Question 1

Households ________ factors of production and ________ goods and services.

Accepted Answer

A) supply;demand 
B) supply;supply 
C) demand;supply 
D) demand;demand 
A) supply;demand 
B) supply;supply 
C) demand;supply 
D) demand;demand

Question 2

What is a marginal benefit?

Accepted Answer

Marginal benefit is

Question 3

What does the term "marginal" mean in economics?

Accepted Answer

A) the edge of a market 
B) an additional or extra 
C) illegal 
D) secondary 
E) trivial 
A) the edge of a market 
B) an additional or extra 
C) illegal 
D) secondary 
E) trivial

Question 4

Policies based on normative economic ideas tend to increase economic efficiency and improve equity.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following best describes an assumption economists make about human behavior?

Accepted Answer

A) They assume that individuals act rationally all the time in all circumstances. 
B) They assume that rational behavior is useful in explaining choices people make even though people may not behave rationally all the time. 
C) They assume that people take into account the question of fairness in all decisions they make. 
D) They assume that individuals act randomly. 
A) They assume that individuals act rationally all the time in all circumstances. 
B) They assume that rational behavior is useful in explaining choices people make even though people may not behave rationally all the time. 
C) They assume that people take into account the question of fairness in all decisions they make. 
D) They assume that individuals act randomly.

Question 6

As population declines,scarcity eventually disappears.

Accepted Answer

A) True 
 B)False

Question 7

A university must decide if it should stop offering foreign language classes.This decision involves answering the economic question of "how to produce."

Accepted Answer

A) True 
 B)False

Question 8

Suppose that to increase sales of hybrid vehicles,auto manufacturers are offering large cash incentives.This is an example of a macroeconomic topic.

Accepted Answer

A) True 
 B)False

Question 9

In the United States in 2012,the CDC estimated that the total number of people with diabetes (both diagnosed and undiagnosed cases)was highest for people in the age range of ________,and the percentage of people with diabetes was highest for people in the age range of ________.

Accepted Answer

A) 20-44;45-64 
B) 45-64;65 and older 
C) 65 and older;65 and older 
D) 65 and older;20-44 
A) 20-44;45-64 
B) 45-64;65 and older 
C) 65 and older;65 and older 
D) 65 and older;20-44

Question 10

Macroeconomics is the study of

Accepted Answer

A) how households make choices. 
B) how firms make choices. 
C) how households and firms make choices. 
D) the economy as a whole. 
A) how households make choices. 
B) how firms make choices. 
C) how households and firms make choices. 
D) the economy as a whole.

Question 11

If the price of milk was $2.50 a gallon and it is now $3.25 a gallon,what is the percentage change in price?

Accepted Answer

A) 13 percent 
B) 30 percent 
C) 75 percent 
D) 77 percent 
A) 13 percent 
B) 30 percent 
C) 75 percent 
D) 77 percent

Question 12

The development of a new good or a new process for making a good is called

Accepted Answer

A) an innovation. 
B) an invention. 
C) a factor of production. 
D) a service. 
A) an innovation. 
B) an invention. 
C) a factor of production. 
D) a service.

Question 13

Scarcity is a problem that will eventually disappear as technology advances.

Accepted Answer

A) True 
 B)False

Question 14

How are most fundamental economic decisions now determined in China?

Accepted Answer

A) Individuals,firms,and the government interact in a market to make these economic decisions. 
B) These decisions are made by the country's elders who have had much experience in answering these questions. 
C) The government decides because China is a centrally planned economy. 
D) The United Nations decides because China is a developing economy. 
A) Individuals,firms,and the government interact in a market to make these economic decisions. 
B) These decisions are made by the country's elders who have had much experience in answering these questions. 
C) The government decides because China is a centrally planned economy. 
D) The United Nations decides because China is a developing economy.

Question 15

The basic economic problem of scarcity

Accepted Answer

A) has always existed and will continue to exist. 
B) will eventually disappear as technology continues to advance. 
C) is a problem only in developing economies. 
D) does not apply to the wealthy in society. 
A) has always existed and will continue to exist. 
B) will eventually disappear as technology continues to advance. 
C) is a problem only in developing economies. 
D) does not apply to the wealthy in society.

Question 16

In market economies,income distribution is always going to be completely equitable.

Accepted Answer

A) True 
 B)False

Question 17

Marginal analysis involves undertaking an activity

Accepted Answer

A) until its marginal costs start declining. 
B) only when its marginal benefits are positive. 
C) until its marginal benefits equal marginal costs. 
D) only if its marginal costs are greater than its marginal benefits. 
A) until its marginal costs start declining. 
B) only when its marginal benefits are positive. 
C) until its marginal benefits equal marginal costs. 
D) only if its marginal costs are greater than its marginal benefits.

Question 18

By definition,economics is the study of

Accepted Answer

A) how to make money in the stock market. 
B) how to make money in a market economy. 
C) the choices people make to attain their goals,given their scarce resources. 
D) supply and demand. 
A) how to make money in the stock market. 
B) how to make money in a market economy. 
C) the choices people make to attain their goals,given their scarce resources. 
D) supply and demand.

Question 19

The study of economics arises due to

Accepted Answer

A) money. 
B) scarcity. 
C) greed. 
D) resources. 
A) money. 
B) scarcity. 
C) greed. 
D) resources.

Question 20

Scenario 1-1
Suppose a cell phone manufacturer currently sells 20,000 cell phones per week and makes a profit of $5,000 per week.A manager at the plant observes,"Although the last 3,000 cell phones we produced and sold increased our revenue by $6,000 and our costs by $6,700,we are still making an overall profit of $5,000 per week so I think we're on the right track.We are producing the optimal number of cell phones."
-Refer to Scenario 1-1.Using marginal analysis terminology,what is another economic term for the incremental revenue received from the sale of the last 3,000 cell phones?

Accepted Answer

A) gross earnings 
B) marginal revenue 
C) sales revenue 
D) gross profit 
A) gross earnings 
B) marginal revenue 
C) sales revenue 
D) gross profit

Exam 1: Economics: Foundations and Models

Households ________ factors of production and ________ goods and services.

What is a marginal benefit?

What does the term "marginal" mean in economics?

Policies based on normative economic ideas tend to increase economic efficiency and improve equity.

Which of the following best describes an assumption economists make about human behavior?

As population declines,scarcity eventually disappears.

A university must decide if it should stop offering foreign language classes.This decision involves answering the economic question of "how to produce."

Suppose that to increase sales of hybrid vehicles,auto manufacturers are offering large cash incentives.This is an example of a macroeconomic topic.

In the United States in 2012,the CDC estimated that the total number of people with diabetes (both diagnosed and undiagnosed cases)was highest for people in the age range of ________,and the percentage of people with diabetes was highest for people in the age range of ________.

Macroeconomics is the study of

If the price of milk was $2.50 a gallon and it is now $3.25 a gallon,what is the percentage change in price?

The development of a new good or a new process for making a good is called

Scarcity is a problem that will eventually disappear as technology advances.

How are most fundamental economic decisions now determined in China?

The basic economic problem of scarcity

In market economies,income distribution is always going to be completely equitable.

Marginal analysis involves undertaking an activity

By definition,economics is the study of

The study of economics arises due to

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, government Price Setting, and Taxes

Externalities, environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms,the Stock Market,and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology,production,and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, taxes, and the Distribution of Income

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money,banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

Households factors of production and goods and services.

In the United States in 2012,the CDC estimated that the total number of people with diabetes (both diagnosed and undiagnosed cases)was highest for people in the age range of ,and the percentage of people with diabetes was highest for people in the age range of .