Question 1

When Dr.Goldfinger decides on the companies in which he will invest,a ________ issue is being addressed.

Accepted Answer

A)  microeconomic
B)  macroeconomic
C)  positive economic
D)  normative economic A

Question 2

What is the "reverse causality" problem in determining cause and effect?

Accepted Answer

A)  It is a problem that occurs when one concludes that a change in variable X caused a change in variable Y when in actual fact,it is a change in variable Z that caused a change in variable Y.
B)  It is a problem that occurs when one observes that a change in variable X caused a change in variable Y which caused a change in variable Z and concludes that a change in variable X caused a change in variable Z.
C)  It is a problem that occurs when one concludes that a change in variable X caused a change in variable Y when in actual fact,it is a change in variable Y that caused a change in variable X.
D)  It is a problem that arises when two variables are inter-connected so that a change in variable X causes a change in variable Y,and a change in variable Y causes a change in variable X. C

Question 3

How does a market system prevent people from getting as many goods and services as they wish?

Accepted Answer

A)  Governments interfere with the market mechanism to influence the allocation of goods and services.
B)  In a market system,firms can charge any price they want,thus preventing poor people from getting as many goods and services as they wish.
C)  The market system allocates goods and services to those who are able to pay for those products and therefore income is a limiting factor.
D)  The government imposes taxes on those who earn beyond a certain amount of income. C

Question 4

If a graph has a line that shows the quantity of flat-screen televisions sold in the last five years,it is known as

Accepted Answer

A)  a pie chart.
B)  a time-series graph.
C)  a demand curve for outsourcing.
D)  a supply curve of outsourcing.

Question 5

Which of the following statements about economic resources is false?

Accepted Answer

A)  Economic resources include financial capital and money.
B)  Economic resources are also called factors of production.
C)  Economic resources are used to produce goods and services.
D)  Some economic resources are human-made while others are found in nature.

Question 6

Assume that a health spa can earn an additional $35,000 of revenue each year from advertising every day in a local newspaper.What must the additional cost of this daily advertising be to make this advertising economically rational?

Accepted Answer

The answer of Assume that a health spa can earn...

Question 7

Marginal benefit is the benefit that your activity provides to someone else.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following are positive economic statements and which are normative economic statements?
a.An increase in the minimum wage causes unemployment.
b.The government should raise the minimum wage above $7.25 per hour.
c.The prolonged recession has caused the unemployment rate to reach a 30-year high.
d.Interest rates need to be lower for the economy to emerge from the recession.
e.Inflation has decreased since the onset of the recession.
f.Once the recession has ended,interest rates should increase to assure that inflation does not go up.

Accepted Answer

The answer of Which of the following are positive economic...

Question 9

You explain to your friend Haslina,who runs a catering service called "Meals in a Zip," about an economic theory which asserts that consumers will purchase less of a product at higher prices than they will at lower prices.She contends that the theory is incorrect because over the past two years she has raised the price of her catered meals and yet has seen a brisk increase in sales.How would you respond to Haslina?

Accepted Answer

A)  Haslina is right;she has evidence to back her claim.The theory must be erroneous.
B)  I will explain to her that she is making the error of reverse causality: it is the increase in demand that has enabled her to raise her prices.
C)  I will explain to her that there are some omitted variables that have contributed to an increase in her sales such as changes in income.
D)  Haslina is making the mistake of assuming that correlation implies causation.

Question 10

Tabitha shares a flea market booth with her sister.Her share of the rent is $150 per month.She is considering moving to her own,larger booth which she will not have to share with anyone.The larger booth rents for $450 per month.Recently,you ran into Tabitha in the grocery store and she tells you that she has rented the larger booth.Tabitha is as rational as any other person.As an economics major,you rightly conclude that

Accepted Answer

A)  Tabitha did not have a choice;her sister was overcharging her.
B)  Tabitha figures that the additional benefit of having her own booth (as opposed to sharing) is at least $300.
C)  Tabitha figures that the additional benefit of having her own booth (as opposed to sharing) is at least $450.
D)  the cost of having one's own booth outweighs the benefits.

Question 11

Which of the following is a positive economic statement?

Accepted Answer

A)  People should not buy imported fruits and vegetables.
B)  The government should subsidize solar power for homeowners.
C)  The minimum wage law causes unemployment.
D)  The number of work visas should not be limited by the government.

Question 12

Economics promotes which of the following as the way to make the best decision?

Accepted Answer

A)  Continue an enjoyable activity as long as you do not have to pay for it.
B)  Continue an enjoyable activity until it is no longer enjoyable.
C)  Continue an enjoyable activity until you cannot afford to pursue it.
D)  Continue an enjoyable activity up to the point where its marginal benefit equals its marginal cost.

Question 13

In a market economy,________ interact in markets to decide the answers to the fundamental economic questions.

Accepted Answer

A)  state and local governments
B)  large corporations
C)  households and firms
D)  the judicial and legislative branches of the federal government

Question 14

Figure 1-4 
-Refer to Figure 1-4.Which of the following statements is true?

Accepted Answer

A)  The slope of the tangent at E is positive and the slope of the tangent at F is negative.
B)  The slope of the tangent at E is negative and the slope of the tangent at F is positive.
C)  The slope of the tangent at E and the slope of the tangent at F are negative.
D)  The slope of the tangent at E and the slope of the tangent at F are positive.

Question 15

Trade-offs force society to make choices when answering what three fundamental questions?

Accepted Answer

The answer of Trade-offs force society to make choices when...

Question 16

There is often a trade-off between

Accepted Answer

A)  productive efficiency and allocative efficiency.
B)  limited and unlimited resources.
C)  voluntary and involuntary exchanges.
D)  economic efficiency and economic equity.

Question 17

Dr.Goldfinger decides to invest in companies which he believes can "improve the productivity and efficiency" of health care services.How can Dr.Goldfinger strive to achieve this productive efficiency?

Accepted Answer

A)  by investing in companies that produce goods and services based on consumer preferences
B)  by investing in companies that produce goods and services at the lowest possible cost
C)  by investing in companies that fairly distribute their products and services
D)  by investing in companies that produce up to the point where the marginal benefit of the last unit produced is equal to the marginal cost of producing it

Question 18

"A decrease in the price of digital cameras will decrease the demand for camera film." This statement is an example of a positive economic statement.

Accepted Answer

A) True 
 B)False

Question 19

Define allocative efficiency.Explain the significance of this concept in economics?

Accepted Answer

The answer of Define allocative efficiency.Explain the significance of this...

Question 20

Which of the following is a normative economic statement?

Accepted Answer

A)  Rising global demand for diesel and heating oil has led to increases in the price of crude oil.
B)  With falling home prices and rising mortgage interest rates,the amount of foreclosures has increased.
C)  The federal government is considering raising the gasoline tax to promote the use of public transportation.
D)  Fashion designers should be allowed to copyright designs to promote innovation.

Exam 1: Economics: Foundations and Models

When Dr.Goldfinger decides on the companies in which he will invest,a ________ issue is being addressed.

What is the "reverse causality" problem in determining cause and effect?

How does a market system prevent people from getting as many goods and services as they wish?

If a graph has a line that shows the quantity of flat-screen televisions sold in the last five years,it is known as

Which of the following statements about economic resources is false?

Assume that a health spa can earn an additional $35,000 of revenue each year from advertising every day in a local newspaper.What must the additional cost of this daily advertising be to make this advertising economically rational?

Marginal benefit is the benefit that your activity provides to someone else.

Which of the following is a positive economic statement?

Economics promotes which of the following as the way to make the best decision?

In a market economy,________ interact in markets to decide the answers to the fundamental economic questions.

Figure 1-4 -Refer to Figure 1-4.Which of the following statements is true?

Trade-offs force society to make choices when answering what three fundamental questions?

There is often a trade-off between

Dr.Goldfinger decides to invest in companies which he believes can "improve the productivity and efficiency" of health care services.How can Dr.Goldfinger strive to achieve this productive efficiency?

"A decrease in the price of digital cameras will decrease the demand for camera film." This statement is an example of a positive economic statement.

Define allocative efficiency.Explain the significance of this concept in economics?

Which of the following is a normative economic statement?