Question 1

Which of the following is a positive statement?

Accepted Answer

A)  People buy more of a good or service when its price falls. 
B)  The distribution of income is fair. 
C)  The government ought to provide health care to everyone. 
D)  Corporations should be more socially responsible. 
A)  People buy more of a good or service when its price falls. 
B)  The distribution of income is fair. 
C)  The government ought to provide health care to everyone. 
D)  Corporations should be more socially responsible.

Question 2

Which of the following is a normative statement?

Accepted Answer

A)  The unemployment rate is too high. 
B)  Forty percent of the public believes that the unemployment rate is too high. 
C)  The unemployment rate rose last month. 
D)  None of the above are normative statements. 
A)  The unemployment rate is too high. 
B)  Forty percent of the public believes that the unemployment rate is too high. 
C)  The unemployment rate rose last month. 
D)  None of the above are normative statements.

Question 3

Whenever one variable increases, another variable decreases. The two variables are

Accepted Answer

A)  definitely related through a third variable. 
B)  negatively related. 
C)  positively related. 
D)  unrelated to each other. 
A)  definitely related through a third variable. 
B)  negatively related. 
C)  positively related. 
D)  unrelated to each other.

Question 4

In part, microeconomics is concerned with

Accepted Answer

A)  how a business firm decides upon the amount it produces and the price it sets. 
B)  changes in the economy's total output of goods and services over long periods of time. 
C)  factors that explain changes in the unemployment rate over time. 
D)  the Federal Reserve's policy decisions. 
A)  how a business firm decides upon the amount it produces and the price it sets. 
B)  changes in the economy's total output of goods and services over long periods of time. 
C)  factors that explain changes in the unemployment rate over time. 
D)  the Federal Reserve's policy decisions.

Question 5

When the government chooses to spend the tax dollars that it collects on homeland security, its choice ________.

Accepted Answer

A)  involves a tradeoff of other goods and services such as education for more homeland security 
B)  illustrates that scarcity does not always exist 
C)  involves no tradeoff because the defense is necessary 
D)  primarily affects who gets the goods and services produced. 
A)  involves a tradeoff of other goods and services such as education for more homeland security 
B)  illustrates that scarcity does not always exist 
C)  involves no tradeoff because the defense is necessary 
D)  primarily affects who gets the goods and services produced.

Question 6

-If a curve rises and then falls, it shows a

Accepted Answer

A)  maximum. 
B)  minimum. 
C)  linear relationship. 
D)  constant slope relationship. 
A)  maximum. 
B)  minimum. 
C)  linear relationship. 
D)  constant slope relationship.

Question 7

"OPEC should supply more oil so that the world's economies can grow more rapidly." This is an example of

Accepted Answer

A)  a normative statement. 
B)  a positive statement. 
C)  a decision at the margin. 
D)  OPEC overcoming scarcity 
A)  a normative statement. 
B)  a positive statement. 
C)  a decision at the margin. 
D)  OPEC overcoming scarcity

Question 8

An analyst on a local news channel argues that the recent corporate scandals "demonstrated very clearly that self-interest always contradicts social interest." Do you agree or disagree? Substantiate your answer.

Accepted Answer

You should disagree. The recent corporat

Question 9

Suppose that you are spending two hours a day studying economics, and your grade is 85 percent. You want a higher grade and decide to study for an extra hour a day. As a result, your grade rises to 90 percent. Your marginal benefit is the

Accepted Answer

A)  5 point increase in your grade minus the opportunity cost to you of spending the hour studying. 
B)  extra hour per day you spend on studying. 
C)  5 point increase in your grade. 
D)  three hours per day you spend on studying. 
A)  5 point increase in your grade minus the opportunity cost to you of spending the hour studying. 
B)  extra hour per day you spend on studying. 
C)  5 point increase in your grade. 
D)  three hours per day you spend on studying.

Question 10

What is the relationship between wants, factors of production, scarcity, and choices? Discuss the relationship for an individual and for a society.

Accepted Answer

A person faces scarcity whenever his or

Question 11

In terms of dollars, the marginal benefit of working five days a week instead of four days a week is

Accepted Answer

A)  the wages received for the fifth day of work. 
B)  the wages received for 5 days of work. 
C)  the wages received for 4 days of work. 
D)  None of the above answers is correct. 
A)  the wages received for the fifth day of work. 
B)  the wages received for 5 days of work. 
C)  the wages received for 4 days of work. 
D)  None of the above answers is correct.

Question 12

Which of the following is a normative statement?

Accepted Answer

A)  Next year's inflation rate will be under 4 percent. 
B)  Consumers will buy more gasoline over the Christmas holiday even if the price of gas is 10 cents higher than it was during the Thanksgiving holiday. 
C)  The government's cuts in welfare spending impose an unfair hardship on the poor. 
D)  The current butter surplus is the result of federal policies. 
A)  Next year's inflation rate will be under 4 percent. 
B)  Consumers will buy more gasoline over the Christmas holiday even if the price of gas is 10 cents higher than it was during the Thanksgiving holiday. 
C)  The government's cuts in welfare spending impose an unfair hardship on the poor. 
D)  The current butter surplus is the result of federal policies.

Question 13

A normative statement is

Accepted Answer

A)  about what ought to be. 
B)  about what is. 
C)  always true. 
D)  one that does not use marginal concepts. 
A)  about what ought to be. 
B)  about what is. 
C)  always true. 
D)  one that does not use marginal concepts.

Question 14

Differences in income are most directly related to which of the following economic question?

Accepted Answer

A)  What goods and services are produced? 
B)  In what quantities are various goods and services produced? 
C)  How are goods and services produced? 
D)  Who consumes the goods and services that are produced? 
A)  What goods and services are produced? 
B)  In what quantities are various goods and services produced? 
C)  How are goods and services produced? 
D)  Who consumes the goods and services that are produced?

Question 15

-"As interest rates rise, people save more money." A graph displaying this relationship would show

Accepted Answer

A)  an inverse relationship. 
B)  a positive relationship. 
C)  a cross-section graph. 
D)  a positive then a negative relationship. 
A)  an inverse relationship. 
B)  a positive relationship. 
C)  a cross-section graph. 
D)  a positive then a negative relationship.

Question 16

The statement "The unemployment rate for teens is higher than that for adults" is

Accepted Answer

A)  a political statement. 
B)  a positive statement. 
C)  a normative statement. 
D)  an ethical statement. 
A)  a political statement. 
B)  a positive statement. 
C)  a normative statement. 
D)  an ethical statement.

Question 17

-Ceteris paribus when graphing a relationship refers to

Accepted Answer

A)  letting all the variables change at once. 
B)  changing the origin of the graph. 
C)  holding constant all but two variables. 
D)  rescaling the coordinates. 
A)  letting all the variables change at once. 
B)  changing the origin of the graph. 
C)  holding constant all but two variables. 
D)  rescaling the coordinates.

Question 18

Suppose Company A's profits increase by $10 million and nobody is made worse off. The CEO of Company A keeps all $10 million for herself. This situation

Accepted Answer

A)  is definitely efficient. 
B)  is definitely not in the self-interest of Company A. 
C)  is definitely not in the social interest. 
D)  is definitely fair. 
A)  is definitely efficient. 
B)  is definitely not in the self-interest of Company A. 
C)  is definitely not in the social interest. 
D)  is definitely fair.

Question 19

-The slope of the line in the above figure is

Accepted Answer

A)  1/2 = 0.5. 
B)  2. 
C)  -1/2 = -0.5. 
D)  -2. 
A)  1/2 = 0.5. 
B)  2. 
C)  -1/2 = -0.5. 
D)  -2.

Question 20

-Using the data in the above table,

Accepted Answer

A)  the variables quantity and price are positively related. 
B)  the variables quantity and price are negatively related. 
C)  the variables quantity and price are neither positively nor negatively related. 
D)  an increase in price is likely to cause an increase in quantity. 
A)  the variables quantity and price are positively related. 
B)  the variables quantity and price are negatively related. 
C)  the variables quantity and price are neither positively nor negatively related. 
D)  an increase in price is likely to cause an increase in quantity.

Exam 1: What Is Economics

Which of the following is a positive statement?

Which of the following is a normative statement?

Whenever one variable increases, another variable decreases. The two variables are

In part, microeconomics is concerned with

When the government chooses to spend the tax dollars that it collects on homeland security, its choice ________.

-If a curve rises and then falls, it shows a

"OPEC should supply more oil so that the world's economies can grow more rapidly." This is an example of

An analyst on a local news channel argues that the recent corporate scandals "demonstrated very clearly that self-interest always contradicts social interest." Do you agree or disagree? Substantiate your answer.

Suppose that you are spending two hours a day studying economics, and your grade is 85 percent. You want a higher grade and decide to study for an extra hour a day. As a result, your grade rises to 90 percent. Your marginal benefit is the

What is the relationship between wants, factors of production, scarcity, and choices? Discuss the relationship for an individual and for a society.

In terms of dollars, the marginal benefit of working five days a week instead of four days a week is

Which of the following is a normative statement?

A normative statement is

Differences in income are most directly related to which of the following economic question?

-"As interest rates rise, people save more money." A graph displaying this relationship would show

The statement "The unemployment rate for teens is higher than that for adults" is

-Ceteris paribus when graphing a relationship refers to

Suppose Company A's profits increase by $10 million and nobody is made worse off. The CEO of Company A keeps all $10 million for herself. This situation

-The slope of the line in the above figure is

-Using the data in the above table,

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices and Public Goods

Externalities and the Environment

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Extension A: Review

Extension B: Review

Extension C: Review

Extension D: Review

Extension E: Review

Extension F: Review

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