Question 1

Positive economics

Accepted Answer

A)  postulates a relationship that is potentially refutable and then seeks to determine whether the stated relationship is correct. 
B)  uses value judgments to determine which policy alternatives should be chosen. 
C)  is of no use to policy makers because it reflects the value judgments of the researcher. 
D)  is the scientific study of "what ought to be" among economic relationships. 
A)  postulates a relationship that is potentially refutable and then seeks to determine whether the stated relationship is correct. 
B)  uses value judgments to determine which policy alternatives should be chosen. 
C)  is of no use to policy makers because it reflects the value judgments of the researcher. 
D)  is the scientific study of "what ought to be" among economic relationships.

Question 2

When economists use the term ceteris paribus, they are indicating that

Accepted Answer

A)  the relationship between two economic variables cannot be determined. 
B)  the analysis is true for the individual but not for the economy as a whole. 
C)  all other variables except the ones specified are assumed to be constant. 
D)  their conclusions are based on normative economics rather than positive economic analysis. 
A)  the relationship between two economic variables cannot be determined. 
B)  the analysis is true for the individual but not for the economy as a whole. 
C)  all other variables except the ones specified are assumed to be constant. 
D)  their conclusions are based on normative economics rather than positive economic analysis.

Question 3

The highest valued alternative that must be given up in order to choose an option is called

Accepted Answer

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

Question 4

Who is more likely to drive carelessly, Camila in her 1980 Ford with bad brakes or Samantha, who has a 2005 BMW with all the most recent safety options?

Accepted Answer

On the surface, we might conclude that S

Question 5

When economists say that people choose rationally, this means

Accepted Answer

A)  they gather all relevant information before making their purchases 
B)  once a pattern of behavior has been established, people tend to become set in their ways 
C)  people respond in predictable ways to changes in costs and benefits 
D)  people rarely make errors when they are permitted to make transactions 
E)  once made, decisions are never reversed 
A)  they gather all relevant information before making their purchases 
B)  once a pattern of behavior has been established, people tend to become set in their ways 
C)  people respond in predictable ways to changes in costs and benefits 
D)  people rarely make errors when they are permitted to make transactions 
E)  once made, decisions are never reversed

Question 6

The basic difference between macroeconomics and microeconomics is that

Accepted Answer

A)  microeconomics is concerned with aggregate markets and the entire economy, while macroeconomics is concerned with specific individual markets. 
B)  macroeconomics is concerned with policy decisions, while microeconomics applies only to theory. 
C)  microeconomics is concerned with individual markets and the behavior of people and firms, while macroeconomics is concerned with aggregate markets and the entire economy. 
D)  macroeconomics is concerned with positive economics, while microeconomics is concerned with normative economics. 
A)  microeconomics is concerned with aggregate markets and the entire economy, while macroeconomics is concerned with specific individual markets. 
B)  macroeconomics is concerned with policy decisions, while microeconomics applies only to theory. 
C)  microeconomics is concerned with individual markets and the behavior of people and firms, while macroeconomics is concerned with aggregate markets and the entire economy. 
D)  macroeconomics is concerned with positive economics, while microeconomics is concerned with normative economics.

Question 7

Which of the following is not consistent with the basic postulate of economics that incentives matter?

Accepted Answer

A)  Farmers produce fewer bushels of wheat in response to an increase in the price of wheat. 
B)  A politician votes against a proposal because most of his constituents oppose it. 
C)  People drive less because of higher gas prices. 
D)  People buy more milk in response to a reduction in the price of milk. 
A)  Farmers produce fewer bushels of wheat in response to an increase in the price of wheat. 
B)  A politician votes against a proposal because most of his constituents oppose it. 
C)  People drive less because of higher gas prices. 
D)  People buy more milk in response to a reduction in the price of milk.

Question 8

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 9

Because information is costly to acquire,

Accepted Answer

A)  people will rationally choose not to become fully informed when making decisions. 
B)  people will generally choose to become as fully informed as possible when making decisions. 
C)  people will generally choose to acquire no information that would be relevant to their decisions. 
D)  none of the above are true. 
A)  people will rationally choose not to become fully informed when making decisions. 
B)  people will generally choose to become as fully informed as possible when making decisions. 
C)  people will generally choose to acquire no information that would be relevant to their decisions. 
D)  none of the above are true.

Question 10

Which of the following is true?

Accepted Answer

A)  Changes in personal costs and benefits will exert a predictable influence on the choices of people. 
B)  If one individual gains from an economic activity, then someone else must lose. 
C)  If a good is provided free to an individual by government, its production will not consume valuable scarce resources. 
D)  If the intentions behind a policy are good, you can be assured that the outcome will be desirable. 
A)  Changes in personal costs and benefits will exert a predictable influence on the choices of people. 
B)  If one individual gains from an economic activity, then someone else must lose. 
C)  If a good is provided free to an individual by government, its production will not consume valuable scarce resources. 
D)  If the intentions behind a policy are good, you can be assured that the outcome will be desirable.

Question 11

The difference between positive economic statements and normative economic statements is that

Accepted Answer

A)  positive statements are based on opinion while normative statements are based on fact 
B)  positive statements are true and normative statements are often false 
C)  positive statements are often false and normative statements are true 
D)  positive statements are based on fact while normative statements are based on opinion 
E)  both b and d. 
A)  positive statements are based on opinion while normative statements are based on fact 
B)  positive statements are true and normative statements are often false 
C)  positive statements are often false and normative statements are true 
D)  positive statements are based on fact while normative statements are based on opinion 
E)  both b and d.

Question 12

A local restaurant offers an "all you can eat" buffet for $15. Mia eats four servings but leaves half of a fifth helping uneaten. Why?

Accepted Answer

A)  Her marginal value of a serving of brunch has fallen below $15. 
B)  Her marginal value of a serving has fallen below $3 ($15 divided by 5 servings). 
C)  Her marginal value of food has fallen to zero. 
D)  The total value she places on the buffet exactly equals $15. 
A)  Her marginal value of a serving of brunch has fallen below $15. 
B)  Her marginal value of a serving has fallen below $3 ($15 divided by 5 servings). 
C)  Her marginal value of food has fallen to zero. 
D)  The total value she places on the buffet exactly equals $15.

Question 13

Economic choice and competitive behavior are the result of

Accepted Answer

A)  basic human greed. 
B)  poverty. 
C)  private ownership of resources. 
D)  scarcity. 
A)  basic human greed. 
B)  poverty. 
C)  private ownership of resources. 
D)  scarcity.

Question 14

When economists say an individual displays economizing behavior, they simply mean that she is

Accepted Answer

A)  making a lot of money. 
B)  buying only those products that are cheap and of low quality. 
C)  learning how to run a business more effectively. 
D)  seeking the lowest cost method to accomplish her objectives. 
A)  making a lot of money. 
B)  buying only those products that are cheap and of low quality. 
C)  learning how to run a business more effectively. 
D)  seeking the lowest cost method to accomplish her objectives.

Question 15

If a good is scarce,

Accepted Answer

A)  there will be shortages of it if the good is rationed by markets. 
B)  the good will have a price in a market setting. 
C)  there will be enough of the good freely available from nature to satisfy the human desire for it. 
D)  all of the above are true. 
A)  there will be shortages of it if the good is rationed by markets. 
B)  the good will have a price in a market setting. 
C)  there will be enough of the good freely available from nature to satisfy the human desire for it. 
D)  all of the above are true.

Question 16

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 17

If a college enforces a new policy where anyone caught cheating is immediately expelled, the basic postulate of economics suggests that

Accepted Answer

A)  cheating will be completely eliminated. 
B)  fewer students will attempt to cheat. 
C)  the amount of cheating will be unaffected. 
D)  any of the above is possible because student behavior is unpredictable. 
A)  cheating will be completely eliminated. 
B)  fewer students will attempt to cheat. 
C)  the amount of cheating will be unaffected. 
D)  any of the above is possible because student behavior is unpredictable.

Question 18

In economics, man-made resources such as tools, equipment, and structures that are used to produce other goods and services are referred to as

Accepted Answer

A)  consumer goods. 
B)  capital. 
C)  marginal goods. 
D)  infrastructures. 
A)  consumer goods. 
B)  capital. 
C)  marginal goods. 
D)  infrastructures.

Question 19

If economics is correct in its assumption that people are rational, why then would anyone choose to smoke cigarettes?

Accepted Answer

Even though the harmful effects of cigar

Question 20

The expression "There's no such thing as a free lunch" means

Accepted Answer

A)  in an exchange, if one person gains, someone else must lose. 
B)  each person must pay for exactly what he or she receives. 
C)  the use of resources to meet one need means that those resources can no longer be used to meet another need. 
D)  in an exchange, if one person gains, someone else must lose and equal amount. 
A)  in an exchange, if one person gains, someone else must lose. 
B)  each person must pay for exactly what he or she receives. 
C)  the use of resources to meet one need means that those resources can no longer be used to meet another need. 
D)  in an exchange, if one person gains, someone else must lose and equal amount.

Positive economics

When economists use the term ceteris paribus, they are indicating that

The highest valued alternative that must be given up in order to choose an option is called

Who is more likely to drive carelessly, Camila in her 1980 Ford with bad brakes or Samantha, who has a 2005 BMW with all the most recent safety options?

When economists say that people choose rationally, this means

The basic difference between macroeconomics and microeconomics is that

Which of the following is not consistent with the basic postulate of economics that incentives matter?

The term ceteris paribus means that

Because information is costly to acquire,

Which of the following is true?

The difference between positive economic statements and normative economic statements is that

A local restaurant offers an "all you can eat" buffet for $15. Mia eats four servings but leaves half of a fifth helping uneaten. Why?

Economic choice and competitive behavior are the result of

When economists say an individual displays economizing behavior, they simply mean that she is

If a good is scarce,

Which of the following is a positive economic statement?

If a college enforces a new policy where anyone caught cheating is immediately expelled, the basic postulate of economics suggests that

In economics, man-made resources such as tools, equipment, and structures that are used to produce other goods and services are referred to as

If economics is correct in its assumption that people are rational, why then would anyone choose to smoke cigarettes?

The expression "There's no such thing as a free lunch" means

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

Taking the Nations Economic Pulse

Economic Fluctuations, Unemployment, and Inflation

An Introduction to Basic Macroeconomic Markets

Dynamic Change, Economic Fluctuations, and the Ad--As Model

Fiscal Policy: The Keynesian View and the Historical Development of Macroeconomics

Fiscal Policy: Incentives, and Secondary Effects

Money and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, Output, and Employment

Creating an Environment for Growth and Prosperity

Institutions, Policies, and Cross-Country Differences in Income and Growth

Gaining From International Trade

International Finance and the Foreign Exchange Market

Special Topics

Filters

Exam 1: The Economic Approach

Positive economics

When economists use the term ceteris paribus, they are indicating that

The highest valued alternative that must be given up in order to choose an option is called

Who is more likely to drive carelessly, Camila in her 1980 Ford with bad brakes or Samantha, who has a 2005 BMW with all the most recent safety options?

When economists say that people choose rationally, this means

The basic difference between macroeconomics and microeconomics is that

Which of the following is not consistent with the basic postulate of economics that incentives matter?

The term ceteris paribus means that

Because information is costly to acquire,

Which of the following is true?

The difference between positive economic statements and normative economic statements is that

A local restaurant offers an "all you can eat" buffet for $15. Mia eats four servings but leaves half of a fifth helping uneaten. Why?

Economic choice and competitive behavior are the result of

When economists say an individual displays economizing behavior, they simply mean that she is

If a good is scarce,

Which of the following is a positive economic statement?

If a college enforces a new policy where anyone caught cheating is immediately expelled, the basic postulate of economics suggests that

In economics, man-made resources such as tools, equipment, and structures that are used to produce other goods and services are referred to as

If economics is correct in its assumption that people are rational, why then would anyone choose to smoke cigarettes?

The expression "There's no such thing as a free lunch" means

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

Taking the Nations Economic Pulse

Economic Fluctuations, Unemployment, and Inflation

An Introduction to Basic Macroeconomic Markets

Dynamic Change, Economic Fluctuations, and the Ad--As Model

Fiscal Policy: The Keynesian View and the Historical Development of Macroeconomics

Fiscal Policy: Incentives, and Secondary Effects

Money and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, Output, and Employment

Creating an Environment for Growth and Prosperity

Institutions, Policies, and Cross-Country Differences in Income and Growth

Gaining From International Trade

International Finance and the Foreign Exchange Market

Special Topics

Filters