Question 1

The difference between a positive economic statement and a normative statement is that

Accepted Answer

A)  a positive statement must be true; a normative statement is often not true 
B)  a normative statement must be true; a positive statement is often not true 
C)  a positive statement can be proved; a normative statement cannot 
D)  a normative statement can be proved; a positive statement cannot 
E)  a positive economic statement is a moral judgment; a normative economic statement is not a moral judgment 
A)  a positive statement must be true; a normative statement is often not true 
B)  a normative statement must be true; a positive statement is often not true 
C)  a positive statement can be proved; a normative statement cannot 
D)  a normative statement can be proved; a positive statement cannot 
E)  a positive economic statement is a moral judgment; a normative economic statement is not a moral judgment

Question 2

Which of the following is true?

Accepted Answer

A)  Changes in personal costs and benefits will exert a predictable impact on the choices of human decision makers. 
B)  Only direct monetary costs matter in making decisions. 
C)  If a good is provided free to an individual, its production will not consume valuable scarce resources. 
D)  Secondary effects are seldom of importance in economics. 
A)  Changes in personal costs and benefits will exert a predictable impact on the choices of human decision makers. 
B)  Only direct monetary costs matter in making decisions. 
C)  If a good is provided free to an individual, its production will not consume valuable scarce resources. 
D)  Secondary effects are seldom of importance in economics.

Question 3

People are willing to pay more for a diamond than for a bottle of water because

Accepted Answer

A)  the marginal cost of producing an extra diamond far exceeds the marginal cost of producing an extra bottle of water. 
B)  the marginal benefit of an extra diamond far exceeds the marginal benefit of an extra bottle of water. 
C)  producers of diamonds have a much greater ability to manipulate diamond prices than producers of water have to manipulate water prices. 
D)  water prices are held artificially low by governments, since water is necessary for life. 
A)  the marginal cost of producing an extra diamond far exceeds the marginal cost of producing an extra bottle of water. 
B)  the marginal benefit of an extra diamond far exceeds the marginal benefit of an extra bottle of water. 
C)  producers of diamonds have a much greater ability to manipulate diamond prices than producers of water have to manipulate water prices. 
D)  water prices are held artificially low by governments, since water is necessary for life.

Question 4

All but one of the following are elements of the economic way of thinking. Which one is not part of the economic way of thinking?

Accepted Answer

A)  Incentives matter. 
B)  The value of goods can be determined objectively. 
C)  Economic thinking is marginal thinking. 
D)  Information is scarce. 
A)  Incentives matter. 
B)  The value of goods can be determined objectively. 
C)  Economic thinking is marginal thinking. 
D)  Information is scarce.

Question 5

Liam wants to buy some milk and a box of cereal. If Liam buys 4 gallons of milk at $3.00 per gallon, the box of cereal costs $2.00. If he buys 5 gallons of milk, the box of cereal is free. For Liam, the marginal cost of buying a fifth gallon of milk is

Accepted Answer

A)  zero. 
B)  $1.00. 
C)  $2.00. 
D)  $3.00. 
A)  zero. 
B)  $1.00. 
C)  $2.00. 
D)  $3.00.

Question 6

The most fundamental concept in economics is that

Accepted Answer

A)  changes in incentives influence behavior in a predictable way--people will be less likely to choose an option as it becomes more expensive. 
B)  changes in incentives generally do not influence human behavior. 
C)  goods that are provided by government are free for society. 
D)  individuals generally do not consider other alternatives when making a choice. 
A)  changes in incentives influence behavior in a predictable way--people will be less likely to choose an option as it becomes more expensive. 
B)  changes in incentives generally do not influence human behavior. 
C)  goods that are provided by government are free for society. 
D)  individuals generally do not consider other alternatives when making a choice.

Question 7

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 8

Which of the following is true?

Accepted Answer

A)  Positive economics deals with how people react to changes in benefits, and normative economics deals with how people react to changes in costs. 
B)  Positive economic statements are testable, but normative statements are not. 
C)  Positive economic statements involve value judgments while normative economics focuses on whether a policy will achieve its intended objectives. 
D)  Positive economic statements focus on policy issues while normative economics focuses on economic theory. 
A)  Positive economics deals with how people react to changes in benefits, and normative economics deals with how people react to changes in costs. 
B)  Positive economic statements are testable, but normative statements are not. 
C)  Positive economic statements involve value judgments while normative economics focuses on whether a policy will achieve its intended objectives. 
D)  Positive economic statements focus on policy issues while normative economics focuses on economic theory.

Question 9

"If Tom had twice as much money, he could consume twice as much. If everyone had twice as much money, they could consume twice as much." This quote illustrates

Accepted Answer

A)  the difference between positive and normative economics. 
B)  the fallacy of composition. 
C)  that association is not causation. 
D)  the law of unintended consequences. 
A)  the difference between positive and normative economics. 
B)  the fallacy of composition. 
C)  that association is not causation. 
D)  the law of unintended consequences.

Question 10

Economic analysis assumes that

Accepted Answer

A)  individuals act only out of selfish motives. 
B)  although individuals are at times selfish and at times unselfish, only their selfish actions may be predicted. 
C)  people are basically humanitarian, and their actions are, therefore, impossible to predict. 
D)  changes in the personal benefits and costs associated with a choice will exert a predictable influence on human behavior. 
A)  individuals act only out of selfish motives. 
B)  although individuals are at times selfish and at times unselfish, only their selfish actions may be predicted. 
C)  people are basically humanitarian, and their actions are, therefore, impossible to predict. 
D)  changes in the personal benefits and costs associated with a choice will exert a predictable influence on human behavior.

Question 11

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 12

A fact based on observable phenomenon that is not influenced by differences in personal opinion is called

Accepted Answer

A)  an objective concept. 
B)  a subjective concept. 
C)  an unintended consequence. 
D)  ceteris paribus. 
A)  an objective concept. 
B)  a subjective concept. 
C)  an unintended consequence. 
D)  ceteris paribus.

Question 13

When Mother Theresa won the Nobel Peace Prize, the monetary award was well in excess of $100,000. Did she accept the money? If so, what did she do with it?

Accepted Answer

Mother Theresa used the money to help th

Question 14

Which of the following is part of the economic way of thinking?

Accepted Answer

A)  The accuracy of the assumptions is the best test of an economic theory. 
B)  When an option becomes more expensive, people will be less likely to choose it. 
C)  The value of a good can be determined objectively by measuring the amount of labor required for its production. 
D)  All of the above. 
A)  The accuracy of the assumptions is the best test of an economic theory. 
B)  When an option becomes more expensive, people will be less likely to choose it. 
C)  The value of a good can be determined objectively by measuring the amount of labor required for its production. 
D)  All of the above.

Question 15

Jacob and Mason go to a diner that sells burritos for $5 and tacos for $3. They agree to split the lunch bill evenly. Mason chooses a taco. The marginal cost to Jacob of ordering a burrito instead of a taco is

Accepted Answer

A)  $1. 
B)  $2. 
C)  $2.50. 
D)  $3. 
A)  $1. 
B)  $2. 
C)  $2.50. 
D)  $3.

Question 16

Which of the following is true?

Accepted Answer

A)  Human choice is generally not influenced by changes in incentives. 
B)  What is true for the individual must be true for the group as a whole. 
C)  Using scarce resources to meet one need reduces our ability to meet needs in other areas. 
D)  The economic way of thinking stresses that good intentions usually lead to sound economic policy. 
A)  Human choice is generally not influenced by changes in incentives. 
B)  What is true for the individual must be true for the group as a whole. 
C)  Using scarce resources to meet one need reduces our ability to meet needs in other areas. 
D)  The economic way of thinking stresses that good intentions usually lead to sound economic policy.

Question 17

When deciding whether to buy a second car, the economic way of thinking indicates that the purchaser should compare

Accepted Answer

A)  the benefits expected from two cars with the cost of both. 
B)  the additional benefits expected from a second car with the cost of the two cars. 
C)  the dollar cost of the two cars with the potential income that the cars will generate. 
D)  the additional benefits of the second car with the additional cost of the second car. 
A)  the benefits expected from two cars with the cost of both. 
B)  the additional benefits expected from a second car with the cost of the two cars. 
C)  the dollar cost of the two cars with the potential income that the cars will generate. 
D)  the additional benefits of the second car with the additional cost of the second car.

Question 18

Economic choice and competitive behavior are the result of

Accepted Answer

A)  scarcity. 
B)  poverty. 
C)  public ownership of resources. 
D)  private ownership of resources. 
A)  scarcity. 
B)  poverty. 
C)  public ownership of resources. 
D)  private ownership of resources.

Question 19

When price is the rationing criterion, individuals have a strong incentive to

Accepted Answer

A)  ignore the wishes of others when making decisions about how to use their resources. 
B)  provide services to others in exchange for income. 
C)  avoid exchanges because in every exchange there will be one person who gains and another who loses. 
D)  substitute promises for the consistent delivery of a quality product. 
A)  ignore the wishes of others when making decisions about how to use their resources. 
B)  provide services to others in exchange for income. 
C)  avoid exchanges because in every exchange there will be one person who gains and another who loses. 
D)  substitute promises for the consistent delivery of a quality product.

Question 20

The economizing problem is essentially one of deciding how to make the best use of

Accepted Answer

A)  limited resources to satisfy limited wants. 
B)  unlimited resources to satisfy limited wants. 
C)  limited resources to satisfy virtually unlimited wants. 
D)  unlimited resources to satisfy unlimited wants. 
A)  limited resources to satisfy limited wants. 
B)  unlimited resources to satisfy limited wants. 
C)  limited resources to satisfy virtually unlimited wants. 
D)  unlimited resources to satisfy unlimited wants.

The difference between a positive economic statement and a normative statement is that

Which of the following is true?

People are willing to pay more for a diamond than for a bottle of water because

All but one of the following are elements of the economic way of thinking. Which one is not part of the economic way of thinking?

Liam wants to buy some milk and a box of cereal. If Liam buys 4 gallons of milk at $3.00 per gallon, the box of cereal costs $2.00. If he buys 5 gallons of milk, the box of cereal is free. For Liam, the marginal cost of buying a fifth gallon of milk is

The most fundamental concept in economics is that

Which of the following are NOT scarce?

Which of the following is true?

"If Tom had twice as much money, he could consume twice as much. If everyone had twice as much money, they could consume twice as much." This quote illustrates

Economic analysis assumes that

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 fact based on observable phenomenon that is not influenced by differences in personal opinion is called

When Mother Theresa won the Nobel Peace Prize, the monetary award was well in excess of $100,000. Did she accept the money? If so, what did she do with it?

Which of the following is part of the economic way of thinking?

Jacob and Mason go to a diner that sells burritos for $5 and tacos for $3. They agree to split the lunch bill evenly. Mason chooses a taco. The marginal cost to Jacob of ordering a burrito instead of a taco is

Which of the following is true?

When deciding whether to buy a second car, the economic way of thinking indicates that the purchaser should compare

Economic choice and competitive behavior are the result of

When price is the rationing criterion, individuals have a strong incentive to

The economizing problem is essentially one of deciding how to make the best use of

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

The difference between a positive economic statement and a normative statement is that

Which of the following is true?

People are willing to pay more for a diamond than for a bottle of water because

All but one of the following are elements of the economic way of thinking. Which one is not part of the economic way of thinking?

Liam wants to buy some milk and a box of cereal. If Liam buys 4 gallons of milk at $3.00 per gallon, the box of cereal costs $2.00. If he buys 5 gallons of milk, the box of cereal is free. For Liam, the marginal cost of buying a fifth gallon of milk is

The most fundamental concept in economics is that

Which of the following are NOT scarce?

Which of the following is true?

"If Tom had twice as much money, he could consume twice as much. If everyone had twice as much money, they could consume twice as much." This quote illustrates

Economic analysis assumes that

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 fact based on observable phenomenon that is not influenced by differences in personal opinion is called

When Mother Theresa won the Nobel Peace Prize, the monetary award was well in excess of $100,000. Did she accept the money? If so, what did she do with it?

Which of the following is part of the economic way of thinking?

Jacob and Mason go to a diner that sells burritos for $5 and tacos for $3. They agree to split the lunch bill evenly. Mason chooses a taco. The marginal cost to Jacob of ordering a burrito instead of a taco is

Which of the following is true?

When deciding whether to buy a second car, the economic way of thinking indicates that the purchaser should compare

Economic choice and competitive behavior are the result of

When price is the rationing criterion, individuals have a strong incentive to

The economizing problem is essentially one of deciding how to make the best use of

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