Question 1

An entrepreneur is _____

Accepted Answer

A) an individual who has an education. 
B) an organizer who seeks profitable opportunities and is willing to accept risks. 
C) a person who is hired by a firm to manage its operations. 
D) a person who earns profit without accepting any risks. 
E) a person who is appointed by the board of directors of a firm for a term of five years. 
A) an individual who has an education. 
B) an organizer who seeks profitable opportunities and is willing to accept risks. 
C) a person who is hired by a firm to manage its operations. 
D) a person who earns profit without accepting any risks. 
E) a person who is appointed by the board of directors of a firm for a term of five years.

Question 2

For an 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.

Question 3

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 five hours instead of three hours?

Accepted Answer

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

Question 4

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 5

Alicia makes the statement that every time she eats chocolate,it starts to rain.Alicia is committing the _____

Accepted Answer

A) fallacy of composition. 
B) fallacy that association is causation. 
C) fallacy of segmentation. 
D) mistake of ignoring secondary effects. 
E) mistake of rejecting a null hypothesis. 
A) fallacy of composition. 
B) fallacy that association is causation. 
C) fallacy of segmentation. 
D) mistake of ignoring secondary effects. 
E) mistake of rejecting a null hypothesis.

Question 6

In the circular-flow model,firms supply _____

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 7

In economics,marginal analysis _____

Accepted Answer

A) has no practical applications or real-world uses. 
B) eliminates incorrect decisions and bad choices. 
C) involves comparing the additional costs and additional benefits of an activity. 
D) involves examining only the total costs and total benefits of an activity. 
E) guarantees an incorrect decision. 
A) has no practical applications or real-world uses. 
B) eliminates incorrect decisions and bad choices. 
C) involves comparing the additional costs and additional benefits of an activity. 
D) involves examining only the total costs and total benefits of an activity. 
E) guarantees an incorrect decision.

Question 8

Natural resources _____

Accepted Answer

A) include bodies of water, trees, oil reserves, and minerals. 
B) are not scarce. 
C) are inexhaustible as long as they are managed properly. 
D) are the result of human effort. 
E) do not follow the law of demand and supply. 
A) include bodies of water, trees, oil reserves, and minerals. 
B) are not scarce. 
C) are inexhaustible as long as they are managed properly. 
D) are the result of human effort. 
E) do not follow the law of demand and supply.

Question 9

An economist would classify 100 shares of Apple Computers as capital.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is a normative economic statement?

Accepted Answer

A) The U.S. rate of unemployment was lower in 2004 than it was in 1994. 
B) Savings accounts earn interest, whereas checking accounts do not. 
C) Congress must recognize that the growing national debt is the most serious problem that the country faces. 
D) The unemployment rate increases when the percentage of the labor force without jobs increases. 
E) The unemployment rate among teenagers is higher than the rate among adults. 
A) The U.S. rate of unemployment was lower in 2004 than it was in 1994. 
B) Savings accounts earn interest, whereas checking accounts do not. 
C) Congress must recognize that the growing national debt is the most serious problem that the country faces. 
D) The unemployment rate increases when the percentage of the labor force without jobs increases. 
E) The unemployment rate among teenagers is higher than the rate among adults.

Question 11

Economists generally believe that _____

Accepted Answer

A) a rational individual will pursue an activity if the average cost of the activity is equal to the total benefit from it. 
B) a rational individual will pursue an activity if the total benefit of the activity is more than the total cost of the activity. 
C) a rational individual will pursue an activity if the total cost of the activity is more than the total benefit from it. 
D) economic decisions result from random behavior. 
E) decision makers never make mistakes. 
A) a rational individual will pursue an activity if the average cost of the activity is equal to the total benefit from it. 
B) a rational individual will pursue an activity if the total benefit of the activity is more than the total cost of the activity. 
C) a rational individual will pursue an activity if the total cost of the activity is more than the total benefit from it. 
D) economic decisions result from random behavior. 
E) decision makers never make mistakes.

Question 12

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

Accepted Answer

A) If the money supply falls, interest rates will rise. 
B) Teenage unemployment would be lower if there were no minimum wage. 
C) The quantity of shirts sold increases as the price of shirts decreases. 
D) The federal government's total spending should be reduced. 
E) If interest rates go up, then fewer buildings will be constructed. 
A) If the money supply falls, interest rates will rise. 
B) Teenage unemployment would be lower if there were no minimum wage. 
C) The quantity of shirts sold increases as the price of shirts decreases. 
D) The federal government's total spending should be reduced. 
E) If interest rates go up, then fewer buildings will be constructed.

Question 13

Sources of confusion in economic analysis include _____

Accepted Answer

A) fallacy of segmentation. 
B) mistake of ignoring primary effects. 
C) rational self-interest. 
D) association-is-causation fallacy. 
E) making positive economic statements. 
A) fallacy of segmentation. 
B) mistake of ignoring primary effects. 
C) rational self-interest. 
D) association-is-causation fallacy. 
E) making positive economic statements.

Question 14

Natural resources are _____

Accepted Answer

A) not considered scarce because no one pays for them. 
B) not used in producing luxury goods. 
C) renewable and exhaustible. 
D) available in unlimited quantities. 
E) not considered scarce because they are not produced by society. 
A) not considered scarce because no one pays for them. 
B) not used in producing luxury goods. 
C) renewable and exhaustible. 
D) available in unlimited quantities. 
E) not considered scarce because they are not produced by society.

Question 15

Which of the following is not an example of the fallacy of composition?

Accepted Answer

A) If I can get to work fastest by taking the interstate, so can everyone else. 
B) If I can only get away from it all by going to Fairbanks, everyone who needs to get away should go to Fairbanks. 
C) Every time I play with my dog, it rains; therefore, playing with my dog brings rain. 
D) If a Couch Potato antenna gives me the best TV reception, then everyone should have a Couch Potato antenna. 
E) If I can get a better view by standing up at the baseball game, then everyone can get a better view by standing up. 
A) If I can get to work fastest by taking the interstate, so can everyone else. 
B) If I can only get away from it all by going to Fairbanks, everyone who needs to get away should go to Fairbanks. 
C) Every time I play with my dog, it rains; therefore, playing with my dog brings rain. 
D) If a Couch Potato antenna gives me the best TV reception, then everyone should have a Couch Potato antenna. 
E) If I can get a better view by standing up at the baseball game, then everyone can get a better view by standing up.

Question 16

A rational individual would make charitable contributions only if such contributions receive favorable tax treatment.

Accepted Answer

A) True 
 B)False

Question 17

The ceteris paribus assumption is the other-things-constant assumption.

Accepted Answer

A) True 
 B)False

Question 18

In economics,_____ means incremental,additional,or extra.

Accepted Answer

A) benefit 
B) marginal 
C) causation 
D) association 
E) optimal 
A) benefit 
B) marginal 
C) causation 
D) association 
E) optimal

Question 19

The "other-things-constant" assumption is also known as _____

Accepted Answer

A) ceteris paribus. 
B) prediction. 
C) normative. 
D) variable. 
E) positive. 
A) ceteris paribus. 
B) prediction. 
C) normative. 
D) variable. 
E) positive.

Question 20

All economic models must involve simplifications because _____

Accepted Answer

A) economists would be unable to command high salaries if their models were too simple. 
B) human behavior is very erratic and unpredictable. 
C) reality is too complex to understand in its entirety, so we must reduce the complexity to a level that we can understand. 
D) economists try to cover all the possible variables. 
E) we must ignore complexity. 
A) economists would be unable to command high salaries if their models were too simple. 
B) human behavior is very erratic and unpredictable. 
C) reality is too complex to understand in its entirety, so we must reduce the complexity to a level that we can understand. 
D) economists try to cover all the possible variables. 
E) we must ignore complexity.

Exam 1: The Art and Science of Economic Analysis

An entrepreneur is _____

For an economist,marginal means _____

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 five hours instead of three hours?

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

Alicia makes the statement that every time she eats chocolate,it starts to rain.Alicia is committing the _____

In the circular-flow model,firms supply _____

In economics,marginal analysis _____

Natural resources _____

An economist would classify 100 shares of Apple Computers as capital.

Which of the following is a normative economic statement?

Economists generally believe that _____

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

Sources of confusion in economic analysis include _____

Natural resources are _____

Which of the following is not an example of the fallacy of composition?

A rational individual would make charitable contributions only if such contributions receive favorable tax treatment.

The ceteris paribus assumption is the other-things-constant assumption.

In economics,_____ means incremental,additional,or extra.

The "other-things-constant" assumption is also known as _____

All economic models must involve simplifications because _____

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