Question 1

Households

Accepted Answer

A) own and sell resources 
B) play a very minor role in the economy 
C) supply goods and services 
D) are the largest purchasers of resources 
E) none of the above 
A) own and sell resources 
B) play a very minor role in the economy 
C) supply goods and services 
D) are the largest purchasers of resources 
E) none of the above

Question 2

Rational economic decision makers will make a change only if

Accepted Answer

A) the change is free of risk 
B) there are no costs involved 
C) their expectations are correct 
D) there is no uncertainty about the results of the change 
E) the expected marginal benefit exceeds expected marginal cost 
A) the change is free of risk 
B) there are no costs involved 
C) their expectations are correct 
D) there is no uncertainty about the results of the change 
E) the expected marginal benefit exceeds expected marginal cost

Question 3

Because people's wants are unlimited but resources are scarce,

Accepted Answer

A) only the rich get everything they want 
B) choices must be made 
C) there will be more services produced than goods 
D) people search for spiritual fulfillment rather than material fulfillment 
E) poor people never get anything they want 
A) only the rich get everything they want 
B) choices must be made 
C) there will be more services produced than goods 
D) people search for spiritual fulfillment rather than material fulfillment 
E) poor people never get anything they want

Question 4

The case study on Japanese vending machines is a story that teaches us

Accepted Answer

A) how a less expensive resource (vending machines) can be substituted for a more expensive resource (labor) 
B) how a more expensive resource (vending machines) can be substituted for a less expensive resource (capital) 
C) how technological innovations (such as vending machines) can eliminate jobs 
D) that machines are starting to dominate our lives 
E) how a technological unsophisticated economy can begin to use machinery 
A) how a less expensive resource (vending machines) can be substituted for a more expensive resource (labor) 
B) how a more expensive resource (vending machines) can be substituted for a less expensive resource (capital) 
C) how technological innovations (such as vending machines) can eliminate jobs 
D) that machines are starting to dominate our lives 
E) how a technological unsophisticated economy can begin to use machinery

Question 5

Which of the following statements regarding the basic economic problem of scarcity is correct?

Accepted Answer

A) The problem only exists in countries that are not highly industrialized. 
B) The problem is likely to disappear as production increases. 
C) The problem is sure to disappear as technology improves. 
D) The problem will exist as long as resources are available in limited amounts. 
E) The problem will disappear as a person's income falls. 
A) The problem only exists in countries that are not highly industrialized. 
B) The problem is likely to disappear as production increases. 
C) The problem is sure to disappear as technology improves. 
D) The problem will exist as long as resources are available in limited amounts. 
E) The problem will disappear as a person's income falls.

Question 6

Which of the following is an accurate list, in order, of the steps of the scientific process?

Accepted Answer

A) define variables; state assumptions; form a hypothesis; test 
B) state assumptions; define variables; form a hypothesis; test 
C) identify variables; state assumptions; test; form a hypothesis 
D) identify variables; form "other things equal" assumptions; form behavioral assumptions; test 
E) form "other things equal" assumptions; form behavioral assumptions; form hypothesis; test 
A) define variables; state assumptions; form a hypothesis; test 
B) state assumptions; define variables; form a hypothesis; test 
C) identify variables; state assumptions; test; form a hypothesis 
D) identify variables; form "other things equal" assumptions; form behavioral assumptions; test 
E) form "other things equal" assumptions; form behavioral assumptions; form hypothesis; test

Question 7

Goods and services are exchanged in

Accepted Answer

A) product markets 
B) resource markets 
C) inventory markets 
D) classified markets 
E) government markets 
A) product markets 
B) resource markets 
C) inventory markets 
D) classified markets 
E) government markets

Question 8

Consumers need information to make good choices. Which of the following is correct regarding this information?

Accepted Answer

A) Advertising is always harmful to consumers. 
B) Information is scarce and therefore valuable. 
C) Brand names offer no informational content. 
D) Acquiring more information is always rational. 
E) Marginal analysis does not apply to the acquisition of information. 
A) Advertising is always harmful to consumers. 
B) Information is scarce and therefore valuable. 
C) Brand names offer no informational content. 
D) Acquiring more information is always rational. 
E) Marginal analysis does not apply to the acquisition of information.

Question 9

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

Accepted Answer

A) If the money supply falls, interest rates will rise. 
B) Teenage unemployment would be lower if there were no minimum wage. 
C) The quantity of shirts sold increases as the price of shirts decreases. 
D) The federal government's total spending should be reduced. 
E) If interest rates go up, then construction activity will fall. 
A) If the money supply falls, interest rates will rise. 
B) Teenage unemployment would be lower if there were no minimum wage. 
C) The quantity of shirts sold increases as the price of shirts decreases. 
D) The federal government's total spending should be reduced. 
E) If interest rates go up, then construction activity will fall.

Question 10

Most real economic choices involve small (or marginal) changes, rather than all-or-nothing decisions.

Accepted Answer

A) True 
 B)False

Question 11

Economics

Accepted Answer

A) studies human behavior when scarcity exists and choices must be made 
B) provides the only reasonable explanation of how people make decisions 
C) can accurately explain all human behavior since it is based on the assumption of rationality 
D) is better at showing the way things ought to be than the other social sciences are 
E) is the only social science that can explain the existence and behavior of public institutions 
A) studies human behavior when scarcity exists and choices must be made 
B) provides the only reasonable explanation of how people make decisions 
C) can accurately explain all human behavior since it is based on the assumption of rationality 
D) is better at showing the way things ought to be than the other social sciences are 
E) is the only social science that can explain the existence and behavior of public institutions

Question 12

Rent is the payment received by resource owners for the use of their natural resources.

Accepted Answer

A) True 
 B)False

Question 13

It is always rational to acquire more information before making a decision.

Accepted Answer

A) True 
 B)False

Question 14

An economic model will produce poor predictions if it includes unrealistic assumptions.

Accepted Answer

A) True 
 B)False

Question 15

According to a 2008 PayScale.com survey, the college majors that have the highest median earnings are ones that require quantitative and analytical skills.

Accepted Answer

A) True 
 B)False

Question 16

Economists generally believe that

Accepted Answer

A) buyers and sellers have all the information they can use 
B) additional information is costly to acquire 
C) decision makers have complete knowledge of all the alternatives available 
D) economic decisions result from random behavior 
E) decision makers never make mistakes 
A) buyers and sellers have all the information they can use 
B) additional information is costly to acquire 
C) decision makers have complete knowledge of all the alternatives available 
D) economic decisions result from random behavior 
E) decision makers never make mistakes

Question 17

Rational choice by an individual implies

Accepted Answer

A) the use of some mathematical model when solving a problem 
B) making decisions aimed at achieving some predetermined goal 
C) that only monetary costs and benefits are weighed 
D) that an individual will never regret any action taken 
E) that scarcity can be eliminated for that individual 
A) the use of some mathematical model when solving a problem 
B) making decisions aimed at achieving some predetermined goal 
C) that only monetary costs and benefits are weighed 
D) that an individual will never regret any action taken 
E) that scarcity can be eliminated for that individual

Question 18

Economists believe that individuals respond in a predictable way to changes in costs and benefits. The term that best describes this belief is

Accepted Answer

A) opportunity cost 
B) demand 
C) supply 
D) scarcity 
E) rational behavior 
A) opportunity cost 
B) demand 
C) supply 
D) scarcity 
E) rational behavior

Question 19

The difference between positive economic statements and normative economic statements is that

Accepted Answer

A) both c and e are true 
B) positive statements are based on opinion while normative statements are based on fact 
C) positive statements are true and normative statements are often false 
D) positive statements are often false and normative statements are true 
E) positive statements are based on fact while normative statements are based on opinion 
A) both c and e are true 
B) positive statements are based on opinion while normative statements are based on fact 
C) positive statements are true and normative statements are often false 
D) positive statements are often false and normative statements are true 
E) positive statements are based on fact while normative statements are based on opinion

Question 20

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 it has a price of zero, a good or service 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 it has a price of zero, a good or service 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

Exam 1: The Art and Science of Economic Analysis

Households

Rational economic decision makers will make a change only if

Because people's wants are unlimited but resources are scarce,

The case study on Japanese vending machines is a story that teaches us

Which of the following statements regarding the basic economic problem of scarcity is correct?

Which of the following is an accurate list, in order, of the steps of the scientific process?

Goods and services are exchanged in

Consumers need information to make good choices. Which of the following is correct regarding this information?

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

Most real economic choices involve small (or marginal) changes, rather than all-or-nothing decisions.

Economics

Rent is the payment received by resource owners for the use of their natural resources.

It is always rational to acquire more information before making a decision.

An economic model will produce poor predictions if it includes unrealistic assumptions.

According to a 2008 PayScale.com survey, the college majors that have the highest median earnings are ones that require quantitative and analytical skills.

Economists generally believe that

Rational choice by an individual implies

Economists believe that individuals respond in a predictable way to changes in costs and benefits. The term that best describes this belief is

The difference between positive economic statements and normative economic statements is that

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

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