Question 1

The good for which has no scarcity is called:

Accepted Answer

A)  a necessity. 
B)  an economic good. 
C)  a free good. 
D)  an economic bad. 
E)  a social bad. 
A)  a necessity. 
B)  an economic good. 
C)  a free good. 
D)  an economic bad. 
E)  a social bad.

Question 2

Which of the following resources will not be considered as land?

Accepted Answer

A)  Minerals 
B)  Timber 
C)  Water 
D)  Fertile soil 
E)  Processed cotton fibre 
A)  Minerals 
B)  Timber 
C)  Water 
D)  Fertile soil 
E)  Processed cotton fibre

Question 3

A haircut at an upscale beauty salon would be regarded as a good in economics.

Accepted Answer

A) True 
 B)False

Question 4

Microeconomics is the branch of economics that focuses on:

Accepted Answer

A)  deficit spending. 
B)  the problems of inflation and unemployment. 
C)  state and local economic problems. 
D)  the individual units that make up an economy. 
E)  development in the absence of economic growth. 
A)  deficit spending. 
B)  the problems of inflation and unemployment. 
C)  state and local economic problems. 
D)  the individual units that make up an economy. 
E)  development in the absence of economic growth.

Question 5

Which of the following can be categorized as financial capital?

Accepted Answer

A)  Offices and warehouses 
B)  Stocks and bonds 
C)  Machinery 
D)  Land 
E)  Equipment 
A)  Offices and warehouses 
B)  Stocks and bonds 
C)  Machinery 
D)  Land 
E)  Equipment

Question 6

Identify the correct statement.

Accepted Answer

A)  Positive economics deals with what ought to be. 
B)  Positive economics is subjective. 
C)  Normative economics is objective. 
D)  Normative economics deals with what is. 
E)  Normative economics expresses someone's opinion 
A)  Positive economics deals with what ought to be. 
B)  Positive economics is subjective. 
C)  Normative economics is objective. 
D)  Normative economics deals with what is. 
E)  Normative economics expresses someone's opinion

Question 7

Which of the following is true of microeconomics?

Accepted Answer

A)  It is often a focal point of debates in a presidential campaign. 
B)  It is the study of the behavior of individual firms and individual consumers. 
C)  It is often focused on the tradeoff between the rate of inflation and the unemployment rate. 
D)  It is based on theories that help us understand the relationship between the money supply and interest rates. 
E)  It is the study of the economy in aggregate. 
A)  It is often a focal point of debates in a presidential campaign. 
B)  It is the study of the behavior of individual firms and individual consumers. 
C)  It is often focused on the tradeoff between the rate of inflation and the unemployment rate. 
D)  It is based on theories that help us understand the relationship between the money supply and interest rates. 
E)  It is the study of the economy in aggregate.

Question 8

A(n) _____ is anything that you would pay to get rid of.

Accepted Answer

A)  economic good 
B)  economic bad 
C)  resource 
D)  free good 
E)  public good 
A)  economic good 
B)  economic bad 
C)  resource 
D)  free good 
E)  public good

Question 9

If unemployment rises when beer consumption rises, then the statement "Rising unemployment is the result of increased beer consumption" is an example of the ceteris paribus fallacy.

Accepted Answer

A) True 
 B)False

Question 10

A good or service becomes scarcer over time if:

Accepted Answer

A)  the difference between the quantity demanded and the quantity supplied at a zero price decreases. 
B)  the excess of the quantity demanded over the quantity supplied at a zero price increases. 
C)  the economy is capable of producing more goods and services. 
D)  people begin to reduce their requirements for the goods and services that are actually available 
E)  the amount of a good available equals the amount desired 
A)  the difference between the quantity demanded and the quantity supplied at a zero price decreases. 
B)  the excess of the quantity demanded over the quantity supplied at a zero price increases. 
C)  the economy is capable of producing more goods and services. 
D)  people begin to reduce their requirements for the goods and services that are actually available 
E)  the amount of a good available equals the amount desired

Question 11

Producers use inputs, or resources, to produce their goods.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following trends has been observed in the U.S. with respect to higher education?

Accepted Answer

A)  Students from less educated families stand a better chance of getting admitted to colleges. 
B)  The divorce rate for college grads is twice as high as that of high school grads. 
C)  The divorce rates for college grads are accelerating every year. 
D)  High school grads are twice as likely to smoke as college grads. 
E)  College grads are likely to live shorter and less healthy lives than high school grads. 
A)  Students from less educated families stand a better chance of getting admitted to colleges. 
B)  The divorce rate for college grads is twice as high as that of high school grads. 
C)  The divorce rates for college grads are accelerating every year. 
D)  High school grads are twice as likely to smoke as college grads. 
E)  College grads are likely to live shorter and less healthy lives than high school grads.

Question 13

The term rational self-interest, as viewed by economists, means:

Accepted Answer

A)  consumers would never pay more for a good simply because it carried a certain designer label. 
B)  only economists are capable of making choices according to rational self-interest. 
C)  people never act until they have perfect information in order to guarantee that they act in their own self-interest. 
D)  consumers always seek the least expensive option when making a purchase, regardless of individual preferences. 
E)  people will make the choices that, given the information available, will give them the greatest amount of satisfaction. 
A)  consumers would never pay more for a good simply because it carried a certain designer label. 
B)  only economists are capable of making choices according to rational self-interest. 
C)  people never act until they have perfect information in order to guarantee that they act in their own self-interest. 
D)  consumers always seek the least expensive option when making a purchase, regardless of individual preferences. 
E)  people will make the choices that, given the information available, will give them the greatest amount of satisfaction.

Question 14

If you agree that government should use a lottery to raise funds for improving education, you are using normative analysis.

Accepted Answer

A) True 
 B)False

Question 15

Identify the logic of economics that those who have not studied economics may fail to understand.

Accepted Answer

A)  The implicit cost of a commodity is always higher than the explicit cost. 
B)  Individual wants are limited by means. 
C)  Private goods do not have a social cost. 
D)  Public goods are available to us freely. 
E)  There are costs to everything. 
A)  The implicit cost of a commodity is always higher than the explicit cost. 
B)  Individual wants are limited by means. 
C)  Private goods do not have a social cost. 
D)  Public goods are available to us freely. 
E)  There are costs to everything.

Question 16

"Inflation is a more serious problem than education." This statement is an example of:

Accepted Answer

A)  a microeconomic analysis. 
B)  bounded rationality. 
C)  the fallacy of composition. 
D)  a positive statement. 
E)  a normative statement. 
A)  a microeconomic analysis. 
B)  bounded rationality. 
C)  the fallacy of composition. 
D)  a positive statement. 
E)  a normative statement.

Question 17

Individuals acting with rational self-interest:

Accepted Answer

A)  always choose the same options as other rational individuals. 
B)  never do voluntary work. 
C)  always try to attain satisfaction at the expense of others. 
D)  choose options that give them the greatest amount of satisfaction. 
E)  are selfish. 
A)  always choose the same options as other rational individuals. 
B)  never do voluntary work. 
C)  always try to attain satisfaction at the expense of others. 
D)  choose options that give them the greatest amount of satisfaction. 
E)  are selfish.

Question 18

Purified bottled water is an example of a free good.

Accepted Answer

A) True 
 B)False

Question 19

"The Super Bowl on January 28, 2001, was won by the Baltimore Ravens. Since the Ravens were originally from Cleveland and are part of the old NFL, the stock market is expected to decline in 2001." This statement is an example of:

Accepted Answer

A)  the interpretation of association as causation. 
B)  ceteris paribus ("everything else held constant"), analysis. 
C)  rational behavior. 
D)  the fallacy of composition. 
E)  marginal analysis. 
A)  the interpretation of association as causation. 
B)  ceteris paribus ("everything else held constant"), analysis. 
C)  rational behavior. 
D)  the fallacy of composition. 
E)  marginal analysis.

Question 20

Economics is the study of how people use:

Accepted Answer

A)  their scarce resources to satisfy their basic wants. 
B)  their scarce resources to attempt to satisfy their unlimited wants. 
C)  the natural resources to satisfy their basic wants. 
D)  the natural resources to attempt to satisfy their unlimited wants. 
E)  their resources to influence the tastes and preferences of others. 
A)  their scarce resources to satisfy their basic wants. 
B)  their scarce resources to attempt to satisfy their unlimited wants. 
C)  the natural resources to satisfy their basic wants. 
D)  the natural resources to attempt to satisfy their unlimited wants. 
E)  their resources to influence the tastes and preferences of others.

Exam 1: Economics: the World Around You

The good for which has no scarcity is called:

Which of the following resources will not be considered as land?

A haircut at an upscale beauty salon would be regarded as a good in economics.

Microeconomics is the branch of economics that focuses on:

Which of the following can be categorized as financial capital?

Identify the correct statement.

Which of the following is true of microeconomics?

A(n) _____ is anything that you would pay to get rid of.

If unemployment rises when beer consumption rises, then the statement "Rising unemployment is the result of increased beer consumption" is an example of the ceteris paribus fallacy.

A good or service becomes scarcer over time if:

Producers use inputs, or resources, to produce their goods.

Which of the following trends has been observed in the U.S. with respect to higher education?

The term rational self-interest, as viewed by economists, means:

If you agree that government should use a lottery to raise funds for improving education, you are using normative analysis.

Identify the logic of economics that those who have not studied economics may fail to understand.

"Inflation is a more serious problem than education." This statement is an example of:

Individuals acting with rational self-interest:

Purified bottled water is an example of a free good.

"The Super Bowl on January 28, 2001, was won by the Baltimore Ravens. Since the Ravens were originally from Cleveland and are part of the old NFL, the stock market is expected to decline in 2001." This statement is an example of:

Economics is the study of how people use:

Choice, Opportunity Costs, and Specialization

Markets, Demand and Supply, and the Price System

The Market System and the Private and Public Sector

National Income Accounting

An Introduction to the Foreign Exchange Market and the Balance of Payments

Unemployment and Inflation

Macroeconomic Equilibrium: Aggregate Demand and Supply

Aggregate Expenditures

Income and Expenditures Equilibrium

Fiscal Policy

Money and Banking

Monetary Policy

Macroeconomic Policy: Tradeoffs, Expectations, Credibility, and Sources of Business Cycles

Macroeconomic Viewpoints: New Keynesian, Monetarist, and New Classical

Economic Growth

Development Economics

Globalization

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

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