Question 1

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

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 2

Alan is a retired economist who enjoys building toy trains for his grandkids.He uses a workbench and tools from his garage,lumber he bought from the lumber store for $10,and varnish and paint he had left over from another project last year.Since a retired economist is always an economist,which of the following statements is he likely to make about building toy trains?

Accepted Answer

A) I'm not paying for any resources, so the toy trains I'm building are a good example of free goods. 
B) I only paid $10 for the lumber, so the toy trains I'm building are a good example of free goods. 
C) I'm using scarce resources to build the toy trains. 
D) The resources I'm using to build the toy trains are not scarce. 
E) If I had used lumber that I cut from the tree in my backyard instead of buying it from the store, then the toy trains I'm building would be a good example of free goods. 
A) I'm not paying for any resources, so the toy trains I'm building are a good example of free goods. 
B) I only paid $10 for the lumber, so the toy trains I'm building are a good example of free goods. 
C) I'm using scarce resources to build the toy trains. 
D) The resources I'm using to build the toy trains are not scarce. 
E) If I had used lumber that I cut from the tree in my backyard instead of buying it from the store, then the toy trains I'm building would be a good example of free goods.

Question 3

The behavior of the entertainment industry in a city is a microeconomics topic.

Accepted Answer

A) True 
 B)False

Question 4

_____ are unintended consequences of economic actions that may develop slowly over time as people react to events.

Accepted Answer

A) Association-is-causation fallacies 
B) Fallacies of composition 
C) Primary effects 
D) Secondary effects 
E) Behavioral assumptions 
A) Association-is-causation fallacies 
B) Fallacies of composition 
C) Primary effects 
D) Secondary effects 
E) Behavioral assumptions

Question 5

Economic fluctuations are _____

Accepted Answer

A) the output decisions of individual firms. 
B) the effect of a tariff on the demand for a good. 
C) the factors that influence the spending decisions of particular households. 
D) the rise and fall of economic activity relative to the long-term growth trend of the economy 
E) economic systems. 
A) the output decisions of individual firms. 
B) the effect of a tariff on the demand for a good. 
C) the factors that influence the spending decisions of particular households. 
D) the rise and fall of economic activity relative to the long-term growth trend of the economy 
E) economic systems.

Question 6

The fallacy of composition involves assuming that _____

Accepted Answer

A) you can determine the composition of a complex product just by examining its exterior properties. 
B) consumer durable goods today do not last as long as they did a generation ago. 
C) any mistakes made in producing a product using an assembly line technique will lead to a compounding of errors as the product moves down the line. 
D) what is true for any individual component in a group is true for the group as a whole. 
E) what was true when a person was young will still be true today. 
A) you can determine the composition of a complex product just by examining its exterior properties. 
B) consumer durable goods today do not last as long as they did a generation ago. 
C) any mistakes made in producing a product using an assembly line technique will lead to a compounding of errors as the product moves down the line. 
D) what is true for any individual component in a group is true for the group as a whole. 
E) what was true when a person was young will still be true today.

Question 7

A hypothesis is _____

Accepted Answer

A) an assumption about the behavior of economic agents. 
B) a prediction of what will occur given certain assumptions. 
C) a normative statement. 
D) a forecast of future events. 
E) useful only if assumptions are realistic. 
A) an assumption about the behavior of economic agents. 
B) a prediction of what will occur given certain assumptions. 
C) a normative statement. 
D) a forecast of future events. 
E) useful only if assumptions are realistic.

Question 8

An economic theory seeks to _____

Accepted Answer

A) distort reality in order to improve forecasting ability. 
B) predict phenomena without explaining them. 
C) explain phenomena without predicting them. 
D) include every detail and interrelation among variables that are being analyzed. 
E) capture the important elements of the problem under study. 
A) distort reality in order to improve forecasting ability. 
B) predict phenomena without explaining them. 
C) explain phenomena without predicting them. 
D) include every detail and interrelation among variables that are being analyzed. 
E) capture the important elements of the problem under study.

Question 9

Rational choice implies _____

Accepted Answer

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

Question 10

Step one in the scientific method to study economic problems is to _____

Accepted Answer

A) formulate a hypothesis. 
B) reflect an opinion. 
C) specify assumptions. 
D) define relevant variables. 
E) test a hypothesis. 
A) formulate a hypothesis. 
B) reflect an opinion. 
C) specify assumptions. 
D) define relevant variables. 
E) test a hypothesis.

Question 11

You want to sell your old iPad to your cousin,who wants to give you $300 for it.You will have to pay $40 to ship the iPad to your cousin.As a rational decision maker,you should _____

Accepted Answer

A) sell it because the marginal benefit is smaller than the marginal cost. 
B) not sell it because the marginal benefit is smaller than the marginal cost. 
C) sell it because the marginal benefit is greater than the marginal cost. 
D) not sell it because the marginal benefit is greater than the marginal cost. 
E) sell it because the marginal benefit is equal to the marginal cost. 
A) sell it because the marginal benefit is smaller than the marginal cost. 
B) not sell it because the marginal benefit is smaller than the marginal cost. 
C) sell it because the marginal benefit is greater than the marginal cost. 
D) not sell it because the marginal benefit is greater than the marginal cost. 
E) sell it because the marginal benefit is equal to the marginal cost.

Question 12

You observe that grocery shoppers choose the shortest line at the checkout.This is an example of _____

Accepted Answer

A) rational self-interest 
B) selfishness 
C) greed 
D) blind materialism 
E) altruism 
A) rational self-interest 
B) selfishness 
C) greed 
D) blind materialism 
E) altruism

Question 13

Households ____

Accepted Answer

A) own and sell resources. 
B) play a very minor role in an economy. 
C) supply goods and services. 
D) are the largest purchasers of resources. 
E) set the price for goods. 
A) own and sell resources. 
B) play a very minor role in an economy. 
C) supply goods and services. 
D) are the largest purchasers of resources. 
E) set the price for goods.

Question 14

Economics is best defined as how people use scarce resources to satisfy unlimited wants.

Accepted Answer

A) True 
 B)False

Question 15

Resources consist of labor and natural resources.

Accepted Answer

A) True 
 B)False

Question 16

Exhibit 1.1
  
-Refer to the circular-flow model in Exhibit 1.1.If box C represents households,then box D represents _____

Accepted Answer

A) firms. 
B) resource markets. 
C) households. 
D) product markets. 
E) expenditures. 
A) firms. 
B) resource markets. 
C) households. 
D) product markets. 
E) expenditures.

Question 17

An economic model is useful if it _____

Accepted Answer

A) includes every detail of reality. 
B) involves no unproven assumptions. 
C) is expressed in equations. 
D) makes accurate predictions. 
E) is simple enough to be understood by a child. 
A) includes every detail of reality. 
B) involves no unproven assumptions. 
C) is expressed in equations. 
D) makes accurate predictions. 
E) is simple enough to be understood by a child.

Question 18

The simple circular-flow model for households and firms is an economic model that focuses on the interaction between households and firms.Which of the following statements regarding the model is correct?

Accepted Answer

A) As the model does not include the interaction between firms and resource markets, it does not predict correctly. 
B) As the model does not include the interaction between households and product markets, it does not predict correctly. 
C) The model has too many simplifying assumptions, and it cannot be used to make predictions about the real world. 
D) The model is a simplification of the real world, and it can be used to make predictions about the real world. 
E) As the model does not include the interaction between firms and product markets, it does not predict correctly. 
A) As the model does not include the interaction between firms and resource markets, it does not predict correctly. 
B) As the model does not include the interaction between households and product markets, it does not predict correctly. 
C) The model has too many simplifying assumptions, and it cannot be used to make predictions about the real world. 
D) The model is a simplification of the real world, and it can be used to make predictions about the real world. 
E) As the model does not include the interaction between firms and product markets, it does not predict correctly.

Question 19

Which of the following would be a topic considered in the field of macroeconomics?

Accepted Answer

A) The study of the growth of the Chinese economy 
B) The study of the causes of the relocation of U.S. manufacturing firms to China 
C) The study of the differences in wages between men and women in the United States 
D) The study of the effect of rent control on the housing market in New York City 
E) The study of the impact of environmental regulations on the production levels of firms 
A) The study of the growth of the Chinese economy 
B) The study of the causes of the relocation of U.S. manufacturing firms to China 
C) The study of the differences in wages between men and women in the United States 
D) The study of the effect of rent control on the housing market in New York City 
E) The study of the impact of environmental regulations on the production levels of firms

Question 20

For a non-economist,marginal means _____

Accepted Answer

A) incremental. 
B) unimportant. 
C) level or size. 
D) scarcity. 
E) inferior. 
A) incremental. 
B) unimportant. 
C) level or size. 
D) scarcity. 
E) inferior.

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

The behavior of the entertainment industry in a city is a microeconomics topic.

_____ are unintended consequences of economic actions that may develop slowly over time as people react to events.

Economic fluctuations are _____

The fallacy of composition involves assuming that _____

A hypothesis is _____

An economic theory seeks to _____

Rational choice implies _____

Step one in the scientific method to study economic problems is to _____

You want to sell your old iPad to your cousin,who wants to give you $300 for it.You will have to pay $40 to ship the iPad to your cousin.As a rational decision maker,you should _____

You observe that grocery shoppers choose the shortest line at the checkout.This is an example of _____

Households ____

Economics is best defined as how people use scarce resources to satisfy unlimited wants.

Resources consist of labor and natural resources.

Exhibit 1.1 -Refer to the circular-flow model in Exhibit 1.1.If box C represents households,then box D represents _____

An economic model is useful if it _____

The simple circular-flow model for households and firms is an economic model that focuses on the interaction between households and firms.Which of the following statements regarding the model is correct?

Which of the following would be a topic considered in the field of macroeconomics?

For a non-economist,marginal means _____

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

Exam 1: The Art and Science of Economic Analysis

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

The behavior of the entertainment industry in a city is a microeconomics topic.

_____ are unintended consequences of economic actions that may develop slowly over time as people react to events.

Economic fluctuations are _____

The fallacy of composition involves assuming that _____

A hypothesis is _____

An economic theory seeks to _____

Rational choice implies _____

Step one in the scientific method to study economic problems is to _____

You want to sell your old iPad to your cousin,who wants to give you $300 for it.You will have to pay $40 to ship the iPad to your cousin.As a rational decision maker,you should _____

You observe that grocery shoppers choose the shortest line at the checkout.This is an example of _____

Households ____

Economics is best defined as how people use scarce resources to satisfy unlimited wants.

Resources consist of labor and natural resources.

Exhibit 1.1 -Refer to the circular-flow model in Exhibit 1.1.If box C represents households,then box D represents _____

An economic model is useful if it _____

The simple circular-flow model for households and firms is an economic model that focuses on the interaction between households and firms.Which of the following statements regarding the model is correct?

Which of the following would be a topic considered in the field of macroeconomics?

For a non-economist,marginal means _____

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