Question 1

For a non-economist, marginal means:

Accepted Answer

A)  incremental. 
B)  unimportant. 
C)  level or size. 
D)  scarcity. 
E)  inferior. 
A)  incremental. 
B)  unimportant. 
C)  level or size. 
D)  scarcity. 
E)  inferior.

Question 2

Considering both product markets and resource markets, most economic decision makers participate in the economy as both buyers and sellers.

Accepted Answer

A) True 
 B)False

Question 3

A rational decision maker will take only those actions for which the expected marginal benefit:

Accepted Answer

A)  is positive. 
B)  is at its maximum level. 
C)  is greater than or equal to the expected marginal cost. 
D)  is less than the expected marginal cost. 
E)  exactly equals the total cost. 
A)  is positive. 
B)  is at its maximum level. 
C)  is greater than or equal to the expected marginal cost. 
D)  is less than the expected marginal cost. 
E)  exactly equals the total cost.

Question 4

A hypothesis is:

Accepted Answer

A)  an assumption about the behavior of economic agents. 
B)  a prediction of what will occur given certain assumptions. 
C)  a normative statement. 
D)  a forecast of future events. 
E)  useful only if assumptions are realistic. 
A)  an assumption about the behavior of economic agents. 
B)  a prediction of what will occur given certain assumptions. 
C)  a normative statement. 
D)  a forecast of future events. 
E)  useful only if assumptions are realistic.

Question 5

Natural resources:

Accepted Answer

A)  include bodies of water, trees, oil reserves, and minerals. 
B)  are not scarce. 
C)  are inexhaustible as long as they are managed properly. 
D)  are the result of human effort. 
E)  do not follow the law of demand and supply. 
A)  include bodies of water, trees, oil reserves, and minerals. 
B)  are not scarce. 
C)  are inexhaustible as long as they are managed properly. 
D)  are the result of human effort. 
E)  do not follow the law of demand and supply.

Question 6

Exhibit 1.2
  
-Refer to the circular-flow model in Exhibit 1.2. Firms supply ________ to households through product markets.

Accepted Answer

A)  goods and services 
B)  products 
C)  labor, capital, natural resources, and entrepreneurial ability 
D)  resources 
E)  wages, interest, rent, and profit 
A)  goods and services 
B)  products 
C)  labor, capital, natural resources, and entrepreneurial ability 
D)  resources 
E)  wages, interest, rent, and profit

Question 7

Economic fluctuations are:

Accepted Answer

A)  the output decisions of individual firms. 
B)  the effect of a tariff on the demand for a good. 
C)  the factors that influence the spending decisions of particular households. 
D)  the rise and fall of economic activity relative to the long-term growth trend of the economy 
E)  economic systems. 
A)  the output decisions of individual firms. 
B)  the effect of a tariff on the demand for a good. 
C)  the factors that influence the spending decisions of particular households. 
D)  the rise and fall of economic activity relative to the long-term growth trend of the economy 
E)  economic systems.

Question 8

By rational, economists mean that people:

Accepted Answer

A)  think only of themselves. 
B)  know with certainty which alternative will turn out to be the best. 
C)  try to make the best choices they can. 
D)  try to maximize the cost of achieving a benefit. 
E)  try to minimize the expected benefit achieved. 
A)  think only of themselves. 
B)  know with certainty which alternative will turn out to be the best. 
C)  try to make the best choices they can. 
D)  try to maximize the cost of achieving a benefit. 
E)  try to minimize the expected benefit achieved.

Question 9

In economics, marginal analysis:

Accepted Answer

A)  has no practical applications or real-world uses. 
B)  eliminates incorrect decisions and bad choices. 
C)  involves comparing the additional costs and additional benefits of an activity. 
D)  involves examining only the total costs and total benefits of an activity. 
E)  guarantees an incorrect decision. 
A)  has no practical applications or real-world uses. 
B)  eliminates incorrect decisions and bad choices. 
C)  involves comparing the additional costs and additional benefits of an activity. 
D)  involves examining only the total costs and total benefits of an activity. 
E)  guarantees an incorrect decision.

Question 10

Most real economic choices involve small (or marginal) changes rather than all-or-nothing decisions.

Accepted Answer

A) True 
 B)False

Question 11

The assumption that individuals act rationally implies that people:

Accepted Answer

A)  think only of themselves and disregard the well-being of others. 
B)  undertake all those activities that do not have any marginal benefit. 
C)  only consider the costs of an activity to decide whether it is worthwhile. 
D)  perform charitable deeds only if the cost is high for the benefactor. 
E)  people implicitly calculate the costs of and the benefits from an activity to decide if it is worthwhile. 
A)  think only of themselves and disregard the well-being of others. 
B)  undertake all those activities that do not have any marginal benefit. 
C)  only consider the costs of an activity to decide whether it is worthwhile. 
D)  perform charitable deeds only if the cost is high for the benefactor. 
E)  people implicitly calculate the costs of and the benefits from an activity to decide if it is worthwhile.

Question 12

The assumption of rational self-interest does not rule out the possibility of concern for other individuals.

Accepted Answer

A) True 
 B)False

Question 13

In economics, money is an example of capital.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is a service?

Accepted Answer

A)  anything that can be used indefinitely 
B)  anything for which people pay less money than they pay for a good 
C)  an intangible activity that satisfies human wants 
D)  any output produced by the service sector industry, such as fast food 
E)  something that is more desirable than a good 
A)  anything that can be used indefinitely 
B)  anything for which people pay less money than they pay for a good 
C)  an intangible activity that satisfies human wants 
D)  any output produced by the service sector industry, such as fast food 
E)  something that is more desirable than a good

Question 15

You currently subscribe to two magazines and are trying to decide whether you should subscribe to a third. What should determine your decision?

Accepted Answer

A)  The total cost of the magazines 
B)  The total amount of enjoyment 
C)  The enjoyment you would get from the third magazine 
D)  The cost of the third magazine including the time it takes to read it 
E)  The cost of the third magazine compared to the additional enjoyment you would get from it 
A)  The total cost of the magazines 
B)  The total amount of enjoyment 
C)  The enjoyment you would get from the third magazine 
D)  The cost of the third magazine including the time it takes to read it 
E)  The cost of the third magazine compared to the additional enjoyment you would get from it

Question 16

A rational decision maker will make a change only if:

Accepted Answer

A)  the marginal benefit from the change exceeds the average benefit from the change. 
B)  there are no costs involved. 
C)  the change increases social welfare. 
D)  there is no uncertainty about the results of the change. 
E)  the expected marginal benefit exceeds the expected marginal cost. 
A)  the marginal benefit from the change exceeds the average benefit from the change. 
B)  there are no costs involved. 
C)  the change increases social welfare. 
D)  there is no uncertainty about the results of the change. 
E)  the expected marginal benefit exceeds the expected marginal cost.

Question 17

Economists tell stories:

Accepted Answer

A)  in order to breathe life into economic theory and personalize abstract ideas. 
B)  because economics is an art, not a science. 
C)  as a way of rigorously testing economic theory. 
D)  because doing so is a required part of the scientific method. 
E)  to show how their theory can predict at least one real-world situation. 
A)  in order to breathe life into economic theory and personalize abstract ideas. 
B)  because economics is an art, not a science. 
C)  as a way of rigorously testing economic theory. 
D)  because doing so is a required part of the scientific method. 
E)  to show how their theory can predict at least one real-world situation.

Question 18

A good economic theory:

Accepted Answer

A)  is based on value judgments. 
B)  contains as much detail as possible. 
C)  cannot be proven false. 
D)  can be used to make predictions. 
E)  can only be presented in mathematical terms. 
A)  is based on value judgments. 
B)  contains as much detail as possible. 
C)  cannot be proven false. 
D)  can be used to make predictions. 
E)  can only be presented in mathematical terms.

Question 19

Scarcity occurs when the amount people desire is less than the amount available at a zero price.

Accepted Answer

A) True 
 B)False

Question 20

A resource is something that:

Accepted Answer

A)  is used to produce goods and services. 
B)  is provided by nature, and not produced by society. 
C)  exists in unlimited quantities in developed countries. 
D)  must be produced by a firm. 
E)  is always available free of cost. 
A)  is used to produce goods and services. 
B)  is provided by nature, and not produced by society. 
C)  exists in unlimited quantities in developed countries. 
D)  must be produced by a firm. 
E)  is always available free of cost.

For a non-economist, marginal means:

Considering both product markets and resource markets, most economic decision makers participate in the economy as both buyers and sellers.

A rational decision maker will take only those actions for which the expected marginal benefit:

A hypothesis is:

Natural resources:

Exhibit 1.2 -Refer to the circular-flow model in Exhibit 1.2. Firms supply ________ to households through product markets.

Economic fluctuations are:

By rational, economists mean that people:

In economics, marginal analysis:

Most real economic choices involve small (or marginal) changes rather than all-or-nothing decisions.

The assumption that individuals act rationally implies that people:

The assumption of rational self-interest does not rule out the possibility of concern for other individuals.

In economics, money is an example of capital.

Which of the following is a service?

You currently subscribe to two magazines and are trying to decide whether you should subscribe to a third. What should determine your decision?

A rational decision maker will make a change only if:

Economists tell stories:

A good economic theory:

Scarcity occurs when the amount people desire is less than the amount available at a zero price.

A resource is something that:

Economic Tools and Economic Systems.

Economic Decision Makers.

Demand, Supply, and Markets.

Introduction to Macroeconomics.

Tracking the U. S. Economy.

Unemployment and Inflation.

Productivity and Growth.

Aggregate Demand.

Aggregate Supply.

Fiscal Policy.

Federal Budgets and Public Policy.

Money and the Financial System.

Banking and the Money Supply.

Monetary Theory and Policy.

Macro Policy Debate: Active or Passive?

International Trade.

International Finance.

Economic Development.

Filters

Exam 1: The Art and Science of Economic Analysis.

For a non-economist, marginal means:

Considering both product markets and resource markets, most economic decision makers participate in the economy as both buyers and sellers.

A rational decision maker will take only those actions for which the expected marginal benefit:

A hypothesis is:

Natural resources:

Exhibit 1.2 -Refer to the circular-flow model in Exhibit 1.2. Firms supply ________ to households through product markets.

Economic fluctuations are:

By rational, economists mean that people:

In economics, marginal analysis:

Most real economic choices involve small (or marginal) changes rather than all-or-nothing decisions.

The assumption that individuals act rationally implies that people:

The assumption of rational self-interest does not rule out the possibility of concern for other individuals.

In economics, money is an example of capital.

Which of the following is a service?

You currently subscribe to two magazines and are trying to decide whether you should subscribe to a third. What should determine your decision?

A rational decision maker will make a change only if:

Economists tell stories:

A good economic theory:

Scarcity occurs when the amount people desire is less than the amount available at a zero price.

A resource is something that:

Economic Tools and Economic Systems.

Economic Decision Makers.

Demand, Supply, and Markets.

Introduction to Macroeconomics.

Tracking the U. S. Economy.

Unemployment and Inflation.

Productivity and Growth.

Aggregate Demand.

Aggregate Supply.

Fiscal Policy.

Federal Budgets and Public Policy.

Money and the Financial System.

Banking and the Money Supply.

Monetary Theory and Policy.

Macro Policy Debate: Active or Passive?

International Trade.

International Finance.

Economic Development.

Filters