining cause and effect?

Policies based on normative economic ideas tend to increase economic efficiency and improve equity.

Which of the following is part of an economic model?

Since 1994,obesity rates in the United States

Which of the following contributes to the efficiency of markets?

When voluntary exchange takes place,neither party gains from the exchange.

At a recent company meeting,Ravi Batra,sales manager of Life's a Beach,a surfboard producer announced,"We have increased our sales by 13 percent in just 9 months." Suppose 9 months ago,its sales amounted to $245,000,what is the value of its sales today?

Explain the economic assumption that "people are rational."

All economic questions arise from the fact that resources are scarce.

Which of the following is motivated by an efficiency concern?

If the marginal cost for the state of Montana to increase the speed limit on its interstate highways to 100 mph is estimated to be $500 per day,then Montana should increase the speed limit to 100 mph

Which of the following is a positive economic statement?

The sales revenue a seller receives from the sale of an additional unit of goods is called the marginal cost.

An economic model is a complex version of reality used to analyze real-world economic situations.

________ occurs when economic benefits are distributed fairly.

Figure 1-2 -Refer to Figure 1-2.Calculate the area of the triangle A.

Which of the following is a normative economic statement?

If it costs Danitra $225 to create 4 necklaces and $275 to create 5 necklaces,then the marginal cost of producing the 5th necklace is $50.

Explain the difference between a firm's revenue and its profit.

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, The Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology,Production,and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, The Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money,Banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, International Trade, and Exchange Rates

Filters

Exam 1: Economics: Foundations and Models

What is the "reverse causality" problem in determining cause and effect?

Policies based on normative economic ideas tend to increase economic efficiency and improve equity.

Which of the following is part of an economic model?

Since 1994,obesity rates in the United States

Which of the following contributes to the efficiency of markets?

When voluntary exchange takes place,neither party gains from the exchange.

At a recent company meeting,Ravi Batra,sales manager of Life's a Beach,a surfboard producer announced,"We have increased our sales by 13 percent in just 9 months." Suppose 9 months ago,its sales amounted to $245,000,what is the value of its sales today?

Explain the economic assumption that "people are rational."

All economic questions arise from the fact that resources are scarce.

Which of the following is motivated by an efficiency concern?

If the marginal cost for the state of Montana to increase the speed limit on its interstate highways to 100 mph is estimated to be $500 per day,then Montana should increase the speed limit to 100 mph

Which of the following is a positive economic statement?

The sales revenue a seller receives from the sale of an additional unit of goods is called the marginal cost.

An economic model is a complex version of reality used to analyze real-world economic situations.

________ occurs when economic benefits are distributed fairly.

Figure 1-2 -Refer to Figure 1-2.Calculate the area of the triangle A.

Which of the following is a normative economic statement?

If it costs Danitra $225 to create 4 necklaces and $275 to create 5 necklaces,then the marginal cost of producing the 5th necklace is $50.

Explain the difference between a firm's revenue and its profit.

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, The Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology,Production,and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, The Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money,Banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, International Trade, and Exchange Rates

Filters