Question 1

Which of the following is a service?

Accepted Answer

A) a college education 
B) an automobile 
C) computer software 
D) a compact disc 
E) a textbook 
A) a college education 
B) an automobile 
C) computer software 
D) a compact disc 
E) a textbook

Question 2

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

Accepted Answer

A) If the money supply falls, interest rates will rise. 
B) Teenage unemployment would be lower if there were no minimum wage. 
C) The quantity of shirts sold increases as the price of shirts decreases. 
D) The federal government's total spending should be reduced. 
E) If interest rates go up, then construction activity will fall. 
A) If the money supply falls, interest rates will rise. 
B) Teenage unemployment would be lower if there were no minimum wage. 
C) The quantity of shirts sold increases as the price of shirts decreases. 
D) The federal government's total spending should be reduced. 
E) If interest rates go up, then construction activity will fall.

Question 3

Which of the four types of decision makers in the U.S.economy plays the largest role?

Accepted Answer

A) U.S.firms and government because they produce the products that households consume 
B) U.S.households because they supply goods to the product markets and are demanders in resource markets 
C) foreign households, firms, and governments because they greatly outnumber those of the United States 
D) U.S.firms and government because they create employment for domestic households and produce goods and services 
E) U.S.households, as buyers in product markets and sellers in resource markets 
A) U.S.firms and government because they produce the products that households consume 
B) U.S.households because they supply goods to the product markets and are demanders in resource markets 
C) foreign households, firms, and governments because they greatly outnumber those of the United States 
D) U.S.firms and government because they create employment for domestic households and produce goods and services 
E) U.S.households, as buyers in product markets and sellers in resource markets

Question 4

Which of the following would be considered a secondary effect of rent control.

Accepted Answer

A) a reduction if the number of rental units that are available to rent 
B) an increase in the number of rental units that people would like to rent 
C) a shortage of rental units in the market 
D) the deterioration in the quality of rental units 
E) an increase in the difficulty of finding a rental unit at the rent control price 
A) a reduction if the number of rental units that are available to rent 
B) an increase in the number of rental units that people would like to rent 
C) a shortage of rental units in the market 
D) the deterioration in the quality of rental units 
E) an increase in the difficulty of finding a rental unit at the rent control price

Question 5

The study of how nations deal with the problem of scarcity is the domain of

Accepted Answer

A) economics 
B) political science 
C) sociology 
D) political economy 
E) anthropology 
A) economics 
B) political science 
C) sociology 
D) political economy 
E) anthropology

Question 6

The labor market is an example of a

Accepted Answer

A) government market 
B) classified market 
C) communication market 
D) resource market 
E) product market 
A) government market 
B) classified market 
C) communication market 
D) resource market 
E) product market

Question 7

Someone who commits the fallacy of composition is likely to assume that

Accepted Answer

A) the simplest model is the best predictor 
B) event B, which follows event A, was caused by event A 
C) event B, which follows event A, was not necessarily caused by event A 
D) what is true for the individual is also true for the group 
E) what is true for the individual is not necessarily true for the group 
A) the simplest model is the best predictor 
B) event B, which follows event A, was caused by event A 
C) event B, which follows event A, was not necessarily caused by event A 
D) what is true for the individual is also true for the group 
E) what is true for the individual is not necessarily true for the group

Question 8

The association-causation fallacy is the error of assuming that what is true for one member of a group must be true for the group.

Accepted Answer

A) True 
 B)False

Question 9

You tell your friend that the stock market does well when we have Republican presidents so you are going to vote republican in the next presidential election.Because she is such a good friend she gently points out to you that you

Accepted Answer

A) are correct only when the economy is in a recession 
B) have mistakenly inferred causation from observed correlation 
C) have ignored secondary effects 
D) have committed the fallacy of composition 
E) are correct only when the United States enjoys economic growth 
A) are correct only when the economy is in a recession 
B) have mistakenly inferred causation from observed correlation 
C) have ignored secondary effects 
D) have committed the fallacy of composition 
E) are correct only when the United States enjoys economic growth

Question 10

Economists often focus on average behavior because it is easier to predict.

Accepted Answer

A) True 
 B)False

Question 11

A hypothesis is

Accepted Answer

A) an assumption about behavior 
B) a prediction of what will occur given certain assumptions 
C) a prediction of what will occur regardless of assumptions 
D) a forecast of future events 
E) useful only if the assumptions are realistic 
A) an assumption about behavior 
B) a prediction of what will occur given certain assumptions 
C) a prediction of what will occur regardless of assumptions 
D) a forecast of future events 
E) useful only if the assumptions are realistic

Question 12

In economics, money is an example of capital.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is not an example of the fallacy of composition?

Accepted Answer

A) If I can get to work fastest by taking the interstate, so can everyone else. 
B) If you can only get away from it all by going to Fairbanks, everyone who needs to get away should go to Fairbanks. 
C) If the quickest way to get off a sinking ship is to run to the nearest lifeboat, all the passengers should do this. 
D) If the best TV reception can be gotten with a Couch Potato antenna, then everyone should have a Couch Potato antenna. 
E) If I can get a better view by standing up at the baseball game, everyone gets a better view by standing up. 
A) If I can get to work fastest by taking the interstate, so can everyone else. 
B) If you can only get away from it all by going to Fairbanks, everyone who needs to get away should go to Fairbanks. 
C) If the quickest way to get off a sinking ship is to run to the nearest lifeboat, all the passengers should do this. 
D) If the best TV reception can be gotten with a Couch Potato antenna, then everyone should have a Couch Potato antenna. 
E) If I can get a better view by standing up at the baseball game, everyone gets a better view by standing up.

Question 14

"Congress must recognize that the growing national debt is the most serious problem that the country faces, " is an example of

Accepted Answer

A) a positive statement 
B) a normative statement 
C) a misleading statement 
D) a negative statement 
E) a marginal statement 
A) a positive statement 
B) a normative statement 
C) a misleading statement 
D) a negative statement 
E) a marginal statement

Question 15

The behavior of the entertainment industry in Detroit is a microeconomic topic.

Accepted Answer

A) True 
 B)False

Question 16

Microeconomics is the study of

Accepted Answer

A) marginal or inferior products 
B) the economic behavior of individual decision makers 
C) the behavior of the economy as a whole 
D) how to use the fewest natural resources to produce goods and services 
E) government's role as a producer in the economy 
A) marginal or inferior products 
B) the economic behavior of individual decision makers 
C) the behavior of the economy as a whole 
D) how to use the fewest natural resources to produce goods and services 
E) government's role as a producer in the economy

Question 17

The basic purpose of economic models is to

Accepted Answer

A) construct simplifying assumptions about the real world 
B) explain reality in all its complexity 
C) collect empirical data to support the facts 
D) construct situations where controlled experiments can be carried out 
E) provide explanations for, and predictions of, economic events 
A) construct simplifying assumptions about the real world 
B) explain reality in all its complexity 
C) collect empirical data to support the facts 
D) construct situations where controlled experiments can be carried out 
E) provide explanations for, and predictions of, economic events

Question 18

According to a 2011 PayScale.com survey, among college majors with 10-20 years of experience, economics ranks second only to computer engineering in terms of the median pay.

Accepted Answer

A) True 
 B)False

Question 19

Even if something has a price of zero, every good or service has a cost.Which of the following statements best describes this idea?

Accepted Answer

A) Que Sera, Sera. 
B) He who laughs last laughs best. 
C) The early bird catches the worm. 
D) A penny saved is a penny earned. 
E) There is no such thing as a free lunch. 
A) Que Sera, Sera. 
B) He who laughs last laughs best. 
C) The early bird catches the worm. 
D) A penny saved is a penny earned. 
E) There is no such thing as a free lunch.

Question 20

The fact that people have unlimited wants means that

Accepted Answer

A) they always want more of at least one good 
B) each person has an unlimited desire for every good 
C) labor unions demand wage increases 
D) selfish people are not concerned about others 
E) people buy goods without regard to what they can afford 
A) they always want more of at least one good 
B) each person has an unlimited desire for every good 
C) labor unions demand wage increases 
D) selfish people are not concerned about others 
E) people buy goods without regard to what they can afford

Exam 1: The Art and Science of Economic Analysis

Which of the following is a service?

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

Which of the four types of decision makers in the U.S.economy plays the largest role?

Which of the following would be considered a secondary effect of rent control.

The study of how nations deal with the problem of scarcity is the domain of

The labor market is an example of a

Someone who commits the fallacy of composition is likely to assume that

The association-causation fallacy is the error of assuming that what is true for one member of a group must be true for the group.

You tell your friend that the stock market does well when we have Republican presidents so you are going to vote republican in the next presidential election.Because she is such a good friend she gently points out to you that you

Economists often focus on average behavior because it is easier to predict.

A hypothesis is

In economics, money is an example of capital.

Which of the following is not an example of the fallacy of composition?

"Congress must recognize that the growing national debt is the most serious problem that the country faces, " is an example of

The behavior of the entertainment industry in Detroit is a microeconomic topic.

Microeconomics is the study of

The basic purpose of economic models is to

According to a 2011 PayScale.com survey, among college majors with 10-20 years of experience, economics ranks second only to computer engineering in terms of the median pay.

Even if something has a price of zero, every good or service has a cost.Which of the following statements best describes this idea?

The fact that people have unlimited wants means that

Appendix--Understanding Graphs

Economic Tools and Economics Systems

Economic Decision Makers

Demand, Supply, and Markets

Elasticity of Demand and Supply

Appendix--Price Elasticity and Tax Incidence

Consumer Choice and Demand

Appendix--Indifference Curves and Utility Maximization

Production and Cost in the Firm

A--Perfect Competition

B--Perfect Competition

A--Monopoly

B--Monopoly

Monopolistic Competition and Oligopoly

Resource Markets

Labor Markets and Labor Unions

Capital, Interest, and Corporate Finance

Transaction Costs, Imperfect Information, and Behavioral Economics

Economic Regulation and Antitrust Policy

Public Goods and Public Choice

Externalities and the Environment

Income Distribution and Poverty

International Trade

International Finance

Economic Development

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