Question 1

Identifying the effect of an increase in the money supply on prices requires the use of:

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 2

To engage in economic reasoning, one must compare:

Accepted Answer

A) total cost and total benefit. 
B) marginal cost, sunk cost, and total benefit. 
C) sunk cost and marginal cost. 
D) marginal cost and marginal benefit. 
A) total cost and total benefit. 
B) marginal cost, sunk cost, and total benefit. 
C) sunk cost and marginal cost. 
D) marginal cost and marginal benefit.

Question 3

The study of inflation is a topic in:

Accepted Answer

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

Question 4

Only marginal costs, not sunk costs, affect economic decisions if individuals are rational.

Accepted Answer

A) True 
 B)False

Question 5

The art of economics is:

Accepted Answer

A) the application of the knowledge gained by positive economics to the goals set in normative economics. 
B) purely technical and therefore more objective than positive or normative economics. 
C) purely subjective so that the economist does not have to strive for the same level of objectivity that positive or normative economists do. 
D) the branch of economics farthest removed from practical application, since its goal is to create the most elegant mathematical models. 
A) the application of the knowledge gained by positive economics to the goals set in normative economics. 
B) purely technical and therefore more objective than positive or normative economics. 
C) purely subjective so that the economist does not have to strive for the same level of objectivity that positive or normative economists do. 
D) the branch of economics farthest removed from practical application, since its goal is to create the most elegant mathematical models.

Question 6

The opportunity cost of undertaking an activity includes any sunk cost.

Accepted Answer

A) True 
 B)False

Question 7

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 8

Say a pill existed that made people selfless. After taking it they were only interested in others, not themselves. Under the coordination definition of economics:

Accepted Answer

A) no economic problem would exist. 
B) there still would be an economic problem. 
C) there would be a political problem but not an economic problem. 
D) there would be a social problem but not an economic problem. 
A) no economic problem would exist. 
B) there still would be an economic problem. 
C) there would be a political problem but not an economic problem. 
D) there would be a social problem but not an economic problem.

Question 9

The price mechanism is:

Accepted Answer

A) not affected by social and political forces. 
B) affected by social but not political forces. 
C) affected by political but not social forces. 
D) affected by both political and social forces. 
A) not affected by social and political forces. 
B) affected by social but not political forces. 
C) affected by political but not social forces. 
D) affected by both political and social forces.

Question 10

You've purchased a car for $20,000 and now are deciding whether to have a sunroof installed for $800 and a security system installed for $200. The marginal cost of adding both the sunroof and the security system is:

Accepted Answer

A) $21,200. 
B) $20,000. 
C) $800. 
D) $1,000. 
A) $21,200. 
B) $20,000. 
C) $800. 
D) $1,000.

Question 11

If allocating dorm rooms changes from allocation by lottery to allocation by the market:

Accepted Answer

A) it becomes an economic problem. 
B) it becomes a political problem but not an economic problem. 
C) it becomes a social problem but not an economic problem. 
D) the allocation problem is still an economic problem. 
A) it becomes an economic problem. 
B) it becomes a political problem but not an economic problem. 
C) it becomes a social problem but not an economic problem. 
D) the allocation problem is still an economic problem.

Question 12

The marginal benefit of you going to a movie during the week is currently $6. Assume that the $4 price of going to the movies measures its marginal cost. Following the economic decision rule, you will:

Accepted Answer

A) continue going to movies until the marginal benefit of doing so falls to zero. 
B) choose not to go to any movies during the week. 
C) continue going to movies until the marginal benefit of doing so falls below $4. 
D) not be able to enjoy a net gain from going to the movies during the week. 
A) continue going to movies until the marginal benefit of doing so falls to zero. 
B) choose not to go to any movies during the week. 
C) continue going to movies until the marginal benefit of doing so falls below $4. 
D) not be able to enjoy a net gain from going to the movies during the week.

Question 13

Comment on the following statement that appeared in a local newspaper: "Our junior high school serves a splendid hot meal for one dollar without costing the taxpayer anything,thanks in part to a government subsidy."

Accepted Answer

There ain't no such thing as a free lunc

Question 14

What does the term efficiency mean?

Accepted Answer

Efficiency means ach

Question 15

Why are empirical results in economics often subject to dispute?

Accepted Answer

Economic models are used to generate nat

Question 16

Which of the following statements about urban sprawl and traffic congestion is the best illustration of a normative statement?

Accepted Answer

A) Snarled traffic cost motorists in the 85 largest U.S. cities 3.5 billion hours. 
B) The average U.S. urban traveler is stuck in road traffic 46 hours a year. 
C) Traffic congestion has increased in the last 20 years. 
D) Because urban sprawl is the result of individual choice, it is okay. 
A) Snarled traffic cost motorists in the 85 largest U.S. cities 3.5 billion hours. 
B) The average U.S. urban traveler is stuck in road traffic 46 hours a year. 
C) Traffic congestion has increased in the last 20 years. 
D) Because urban sprawl is the result of individual choice, it is okay.

Question 17

Which of the following tools did Adam Smith argue provided a reasonable way to address normative questions objectively?

Accepted Answer

A) The impartial spectator tool 
B) The invisible observer tool 
C) The scientific observer tool 
D) The reasoned spectator tool 
A) The impartial spectator tool 
B) The invisible observer tool 
C) The scientific observer tool 
D) The reasoned spectator tool

Question 18

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.

Exam 1: Economics and Economic Reasoning

Identifying the effect of an increase in the money supply on prices requires the use of:

To engage in economic reasoning, one must compare:

The study of inflation is a topic in:

Only marginal costs, not sunk costs, affect economic decisions if individuals are rational.

The art of economics is:

The opportunity cost of undertaking an activity includes any sunk cost.

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

Say a pill existed that made people selfless. After taking it they were only interested in others, not themselves. Under the coordination definition of economics:

The price mechanism is:

You've purchased a car for $20,000 and now are deciding whether to have a sunroof installed for $800 and a security system installed for $200. The marginal cost of adding both the sunroof and the security system is:

If allocating dorm rooms changes from allocation by lottery to allocation by the market:

The marginal benefit of you going to a movie during the week is currently $6. Assume that the $4 price of going to the movies measures its marginal cost. Following the economic decision rule, you will:

Comment on the following statement that appeared in a local newspaper: "Our junior high school serves a splendid hot meal for one dollar without costing the taxpayer anything,thanks in part to a government subsidy."

What does the term efficiency mean?

Why are empirical results in economics often subject to dispute?

Which of the following statements about urban sprawl and traffic congestion is the best illustration of a normative statement?

Which of the following tools did Adam Smith argue provided a reasonable way to address normative questions objectively?

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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