Question 1

Economists believe that people respond in a predictable way to changes in costs and benefits. This is known as:

Accepted Answer

A)  opportunity cost. 
B)  scarcity. 
C)  innovation. 
D)  marginal analysis. 
E)  other things equal. 
A)  opportunity cost. 
B)  scarcity. 
C)  innovation. 
D)  marginal analysis. 
E)  other things equal.

Question 2

Michigan has an abundant supply of fresh water. However, an economist would consider it a scarce resource because:

Accepted Answer

A)  water is necessary for human survival. 
B)  pollution will eventually destroy all life in the Great Lakes. 
C)  water is limited in supply relative to people's unlimited wants. 
D)  water commands a very high price. 
E)  the cost of supplying water is prohibitively high. 
A)  water is necessary for human survival. 
B)  pollution will eventually destroy all life in the Great Lakes. 
C)  water is limited in supply relative to people's unlimited wants. 
D)  water commands a very high price. 
E)  the cost of supplying water is prohibitively high.

Question 3

Which of the following is an example of a normative economic statement?

Accepted Answer

A)  Incomes increase when national production increases. 
B)  Women should earn the same income as men. 
C)  When the price of a good rises, people will buy more of it. 
D)  The more time you spend studying, the higher your economics test scores will be. 
E)  The price and the quantity demanded of a good are negatively related. 
A)  Incomes increase when national production increases. 
B)  Women should earn the same income as men. 
C)  When the price of a good rises, people will buy more of it. 
D)  The more time you spend studying, the higher your economics test scores will be. 
E)  The price and the quantity demanded of a good are negatively related.

Question 4

Given that consumers need time and information to make good choices, which of the following is correct?

Accepted Answer

A)  Paying for information is a waste of money. 
B)  Acquiring more information is always rational. 
C)  Brand names offer no informational content. 
D)  Consumers are willing to pay for information that improves choices. 
E)  Marginal analysis does not apply to the acquisition of information. 
A)  Paying for information is a waste of money. 
B)  Acquiring more information is always rational. 
C)  Brand names offer no informational content. 
D)  Consumers are willing to pay for information that improves choices. 
E)  Marginal analysis does not apply to the acquisition of information.

Question 5

"An increase in the price of a product causes consumers to purchase more of that product" is an example of a positive economic statement.

Accepted Answer

A) True 
 B)False

Question 6

The payment in return for the use of capital is _____.

Accepted Answer

A)  profit 
B)  wages 
C)  rent 
D)  dividends 
E)  interest 
A)  profit 
B)  wages 
C)  rent 
D)  dividends 
E)  interest

Question 7

Economists often focus on average behavior because it is easier to predict.

Accepted Answer

A) True 
 B)False

Question 8

The primary behavioral assumption is:

Accepted Answer

A)  opportunity cost. 
B)  demand. 
C)  supply. 
D)  scarcity. 
E)  rational self-interest. 
A)  opportunity cost. 
B)  demand. 
C)  supply. 
D)  scarcity. 
E)  rational self-interest.

Question 9

In economics, marginal usually refers to:

Accepted Answer

A)  a small change in an economic variable. 
B)  a low-quality product or resource. 
C)  an unimportant and irrelevant economic variable. 
D)  an all-or-nothing economic decision. 
E)  a footnote or minor point. 
A)  a small change in an economic variable. 
B)  a low-quality product or resource. 
C)  an unimportant and irrelevant economic variable. 
D)  an all-or-nothing economic decision. 
E)  a footnote or minor point.

Question 10

In economics, capital refers to:

Accepted Answer

A)  wages earned by workers. 
B)  dividends and interest earned by investors. 
C)  the foreign reserves held by governments. 
D)  machines, buildings, tools, and knowledge. 
E)  the net worth of firms. 
A)  wages earned by workers. 
B)  dividends and interest earned by investors. 
C)  the foreign reserves held by governments. 
D)  machines, buildings, tools, and knowledge. 
E)  the net worth of firms.

Question 11

Resources consist of labor and natural resources.

Accepted Answer

A) True 
 B)False

Question 12

Economic models, such as the circular-flow model:

Accepted Answer

A)  distort reality in order to improve forecasting ability. 
B)  predict phenomena without explaining them. 
C)  explain phenomena without predicting them. 
D)  include every detail and interrelation among variables that are being analyzed. 
E)  capture the important elements of the problem under study. 
A)  distort reality in order to improve forecasting ability. 
B)  predict phenomena without explaining them. 
C)  explain phenomena without predicting them. 
D)  include every detail and interrelation among variables that are being analyzed. 
E)  capture the important elements of the problem under study.

Question 13

The problem of scarce resources:

Accepted Answer

A)  can be solved in a market economy, but not in a command economy. 
B)  can be solved if all resources are jointly owned by the public and private sectors. 
C)  implies that the resources are not freely available. 
D)  arises because all natural resources are owned by the government in every country. 
E)  can be solved by lowering taxes in an economy. 
A)  can be solved in a market economy, but not in a command economy. 
B)  can be solved if all resources are jointly owned by the public and private sectors. 
C)  implies that the resources are not freely available. 
D)  arises because all natural resources are owned by the government in every country. 
E)  can be solved by lowering taxes in an economy.

Question 14

Which of the following statements regarding the basic economic problem of scarcity is correct?

Accepted Answer

A)  The problem will exist only in countries that are not highly industrialized. 
B)  The problem will disappear as production increases. 
C)  The problem will disappear as technology improves. 
D)  The problem will exist as long as resources are available in limited amounts. 
E)  The problem will disappear as a person's income falls. 
A)  The problem will exist only in countries that are not highly industrialized. 
B)  The problem will disappear as production increases. 
C)  The problem will disappear as technology improves. 
D)  The problem will exist as long as resources are available in limited amounts. 
E)  The problem will disappear as a person's income falls.

Question 15

You want to sell your old iPad to your cousin, who wants to give you $300 for it. You will have to pay $40 to ship the iPad to your cousin. As a rational decision maker, you should:

Accepted Answer

A)  sell it because the marginal benefit is smaller than the marginal cost. 
B)  not sell it because the marginal benefit is smaller than the marginal cost. 
C)  sell it because the marginal benefit is greater than the marginal cost. 
D)  not sell it because the marginal benefit is greater than the marginal cost. 
E)  sell it because the marginal benefit is equal to the marginal cost. 
A)  sell it because the marginal benefit is smaller than the marginal cost. 
B)  not sell it because the marginal benefit is smaller than the marginal cost. 
C)  sell it because the marginal benefit is greater than the marginal cost. 
D)  not sell it because the marginal benefit is greater than the marginal cost. 
E)  sell it because the marginal benefit is equal to the marginal cost.

Question 16

Exhibit 1.3
  
-Refer to Exhibit 1.3 of the Scientific Method: Step-by-Step. Step 1 is:

Accepted Answer

A)  Formulate a hypothesis. 
B)  Specify assumptions. 
C)  Identify the question and define relevant variables. 
D)  Test the hypothesis. 
E)  Use the hypothesis until a better one shows up. 
A)  Formulate a hypothesis. 
B)  Specify assumptions. 
C)  Identify the question and define relevant variables. 
D)  Test the hypothesis. 
E)  Use the hypothesis until a better one shows up.

Question 17

Goods and services are bought and sold in:

Accepted Answer

A)  product markets. 
B)  resource markets. 
C)  foreign exchange markets. 
D)  the stock market. 
E)  the spot market. 
A)  product markets. 
B)  resource markets. 
C)  foreign exchange markets. 
D)  the stock market. 
E)  the spot market.

Question 18

Microeconomics is the study of:

Accepted Answer

A)  the effect of an increase in money supply on interest rates. 
B)  the effect of an increase in interest rates on the level of investment in an economy. 
C)  the government's role as a distributor in an economy. 
D)  the economic behavior of individual decision makers. 
E)  the government's role as a producer in an economy. 
A)  the effect of an increase in money supply on interest rates. 
B)  the effect of an increase in interest rates on the level of investment in an economy. 
C)  the government's role as a distributor in an economy. 
D)  the economic behavior of individual decision makers. 
E)  the government's role as a producer in an economy.

Question 19

The incorrect belief that what is true for the individual must necessarily be true for the group is known as:

Accepted Answer

A)  the association-is-causation fallacy. 
B)  the fallacy of composition. 
C)  a primary effect. 
D)  a secondary effect. 
E)  a behavioral assumption. 
A)  the association-is-causation fallacy. 
B)  the fallacy of composition. 
C)  a primary effect. 
D)  a secondary effect. 
E)  a behavioral assumption.

Question 20

Macroeconomists analyze:

Accepted Answer

A)  the role of labor unions in industries. 
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 impact of unemployment on the growth rate of an economy. 
E)  the factors that affect the output decisions of individual firms. 
A)  the role of labor unions in industries. 
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 impact of unemployment on the growth rate of an economy. 
E)  the factors that affect the output decisions of individual firms.

Economists believe that people respond in a predictable way to changes in costs and benefits. This is known as:

Michigan has an abundant supply of fresh water. However, an economist would consider it a scarce resource because:

Which of the following is an example of a normative economic statement?

Given that consumers need time and information to make good choices, which of the following is correct?

"An increase in the price of a product causes consumers to purchase more of that product" is an example of a positive economic statement.

The payment in return for the use of capital is _____.

Economists often focus on average behavior because it is easier to predict.

The primary behavioral assumption is:

In economics, marginal usually refers to:

In economics, capital refers to:

Resources consist of labor and natural resources.

Economic models, such as the circular-flow model:

The problem of scarce resources:

Which of the following statements regarding the basic economic problem of scarcity is correct?

You want to sell your old iPad to your cousin, who wants to give you $300 for it. You will have to pay $40 to ship the iPad to your cousin. As a rational decision maker, you should:

Exhibit 1.3 -Refer to Exhibit 1.3 of the Scientific Method: Step-by-Step. Step 1 is:

Goods and services are bought and sold in:

Microeconomics is the study of:

The incorrect belief that what is true for the individual must necessarily be true for the group is known as:

Macroeconomists analyze:

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.

Economists believe that people respond in a predictable way to changes in costs and benefits. This is known as:

Michigan has an abundant supply of fresh water. However, an economist would consider it a scarce resource because:

Which of the following is an example of a normative economic statement?

Given that consumers need time and information to make good choices, which of the following is correct?

"An increase in the price of a product causes consumers to purchase more of that product" is an example of a positive economic statement.

The payment in return for the use of capital is _____.

Economists often focus on average behavior because it is easier to predict.

The primary behavioral assumption is:

In economics, marginal usually refers to:

In economics, capital refers to:

Resources consist of labor and natural resources.

Economic models, such as the circular-flow model:

The problem of scarce resources:

Which of the following statements regarding the basic economic problem of scarcity is correct?

You want to sell your old iPad to your cousin, who wants to give you $300 for it. You will have to pay $40 to ship the iPad to your cousin. As a rational decision maker, you should:

Exhibit 1.3 -Refer to Exhibit 1.3 of the Scientific Method: Step-by-Step. Step 1 is:

Goods and services are bought and sold in:

Microeconomics is the study of:

The incorrect belief that what is true for the individual must necessarily be true for the group is known as:

Macroeconomists analyze:

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