Question 1

When economists say that people act as rational decision makers,they mean that _____

Accepted Answer

A) people act on the basis of their instincts. 
B) once a pattern of behavior has been established, people tend to become set in their ways. 
C) people respond in predictable ways to changes in costs and benefits. 
D) people rarely make errors when permitted to make transactions. 
E) once made, decisions are never reversed. 
A) people act on the basis of their instincts. 
B) once a pattern of behavior has been established, people tend to become set in their ways. 
C) people respond in predictable ways to changes in costs and benefits. 
D) people rarely make errors when permitted to make transactions. 
E) once made, decisions are never reversed.

Question 2

In the economic model of consumer behavior,rational self-interest would likely be _____

Accepted Answer

A) a key variable. 
B) the hypothesis of the model. 
C) a behavioral assumption. 
D) a prediction of the model. 
E) a method of testing the model. 
A) a key variable. 
B) the hypothesis of the model. 
C) a behavioral assumption. 
D) a prediction of the model. 
E) a method of testing the model.

Question 3

A good economic theory brings clarity to chaos.

Accepted Answer

A) True 
 B)False

Question 4

Exhibit 1.3
  
-Refer to Exhibit 1.3 of the Scientific Method: Step-by-Step.Step 2 is _____

Accepted Answer

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

Question 5

If a firm produces and sells only one unit of a good,its profit would be equal to the _____

Accepted Answer

A) market price of the good. 
B) revenue from the item sold minus the cost of the resources used to produce the good. 
C) difference between the interest paid by the firm on its outstanding loans and the rate of depreciation. 
D) sum of the price of the good and the wages paid to labor. 
E) product of the wages paid to labor and the market price of the good. 
A) market price of the good. 
B) revenue from the item sold minus the cost of the resources used to produce the good. 
C) difference between the interest paid by the firm on its outstanding loans and the rate of depreciation. 
D) sum of the price of the good and the wages paid to labor. 
E) product of the wages paid to labor and the market price of the good.

Question 6

By rational,economists mean that people _____

Accepted Answer

A) think only of themselves. 
B) know with certainty which alternative will turn out to be the best. 
C) try to make the best choices they can. 
D) try to maximize the cost of achieving a benefit. 
E) try to minimize the expected benefit achieved. 
A) think only of themselves. 
B) know with certainty which alternative will turn out to be the best. 
C) try to make the best choices they can. 
D) try to maximize the cost of achieving a benefit. 
E) try to minimize the expected benefit achieved.

Question 7

Secondary effects are consequences of economic actions that develop slowly over time as people react to events.

Accepted Answer

A) True 
 B)False

Question 8

Resources can be divided into _____

Accepted Answer

A) people, money, and machines. 
B) savings, spending, investment, and capital. 
C) human resources, technology, and government. 
D) natural resources, labor, capital, and entrepreneurial ability. 
E) income, interest, and expenditure. 
A) people, money, and machines. 
B) savings, spending, investment, and capital. 
C) human resources, technology, and government. 
D) natural resources, labor, capital, and entrepreneurial ability. 
E) income, interest, and expenditure.

Question 9

Economic decision makers will continue to acquire information only as long as the expected additional benefit exceeds the expected additional cost of the information.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following fundamental resources is the basis of labor?

Accepted Answer

A) Capital 
B) Natural resources 
C) Time 
D) Profit 
E) Entrepreneurial ability 
A) Capital 
B) Natural resources 
C) Time 
D) Profit 
E) Entrepreneurial ability

Question 11

In economics,marginal usually refers to _____

Accepted Answer

A) a small change in an economic variable. 
B) a low-quality product or resource. 
C) an unimportant and irrelevant economic variable. 
D) an all-or-nothing economic decision. 
E) a footnote or minor point. 
A) a small change in an economic variable. 
B) a low-quality product or resource. 
C) an unimportant and irrelevant economic variable. 
D) an all-or-nothing economic decision. 
E) a footnote or minor point.

Question 12

The "other-things-constant" assumption _____

Accepted Answer

A) allows an economist to make useful predictions. 
B) is a prediction. 
C) applies only to consumers' decisions and not to those of firms. 
D) forces an economist to ignore reality, where things are constantly changing. 
E) implies rational self-interest on the part of all economic actors. 
A) allows an economist to make useful predictions. 
B) is a prediction. 
C) applies only to consumers' decisions and not to those of firms. 
D) forces an economist to ignore reality, where things are constantly changing. 
E) implies rational self-interest on the part of all economic actors.

Question 13

Patrick decided to go to class today instead of going to the movies.He made this decision because the additional benefit of going to _____

Accepted Answer

A) class exceeded the additional cost of going to class. 
B) the movies exceeded the additional cost of going to class. 
C) class exceeded the additional cost of going to the movies. 
D) the movies exceeded the additional cost of going to the movies. 
E) class equaled the additional cost of going to the movies. 
A) class exceeded the additional cost of going to class. 
B) the movies exceeded the additional cost of going to class. 
C) class exceeded the additional cost of going to the movies. 
D) the movies exceeded the additional cost of going to the movies. 
E) class equaled the additional cost of going to the movies.

Question 14

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 two hours instead of one hour?

Accepted Answer

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

Question 15

Rational decision makers continue to acquire information as long as the additional benefit expected from that information _____ the additional cost of gathering it.

Accepted Answer

A) is less than 
B) exceeds 
C) is equal to 
D) is the same as 
E) is different from 
A) is less than 
B) exceeds 
C) is equal to 
D) is the same as 
E) is different from

Question 16

It is always rational to acquire more information before making a decision.

Accepted Answer

A) True 
 B)False

Question 17

Exhibit 1.3
  
-Refer to Exhibit 1.3 of the Scientific Method: Step-by-Step.Step 3 is _____

Accepted Answer

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

Question 18

In the simple circular flow model,the two markets are _____

Accepted Answer

A) capital goods and consumer goods markets. 
B) goods and services markets. 
C) product and resource markets. 
D) households and firms markets. 
E) domestic and foreign markets. 
A) capital goods and consumer goods markets. 
B) goods and services markets. 
C) product and resource markets. 
D) households and firms markets. 
E) domestic and foreign markets.

Question 19

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 students for $10 an hour.
-Refer to Table 1.1.Sergio hires an assistant for $5 per hour.What is his marginal cost if he tutors 1 hour a week and also pays his assistant?

Accepted Answer

A) $25 
B) $20 
C) $15 
D) $10 
E) $5 
A) $25 
B) $20 
C) $15 
D) $10 
E) $5

Question 20

A rational decision maker compares the expected marginal cost to the expected marginal benefit of any activity.

Accepted Answer

A) True 
 B)False

Exam 1: The Art and Science of Economic Analysis

When economists say that people act as rational decision makers,they mean that _____

In the economic model of consumer behavior,rational self-interest would likely be _____

A good economic theory brings clarity to chaos.

Exhibit 1.3 -Refer to Exhibit 1.3 of the Scientific Method: Step-by-Step.Step 2 is _____

If a firm produces and sells only one unit of a good,its profit would be equal to the _____

By rational,economists mean that people _____

Secondary effects are consequences of economic actions that develop slowly over time as people react to events.

Resources can be divided into _____

Economic decision makers will continue to acquire information only as long as the expected additional benefit exceeds the expected additional cost of the information.

Which of the following fundamental resources is the basis of labor?

In economics,marginal usually refers to _____

The "other-things-constant" assumption _____

Patrick decided to go to class today instead of going to the movies.He made this decision because the additional benefit of going to _____

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 two hours instead of one hour?

Rational decision makers continue to acquire information as long as the additional benefit expected from that information _____ the additional cost of gathering it.

It is always rational to acquire more information before making a decision.

Exhibit 1.3 -Refer to Exhibit 1.3 of the Scientific Method: Step-by-Step.Step 3 is _____

In the simple circular flow model,the two markets are _____

Table 1.1 ​ Hours Revenue (\ ) 1 \ 10 2 \ 20 3 \ 30 4 \ 40 5 \ 50 Sergio tutors students for $10 an hour. -Refer to Table 1.1.Sergio hires an assistant for $5 per hour.What is his marginal cost if he tutors 1 hour a week and also pays his assistant?

A rational decision maker compares the expected marginal cost to the expected marginal benefit of any activity.

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

Table 1.1 Hours Revenue (\ ) 1 \ 10 2 \ 20 3 \ 30 4 \ 40 5 \ 50 Sergio tutors students for $10 an hour. -Refer to Table 1.1.Sergio hires an assistant for $5 per hour.What is his marginal cost if he tutors 1 hour a week and also pays his assistant?