Question 1

Which of the following is a positive economic statement?

Accepted Answer

A)  We should raise the minimum wage in order to provide a decent wage for more people. 
B)  Consumers bought fewer cars when the relative price of cars increased. 
C)  The budget deficit has been rising in recent years. 
D)  Federal government spending ought to be curtailed. 
E)  b and c 
A)  We should raise the minimum wage in order to provide a decent wage for more people. 
B)  Consumers bought fewer cars when the relative price of cars increased. 
C)  The budget deficit has been rising in recent years. 
D)  Federal government spending ought to be curtailed. 
E)  b and c E

Question 2

Which of the following statements is true?

Accepted Answer

A)  Oil is classified as part of the resource category land. 
B)  A person working for a company is classified as part of the resource category capital. 
C)  A machine in a factory is classified as part of the resource category land. 
D)  A person with the particular talent for organizing the resources of land,labor,and capital to produce goods,seek new business opportunities,and develop new ways of doing things is classified as part of the resource category labor. 
E)  a and d 
A)  Oil is classified as part of the resource category land. 
B)  A person working for a company is classified as part of the resource category capital. 
C)  A machine in a factory is classified as part of the resource category land. 
D)  A person with the particular talent for organizing the resources of land,labor,and capital to produce goods,seek new business opportunities,and develop new ways of doing things is classified as part of the resource category labor. 
E)  a and d A

Question 3

In all cases,macroeconomics deals with

Accepted Answer

A)  what is. 
B)  what should be. 
C)  relatively small units in the economy. 
D)  the entire economy. 
A)  what is. 
B)  what should be. 
C)  relatively small units in the economy. 
D)  the entire economy. D

Question 4

In economics,capital is defined as a financial asset such as stocks and bonds.

Accepted Answer

A) True 
 B)False

Question 5

-Refer to Exhibit 1-3.According to the data provided in this table,what is the approximate slope of the line between points C and D (if these data were graphed with X on the horizontal axis and Y on the vertical axis)?

Accepted Answer

A)  -0.17 
B)  -6.00 
C)  0.17 
D)  6.00 
E)  none of the above 
A)  -0.17 
B)  -6.00 
C)  0.17 
D)  6.00 
E)  none of the above

Question 6

A good provides __________ and a bad provides __________.

Accepted Answer

A)  utility; satisfaction 
B)  disutility; utility 
C)  dissatisfaction; satisfaction 
D)  utility; disutility 
E)  satisfaction; utility 
A)  utility; satisfaction 
B)  disutility; utility 
C)  dissatisfaction; satisfaction 
D)  utility; disutility 
E)  satisfaction; utility

Question 7

Which of the following is a normative macroeconomics statement?

Accepted Answer

A)  The central bank should increase the nation's money supply. 
B)  The increase in the nation's money supply helped push the nation's unemployment rate down in the short run. 
C)  Ford Motor Company's new advertising campaign ended up hurting General Motors' sales. 
D)  The local government ought to spend more on recreational facilities. 
A)  The central bank should increase the nation's money supply. 
B)  The increase in the nation's money supply helped push the nation's unemployment rate down in the short run. 
C)  Ford Motor Company's new advertising campaign ended up hurting General Motors' sales. 
D)  The local government ought to spend more on recreational facilities.

Question 8

Macroeconomics deals with issues involving large corporations,while microeconomics exclusively deals with issues involving small businesses.

Accepted Answer

A) True 
 B)False

Question 9

It usually takes less time to buy a six-pack of Pepsi,a loaf of bread,and a bag of potato chips at a small convenience store (such as 7-Eleven)than at a large,full-service grocery store.Which of the following persons is most likely to buy these items at a convenience store?

Accepted Answer

A)  a person with a high opportunity cost of time 
B)  a person with a low opportunity cost of time 
C)  a person who is out of work 
D)  a person who works at a full-service grocery store 
A)  a person with a high opportunity cost of time 
B)  a person with a low opportunity cost of time 
C)  a person who is out of work 
D)  a person who works at a full-service grocery store

Question 10

The concept that relates how much one variable changes as another variable changes is

Accepted Answer

A)  slope. 
B)  line. 
C)  curve. 
D)  graph. 
A)  slope. 
B)  line. 
C)  curve. 
D)  graph.

Question 11

Many years ago,chemists at 3M Corporation were trying to create a super-strong glue.Somehow they got their molecules twisted and came up with one of the weakest glues ever made.But,rather than pouring it down the drain,they tried coating some paper with it,and the "Post-It Note" was born.In this case,3M was acting as a(n)

Accepted Answer

A)  utility. 
B)  rationer. 
C)  entrepreneur. 
D)  abstraction. 
A)  utility. 
B)  rationer. 
C)  entrepreneur. 
D)  abstraction.

Question 12

If variable X falls as a result of variable Y falling,then X and Y are

Accepted Answer

A)  directly related. 
B)  negatively related. 
C)  inversely related. 
D)  independent. 
A)  directly related. 
B)  negatively related. 
C)  inversely related. 
D)  independent.

Question 13

Which of the following is most likely to be a negative unintended effect of placing safety caps on medicine containers?

Accepted Answer

A)  It is now easier for people to open their medicine containers. 
B)  People leave their medicine containers open more often,which ends up making it easier for children to get into the medicine. 
C)  Fewer people get sick and need medicine. 
D)  Medicine prices fall sharply. 
A)  It is now easier for people to open their medicine containers. 
B)  People leave their medicine containers open more often,which ends up making it easier for children to get into the medicine. 
C)  Fewer people get sick and need medicine. 
D)  Medicine prices fall sharply.

Question 14

Attempts to determine "what is" are part of __________ economics.

Accepted Answer

A)  positive 
B)  normative 
C)  positive and normative 
D)  neither positive nor normative 
A)  positive 
B)  normative 
C)  positive and normative 
D)  neither positive nor normative

Question 15

A three-word synonym for the term ceteris paribus is

Accepted Answer

A)  "nothing else changes." 
B)  "in my opinion." 
C)  "it is proved." 
D)  "under this assumption." 
A)  "nothing else changes." 
B)  "in my opinion." 
C)  "it is proved." 
D)  "under this assumption."

Question 16

-Refer to Exhibit 1-1.The student whose study habits are illustrated in this diagram will maximize the net benefits of studying when she has studied __________ hours.

Accepted Answer

A)  2 
B)  4 
C)  6 
D)  8 
A)  2 
B)  4 
C)  6 
D)  8

Question 17

The cost of building a new interstate highway system is reported to be high at $25 billion.Does it necessarily follow that the interstate highway is not worth building?

Accepted Answer

A)  Yes,because it is better to spend $25 billion on ending poverty than on building another interstate highway system. 
B)  No,because building a new interstate highway system promotes economic growth,which helps everyone. 
C)  No,because the benefits of building a new interstate highway system may be greater than $25 billion. 
D)  Yes,because the benefits of building a new interstate highway system may be greater than $25 billion. 
A)  Yes,because it is better to spend $25 billion on ending poverty than on building another interstate highway system. 
B)  No,because building a new interstate highway system promotes economic growth,which helps everyone. 
C)  No,because the benefits of building a new interstate highway system may be greater than $25 billion. 
D)  Yes,because the benefits of building a new interstate highway system may be greater than $25 billion.

Question 18

Saying "the marginal costs are greater than the marginal benefits" is the same as saying

Accepted Answer

A)  the average costs are greater than the average benefits. 
B)  the total costs are greater than the average benefits. 
C)  the benefits are greater than the costs. 
D)  the additional costs are greater than the additional benefits. 
E)  the costs minus the benefits equal the net costs. 
A)  the average costs are greater than the average benefits. 
B)  the total costs are greater than the average benefits. 
C)  the benefits are greater than the costs. 
D)  the additional costs are greater than the additional benefits. 
E)  the costs minus the benefits equal the net costs.

Question 19

Variables A and B are directly related.If we plot A on the horizontal axis and B on the vertical axis,the line that connects combinations of A and B plotted in a two-variable diagram would be

Accepted Answer

A)  parallel to the horizontal axis. 
B)  downward-sloping (left to right). 
C)  parallel to the vertical axis. 
D)  upward-sloping (left to right). 
E)  a or c 
A)  parallel to the horizontal axis. 
B)  downward-sloping (left to right). 
C)  parallel to the vertical axis. 
D)  upward-sloping (left to right). 
E)  a or c

Question 20

Describe the difference between positive and normative economics.Cite an example of each.

Accepted Answer

Positive economics deals with "what is."

Exam 1: What Economics Is About

Which of the following is a positive economic statement?

Which of the following statements is true?

In all cases,macroeconomics deals with

In economics,capital is defined as a financial asset such as stocks and bonds.

-Refer to Exhibit 1-3.According to the data provided in this table,what is the approximate slope of the line between points C and D (if these data were graphed with X on the horizontal axis and Y on the vertical axis)?

A good provides __________ and a bad provides __________.

Which of the following is a normative macroeconomics statement?

Macroeconomics deals with issues involving large corporations,while microeconomics exclusively deals with issues involving small businesses.

It usually takes less time to buy a six-pack of Pepsi,a loaf of bread,and a bag of potato chips at a small convenience store (such as 7-Eleven)than at a large,full-service grocery store.Which of the following persons is most likely to buy these items at a convenience store?

The concept that relates how much one variable changes as another variable changes is

If variable X falls as a result of variable Y falling,then X and Y are

Which of the following is most likely to be a negative unintended effect of placing safety caps on medicine containers?

Attempts to determine "what is" are part of __________ economics.

A three-word synonym for the term ceteris paribus is

-Refer to Exhibit 1-1.The student whose study habits are illustrated in this diagram will maximize the net benefits of studying when she has studied __________ hours.

The cost of building a new interstate highway system is reported to be high at $25 billion.Does it necessarily follow that the interstate highway is not worth building?

Saying "the marginal costs are greater than the marginal benefits" is the same as saying

Variables A and B are directly related.If we plot A on the horizontal axis and B on the vertical axis,the line that connects combinations of A and B plotted in a two-variable diagram would be

Describe the difference between positive and normative economics.Cite an example of each.

Production Possibilities Frontier Framework

Supply and Demand: Theory

Prices: Free,controlled,and Relative

Supply,demand,and Price: Applications

Elasticity

Consumer Choice: Maximizing Utility and Behavioral Economics

Production and Costs

Perfect Competition

Monopoly

Monopolistic Competition, oligopoly, and Game Theory

Government and Product Markets: Antitrust and Regulation

Factor Markets: With Emphasis on the Labor Market

Wages,union,and Labor

The Distribution of Income and Poverty

Interest,rent,and Profit

Market Failure: Externalities, public Goods, and Asymmetric Information

Public Choice and Special-Interest-Group Politics

Building Theories to Explain Everyday Life: From Observations to Questions to Theories to Predictions

International Trade

International Finance

The Economic Case for and Against Government: Five Topics Considered

Stocks,bonds,futures,and Options

Stocks,bonds,futures,and Options

Filters

A good provides and a bad provides .