Deck 1: Economics and Institutions: a Shift of Emphasis

Question 1

The optimal way for Santa Claus to allocate presents to children depends on the incremental happiness that each dollar allocated to a child brings.

Answer 1

True

Question 2

Incremental happiness is

A) an example of normative economics
B) impossible to achieve
C) the optimal economic way for parents to allocate their funds between their children

Answer 2

the optimal economic way for parents to allocate their funds between their children

Question 3

One type of institution is

A) perfectly competitive markets
B) perfectly and imperfectly competitive markets
C) imperfectly competitive markets

Answer 3

perfectly and imperfectly competitive markets

Question 4

Which of the following is not an example of an institution that shapes the life of an executive?

A) expressways
B) happiness
C) insurance companies

Question 5

Though different, Japanese and U.S. compensation systems serve the same purpose, which is

A) to pay the highest salaries possible
B) to motivate employees at work
C) to pay the lowest bonuses possible

Question 6

Property rights enhance the efficiency of economic activities by giving people the appropriate incentives to manage what would otherwise be common resources.

Question 7

A statement that we should increase the minimum wage is an example of positive economics.

Question 8

Which question is least important to institutional microeconomists?

A) the allocative role of markets
B) how markets come into being in the first place
C) how markets can be designed to increase economic welfare

Question 9

Because other societies faced with the same problems have found different solutions, clearly some institutional arrangements are arbitrary.

Question 10

The type of economics that deals with prescriptive statements is

A) positive
B) medical
C) normative (welfare)

Question 11

Which of the following is an institutional process that a family could use to make allocation decisions?

A) dictatorial
B) democratic
C) market-based
D) All the answers are correct

Question 12

How do individuals, in an attempt to maximize their own self-interest, create a set of economic institutions that structure their daily lives is a question for

A) macroeconomics
B) fiscal policy economics
C) microeconomics

Question 13

The positive question of modern institutional economics is why we have the current set of institutions.

Question 14

Economic models are abstract representations of reality that economists use to study economic and social phenomena.

Question 15

Conventions developed by a society to help it resolve recurrent economic problems are called economic models.

Question 16

Which of the following questions is an example of institutional arrangements?

A) Why does the government allow only one utility company to deliver electricity in an area?
B) Why do most committees make their decisions by a simple majority vote?
C) Why can't consumers in Washington state buy locally grown apples?
D) All of the answers is correct
E) None of the answers is correct

Question 17

The type of economics that deals with descriptive statements is

A) welfare
B) positive
C) normative

Question 18

The study of games of strategy and the strategic interactions that such games reveal is known as game theory.

Question 19

Microeconomics asks how individuals create a set of economic institutions to maximize their self-interest.

Question 20

Laura Ramos developed an economic theory and tested it in a lab experiment. The lab data did not match the behavior predicted by her theory. Laura should rethink the validity of her theory.

Question 21

Abstract representations of reality used by economists to study economic and social phenomena are called

A) fashion models
B) economic models
C) model homes

Question 22

To understand how Sony, Toshiba, and Panasonic use prices to compete in the consumer electronics market, economists might use

A) game theory
B) physics
C) international diplomacy

Question 23

A natural monopoly is a situation that occurs

A) when an exotic plant kills off locals plants
B) in industries where the cheapest way to obtain a given quantity of output is to have only one firm produce it
C) Both answers are correct

Question 24

Should students accept the predictions of economic models?

Question 25

Decisions that are typically made at one pont in time are

A) always easy
B) static
C) dynamic

Question 26

When Brenda takes out a mortgage and does not know if her house's price will go up or down, she faces

A) certainty
B) a guaranteed way to get rich
C) uncertainty

Question 27

If producers and consumers are not fully knowledgeable about the characteristics of all products produced and consumed in the economy, the people suffer from

A) incomplete information
B) total ignorance
C) perfect information

Question 28

Economic institutions are

A) sets of rules created to govern athletic games
B) a society's conventions that help resolve recurrent economic problems
C) abstract representations of reality that economists use in their studies

Question 29

Why begin the study of market structures with perfect competition?

Question 30

A type of economic model is a(n)

A) mathematical model
B) analogy
C) Both answers are correct

Question 31

Which of the following is not an institution?

A) the practice of tipping the person who cuts your hair
B) a set of mathematical equations to represent each segment of an economy
C) the set of rules that specifying how your state legislature makes decisions

Question 32

What problems are solved by the institution of a state?

Question 33

An economics classroom has a very happy student. Every compliment from the professor makes this student exquisitely happy. There is also a morose student who rejects every compliment. What economic principle could the professor use to allocate compliments between these two students?

Question 34

The best measure of how good an economic theory is how

A) elegant its mathematics equations are
B) many people believe it
C) well it explains the real world

Question 35

One concern about using real-world data to estimate key parameters of economic models is that the data is collected by agencies that are

A) political
B) scientific
C) theoretical

Question 36

What are the advantages of using analogies as economic models?

Question 37

If Mark Kimura develops an economic theory, but cannot observe the predicted behavior during lab experiments, he should

A) ignore the results and stick with his idea
B) rethink the validity of the theory
C) keep running the lab experiments and hope for different resutls

Question 38

In economics, a free ride is

A) enjoying a public good paid for by others
B) jumping the turnstile at the subway
C) enjoying a private good paid for by others

Question 39

If social agents find all the food they need growing on trees and the only decision that the agents must make is is how much time to spend picking fruit versus relaxing, the agents live in a(n)

A) primitive state of confusion
B) primitive state of nature
C) industrialized state of nature

Question 40

Equations that represent each segment of an economy and the interaction of the equations is known as a(n)

A) analogy
B) mathematical model
C) economic institution