Question 1

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 2

Economists classify all of the following as capital,except one.Which one is not capital?

Accepted Answer

A) a $20 bill in a firm's petty cash drawer 
B) the building where our economics class meets 
C) a plumber's wrench 
D) a railroad car 
E) a factory 
A) a $20 bill in a firm's petty cash drawer 
B) the building where our economics class meets 
C) a plumber's wrench 
D) a railroad car 
E) a factory

Question 3

"There should be less discrimination against the elderly." This is an example of a

Accepted Answer

A) normative statement 
B) positive statement 
C) forecast 
D) hypothesis 
E) prediction 
A) normative statement 
B) positive statement 
C) forecast 
D) hypothesis 
E) prediction

Question 4

Rational economic decision makers will make a change only if

Accepted Answer

A) the change is free of risk 
B) there are no costs involved 
C) their expectations are correct 
D) there is no uncertainty about the results of the change 
E) the expected marginal benefit exceeds expected marginal cost 
A) the change is free of risk 
B) there are no costs involved 
C) their expectations are correct 
D) there is no uncertainty about the results of the change 
E) the expected marginal benefit exceeds expected marginal cost

Question 5

The assumption of rational self-interest means that economic decision makers

Accepted Answer

A) have no concern for the welfare of others 
B) consider the welfare of others to be more important than their own happiness 
C) know with certainty which choice will have the best result 
D) make reasonable decisions based on their expectations of results 
E) do not make incorrect decisions or bad choices 
A) have no concern for the welfare of others 
B) consider the welfare of others to be more important than their own happiness 
C) know with certainty which choice will have the best result 
D) make reasonable decisions based on their expectations of results 
E) do not make incorrect decisions or bad choices

Question 6

"There should be less discrimination against women" is an example of a positive statement.

Accepted Answer

A) True 
 B)False

Question 7

A good or service is considered scarce if

Accepted Answer

A) any quantity of it can be consumed at a zero price 
B) the amount people desire exceeds the amount available at a zero price 
C) the amount people desire exceeds the amount available at any price 
D) the amount people desire is less than the amount available at any price 
E) the amount people desire is less than the amount available at a zero price 
A) any quantity of it can be consumed at a zero price 
B) the amount people desire exceeds the amount available at a zero price 
C) the amount people desire exceeds the amount available at any price 
D) the amount people desire is less than the amount available at any price 
E) the amount people desire is less than the amount available at a zero price

Question 8

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 9

The case study on Japanese vending machines is a story that teaches us

Accepted Answer

A) how a less expensive resource (vending machines)can be substituted for a more expensive resource (labor) 
B) how a more expensive resource (vending machines)can be substituted for a less expensive resource (capital) 
C) how technological innovations (such as vending machines)can eliminate jobs 
D) that machines are starting to dominate our lives 
E) how a technological unsophisticated economy can begin to use machinery 
A) how a less expensive resource (vending machines)can be substituted for a more expensive resource (labor) 
B) how a more expensive resource (vending machines)can be substituted for a less expensive resource (capital) 
C) how technological innovations (such as vending machines)can eliminate jobs 
D) that machines are starting to dominate our lives 
E) how a technological unsophisticated economy can begin to use machinery

Question 10

Japan has more vending machines per capita than any other country in the world.One explanation for this phenomenon is that

Accepted Answer

A) vending machines are expensive in Japan 
B) the Japanese sales clerks' union requires that vending machines be used wherever possible 
C) labor is scarce in Japan,and vending machines help conserve on labor 
D) labor is abundant in Japan,and vending machines help conserve on labor 
E) vending machines were invented in Japan 
A) vending machines are expensive in Japan 
B) the Japanese sales clerks' union requires that vending machines be used wherever possible 
C) labor is scarce in Japan,and vending machines help conserve on labor 
D) labor is abundant in Japan,and vending machines help conserve on labor 
E) vending machines were invented in Japan

Question 11

Economists tell stories -- like the vending machine story --

Accepted Answer

A) in order to breathe life into economic theory and personalize abstract ideas 
B) because economics is an art,not a science 
C) as a way of rigorously testing economic theory 
D) because doing so is a required part of the scientific method 
E) to show how their theory can predict at least one real-world situation 
A) in order to breathe life into economic theory and personalize abstract ideas 
B) because economics is an art,not a science 
C) as a way of rigorously testing economic theory 
D) because doing so is a required part of the scientific method 
E) to show how their theory can predict at least one real-world situation

Question 12

An economic model

Accepted Answer

A) always has a mathematical foundation 
B) can never be proven wrong 
C) can be constructed for an individual economic unit but not for the economy as a whole 
D) is a simplification of the real world 
E) can be constructed for the economy as a whole but not for an individual economic unit 
A) always has a mathematical foundation 
B) can never be proven wrong 
C) can be constructed for an individual economic unit but not for the economy as a whole 
D) is a simplification of the real world 
E) can be constructed for the economy as a whole but not for an individual economic unit

Question 13

The problem of scarce resources

Accepted Answer

A) means that in some cities there are not enough jobs 
B) could be solved if the unemployment rate fell 
C) is that there are not enough resources to satisfy people's unlimited wants 
D) is that resources are used inefficiently 
E) can be solved by lowering taxes 
A) means that in some cities there are not enough jobs 
B) could be solved if the unemployment rate fell 
C) is that there are not enough resources to satisfy people's unlimited wants 
D) is that resources are used inefficiently 
E) can be solved by lowering taxes

Question 14

The basic purpose of economic models is to

Accepted Answer

A) construct simplifying assumptions about the real world 
B) explain reality in all its complexity 
C) collect empirical data to support the facts 
D) construct situations where controlled experiments can be carried out 
E) provide explanations for,and predictions of,economic events 
A) construct simplifying assumptions about the real world 
B) explain reality in all its complexity 
C) collect empirical data to support the facts 
D) construct situations where controlled experiments can be carried out 
E) provide explanations for,and predictions of,economic events

Question 15

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 16

An economic model

Accepted Answer

A) omits critical elements 
B) must be presented in mathematical terms 
C) simplifies reality in order to focus on its essential elements 
D) can never be proven wrong if its assumptions are realistic 
E) produces poor predictions if it includes an unrealistic assumption 
A) omits critical elements 
B) must be presented in mathematical terms 
C) simplifies reality in order to focus on its essential elements 
D) can never be proven wrong if its assumptions are realistic 
E) produces poor predictions if it includes an unrealistic assumption

Question 17

Unlike a "service," a "good"

Accepted Answer

A) is desirable 
B) uses resources to satisfy wants 
C) is physical and tangible 
D) is abundant and free 
E) is a resource 
A) is desirable 
B) uses resources to satisfy wants 
C) is physical and tangible 
D) is abundant and free 
E) is a resource

Question 18

When labor is relatively expensive,as it is in Japan,

Accepted Answer

A) manufacturers will employ lots of labor 
B) the unemployment rate will be high 
C) vending machines displace labor,causing unemployment 
D) businesses will substitute capital -- such as vending machines -- in place of labor 
E) alcohol and cigarettes must be sold through vending machines 
A) manufacturers will employ lots of labor 
B) the unemployment rate will be high 
C) vending machines displace labor,causing unemployment 
D) businesses will substitute capital -- such as vending machines -- in place of labor 
E) alcohol and cigarettes must be sold through vending machines

Question 19

One might commit the fallacy of composition by concluding that

Accepted Answer

A) statements that are true during prosperity are necessarily true during depression 
B) what is good for the individual is necessarily good for the group 
C) an event that precedes another is necessarily the cause of the latter 
D) intentions need not coincide with actions 
E) the composition of a complex product is not revealed by its exterior appearance 
A) statements that are true during prosperity are necessarily true during depression 
B) what is good for the individual is necessarily good for the group 
C) an event that precedes another is necessarily the cause of the latter 
D) intentions need not coincide with actions 
E) the composition of a complex product is not revealed by its exterior appearance

Question 20

The expression "There's no such thing as a free lunch" means

Accepted Answer

A) that even if the lunch is free,we pay for it in extra calories 
B) that resources used up in producing the lunch are not available to satisfy other wants 
C) the same thing as "The best things in life are free" 
D) you can eat only if you work first 
E) neither sea water nor air is free 
A) that even if the lunch is free,we pay for it in extra calories 
B) that resources used up in producing the lunch are not available to satisfy other wants 
C) the same thing as "The best things in life are free" 
D) you can eat only if you work first 
E) neither sea water nor air is free

Exam 1: The Art and Science of Economic Analysis

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

Economists classify all of the following as capital,except one.Which one is not capital?

"There should be less discrimination against the elderly." This is an example of a

Rational economic decision makers will make a change only if

The assumption of rational self-interest means that economic decision makers

"There should be less discrimination against women" is an example of a positive statement.

A good or service is considered scarce if

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

The case study on Japanese vending machines is a story that teaches us

Japan has more vending machines per capita than any other country in the world.One explanation for this phenomenon is that

Economists tell stories -- like the vending machine story --

An economic model

The problem of scarce resources

The basic purpose of economic models is to

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

An economic model

Unlike a "service," a "good"

When labor is relatively expensive,as it is in Japan,

One might commit the fallacy of composition by concluding that

The expression "There's no such thing as a free lunch" means

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

Filters