Question 1

Resources are used only in the production of goods,not services.

Accepted Answer

A) True 
 B)False

Question 2

"An increase in the price of a product causes consumers to purchase more of that product" is an example of a positive economic statement.

Accepted Answer

A) True 
 B)False

Question 3

Economists tell stories _____

Accepted Answer

A) in order to breathe life into economic theory and personalize abstract ideas. 
B) because economics is an art, not a science. 
C) as a way of rigorously testing economic theory. 
D) because doing so is a required part of the scientific method. 
E) to show how their theory can predict at least one real-world situation. 
A) in order to breathe life into economic theory and personalize abstract ideas. 
B) because economics is an art, not a science. 
C) as a way of rigorously testing economic theory. 
D) because doing so is a required part of the scientific method. 
E) to show how their theory can predict at least one real-world situation.

Question 4

Table 1.1
 $$\begin{array} { | l | l | } 
\hline \text { Hours } & \text { Revenue } \
\hline 1 & 10 \
\hline 2 & 20 \
\hline 3 & 30 \
\hline 4 & 40 \
\hline 5 & 50 \
\hline
\end{array}$$ Sergio tutors fellow students for $10 an hour.
-Refer to Table 1.1.What is Sergio's marginal benefit if he tutors for four hours instead of two hours?

Accepted Answer

A) $50 
B) $40 
C) $30 
D) $20 
E) $10 
A) $50 
B) $40 
C) $30 
D) $20 
E) $10

Question 5

Sources of confusion in economic analysis include _____

Accepted Answer

A) fallacy of segmentation. 
B) mistake of ignoring secondary effects. 
C) rational self-interest. 
D) telling stories. 
E) making positive economic statements. 
A) fallacy of segmentation. 
B) mistake of ignoring secondary effects. 
C) rational self-interest. 
D) telling stories. 
E) making positive economic statements.

Question 6

Exhibit 1.3
  
-Refer to Exhibit 1.3 of the Scientific Method: Step-by-Step.Step 1 is _____

Accepted Answer

A) Formulate a hypothesis. 
B) Specify assumptions. 
C) Identify the question and define relevant variables. 
D) Test the hypothesis. 
E) Use the hypothesis until a better one shows up. 
A) Formulate a hypothesis. 
B) Specify assumptions. 
C) Identify the question and define relevant variables. 
D) Test the hypothesis. 
E) Use the hypothesis until a better one shows up.

Question 7

Unintended consequences of economic actions that may develop slowly over time as people react to events is known as _____

Accepted Answer

A) the association-is-causation fallacy. 
B) the fallacy of composition. 
C) a primary effect. 
D) a secondary effect. 
E) a behavioral assumption. 
A) the association-is-causation fallacy. 
B) the fallacy of composition. 
C) a primary effect. 
D) a secondary effect. 
E) a behavioral assumption.

Question 8

The basic purpose of economic models is to _____

Accepted Answer

A) make simplifying assumptions about the real world. 
B) explain reality in all its complexity. 
C) collect empirical data to support facts. 
D) construct situations where controlled experiments can be carried out. 
E) explain and predict events. 
A) make simplifying assumptions about the real world. 
B) explain reality in all its complexity. 
C) collect empirical data to support facts. 
D) construct situations where controlled experiments can be carried out. 
E) explain and predict events.

Question 9

Economics is best defined as the study of how _____

Accepted Answer

A) people make decisions in a world of scarcity. 
B) governments can influence the social structure. 
C) to separate the executive from the legislature and the judiciary. 
D) individuals can participate in electing their representatives to the government. 
E) to change the class structure of an economy. 
A) people make decisions in a world of scarcity. 
B) governments can influence the social structure. 
C) to separate the executive from the legislature and the judiciary. 
D) individuals can participate in electing their representatives to the government. 
E) to change the class structure of an economy.

Question 10

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

Accepted Answer

A) The problem will exist only in countries that are not highly industrialized. 
B) The problem will disappear as production increases. 
C) The problem will 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 will exist only in countries that are not highly industrialized. 
B) The problem will disappear as production increases. 
C) The problem will 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 11

Which of the following is a positive statement?

Accepted Answer

A) An unemployment rate of 7 percent or higher is a national disgrace. 
B) Unemployment is a less important problem than inflation. 
C) When the unemployment rate in an economy is 7 percent, the unemployment rate of the urban population is often close to 40 percent. 
D) Unemployment and inflation are equally important problems. 
E) An inflation rate of 7 percent is too high. 
A) An unemployment rate of 7 percent or higher is a national disgrace. 
B) Unemployment is a less important problem than inflation. 
C) When the unemployment rate in an economy is 7 percent, the unemployment rate of the urban population is often close to 40 percent. 
D) Unemployment and inflation are equally important problems. 
E) An inflation rate of 7 percent is too high.

Question 12

The difference between a positive economic statement and a normative economic statement is that _____

Accepted Answer

A) a positive statement must be true, while a normative statement is often not true. 
B) a normative statement must be true, while a positive statement is often not true. 
C) a positive statement can be verified, while a normative statement cannot be verified. 
D) a normative statement can be verified, while a positive statement cannot be verified. 
E) a positive economic statement is a moral judgment, while a normative economic statement is not a moral judgment. 
A) a positive statement must be true, while a normative statement is often not true. 
B) a normative statement must be true, while a positive statement is often not true. 
C) a positive statement can be verified, while a normative statement cannot be verified. 
D) a normative statement can be verified, while a positive statement cannot be verified. 
E) a positive economic statement is a moral judgment, while a normative economic statement is not a moral judgment.

Question 13

You will buy another pair of jeans 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

The scientific method is useful _____

Accepted Answer

A) only in fields of science such as chemistry and physics. 
B) for testing the validity of the prediction of economic theories. 
C) for predicting the behavior of individual consumers and producers. 
D) when no economic variables can be assumed to be constant. 
E) only if a theory has been proven to be true. 
A) only in fields of science such as chemistry and physics. 
B) for testing the validity of the prediction of economic theories. 
C) for predicting the behavior of individual consumers and producers. 
D) when no economic variables can be assumed to be constant. 
E) only if a theory has been proven to be true.

Question 15

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 16

Most economists consider a theory a good one if it predicts well.

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

A) Incomes increase when national production increases. 
B) Women should earn the same income as men. 
C) When the price of a good rises, people will buy more of it. 
D) The more time you spend studying, the higher your economics test scores will be. 
E) The price and the quantity demanded of a good are negatively related. 
A) Incomes increase when national production increases. 
B) Women should earn the same income as men. 
C) When the price of a good rises, people will buy more of it. 
D) The more time you spend studying, the higher your economics test scores will be. 
E) The price and the quantity demanded of a good are negatively related.

Question 18

The association-is-causation fallacy is the error of assuming that what is true for one member of a group must be true for the group.

Accepted Answer

A) True 
 B)False

Question 19

Exhibit 1.3
  
-Refer to Exhibit 1.3 of the Scientific Method: Step-by-Step.If Box A is 'Reject the hypothesis,' then Box B is _____

Accepted Answer

A) Formulate a hypothesis. 
B) Modify the approach. 
C) Reject the hypothesis 
D) Use the hypothesis until a better one shows up. 
E) Test the hypothesis. 
A) Formulate a hypothesis. 
B) Modify the approach. 
C) Reject the hypothesis 
D) Use the hypothesis until a better one shows up. 
E) Test the hypothesis.

Question 20

The incorrect idea that if two variables are associated in time,one must necessarily cause the other is known as _____

Accepted Answer

A) the association-is-causation fallacy. 
B) the fallacy of composition. 
C) a primary effect. 
D) a secondary effect. 
E) a behavioral assumption. 
A) the association-is-causation fallacy. 
B) the fallacy of composition. 
C) a primary effect. 
D) a secondary effect. 
E) a behavioral assumption.

Exam 1: The Art and Science of Economic Analysis

Resources are used only in the production of goods,not services.

"An increase in the price of a product causes consumers to purchase more of that product" is an example of a positive economic statement.

Economists tell stories _____

Table 1.1 Hours Revenue 1 10 2 20 3 30 4 40 5 50 Sergio tutors fellow students for $10 an hour. -Refer to Table 1.1.What is Sergio's marginal benefit if he tutors for four hours instead of two hours?

Sources of confusion in economic analysis include _____

Exhibit 1.3 -Refer to Exhibit 1.3 of the Scientific Method: Step-by-Step.Step 1 is _____

Unintended consequences of economic actions that may develop slowly over time as people react to events is known as _____

The basic purpose of economic models is to _____

Economics is best defined as the study of how _____

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

Which of the following is a positive statement?

The difference between a positive economic statement and a normative economic statement is that _____

You will buy another pair of jeans only if _____

The scientific method is useful _____

Economic information _____

Most economists consider a theory a good one if it predicts well.

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

The association-is-causation fallacy is the error of assuming that what is true for one member of a group must be true for the group.

Exhibit 1.3 -Refer to Exhibit 1.3 of the Scientific Method: Step-by-Step.If Box A is 'Reject the hypothesis,' then Box B is _____

The incorrect idea that if two variables are associated in time,one must necessarily cause the other is known as _____

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

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