Question 1

In the circular-flow model, firms supply:

Accepted Answer

A)  labor. 
B)  goods and services. 
C)  capital. 
D)  entrepreneurial ability. 
E)  natural resources. 
A)  labor. 
B)  goods and services. 
C)  capital. 
D)  entrepreneurial ability. 
E)  natural resources.

Question 2

In the circular-flow model, firms demand all of the following except:

Accepted Answer

A)  labor. 
B)  goods and services. 
C)  capital. 
D)  entrepreneurial ability. 
E)  natural resources. 
A)  labor. 
B)  goods and services. 
C)  capital. 
D)  entrepreneurial ability. 
E)  natural resources.

Question 3

The fallacy of composition is the error of believing that a cause-and-effect relationship exists between two events that are associated in time.

Accepted Answer

A) True 
 B)False

Question 4

Profit is the payment received by resource owners for the use of their capital.

Accepted Answer

A) True 
 B)False

Question 5

It is always rational to acquire more information before making a decision.

Accepted Answer

A) True 
 B)False

Question 6

The fact that people have unlimited wants means that:

Accepted Answer

A)  they always want more of at least one good. 
B)  people always purchase the goods that cost the least. 
C)  there is always an excess supply of necessary goods in the market. 
D)  selfish people are not concerned about others. 
E)  people do not behave rationally while making a choice. 
A)  they always want more of at least one good. 
B)  people always purchase the goods that cost the least. 
C)  there is always an excess supply of necessary goods in the market. 
D)  selfish people are not concerned about others. 
E)  people do not behave rationally while making a choice.

Question 7

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

Accepted Answer

A)  Advertising is always harmful to consumers. 
B)  Time and information are scarce and therefore valuable. 
C)  Brand names offer no informational content. 
D)  Acquiring more information is always rational. 
E)  Marginal analysis does not apply to the acquisition of information. 
A)  Advertising is always harmful to consumers. 
B)  Time and information are scarce and therefore valuable. 
C)  Brand names offer no informational content. 
D)  Acquiring more information is always rational. 
E)  Marginal analysis does not apply to the acquisition of information.

Question 8

The ceteris paribus assumption is the other-things-constant assumption.

Accepted Answer

A) True 
 B)False

Question 9

Economic decision makers will continue to acquire information only as long as the expected additional benefit exceeds the expected additional cost of the information.

Accepted Answer

A) True 
 B)False

Question 10

You will buy another pair of jeans 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 11

Economics is as much an art as it is a science.

Accepted Answer

A) True 
 B)False

Question 12

Exhibit 1.3
  
-Refer to Exhibit 1.3 of the Scientific Method: Step-by-Step. Step 4 is:

Accepted Answer

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

Question 13

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

Accepted Answer

A)  If the money supply falls, interest rates will rise. 
B)  Teenage unemployment would be lower if there were no minimum wage. 
C)  The quantity of shirts sold increases as the price of shirts decreases. 
D)  The federal government's total spending should be reduced. 
E)  If interest rates go up, then fewer buildings will be constructed. 
A)  If the money supply falls, interest rates will rise. 
B)  Teenage unemployment would be lower if there were no minimum wage. 
C)  The quantity of shirts sold increases as the price of shirts decreases. 
D)  The federal government's total spending should be reduced. 
E)  If interest rates go up, then fewer buildings will be constructed.

Question 14

Environmentalists have continually argued for the use of alternatives to fossil fuels to generate energy and that wind farms are a good alternative. As windmills can harm migratory birds, we could say that environmentalists have committed the:

Accepted Answer

A)  fallacy of composition. 
B)  fallacy that association is causation. 
C)  fallacy of segmentation. 
D)  mistake of ignoring secondary effects. 
E)  mistake of ignoring the obvious. 
A)  fallacy of composition. 
B)  fallacy that association is causation. 
C)  fallacy of segmentation. 
D)  mistake of ignoring secondary effects. 
E)  mistake of ignoring the obvious.

Question 15

In the circular-flow model, households supply all of the following except:

Accepted Answer

A)  labor. 
B)  goods and services. 
C)  capital. 
D)  entrepreneurial ability. 
E)  natural resources. 
A)  labor. 
B)  goods and services. 
C)  capital. 
D)  entrepreneurial ability. 
E)  natural resources.

Question 16

Your friend notices that U.S. auto production and U.S. population growth have moved together over several decades. He reasons that one way to slow population growth is for the government to order the auto makers to cut back on production. You gently point out to him that he:

Accepted Answer

A)  would be correct only when the economy was in a recession. 
B)  has committed the fallacy that association is causation. 
C)  has ignored the secondary effects. 
D)  has committed the fallacy of composition. 
E)  would be correct only if the United States enjoyed a high rate of economic growth. 
A)  would be correct only when the economy was in a recession. 
B)  has committed the fallacy that association is causation. 
C)  has ignored the secondary effects. 
D)  has committed the fallacy of composition. 
E)  would be correct only if the United States enjoyed a high rate of economic growth.

Question 17

Exhibit 1.1
  
-Refer to the circular-flow model in Exhibit 1.1. If box C represents households, then box D represents:

Accepted Answer

A)  firms. 
B)  resource markets. 
C)  households. 
D)  product markets. 
E)  expenditures. 
A)  firms. 
B)  resource markets. 
C)  households. 
D)  product markets. 
E)  expenditures.

Question 18

Table 1.1
 Table $1.1$
$\begin{array}{|l|l|}
\hline \text { Hours } & \text { Revenue } \
\hline 1 & \$ 10 \
\hline 2 & \$ 20 \
\hline 3 & \$ 30 \
\hline 4 & \$ 40 \
\hline 5 & \$ 50 \
\hline
\end{array}$
Sergio tutors fellow students for $\$ 10$ an hour.
-Refer to Table 1.1. Sergio hires an assistant for $5 per hour. What is his marginal cost if he tutors 1 hour a week and also pays his assistant?

Accepted Answer

A)  $25 
B)  $20 
C)  $15 
D)  $10 
E)  $5 
A)  $25 
B)  $20 
C)  $15 
D)  $10 
E)  $5

Question 19

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

Accepted Answer

A)  causation 
B)  composition 
C)  primary effects 
D)  secondary effects 
E)  behavioral assumptions 
A)  causation 
B)  composition 
C)  primary effects 
D)  secondary effects 
E)  behavioral assumptions

Question 20

Economic fluctuations are also known as:

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)  business cycles. 
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)  business cycles. 
E)  economic systems.

In the circular-flow model, firms supply:

In the circular-flow model, firms demand all of the following except:

The fallacy of composition is the error of believing that a cause-and-effect relationship exists between two events that are associated in time.

Profit is the payment received by resource owners for the use of their capital.

It is always rational to acquire more information before making a decision.

The fact that people have unlimited wants means that:

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

The ceteris paribus assumption is the other-things-constant assumption.

Economic decision makers will continue to acquire information only as long as the expected additional benefit exceeds the expected additional cost of the information.

You will buy another pair of jeans only if:

Economics is as much an art as it is a science.

Exhibit 1.3 -Refer to Exhibit 1.3 of the Scientific Method: Step-by-Step. Step 4 is:

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

Environmentalists have continually argued for the use of alternatives to fossil fuels to generate energy and that wind farms are a good alternative. As windmills can harm migratory birds, we could say that environmentalists have committed the:

In the circular-flow model, households supply all of the following except:

Your friend notices that U.S. auto production and U.S. population growth have moved together over several decades. He reasons that one way to slow population growth is for the government to order the auto makers to cut back on production. You gently point out to him that he:

Exhibit 1.1 -Refer to the circular-flow model in Exhibit 1.1. If box C represents households, then box D represents:

Table 1.1 Table $1.1$ Hours Revenue 1 \ 10 2 \ 20 3 \ 30 4 \ 40 5 \ 50 Sergio tutors fellow students for $\$ 10$ an hour. -Refer to Table 1.1. Sergio hires an assistant for $5 per hour. What is his marginal cost if he tutors 1 hour a week and also pays his assistant?

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

Economic fluctuations are also known as:

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.

In the circular-flow model, firms supply:

In the circular-flow model, firms demand all of the following except:

The fallacy of composition is the error of believing that a cause-and-effect relationship exists between two events that are associated in time.

Profit is the payment received by resource owners for the use of their capital.

It is always rational to acquire more information before making a decision.

The fact that people have unlimited wants means that:

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

The ceteris paribus assumption is the other-things-constant assumption.

Economic decision makers will continue to acquire information only as long as the expected additional benefit exceeds the expected additional cost of the information.

You will buy another pair of jeans only if:

Economics is as much an art as it is a science.

Exhibit 1.3 -Refer to Exhibit 1.3 of the Scientific Method: Step-by-Step. Step 4 is:

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

Environmentalists have continually argued for the use of alternatives to fossil fuels to generate energy and that wind farms are a good alternative. As windmills can harm migratory birds, we could say that environmentalists have committed the:

In the circular-flow model, households supply all of the following except:

Your friend notices that U.S. auto production and U.S. population growth have moved together over several decades. He reasons that one way to slow population growth is for the government to order the auto makers to cut back on production. You gently point out to him that he:

Exhibit 1.1 -Refer to the circular-flow model in Exhibit 1.1. If box C represents households, then box D represents:

Table 1.1 Table 1.11.11.1 Hours Revenue 1 \ 10 2 \ 20 3 \ 30 4 \ 40 5 \ 50 Sergio tutors fellow students for $10\$ 10$10 an hour. -Refer to Table 1.1. Sergio hires an assistant for $5 per hour. What is his marginal cost if he tutors 1 hour a week and also pays his assistant?

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

Economic fluctuations are also known as:

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

Table 1.1 Table $1.1$ Hours Revenue 1 \ 10 2 \ 20 3 \ 30 4 \ 40 5 \ 50 Sergio tutors fellow students for $\$ 10$ an hour. -Refer to Table 1.1. Sergio hires an assistant for $5 per hour. What is his marginal cost if he tutors 1 hour a week and also pays his assistant?