Question 1

Which of the following is most consistent with economizing behavior?

Accepted Answer

A)  If you derive the same satisfaction from eating pizza and eating ice cream, it makes no difference which one of the two you choose. 
B)  Before voting, you should invest the time and energy to become fully informed on all of the issues and candidates. 
C)  It never makes sense to hire someone to do something for you that you could do yourself. 
D)  If you get the same satisfaction from a chicken sandwich and a salad, you should purchase the one that costs the least. 
A)  If you derive the same satisfaction from eating pizza and eating ice cream, it makes no difference which one of the two you choose. 
B)  Before voting, you should invest the time and energy to become fully informed on all of the issues and candidates. 
C)  It never makes sense to hire someone to do something for you that you could do yourself. 
D)  If you get the same satisfaction from a chicken sandwich and a salad, you should purchase the one that costs the least.

Question 2

Modern economics as a field of study is usually thought to have begun with

Accepted Answer

A)  Adam Smith and the writing of The Wealth of Nations . 
B)  David Ricardo and the writing of The Principles of Political Economy and Taxation . 
C)  Aristotle and the writing of Politics and Ethics . 
D)  Moses and the Ten Commandments. 
A)  Adam Smith and the writing of The Wealth of Nations . 
B)  David Ricardo and the writing of The Principles of Political Economy and Taxation . 
C)  Aristotle and the writing of Politics and Ethics . 
D)  Moses and the Ten Commandments.

Question 3

The economic way of thinking suggests that if the government imposed a $500 tax on owners of red automobiles,

Accepted Answer

A)  fewer red automobiles would be produced and sold. 
B)  more red automobiles would be produced and sold. 
C)  there would be no change in the number of red automobiles produced and sold. 
D)  red automobiles would cease to exist. 
A)  fewer red automobiles would be produced and sold. 
B)  more red automobiles would be produced and sold. 
C)  there would be no change in the number of red automobiles produced and sold. 
D)  red automobiles would cease to exist.

Question 4

The value of a good is

Accepted Answer

A)  subjective. 
B)  objective. 
C)  determined by a government statistical agency. 
D)  based on the cost of production. 
A)  subjective. 
B)  objective. 
C)  determined by a government statistical agency. 
D)  based on the cost of production.

Question 5

The benefit (or satisfaction) that an individual expects to derive from an activity is called

Accepted Answer

A)  opportunity cost. 
B)  utility. 
C)  marginal cost. 
D)  scarcity. 
A)  opportunity cost. 
B)  utility. 
C)  marginal cost. 
D)  scarcity.

Question 6

The term ceteris paribus means that

Accepted Answer

A)  everything is changing. 
B)  all variables except those specified are constant. 
C)  no one knows which variables will change and which will remain constant. 
D)  the basic postulate of economics does not apply for the case being considered. 
A)  everything is changing. 
B)  all variables except those specified are constant. 
C)  no one knows which variables will change and which will remain constant. 
D)  the basic postulate of economics does not apply for the case being considered.

Question 7

A tradeoff exists between a clean environment and a higher level of income in that

Accepted Answer

A)  studies show that individuals with higher levels of income actually pollute less than low-income individuals. 
B)  efforts to reduce pollution typically are not completely successful. 
C)  laws that reduce pollution raise costs of production and reduce incomes. 
D)  by employing individuals to clean up pollution, employment and income both rise. 
A)  studies show that individuals with higher levels of income actually pollute less than low-income individuals. 
B)  efforts to reduce pollution typically are not completely successful. 
C)  laws that reduce pollution raise costs of production and reduce incomes. 
D)  by employing individuals to clean up pollution, employment and income both rise.

Question 8

Which of the following is a positive economic statement?

Accepted Answer

A)  Raising the federal minimum wage to $6.50 per hour will cause the rate of unemployment to increase. 
B)  The United States spends too much on welfare. 
C)  Philosophy is not as interesting as economics. 
D)  Cold weather is much more enjoyable than warm weather. 
A)  Raising the federal minimum wage to $6.50 per hour will cause the rate of unemployment to increase. 
B)  The United States spends too much on welfare. 
C)  Philosophy is not as interesting as economics. 
D)  Cold weather is much more enjoyable than warm weather.

Question 9

Someone notices that sunspot activity is high just prior to recessions and concludes that sunspots cause recessions. This person has

Accepted Answer

A)  confused association and causation. 
B)  misunderstood the ceteris paribus assumption. 
C)  used normative economics to answer a positive question. 
D)  built an untestable model. 
A)  confused association and causation. 
B)  misunderstood the ceteris paribus assumption. 
C)  used normative economics to answer a positive question. 
D)  built an untestable model.

Question 10

Which of the following is an example of a rational decision?

Accepted Answer

A)  Jim enjoys the feeling of wind in his hair enough to ride his motorcycle without a helmet, even though he fully realizes the potential for injury it creates by not wearing one in the unlikely event he is in an accident. 
B)  Doris, a burglar who breaks into houses, decides to break into the house at 265 Elm Street, rather than the house next door because the house next door has a sign in the yard that says "home protected by a security system." 
C)  Brandon, a drug user, chooses to buy his cocaine from Pablo, because Pablo's cocaine is as good as the cocaine from other dealers, but Pablo has lower prices. 
D)  All of the above are examples of rational choices. 
A)  Jim enjoys the feeling of wind in his hair enough to ride his motorcycle without a helmet, even though he fully realizes the potential for injury it creates by not wearing one in the unlikely event he is in an accident. 
B)  Doris, a burglar who breaks into houses, decides to break into the house at 265 Elm Street, rather than the house next door because the house next door has a sign in the yard that says "home protected by a security system." 
C)  Brandon, a drug user, chooses to buy his cocaine from Pablo, because Pablo's cocaine is as good as the cocaine from other dealers, but Pablo has lower prices. 
D)  All of the above are examples of rational choices.

Question 11

Which of the following is a guidepost to economic thinking?

Accepted Answer

A)  The value of a good can be objectively measured. 
B)  Individuals should never make a decision without having complete information. 
C)  Incentives matter. 
D)  Goods are scarce for the poor but not for the rich. 
A)  The value of a good can be objectively measured. 
B)  Individuals should never make a decision without having complete information. 
C)  Incentives matter. 
D)  Goods are scarce for the poor but not for the rich.

Question 12

Which of the following are NOT scarce?

Accepted Answer

A)  time for leisure activities 
B)  computers 
C)  compact discs 
D)  the air we breathe 
A)  time for leisure activities 
B)  computers 
C)  compact discs 
D)  the air we breathe

Question 13

Economic analysis is based on the premise that

Accepted Answer

A)  people act only out of selfish motives. 
B)  people are always fully informed when making choices. 
C)  changes in the personal benefits or costs of an action influence behavior in a predictable way. 
D)  most human behavior is unpredictable. 
A)  people act only out of selfish motives. 
B)  people are always fully informed when making choices. 
C)  changes in the personal benefits or costs of an action influence behavior in a predictable way. 
D)  most human behavior is unpredictable.

Question 14

Economists make assumptions in order to

Accepted Answer

A)  mimic the methodologies employed by other scientists. 
B)  minimize the number of experiments that yield no useful data. 
C)  minimize the likelihood that some aspect of the problem at hand is being overlooked. 
D)  focus their thinking on the essence of the problem at hand. 
A)  mimic the methodologies employed by other scientists. 
B)  minimize the number of experiments that yield no useful data. 
C)  minimize the likelihood that some aspect of the problem at hand is being overlooked. 
D)  focus their thinking on the essence of the problem at hand.

Question 15

The fallacy of composition is the incorrect view that

Accepted Answer

A)  decisions are always made at the margin. 
B)  incentives matter only to those who behave selfishly. 
C)  if something is true for an individual, then it must also be true for the group. 
D)  the value of a good can be objectively measured by its cost of production. 
A)  decisions are always made at the margin. 
B)  incentives matter only to those who behave selfishly. 
C)  if something is true for an individual, then it must also be true for the group. 
D)  the value of a good can be objectively measured by its cost of production.

Question 16

"The money and resources currently being devoted to the War on Terrorism reduces the quantity of other goods that we are able to supply." This statement most clearly illustrates which of the following?

Accepted Answer

A)  the fallacy of composition. 
B)  the idea that association is not causation. 
C)  the concept of opportunity cost. 
D)  the difference between positive and normative economics. 
A)  the fallacy of composition. 
B)  the idea that association is not causation. 
C)  the concept of opportunity cost. 
D)  the difference between positive and normative economics.

Question 17

When economists say an individual has made a rational choice, they mean the individual has

Accepted Answer

A)  made the choice by weighing their own subjective costs and benefits. 
B)  made a "good" decision, one that reasonable outside observers would have also made. 
C)  neglected to consider the unintended consequences arising from their decision. 
D)  ignored their own personal interests and made the choice that is best for society. 
A)  made the choice by weighing their own subjective costs and benefits. 
B)  made a "good" decision, one that reasonable outside observers would have also made. 
C)  neglected to consider the unintended consequences arising from their decision. 
D)  ignored their own personal interests and made the choice that is best for society.

Question 18

In economics the term utility refers to

Accepted Answer

A)  the subjective benefit or satisfaction a person expects to receive from a choice or course of action. 
B)  the number of possible uses for a resource. 
C)  the fact that human desire for goods is unlimited while the resources available to meet those desires is limited. 
D)  the highest valued alternative that must be sacrificed when a choice is made. 
A)  the subjective benefit or satisfaction a person expects to receive from a choice or course of action. 
B)  the number of possible uses for a resource. 
C)  the fact that human desire for goods is unlimited while the resources available to meet those desires is limited. 
D)  the highest valued alternative that must be sacrificed when a choice is made.

Question 19

When a good is scarce,

Accepted Answer

A)  this indicates that producers are withholding output so they can raise the price of the good. 
B)  some method must be used to allocate the good among users. 
C)  price is one way to ration the good. 
D)  both b and c are correct. 
E)  all of the above are correct. 
A)  this indicates that producers are withholding output so they can raise the price of the good. 
B)  some method must be used to allocate the good among users. 
C)  price is one way to ration the good. 
D)  both b and c are correct. 
E)  all of the above are correct.

Question 20

In economics, the term "scarcity" refers to the fact that

Accepted Answer

A)  everything really worthwhile costs money. 
B)  even in wealthy countries like the United States, some people are poor. 
C)  no society can produce enough to satisfy fully the desires of people for goods and services. 
D)  sometimes shortages of a good arise when its price is set below the market equilibrium. 
A)  everything really worthwhile costs money. 
B)  even in wealthy countries like the United States, some people are poor. 
C)  no society can produce enough to satisfy fully the desires of people for goods and services. 
D)  sometimes shortages of a good arise when its price is set below the market equilibrium.

Which of the following is most consistent with economizing behavior?

Modern economics as a field of study is usually thought to have begun with

The economic way of thinking suggests that if the government imposed a $500 tax on owners of red automobiles,

The value of a good is

The benefit (or satisfaction) that an individual expects to derive from an activity is called

The term ceteris paribus means that

A tradeoff exists between a clean environment and a higher level of income in that

Which of the following is a positive economic statement?

Someone notices that sunspot activity is high just prior to recessions and concludes that sunspots cause recessions. This person has

Which of the following is an example of a rational decision?

Which of the following is a guidepost to economic thinking?

Which of the following are NOT scarce?

Economic analysis is based on the premise that

Economists make assumptions in order to

The fallacy of composition is the incorrect view that

"The money and resources currently being devoted to the War on Terrorism reduces the quantity of other goods that we are able to supply." This statement most clearly illustrates which of the following?

When economists say an individual has made a rational choice, they mean the individual has

In economics the term utility refers to

When a good is scarce,

In economics, the term "scarcity" refers to the fact that

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Consumer Choice and Elasticity

Costs and the Supply of Goods

Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Price-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Applying the Basics: Special Topics in Economics

Filters

Exam 1: The Economic Approach

Which of the following is most consistent with economizing behavior?

Modern economics as a field of study is usually thought to have begun with

The economic way of thinking suggests that if the government imposed a $500 tax on owners of red automobiles,

The value of a good is

The benefit (or satisfaction) that an individual expects to derive from an activity is called

The term ceteris paribus means that

A tradeoff exists between a clean environment and a higher level of income in that

Which of the following is a positive economic statement?

Someone notices that sunspot activity is high just prior to recessions and concludes that sunspots cause recessions. This person has

Which of the following is an example of a rational decision?

Which of the following is a guidepost to economic thinking?

Which of the following are NOT scarce?

Economic analysis is based on the premise that

Economists make assumptions in order to

The fallacy of composition is the incorrect view that

"The money and resources currently being devoted to the War on Terrorism reduces the quantity of other goods that we are able to supply." This statement most clearly illustrates which of the following?

When economists say an individual has made a rational choice, they mean the individual has

In economics the term utility refers to

When a good is scarce,

In economics, the term "scarcity" refers to the fact that

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Consumer Choice and Elasticity

Costs and the Supply of Goods

Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Price-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Applying the Basics: Special Topics in Economics

Filters