Question 1

How does microeconomics differ from macroeconomics?

Accepted Answer

Microeconomics involves an analysis of i

Question 2

Microeconomics includes the study of:

Accepted Answer

A) inflation. 
B) unemployment. 
C) business cycles. 
D) a firm's pricing policies. 
A) inflation. 
B) unemployment. 
C) business cycles. 
D) a firm's pricing policies.

Question 3

Which of the following topics is best categorized as a macroeconomic issue?

Accepted Answer

A) The choices a student makes in selecting college courses 
B) The decision by Apple to produce fewer Macintosh computers 
C) The effect of a drought on the price of corn 
D) The effect of an increase in federal spending on the unemployment rate 
A) The choices a student makes in selecting college courses 
B) The decision by Apple to produce fewer Macintosh computers 
C) The effect of a drought on the price of corn 
D) The effect of an increase in federal spending on the unemployment rate

Question 4

Political forces:

Accepted Answer

A) affect the price mechanism through cultural norms. 
B) affect the price mechanism through the legal system. 
C) affect the price mechanism through scarcity. 
D) do not affect the price mechanism. 
A) affect the price mechanism through cultural norms. 
B) affect the price mechanism through the legal system. 
C) affect the price mechanism through scarcity. 
D) do not affect the price mechanism.

Question 5

If it takes you an hour to make a rational decision and the opportunity cost of that hour is $100, you will:

Accepted Answer

A) always make rational decisions. 
B) make rational decisions only if the benefit from doing so exceeds $100. 
C) make rational decisions only if the benefit from doing so is less than $100. 
D) never make rational decisions. 
A) always make rational decisions. 
B) make rational decisions only if the benefit from doing so exceeds $100. 
C) make rational decisions only if the benefit from doing so is less than $100. 
D) never make rational decisions.

Question 6

Which of the following is not an economic institution?

Accepted Answer

A) Corporations 
B) Government 
C) Cultural norms 
D) None of the answers is correct. 
A) Corporations 
B) Government 
C) Cultural norms 
D) None of the answers is correct.

Question 7

What is the difference between economic forces and market forces?

Accepted Answer

Economic forces are the necessary reacti

Question 8

An economist who is studying the relationship between the money supply, interest rates, and the rate of inflation is engaged in:

Accepted Answer

A) microeconomic research. 
B) macroeconomic research. 
C) theoretical research because there is no data on these variables. 
D) empirical research because there is no economic theory related to these variables. 
A) microeconomic research. 
B) macroeconomic research. 
C) theoretical research because there is no data on these variables. 
D) empirical research because there is no economic theory related to these variables.

Question 9

According to the text, economics is the study of how:

Accepted Answer

A) governments allocate resources in the face of constraints. 
B) government policies can be used to meet individuals' wants and desires. 
C) human beings coordinate their wants and desires. 
D) scarce resources are allocated between capitalists and workers. 
A) governments allocate resources in the face of constraints. 
B) government policies can be used to meet individuals' wants and desires. 
C) human beings coordinate their wants and desires. 
D) scarce resources are allocated between capitalists and workers.

Question 10

What is opportunity cost? What would be the opportunity cost of having a date on Saturday night? Alternatively,why is there no such thing as a free date (even if she/he pays)?

Accepted Answer

Opportunity cost is the benefit forgone

Question 11

The invisible hand theorem relates mostly to:

Accepted Answer

A) microeconomics. 
B) macroeconomics. 
C) normative economics. 
D) supra-economics. 
A) microeconomics. 
B) macroeconomics. 
C) normative economics. 
D) supra-economics.

Question 12

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 13

Social forces:

Accepted Answer

A) affect the price mechanism through cultural norms. 
B) affect the price mechanism but not the legal system. 
C) affect the price mechanism through scarcity. 
D) do not affect the price mechanism. 
A) affect the price mechanism through cultural norms. 
B) affect the price mechanism but not the legal system. 
C) affect the price mechanism through scarcity. 
D) do not affect the price mechanism.

Question 14

The opportunity cost of attending college for one year is best measured by the:

Accepted Answer

A) benefit received by the student. 
B) tuition paid for the year. 
C) value of the next-best activity forgone by attending college. 
D) total money expenses associated with attending college. 
A) benefit received by the student. 
B) tuition paid for the year. 
C) value of the next-best activity forgone by attending college. 
D) total money expenses associated with attending college.

Question 15

Three different ways (approaches)can be used to study economics: positive,normative,and their combination (the art of economics).Describe each approach and give an example of each.Which do you think is the best approach to study economic issues? Explain why you picked the approach you did.

Accepted Answer

(a).Positive economics is the study of w

Question 16

What is the invisible hand theory?

Accepted Answer

The invisible hand theory is t

Question 17

What relates positive economics to normative economics?

Accepted Answer

A) Microeconomics 
B) Macroeconomics 
C) The art of economics 
D) The science of economics 
A) Microeconomics 
B) Macroeconomics 
C) The art of economics 
D) The science of economics

Question 18

Which of the following is the best example of a positive question?

Accepted Answer

A) How should the government deal with the next recession? 
B) Should the government reduce inflation? 
C) How are price and quantity demanded related? 
D) Should government allow two large companies to merge? 
A) How should the government deal with the next recession? 
B) Should the government reduce inflation? 
C) How are price and quantity demanded related? 
D) Should government allow two large companies to merge?

Question 19

In the late 1970's,the U.S.mandated a maximum highway speed of 55 miles per hour to economize on fuel.Evidence showed that the lower 55-miles-per hour speed limit also significantly reduced traffic fatalities.Nevertheless,when the gas shortage eased,we have returned to the higher speed limits.Provide an economic rationale for not permanently lowering the speed limit to 55 miles per hour when we know that it will save lives.

Accepted Answer

Although experience proves that lower sp

Question 20

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.

Exam 1: Economics and Economic Reasoning

How does microeconomics differ from macroeconomics?

Microeconomics includes the study of:

Which of the following topics is best categorized as a macroeconomic issue?

Political forces:

If it takes you an hour to make a rational decision and the opportunity cost of that hour is $100, you will:

Which of the following is not an economic institution?

What is the difference between economic forces and market forces?

An economist who is studying the relationship between the money supply, interest rates, and the rate of inflation is engaged in:

According to the text, economics is the study of how:

What is opportunity cost? What would be the opportunity cost of having a date on Saturday night? Alternatively,why is there no such thing as a free date (even if she/he pays)?

The invisible hand theorem relates mostly to:

Antitrust laws are an example of:

Social forces:

The opportunity cost of attending college for one year is best measured by the:

Three different ways (approaches)can be used to study economics: positive,normative,and their combination (the art of economics).Describe each approach and give an example of each.Which do you think is the best approach to study economic issues? Explain why you picked the approach you did.

What is the invisible hand theory?

What relates positive economics to normative economics?

Which of the following is the best example of a positive question?

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 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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