Question 1

Considering both product markets and resource markets,most economic decision makers participate in the economy as both buyers and sellers.

Accepted Answer

A) True 
 B)False

Question 2

Households

Accepted Answer

A) own and sell resources 
B) play a very minor role in the economy 
C) supply goods and services 
D) are the largest purchasers of resources 
E) none of the above 
A) own and sell resources 
B) play a very minor role in the economy 
C) supply goods and services 
D) are the largest purchasers of resources 
E) none of the above

Question 3

Choices made by economic decision makers

Accepted Answer

A) are government decisions only 
B) are the primary focus of economics 
C) are not important in economic analysis 
D) occur infrequently 
E) do not involve ordinary citizens 
A) are government decisions only 
B) are the primary focus of economics 
C) are not important in economic analysis 
D) occur infrequently 
E) do not involve ordinary citizens

Question 4

Scarcity is best defined as

Accepted Answer

A) unlimited resources 
B) a shortage -- when buyers cannot obtain the goods they want 
C) a surplus -- when sellers cannot sell the goods they produce 
D) insufficient resources to satisfy unlimited wants 
E) the private ownership of society's resources 
A) unlimited resources 
B) a shortage -- when buyers cannot obtain the goods they want 
C) a surplus -- when sellers cannot sell the goods they produce 
D) insufficient resources to satisfy unlimited wants 
E) the private ownership of society's resources

Question 5

Resources are used only in the production of goods,not services.

Accepted Answer

A) True 
 B)False

Question 6

The existence of scarcity as defined by economists means that

Accepted Answer

A) societies are inefficiently organized 
B) people are irrational 
C) societies must make choices of how to use their resources 
D) resources are non-renewable 
E) people are greedy 
A) societies are inefficiently organized 
B) people are irrational 
C) societies must make choices of how to use their resources 
D) resources are non-renewable 
E) people are greedy

Question 7

According to a 2011 PayScale.com survey,the college majors that have the highest median earnings are ones that require quantitative and analytical skills.

Accepted Answer

A) True 
 B)False

Question 8

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

Question 9

An economist would classify 100 shares of Apple Computer stock as capital.

Accepted Answer

A) True 
 B)False

Question 10

The study of how nations deal with the problem of scarcity is the domain of

Accepted Answer

A) economics 
B) political science 
C) sociology 
D) political economy 
E) anthropology 
A) economics 
B) political science 
C) sociology 
D) political economy 
E) anthropology

Question 11

Economics

Accepted Answer

A) studies human behavior when scarcity exists and choices must be made 
B) provides the only reasonable explanation of how people make decisions 
C) can accurately explain all human behavior since it is based on the assumption of rationality 
D) is better at showing the way things ought to be than the other social sciences are 
E) is the only social science that can explain the existence and behavior of public institutions 
A) studies human behavior when scarcity exists and choices must be made 
B) provides the only reasonable explanation of how people make decisions 
C) can accurately explain all human behavior since it is based on the assumption of rationality 
D) is better at showing the way things ought to be than the other social sciences are 
E) is the only social science that can explain the existence and behavior of public institutions

Question 12

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 13

An entrepreneur

Accepted Answer

A) always makes a profit 
B) starts with an idea,organizes the resources to bring the idea to life and assumes the risk of profit or loss 
C) always avoids risk 
D) is a parasite that benefits by not paying other resources for their services 
E) is the manager who runs an enterprise and keeps the customers happy 
A) always makes a profit 
B) starts with an idea,organizes the resources to bring the idea to life and assumes the risk of profit or loss 
C) always avoids risk 
D) is a parasite that benefits by not paying other resources for their services 
E) is the manager who runs an enterprise and keeps the customers happy

Question 14

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

Accepted Answer

A) True 
 B)False

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 you can only get away from it all by going to Fairbanks,everyone who needs to get away should go to Fairbanks. 
C) If the quickest way to get off a sinking ship is to run to the nearest lifeboat,all the passengers should do this. 
D) If the best TV reception can be gotten with a Couch Potato antenna,then everyone should have a Couch Potato antenna. 
E) If I can get a better view by standing up at the baseball game,everyone gets a better view by standing up. 
A) If I can get to work fastest by taking the interstate,so can everyone else. 
B) If you can only get away from it all by going to Fairbanks,everyone who needs to get away should go to Fairbanks. 
C) If the quickest way to get off a sinking ship is to run to the nearest lifeboat,all the passengers should do this. 
D) If the best TV reception can be gotten with a Couch Potato antenna,then everyone should have a Couch Potato antenna. 
E) If I can get a better view by standing up at the baseball game,everyone gets a better view by standing up.

Question 16

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 17

To say that people make marginal decisions means that

Accepted Answer

A) they usually wait until the last minute before making a decision to buy 
B) they weigh the additional costs and additional benefits of various activities before they make a decision 
C) most people just barely get by on the incomes they earn and live from day to day on the very edge of subsistence 
D) given a choice,most people would prefer to make their own decisions concerning the things that affect their lives 
E) they consider the total cost and benefit of various activities before they make a purchase 
A) they usually wait until the last minute before making a decision to buy 
B) they weigh the additional costs and additional benefits of various activities before they make a decision 
C) most people just barely get by on the incomes they earn and live from day to day on the very edge of subsistence 
D) given a choice,most people would prefer to make their own decisions concerning the things that affect their lives 
E) they consider the total cost and benefit of various activities before they make a purchase

Question 18

The difference between a positive economic statement and a normative statement is that

Accepted Answer

A) a positive statement must be true; a normative statement is often not true 
B) a normative statement must be true; a positive statement is often not true 
C) a positive statement can be verified; a normative statement cannot 
D) a normative statements can be verified; a positive statement cannot 
E) a positive economic statement is a moral judgment; a normative economic statement is not a moral judgment 
A) a positive statement must be true; a normative statement is often not true 
B) a normative statement must be true; a positive statement is often not true 
C) a positive statement can be verified; a normative statement cannot 
D) a normative statements can be verified; a positive statement cannot 
E) a positive economic statement is a moral judgment; a normative economic statement is not a moral judgment

Question 19

Which of the following is the fundamental resource that is the basis of labor?

Accepted Answer

A) capital 
B) natural resources 
C) time 
D) money 
E) entrepreneurial ability 
A) capital 
B) natural resources 
C) time 
D) money 
E) entrepreneurial ability

Question 20

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

Exam 1: The Art and Science of Economic Analysis

Considering both product markets and resource markets,most economic decision makers participate in the economy as both buyers and sellers.

Households

Choices made by economic decision makers

Scarcity is best defined as

Resources are used only in the production of goods,not services.

The existence of scarcity as defined by economists means that

According to a 2011 PayScale.com survey,the college majors that have the highest median earnings are ones that require quantitative and analytical skills.

Theory seeks to

An economist would classify 100 shares of Apple Computer stock as capital.

The study of how nations deal with the problem of scarcity is the domain of

Economics

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.

An entrepreneur

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

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

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

To say that people make marginal decisions means that

The difference between a positive economic statement and a normative statement is that

Which of the following is the fundamental resource that is the basis of labor?

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

Economic Tools and Economics Systems

Economic Decision Makers

Demand, supply, and Markets

Introduction to Macroeconomics

Tracking the Useconomy

Unemployment and Inflation

Productivity and Growth

Aaggregate Expenditure and Aggregate Demand

Baggregate Expenditure and Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy

Macro Policy Debate: Active or Passive

International Trade

Externalities and the Environment

International Finance

Economic Development

understanding Graphs

National Income Accounts

The Algebra of Demand-Side Equilibrium

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