Question 1

As population declines,scarcity eventually disappears.

Accepted Answer

A) True 
 B)False

Question 2

Fast food restaurants produce a range of menu items such as hamburgers,chicken sandwiches,salads,and french fries.What fundamental economic question are they addressing by offering this range of items?

Accepted Answer

A) How to produce goods that consumers want? 
B) Why produce a variety of menu items? 
C) What to produce? 
D) Who to produce the menu items for?

Question 3

"The distribution of income should be determined by the government" is an example of a normative economic statement.

Accepted Answer

A) True 
 B)False

Question 4

Your roommate,Serafina,a psychology major,said,"The problem with economics is that it assumes that consumers and firms always make the correct decision.But we know that everyone's human,and we all make mistakes." Do you agree with her comment?

Accepted Answer

A) Yes,I agree with her.One cannot make predictions about economic behavior because in reality people make incorrect choices in many situations. 
B) I disagree with her.Economics does not study correct or incorrect behaviors but rather it assumes that economic agents behave rationally,meaning they make the best decisions given their knowledge of the costs and benefits. 
C) Yes,I agree with her.Economic theory should allow for irrational behavior so that we can have more reliable predictions. 
D) I disagree with her.If we cannot assume that decisions are correct,then we will not be able to examine the moral implications of these decisions.

Question 5

Consider the following economic agents: a.the government
B.consumers
C.producers
Who,in a modern mixed economy,decides what goods and services will be produced with the scarce resources available in that economy?

Accepted Answer

A) the government 
B) producers 
C) consumers 
D) consumers and producers 
E) the government,consumers,and producers

Question 6

The decisions General Motors makes in determining production levels for its Chevy Volt is an example of a microeconomics topic.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following are primarily macroeconomic topics and which are primarily microeconomic topics?
a.college tuition rates
b.farm subsidies
c.national income
d.automobile prices
e.air traffic congestion
f.economic recession

Accepted Answer

The answer of Which of the following are primarily macroeconomic...

Question 8

Suppose when the price of hybrid automobiles rises,consumers buy fewer hybrid automobiles.This implies that

Accepted Answer

A) there is a positive relationship between hybrid automobile prices and quantities purchased by consumers. 
B) there is a negative relationship between hybrid automobile prices and quantities purchased by consumers. 
C) there is a direct relationship between hybrid automobile prices and quantities purchased by consumers. 
D) there is a one-to-one relationship between hybrid automobile prices and quantities purchased by consumers.

Question 9

Fiona shares an office with her ex-husband.Her share of the rent and utilities is $625 per month.She is considering moving to a home office which she will not have to share with anyone.The home office will not cost her anything as far as extra rent or utilities.Recently,you ran into Fiona at the gym and she tells you that she has moved into her home office.Fiona is as rational as any other person.As an economics major,you rightly conclude that

Accepted Answer

A) Fiona did not have a choice;her ex-husband was a jerk. 
B) Fiona figures that the additional benefit of having her own office (as opposed to sharing)is at least $625. 
C) Fiona figures that the benefit of having her own office (as opposed to sharing)is zero,since she is no longer paying rent and utilities. 
D) The cost of having one's own space outweighs the benefits.

Question 10

In economics,the total amount received for selling a good or service is referred to as

Accepted Answer

A) revenue. 
B) profit. 
C) capital gains. 
D) factor payments.

Question 11

Which of the following is a positive economic statement?

Accepted Answer

A) People should use public transportation more often. 
B) The government should ban diesel engines in automobiles. 
C) Due to a decrease in state funding,university tuition has risen. 
D) Foreign citizens should not be allowed to work without a work visa.

Question 12

Voluntary exchange increases economic efficiency

Accepted Answer

A) because neither the buyer nor the seller would agree to a trade unless they both benefit. 
B) because voluntary exchange only takes place with government permission. 
C) because it is free and consequently does not cost anything. 
D) because it allows wealthy individuals to act altruistically and give to the poor.

Question 13

Every society faces economic trade-offs.This means

Accepted Answer

A) some people live better than others do. 
B) not everyone can have enough goods to survive. 
C) producing more of one good means less of another good can be produced. 
D) society's output cannot be made available to all.

Question 14

Describe what has happened to state obesity rates in the United States since 1994.

Accepted Answer

The answer of Describe what has happened to state obesity...

Question 15

Which of the following is a problem inherent in centrally planned economies?

Accepted Answer

A) There are no problems and everyone,including consumers,is satisfied. 
B) There is too much production of low-cost,high-quality goods and services. 
C) Production managers are more concerned with satisfying government's orders than with satisfying consumer wants. 
D) Unemployment is too high.

Question 16

If it costs Vijay $150 to design 5 Web sites and $175 to design 6 Web sites,then $175 is the marginal cost of producing the 6th Web site.

Accepted Answer

A) True 
 B)False

Question 17

In the market for factors of production,households earn income by supplying factors of production to firms.

Accepted Answer

A) True 
 B)False

Question 18

What is a market economy?

Accepted Answer

The answer of What is a market economy?...

Question 19

In the United States in 2012,the number of new,diagnosed diabetes cases was lowest for people in the age range of ________,and the rate of new diabetes cases per 1,000 people was lowest for people in the age range of ________.

Accepted Answer

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

Question 20

Suppose the extra cost to a car wash of advertising one additional day each month on a local radio station is $175.Then,the car wash should advertize that one additional day each month if doing so brings in additional revenue of $175 or more each month.

Accepted Answer

A) True 
 B)False

Exam 1: Economics: Foundations and Models

As population declines,scarcity eventually disappears.

Fast food restaurants produce a range of menu items such as hamburgers,chicken sandwiches,salads,and french fries.What fundamental economic question are they addressing by offering this range of items?

"The distribution of income should be determined by the government" is an example of a normative economic statement.

Your roommate,Serafina,a psychology major,said,"The problem with economics is that it assumes that consumers and firms always make the correct decision.But we know that everyone's human,and we all make mistakes." Do you agree with her comment?

Consider the following economic agents: a.the government B.consumers C.producers Who,in a modern mixed economy,decides what goods and services will be produced with the scarce resources available in that economy?

The decisions General Motors makes in determining production levels for its Chevy Volt is an example of a microeconomics topic.

Which of the following are primarily macroeconomic topics and which are primarily microeconomic topics? a.college tuition rates b.farm subsidies c.national income d.automobile prices e.air traffic congestion f.economic recession

Suppose when the price of hybrid automobiles rises,consumers buy fewer hybrid automobiles.This implies that

In economics,the total amount received for selling a good or service is referred to as

Which of the following is a positive economic statement?

Voluntary exchange increases economic efficiency

Every society faces economic trade-offs.This means

Describe what has happened to state obesity rates in the United States since 1994.

Which of the following is a problem inherent in centrally planned economies?

If it costs Vijay $150 to design 5 Web sites and $175 to design 6 Web sites,then $175 is the marginal cost of producing the 6th Web site.

In the market for factors of production,households earn income by supplying factors of production to firms.

What is a market economy?

In the United States in 2012,the number of new,diagnosed diabetes cases was lowest for people in the age range of ,and the rate of new diabetes cases per 1,000 people was lowest for people in the age range of .

Suppose the extra cost to a car wash of advertising one additional day each month on a local radio station is $175.Then,the car wash should advertize that one additional day each month if doing so brings in additional revenue of $175 or more each month.