Question 1

The market mechanism provides a financial incentive for firms to minimize the pollution they create.

Accepted Answer

A) True 
 B)False  False

Question 2

The opportunity cost to you of an action is

Accepted Answer

A)  how much you must pay for the opportunity to take the action. 
B)  the value to you of the next best action you could have taken. 
C)  the cost to society of giving you the opportunity to take the action. 
D)  the dollar cost to you of the action. 
A)  how much you must pay for the opportunity to take the action. 
B)  the value to you of the next best action you could have taken. 
C)  the cost to society of giving you the opportunity to take the action. 
D)  the dollar cost to you of the action. B

Question 3

Carefully define the following terms and explain their importance.a.variable
b.ray
c.slope
d.contour map

Accepted Answer

a.A variable is an object, such as price, whose magnitude is measured by a number.It is used to analyze what happens to other things when the size of that number changes.
b.A ray is a straight line emanating from a particular point an extending endlessly in one direction.
c.The slope of a line is change per unit from left to right.It is measured by the change in the variable on the vertical axis divided by the change in the variable on the horizontal axis.
d.A contour map shows all points representing different combinations of two variables, e.g., combinations of labor and raw materials capable of producing a given output.(Other examples of contour maps could be drawn from later chapters.)

Question 4

Abstraction ignores many details in order to focus on the most important elements of a problem.

Accepted Answer

A) True 
 B)False

Question 5

In the short run, efforts to reduce the unemployment rate are likely to cause

Accepted Answer

A)  a decrease in the inflation rate. 
B)  an increase in the inflation rate. 
C)  no change in the inflation rate. 
D)  Uncertain-economists have found no relationship between the two variables. 
A)  a decrease in the inflation rate. 
B)  an increase in the inflation rate. 
C)  no change in the inflation rate. 
D)  Uncertain-economists have found no relationship between the two variables.

Question 6

Value judgments are based on people's tastes, preferences, and ethical opinions.

Accepted Answer

A) True 
 B)False

Question 7

The achievement of greater efficiency in the United States has been at the expense of growing inequality.

Accepted Answer

A) True 
 B)False

Question 8

Economists probably agree more often than they disagree.

Accepted Answer

A) True 
 B)False

Question 9

Economists and others use economic theory

Accepted Answer

A)  only to analyze situations in which money changes hands. 
B)  as a partial basis for public policy recommendations. 
C)  to confuse their enemies. 
D)  to replace value judgments about important policy issues. 
A)  only to analyze situations in which money changes hands. 
B)  as a partial basis for public policy recommendations. 
C)  to confuse their enemies. 
D)  to replace value judgments about important policy issues.

Question 10

Tools used by economists include

Accepted Answer

A)  historical study. 
B)  mathematical reasoning. 
C)  statistical inference. 
D)  All of the above are correct. 
A)  historical study. 
B)  mathematical reasoning. 
C)  statistical inference. 
D)  All of the above are correct.

Question 11

How would you interpret (1) an upward sloping curve and (2) a zero slope curve in a two variable diagram?

Accepted Answer

(1)Positive slope, where varia

Question 12

Greater economic efficiency often leads to greater economic inequality.

Accepted Answer

A) True 
 B)False

Question 13

In contrast to the United States, the European Union has chosen

Accepted Answer

A)  greater wage inequality for lower unemployment. 
B)  less wage inequality and lower unemployment. 
C)  greater wage inequality and higher unemployment. 
D)  similar wage inequality but more unemployment. 
E)  less wage inequality for higher unemployment. 
A)  greater wage inequality for lower unemployment. 
B)  less wage inequality and lower unemployment. 
C)  greater wage inequality and higher unemployment. 
D)  similar wage inequality but more unemployment. 
E)  less wage inequality for higher unemployment.

Question 14

A vertical line has a slope of

Accepted Answer

A)  infinity. 
B)  zero. 
C)  undefined. 
D)  1,000. 
A)  infinity. 
B)  zero. 
C)  undefined. 
D)  1,000.

Question 15

Economic efficiency and income equality are often conflicting goals in an economy.

Accepted Answer

A) True 
 B)False

Question 16

If trade between two countries is voluntary, one can expect that

Accepted Answer

A)  one country's gain is necessarily the other's loss. 
B)  one country will exploit the other one. 
C)  neither country really gains from trade. 
D)  the larger country will always gain at the expense of the smaller. 
E)  both countries expect to gain something. 
A)  one country's gain is necessarily the other's loss. 
B)  one country will exploit the other one. 
C)  neither country really gains from trade. 
D)  the larger country will always gain at the expense of the smaller. 
E)  both countries expect to gain something.

Question 17

In Egypt, in 1970, the Aswan Dam was completed.By preventing the annual flood of the Nile (thereby providing millions of acres of arable land) and by providing electricity, the dam was expected to raise the living standard of the Egyptian people-and it has.However, it has also led to a rise in the water table which causes Egypt's limestone structures, including the pyramids, to absorb more salt water and to suffer serious erosion from crystallized salts.Combined with air pollution and traffic vibration, this erosion is turning the pyramids to dust.Economists analyze this type of problem with the concept of

Accepted Answer

A)  an externality. 
B)  the antiquity problem. 
C)  a free-rider problem. 
D)  the public good problem. 
E)  the trade-off between equity and output. 
A)  an externality. 
B)  the antiquity problem. 
C)  a free-rider problem. 
D)  the public good problem. 
E)  the trade-off between equity and output.

Question 18

Economic analysis requires both mathematical reasoning and historical study.

Accepted Answer

A) True 
 B)False

Question 19

Figure 1-2
  
-Identify the slope of the two curves A and B in Figure 1-2.

Accepted Answer

A)  A - zero, B - one. 
B)  A - one, B - zero. 
C)  A - one, B - different at different points. 
D)  A - different at different points, B - zero. 
A)  A - zero, B - one. 
B)  A - one, B - zero. 
C)  A - one, B - different at different points. 
D)  A - different at different points, B - zero.

Question 20

A contour map illustrates which of the following?

Accepted Answer

A)  the cause-effect relationship between two variables 
B)  the cause-effect relationship between three variables 
C)  the way that three variables are correlated 
D)  the way that one variable affects another, which in turn affects a third variable 
E)  the way that two variables are correlated and in turn cause changes in a third variable 
A)  the cause-effect relationship between two variables 
B)  the cause-effect relationship between three variables 
C)  the way that three variables are correlated 
D)  the way that one variable affects another, which in turn affects a third variable 
E)  the way that two variables are correlated and in turn cause changes in a third variable

Exam 1: What Is Economics?

The market mechanism provides a financial incentive for firms to minimize the pollution they create.

The opportunity cost to you of an action is

Carefully define the following terms and explain their importance.a.variable b.ray c.slope d.contour map

Abstraction ignores many details in order to focus on the most important elements of a problem.

In the short run, efforts to reduce the unemployment rate are likely to cause

Value judgments are based on people's tastes, preferences, and ethical opinions.

The achievement of greater efficiency in the United States has been at the expense of growing inequality.

Economists probably agree more often than they disagree.

Economists and others use economic theory

Tools used by economists include

How would you interpret (1) an upward sloping curve and (2) a zero slope curve in a two variable diagram?

Greater economic efficiency often leads to greater economic inequality.

In contrast to the United States, the European Union has chosen

A vertical line has a slope of

Economic efficiency and income equality are often conflicting goals in an economy.

If trade between two countries is voluntary, one can expect that

Economic analysis requires both mathematical reasoning and historical study.

Figure 1-2 -Identify the slope of the two curves A and B in Figure 1-2.

A contour map illustrates which of the following?

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: An Initial Look

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: The Importance of Marginal Analysis

Securities: Business Finance, and the Economy: The Tail that Wags the Dog?

The Firm and the Industry under Perfect Competition

Monopoly

Between Competition and Monopoly

Limiting Market Power: Regulation and Antitrust

The Case for Free Markets I: The Price System

The Shortcomings of Free Markets

The Market's Prime Achievement: Innovation and Growth

Externalities, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: The Human Inputs

Poverty, Inequality, and Discrimination

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation?

Bringing in the Supply Side: Unemployment and Inflation?

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

The Financial Crisis and the Great Recession

The Debate over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade-Off between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder?

Exchange Rates and the Macroeconomy

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