Question 1

Economic reasoning would argue that there is an opportunity cost to:

Accepted Answer

A)  all choices. 
B)  more choices. 
C)  only choices that involve money. 
D)  only choices that do not involve money. 
A)  all choices. 
B)  more choices. 
C)  only choices that involve money. 
D)  only choices that do not involve money. A

Question 2

When your wages rise, the:

Accepted Answer

A)  opportunity cost of an hour of work decreases. 
B)  opportunity cost of an hour of leisure stays the same. 
C)  cost of working increases. 
D)  opportunity cost of an hour of leisure increases. 
A)  opportunity cost of an hour of work decreases. 
B)  opportunity cost of an hour of leisure stays the same. 
C)  cost of working increases. 
D)  opportunity cost of an hour of leisure increases. D

Question 3

Which of the following topics is most appropriately studied in a microeconomics course?

Accepted Answer

A)  The decision by a nurse to change professions 
B)  When the next recession will arrive 
C)  Why unemployment is so low and inflation has not accelerated 
D)  How the presidential candidates' tax plans might affect economic growth 
A)  The decision by a nurse to change professions 
B)  When the next recession will arrive 
C)  Why unemployment is so low and inflation has not accelerated 
D)  How the presidential candidates' tax plans might affect economic growth A

Question 4

Alan is sitting in a bar drinking beers that cost $4 each. According to the economic decision rule, Alan will stop drinking when the marginal:

Accepted Answer

A)  benefit to him of an additional beer is less than $4. 
B)  cost to him of an additional beer is less than the marginal benefit. 
C)  cost remains at $4. 
D)  benefit to him of an additional beer is greater than $4. 
A)  benefit to him of an additional beer is less than $4. 
B)  cost to him of an additional beer is less than the marginal benefit. 
C)  cost remains at $4. 
D)  benefit to him of an additional beer is greater than $4.

Question 5

You bought one share of McDonald's stock for $10, one share of Coca-Cola for $15, and one share of Pepto-Bismol for $20. Currently, each stock is priced at $15. Assuming that there are no tax issues and that you cannot predict the future price of any of the stocks, if you needed $15, which stock would you sell?

Accepted Answer

A)  McDonald's 
B)  Coca-Cola 
C)  Pepto-Bismol 
D)  Any one of them 
A)  McDonald's 
B)  Coca-Cola 
C)  Pepto-Bismol 
D)  Any one of them

Question 6

The table below shows how the marginal benefit of car washes varies for Carol with the number purchased per month. $$\begin{array} { | c | c | } 
\hline \text { Car washes per month } & \begin{array} { c } 
\text { Marginal benefit of purchasing an additimal car } \
\text { wash }
\end{array} \
\hline 1 & \$ 6.00 \
\hline 2 & \$ 5.00 \
\hline 3 & \$ 4.00 \
\hline 4 & \$ 3.00 \
\hline 5 & \$ 2.00 \
\hline
\end{array}$$ The price of each car wash is reduced from $2.99 to $1.99. Assuming that the price of a car wash accurately reflects the marginal cost to Carol and that she is rational, she will increase the number of car washes purchased per month from:

Accepted Answer

A)  one to two. 
B)  two to three. 
C)  three to four. 
D)  four to five. 
A)  one to two. 
B)  two to three. 
C)  three to four. 
D)  four to five.

Question 7

Scarcity exists because:

Accepted Answer

A)  individuals cannot solve the three central coordination problems. 
B)  governments cannot solve the three central coordination problems. 
C)  the supply of goods is always less than the demand. 
D)  new wants continue to develop and willingness to meet them is limited. 
A)  individuals cannot solve the three central coordination problems. 
B)  governments cannot solve the three central coordination problems. 
C)  the supply of goods is always less than the demand. 
D)  new wants continue to develop and willingness to meet them is limited.

Question 8

Positive economics seeks to:

Accepted Answer

A)  determine the most appropriate economic goals for society. 
B)  determine what government economic policies are best. 
C)  objectively explain how the economy functions. 
D)  objectively explain how societies value different economic outcomes. 
A)  determine the most appropriate economic goals for society. 
B)  determine what government economic policies are best. 
C)  objectively explain how the economy functions. 
D)  objectively explain how societies value different economic outcomes.

Question 9

Dogfighting is against the law in New Jersey, resulting in high-priced events held illegally in the state. What idea from Chapter 1 of the text does this story best illustrate?

Accepted Answer

A)  There ain't no such thing as a free lunch. 
B)  The invisible hand is always invisible. 
C)  Social and political forces sometimes rein in market forces. 
D)  Maintaining objectivity is easiest in positive economics. 
A)  There ain't no such thing as a free lunch. 
B)  The invisible hand is always invisible. 
C)  Social and political forces sometimes rein in market forces. 
D)  Maintaining objectivity is easiest in positive economics.

Question 10

The statement, "because the invisible hand allocates resources efficiently, economies ought to minimize government interference" is an example of:

Accepted Answer

A)  an economic theorem. 
B)  an economic precept. 
C)  a natural experiment. 
D)  efficiency. 
A)  an economic theorem. 
B)  an economic precept. 
C)  a natural experiment. 
D)  efficiency.

Question 11

A precept is:

Accepted Answer

A)  the application of models combined with judgment. 
B)  a policy rule that concludes that a particular course of action is preferable. 
C)  a proposition that is logically true based on the assumptions of a model. 
D)  a set of equations that define a model. 
A)  the application of models combined with judgment. 
B)  a policy rule that concludes that a particular course of action is preferable. 
C)  a proposition that is logically true based on the assumptions of a model. 
D)  a set of equations that define a model.

Question 12

Microsoft filed a lawsuit against people who sent spam (junk email) and a website owner who hosted spam services. A spokesman for Microsoft said that Microsoft was "trying to change the economics of spam" by increasing the cost of being a spammer. An economist most likely would agree with which statement about Microsoft's actions?

Accepted Answer

A)  A more effective approach would be to educate spammers about the costs they impose on others. 
B)  A more effective approach would be to appeal to the morals of the spammers and tell them to follow the Golden Rule. 
C)  Microsoft's approach of trying to change the costs of spamming is the most efficient way to change behavior. 
D)  Microsoft should not be involved because spamming is just part of the invisible hand at work and should be left alone. 
A)  A more effective approach would be to educate spammers about the costs they impose on others. 
B)  A more effective approach would be to appeal to the morals of the spammers and tell them to follow the Golden Rule. 
C)  Microsoft's approach of trying to change the costs of spamming is the most efficient way to change behavior. 
D)  Microsoft should not be involved because spamming is just part of the invisible hand at work and should be left alone.

Question 13

Marginal analysis suggests that you will engage in more of an activity if the:

Accepted Answer

A)  total benefit of the activity is less than the total cost. 
B)  additional benefit from the activity exceeds the additional cost. 
C)  total benefit from the activity exceeds the total cost. 
D)  additional cost of the activity exceeds the additional benefit. 
A)  total benefit of the activity is less than the total cost. 
B)  additional benefit from the activity exceeds the additional cost. 
C)  total benefit from the activity exceeds the total cost. 
D)  additional cost of the activity exceeds the additional benefit.

Question 14

Propositions that are logically true based on the assumptions of a model are known as:

Accepted Answer

A)  precepts. 
B)  theorems. 
C)  insights. 
D)  policies. 
A)  precepts. 
B)  theorems. 
C)  insights. 
D)  policies.

Question 15

Who would probably argue that you need to study the forest before you can understand the trees?

Accepted Answer

A)  A microeconomist 
B)  A macroeconomist 
C)  A normative economist 
D)  A classical economist 
A)  A microeconomist 
B)  A macroeconomist 
C)  A normative economist 
D)  A classical economist

Question 16

"The distribution of income should be left to the market" is an example of:

Accepted Answer

A)  positive economics. 
B)  normative economics. 
C)  the art of economics. 
D)  negative economics. 
A)  positive economics. 
B)  normative economics. 
C)  the art of economics. 
D)  negative economics.

Question 17

Say that an economic model concludes that "government raising payroll taxes is a measure that can maintain current Social Security benefit levels for every retiree." This conclusion is:

Accepted Answer

A)  a normative statement because there is disagreement over whether Social Security benefits should be maintained. 
B)  a positive statement because raising payroll taxes is one way to maintain Social Security benefits. 
C)  a statement in the art of economics because it is about policy. 
D)  false because there is no payroll tax rate high enough to maintain current benefits. 
A)  a normative statement because there is disagreement over whether Social Security benefits should be maintained. 
B)  a positive statement because raising payroll taxes is one way to maintain Social Security benefits. 
C)  a statement in the art of economics because it is about policy. 
D)  false because there is no payroll tax rate high enough to maintain current benefits.

Question 18

The marginal benefit of another T-shirt this month to Mary is $15. If the $10 price of a T-shirt reflects its marginal cost to Mary and Mary uses economic reasoning, she:

Accepted Answer

A)  will sell the T-shirts she has to others who are willing to pay $10. 
B)  will not gain anything by buying another T-shirt. 
C)  will buy another T-shirt this month. 
D)  will not buy a T-shirt this month. 
A)  will sell the T-shirts she has to others who are willing to pay $10. 
B)  will not gain anything by buying another T-shirt. 
C)  will buy another T-shirt this month. 
D)  will not buy a T-shirt this month.

Question 19

Antitrust laws are an example of:

Accepted Answer

A)  social forces. 
B)  political forces. 
C)  economic forces. 
D)  the invisible hand. 
A)  social forces. 
B)  political forces. 
C)  economic forces. 
D)  the invisible hand.

Question 20

Suppose the marginal cost of dating Perry is $30 and the marginal benefit is worth $40 to you. Following economic reasoning, you should:

Accepted Answer

A)  date Perry. 
B)  not date Perry. 
C)  determine what your sunk costs are. 
D)  determine what your total benefits and total costs are. 
A)  date Perry. 
B)  not date Perry. 
C)  determine what your sunk costs are. 
D)  determine what your total benefits and total costs are.

Economic reasoning would argue that there is an opportunity cost to:

When your wages rise, the:

Which of the following topics is most appropriately studied in a microeconomics course?

Alan is sitting in a bar drinking beers that cost $4 each. According to the economic decision rule, Alan will stop drinking when the marginal:

Scarcity exists because:

Positive economics seeks to:

Dogfighting is against the law in New Jersey, resulting in high-priced events held illegally in the state. What idea from Chapter 1 of the text does this story best illustrate?

The statement, "because the invisible hand allocates resources efficiently, economies ought to minimize government interference" is an example of:

A precept is:

Marginal analysis suggests that you will engage in more of an activity if the:

Propositions that are logically true based on the assumptions of a model are known as:

Who would probably argue that you need to study the forest before you can understand the trees?

"The distribution of income should be left to the market" is an example of:

Say that an economic model concludes that "government raising payroll taxes is a measure that can maintain current Social Security benefit levels for every retiree." This conclusion is:

The marginal benefit of another T-shirt this month to Mary is $15. If the $10 price of a T-shirt reflects its marginal cost to Mary and Mary uses economic reasoning, she:

Antitrust laws are an example of:

Suppose the marginal cost of dating Perry is $30 and the marginal benefit is worth $40 to you. Following economic reasoning, you should:

The Production Possibility Model, Trade, and Globalization

Economic Institutions

Supply and Demand

Using Supply and Demand

Describing Supply and Demand: Elasticities

Taxation and Government Intervention

Market Failure Versus Government Failure

Comparative Advantage, Exchange Rates, and Globalization

International Trade Policy

Production and Cost Analysis I

Production and Cost Analysis II

Perfect Competition

Monopoly and Monopolistic Competition

Oligopoly and Antitrust Policy

Real-World Competition and Technology

Work and the Labor Market

Who Gets What the Distribution of Income

The Logic of Individual Choice: the Foundation of Supply and Demand

Game Theory, Strategic Decision Making, and Behavioral Economics

Thinking Like a Modern Economist

Behavioral Economics and Modern Economic Policy

Microeconomic Policy, Economic Reasoning, and Beyond

Filters

Exam 1: Economics and Economic Reasoning

Economic reasoning would argue that there is an opportunity cost to:

When your wages rise, the:

Which of the following topics is most appropriately studied in a microeconomics course?

Alan is sitting in a bar drinking beers that cost $4 each. According to the economic decision rule, Alan will stop drinking when the marginal:

Scarcity exists because:

Positive economics seeks to:

Dogfighting is against the law in New Jersey, resulting in high-priced events held illegally in the state. What idea from Chapter 1 of the text does this story best illustrate?

The statement, "because the invisible hand allocates resources efficiently, economies ought to minimize government interference" is an example of:

A precept is:

Marginal analysis suggests that you will engage in more of an activity if the:

Propositions that are logically true based on the assumptions of a model are known as:

Who would probably argue that you need to study the forest before you can understand the trees?

"The distribution of income should be left to the market" is an example of:

Say that an economic model concludes that "government raising payroll taxes is a measure that can maintain current Social Security benefit levels for every retiree." This conclusion is:

The marginal benefit of another T-shirt this month to Mary is $15. If the $10 price of a T-shirt reflects its marginal cost to Mary and Mary uses economic reasoning, she:

Antitrust laws are an example of:

Suppose the marginal cost of dating Perry is $30 and the marginal benefit is worth $40 to you. Following economic reasoning, you should:

The Production Possibility Model, Trade, and Globalization

Economic Institutions

Supply and Demand

Using Supply and Demand

Describing Supply and Demand: Elasticities

Taxation and Government Intervention

Market Failure Versus Government Failure

Comparative Advantage, Exchange Rates, and Globalization

International Trade Policy

Production and Cost Analysis I

Production and Cost Analysis II

Perfect Competition

Monopoly and Monopolistic Competition

Oligopoly and Antitrust Policy

Real-World Competition and Technology

Work and the Labor Market

Who Gets What the Distribution of Income

The Logic of Individual Choice: the Foundation of Supply and Demand

Game Theory, Strategic Decision Making, and Behavioral Economics

Thinking Like a Modern Economist

Behavioral Economics and Modern Economic Policy

Microeconomic Policy, Economic Reasoning, and Beyond

Filters