Question 1

Criteria for rationing goods and resources must be established because of

Accepted Answer

A) the law of comparative advantage. 
B) the use of capitalism as a form of economic organization. 
C) the inability of politicians to develop efficient forms of economic organization. 
D) scarcity imposed by nature. 
A) the law of comparative advantage. 
B) the use of capitalism as a form of economic organization. 
C) the inability of politicians to develop efficient forms of economic organization. 
D) scarcity imposed by nature.

Question 2

Which of the following is true?

Accepted Answer

A) Human choice is generally not influenced by changes in incentives. 
B) What is true for the individual must be true for the group as a whole. 
C) Using scarce resources to meet one need reduces our ability to meet needs in other areas. 
D) The economic way of thinking stresses that good intentions usually lead to sound economic policy. 
A) Human choice is generally not influenced by changes in incentives. 
B) What is true for the individual must be true for the group as a whole. 
C) Using scarce resources to meet one need reduces our ability to meet needs in other areas. 
D) The economic way of thinking stresses that good intentions usually lead to sound economic policy.

Question 3

The fallacy of composition is the fallacious view that

Accepted Answer

A) economic activity will benefit everyone. 
B) what is true for the individual will also be true for the group. 
C) it is possible for the whole to be greater than the sum of the individual parts. 
D) association does not necessarily indicate causation. 
A) economic activity will benefit everyone. 
B) what is true for the individual will also be true for the group. 
C) it is possible for the whole to be greater than the sum of the individual parts. 
D) association does not necessarily indicate causation.

Question 4

Rational choice requires that opportunity cost be

Accepted Answer

A) ignored in making a decision. 
B) considered for individual choices, but not for societal choices. 
C) computed, but not actually used in making a decision. 
D) considered as part of making a decision. 
E) used as the sole decision criterion. 
A) ignored in making a decision. 
B) considered for individual choices, but not for societal choices. 
C) computed, but not actually used in making a decision. 
D) considered as part of making a decision. 
E) used as the sole decision criterion.

Question 5

To say that people make marginal decisions means that

Accepted Answer

A) they usually wait until the last minute before making a decision to buy 
B) they weigh the additional costs and additional benefits of various activities before they make a decision 
C) most people just barely get by on the incomes they earn and live from day to day on the very edge of subsistence 
D) they consider the total cost and benefit of various activities before they make a purchase 
A) they usually wait until the last minute before making a decision to buy 
B) they weigh the additional costs and additional benefits of various activities before they make a decision 
C) most people just barely get by on the incomes they earn and live from day to day on the very edge of subsistence 
D) they consider the total cost and benefit of various activities before they make a purchase

Question 6

The term ceteris paribus means that

Accepted Answer

A) everything is changing. 
B) all variables except those specified are constant. 
C) no one knows which variables will change and which will remain constant. 
D) the basic postulate of economics does not apply for the case being considered. 
A) everything is changing. 
B) all variables except those specified are constant. 
C) no one knows which variables will change and which will remain constant. 
D) the basic postulate of economics does not apply for the case being considered.

Question 7

Which of the following was a key belief of Adam Smith?

Accepted Answer

A) he felt that human goodness would provide adequate goods and services to everyone. 
B) he stressed that limited exchange and command economies would prevent the exploitation of the poor. 
C) he believed that individuals pursuing their own interests would direct economic activity in the most advantageous way. 
D) he lectured about the importance of gold and silver in providing a stable monetary system. 
A) he felt that human goodness would provide adequate goods and services to everyone. 
B) he stressed that limited exchange and command economies would prevent the exploitation of the poor. 
C) he believed that individuals pursuing their own interests would direct economic activity in the most advantageous way. 
D) he lectured about the importance of gold and silver in providing a stable monetary system.

Question 8

"If Tom had twice as much money, he could consume twice as much. If everyone had twice as much money, they could consume twice as much." This quote illustrates

Accepted Answer

A) the difference between positive and normative economics. 
B) the fallacy of composition. 
C) that association is not causation. 
D) the law of unintended consequences. 
A) the difference between positive and normative economics. 
B) the fallacy of composition. 
C) that association is not causation. 
D) the law of unintended consequences.

Question 9

While waiting in line to buy two tacos at 75 cents each, and a medium drink for 80 cents, Emma notices that the restaurant has a value meal containing three tacos and a medium drink all for $2.50. For Emma, the marginal cost of purchasing the third taco would be

Accepted Answer

A) zero. 
B) 20 cents. 
C) 75 cents. 
D) 80 cents. 
A) zero. 
B) 20 cents. 
C) 75 cents. 
D) 80 cents.

Question 10

"After every fall election, the weather starts to turn cold, therefore elections cause cold weather." This statement

Accepted Answer

A) confuses positive and normative analysis. 
B) commits the fallacy of composition. 
C) fails to recognize that association is not causation. 
D) confuses macroeconomics with microeconomics. 
A) confuses positive and normative analysis. 
B) commits the fallacy of composition. 
C) fails to recognize that association is not causation. 
D) confuses macroeconomics with microeconomics.

Question 11

Economic choice and competitive behavior are the result of

Accepted Answer

A) scarcity. 
B) poverty. 
C) public ownership of resources. 
D) private ownership of resources. 
A) scarcity. 
B) poverty. 
C) public ownership of resources. 
D) private ownership of resources.

Question 12

During a war, governments will sometimes draft people, most of whom are presently employed, into the army. An economist, computing the real cost of the war, would be sure to include which of the following items?

Accepted Answer

A) the value of the civilian goods no longer produced by the new soldiers 
B) the cost of feeding and clothing the new soldiers 
C) the dollar cost of the payroll 
D) the higher prices of civilian goods due to wartime shortages 
E) the cost of transporting the soldiers to combat 
A) the value of the civilian goods no longer produced by the new soldiers 
B) the cost of feeding and clothing the new soldiers 
C) the dollar cost of the payroll 
D) the higher prices of civilian goods due to wartime shortages 
E) the cost of transporting the soldiers to combat

Question 13

Economic choice and competitive behavior are the result of

Accepted Answer

A) basic human greed. 
B) poverty. 
C) private ownership of resources. 
D) scarcity. 
A) basic human greed. 
B) poverty. 
C) private ownership of resources. 
D) scarcity.

Question 14

Which of the following groups would most likely benefit from a law that is extremely tough on those who drink and drive?

Accepted Answer

A) truck drivers 
B) taxi drivers 
C) bartenders 
D) doctors and nurses 
A) truck drivers 
B) taxi drivers 
C) bartenders 
D) doctors and nurses

Question 15

When a society cannot produce all the goods and services people wish to have, it is said that the economy is experiencing

Accepted Answer

A) scarcity. 
B) shortages. 
C) inefficiencies. 
D) inequities. 
A) scarcity. 
B) shortages. 
C) inefficiencies. 
D) inequities.

Question 16

Which of the following is most consistent with economizing behavior?

Accepted Answer

A) If you get the same satisfaction from a hamburger and a fish sandwich, you should purchase the one that costs the most. 
B) Even if you know how to paint, hiring someone to do the job is consistent with economizing behavior, if your opportunity cost is high enough. 
C) If the government provides a good free to citizens, the opportunity cost of the good is zero. 
D) If you get the same satisfaction from going to the opera and going to an art museum, it makes no difference which you choose. 
A) If you get the same satisfaction from a hamburger and a fish sandwich, you should purchase the one that costs the most. 
B) Even if you know how to paint, hiring someone to do the job is consistent with economizing behavior, if your opportunity cost is high enough. 
C) If the government provides a good free to citizens, the opportunity cost of the good is zero. 
D) If you get the same satisfaction from going to the opera and going to an art museum, it makes no difference which you choose.

Question 17

Which of the following is often referred to as the basic postulate of economics?

Accepted Answer

A) Individuals act only out of selfish motives. 
B) Incentives matter--individuals respond in predictable ways to changes in personal costs and benefits. 
C) The accuracy of the assumptions is the best test of an economic theory. 
D) The value of a good is objective; it is equal to the cost of producing the good. 
A) Individuals act only out of selfish motives. 
B) Incentives matter--individuals respond in predictable ways to changes in personal costs and benefits. 
C) The accuracy of the assumptions is the best test of an economic theory. 
D) The value of a good is objective; it is equal to the cost of producing the good.

Question 18

When economists say goods are scarce, they mean

Accepted Answer

A) consumers are too poor to afford the goods and services available. 
B) consumers are unwilling to buy goods unless they have very low prices. 
C) goods are generally freely available from nature in most countries. 
D) the desire for goods and services exceeds our ability to produce them with the limited resources available. 
A) consumers are too poor to afford the goods and services available. 
B) consumers are unwilling to buy goods unless they have very low prices. 
C) goods are generally freely available from nature in most countries. 
D) the desire for goods and services exceeds our ability to produce them with the limited resources available.

Question 19

Santiago wants to buy some milk and a box of cereal. If he buys 2 quarts of milk at $1 per quart, the box of cereal costs 75 cents. If he buys 3 quarts of milk at $1 per quart, the box of cereal is free. For Santiago, the marginal cost of the third quart of milk is

Accepted Answer

A) zero. 
B) 25 cents. 
C) 75 cents. 
D) $1. 
A) zero. 
B) 25 cents. 
C) 75 cents. 
D) $1.

Question 20

Which of the following is a positive economic statement?

Accepted Answer

A) reducing unemployment should be the highest priority of the federal government. 
B) a reduction in the payroll tax will reduce the unemployment rate. 
C) corporations should be prohibited from laying off workers during a recession. 
D) the current unemployment rate is too high. 
A) reducing unemployment should be the highest priority of the federal government. 
B) a reduction in the payroll tax will reduce the unemployment rate. 
C) corporations should be prohibited from laying off workers during a recession. 
D) the current unemployment rate is too high.

Criteria for rationing goods and resources must be established because of

Which of the following is true?

The fallacy of composition is the fallacious view that

Rational choice requires that opportunity cost be

To say that people make marginal decisions means that

The term ceteris paribus means that

Which of the following was a key belief of Adam Smith?

"If Tom had twice as much money, he could consume twice as much. If everyone had twice as much money, they could consume twice as much." This quote illustrates

While waiting in line to buy two tacos at 75 cents each, and a medium drink for 80 cents, Emma notices that the restaurant has a value meal containing three tacos and a medium drink all for $2.50. For Emma, the marginal cost of purchasing the third taco would be

"After every fall election, the weather starts to turn cold, therefore elections cause cold weather." This statement

Economic choice and competitive behavior are the result of

During a war, governments will sometimes draft people, most of whom are presently employed, into the army. An economist, computing the real cost of the war, would be sure to include which of the following items?

Economic choice and competitive behavior are the result of

Which of the following groups would most likely benefit from a law that is extremely tough on those who drink and drive?

When a society cannot produce all the goods and services people wish to have, it is said that the economy is experiencing

Which of the following is most consistent with economizing behavior?

Which of the following is often referred to as the basic postulate of economics?

When economists say goods are scarce, they mean

Santiago wants to buy some milk and a box of cereal. If he buys 2 quarts of milk at $1 per quart, the box of cereal costs 75 cents. If he buys 3 quarts of milk at $1 per quart, the box of cereal is free. For Santiago, the marginal cost of the third quart of milk is

Which of the following is a positive economic statement?

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Taking the Nations Economic Pulse

Economic Fluctuations, Unemployment, and Inflation

An Introduction to Basic Macroeconomic Markets

Dynamic Change, Economic Fluctuations, and the Ad-As Model

Fiscal Policy: the Keynesian View and the Historical Development of Macroeconomics

Fiscal Policy, Incentives, and Secondary Effects

Money and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, Output, and Employment

Creating an Environment for Growth and Prosperity

Institutions, Policies, and Cross-Country Differences in Income and Growth

Gaining From International Trade

International Finance and the Foreign Exchange Market

Filters

Exam 1: The Economic Approach

Criteria for rationing goods and resources must be established because of

Which of the following is true?

The fallacy of composition is the fallacious view that

Rational choice requires that opportunity cost be

To say that people make marginal decisions means that

The term ceteris paribus means that

Which of the following was a key belief of Adam Smith?

"If Tom had twice as much money, he could consume twice as much. If everyone had twice as much money, they could consume twice as much." This quote illustrates

While waiting in line to buy two tacos at 75 cents each, and a medium drink for 80 cents, Emma notices that the restaurant has a value meal containing three tacos and a medium drink all for $2.50. For Emma, the marginal cost of purchasing the third taco would be

"After every fall election, the weather starts to turn cold, therefore elections cause cold weather." This statement

Economic choice and competitive behavior are the result of

During a war, governments will sometimes draft people, most of whom are presently employed, into the army. An economist, computing the real cost of the war, would be sure to include which of the following items?

Economic choice and competitive behavior are the result of

Which of the following groups would most likely benefit from a law that is extremely tough on those who drink and drive?

When a society cannot produce all the goods and services people wish to have, it is said that the economy is experiencing

Which of the following is most consistent with economizing behavior?

Which of the following is often referred to as the basic postulate of economics?

When economists say goods are scarce, they mean

Santiago wants to buy some milk and a box of cereal. If he buys 2 quarts of milk at $1 per quart, the box of cereal costs 75 cents. If he buys 3 quarts of milk at $1 per quart, the box of cereal is free. For Santiago, the marginal cost of the third quart of milk is

Which of the following is a positive economic statement?

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Taking the Nations Economic Pulse

Economic Fluctuations, Unemployment, and Inflation

An Introduction to Basic Macroeconomic Markets

Dynamic Change, Economic Fluctuations, and the Ad-As Model

Fiscal Policy: the Keynesian View and the Historical Development of Macroeconomics

Fiscal Policy, Incentives, and Secondary Effects

Money and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, Output, and Employment

Creating an Environment for Growth and Prosperity

Institutions, Policies, and Cross-Country Differences in Income and Growth

Gaining From International Trade

International Finance and the Foreign Exchange Market

Filters