Question 1

The economic way of thinking is

Accepted Answer

A) a set of historical generalizations that indicates what goods should be produced. 
B) a body of statistical data that indicates how an economy should be organized. 
C) a set of basic concepts that helps one understand human choices. 
D) a set of complex, highly abstract theories that provides persons skilled in statistics with the information necessary to tell others what choices they should make. 
A) a set of historical generalizations that indicates what goods should be produced. 
B) a body of statistical data that indicates how an economy should be organized. 
C) a set of basic concepts that helps one understand human choices. 
D) a set of complex, highly abstract theories that provides persons skilled in statistics with the information necessary to tell others what choices they should make.

Question 2

Some individuals or families can become completely saturated with a service such as television. This suggests that

Accepted Answer

A) wants are limited 
B) desires for a single commodity can be satisfied but then the focus will switch to other goods and services 
C) a highly productive economy may someday be able to satisfy all human desires 
D) resources are not truly fixed in supply as we generally assume 
E) scarcity does not exist 
A) wants are limited 
B) desires for a single commodity can be satisfied but then the focus will switch to other goods and services 
C) a highly productive economy may someday be able to satisfy all human desires 
D) resources are not truly fixed in supply as we generally assume 
E) scarcity does not exist

Question 3

The highest valued alternative option that must be given up in order to choose an action is called its

Accepted Answer

A) utility. 
B) opportunity cost. 
C) capital. 
D) ceteris paribus 
A) utility. 
B) opportunity cost. 
C) capital. 
D) ceteris paribus

Question 4

Someone notices that sunspot activity is high just prior to recessions and concludes that sunspots cause recessions. This person has

Accepted Answer

A) confused association and causation. 
B) misunderstood the ceteris paribus assumption. 
C) used normative economics to answer a positive question. 
D) built an untestable model. 
A) confused association and causation. 
B) misunderstood the ceteris paribus assumption. 
C) used normative economics to answer a positive question. 
D) built an untestable model.

Question 5

The difference between a positive economic statement and a normative statement is that

Accepted Answer

A) a positive statement must be true; a normative statement is often not true 
B) a normative statement must be true; a positive statement is often not true 
C) a positive statement can be proved; a normative statement cannot 
D) a normative statement can be proved; a positive statement cannot 
E) a positive economic statement is a moral judgment; a normative economic statement is not a moral judgment 
A) a positive statement must be true; a normative statement is often not true 
B) a normative statement must be true; a positive statement is often not true 
C) a positive statement can be proved; a normative statement cannot 
D) a normative statement can be proved; a positive statement cannot 
E) a positive economic statement is a moral judgment; a normative economic statement is not a moral judgment

Question 6

When an individual weighs her options and makes a choice that maximizes her benefit at the minimum cost, economists refer to this as a process of

Accepted Answer

A) rational decision making. 
B) objective decision making because the value of goods is determined objectively. 
C) marginal management analysis. 
D) random decision making. 
A) rational decision making. 
B) objective decision making because the value of goods is determined objectively. 
C) marginal management analysis. 
D) random decision making.

Question 7

What is the best test of an economic theory?

Accepted Answer

A) its eloquence 
B) the plausibility of its assumptions 
C) its ability to predict real-world events, patterns, and changes 
D) whether it produces implications that are favored by the researcher 
A) its eloquence 
B) the plausibility of its assumptions 
C) its ability to predict real-world events, patterns, and changes 
D) whether it produces implications that are favored by the researcher

Question 8

When economists say a good is scarce, they mean

Accepted Answer

A) there are only a limited number of consumers who would be interested in purchasing the good. 
B) the human desire for the good exceeds the amount freely available from nature. 
C) most people in poorer countries do not have enough of the good. 
D) the production of the good has no opportunity cost for society. 
A) there are only a limited number of consumers who would be interested in purchasing the good. 
B) the human desire for the good exceeds the amount freely available from nature. 
C) most people in poorer countries do not have enough of the good. 
D) the production of the good has no opportunity cost for society.

Question 9

If scarcity were eliminated,

Accepted Answer

A) all goods would be free. 
B) no one would have to make any choices. 
C) everyone could have all they want at no cost. 
D) all of the above are true. 
A) all goods would be free. 
B) no one would have to make any choices. 
C) everyone could have all they want at no cost. 
D) all of the above are true.

Question 10

While waiting in line to buy one cheeseburger for $1.50 and a medium drink for $1.00, Sally notices that she could get a value meal that contains both the cheeseburger and medium drink and also a medium order of fries for $2.75. She thinks to herself, "Is it worth the extra 25 cents to get the medium fries?" To an economist, Sally's decision is an example of

Accepted Answer

A) marginal decision making. 
B) basing decisions on total, rather than marginal, value. 
C) an unintended consequence. 
D) the fallacy of composition. 
A) marginal decision making. 
B) basing decisions on total, rather than marginal, value. 
C) an unintended consequence. 
D) the fallacy of composition.

Question 11

Which of the following most clearly distinguishes between positive and normative economics?

Accepted Answer

A) Positive economics is the study of what ought to be; normative economics is concerned with the facts. 
B) Positive economics is the study of the facts; normative economics is concerned with what ought to be. 
C) Positive economics is the study of supply and demand in narrowly defined markets such as the market for shoes; normative economics focuses on highly aggregated markets such as the market for all consumer products. 
D) Positive economics is the study of goods that are scarce; normative economics is concerned with goods that are not scarce. 
A) Positive economics is the study of what ought to be; normative economics is concerned with the facts. 
B) Positive economics is the study of the facts; normative economics is concerned with what ought to be. 
C) Positive economics is the study of supply and demand in narrowly defined markets such as the market for shoes; normative economics focuses on highly aggregated markets such as the market for all consumer products. 
D) Positive economics is the study of goods that are scarce; normative economics is concerned with goods that are not scarce.

Question 12

When Mother Theresa won the Nobel Peace Prize, the monetary award was well in excess of $100,000. Did she accept the money? If so, what did she do with it?

Accepted Answer

Mother Theresa used the money to help th

Question 13

Which of the following statements best describes the scientific method?

Accepted Answer

A) The use of modern electronic testing equipment to understand the world. 
B) The unbiased development and testing of theories about how the world works. 
C) The use of controlled laboratory experiments to understand the way the world works. 
D) Finding evidence to support preconceived theories about how the world works. 
A) The use of modern electronic testing equipment to understand the world. 
B) The unbiased development and testing of theories about how the world works. 
C) The use of controlled laboratory experiments to understand the way the world works. 
D) Finding evidence to support preconceived theories about how the world works.

Question 14

The unintended consequences of an economic change that are not immediately identifiable but are felt only with time are known in economics as

Accepted Answer

A) opportunity costs. 
B) marginal effects. 
C) secondary effects. 
D) scarcity constraints. 
A) opportunity costs. 
B) marginal effects. 
C) secondary effects. 
D) scarcity constraints.

Question 15

According to marginal analysis, you should spend more time studying economics if the extra benefit from an additional hour of study

Accepted Answer

A) is positive. 
B) outweighs the extra cost. 
C) exceeds the benefits of the previous hour of study. 
D) will raise your exam score. 
A) is positive. 
B) outweighs the extra cost. 
C) exceeds the benefits of the previous hour of study. 
D) will raise your exam score.

Question 16

Ethan washes and irons his own shirts. Sophia, his boss, sends her clothes to a laundry. Which is the most plausible economic explanation for this difference?

Accepted Answer

A) Ethan must enjoy ironing more than Sophia does. 
B) Ethan must be better at ironing than Sophia is. 
C) The opportunity cost of ironing is greater for Ethan. 
D) Sophia has a higher opportunity cost of laundering her clothes than Ethan does. 
A) Ethan must enjoy ironing more than Sophia does. 
B) Ethan must be better at ironing than Sophia is. 
C) The opportunity cost of ironing is greater for Ethan. 
D) Sophia has a higher opportunity cost of laundering her clothes than Ethan does.

Question 17

A restaurant offers an "all you can eat" meal for $9. Tyrone has eaten three servings and is trying to decide whether or not to go back for a fourth. The economic way of thinking suggests that Tyrone should go back for the fourth serving if and only if

Accepted Answer

A) his marginal benefit of the additional serving is greater than zero. 
B) his marginal benefit of the additional serving is at least $3. 
C) his marginal benefit of the additional serving is $9 or more. 
D) his total value from the meal exceeds $9. 
A) his marginal benefit of the additional serving is greater than zero. 
B) his marginal benefit of the additional serving is at least $3. 
C) his marginal benefit of the additional serving is $9 or more. 
D) his total value from the meal exceeds $9.

Question 18

While waiting in line to buy two tacos at 80 cents each and a medium drink for 90 cents, Kayla notices that the restaurant has a value meal containing three tacos and a medium drink all for $3. For Kayla, the marginal cost of the third taco would be

Accepted Answer

A) zero. 
B) 50 cents. 
C) 80 cents. 
D) $1. 
A) zero. 
B) 50 cents. 
C) 80 cents. 
D) $1.

Question 19

People are more likely to purchase a consumer ratings magazine that reviews new automobiles before buying a new car than they are to purchase a consumer ratings magazine that reviews pens and pencils before buying a new pen or pencil. Which of the following best explains this behavior?

Accepted Answer

A) Because the consumer ratings magazine must have a higher price for the issue reviewing pens and pencils. 
B) Because the value of the information, in terms of avoiding a mistake on the purchase, is much higher for an automobile than for a pen or pencil, it is more worthwhile to gather this information. 
C) Because people generally do not know which products are reviewed by these consumer magazines. 
D) None of the above explain this behavior. 
A) Because the consumer ratings magazine must have a higher price for the issue reviewing pens and pencils. 
B) Because the value of the information, in terms of avoiding a mistake on the purchase, is much higher for an automobile than for a pen or pencil, it is more worthwhile to gather this information. 
C) Because people generally do not know which products are reviewed by these consumer magazines. 
D) None of the above explain this behavior.

Question 20

The consequences of an economic change that are not immediately identifiable but are felt only with the passage of time are known in economics as

Accepted Answer

A) opportunity costs. 
B) utility curves. 
C) secondary effects. 
D) comparative advantages. 
A) opportunity costs. 
B) utility curves. 
C) secondary effects. 
D) comparative advantages.

The economic way of thinking is

Some individuals or families can become completely saturated with a service such as television. This suggests that

The highest valued alternative option that must be given up in order to choose an action is called its

Someone notices that sunspot activity is high just prior to recessions and concludes that sunspots cause recessions. This person has

The difference between a positive economic statement and a normative statement is that

When an individual weighs her options and makes a choice that maximizes her benefit at the minimum cost, economists refer to this as a process of

What is the best test of an economic theory?

When economists say a good is scarce, they mean

If scarcity were eliminated,

Which of the following most clearly distinguishes between positive and normative economics?

When Mother Theresa won the Nobel Peace Prize, the monetary award was well in excess of $100,000. Did she accept the money? If so, what did she do with it?

Which of the following statements best describes the scientific method?

The unintended consequences of an economic change that are not immediately identifiable but are felt only with time are known in economics as

According to marginal analysis, you should spend more time studying economics if the extra benefit from an additional hour of study

Ethan washes and irons his own shirts. Sophia, his boss, sends her clothes to a laundry. Which is the most plausible economic explanation for this difference?

A restaurant offers an "all you can eat" meal for $9. Tyrone has eaten three servings and is trying to decide whether or not to go back for a fourth. The economic way of thinking suggests that Tyrone should go back for the fourth serving if and only if

While waiting in line to buy two tacos at 80 cents each and a medium drink for 90 cents, Kayla notices that the restaurant has a value meal containing three tacos and a medium drink all for $3. For Kayla, the marginal cost of the third taco would be

People are more likely to purchase a consumer ratings magazine that reviews new automobiles before buying a new car than they are to purchase a consumer ratings magazine that reviews pens and pencils before buying a new pen or pencil. Which of the following best explains this behavior?

The consequences of an economic change that are not immediately identifiable but are felt only with the passage of time are known in economics as

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

The economic way of thinking is

Some individuals or families can become completely saturated with a service such as television. This suggests that

The highest valued alternative option that must be given up in order to choose an action is called its

Someone notices that sunspot activity is high just prior to recessions and concludes that sunspots cause recessions. This person has

The difference between a positive economic statement and a normative statement is that

When an individual weighs her options and makes a choice that maximizes her benefit at the minimum cost, economists refer to this as a process of

What is the best test of an economic theory?

When economists say a good is scarce, they mean

If scarcity were eliminated,

Which of the following most clearly distinguishes between positive and normative economics?

When Mother Theresa won the Nobel Peace Prize, the monetary award was well in excess of $100,000. Did she accept the money? If so, what did she do with it?

Which of the following statements best describes the scientific method?

The unintended consequences of an economic change that are not immediately identifiable but are felt only with time are known in economics as

According to marginal analysis, you should spend more time studying economics if the extra benefit from an additional hour of study

Ethan washes and irons his own shirts. Sophia, his boss, sends her clothes to a laundry. Which is the most plausible economic explanation for this difference?

A restaurant offers an "all you can eat" meal for $9. Tyrone has eaten three servings and is trying to decide whether or not to go back for a fourth. The economic way of thinking suggests that Tyrone should go back for the fourth serving if and only if

While waiting in line to buy two tacos at 80 cents each and a medium drink for 90 cents, Kayla notices that the restaurant has a value meal containing three tacos and a medium drink all for $3. For Kayla, the marginal cost of the third taco would be

People are more likely to purchase a consumer ratings magazine that reviews new automobiles before buying a new car than they are to purchase a consumer ratings magazine that reviews pens and pencils before buying a new pen or pencil. Which of the following best explains this behavior?

The consequences of an economic change that are not immediately identifiable but are felt only with the passage of time are known in economics as

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