Question 1

Refer to the information provided in Figure 1.5 below to answer the questions that follow.  Figure 1.5
-If the slope of a straight line is -2. and if X (the variable on the horizontal axis) decreases by 8, then Y (the variable on the vertical axis) will

Accepted Answer

A)  increase by 4. 
B)  decrease by 4. 
C)  increase by 16. 
D)  decrease by 16.

Question 2

Which of the following is a question answered with positive economic analysis?

Accepted Answer

A)  Should the college offer free parking for students? 
B)  Should the college provide more financial aid assistance? 
C)  If the college increased tuition, will class size decline? 
D)  Should the college cut tuition to stimulate enrollment?

Question 3

Opportunity cost is

Accepted Answer

A)  the additional cost incurred from the consumption of one more unit of output. 
B)  the cost involved when choosing between alternatives. 
C)  the cost of production which cannot be recaptured. 
D)  the total cost incurred from the consumption of additional output.

Question 4

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 5

Stability implies a steady rate of economic growth and low inflation.

Accepted Answer

A) True 
 B)False

Question 6

The study of how benefits are determined for city employees would be considered

Accepted Answer

A)  microeconomics. 
B)  macroeconomics. 
C)  descriptive economics. 
D)  institutional economics.

Question 7

Whenever the Democrats gain control of the Congress, spending on social programs increases; whenever Republicans gain control of the Congress, spending on defense increases. Hence, we know what the next party in control will do. This statement is an example of the

Accepted Answer

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

Question 8

Refer to the information provided in Figure 1.3 below to answer the questions that follow.  Figure 1.3
-Refer to Figure 1.3. The slope of the line between Points D and C is

Accepted Answer

A)  -3. 
B)  -0.33. 
C)  0.33. 
D)  3.

Question 9

The phrase "there's no such thing as a free lunch" is a common way of expressing the concept of efficient markets.

Accepted Answer

A) True 
 B)False

Question 10

A change in economic output is ________ if the value of the resulting gains exceeds the value of the resulting losses.

Accepted Answer

A)  potentially efficient 
B)  always efficient 
C)  always inefficient 
D)  irrelevant

Question 11

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 12

The rate of economic growth is a topic of microeconomics.

Accepted Answer

A) True 
 B)False

Question 13

Related to the Economics in Practice on page 5: According to the Economics in Practice, a majority of the $10 retail value of the Barbie doll

Accepted Answer

A)  is needed to pay for the cost of the Taiwanese plastic used to make the dolls. 
B)  pays for the Chinese labor used to assemble the doll. 
C)  is captured in the United States. 
D)  goes to the Japanese manufacturer of the hair which is used for the dolls.

Question 14

You own American Sniper on DVD. The opportunity cost of watching this DVD for the fourth time

Accepted Answer

A)  is zero, since you own it. 
B)  is one-fourth the cost of the DVD, as this is the fourth time you have watched it. 
C)  is the value of the alternative use of the time you spend watching the DVD. 
D)  must be the same as the opportunity cost of watching it the first time.

Question 15

Which of the following is an example of a positive statement?

Accepted Answer

A)  There should be no unemployment in an advanced industrial society. 
B)  Higher prices cause consumers to purchase less. 
C)  Consumption should be distributed fairly in society. 
D)  People should pollute as little as possible.

Question 16

The post hoc, ergo propter hoc fallacy is the belief that

Accepted Answer

A)  if Event A happens before Event B happens, then Event A causes Event B to occur. 
B)  what is true for the whole is necessarily true of the parts. 
C)  what is true for a part is necessarily true for the whole. 
D)  it is impossible to draw generalizations about cause and effect.

Question 17

Empirical economics refers to the

Accepted Answer

A)  exclusion of irrelevant data when analyzing a model. 
B)  collection and use of data to test economic theories. 
C)  model of economics used prior to the Industrial Revolution. 
D)  belief that what is true for a part is necessarily true for the whole.

Question 18

Positive economics questions "What ought to be?" Normative economics predicts the consequences of alternative actions, answering the questions "What is?" or "What will be?"

Accepted Answer

A) True 
 B)False

Question 19

There is great concern over the fact that global warming is causing permanent damage to the global environment. A study of the costs and benefits of purchasing carbon offsets to combat global warming is an example of

Accepted Answer

A)  labor economics. 
B)  normative economics. 
C)  positive economics. 
D)  laissez-faire economics.

Question 20

Related to the Economics in Practice on page 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.

Exam 1: The Scope and Method of Economics

Refer to the information provided in Figure 1.5 below to answer the questions that follow. Figure 1.5 -If the slope of a straight line is -2. and if X (the variable on the horizontal axis) decreases by 8, then Y (the variable on the vertical axis) will

Which of the following is a question answered with positive economic analysis?

Opportunity cost is

The Latin phrase economists use that means all else equal is

Stability implies a steady rate of economic growth and low inflation.

The study of how benefits are determined for city employees would be considered

Whenever the Democrats gain control of the Congress, spending on social programs increases; whenever Republicans gain control of the Congress, spending on defense increases. Hence, we know what the next party in control will do. This statement is an example of the

Refer to the information provided in Figure 1.3 below to answer the questions that follow. Figure 1.3 -Refer to Figure 1.3. The slope of the line between Points D and C is

The phrase "there's no such thing as a free lunch" is a common way of expressing the concept of efficient markets.

A change in economic output is ________ if the value of the resulting gains exceeds the value of the resulting losses.

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

The rate of economic growth is a topic of microeconomics.

Related to the Economics in Practice on page 5: According to the Economics in Practice, a majority of the $10 retail value of the Barbie doll

You own American Sniper on DVD. The opportunity cost of watching this DVD for the fourth time

Which of the following is an example of a positive statement?

The post hoc, ergo propter hoc fallacy is the belief that

Empirical economics refers to the

Positive economics questions "What ought to be?" Normative economics predicts the consequences of alternative actions, answering the questions "What is?" or "What will be?"

There is great concern over the fact that global warming is causing permanent damage to the global environment. A study of the costs and benefits of purchasing carbon offsets to combat global warming is an example of

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