Question 1

One of the consequences of allowing wages to fall in the United States has been growing wage inequality.

Accepted Answer

A) True 
 B)False

Question 2

If an airline company has several empty seats on a flight and the full price of an air ticket is $500 and the marginal cost per passenger is $100, then it will be profitable for the airline to

Accepted Answer

A) charge a stand-by passenger no less than the full fare of $500. 
B) charge a stand-by passenger less than $100. 
C) charge a stand-by passenger more than $500. 
D) charge a stand-by passenger more than $100. 
E) fill the seats at the last minute for any price. 
A) charge a stand-by passenger no less than the full fare of $500. 
B) charge a stand-by passenger less than $100. 
C) charge a stand-by passenger more than $500. 
D) charge a stand-by passenger more than $100. 
E) fill the seats at the last minute for any price.

Question 3

A horizontal line has a slope of 0.

Accepted Answer

A) True 
 B)False

Question 4

There is no trade-off between efficiency and equality.

Accepted Answer

A) True 
 B)False

Question 5

If you go to the movies on Thursday night, the only cost to you is the price you pay for the movie ticket.

Accepted Answer

A) True 
 B)False

Question 6

Economic analysis requires both mathematical reasoning and historical study.

Accepted Answer

A) True 
 B)False

Question 7

"The hotter it gets, the more water people drink." This statement implies that the relationship between temperature and water consumption must have a

Accepted Answer

A) negative slope. 
B) positive slope. 
C) slope always equal to one. 
D) slope always equal to 45 degrees. 
A) negative slope. 
B) positive slope. 
C) slope always equal to one. 
D) slope always equal to 45 degrees.

Question 8

The lower left-hand corner of a graph where the two axes meet is called the graph's origin.

Accepted Answer

A) True 
 B)False

Question 9

The tangent at point A on a curve has a positive slope. Therefore, the curve has a

Accepted Answer

A) positive slope at all points. 
B) positive slope at point A. 
C) negative slope at all points. 
D) negative slope at point A. 
A) positive slope at all points. 
B) positive slope at point A. 
C) negative slope at all points. 
D) negative slope at point A.

Question 10

Two advisors to the president have given their policy recommendations, and they are in disagreement. Why do these economists disagree?

Accepted Answer

A) Because they do not have all relevant information about the problem 
B) Because they disagree on the nature of some cause-effect relationship 
C) Because they have different values and opinions 
D) All of the above are reasons for disagreements among economists. 
A) Because they do not have all relevant information about the problem 
B) Because they disagree on the nature of some cause-effect relationship 
C) Because they have different values and opinions 
D) All of the above are reasons for disagreements among economists.

Question 11

"Assume that all individuals have perfect information about prices now and in the future, that they have identical tastes, that all markets are competitive, and that there is no government." This statement is an example of how economists

Accepted Answer

A) apply the law of supply and demand. 
B) employ marginal analysis. 
C) are prevented from getting correct answers. 
D) ignore reality. 
E) use unrealistic assumptions to develop theory. 
A) apply the law of supply and demand. 
B) employ marginal analysis. 
C) are prevented from getting correct answers. 
D) ignore reality. 
E) use unrealistic assumptions to develop theory.

Question 12

Externalities can only involve the imposition of harm on a party not directly involved in an economic transaction.

Accepted Answer

A) True 
 B)False

Question 13

In both the 1970s and the 1990s, extreme economic events caused unemployment to move in the same direction as inflation.

Accepted Answer

A) True 
 B)False

Question 14

The use of abstraction in economics is analogous to the use of a road map providing directions to a location.

Accepted Answer

A) True 
 B)False

Question 15

Unemployment and inflation are important determinants of short-run material welfare, whereas productivity growth is an important determinant of long-run material well-being.

Accepted Answer

A) True 
 B)False

Question 16

Economic models are often expressed in

Accepted Answer

A) equations. 
B) words. 
C) graphs. 
D) physical objects. 
A) equations. 
B) words. 
C) graphs. 
D) physical objects.

Question 17

Economic problems are made manageable by stripping away some of the unnecessary details.

Accepted Answer

A) True 
 B)False

Question 18

Economists are often perceived as disagreeing with each other. Is this the way things really are?

Accepted Answer

A) No, economists agree on much more than is commonly supposed. 
B) No, the problem is that some economists are smarter than others. 
C) No, economists "stage" disagreements for public amusement. 
D) Yes, economists rarely agree on much of anything. 
E) Yes, economists are unable to analyze problems dispassionately. 
A) No, economists agree on much more than is commonly supposed. 
B) No, the problem is that some economists are smarter than others. 
C) No, economists "stage" disagreements for public amusement. 
D) Yes, economists rarely agree on much of anything. 
E) Yes, economists are unable to analyze problems dispassionately.

Question 19

A model that is an oversimplification for one purpose will likely be an oversimplification for other purposes as well.

Accepted Answer

A) True 
 B)False

Question 20

The concept of economic efficiency refers to the size of the "economic pie" whereas the concept of equality refers to how the "pie" is distributed.

Accepted Answer

A) True 
 B)False

Exam 1: What Is Economics

One of the consequences of allowing wages to fall in the United States has been growing wage inequality.

If an airline company has several empty seats on a flight and the full price of an air ticket is $500 and the marginal cost per passenger is $100, then it will be profitable for the airline to

A horizontal line has a slope of 0.

There is no trade-off between efficiency and equality.

If you go to the movies on Thursday night, the only cost to you is the price you pay for the movie ticket.

Economic analysis requires both mathematical reasoning and historical study.

"The hotter it gets, the more water people drink." This statement implies that the relationship between temperature and water consumption must have a

The lower left-hand corner of a graph where the two axes meet is called the graph's origin.

The tangent at point A on a curve has a positive slope. Therefore, the curve has a

Two advisors to the president have given their policy recommendations, and they are in disagreement. Why do these economists disagree?

"Assume that all individuals have perfect information about prices now and in the future, that they have identical tastes, that all markets are competitive, and that there is no government." This statement is an example of how economists

Externalities can only involve the imposition of harm on a party not directly involved in an economic transaction.

In both the 1970s and the 1990s, extreme economic events caused unemployment to move in the same direction as inflation.

The use of abstraction in economics is analogous to the use of a road map providing directions to a location.

Unemployment and inflation are important determinants of short-run material welfare, whereas productivity growth is an important determinant of long-run material well-being.

Economic models are often expressed in

Economic problems are made manageable by stripping away some of the unnecessary details.

Economists are often perceived as disagreeing with each other. Is this the way things really are?

A model that is an oversimplification for one purpose will likely be an oversimplification for other purposes as well.

The concept of economic efficiency refers to the size of the "economic pie" whereas the concept of equality refers to how the "pie" is distributed.

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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