Question 1

If an economist says "the higher the price of oranges,the fewer oranges individuals will buy,ceteris paribus," this means that

Accepted Answer

A)  individuals don't like high-priced oranges. 
B)  as the price of oranges rises, individuals' preferences change and they no longer like oranges as much as they once did. 
C)  as the price of oranges rises, individuals' preferences do not change, nor does anything else, but individuals buy fewer oranges in response to the higher price of oranges. 
D)  the higher the price of oranges, the fewer oranges individuals will buy, assuming that people have economic motives. 
A)  individuals don't like high-priced oranges. 
B)  as the price of oranges rises, individuals' preferences change and they no longer like oranges as much as they once did. 
C)  as the price of oranges rises, individuals' preferences do not change, nor does anything else, but individuals buy fewer oranges in response to the higher price of oranges. 
D)  the higher the price of oranges, the fewer oranges individuals will buy, assuming that people have economic motives.

Question 2

Variable X rises as a result of variable Y rising.Variables X and Y are

Accepted Answer

A)  inversely related. 
B)  directly related. 
C)  independent of each other. 
D)  smoothly related. 
E)  none of the above 
A)  inversely related. 
B)  directly related. 
C)  independent of each other. 
D)  smoothly related. 
E)  none of the above

Question 3

Economists sometimes refer to the resource category land as natural resources.

Accepted Answer

A) True 
 B)False

Question 4

Exhibit 1-1
  
-Refer to Exhibit 1-1. If the student whose study habits are illustrated here is currently studying for the 8th hour,she should

Accepted Answer

A)  cut back on the number of hours she is studying because the marginal benefit of studying for the 8th hour is less than the marginal cost of doing so. 
B)  cut back on the number of hours she is studying because the marginal benefit of studying for the 8th greater than the marginal cost of doing so. 
C)  increase the number of hours she is studying because the marginal benefit of studying for the 8th hour is less than the marginal cost of doing so. 
D)  increase the number of hours she is studying because the marginal benefit of studying for the 8th hour is greater than the marginal cost of doing so. 
A)  cut back on the number of hours she is studying because the marginal benefit of studying for the 8th hour is less than the marginal cost of doing so. 
B)  cut back on the number of hours she is studying because the marginal benefit of studying for the 8th greater than the marginal cost of doing so. 
C)  increase the number of hours she is studying because the marginal benefit of studying for the 8th hour is less than the marginal cost of doing so. 
D)  increase the number of hours she is studying because the marginal benefit of studying for the 8th hour is greater than the marginal cost of doing so.

Question 5

What is the most prominent rationing device you will likely find at your campus bookstore?

Accepted Answer

A)  dollar price 
B)  brute force 
C)  anti-theft tags on the high-priced items 
D)  none of the above 
A)  dollar price 
B)  brute force 
C)  anti-theft tags on the high-priced items 
D)  none of the above

Question 6

The need to make choices is most closely related to the concept of

Accepted Answer

A)  opportunity cost. 
B)  efficiency. 
C)  inefficiency. 
D)  utility. 
E)  disutility. 
A)  opportunity cost. 
B)  efficiency. 
C)  inefficiency. 
D)  utility. 
E)  disutility.

Question 7

Which of the following statements is false?

Accepted Answer

A)  Capital consists of produced goods that can be used as inputs for further production. 
B)  The terms resources, inputs, and factors of production are synonyms. 
C)  Labor consists of the physical, but not mental, talents of people who contribute to the production process. 
D)  Entrepreneurship is one of the four categories of resources. 
E)  The resource category land includes natural resources, such as minerals, forests, water, and unimproved land. 
A)  Capital consists of produced goods that can be used as inputs for further production. 
B)  The terms resources, inputs, and factors of production are synonyms. 
C)  Labor consists of the physical, but not mental, talents of people who contribute to the production process. 
D)  Entrepreneurship is one of the four categories of resources. 
E)  The resource category land includes natural resources, such as minerals, forests, water, and unimproved land.

Question 8

Describe the difference between positive and normative economics.Cite an example of each.

Accepted Answer

Positive economics deals with "what is."

Question 9

Exhibit 1-3
  
-Refer to Exhibit 1-3. Based on the data provided in this table, what type of relationship exists between variables X and Y?

Accepted Answer

A)  inverse 
B)  direct 
C)  independent 
D)  There is no relationship between variables X and Y. 
A)  inverse 
B)  direct 
C)  independent 
D)  There is no relationship between variables X and Y.

Question 10

Microeconomics is the branch of economics that deals with

Accepted Answer

A)  highly aggregated markets or the entire economy. 
B)  the production side of the economy, exclusively. 
C)  the buying side of the economy, exclusively. 
D)  human behavior and choices as they relate to relatively small units --- an individual, a firm, an industry. 
A)  highly aggregated markets or the entire economy. 
B)  the production side of the economy, exclusively. 
C)  the buying side of the economy, exclusively. 
D)  human behavior and choices as they relate to relatively small units --- an individual, a firm, an industry.

Question 11

Which of the following is an unintended effect of placing safety caps on medicines?

Accepted Answer

A)  It is now harder for people to open their medicine containers. 
B)  People leave their medicine containers open more often, which ends up making it easier for children to get into the medicine. 
C)  Fewer people get sick and need medicine. 
D)  Medicine prices fall sharply. 
A)  It is now harder for people to open their medicine containers. 
B)  People leave their medicine containers open more often, which ends up making it easier for children to get into the medicine. 
C)  Fewer people get sick and need medicine. 
D)  Medicine prices fall sharply.

Question 12

In an interview an economist states,"This problem should be of greater concern to the federal government." We can explicitly put this statement in the category of

Accepted Answer

A)  microeconomics. 
B)  macroeconomics. 
C)  positive economics. 
D)  normative economics. 
A)  microeconomics. 
B)  macroeconomics. 
C)  positive economics. 
D)  normative economics.

Question 13

The absence of value judgments is the essence of

Accepted Answer

A)  normative economics. 
B)  positive economics. 
C)  microeconomics. 
D)  macroeconomics. 
A)  normative economics. 
B)  positive economics. 
C)  microeconomics. 
D)  macroeconomics.

Question 14

The cost of building a new interstate highway system is reported to be high at $25 billion.Does it necessarily follow that the interstate highway is not worth building?

Accepted Answer

A)  Yes, because it is better to spend $25 billion on ending poverty than on building another interstate highway system. 
B)  No, because building a new interstate highway system promotes economic growth, which helps everyone. 
C)  No, because the benefits of building a new interstate highway system may be greater than $25 billion. 
D)  Yes, because the benefits of building a new interstate highway system may be greater than $25 billion. 
A)  Yes, because it is better to spend $25 billion on ending poverty than on building another interstate highway system. 
B)  No, because building a new interstate highway system promotes economic growth, which helps everyone. 
C)  No, because the benefits of building a new interstate highway system may be greater than $25 billion. 
D)  Yes, because the benefits of building a new interstate highway system may be greater than $25 billion.

Question 15

Positive economics is concerned with

Accepted Answer

A)  value judgments. 
B)  cause-effect relationships. 
C)  observations that cannot be proved. 
D)  both b and c 
A)  value judgments. 
B)  cause-effect relationships. 
C)  observations that cannot be proved. 
D)  both b and c

Question 16

In all cases,positive economics deals with

Accepted Answer

A)  what is. 
B)  what should be. 
C)  relatively small units in the economy. 
D)  aggregates or the entire economy. 
A)  what is. 
B)  what should be. 
C)  relatively small units in the economy. 
D)  aggregates or the entire economy.

Question 17

A line is parallel to the vertical axis.The slope of the line is

Accepted Answer

A)  zero. 
B)  infinite. 
C)  indicative of an inverse relationship between two variables. 
D)  indicative of a direct relationship between two variables. 
E)  b and d 
A)  zero. 
B)  infinite. 
C)  indicative of an inverse relationship between two variables. 
D)  indicative of a direct relationship between two variables. 
E)  b and d

Question 18

When a person is making a decision at the margin he or she is comparing the additional benefit of that activity to the additional cost of the proposed action.

Accepted Answer

A) True 
 B)False

Question 19

Something that motivates or encourages people to take an action is referred to as a(n)

Accepted Answer

A)  utility. 
B)  abstract. 
C)  market. 
D)  incentive. 
A)  utility. 
B)  abstract. 
C)  market. 
D)  incentive.

Question 20

Produced goods used as inputs for the production of other goods comprise the resource known as

Accepted Answer

A)  natural resources. 
B)  services. 
C)  capital. 
D)  entrepreneurship. 
A)  natural resources. 
B)  services. 
C)  capital. 
D)  entrepreneurship.

Exam 1: What Economics Is About

If an economist says "the higher the price of oranges,the fewer oranges individuals will buy,ceteris paribus," this means that

Variable X rises as a result of variable Y rising.Variables X and Y are

Economists sometimes refer to the resource category land as natural resources.

Exhibit 1-1 -Refer to Exhibit 1-1. If the student whose study habits are illustrated here is currently studying for the 8th hour,she should

What is the most prominent rationing device you will likely find at your campus bookstore?

The need to make choices is most closely related to the concept of

Which of the following statements is false?

Describe the difference between positive and normative economics.Cite an example of each.

Exhibit 1-3 -Refer to Exhibit 1-3. Based on the data provided in this table, what type of relationship exists between variables X and Y?

Microeconomics is the branch of economics that deals with

Which of the following is an unintended effect of placing safety caps on medicines?

In an interview an economist states,"This problem should be of greater concern to the federal government." We can explicitly put this statement in the category of

The absence of value judgments is the essence of

The cost of building a new interstate highway system is reported to be high at $25 billion.Does it necessarily follow that the interstate highway is not worth building?

Positive economics is concerned with

In all cases,positive economics deals with

A line is parallel to the vertical axis.The slope of the line is

When a person is making a decision at the margin he or she is comparing the additional benefit of that activity to the additional cost of the proposed action.

Something that motivates or encourages people to take an action is referred to as a(n)

Produced goods used as inputs for the production of other goods comprise the resource known as

Production Possibilities Frontier Framework

Supply and Demand: Theory

Prices: Free, Controlled, and Relative

Supply, Demand, and Price: Applications

Macroeconomic Measurements: Prices and Unemployment

Macroeconomic Measurements: GDP and Real GDP

Aggregate Demand and Aggregate Supply

Classical Macroeconomics and the Self Regulating Economy

Keynesian Macroeconomics and Economic Instability: A Critique of the Self-Regulating Economy

Fiscal Policy and the Federal Budget

Money, Banking,and the Financial System

The Federal Reserve System

Money and the Economy

Monetary Policy

Expectations Theory and the Economy

Economic Growth: Resources, Technology, Ideas, and Institutions

The Financial Crisis of 2007-2009

Debates in Macroeconomics Over the Role and Effects of Government

Elasticity

Consumer Choice: Maximizing Utility and Behavioral Economics

Production and Costs

Perfect Competition

Monopoly

Monopolistic Competition, Oligopoly, and Game Theory

Government and Product Markets: Antitrust and Regulation

Factor Markets: With Emphasis on the Labor Market

Wages,Unions,and Labor

The Distribution of Income and Poverty

Interest, Rent, and Profit

Market Failure: Externalities, Public Goods, and Asymmetric Information

Public Choice and Special-Interest-Group Politics

Building Theories to Explain Everyday Life: From Observations to Questions to Theories to Predictions

International Trade

International Finance

Globalization and International Impacts on the Economy

The Economic Case For and Against Government: Five Topics Considered

Stocks, Bonds, Futures, and Options

Agriculture: Problems, Policies, and Unintended Effects

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