Question 1

What is the primary concern of economics?

Accepted Answer

A)  studying limited desires in the face of unlimited resources 
B)  studying problems such as poverty and unemployment 
C)  studying production and distribution of goods in a world of unlimited resources 
D)  studying production and distribution of goods in a world of limited resources 
A)  studying limited desires in the face of unlimited resources 
B)  studying problems such as poverty and unemployment 
C)  studying production and distribution of goods in a world of unlimited resources 
D)  studying production and distribution of goods in a world of limited resources

Question 2

Which of the following will NOT directly add to improvements in human capital?

Accepted Answer

A)  free business classes for low-level managers 
B)  increases in take-home pay 
C)  improved job training programs offered to employees 
D)  an increase in the computer-proficiency requirements of all high school graduates 
A)  free business classes for low-level managers 
B)  increases in take-home pay 
C)  improved job training programs offered to employees 
D)  an increase in the computer-proficiency requirements of all high school graduates

Question 3

How is an economic theory tested?

Accepted Answer

A)  by assessing the realism of its assumptions 
B)  by comparing and contrasting its simplicity with related theories 
C)  by comparing its predictions with real-world observations 
D)  by polling economists to see if there is consensus as to the validity of the hypothesis 
A)  by assessing the realism of its assumptions 
B)  by comparing and contrasting its simplicity with related theories 
C)  by comparing its predictions with real-world observations 
D)  by polling economists to see if there is consensus as to the validity of the hypothesis

Question 4

What is the term for the ability to produce at a lower opportunity cost than someone else?

Accepted Answer

A)  competitive disadvantage 
B)  absolute advantage 
C)  absolute superiority 
D)  comparative advantage 
A)  competitive disadvantage 
B)  absolute advantage 
C)  absolute superiority 
D)  comparative advantage

Question 5

Which of the following is the opportunity cost of attending university NOT likely to include?

Accepted Answer

A)  the cost of required textbooks 
B)  tuition fees 
C)  the income you forgo in order to attend classes 
D)  the cost of groceries during the school term 
A)  the cost of required textbooks 
B)  tuition fees 
C)  the income you forgo in order to attend classes 
D)  the cost of groceries during the school term

Question 6

Which of the following statements describing correlation is the most accurate?

Accepted Answer

A)  Two sets of phenomena may be related, but one does not necessarily cause the other. 
B)  When two phenomena are not observed together, one still causes the other. 
C)  When two phenomena are repeatedly observed together, one must cause the other. 
D)  Two sets of phenomena are not related and one may in fact cause the other. 
A)  Two sets of phenomena may be related, but one does not necessarily cause the other. 
B)  When two phenomena are not observed together, one still causes the other. 
C)  When two phenomena are repeatedly observed together, one must cause the other. 
D)  Two sets of phenomena are not related and one may in fact cause the other.

Question 7

What is the basic difference between macroeconomics and microeconomics?

Accepted Answer

A)  Microeconomics explores the causes of inflation, while macroeconomics focuses on the causes of unemployment. 
B)  Microeconomics concentrates on the behaviour of individual consumers, while macroeconomics focuses on the behaviour of firms. 
C)  Microeconomics concentrates on the behaviour of individual consumers and firms, while macroeconomics focuses on the performance of the entire economy. 
D)  Microeconomics concentrates on individual markets, while macroeconomics focuses primarily on international trade. 
A)  Microeconomics explores the causes of inflation, while macroeconomics focuses on the causes of unemployment. 
B)  Microeconomics concentrates on the behaviour of individual consumers, while macroeconomics focuses on the behaviour of firms. 
C)  Microeconomics concentrates on the behaviour of individual consumers and firms, while macroeconomics focuses on the performance of the entire economy. 
D)  Microeconomics concentrates on individual markets, while macroeconomics focuses primarily on international trade.

Question 8

Human capital consists of computers, tools, and equipment owned by private individuals.

Accepted Answer

A) True 
 B)False

Question 9

What is the difference between a theory and a hypothesis?

Accepted Answer

A)  A hypothesis is a testable proposition and is tentatively accepted as a theory. 
B)  A hypothesis abstracts from reality while a theory describes reality. 
C)  A theory is not an established explanation but a hypothesis is. 
D)  A theory abstracts from reality while a hypothesis describes reality. 
A)  A hypothesis is a testable proposition and is tentatively accepted as a theory. 
B)  A hypothesis abstracts from reality while a theory describes reality. 
C)  A theory is not an established explanation but a hypothesis is. 
D)  A theory abstracts from reality while a hypothesis describes reality.

Question 10

What is the term for the branch of economics that studies the aggregate decisions of all households and all firms?

Accepted Answer

A)  normative economics 
B)  microeconomics 
C)  positive economics 
D)  macroeconomics 
A)  normative economics 
B)  microeconomics 
C)  positive economics 
D)  macroeconomics

Question 11

What is the result of economic choices or trade-offs?

Accepted Answer

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

Question 12

"A reduction in the rate at which stock dividends are taxed will lead to greater investment in the stock market." What is this statement an example of?

Accepted Answer

A)  a normative economic statement 
B)  the fallacy of composition 
C)  a positive economic statement 
D)  a negative economic statement 
A)  a normative economic statement 
B)  the fallacy of composition 
C)  a positive economic statement 
D)  a negative economic statement

Question 13

What do all economic problems arise from?

Accepted Answer

A)  scarcity 
B)  too little currency available in circulation 
C)  high unemployment rates 
D)  competition 
A)  scarcity 
B)  too little currency available in circulation 
C)  high unemployment rates 
D)  competition

Question 14

Which of the following statements about scarcity is the most accurate?

Accepted Answer

A)  It is a problem in both communist and socialist countries, but not in market economies. 
B)  It will never be eradicated because humans develop new wants as productive capabilities improve. 
C)  It is a problem only in communist countries. 
D)  It does not exist in wealthy countries. 
A)  It is a problem in both communist and socialist countries, but not in market economies. 
B)  It will never be eradicated because humans develop new wants as productive capabilities improve. 
C)  It is a problem only in communist countries. 
D)  It does not exist in wealthy countries.

Question 15

Which of the following statements best describes scarcity?

Accepted Answer

A)  There will always be families living below the poverty line. 
B)  Human wants are limited. 
C)  Limited resources cannot satisfy all of our unlimited human wants. 
D)  Resources are unlimited. 
A)  There will always be families living below the poverty line. 
B)  Human wants are limited. 
C)  Limited resources cannot satisfy all of our unlimited human wants. 
D)  Resources are unlimited.

Question 16

What is another term for economic resources?

Accepted Answer

A)  elements 
B)  factors of production 
C)  financial capital 
D)  building blocks 
A)  elements 
B)  factors of production 
C)  financial capital 
D)  building blocks

Question 17

What do economists mean when they state that a good is scarce?

Accepted Answer

A)  People will want to buy more of the good regardless of price. 
B)  It is impossible to expand the availability of the good. 
C)  Our wants exceed our limited resources. 
D)  There is a shortage of the good at a sale price. 
A)  People will want to buy more of the good regardless of price. 
B)  It is impossible to expand the availability of the good. 
C)  Our wants exceed our limited resources. 
D)  There is a shortage of the good at a sale price.

Question 18

What is the solution to solving the fundamental economic problem?

Accepted Answer

A)  to allocate limited resources among competing uses 
B)  to guarantee everyone on the planet a minimum level of food, shelter, and clean water 
C)  to eliminate poverty in the developing world 
D)  to increase the amount of leisure time available to people 
A)  to allocate limited resources among competing uses 
B)  to guarantee everyone on the planet a minimum level of food, shelter, and clean water 
C)  to eliminate poverty in the developing world 
D)  to increase the amount of leisure time available to people

Question 19

What does the term "ceteris paribus" mean when used by an economist?

Accepted Answer

A)  Their conclusions are based on normative rather than positive economic analysis. 
B)  The causal relationship between two economic variables cannot be determined. 
C)  The analysis is True for the individual but not for the economy as a whole. 
D)  All other variables except the ones specified are assumed to be constant. 
A)  Their conclusions are based on normative rather than positive economic analysis. 
B)  The causal relationship between two economic variables cannot be determined. 
C)  The analysis is True for the individual but not for the economy as a whole. 
D)  All other variables except the ones specified are assumed to be constant.

Question 20

What is the likely reason that airlines might restrict the use of frequent flyer miles during holiday periods?

Accepted Answer

A)  The opportunity cost to airlines of filling seats with frequent flyers is lower at these times. 
B)  Airlines want to protect their most loyal customers from the discomfort of overcrowded airplanes. 
C)  The opportunity cost to airlines of filling seats with frequent flyers is higher at these times. 
D)  Passengers have more transportation alternatives available to them at these times. 
A)  The opportunity cost to airlines of filling seats with frequent flyers is lower at these times. 
B)  Airlines want to protect their most loyal customers from the discomfort of overcrowded airplanes. 
C)  The opportunity cost to airlines of filling seats with frequent flyers is higher at these times. 
D)  Passengers have more transportation alternatives available to them at these times.

What is the primary concern of economics?

Which of the following will NOT directly add to improvements in human capital?

How is an economic theory tested?

What is the term for the ability to produce at a lower opportunity cost than someone else?

Which of the following is the opportunity cost of attending university NOT likely to include?

Which of the following statements describing correlation is the most accurate?

What is the basic difference between macroeconomics and microeconomics?

Human capital consists of computers, tools, and equipment owned by private individuals.

What is the difference between a theory and a hypothesis?

What is the term for the branch of economics that studies the aggregate decisions of all households and all firms?

What is the result of economic choices or trade-offs?

"A reduction in the rate at which stock dividends are taxed will lead to greater investment in the stock market." What is this statement an example of?

What do all economic problems arise from?

Which of the following statements about scarcity is the most accurate?

Which of the following statements best describes scarcity?

What is another term for economic resources?

What do economists mean when they state that a good is scarce?

What is the solution to solving the fundamental economic problem?

What does the term "ceteris paribus" mean when used by an economist?

What is the likely reason that airlines might restrict the use of frequent flyer miles during holiday periods?

Scarcity, Trade-Offs, and Production Possibilities

Supply and Demand

Bringing Supply and Demand Together

Elasticity

Market Efficiency and Market Failure

Production and Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labour Markets and the Distribution of Income

The Environment

Filters

Exam 1: The Role and Method of Economics

What is the primary concern of economics?

Which of the following will NOT directly add to improvements in human capital?

How is an economic theory tested?

What is the term for the ability to produce at a lower opportunity cost than someone else?

Which of the following is the opportunity cost of attending university NOT likely to include?

Which of the following statements describing correlation is the most accurate?

What is the basic difference between macroeconomics and microeconomics?

Human capital consists of computers, tools, and equipment owned by private individuals.

What is the difference between a theory and a hypothesis?

What is the term for the branch of economics that studies the aggregate decisions of all households and all firms?

What is the result of economic choices or trade-offs?

"A reduction in the rate at which stock dividends are taxed will lead to greater investment in the stock market." What is this statement an example of?

What do all economic problems arise from?

Which of the following statements about scarcity is the most accurate?

Which of the following statements best describes scarcity?

What is another term for economic resources?

What do economists mean when they state that a good is scarce?

What is the solution to solving the fundamental economic problem?

What does the term "ceteris paribus" mean when used by an economist?

What is the likely reason that airlines might restrict the use of frequent flyer miles during holiday periods?

Scarcity, Trade-Offs, and Production Possibilities

Supply and Demand

Bringing Supply and Demand Together

Elasticity

Market Efficiency and Market Failure

Production and Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labour Markets and the Distribution of Income

The Environment

Filters