Question 1

You have decided that you want to attend a costume party as Iron Man.You estimate that it will cost $40 to assemble your costume.After spending $40 on the costume,you realize that the additional pieces you need will cost you $25 more.The marginal cost of completing the costume is

Accepted Answer

A) $15. 
B) $25. 
C) $40. 
D) $65.

Question 2

Related to the Economics in Practice on p.10: Prior to joining a fraternity,James spent most of his evenings and weekends studying for his classes.Once he joined the fraternity,James spent a majority of his evenings and weekends going to parties.This change in behavior is best described by

Accepted Answer

A) the fallacy of composition. 
B) the post hoc ergo propter hoc fallacy. 
C) the problem of causality. 
D) the ceteris paribus error.

Question 3

Refer to the information provided in Figure 1.1 below to answer the questions that follow.  Figure 1.1
-Refer to Figure 1.1.There is ________ relationship between the daily temperature and the number of gallons of ice cream purchased.

Accepted Answer

A) a negative 
B) a positive 
C) both a negative and a positive 
D) an inverse

Question 4

The mistake of inferring causality from two events happening one after the other is called

Accepted Answer

A) the post hoc,ergo propter hoc fallacy. 
B) the fallacy of composition. 
C) Ockham's razor. 
D) the fallacy of co-dependence.

Question 5

Dividing the change in quantity on the Y axis by the change in quantity on the X axis calculates the slope of a line.

Accepted Answer

A) True 
 B)False

Question 6

The economy was expanding during all of the years that I was a student,but as soon as I graduated,the economy contracted.Therefore,the labor market was waiting until I started looking for a job to contract.This statement is an example of

Accepted Answer

A) ceteris paribus fallacy. 
B) post hoc,ergo propter hoc fallacy. 
C) fallacy of composition. 
D) fallacy of inductive reasoning.

Question 7

I have lived in a house on the Mississippi River for many years and have never seen a flood.Therefore,there is no reason for anyone to buy flood insurance.This statement is an example of

Accepted Answer

A) fallacy of composition. 
B) post hoc,ergo propter hoc fallacy. 
C) fallacy of inductive reasoning. 
D) ceteris paribus fallacy.

Question 8

A government policy that tries to minimize inflation and unemployment can best be described as trying to achieve economic

Accepted Answer

A) efficiency. 
B) equity. 
C) profitability. 
D) stability.

Question 9

The value of the best alternative foregone is the opportunity cost of making a decision.

Accepted Answer

A) True 
 B)False

Question 10

Related to the Economics in Practice on p.5: The opportunity cost to Mattel of having its Barbie doll assembled in China is

Accepted Answer

A) the low wages paid to Chinese workers. 
B) the $2 export value the doll carries when it leaves Hong Kong. 
C) the $8 of its $10 retail value which is captured in the United States. 
D) having the Barbie doll assembled in the next best available location.

Question 11

Experimental research in small cities suggests that mandating work for welfare recipients increases their income.Therefore,we should mandate work requirements for all welfare recipients.This statement is an example of

Accepted Answer

A) fallacy of inductive reasoning. 
B) ceteris paribus fallacy. 
C) fallacy of composition. 
D) post hoc,ergo propter hoc fallacy.

Question 12

Refer to the information provided in Figure 1.5 below to answer the questions that follow.  Figure 1.5
-Refer to Figure 1.5.Which of the curves has a slope that is positive and decreasing?

Accepted Answer

A) A 
B) B 
C) C 
D) D

Question 13

Refer to the information provided in Figure 1.2 below to answer the questions that follow.  Figure 1.2
-Refer to Figure 1.2.The slope of the line between Points A and B is

Accepted Answer

A) 0.4. 
B) 1.2. 
C) 2.5. 
D) indeterminate from this information.

Question 14

The Latin phrase economists use that means all else equal is

Accepted Answer

A) ceteris paribus. 
B) cogito ergo sum. 
C) carpe diem. 
D) caveat emptor.

Question 15

A measure that can change from observation to observation is known as a(n)

Accepted Answer

A) empirical measure. 
B) model. 
C) causality. 
D) variable.

Question 16

The reason that opportunity costs arise is that

Accepted Answer

A) an economy relies on money to facilitate exchange of goods and services. 
B) resources are scarce. 
C) there are no alternative decisions that could be made. 
D) people have limited wants.

Question 17

A market is considered efficient if profit opportunities remain continually available.

Accepted Answer

A) True 
 B)False

Question 18

Refer to the information provided in Figure 1.3 below to answer the questions that follow.  Figure 1.3
-Refer to Figure 1.3.At Point A the slope of the line is 3,so at Point D the slope would be

Accepted Answer

A) greater than 3. 
B) less than 3. 
C) equal to 3. 
D) indeterminate from this information.

Question 19

An efficient market is characterized by the fact that

Accepted Answer

A) output is steady or growing and there is low inflation. 
B) profit opportunities are eliminated almost instantaneously. 
C) there are no opportunity costs. 
D) wealth is distributed fairly.

Question 20

Refer to the information provided in Figure 1.4 below to answer the questions that follow.  Figure 1.4
-Refer to Figure 1.4.At Point E in panel A,the slope is

Accepted Answer

A) zero. 
B) infinite. 
C) negative. 
D) indeterminate from this information.

Exam 1: The Scope and Method of Economics

You have decided that you want to attend a costume party as Iron Man.You estimate that it will cost $40 to assemble your costume.After spending $40 on the costume,you realize that the additional pieces you need will cost you $25 more.The marginal cost of completing the costume is

Related to the Economics in Practice on p.10: Prior to joining a fraternity,James spent most of his evenings and weekends studying for his classes.Once he joined the fraternity,James spent a majority of his evenings and weekends going to parties.This change in behavior is best described by

Refer to the information provided in Figure 1.1 below to answer the questions that follow. Figure 1.1 -Refer to Figure 1.1.There is ________ relationship between the daily temperature and the number of gallons of ice cream purchased.

The mistake of inferring causality from two events happening one after the other is called

Dividing the change in quantity on the Y axis by the change in quantity on the X axis calculates the slope of a line.

The economy was expanding during all of the years that I was a student,but as soon as I graduated,the economy contracted.Therefore,the labor market was waiting until I started looking for a job to contract.This statement is an example of

I have lived in a house on the Mississippi River for many years and have never seen a flood.Therefore,there is no reason for anyone to buy flood insurance.This statement is an example of

A government policy that tries to minimize inflation and unemployment can best be described as trying to achieve economic

The value of the best alternative foregone is the opportunity cost of making a decision.

Related to the Economics in Practice on p.5: The opportunity cost to Mattel of having its Barbie doll assembled in China is

Experimental research in small cities suggests that mandating work for welfare recipients increases their income.Therefore,we should mandate work requirements for all welfare recipients.This statement is an example of

Refer to the information provided in Figure 1.5 below to answer the questions that follow. Figure 1.5 -Refer to Figure 1.5.Which of the curves has a slope that is positive and decreasing?

Refer to the information provided in Figure 1.2 below to answer the questions that follow. Figure 1.2 -Refer to Figure 1.2.The slope of the line between Points A and B is

The Latin phrase economists use that means all else equal is

A measure that can change from observation to observation is known as a(n)

The reason that opportunity costs arise is that

A market is considered efficient if profit opportunities remain continually available.

Refer to the information provided in Figure 1.3 below to answer the questions that follow. Figure 1.3 -Refer to Figure 1.3.At Point A the slope of the line is 3,so at Point D the slope would be

An efficient market is characterized by the fact that

Refer to the information provided in Figure 1.4 below to answer the questions that follow. Figure 1.4 -Refer to Figure 1.4.At Point E in panel A,the slope is