Question 1

Exhibit 1.2
  
-Refer to the circular-flow model in Exhibit 1.2.The flow from firms to product markets is _____

Accepted Answer

A) goods and services. 
B) products. 
C) labor, capital, natural resources, and entrepreneurial ability. 
D) resources. 
E) wages, interest, rent, and profit. 
A) goods and services. 
B) products. 
C) labor, capital, natural resources, and entrepreneurial ability. 
D) resources. 
E) wages, interest, rent, and profit.

Question 2

One of the difficulties with an economic policy such as rent control is that _____

Accepted Answer

A) policy makers do not consider its secondary effects. 
B) the policy affects only the renters and not apartment owners. 
C) it is difficult to enforce anti-discrimination laws in the rental market. 
D) it makes landlords wealthy at the expense of renters. 
E) the pressure from landlords has resulted in its repeal in many cities. 
A) policy makers do not consider its secondary effects. 
B) the policy affects only the renters and not apartment owners. 
C) it is difficult to enforce anti-discrimination laws in the rental market. 
D) it makes landlords wealthy at the expense of renters. 
E) the pressure from landlords has resulted in its repeal in many cities.

Question 3

"There should be less discrimination against women" is an example of a positive economic statement.

Accepted Answer

A) True 
 B)False

Question 4

An economic model _____

Accepted Answer

A) omits critical elements. 
B) must be presented in mathematical terms. 
C) is used to make predictions about the real world. 
D) can never be proven wrong if its assumptions are realistic. 
E) produces poor predictions if it includes assumptions. 
A) omits critical elements. 
B) must be presented in mathematical terms. 
C) is used to make predictions about the real world. 
D) can never be proven wrong if its assumptions are realistic. 
E) produces poor predictions if it includes assumptions.

Question 5

Which of the following is not classified as physical capital by economists?

Accepted Answer

A) a $20 bill in a firm's petty cash drawer 
B) the building where an economics class meets 
C) a plumber's wrench 
D) a railroad car 
E) A factory 
A) a $20 bill in a firm's petty cash drawer 
B) the building where an economics class meets 
C) a plumber's wrench 
D) a railroad car 
E) A factory

Question 6

The interaction of economic decision makers _____

Accepted Answer

A) is not based on marginal analysis. 
B) determines how an economy's resources are allocated. 
C) is not important in economic analysis. 
D) occurs infrequently. 
E) does not involve ordinary citizens. 
A) is not based on marginal analysis. 
B) determines how an economy's resources are allocated. 
C) is not important in economic analysis. 
D) occurs infrequently. 
E) does not involve ordinary citizens.

Question 7

Your best friend buys you lunch on your birthday.You think this was not a free lunch because _____

Accepted Answer

A) even if you didn't pay in dollars for it, you paid for it in extra calories. 
B) the resources used to produce the lunch were not available to satisfy other wants. 
C) you disagree with the expression "the best things in life are free." 
D) you can eat only if you work out first. 
E) neither sea water nor air is free. 
A) even if you didn't pay in dollars for it, you paid for it in extra calories. 
B) the resources used to produce the lunch were not available to satisfy other wants. 
C) you disagree with the expression "the best things in life are free." 
D) you can eat only if you work out first. 
E) neither sea water nor air is free.

Question 8

In economics,capital is defined as _____

Accepted Answer

A) natural resources, such as water, oil, and iron ore. 
B) the number of people in the labor force. 
C) all human creations used to produce goods and services. 
D) the money exchanged in the underground economy. 
E) the willingness of business owners to take risks. 
A) natural resources, such as water, oil, and iron ore. 
B) the number of people in the labor force. 
C) all human creations used to produce goods and services. 
D) the money exchanged in the underground economy. 
E) the willingness of business owners to take risks.

Question 9

When economists refer to human capital,they refer to _____

Accepted Answer

A) income earned by capitalists. 
B) skills used in production. 
C) dividends earned by investors. 
D) bonds held by the public. 
E) bank loans given to the public. 
A) income earned by capitalists. 
B) skills used in production. 
C) dividends earned by investors. 
D) bonds held by the public. 
E) bank loans given to the public.

Question 10

The payment in return for the use of natural resources is _____

Accepted Answer

A) profit. 
B) wages. 
C) rent. 
D) dividends. 
E) interest. 
A) profit. 
B) wages. 
C) rent. 
D) dividends. 
E) interest.

Question 11

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

Accepted Answer

A) positive statements are based on opinion, while normative statements are always 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) positive statements are based on opinion, while normative statements are always 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 12

The assumption that individuals act rationally implies that people _____

Accepted Answer

A) think only of themselves and disregard the well-being of others. 
B) undertake all those activities that do not have any marginal benefit. 
C) only consider the costs of an activity to decide whether it is worthwhile. 
D) perform charitable deeds only if the cost is high for the benefactor. 
E) people implicitly calculate the costs of and the benefits from an activity to decide if it is worthwhile. 
A) think only of themselves and disregard the well-being of others. 
B) undertake all those activities that do not have any marginal benefit. 
C) only consider the costs of an activity to decide whether it is worthwhile. 
D) perform charitable deeds only if the cost is high for the benefactor. 
E) people implicitly calculate the costs of and the benefits from an activity to decide if it is worthwhile.

Question 13

A rational decision maker will make a change only if _____

Accepted Answer

A) the marginal benefit from the change exceeds the average benefit from the change. 
B) there are no costs involved. 
C) the change increases social welfare. 
D) there is no uncertainty about the results of the change. 
E) the expected marginal benefit exceeds the expected marginal cost. 
A) the marginal benefit from the change exceeds the average benefit from the change. 
B) there are no costs involved. 
C) the change increases social welfare. 
D) there is no uncertainty about the results of the change. 
E) the expected marginal benefit exceeds the expected marginal cost.

Question 14

Which of the following is an example of a positive economic statement?

Accepted Answer

A) Workers with families should be paid at least the minimum wage. 
B) If crime rates were reduced, the world would be a better place to live. 
C) Marginal tax rates should be reduced for individuals in the highest tax bracket. 
D) An increase in the price of gasoline will cause a reduction in the amount of gasoline purchased. 
E) Corrupt politicians ought to be voted out of office. 
A) Workers with families should be paid at least the minimum wage. 
B) If crime rates were reduced, the world would be a better place to live. 
C) Marginal tax rates should be reduced for individuals in the highest tax bracket. 
D) An increase in the price of gasoline will cause a reduction in the amount of gasoline purchased. 
E) Corrupt politicians ought to be voted out of office.

Question 15

Which of the following is a service?

Accepted Answer

A) anything that can be used indefinitely 
B) anything for which people pay less money than they pay for a good 
C) an intangible activity that satisfies human wants 
D) any output produced by the service sector industry, such as fast food 
E) something that is more desirable than a good 
A) anything that can be used indefinitely 
B) anything for which people pay less money than they pay for a good 
C) an intangible activity that satisfies human wants 
D) any output produced by the service sector industry, such as fast food 
E) something that is more desirable than a good

Question 16

In the circular-flow model,firms demand all of the following except _____

Accepted Answer

A) labor. 
B) goods and services. 
C) capital. 
D) entrepreneurial ability. 
E) natural resources. 
A) labor. 
B) goods and services. 
C) capital. 
D) entrepreneurial ability. 
E) natural resources.

Question 17

Labor and capital are exchanged in the resource market.

Accepted Answer

A) True 
 B)False

Question 18

Profit is the payment received by resource owners for the use of their capital.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

If the marginal cost of adding a new line of products is $10 million,then Amazon should add the product

Accepted Answer

A) if marginal costs fall. 
B) if marginal benefits fall. 
C) if marginal benefits are less than $10 million. 
D) if marginal benefits are more than $10 million. 
E) if Amazon does not operate at a loss. 
A) if marginal costs fall. 
B) if marginal benefits fall. 
C) if marginal benefits are less than $10 million. 
D) if marginal benefits are more than $10 million. 
E) if Amazon does not operate at a loss.

Exam 1: The Art and Science of Economic Analysis

Exhibit 1.2 -Refer to the circular-flow model in Exhibit 1.2.The flow from firms to product markets is _____

One of the difficulties with an economic policy such as rent control is that _____

"There should be less discrimination against women" is an example of a positive economic statement.

An economic model _____

Which of the following is not classified as physical capital by economists?

The interaction of economic decision makers _____

Your best friend buys you lunch on your birthday.You think this was not a free lunch because _____

In economics,capital is defined as _____

When economists refer to human capital,they refer to _____

The payment in return for the use of natural resources is _____

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

The assumption that individuals act rationally implies that people _____

A rational decision maker will make a change only if _____

Which of the following is an example of a positive economic statement?

Which of the following is a service?

In the circular-flow model,firms demand all of the following except _____

Labor and capital are exchanged in the resource market.

Profit is the payment received by resource owners for the use of their capital.

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

If the marginal cost of adding a new line of products is $10 million,then Amazon should add the product

Economic Tools and Economic Systems

Economic Decision Makers

Demand, supply, and Markets

Elasticity of Demand and Supply

Consumer Choice and Demand

Production and Cost in the Firm

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Resource Markets

Labor Markets and Labor Unions

Capital, interest, entrepreneurship, and Corporate Finance

Transaction Costs, asymmetric Information, and Behavioral Economics

Economic Regulation and Antitrust Policy

Public Goods and Public Choice

Externalities and the Environment

Poverty and Redistribution

International Trade

International Finance

Economic Development

Filters