Question 1

Economics studies how decision makers use scarce resources to satisfy unlimited wants.

Accepted Answer

A) True 
 B)False

Question 2

An entrepreneur

Accepted Answer

A) always makes a profit 
B) generally avoids risky situations 
C) claims the residual (i.e., whatever is left over) after other resource suppliers are compensated 
D) is a parasite that benefits by not paying other resources for their services 
E) is the manager who runs an enterprise and keeps the customers happy 
A) always makes a profit 
B) generally avoids risky situations 
C) claims the residual (i.e., whatever is left over) after other resource suppliers are compensated 
D) is a parasite that benefits by not paying other resources for their services 
E) is the manager who runs an enterprise and keeps the customers happy

Question 3

The difference between a good and a service is that

Accepted Answer

A) a good helps satisfy unlimited wants; a service does not 
B) a service helps satisfy unlimited wants; a good does not 
C) a services is available in unlimited quantities; a good is not 
D) a good is available in unlimited quantities; a service is not 
E) a good is tangible; a service is not 
A) a good helps satisfy unlimited wants; a service does not 
B) a service helps satisfy unlimited wants; a good does not 
C) a services is available in unlimited quantities; a good is not 
D) a good is available in unlimited quantities; a service is not 
E) a good is tangible; a service is not

Question 4

Economics employs a scientific methodology. In part, this means that

Accepted Answer

A) all economic laws have been proven true by laboratory tests 
B) there is a single economic theory accepted by all economists 
C) economic hypotheses are tested to determine their validity 
D) personal values never enter into economic policy recommendations 
E) assumptions are not necessary in economic science 
A) all economic laws have been proven true by laboratory tests 
B) there is a single economic theory accepted by all economists 
C) economic hypotheses are tested to determine their validity 
D) personal values never enter into economic policy recommendations 
E) assumptions are not necessary in economic science

Question 5

Theory seeks to

Accepted Answer

A) simplify a complex reality 
B) confront reality in all its complexity by focusing on the unique aspects of each phenomenon 
C) explain phenomena without predicting them 
D) predict phenomena without explaining them 
E) distort reality in order to improve forecasting ability 
A) simplify a complex reality 
B) confront reality in all its complexity by focusing on the unique aspects of each phenomenon 
C) explain phenomena without predicting them 
D) predict phenomena without explaining them 
E) distort reality in order to improve forecasting ability

Question 6

Economics is the study of

Accepted Answer

A) how the human race differs from other species 
B) how individuals amass personal fortunes in the stock market 
C) how individuals and nations deal with the problem of scarcity 
D) role that money plays in the economy 
E) how goods and services are distributed throughout the world 
A) how the human race differs from other species 
B) how individuals amass personal fortunes in the stock market 
C) how individuals and nations deal with the problem of scarcity 
D) role that money plays in the economy 
E) how goods and services are distributed throughout the world

Question 7

Normative economic statements refer to what should be.

Accepted Answer

A) True 
 B)False

Question 8

The fallacy of composition is the error of believing a cause-effect relationship exists between two events that are associated in time.

Accepted Answer

A) True 
 B)False

Question 9

In economics, marginal means

Accepted Answer

A) incremental or decremental 
B) unimportant 
C) level or size 
D) a border-line situation 
E) a bad alternative 
A) incremental or decremental 
B) unimportant 
C) level or size 
D) a border-line situation 
E) a bad alternative

Question 10

Economic information

Accepted Answer

A) is usually scarce and costly to acquire 
B) is usually available free to any decision maker 
C) is usually not required for rational decision making 
D) must be complete before any decision is made 
E) is usually useful only to governments 
A) is usually scarce and costly to acquire 
B) is usually available free to any decision maker 
C) is usually not required for rational decision making 
D) must be complete before any decision is made 
E) is usually useful only to governments

Question 11

Which of the following would an economist classify as capital?

Accepted Answer

A) 100 shares of Microsoft stock 
B) a $50 bill 
C) a credit card 
D) a lawyer's personal computer 
E) a bauxite mine in Jamaica 
A) 100 shares of Microsoft stock 
B) a $50 bill 
C) a credit card 
D) a lawyer's personal computer 
E) a bauxite mine in Jamaica

Question 12

Choices made by economic decision makers

Accepted Answer

A) are government decisions only 
B) are the primary focus of economics 
C) are not important in economic analysis 
D) occur infrequently 
E) do not involve ordinary citizens 
A) are government decisions only 
B) are the primary focus of economics 
C) are not important in economic analysis 
D) occur infrequently 
E) do not involve ordinary citizens

Question 13

Unlike a "service," a "good"

Accepted Answer

A) is desirable 
B) uses resources to satisfy wants 
C) is physical and tangible 
D) is abundant and free 
E) is a resource 
A) is desirable 
B) uses resources to satisfy wants 
C) is physical and tangible 
D) is abundant and free 
E) is a resource

Question 14

Economic theories are

Accepted Answer

A) useful because they are as exact as theories in the physical sciences 
B) useless because they are based on abstractions 
C) useful because they allow us to make predictions 
D) too complex to understand because they include all of reality 
E) useful in predicting events only if their assumptions are realistic 
A) useful because they are as exact as theories in the physical sciences 
B) useless because they are based on abstractions 
C) useful because they allow us to make predictions 
D) too complex to understand because they include all of reality 
E) useful in predicting events only if their assumptions are realistic

Question 15

Scarcity is best defined as

Accepted Answer

A) unlimited resources 
B) a shortage -- when buyers cannot obtain the goods they want 
C) a surplus -- when sellers cannot sell the goods they produce 
D) insufficient resources to satisfy unlimited wants 
E) the private ownership of society's resources 
A) unlimited resources 
B) a shortage -- when buyers cannot obtain the goods they want 
C) a surplus -- when sellers cannot sell the goods they produce 
D) insufficient resources to satisfy unlimited wants 
E) the private ownership of society's resources

Question 16

Most of the disagreement among economists involves normative debates.

Accepted Answer

A) True 
 B)False

Question 17

When economic choice involves an adjustment to an existing situation, marginal analysis

Accepted Answer

A) has no practical applications or real-world uses 
B) eliminates incorrect decisions and bad choices 
C) involves comparing the additional costs and additional benefits of an activity before deciding 
D) involves examining only the total costs and total benefits of an activity before deciding 
E) none of the above 
A) has no practical applications or real-world uses 
B) eliminates incorrect decisions and bad choices 
C) involves comparing the additional costs and additional benefits of an activity before deciding 
D) involves examining only the total costs and total benefits of an activity before deciding 
E) none of the above

Question 18

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 you can only get away from it all by going to Fairbanks, everyone who needs to get away should go to Fairbanks. 
C) If the quickest way to get off a sinking ship is to run to the nearest lifeboat, all the passengers should do this. 
D) If the best TV reception can be gotten with a Couch Potato antenna, then everyone should have a Couch Potato antenna. 
E) If I can get a better view by standing up at the baseball game, everyone gets a better view by standing up. 
A) If I can get to work fastest by taking the interstate, so can everyone else. 
B) If you can only get away from it all by going to Fairbanks, everyone who needs to get away should go to Fairbanks. 
C) If the quickest way to get off a sinking ship is to run to the nearest lifeboat, all the passengers should do this. 
D) If the best TV reception can be gotten with a Couch Potato antenna, then everyone should have a Couch Potato antenna. 
E) If I can get a better view by standing up at the baseball game, everyone gets a better view by standing up.

Question 19

The economic behavior of individual decision makers and the determination of price and output in specific markets are both studied in

Accepted Answer

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

Question 20

"There should be less discrimination against the elderly." This is an example of a

Accepted Answer

A) normative statement 
B) positive statement 
C) forecast 
D) hypothesis 
E) prediction 
A) normative statement 
B) positive statement 
C) forecast 
D) hypothesis 
E) prediction

Exam 1: The Art and Science of Economic Analysis

Economics studies how decision makers use scarce resources to satisfy unlimited wants.

An entrepreneur

The difference between a good and a service is that

Economics employs a scientific methodology. In part, this means that

Theory seeks to

Economics is the study of

Normative economic statements refer to what should be.

The fallacy of composition is the error of believing a cause-effect relationship exists between two events that are associated in time.

In economics, marginal means

Economic information

Which of the following would an economist classify as capital?

Choices made by economic decision makers

Unlike a "service," a "good"

Economic theories are

Scarcity is best defined as

Most of the disagreement among economists involves normative debates.

When economic choice involves an adjustment to an existing situation, marginal analysis

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

The economic behavior of individual decision makers and the determination of price and output in specific markets are both studied in

"There should be less discrimination against the elderly." This is an example of a

Economic Tools and Economics Systems

Economic Decision Makers

Demand Supply and Markets

Introduction to Macroeconomics

Tracking the Us Economy

Unemployment and Inflation

Productivity and Growth

Aggregate Expenditure

Aggregate Expenditure and Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

The Algebra of Income and Expenditure

Monetary Theory and Policy

Macro Policy Debate: Active or Passive

The Algebra of Demand-Side Equilibrium

International Trade

International Finance

Economic Development

National Income Accounts

Understanding Graphs

Variable Net Exports

Variable Net Exports Revisited

Filters