Question 1

Resources are used only in the production of goods, not services.

Accepted Answer

A) True 
 B)False

Question 2

A model that sometimes makes incorrect predictions may be used by economic decision makers

Accepted Answer

A) under no circumstances 
B) only if its assumptions are detailed and realistic 
C) if it is mathematical and computerized 
D) if it is simple enough for a child to understand 
E) until a better model is developed 
A) under no circumstances 
B) only if its assumptions are detailed and realistic 
C) if it is mathematical and computerized 
D) if it is simple enough for a child to understand 
E) until a better model is developed

Question 3

Japan has more vending machines per capita than any other country in the world.One explanation for this phenomenon is that

Accepted Answer

A) vending machines are very expensive in Japan 
B) the customs of the Japanese marketplace encourage businesses to install vending machines 
C) vending machines were invented in Japan 
D) time is less valuable in Japan than it is elsewhere 
E) most products commonly purchased by Japanese consumers are small enough to be sold in vending machines 
A) vending machines are very expensive in Japan 
B) the customs of the Japanese marketplace encourage businesses to install vending machines 
C) vending machines were invented in Japan 
D) time is less valuable in Japan than it is elsewhere 
E) most products commonly purchased by Japanese consumers are small enough to be sold in vending machines

Question 4

Macroeconomics is the study of

Accepted Answer

A) the behavior of large firms in the marketplace 
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 stabilizing influence on the economy 
A) the behavior of large firms in the marketplace 
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 stabilizing influence on the economy

Question 5

Economic theory allows us to predict the behavior of a specific person or firm.

Accepted Answer

A) True 
 B)False

Question 6

The other-things-constant assumption

Accepted Answer

A) allows the economist to make useful predictions 
B) is a prediction 
C) applies only to consumers' decisions, not to those of firms 
D) forces the economist to ignore reality, where things are constantly changing 
E) implies rational self-interest on the part of all economic actors 
A) allows the economist to make useful predictions 
B) is a prediction 
C) applies only to consumers' decisions, not to those of firms 
D) forces the economist to ignore reality, where things are constantly changing 
E) implies rational self-interest on the part of all economic actors

Question 7

Most of the disagreement among economists involves normative debates.

Accepted Answer

A) True 
 B)False

Question 8

A rational decision maker will engage in more of an activity only if the marginal benefit ot the additional activity

Accepted Answer

A) is positive 
B) is at its maximum level 
C) is greater than or equal to the expected marginal cost 
D) is less than the expected marginal cost 
E) exactly equals the expected marginal cost 
A) is positive 
B) is at its maximum level 
C) is greater than or equal to the expected marginal cost 
D) is less than the expected marginal cost 
E) exactly equals the expected marginal cost

Question 9

The fallacy of composition is the error of believing a cause-effect relationship exists between two events that are associated in time.

Accepted Answer

A) True 
 B)False

Question 10

Economists believe that people respond in a predictable way to changes in costs and benefits.The term that best describes this phenomenon is

Accepted Answer

A) opportunity cost 
B) scarcity 
C) innovation 
D) marginal analysis 
E) other things equal (or ceteris paribus) 
A) opportunity cost 
B) scarcity 
C) innovation 
D) marginal analysis 
E) other things equal (or ceteris paribus)

Question 11

When people are assumed to implicitly calculate the costs and benefits of an activity to decide if it is worthwhile, they are behaving

Accepted Answer

A) rationally 
B) self-interestedly 
C) greedily 
D) marginally 
E) expectantly 
A) rationally 
B) self-interestedly 
C) greedily 
D) marginally 
E) expectantly

Question 12

Which of the following is a normative statement?

Accepted Answer

A) The U.S.rate of unemployment was lower in 2004 than it was in 1994. 
B) Savings accounts earn interest, whereas checking accounts do not. 
C) Congress must recognize that the growing national debt is the most serious problem that the country faces. 
D) The unemployment rate increases when the percentage of the labor force without jobs increases. 
E) The unemployment rate among teenagers is higher than the rate among adults. 
A) The U.S.rate of unemployment was lower in 2004 than it was in 1994. 
B) Savings accounts earn interest, whereas checking accounts do not. 
C) Congress must recognize that the growing national debt is the most serious problem that the country faces. 
D) The unemployment rate increases when the percentage of the labor force without jobs increases. 
E) The unemployment rate among teenagers is higher than the rate among adults.

Question 13

Goods and services are scarce because

Accepted Answer

A) people are greedy 
B) they are produced using scarce resources 
C) firms keep production low in order to earn higher profits 
D) they are produced by firms that seeks profits 
E) government wants to maintain its power over the economy 
A) people are greedy 
B) they are produced using scarce resources 
C) firms keep production low in order to earn higher profits 
D) they are produced by firms that seeks profits 
E) government wants to maintain its power over the economy

Question 14

According to a 2011 Payscale.com survey the highest paying college major is:

Accepted Answer

A) Economics 
B) Management 
C) Finance 
D) Computer Engineering 
E) Political Science 
A) Economics 
B) Management 
C) Finance 
D) Computer Engineering 
E) Political Science

Question 15

Profit is the payment made for land resources.

Accepted Answer

A) True 
 B)False

Question 16

The difference between a good and a service is that

Accepted Answer

A) a good helps satisfy unlimited wants; a service does not 
B) a service helps satisfy unlimited wants; a good does not 
C) a services is available in unlimited quantities; a good is not 
D) a good is available in unlimited quantities; a service is not 
E) a good is tangible; a service is not 
A) a good helps satisfy unlimited wants; a service does not 
B) a service helps satisfy unlimited wants; a good does not 
C) a services is available in unlimited quantities; a good is not 
D) a good is available in unlimited quantities; a service is not 
E) a good is tangible; a service is not

Question 17

A rational decision maker will take only those actions for which the expected marginal benefit

Accepted Answer

A) is positive 
B) is at its maximum level 
C) is greater than or equal to the expected marginal cost 
D) is less than the expected marginal cost 
E) exactly equals the expected marginal cost 
A) is positive 
B) is at its maximum level 
C) is greater than or equal to the expected marginal cost 
D) is less than the expected marginal cost 
E) exactly equals the expected marginal cost

Question 18

The scientific method is useful

Accepted Answer

A) only in fields of science such as chemistry and physics 
B) for testing the validity of theoretical predictions 
C) for testing the validity of a model's assumptions 
D) when no economic variables can be assumed to be constant 
E) only if a theory has been proven to be true 
A) only in fields of science such as chemistry and physics 
B) for testing the validity of theoretical predictions 
C) for testing the validity of a model's assumptions 
D) when no economic variables can be assumed to be constant 
E) only if a theory has been proven to be true

Question 19

Choices made by economic decision makers

Accepted Answer

A) are government decisions only 
B) are the primary focus of economics 
C) are not important in economic analysis 
D) occur infrequently 
E) do not involve ordinary citizens 
A) are government decisions only 
B) are the primary focus of economics 
C) are not important in economic analysis 
D) occur infrequently 
E) do not involve ordinary citizens

Question 20

Which of the following would be an example of a resource market?

Accepted Answer

A) the market for tires 
B) the market for baseball games 
C) the market for compact discs 
D) the market for economists 
E) the market for downloadable music 
A) the market for tires 
B) the market for baseball games 
C) the market for compact discs 
D) the market for economists 
E) the market for downloadable music

Exam 1: The Art and Science of Economic Analysis

Resources are used only in the production of goods, not services.

A model that sometimes makes incorrect predictions may be used by economic decision makers

Japan has more vending machines per capita than any other country in the world.One explanation for this phenomenon is that

Macroeconomics is the study of

Economic theory allows us to predict the behavior of a specific person or firm.

The other-things-constant assumption

Most of the disagreement among economists involves normative debates.

A rational decision maker will engage in more of an activity only if the marginal benefit ot the additional activity

The fallacy of composition is the error of believing a cause-effect relationship exists between two events that are associated in time.

Economists believe that people respond in a predictable way to changes in costs and benefits.The term that best describes this phenomenon is

When people are assumed to implicitly calculate the costs and benefits of an activity to decide if it is worthwhile, they are behaving

Which of the following is a normative statement?

Goods and services are scarce because

According to a 2011 Payscale.com survey the highest paying college major is:

Profit is the payment made for land resources.

The difference between a good and a service is that

A rational decision maker will take only those actions for which the expected marginal benefit

The scientific method is useful

Choices made by economic decision makers

Which of the following would be an example of a resource market?

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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