Question 1

Abstract economic theory can be used by academicians but not by politicians or business people.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is one source of disagreement between economists?

Accepted Answer

A) Some facts about the economy are unknown. 
B) Economists differ in their political persuasions. 
C) Economic theory may not always give an unambiguous answer to a question. 
D) Solving one problem may make another problem worse. 
E) All of these responses are correct. 
A) Some facts about the economy are unknown. 
B) Economists differ in their political persuasions. 
C) Economic theory may not always give an unambiguous answer to a question. 
D) Solving one problem may make another problem worse. 
E) All of these responses are correct.

Question 3

Graphs are useful because of the way they

Accepted Answer

A) facilitate interpretation and analysis of data. 
B) clarify interpretation and analysis of ideas. 
C) permit a person to easily see relationships. 
D) convey an idea that might otherwise take many words. 
E) All of these responses are correct. 
A) facilitate interpretation and analysis of data. 
B) clarify interpretation and analysis of ideas. 
C) permit a person to easily see relationships. 
D) convey an idea that might otherwise take many words. 
E) All of these responses are correct.

Question 4

A ray through the origin always has a slope of one.

Accepted Answer

A) True 
 B)False

Question 5

A recent article about the US economy asked, "What is the price of low inflation?" In this context, the price is likely to be measured by

Accepted Answer

A) the value of comparative advantage. 
B) the cost of externalities. 
C) the increase in unemployment. 
D) the drop in market value. 
E) the opportunity cost of higher interest rates. 
A) the value of comparative advantage. 
B) the cost of externalities. 
C) the increase in unemployment. 
D) the drop in market value. 
E) the opportunity cost of higher interest rates.

Question 6

Since a trade-off exists between total output and equality of income distribution,

Accepted Answer

A) greater equality of distribution will generally result in higher levels of output. 
B) greater output is generally associated with more equal distribution. 
C) policies designed to increase output will only succeed if distribution is more equal. 
D) policies intended to expand output must necessarily fail. 
E) policies designed to equalize distribution may adversely affect the size of output. 
A) greater equality of distribution will generally result in higher levels of output. 
B) greater output is generally associated with more equal distribution. 
C) policies designed to increase output will only succeed if distribution is more equal. 
D) policies intended to expand output must necessarily fail. 
E) policies designed to equalize distribution may adversely affect the size of output.

Question 7

Economic theory is a necessity, not a luxury. This statement is true because theory

Accepted Answer

A) always leads to practical and useful policy. 
B) can prevent depressions in the economy. 
C) substitutes for vast amounts of data. 
D) provides a structure for organizing and analyzing data. 
E) always leads to accurate predictions. 
A) always leads to practical and useful policy. 
B) can prevent depressions in the economy. 
C) substitutes for vast amounts of data. 
D) provides a structure for organizing and analyzing data. 
E) always leads to accurate predictions.

Question 8

A line that rises at a 45 degree angle has a slope of

Accepted Answer

A) 0.45. 
B) 1. 
C) 45. 
D) 1\45. 
A) 0.45. 
B) 1. 
C) 45. 
D) 1\45.

Question 9

When the economy experiences a bust, the government knows exactly which policies will spur an economic recovery.

Accepted Answer

A) True 
 B)False

Question 10

The marginal cost of an airline ticket is the total cost of operating a flight divided by the number of passengers who buy tickets.

Accepted Answer

A) True 
 B)False

Question 11

A student was heard to remark, "Even though I am certain to fail this course, I cannot withdraw from it since it is too late to get back my tuition." Use one or more "Ideas for Beyond the Final Exam" to analyze this reasoning.

Accepted Answer

The student is failing to use marginal a

Question 12

Why might well-educated economists disagree on appropriate public policy in some situations?

Accepted Answer

Economists might disagree beca

Question 13

Inaccurate prediction generally invalidates the use of theory in economics.

Accepted Answer

A) True 
 B)False

Question 14

The high unemployment of 2008-2010 caused a substantial decrease in inflation, which created fears of deflation.

Accepted Answer

A) True 
 B)False

Question 15

Jack buys a computer from Sam, knowing fully well that the technology used in it is obsolete. In this case, the trade is

Accepted Answer

A) beneficial to both parties. 
B) beneficial only to Sam. 
C) beneficial only to Jack. 
D) not beneficial to either of them. 
A) beneficial to both parties. 
B) beneficial only to Sam. 
C) beneficial only to Jack. 
D) not beneficial to either of them.

Question 16

Which of the following is an example of an externality?

Accepted Answer

A) The reduction in health risks when Tom's family receives a measles vaccine 
B) Robert's purchase of a new car 
C) A firm's investment of new computer technology 
D) Eric's choice to buy a new lawn mower 
A) The reduction in health risks when Tom's family receives a measles vaccine 
B) Robert's purchase of a new car 
C) A firm's investment of new computer technology 
D) Eric's choice to buy a new lawn mower

Question 17

Graphs are valuable because they facilitate interpretation of data.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is an example of an undesirable side effect of the operation of the market mechanism?

Accepted Answer

A) Negative externalities 
B) Comparative advantages 
C) Abstractions 
D) Productivity growth 
A) Negative externalities 
B) Comparative advantages 
C) Abstractions 
D) Productivity growth

Question 19

A contour map illustrates which of the following?

Accepted Answer

A) The cause-effect relationship between two variables 
B) The cause-effect relationship between three variables 
C) The way that three variables are correlated 
D) The way that one variable affects another, which in turn affects a third variable 
E) The way that two variables are correlated and in turn cause changes in a third variable 
A) The cause-effect relationship between two variables 
B) The cause-effect relationship between three variables 
C) The way that three variables are correlated 
D) The way that one variable affects another, which in turn affects a third variable 
E) The way that two variables are correlated and in turn cause changes in a third variable

Question 20

Consider the following information regarding a person's decision to go to college: college tuition is $20,000 per year, room and board is $10,000 per year, and books and materials are $2,000 per year. Suppose that instead of going to college this person could have earned $18,000 working in a store. An economist would calculate the cost of going to college as

Accepted Answer

A) $20,000. 
B) $30,000. 
C) $32,000. 
D) $50,000. 
E) $18,000. 
A) $20,000. 
B) $30,000. 
C) $32,000. 
D) $50,000. 
E) $18,000.

Exam 1: What Is Economics

Abstract economic theory can be used by academicians but not by politicians or business people.

Which of the following is one source of disagreement between economists?

Graphs are useful because of the way they

A ray through the origin always has a slope of one.

A recent article about the US economy asked, "What is the price of low inflation?" In this context, the price is likely to be measured by

Since a trade-off exists between total output and equality of income distribution,

Economic theory is a necessity, not a luxury. This statement is true because theory

A line that rises at a 45 degree angle has a slope of

When the economy experiences a bust, the government knows exactly which policies will spur an economic recovery.

The marginal cost of an airline ticket is the total cost of operating a flight divided by the number of passengers who buy tickets.

A student was heard to remark, "Even though I am certain to fail this course, I cannot withdraw from it since it is too late to get back my tuition." Use one or more "Ideas for Beyond the Final Exam" to analyze this reasoning.

Why might well-educated economists disagree on appropriate public policy in some situations?

Inaccurate prediction generally invalidates the use of theory in economics.

The high unemployment of 2008-2010 caused a substantial decrease in inflation, which created fears of deflation.

Jack buys a computer from Sam, knowing fully well that the technology used in it is obsolete. In this case, the trade is

Which of the following is an example of an externality?

Graphs are valuable because they facilitate interpretation of data.

Which of the following is an example of an undesirable side effect of the operation of the market mechanism?

A contour map illustrates which of the following?

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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