Question 1

What is the branch of economics which studies how households and firms interact in markets?

Accepted Answer

A) Macroeconomics 
B) Microeconomics 
C) Positive economics 
D) Normative economics 
A) Macroeconomics 
B) Microeconomics 
C) Positive economics 
D) Normative economics

Question 2

Which of the following statements about the economic decisions consumers, firms, and the government have to make is false?

Accepted Answer

A) Governments face the problem of scarcity in making economic decisions. 
B) Only individuals face scarcity; firms and the government do not. 
C) Both firms and individuals face scarcity. 
D) Each faces the problem of scarcity which necessitates trade-offs in making economic decisions. 
A) Governments face the problem of scarcity in making economic decisions. 
B) Only individuals face scarcity; firms and the government do not. 
C) Both firms and individuals face scarcity. 
D) Each faces the problem of scarcity which necessitates trade-offs in making economic decisions.

Question 3

Which of the following is a normative economic statement?

Accepted Answer

A) Rising corn prices have increased the price of corn-based ethanol. 
B) With rising home prices and falling mortgage interest rates, the amount of home foreclosures has decreased. 
C) The federal government is considering increasing regulations on the use of fossil fuels to promote the use of wind power. 
D) Farmers should not be allowed to grow and sell genetically-modified crops. 
A) Rising corn prices have increased the price of corn-based ethanol. 
B) With rising home prices and falling mortgage interest rates, the amount of home foreclosures has decreased. 
C) The federal government is considering increasing regulations on the use of fossil fuels to promote the use of wind power. 
D) Farmers should not be allowed to grow and sell genetically-modified crops.

Question 4

Jewellery manufacturers produce a range of products such as rings, necklaces, bracelets, and brooches.What fundamental economic question are they addressing by offering this range of items?

Accepted Answer

A) How to produce goods that consumers want? 
B) Why produce a variety of items? 
C) What to produce? 
D) Who to produce the items for? 
A) How to produce goods that consumers want? 
B) Why produce a variety of items? 
C) What to produce? 
D) Who to produce the items for?

Question 5

The term 'market' refers to trading arrangements by which buyers and sellers come together.

Accepted Answer

A) True 
 B)False

Question 6

The ________ the sale of an additional unit of a product is a marginal benefit to the firm.

Accepted Answer

A) revenue received from 
B) extra cost of 
C) total value of 
D) sales tax on 
A) revenue received from 
B) extra cost of 
C) total value of 
D) sales tax on

Question 7

Voluntary exchange ________ economic efficiency because neither the buyer nor the seller would agree to a trade unless ________.

Accepted Answer

A) increases; they both benefit 
B) increases; only one party benefits 
C) decreases; neither benefit 
D) decreases; they both benefit 
A) increases; they both benefit 
B) increases; only one party benefits 
C) decreases; neither benefit 
D) decreases; they both benefit

Question 8

Allocative efficiency best explains ________, and productive efficiency best explains ________.

Accepted Answer

A) how something will be produced; when something will be produced 
B) when something will be produced; why something will be produced 
C) why something will be produced; what will be produced 
D) what will be produced; how something will be produced 
A) how something will be produced; when something will be produced 
B) when something will be produced; why something will be produced 
C) why something will be produced; what will be produced 
D) what will be produced; how something will be produced

Question 9

Which of the following statements is true about competition in a market?

Accepted Answer

A) Competition forces firms to outsource the production of their labour-intensive products. 
B) Competition forces firms to undercut their selling price, thus benefiting consumers who will be able to purchase products at the lowest price possible. 
C) Competition forces firms to produce and sell products as long as the marginal benefit to consumers exceeds the marginal cost of production. 
D) Competition forces firms to add only low profit margins to their costs of production. 
A) Competition forces firms to outsource the production of their labour-intensive products. 
B) Competition forces firms to undercut their selling price, thus benefiting consumers who will be able to purchase products at the lowest price possible. 
C) Competition forces firms to produce and sell products as long as the marginal benefit to consumers exceeds the marginal cost of production. 
D) Competition forces firms to add only low profit margins to their costs of production.

Question 10

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 11

'A decrease in the price of tablet computers will decrease the demand for desktop computers.' This statement is an example of a normative economic statement.

Accepted Answer

A) True 
 B)False

Question 12

Figure 1.1  
-Refer to Figure 1.1.Using the information in the figure above, calculate the percentage change in sales of alcoholic beverages between 2007 and 2011.

Accepted Answer

A) 30% 
B) 50% 
C) 66.7% 
D) 100% 
A) 30% 
B) 50% 
C) 66.7% 
D) 100%

Question 13

Which of the following are positive economic statements and which are normative economic statements?
a.An increase in the price of petrol will decrease the quantity of petrol purchased.
b.The government should eliminate the minimum wage.
c.All states should raise the minimum wage to at least $10 per hour.
d.The government should scrap its current income tax structure in favour of a flat tax.
e.Unemployment has increased since the onset of the recession.
f.The government should not bail out investment banks during a financial crisis.
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

Statements a and e are positiv

Question 14

What is the name of the branch of economics which studies the behaviour of entire economies?

Accepted Answer

A) Public economics 
B) Microeconomics 
C) Macroeconomics 
D) Normative economics 
A) Public economics 
B) Microeconomics 
C) Macroeconomics 
D) Normative economics

Question 15

Marginal analysis involves undertaking an activity________.

Accepted Answer

A) until its marginal costs start declining. 
B) only when its marginal benefits are positive. 
C) until its marginal benefits equal marginal costs. 
D) only if its marginal costs are greater than its marginal benefits. 
A) until its marginal costs start declining. 
B) only when its marginal benefits are positive. 
C) until its marginal benefits equal marginal costs. 
D) only if its marginal costs are greater than its marginal benefits.

Question 16

Economists assume that individuals________.

Accepted Answer

A) behave in unpredictable ways. 
B) will never take action to help others. 
C) prefer to live in a society that values fairness above all else. 
D) are rational and respond to incentives. 
A) behave in unpredictable ways. 
B) will never take action to help others. 
C) prefer to live in a society that values fairness above all else. 
D) are rational and respond to incentives.

Question 17

A problem inherent in centrally planned economies is:

Accepted Answer

A) households and firms make poor decisions in choosing how resources are allocated. 
B) there is too little production of low-cost, high-quality goods and services. 
C) production managers are more concerned with satisfying consumer wants than with satisfying government's orders. 
D) exports tend to exceed imports. 
A) households and firms make poor decisions in choosing how resources are allocated. 
B) there is too little production of low-cost, high-quality goods and services. 
C) production managers are more concerned with satisfying consumer wants than with satisfying government's orders. 
D) exports tend to exceed imports.

Question 18

What do economists call the idea that because of scarcity, producing more of one good or service means producing less of another good or service?

Accepted Answer

A) Optimisation 
B) Efficiency 
C) Trade-off 
D) Equity 
A) Optimisation 
B) Efficiency 
C) Trade-off 
D) Equity

Question 19

Consider the following statements: 
a.Car owners purchase more petrol from a petrol station that sells petrol at a lower price than other rival petrol stations in the area.
b. Banks do not take steps to increase security since they believe it is less costly to allow some bank robberies than to install expensive security monitoring equipment.
c. Firms produce more of a particular DVD when its selling price rises.
Which of the above statements demonstrates that economic agents respond to incentives?

Accepted Answer

A) b only 
B) c only 
C) a and b 
D) a, b, and c 
A) b only 
B) c only 
C) a and b 
D) a, b, and c

Question 20

When Mr.Peabody decides on the companies to which he will donate his time and money, a ________ issue is being addressed.

Accepted Answer

A) microeconomic 
B) macroeconomic 
C) positive economic 
D) normative economic 
A) microeconomic 
B) macroeconomic 
C) positive economic 
D) normative economic

What is the branch of economics which studies how households and firms interact in markets?

Which of the following statements about the economic decisions consumers, firms, and the government have to make is false?

Which of the following is a normative economic statement?

Jewellery manufacturers produce a range of products such as rings, necklaces, bracelets, and brooches.What fundamental economic question are they addressing by offering this range of items?

The term 'market' refers to trading arrangements by which buyers and sellers come together.

The ________ the sale of an additional unit of a product is a marginal benefit to the firm.

Voluntary exchange economic efficiency because neither the buyer nor the seller would agree to a trade unless .

Allocative efficiency best explains , and productive efficiency best explains .

Which of the following statements is true about competition in a market?

Figure 1.2 -Refer to Figure 1.2.Calculate the area of the triangle A.

'A decrease in the price of tablet computers will decrease the demand for desktop computers.' This statement is an example of a normative economic statement.

Figure 1.1 -Refer to Figure 1.1.Using the information in the figure above, calculate the percentage change in sales of alcoholic beverages between 2007 and 2011.

What is the name of the branch of economics which studies the behaviour of entire economies?

Marginal analysis involves undertaking an activity________.

Economists assume that individuals________.

A problem inherent in centrally planned economies is:

What do economists call the idea that because of scarcity, producing more of one good or service means producing less of another good or service?

When Mr.Peabody decides on the companies to which he will donate his time and money, a ________ issue is being addressed.

Choices and Trade-Offs in the Market

Where Prices Come From: The Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency, Government Price Setting and Taxes

Consumer Choice and Behavioural Economics

Technology Production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition: The Competitive Model in a More Realistic

Oligopoly: Markets With Few Competitors

The Markets for Labour and Other Factors of Production

Comparative Advantage and the Gains From International Trade

Government Intervention in the Market

Externalities, Environmental Policy and Public Goods

The Distribution of Income and Social Policy

Filters

Exam 1: Economics: Foundations and Models

What is the branch of economics which studies how households and firms interact in markets?

Which of the following statements about the economic decisions consumers, firms, and the government have to make is false?

Which of the following is a normative economic statement?

Jewellery manufacturers produce a range of products such as rings, necklaces, bracelets, and brooches.What fundamental economic question are they addressing by offering this range of items?

The term 'market' refers to trading arrangements by which buyers and sellers come together.

The ________ the sale of an additional unit of a product is a marginal benefit to the firm.

Voluntary exchange ________ economic efficiency because neither the buyer nor the seller would agree to a trade unless ________.

Allocative efficiency best explains ________, and productive efficiency best explains ________.

Which of the following statements is true about competition in a market?

Figure 1.2 -Refer to Figure 1.2.Calculate the area of the triangle A.

'A decrease in the price of tablet computers will decrease the demand for desktop computers.' This statement is an example of a normative economic statement.

Figure 1.1 -Refer to Figure 1.1.Using the information in the figure above, calculate the percentage change in sales of alcoholic beverages between 2007 and 2011.

What is the name of the branch of economics which studies the behaviour of entire economies?

Marginal analysis involves undertaking an activity________.

Economists assume that individuals________.

A problem inherent in centrally planned economies is:

What do economists call the idea that because of scarcity, producing more of one good or service means producing less of another good or service?

When Mr.Peabody decides on the companies to which he will donate his time and money, a ________ issue is being addressed.

Choices and Trade-Offs in the Market

Where Prices Come From: The Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency, Government Price Setting and Taxes

Consumer Choice and Behavioural Economics

Technology Production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition: The Competitive Model in a More Realistic

Oligopoly: Markets With Few Competitors

The Markets for Labour and Other Factors of Production

Comparative Advantage and the Gains From International Trade

Government Intervention in the Market

Externalities, Environmental Policy and Public Goods

The Distribution of Income and Social Policy

Filters

Voluntary exchange economic efficiency because neither the buyer nor the seller would agree to a trade unless .

Allocative efficiency best explains , and productive efficiency best explains .