Question 1

The invisible hand theorem comes from:

Accepted Answer

A) microeconomics. 
B) macroeconomics. 
C) sociology. 
D) political science. 
A) microeconomics. 
B) macroeconomics. 
C) sociology. 
D) political science.

Question 2

New Jersey raises its minimum wage while neighboring state Pennsylvania, does not. Economists compared the labor market in both states to draw conclusions about the effect of a minimum wage on employment and wages. This is an example of:

Accepted Answer

A) simulation economics. 
B) a natural experiment. 
C) an economic principle. 
D) the economic decision rule. 
A) simulation economics. 
B) a natural experiment. 
C) an economic principle. 
D) the economic decision rule.

Question 3

Observers have noted that people often vote against what is in their economic self-interest.It has been called the Kansas paradox because a famous article discussed the phenomenon in relation to the state of Kansas.Would Adam Smith see this as a paradox?

Accepted Answer

No,not necessarily.He would see it as li

Question 4

An economic principle:

Accepted Answer

A) should be used to make every individual decision. 
B) generally is stated as a normative statement. 
C) can be combined with knowledge of economic institutions to make policy proposals. 
D) is an action taken to influence the course of economic events. 
A) should be used to make every individual decision. 
B) generally is stated as a normative statement. 
C) can be combined with knowledge of economic institutions to make policy proposals. 
D) is an action taken to influence the course of economic events.

Question 5

Which statement best summarizes the invisible hand theorem?

Accepted Answer

A) Government policies direct people's selfish desires (tempered by social and economic forces)to the benefit of society. 
B) Cultural norms direct people's selfish desires (tempered by political and economic forces)to the common good. 
C) Markets direct people's selfish desires (tempered by political and social forces)to the common good. 
D) Social, political, and economic forces act against people's selfish desires to promote the common good. 
A) Government policies direct people's selfish desires (tempered by social and economic forces)to the benefit of society. 
B) Cultural norms direct people's selfish desires (tempered by political and economic forces)to the common good. 
C) Markets direct people's selfish desires (tempered by political and social forces)to the common good. 
D) Social, political, and economic forces act against people's selfish desires to promote the common good.

Question 6

Dorm rooms usually are not allocated by markets. Allocating dorm rooms is:

Accepted Answer

A) not an economic problem. 
B) an economic problem. 
C) not affected by economic forces. 
D) determined by prices. 
A) not an economic problem. 
B) an economic problem. 
C) not affected by economic forces. 
D) determined by prices.

Question 7

Economics is primarily:

Accepted Answer

A) a normative science. 
B) an observational science. 
C) a laboratory science. 
D) a natural science. 
A) a normative science. 
B) an observational science. 
C) a laboratory science. 
D) a natural science.

Question 8

Explain how each of the following scenarios illustrates the interaction of economic forces,social and cultural forces,and political and legal forces.
(a)State officials are trying to move welfare recipients into jobs during a period of economic weakness,rising unemployment,and declining federal funding.
(b)The European Union is funding a massive program to explore ways of using hydrogen to replace fossil fuels both to increase energy availability and to protect the environment.
(c)In some states,many types of retail stores are prohibited from opening before noon on Sunday.
(d)In North Dakota,most colleges and universities are located in small towns.Despite shrinking student populations,state law mandates that all of these schools remain open.

Accepted Answer

(a)The plight of these state officials i

Question 9

The marginal benefit from consuming another unit of a good:

Accepted Answer

A) must equal the marginal cost or the unit will not be consumed. 
B) must be less than the marginal cost or the unit will not be consumed. 
C) equals the increase in total benefits from consuming the unit. 
D) equals the total benefit obtained from the consumption of all prior units. 
A) must equal the marginal cost or the unit will not be consumed. 
B) must be less than the marginal cost or the unit will not be consumed. 
C) equals the increase in total benefits from consuming the unit. 
D) equals the total benefit obtained from the consumption of all prior units.

Question 10

An economist secures volunteers from her college campus and divides them into two groups that are ushered into different rooms. Both groups are given a test. Those in the first group who score 90 percent or more receive an Apple iPad. Upon exiting the room, those given iPads are offered the choice of receiving $150 in exchange for the iPad. Only a few take the exchange. Those in the second group who score 90 percent are offered either an Apple iPad or $150. About half the students choose $150. The professor uses this data to support a principle known as the endowment effect. The professor is engaging in:

Accepted Answer

A) experimental economics. 
B) natural experiments. 
C) the economic decision rule. 
D) a market coordination mechanism. 
A) experimental economics. 
B) natural experiments. 
C) the economic decision rule. 
D) a market coordination mechanism.

Question 11

What is an economic institution? Why is it important? Describe three economic institutions that regularly impact our daily lives.

Accepted Answer

An economic institution is any structura

Question 12

Maintaining objectivity is easiest in:

Accepted Answer

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

Question 13

Which of the following is least likely to be studied in macroeconomics?

Accepted Answer

A) Inflation 
B) Unemployment 
C) Business cycles 
D) Advertising 
A) Inflation 
B) Unemployment 
C) Business cycles 
D) Advertising

Question 14

A necessary assumption behind the invisible hand theorem is that:

Accepted Answer

A) market forces are determined by cultural norms. 
B) market forces produce inefficient outcomes. 
C) the price mechanism is not constrained by political or social forces. 
D) people behave rationally. 
A) market forces are determined by cultural norms. 
B) market forces produce inefficient outcomes. 
C) the price mechanism is not constrained by political or social forces. 
D) people behave rationally.

Question 15

Nepalese villagers sell their kidneys as a way to earn much-needed money. Unfortunately, although the demand for such kidneys in developed economies is high and the medical facilities are available to conduct kidney transplants, the selling and buying of organs is illegal. What idea from Chapter 1 of the text does this situation best illustrate?

Accepted Answer

A) Sunk costs do not matter in making decisions. 
B) Marginal revenue should equal marginal cost. 
C) Social and political forces sometimes rein in market forces. 
D) Microeconomics and macroeconomics are very much interrelated. 
A) Sunk costs do not matter in making decisions. 
B) Marginal revenue should equal marginal cost. 
C) Social and political forces sometimes rein in market forces. 
D) Microeconomics and macroeconomics are very much interrelated.

Question 16

How do you use the concept of scarcity to explain why a highly paid,star basketball player makes more money than the average player in the league?

Accepted Answer

A highly paid basketball player possesse

Question 17

A policy rule that concludes that a particular course of action is preferable is known as a(n):

Accepted Answer

A) precept. 
B) theorem. 
C) insight. 
D) policy. 
A) precept. 
B) theorem. 
C) insight. 
D) policy.

Question 18

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 19

A basic difference between microeconomics and macroeconomics is that:

Accepted Answer

A) microeconomics focuses on the choices of individual consumers, whereas macroeconomics considers the behavior of large businesses. 
B) microeconomics focuses on financial reporting by individuals, whereas macroeconomics focuses on financial reporting by large firms. 
C) microeconomics examines the choices made by individual participants in an economy, whereas macroeconomics considers the economy's overall performance. 
D) microeconomics focuses on national markets, whereas macroeconomics concentrates on international markets. 
A) microeconomics focuses on the choices of individual consumers, whereas macroeconomics considers the behavior of large businesses. 
B) microeconomics focuses on financial reporting by individuals, whereas macroeconomics focuses on financial reporting by large firms. 
C) microeconomics examines the choices made by individual participants in an economy, whereas macroeconomics considers the economy's overall performance. 
D) microeconomics focuses on national markets, whereas macroeconomics concentrates on international markets.

Question 20

"We should support the market because it is efficient" is an example of:

Accepted Answer

A) positive economics. 
B) normative economics. 
C) objective economics. 
D) negative economics. 
A) positive economics. 
B) normative economics. 
C) objective economics. 
D) negative economics.

Exam 1: Economics and Economic Reasoning

The invisible hand theorem comes from:

New Jersey raises its minimum wage while neighboring state Pennsylvania, does not. Economists compared the labor market in both states to draw conclusions about the effect of a minimum wage on employment and wages. This is an example of:

Observers have noted that people often vote against what is in their economic self-interest.It has been called the Kansas paradox because a famous article discussed the phenomenon in relation to the state of Kansas.Would Adam Smith see this as a paradox?

An economic principle:

Which statement best summarizes the invisible hand theorem?

Dorm rooms usually are not allocated by markets. Allocating dorm rooms is:

Economics is primarily:

The marginal benefit from consuming another unit of a good:

What is an economic institution? Why is it important? Describe three economic institutions that regularly impact our daily lives.

Maintaining objectivity is easiest in:

Which of the following is least likely to be studied in macroeconomics?

A necessary assumption behind the invisible hand theorem is that:

How do you use the concept of scarcity to explain why a highly paid,star basketball player makes more money than the average player in the league?

A policy rule that concludes that a particular course of action is preferable is known as a(n):

A precept is:

A basic difference between microeconomics and macroeconomics is that:

"We should support the market because it is efficient" is an example of:

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

Economic Growth, Business Cycles, and Unemployment

Measuring and Describing the Aggregate Economy

The Keynesian Short-Run Policy Model: Demand-Side Policies

The Classical Long-Run Policy Model: Growth and Supply-Side Policies

The Financial Sector and the Economy

Monetary Policy

Financial Crises, Panics, and Unconventional Monetary Policy

Deficits and Debt: the Austerity Debate

The Fiscal Policy Dilemma

Jobs and Unemployment

Inflation, Deflation, and Macro Policy

International Financial Policy

Macro Policy in a Global Setting

Structural Stagnation and Globalization

Macro Policy in Developing Countries

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