Question 1

Which of the following statements about normative analysis is correct?

Accepted Answer

A)  Normative analysis, because it is based on opinion, rarely employs any positive analysis when prescribing a solution to a given problem. 
B)  Normative analysis typically cannot be trusted because it is only someone's opinion. 
C)  Normative analysis ignores exogenous variables when making predictions. 
D)  Normative analysis typically focuses on issues of social welfare. 
A)  Normative analysis, because it is based on opinion, rarely employs any positive analysis when prescribing a solution to a given problem. 
B)  Normative analysis typically cannot be trusted because it is only someone's opinion. 
C)  Normative analysis ignores exogenous variables when making predictions. 
D)  Normative analysis typically focuses on issues of social welfare.

Question 2

In general,economics is the study of

Accepted Answer

A)  the allocation of scarce wants to unlimited resources. 
B)  the allocation scarce resources to unlimited wants. 
C)  the allocation of resources between the government and the private sector. 
D)  the allocation of workers between firms. 
A)  the allocation of scarce wants to unlimited resources. 
B)  the allocation scarce resources to unlimited wants. 
C)  the allocation of resources between the government and the private sector. 
D)  the allocation of workers between firms.

Question 3

Which of the following statements represents normative analysis?

Accepted Answer

A)  Eliminating rent controls in New York City will likely lead to greater supply of housing in the future. 
B)  Eliminating the minimum wage will likely lead to lower unemployment. 
C)  Subsidies to farmers to produce corn for ethanol will lead to a (desirable) reduced dependence on foreign oil. 
D)  Raising taxes on gasoline will reduce automobile traffic on our nation's highways. 
A)  Eliminating rent controls in New York City will likely lead to greater supply of housing in the future. 
B)  Eliminating the minimum wage will likely lead to lower unemployment. 
C)  Subsidies to farmers to produce corn for ethanol will lead to a (desirable) reduced dependence on foreign oil. 
D)  Raising taxes on gasoline will reduce automobile traffic on our nation's highways.

Question 4

A good example of marginal reasoning would be

Accepted Answer

A)  the addition to total sales from spending an additional dollar on advertising. 
B)  the sales resulting from total spending on advertising. 
C)  the decision to shut down production. 
D)  the decision to maximize profits rather than sales. 
A)  the addition to total sales from spending an additional dollar on advertising. 
B)  the sales resulting from total spending on advertising. 
C)  the decision to shut down production. 
D)  the decision to maximize profits rather than sales.

Question 5

Which of the following statements regarding exogenous and endogenous variables is correct?

Accepted Answer

A)  The set of exogenous variables in any economic model should take into account the rich detail of the world and so should be limitless. 
B)  Endogenous variables will always be determined within the model. 
C)  Exogenous variables change as a result of changes in endogenous variables. 
D)  The only variables that are relevant to the market equilibrium are the endogenous variables, as they are determined within the model. 
A)  The set of exogenous variables in any economic model should take into account the rich detail of the world and so should be limitless. 
B)  Endogenous variables will always be determined within the model. 
C)  Exogenous variables change as a result of changes in endogenous variables. 
D)  The only variables that are relevant to the market equilibrium are the endogenous variables, as they are determined within the model.

Question 6

Suppose a consumer's level of satisfaction is given by AB2 and he/she has a total of $10 to spend on goods A and B.If the price of A is $1 and the price of B is $2,and assuming you can only purchase whole units (not fractional) of A and B,how many units of A and B should he/she purchase?

Accepted Answer

A)  2 units of A and 4 units of B. 
B)  4 units of A and 3 units of B. 
C)  6 units of A and 2 units of B. 
D)  0 units of A and 5 units of B. 
A)  2 units of A and 4 units of B. 
B)  4 units of A and 3 units of B. 
C)  6 units of A and 2 units of B. 
D)  0 units of A and 5 units of B.

Question 7

Suppose that we illustrate demand and supply with quantity on the horizontal axis and income on the vertical axis.Let demand be a function of price and income,Qd (P,I).Which of the following statements is true?

Accepted Answer

A)  A change in income will cause a shift in the demand curve. 
B)  A change in income level is represented by a movement along the demand curve. 
C)  Income is treated as an exogenous variable in the graphical analysis. 
D)  Price and income together must change in order to create a shift in the demand curve. 
A)  A change in income will cause a shift in the demand curve. 
B)  A change in income level is represented by a movement along the demand curve. 
C)  Income is treated as an exogenous variable in the graphical analysis. 
D)  Price and income together must change in order to create a shift in the demand curve.

Question 8

Which of the following statements about positive analysis is correct?

Accepted Answer

A)  Positive analysis prescribes the best solution to an economic problem. 
B)  Positive analysis predicts how an economic system will change over time. 
C)  While normative analysis can be wrong, since it is often based on someone's opinion, positive analysis is always accurate. 
D)  Since positive analysis is based on a model, and not the real world, it is mostly irrelevant. 
A)  Positive analysis prescribes the best solution to an economic problem. 
B)  Positive analysis predicts how an economic system will change over time. 
C)  While normative analysis can be wrong, since it is often based on someone's opinion, positive analysis is always accurate. 
D)  Since positive analysis is based on a model, and not the real world, it is mostly irrelevant.

Which of the following statements about normative analysis is correct?

In general,economics is the study of

Which of the following statements represents normative analysis?

A good example of marginal reasoning would be

Which of the following statements regarding exogenous and endogenous variables is correct?

Suppose a consumer's level of satisfaction is given by AB² and he/she has a total of $10 to spend on goods A and B.If the price of A is $1 and the price of B is $2,and assuming you can only purchase whole units (not fractional) of A and B,how many units of A and B should he/she purchase?

Suppose that we illustrate demand and supply with quantity on the horizontal axis and income on the vertical axis.Let demand be a function of price and income,Q^d (P,I).Which of the following statements is true?

Which of the following statements about positive analysis is correct?

Demand and Supply Analysis

Consumer Preferences and the Concept of Utility

Consumer Choice

The Theory of Demand

Inputs and Production Functions

Costs and Cost Minimization

Cost Curves

Perfectly Competitive Markets

Competitive Markets

Monopoly and Monopsony

Capturing Surplus

Market Structure and Competition

Game Theory and Strategic Behavior

Risk and Information

General Equilibrium Theory

Externalities and Public Goods

Filters

Exam 1: Analyzing Economic Problems

Which of the following statements about normative analysis is correct?

In general,economics is the study of

Which of the following statements represents normative analysis?

A good example of marginal reasoning would be

Which of the following statements regarding exogenous and endogenous variables is correct?

Suppose a consumer's level of satisfaction is given by AB2 and he/she has a total of $10 to spend on goods A and B.If the price of A is $1 and the price of B is $2,and assuming you can only purchase whole units (not fractional) of A and B,how many units of A and B should he/she purchase?

Suppose that we illustrate demand and supply with quantity on the horizontal axis and income on the vertical axis.Let demand be a function of price and income,Qd (P,I).Which of the following statements is true?

Which of the following statements about positive analysis is correct?

Demand and Supply Analysis

Consumer Preferences and the Concept of Utility

Consumer Choice

The Theory of Demand

Inputs and Production Functions

Costs and Cost Minimization

Cost Curves

Perfectly Competitive Markets

Competitive Markets

Monopoly and Monopsony

Capturing Surplus

Market Structure and Competition

Game Theory and Strategic Behavior

Risk and Information

General Equilibrium Theory

Externalities and Public Goods

Filters

Suppose a consumer's level of satisfaction is given by AB² and he/she has a total of $10 to spend on goods A and B.If the price of A is $1 and the price of B is $2,and assuming you can only purchase whole units (not fractional) of A and B,how many units of A and B should he/she purchase?

Suppose that we illustrate demand and supply with quantity on the horizontal axis and income on the vertical axis.Let demand be a function of price and income,Q^d (P,I).Which of the following statements is true?