Exam 1: The Role and Method of Economics

Maggie is a potter and she likes to dig her own clay for producing pots, cups, and other ceramic items. She is aware of two places where she can obtain the right clay for her work. The first field is quite close, just at the edge of town. The second field is 15 miles away and (since there are no access roads) requires a half-day of travel just to get there. Compare the opportunity cost of producing pots using clay from each of these fields.

Many people have heard that the US stock market rises when a team from the National Football Conference (NFC) wins the Super Bowl, and falls when a team from the American Football Conference (AFC) is victorious. If you conclude that there is a causal relationship between the outcome of the Super Bowl and stock prices, you probably are making what mistake?

Why is money NOT considered to be an economic resource?

Which of the following statements best describes opportunity costs?

Why does the problem of scarcity exist?

Why is there scarcity?

What is the opportunity cost of attending a university for a year?

Economists believe that the stiff penalties for drug trafficking in Singapore do not affect the decision making of those who traffic in drugs.

What is the term for the additional benefit received as a result of undertaking an action?

Which of the following statements about criminal behaviour describes what economists believe?

What two main branches of study can economics be divided into?

The opportunity cost of attending college is likely higher for a high school graduate who leaves a job grilling hamburgers than it is for a high school dropout who leaves a job working as a computer network administrator.

What area of economic study is most concerned with the determination of prices in the market for automobiles?

Which of the following best illustrates the fallacy of composition?

According to most economists, what is the fundamental economic problem?

When economists disagree, it is often over what type of issues?

Tractors, shovels, copy machines, and computer programming expertise are all examples of scarce resources.

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

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

What is the term for the additional cost incurred as a result of undertaking an action?