Question 1

When economists say that people act as rational decision makers,that means

Accepted Answer

A)  they gather all relevant information before making their purchases 
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 they are permitted to make transactions 
E)  once made,decisions are never reversed 
A)  they gather all relevant information before making their purchases 
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 they are permitted to make transactions 
E)  once made,decisions are never reversed

Question 2

In economics,marginal means

Accepted Answer

A)  incremental or decremental 
B)  unimportant 
C)  level or size 
D)  a border-line situation 
E)  a bad alternative 
A)  incremental or decremental 
B)  unimportant 
C)  level or size 
D)  a border-line situation 
E)  a bad alternative

Question 3

To tell a compelling story,an economist relies on

Accepted Answer

A)  case studies 
B)  anecdotes 
C)  irrelevant data 
D)  anecdotes and irrelevant data 
E)  case studies and anecdotes 
A)  case studies 
B)  anecdotes 
C)  irrelevant data 
D)  anecdotes and irrelevant data 
E)  case studies and anecdotes

Question 4

The fallacy of composition is the error of believing a cause-effect relationship exists between two events that are associated in time.

Accepted Answer

A) True 
 B)False

Question 5

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 6

Which of the four types of decision makers in the U.S.economy plays the largest role?

Accepted Answer

A)  U.S.firms and government because they produce the products that households consume 
B)  U.S.households because they supply goods to the product markets and are demanders in resource markets 
C)  foreign households,firms,and governments because they greatly outnumber those of the United States 
D)  U.S.firms and government because they create employment for domestic households and produce goods and services 
E)  U.S.households,as buyers in product markets and sellers in resource markets 
A)  U.S.firms and government because they produce the products that households consume 
B)  U.S.households because they supply goods to the product markets and are demanders in resource markets 
C)  foreign households,firms,and governments because they greatly outnumber those of the United States 
D)  U.S.firms and government because they create employment for domestic households and produce goods and services 
E)  U.S.households,as buyers in product markets and sellers in resource markets

Question 7

Profit is the payment received by resource owners for the use of their capital.

Accepted Answer

A) True 
 B)False

Question 8

The association-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 9

The economic behavior of individual decision makers and the determination of price and output in specific markets are both studied in

Accepted Answer

A)  microeconomics 
B)  macroeconomics 
C)  positive economics 
D)  normative economics 
E)  disequilibrium economics 
A)  microeconomics 
B)  macroeconomics 
C)  positive economics 
D)  normative economics 
E)  disequilibrium economics

Question 10

The assumption of rational self-interest does not rule out the possibility of concern for other individuals.

Accepted Answer

A) True 
 B)False

Question 11

As a scientist,an economist's main professional objective is to

Accepted Answer

A)  become wealthy 
B)  control the government's decision-making processes 
C)  understand how the economy works 
D)  discover which stock prices will decrease 
E)  understand the psychology of participants in markets 
A)  become wealthy 
B)  control the government's decision-making processes 
C)  understand how the economy works 
D)  discover which stock prices will decrease 
E)  understand the psychology of participants in markets

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Jackson is a manager at the local 'Two-minute Bank'.He wants to extend the bank's operating hours by 3 more hours,but he'll have to hire one more bank teller.Jackson estimates the benefits from keeping the bank opened longer hours to be $1,900 per week,and he'll have to pay the new bank teller $700 per week.Should Jackson hire the additional bank teller? Why?

Accepted Answer

A)  Jackson should not hire the additional bank teller because the expected profit is only $1,200 per week. 
B)  Jackson should not hire the additional bank teller because the expected additional benefits are greater than the expected additional costs. 
C)  Jackson should hire the additional bank teller because the expected additional benefits are lower than the expected additional costs. 
D)  Jackson should hire the additional bank teller because the expected additional benefits are greater than the expected additional costs. 
E)  Jackson should not hire the additional bank teller because the expected additional benefits are lower than the expected additional costs. 
A)  Jackson should not hire the additional bank teller because the expected profit is only $1,200 per week. 
B)  Jackson should not hire the additional bank teller because the expected additional benefits are greater than the expected additional costs. 
C)  Jackson should hire the additional bank teller because the expected additional benefits are lower than the expected additional costs. 
D)  Jackson should hire the additional bank teller because the expected additional benefits are greater than the expected additional costs. 
E)  Jackson should not hire the additional bank teller because the expected additional benefits are lower than the expected additional costs.

Question 14

Your friend notices that U.S.auto production and U.S.population growth have moved together over several decades.He reasons that one way to slow population growth is for the government to order the auto makers to cut back on production.You gently point out to him that he

Accepted Answer

A)  is correct only when the economy is in a recession 
B)  has mistakenly inferred causation from observed correlation 
C)  has ignored secondary effects 
D)  has committed the fallacy of composition 
E)  is correct only when the United States enjoys economic growth 
A)  is correct only when the economy is in a recession 
B)  has mistakenly inferred causation from observed correlation 
C)  has ignored secondary effects 
D)  has committed the fallacy of composition 
E)  is correct only when the United States enjoys economic growth

Question 15

Economics is the study of

Accepted Answer

A)  how the human race differs from other species 
B)  how individuals amass personal fortunes in the stock market 
C)  how individuals and nations deal with the problem of scarcity 
D)  role that money plays in the economy 
E)  how goods and services are distributed throughout the world 
A)  how the human race differs from other species 
B)  how individuals amass personal fortunes in the stock market 
C)  how individuals and nations deal with the problem of scarcity 
D)  role that money plays in the economy 
E)  how goods and services are distributed throughout the world

Question 16

As a scientist,an economist's main professional objective is to become wealthy.

Accepted Answer

A) True 
 B)False

Question 17

Some individuals or families can become completely saturated with a service such as television.This suggests that

Accepted Answer

A)  wants are limited 
B)  desires for a single commodity can be satisfied but then the focus will switch to other goods and services 
C)  a highly productive economy may someday be able to satisfy all human desires 
D)  resources are not truly fixed in supply as we generally assume 
E)  scarcity does not exist 
A)  wants are limited 
B)  desires for a single commodity can be satisfied but then the focus will switch to other goods and services 
C)  a highly productive economy may someday be able to satisfy all human desires 
D)  resources are not truly fixed in supply as we generally assume 
E)  scarcity does not exist

Question 18

Economists often focus on average behavior because it is easier to predict.

Accepted Answer

A) True 
 B)False

Question 19

Consumers need information to make good choices.Which of the following is correct regarding this information?

Accepted Answer

A)  Advertising is always harmful to consumers. 
B)  Information is scarce and therefore valuable. 
C)  Brand names offer no informational content. 
D)  Acquiring more information is always rational. 
E)  Marginal analysis does not apply to the acquisition of information. 
A)  Advertising is always harmful to consumers. 
B)  Information is scarce and therefore valuable. 
C)  Brand names offer no informational content. 
D)  Acquiring more information is always rational. 
E)  Marginal analysis does not apply to the acquisition of information.

Question 20

Theory seeks to

Accepted Answer

A)  simplify a complex reality 
B)  confront reality in all its complexity by focusing on the unique aspects of each phenomenon 
C)  explain phenomena without predicting them 
D)  predict phenomena without explaining them 
E)  distort reality in order to improve forecasting ability 
A)  simplify a complex reality 
B)  confront reality in all its complexity by focusing on the unique aspects of each phenomenon 
C)  explain phenomena without predicting them 
D)  predict phenomena without explaining them 
E)  distort reality in order to improve forecasting ability

When economists say that people act as rational decision makers,that means

In economics,marginal means

To tell a compelling story,an economist relies on

The fallacy of composition is the error of believing a cause-effect relationship exists between two events that are associated in time.

An economic model is useful if it

Which of the four types of decision makers in the U.S.economy plays the largest role?

Profit is the payment received by resource owners for the use of their capital.

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

The economic behavior of individual decision makers and the determination of price and output in specific markets are both studied in

The assumption of rational self-interest does not rule out the possibility of concern for other individuals.

As a scientist,an economist's main professional objective is to

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

Your friend notices that U.S.auto production and U.S.population growth have moved together over several decades.He reasons that one way to slow population growth is for the government to order the auto makers to cut back on production.You gently point out to him that he

Economics is the study of

As a scientist,an economist's main professional objective is to become wealthy.

Some individuals or families can become completely saturated with a service such as television.This suggests that

Economists often focus on average behavior because it is easier to predict.

Consumers need information to make good choices.Which of the following is correct regarding this information?

Theory seeks to

Economic Tools and Economics 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

Amonopoly

Monopolistic Competition and Oligopoly

Resource Markets

Labor Markets and Labor Unions

Capital, interest, and Corporate Finance

Transaction Costs, imperfect Information, and Market Behavior

Economic Regulation and Antitrust Policy

Public Goods and Public Choice

Externalities and the Environment

Income Distribution and Poverty

International Trade

International Finance

Developing and Transitional Economies

Filters

Exam 1: The Art and Science of Economic Analysis

When economists say that people act as rational decision makers,that means

In economics,marginal means

To tell a compelling story,an economist relies on

The fallacy of composition is the error of believing a cause-effect relationship exists between two events that are associated in time.

An economic model is useful if it

Which of the four types of decision makers in the U.S.economy plays the largest role?

Profit is the payment received by resource owners for the use of their capital.

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

The economic behavior of individual decision makers and the determination of price and output in specific markets are both studied in

The assumption of rational self-interest does not rule out the possibility of concern for other individuals.

As a scientist,an economist's main professional objective is to

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

Your friend notices that U.S.auto production and U.S.population growth have moved together over several decades.He reasons that one way to slow population growth is for the government to order the auto makers to cut back on production.You gently point out to him that he

Economics is the study of

As a scientist,an economist's main professional objective is to become wealthy.

Some individuals or families can become completely saturated with a service such as television.This suggests that

Economists often focus on average behavior because it is easier to predict.

Consumers need information to make good choices.Which of the following is correct regarding this information?

Theory seeks to

Economic Tools and Economics 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

Amonopoly

Monopolistic Competition and Oligopoly

Resource Markets

Labor Markets and Labor Unions

Capital, interest, and Corporate Finance

Transaction Costs, imperfect Information, and Market Behavior

Economic Regulation and Antitrust Policy

Public Goods and Public Choice

Externalities and the Environment

Income Distribution and Poverty

International Trade

International Finance

Developing and Transitional Economies

Filters