Question 1

One guideline that should be used whenever possible in developing a model is to

Accepted Answer

A) keep the model as simple as possible 
B) make the model as complex as possible so that it will be more accurate than other models 
C) rely on as many assumptions as possible 
D) not be concerned about including unnecessary details 
E) make certain that the model is an accurate,complete depiction of reality 
A) keep the model as simple as possible 
B) make the model as complex as possible so that it will be more accurate than other models 
C) rely on as many assumptions as possible 
D) not be concerned about including unnecessary details 
E) make certain that the model is an accurate,complete depiction of reality A

Question 2

Macroeconomics is the branch of economics that concerns

Accepted Answer

A) the behavior of individual actors in the economy 
B) output in a specific industry 
C) the overall health of the economy 
D) the federal government only 
E) prices in a specific industry 
A) the behavior of individual actors in the economy 
B) output in a specific industry 
C) the overall health of the economy 
D) the federal government only 
E) prices in a specific industry C

Question 3

The term capital,as used by economists,refers to

Accepted Answer

A) money 
B) the physical space in which production occurs 
C) the time allocated to producing goods and services 
D) financial securities such as stocks and bonds 
E) machinery and equipment that is not used up during the production process 
A) money 
B) the physical space in which production occurs 
C) the time allocated to producing goods and services 
D) financial securities such as stocks and bonds 
E) machinery and equipment that is not used up during the production process E

Question 4

Which if the following is a normative statement?

Accepted Answer

A) The extent of income inequality in the United States is unjust. 
B) An increase in the demand for gasoline will lead to an increase in its price. 
C) The American Recovery and Reinvestment Act has created hundreds of thousands of jobs. 
D) The current unemployment rate is 8.5% 
E) Inflation harms individuals living on fixed incomes. 
A) The extent of income inequality in the United States is unjust. 
B) An increase in the demand for gasoline will lead to an increase in its price. 
C) The American Recovery and Reinvestment Act has created hundreds of thousands of jobs. 
D) The current unemployment rate is 8.5% 
E) Inflation harms individuals living on fixed incomes.

Question 5

What an economic decision maker must give up when choosing one economic activity over others is known as the

Accepted Answer

A) alternative cost 
B) decision cost 
C) foregone cost 
D) opportunity cost 
E) accounting cost 
A) alternative cost 
B) decision cost 
C) foregone cost 
D) opportunity cost 
E) accounting cost

Question 6

A statement of opinion about which model best explains the economy is

Accepted Answer

A) an abstraction 
B) a positive statement 
C) a normative statement 
D) a philosophical conundrum 
E) empirically verifiable 
A) an abstraction 
B) a positive statement 
C) a normative statement 
D) a philosophical conundrum 
E) empirically verifiable

Question 7

Economic models do not have to completely describe every aspect of the economy in order to be useful.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following would be a concern of normative economics?

Accepted Answer

A) measuring the actual distribution of income in the economy 
B) recommending a change in government policy to make the distribution of income more equitable 
C) determining the impact of higher income taxes on the distribution of income 
D) determining the impact of a lower federal budget deficit on the distribution of income 
E) measuring the change in the nation's income distribution since 1960 
A) measuring the actual distribution of income in the economy 
B) recommending a change in government policy to make the distribution of income more equitable 
C) determining the impact of higher income taxes on the distribution of income 
D) determining the impact of a lower federal budget deficit on the distribution of income 
E) measuring the change in the nation's income distribution since 1960

Question 9

Economics is the study of

Accepted Answer

A) how to start a business 
B) how to make money in stocks,bonds,and real estate 
C) choice under conditions of abundance 
D) choice under conditions of scarcity 
E) multinational business 
A) how to start a business 
B) how to make money in stocks,bonds,and real estate 
C) choice under conditions of abundance 
D) choice under conditions of scarcity 
E) multinational business

Question 10

Which of the following disciplines is not a social science?

Accepted Answer

A) psychology 
B) mathematics 
C) economics 
D) political science 
E) sociology 
A) psychology 
B) mathematics 
C) economics 
D) political science 
E) sociology

Question 11

Economic models are used primarily to

Accepted Answer

A) predict behavior under specific circumstances 
B) make an exact reproduction of one facet of the economy 
C) increase the mathematical complexity and rigor of economics 
D) provide simple answers to simple questions 
E) give accurate forecasts of the future 
A) predict behavior under specific circumstances 
B) make an exact reproduction of one facet of the economy 
C) increase the mathematical complexity and rigor of economics 
D) provide simple answers to simple questions 
E) give accurate forecasts of the future

Question 12

Due to resource scarcity,

Accepted Answer

A) some economic activities have an opportunity cost 
B) all economic activities have an opportunity cost 
C) no economic activities have an opportunity cost 
D) economic activities have opportunity costs equal to their market prices 
E) economic activities have opportunity costs generally lower than their market prices 
A) some economic activities have an opportunity cost 
B) all economic activities have an opportunity cost 
C) no economic activities have an opportunity cost 
D) economic activities have opportunity costs equal to their market prices 
E) economic activities have opportunity costs generally lower than their market prices

Question 13

Simplifying assumptions always affect the conclusions derived from an economic model.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is a positive statement?

Accepted Answer

A) Driving speeds should be lowered so that fewer accidents will occur. 
B) When per capita income falls,fewer meals are consumed at restaurants. 
C) The minimum wage is too low;college students deserve a raise. 
D) Cigarette sales should be made illegal in order to reduce the incidence of cancer. 
E) Social Security is a good program for U.S.workers. 
A) Driving speeds should be lowered so that fewer accidents will occur. 
B) When per capita income falls,fewer meals are consumed at restaurants. 
C) The minimum wage is too low;college students deserve a raise. 
D) Cigarette sales should be made illegal in order to reduce the incidence of cancer. 
E) Social Security is a good program for U.S.workers.

Question 15

No society can provide its citizens with everything that they want because of

Accepted Answer

A) greedy politicians 
B) lazy workers 
C) an educational system that does not provide hands on experience 
D) firms that strive to maximize profits 
E) a scarcity of resources 
A) greedy politicians 
B) lazy workers 
C) an educational system that does not provide hands on experience 
D) firms that strive to maximize profits 
E) a scarcity of resources

Question 16

Normative economics deals with

Accepted Answer

A) social norms and customs that influence economic behavior 
B) norms of behavior that can be taken as facts 
C) statements of fact 
D) statements about the value of a proposed policy 
E) government rules and regulations that drag down the economy 
A) social norms and customs that influence economic behavior 
B) norms of behavior that can be taken as facts 
C) statements of fact 
D) statements about the value of a proposed policy 
E) government rules and regulations that drag down the economy

Question 17

A critical assumption is one

Accepted Answer

A) that affects a model in important ways 
B) that is understood only by economists 
C) that makes a model simpler without affecting any of its important conclusions 
D) with negative implications for a process or outcome 
E) that is critically unreasonable 
A) that affects a model in important ways 
B) that is understood only by economists 
C) that makes a model simpler without affecting any of its important conclusions 
D) with negative implications for a process or outcome 
E) that is critically unreasonable

Question 18

-Grant has four hours of time to divide between studying for a physics exam and a geology exam.Figure 1-1 shows his estimates of the grades (on a scale of 0 to 100)that he could earn from studying a particular number of hours on each subject.If he plans on spending two hours studying each subject,what would be his opportunity cost of an additional hour studying physics?

Accepted Answer

A) 10 points on his geology exam 
B) 20 points on his geology exam 
C) 80 points on his geology exam 
D) 25 points on his physics exam 
E) 85 points on his physics exam 
A) 10 points on his geology exam 
B) 20 points on his geology exam 
C) 80 points on his geology exam 
D) 25 points on his physics exam 
E) 85 points on his physics exam

Question 19

Economics is

Accepted Answer

A) exclusively the study of the markets for stocks and bonds 
B) the study of choice under conditions of scarcity 
C) exclusively the study of business firms 
D) fundamentally the same as sociology 
E) applicable only when scarcity is not a problem 
A) exclusively the study of the markets for stocks and bonds 
B) the study of choice under conditions of scarcity 
C) exclusively the study of business firms 
D) fundamentally the same as sociology 
E) applicable only when scarcity is not a problem

Question 20

Carl is considering attending a concert with a ticket price of $35.He estimates that the cost of driving to the concert and parking there will total an additional $20.In order to attend the concert,Carl will have to take time off from his part-time job and forgo studying for an exam scheduled for the next morning.He estimates that he will lose 3 hours at work,at a wage of $6 per hour,plus 2 hours of study time.Carl's opportunity cost of attending the concert equals

Accepted Answer

A) $73 plus the value of the higher exam grade he could earn by studying longer 
B) $73 
C) $35 plus the value of the higher exam grade he could earn by studying longer 
D) $35 
E) $55 plus the value of the higher exam grade he could earn by studying longer 
A) $73 plus the value of the higher exam grade he could earn by studying longer 
B) $73 
C) $35 plus the value of the higher exam grade he could earn by studying longer 
D) $35 
E) $55 plus the value of the higher exam grade he could earn by studying longer

One guideline that should be used whenever possible in developing a model is to

Macroeconomics is the branch of economics that concerns

The term capital,as used by economists,refers to

Which if the following is a normative statement?

What an economic decision maker must give up when choosing one economic activity over others is known as the

A statement of opinion about which model best explains the economy is

Economic models do not have to completely describe every aspect of the economy in order to be useful.

Which of the following would be a concern of normative economics?

Economics is the study of

Which of the following disciplines is not a social science?

Economic models are used primarily to

Due to resource scarcity,

Simplifying assumptions always affect the conclusions derived from an economic model.

Which of the following is a positive statement?

No society can provide its citizens with everything that they want because of

Normative economics deals with

A critical assumption is one

Economics is

Scarcity, choice, and Economic Systems

Supply and Demand

Working With Supply and Demand

Elasticity

Consumer Choice

Production and Cost

How Firms Make Decisions: Profit Maximization

Perfect Competition

B:Perfect Competition

Monopolistic Competition and Oligopoly

Monopoly

Labor Markets

B: Labor Markets

Capital and Financial Markets

Economic Efficiency and the Competitive Ideal

Governments Role in Economic Efficiency

Comparative Advantage and the Gains From International Trade

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Exam 1: What Is Economics

One guideline that should be used whenever possible in developing a model is to

Macroeconomics is the branch of economics that concerns

The term capital,as used by economists,refers to

Which if the following is a normative statement?

What an economic decision maker must give up when choosing one economic activity over others is known as the

A statement of opinion about which model best explains the economy is

Economic models do not have to completely describe every aspect of the economy in order to be useful.

Which of the following would be a concern of normative economics?

Economics is the study of

Which of the following disciplines is not a social science?

Economic models are used primarily to

Due to resource scarcity,

Simplifying assumptions always affect the conclusions derived from an economic model.

Which of the following is a positive statement?

No society can provide its citizens with everything that they want because of

Normative economics deals with

A critical assumption is one

Economics is

Scarcity, choice, and Economic Systems

Supply and Demand

Working With Supply and Demand

Elasticity

Consumer Choice

Production and Cost

How Firms Make Decisions: Profit Maximization

Perfect Competition

B:Perfect Competition

Monopolistic Competition and Oligopoly

Monopoly

Labor Markets

B: Labor Markets

Capital and Financial Markets

Economic Efficiency and the Competitive Ideal

Governments Role in Economic Efficiency

Comparative Advantage and the Gains From International Trade

Filters