Question 1

An introductory course in economics should allow a student to

Accepted Answer

A) turn into an economist. 
B) develop solutions to most social problems. 
C) answer all complex social questions. 
D) make rational decisions. 
E) All of these responses are correct. 
A) turn into an economist. 
B) develop solutions to most social problems. 
C) answer all complex social questions. 
D) make rational decisions. 
E) All of these responses are correct.

Question 2

The market price of a transaction always includes all of the costs and benefits associated with the transaction.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following statements is correct?

Accepted Answer

A) Theory and hypothesis are interchangeable terms for the same thing. 
B) A hypothesis may result from a tested and confirmed theory. 
C) A theory may result from a tested and confirmed hypothesis. 
D) A hypothesis is a theory whose formulation relies on mathematics. 
A) Theory and hypothesis are interchangeable terms for the same thing. 
B) A hypothesis may result from a tested and confirmed theory. 
C) A theory may result from a tested and confirmed hypothesis. 
D) A hypothesis is a theory whose formulation relies on mathematics.

Question 4

Externalities are costs to society, which have an impact on parties not directly involved into a particular economic transaction.

Accepted Answer

A) True 
 B)False

Question 5

In economic theorizing, common sense will always lead to the correct answer.

Accepted Answer

A) True 
 B)False

Question 6

When nations trade based upon comparative advantage, only one side of the transaction will benefit.

Accepted Answer

A) True 
 B)False

Question 7

A contour map illustrates a cause-and-effect relationship among three variables.

Accepted Answer

A) True 
 B)False

Question 8

Economists make assumptions because

Accepted Answer

A) this is a way of incorporating value judgments into their models. 
B) their use allows complex situations to be analyzed. 
C) this permits imperfect information to describe reality. 
D) assumptions are the final product of careful economic analysis. 
E) assumptions allow economists to avoid facts that contradict their theories. 
A) this is a way of incorporating value judgments into their models. 
B) their use allows complex situations to be analyzed. 
C) this permits imperfect information to describe reality. 
D) assumptions are the final product of careful economic analysis. 
E) assumptions allow economists to avoid facts that contradict their theories.

Question 9

Suppose Tammy grew up on a farm and is very good at plowing. In addition, suppose she is a popular country singer who earns $4,000 per performance. If her husband Bob can plow (but not as well as Tammy)but he can't carry a tune, then it would be most efficient if

Accepted Answer

A) Tammy did both the plowing and the singing. 
B) Tammy specialized in plowing and Bob in singing. 
C) Bob did both the plowing and singing. 
D) Tammy specialized in singing and Bob in plowing. 
E) they both plowed and sang. 
A) Tammy did both the plowing and the singing. 
B) Tammy specialized in plowing and Bob in singing. 
C) Bob did both the plowing and singing. 
D) Tammy specialized in singing and Bob in plowing. 
E) they both plowed and sang.

Question 10

How does correlation differ from causation? Give an example of each to illustrate your answer.

Accepted Answer

Correlation means that two (or more)vari

Question 11

There is an inverse relationship between inflation and unemployment in the short run and this can be seen as an

Accepted Answer

A) example of the equality-efficiency trade-off. 
B) example of the impact of comparative advantage. 
C) example of macroeconomic policy choices. 
D) example of an externality. 
E) example of the use of abstraction in economic analysis. 
A) example of the equality-efficiency trade-off. 
B) example of the impact of comparative advantage. 
C) example of macroeconomic policy choices. 
D) example of an externality. 
E) example of the use of abstraction in economic analysis.

Question 12

Which of the following statements is NOT true?

Accepted Answer

A) Economic theory often makes unrealistic assumptions. 
B) Economists ignore details to focus on complex problems. 
C) Abstraction is not an important part of economic analysis. 
D) The word theory means different things to economists and to ordinary people. 
A) Economic theory often makes unrealistic assumptions. 
B) Economists ignore details to focus on complex problems. 
C) Abstraction is not an important part of economic analysis. 
D) The word theory means different things to economists and to ordinary people.

Question 13

The word "theory" means the same to the scientist as it does to the man on the street.

Accepted Answer

A) True 
 B)False

Question 14

A music venue discovers that its concerts consistently have empty seats in the back rows of the facility. If the venue owner uses marginal analysis to evaluate this situation, he should

Accepted Answer

A) raise the price of seats in the front rows. 
B) remove the last few rows. 
C) lower the ticket price for the seats on the back rows. 
D) cancel concerts that are not sellouts. 
E) book acts that are less expensive. 
A) raise the price of seats in the front rows. 
B) remove the last few rows. 
C) lower the ticket price for the seats on the back rows. 
D) cancel concerts that are not sellouts. 
E) book acts that are less expensive.

Question 15

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 16

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 17

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

Accepted Answer

A) True 
 B)False

Question 18

In economics, the true cost of making a choice is the value of what must be given up.

Accepted Answer

A) True 
 B)False

Question 19

Some economists develop theories concerning policy issues to

Accepted Answer

A) further their own political agendas. 
B) understand what happened in an earlier time period. 
C) describe current economic events. 
D) make sound recommendations about policy alternatives. 
E) help elect new government officials. 
A) further their own political agendas. 
B) understand what happened in an earlier time period. 
C) describe current economic events. 
D) make sound recommendations about policy alternatives. 
E) help elect new government officials.

Question 20

Economic analysis and policy are made more difficult by

Accepted Answer

A) having so much data to work with. 
B) inadequate and imperfect information. 
C) an incomplete consensus on the basic goals of social policy. 
D) the lack of public interest and opinion on economic questions. 
E) the major economic problems society faces. 
A) having so much data to work with. 
B) inadequate and imperfect information. 
C) an incomplete consensus on the basic goals of social policy. 
D) the lack of public interest and opinion on economic questions. 
E) the major economic problems society faces.

Exam 1: What Is Economics

An introductory course in economics should allow a student to

The market price of a transaction always includes all of the costs and benefits associated with the transaction.

Which of the following statements is correct?

Externalities are costs to society, which have an impact on parties not directly involved into a particular economic transaction.

In economic theorizing, common sense will always lead to the correct answer.

When nations trade based upon comparative advantage, only one side of the transaction will benefit.

A contour map illustrates a cause-and-effect relationship among three variables.

Economists make assumptions because

Suppose Tammy grew up on a farm and is very good at plowing. In addition, suppose she is a popular country singer who earns $4,000 per performance. If her husband Bob can plow (but not as well as Tammy)but he can't carry a tune, then it would be most efficient if

How does correlation differ from causation? Give an example of each to illustrate your answer.

There is an inverse relationship between inflation and unemployment in the short run and this can be seen as an

Which of the following statements is NOT true?

The word "theory" means the same to the scientist as it does to the man on the street.

A music venue discovers that its concerts consistently have empty seats in the back rows of the facility. If the venue owner uses marginal analysis to evaluate this situation, he should

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

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

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

In economics, the true cost of making a choice is the value of what must be given up.

Some economists develop theories concerning policy issues to

Economic analysis and policy are made more difficult by

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

The Financial Markets and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

The Case for Free Markets: the Price System

Monopoly

Between Competition and Monopoly

Limiting Market Power: Antitrust and Regulation

The Shortcomings of Free Markets

Externalities, Externaliteis, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

International Trade and Comparative Advantage

Contemporary Issues in the Us Economy

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