Question 1

Economists use models in order to

Accepted Answer

A) get around having to deal with actual facts. 
B) understand real-life events and predict outcomes. 
C) avoid having to use theories to understand economic conditions. 
D) help elect political candidates. 
A) get around having to deal with actual facts. 
B) understand real-life events and predict outcomes. 
C) avoid having to use theories to understand economic conditions. 
D) help elect political candidates.

Question 2

What is the role of value judgments in economic analysis?

Accepted Answer

Economists employ value judgments in mak

Question 3

Economists use models in order to

Accepted Answer

A) experiment with alternative circumstances. 
B) make educated guesses about real-life events. 
C) predict outcomes under various hypothetical conditions. 
D) increase understanding of how a relationship actually works. 
E) All of these responses are correct. 
A) experiment with alternative circumstances. 
B) make educated guesses about real-life events. 
C) predict outcomes under various hypothetical conditions. 
D) increase understanding of how a relationship actually works. 
E) All of these responses are correct.

Question 4

The United States has chosen to balance the competing claims of efficiency versus equality by emphasizing greater efficiency over greater equality.

Accepted Answer

A) True 
 B)False

Question 5

Economic models cannot take the form of

Accepted Answer

A) equations. 
B) words. 
C) graphs. 
D) actual duplication of observed conditions. 
A) equations. 
B) words. 
C) graphs. 
D) actual duplication of observed conditions.

Question 6

Economists and others use economic theory

Accepted Answer

A) only to analyze situations in which money changes hands. 
B) as a partial basis for public policy recommendations. 
C) to confuse their enemies. 
D) instead of using value judgments concerning important policy issues. 
A) only to analyze situations in which money changes hands. 
B) as a partial basis for public policy recommendations. 
C) to confuse their enemies. 
D) instead of using value judgments concerning important policy issues.

Question 7

The terms "correlation" and "causation" are synonymous.

Accepted Answer

A) True 
 B)False

Question 8

All two-dimensional graphs must have an origin, a horizontal axis, and a vertical axis.

Accepted Answer

A) True 
 B)False

Question 9

Over the last 40 years, the gap between the rich and the poor in the United States has been increasing. Economists have justified this outcome by noting that

Accepted Answer

A) efficiency can never be achieved without greater inequality. 
B) inequality is not a problem. 
C) inequality is a desirable policy outcome. 
D) inequality is a necessary consequence of achieving greater efficiency. 
E) efficiency should be achieved regardless of the cost. 
A) efficiency can never be achieved without greater inequality. 
B) inequality is not a problem. 
C) inequality is a desirable policy outcome. 
D) inequality is a necessary consequence of achieving greater efficiency. 
E) efficiency should be achieved regardless of the cost.

Question 10

Carefully distinguish between an economic theory and economic model.

Accepted Answer

An economic theory is a deliberate simpl

Question 11

An economist is unlikely to be hired to do research about the following?

Accepted Answer

A) Oil prices. 
B) Election outcomes 
C) Interest rate 
D) Inflation rates 
E) Unemployment 
A) Oil prices. 
B) Election outcomes 
C) Interest rate 
D) Inflation rates 
E) Unemployment

Question 12

Harry Truman is credited with the statement, "Give me a one-armed economist," because economists are likely to say, "On the one hand, . . . on the other hand." Why do economists "waffle" more than physicists or chemists?

Accepted Answer

Economists describe human behavior, whic

Question 13

The law of comparative advantages explains why

Accepted Answer

A) advanced nations will not trade with less-developed countries. 
B) an advanced nation will not trade with other countries. 
C) less-developed countries only trade among themselves. 
D) nations trade with each other, regardless of their relative levels of economic development. 
E) nations erect trade barriers. 
A) advanced nations will not trade with less-developed countries. 
B) an advanced nation will not trade with other countries. 
C) less-developed countries only trade among themselves. 
D) nations trade with each other, regardless of their relative levels of economic development. 
E) nations erect trade barriers.

Question 14

With the technological developments in the twenty-first century, productivity growth is no longer an important factor in economic well-being.

Accepted Answer

A) True 
 B)False

Question 15

Externalities affect only the buyer and seller involved in an exchange.

Accepted Answer

A) True 
 B)False

Question 16

A large airline calculates that the additional cost of a having a passenger on a flight to the Bahamas as the cost of a bag of peanuts and a soft drink, which totals $1.50, but the airline's price is $600 for potential customers who want to buy vacant seats on the day of the flight. Which economic principle is this airline failing to utilize?

Accepted Answer

The airline is failing to think at the m

Question 17

Using economic theory to analyze policy issues

Accepted Answer

A) is a way to avoid inconvenient facts. 
B) allows researchers to disprove a hypothesis. 
C) relies on simplifications to conduct studies. 
D) always includes the inclusion of political ideals. 
A) is a way to avoid inconvenient facts. 
B) allows researchers to disprove a hypothesis. 
C) relies on simplifications to conduct studies. 
D) always includes the inclusion of political ideals.

Question 18

A small increase in productivity growth can have a huge impact on a country's standard of living.

Accepted Answer

A) True 
 B)False

Question 19

Economists disagree on most economic issues facing an economy.

Accepted Answer

A) True 
 B)False

Question 20

To an economist, theory can be thought of as

Accepted Answer

A) abstraction for the sake of argument. 
B) one person's opinion, which is just as good as another's. 
C) another term for the description of a situation. 
D) beliefs that cannot necessarily be verified. 
E) explanation of mechanisms behind observed phenomena. 
A) abstraction for the sake of argument. 
B) one person's opinion, which is just as good as another's. 
C) another term for the description of a situation. 
D) beliefs that cannot necessarily be verified. 
E) explanation of mechanisms behind observed phenomena.

Exam 1: What Is Economics

Economists use models in order to

What is the role of value judgments in economic analysis?

Economists use models in order to

The United States has chosen to balance the competing claims of efficiency versus equality by emphasizing greater efficiency over greater equality.

Economic models cannot take the form of

Economists and others use economic theory

The terms "correlation" and "causation" are synonymous.

All two-dimensional graphs must have an origin, a horizontal axis, and a vertical axis.

Over the last 40 years, the gap between the rich and the poor in the United States has been increasing. Economists have justified this outcome by noting that

Carefully distinguish between an economic theory and economic model.

An economist is unlikely to be hired to do research about the following?

Harry Truman is credited with the statement, "Give me a one-armed economist," because economists are likely to say, "On the one hand, . . . on the other hand." Why do economists "waffle" more than physicists or chemists?

The law of comparative advantages explains why

With the technological developments in the twenty-first century, productivity growth is no longer an important factor in economic well-being.

Externalities affect only the buyer and seller involved in an exchange.

Using economic theory to analyze policy issues

A small increase in productivity growth can have a huge impact on a country's standard of living.

Economists disagree on most economic issues facing an economy.

To an economist, theory can be thought of as

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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