Question 1

The branch of economics which studies how households and firms interact in markets is called:

Accepted Answer

A) macroeconomics. 
B) microeconomics. 
C) positive economics. 
D) normative economics. 
A) macroeconomics. 
B) microeconomics. 
C) positive economics. 
D) normative economics.

Question 2

Which of the following statements is true about competition in a market?

Accepted Answer

A) Competition forces firms to outsource the production of their labour-intensive products. 
B) Competition forces firms to undercut their selling price, thus benefiting consumers who will be able to purchase products at the lowest price possible. 
C) Competition forces firms to produce and sell products as long as the marginal benefit to consumers exceeds the marginal cost of production. 
D) Competition forces firms to add only low profit margins to their costs of production. 
A) Competition forces firms to outsource the production of their labour-intensive products. 
B) Competition forces firms to undercut their selling price, thus benefiting consumers who will be able to purchase products at the lowest price possible. 
C) Competition forces firms to produce and sell products as long as the marginal benefit to consumers exceeds the marginal cost of production. 
D) Competition forces firms to add only low profit margins to their costs of production.

Question 3

DeShawn's Detailing is a service that details cars at the customers' homes or places of work. DeShawn's cost for a basic detailing package is $45, and he charges $80 for this service. For a total price of $95, DeShawn will also detail the car's engine, a service that adds an additional $20 to the total cost of the package. Should DeShawn continue to offer the engine detailing service?

Accepted Answer

A) Yes, he still makes a profit by selling the engine detailing service with the basic detailing package. 
B) Yes, but only if he raises the price of the basic detailing package. 
C) No, his marginal benefit is less than his marginal cost. 
D) More information is needed for DeShawn to make this decision. 
A) Yes, he still makes a profit by selling the engine detailing service with the basic detailing package. 
B) Yes, but only if he raises the price of the basic detailing package. 
C) No, his marginal benefit is less than his marginal cost. 
D) More information is needed for DeShawn to make this decision.

Question 4

Scarcity is a problem that will eventually disappear as technology advances.

Accepted Answer

A) True 
 B)False

Question 5

Explain why economics is considered a social science.
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

Economics is a social science

Question 6

The basic economic problem of ________ has always existed and will continue to exist.

Accepted Answer

A) scarcity 
B) efficiency 
C) inflation 
D) recession 
A) scarcity 
B) efficiency 
C) inflation 
D) recession

Question 7

Which of the following is not an example of an economic trade-off that a firm has to make?

Accepted Answer

A) Whether it is cheaper to produce with more machines or with more workers. 
B) Whether it is cheaper to outsource the production of a good or service. 
C) Whether or not consumers will buy its products. 
D) Whether it should produce more of its product. 
A) Whether it is cheaper to produce with more machines or with more workers. 
B) Whether it is cheaper to outsource the production of a good or service. 
C) Whether or not consumers will buy its products. 
D) Whether it should produce more of its product.

Question 8

Soo Jin shares a one-bedroom apartment with her classmate. Her share of the rent is $600 per month. She is considering moving to a studio apartment which she will not have to share with anyone. The studio apartment rents for $950 per month. Recently, you ran into Soo Jin on campus and she tells you that she has moved into the studio apartment. Soo Jin is as rational as any other person. As an economics major, you rightly conclude that:

Accepted Answer

A) Soo Jin did not have a choice; her roommate was a slob. 
B) Soo Jin figures that the additional benefit of having her own place (as opposed to sharing)is at least $350. 
C) Soo Jin figures that the benefit of having her own place (as opposed to sharing)is at least $950. 
D) the cost of having one's own space outweighs the benefits. 
A) Soo Jin did not have a choice; her roommate was a slob. 
B) Soo Jin figures that the additional benefit of having her own place (as opposed to sharing)is at least $350. 
C) Soo Jin figures that the benefit of having her own place (as opposed to sharing)is at least $950. 
D) the cost of having one's own space outweighs the benefits.

Question 9

In a centrally planned economy, the households and firms decide how economic resources will be allocated.

Accepted Answer

A) True 
 B)False

Question 10

Figure 1.1
  
-Refer to Figure 1.1. Using the information in the figure above, calculate the percentage change in sales of alcoholic beverages between 2012 and 2015.

Accepted Answer

A) 23.1% 
B) 23.8% 
C) 30% 
D) 42.9% 
A) 23.1% 
B) 23.8% 
C) 30% 
D) 42.9%

Question 11

Mr Beasley chooses to invest in companies that produce goods and services at the lowest possible cost. Mr Beasley is investing in companies that are:

Accepted Answer

A) productively efficient. 
B) allocatively efficient. 
C) guaranteed to make a profit. 
D) All of the above. 
A) productively efficient. 
B) allocatively efficient. 
C) guaranteed to make a profit. 
D) All of the above.

Question 12

An 'economic model' is a simplified version of reality used to analyse real-world economic situations.

Accepted Answer

A) True 
 B)False

Question 13

What do economists assume about individuals?

Accepted Answer

A) That they are rational and respond to incentives. 
B) That they prefer to live in a society that values fairness above all else. 
C) That they will never take action to help others. 
D) That they behave in unpredictable ways. 
A) That they are rational and respond to incentives. 
B) That they prefer to live in a society that values fairness above all else. 
C) That they will never take action to help others. 
D) That they behave in unpredictable ways.

Question 14

Which of the following is a 'microeconomics' question?

Accepted Answer

A) How much will be saved and how much will be produced in the entire economy? 
B) What will the level of economic growth be in the entire economy? 
C) What factors determine the price of carrots? 
D) What determines the average price level and inflation? 
A) How much will be saved and how much will be produced in the entire economy? 
B) What will the level of economic growth be in the entire economy? 
C) What factors determine the price of carrots? 
D) What determines the average price level and inflation?

Question 15

Abigail's Auto Art is a company that applies pinstripes to vehicles. Abigail's cost for a basic 1-colour pinstriping job is $40, and she charges $100 for this service. For a total price of $185, Abigail will apply a fancier 3-colour pinstripe application to an automobile, a service that adds an additional $50 to the total cost of the package. What is the marginal cost of moving up from the 1-colour application to the 3-colour application?

Accepted Answer

A) $40 
B) $50 
C) $100 
D) $175 
A) $40 
B) $50 
C) $100 
D) $175

Question 16

Assume that a doctor can earn an additional $20 000 of revenue each year from keeping his office open for one additional hour per week. What must the additional cost of keeping the office open this additional hour per week be to make staying open for the extra hour economically rational?
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

The additional cost of staying

Question 17

One desirable outcome of a market economy is that it leads to a more equitable distribution of income.

Accepted Answer

A) True 
 B)False

Question 18

Examining the conditions that could lead to a recession in an economy is an example of a macroeconomics topic.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following statements about the economic decisions consumers, firms and the government have to make is false?

Accepted Answer

A) Governments face the problem of scarcity in making economic decisions. 
B) Only individuals face scarcity; firms and the government do not. 
C) Both firms and individuals face scarcity. 
D) Each faces the problem of scarcity which necessitates trade-offs in making economic decisions. 
A) Governments face the problem of scarcity in making economic decisions. 
B) Only individuals face scarcity; firms and the government do not. 
C) Both firms and individuals face scarcity. 
D) Each faces the problem of scarcity which necessitates trade-offs in making economic decisions.

Question 20

The idea that because of scarcity, producing more of one good or service means producing less of another good or service refers to the economic concept of:

Accepted Answer

A) optimisation. 
B) efficiency. 
C) trade-off. 
D) equity. 
A) optimisation. 
B) efficiency. 
C) trade-off. 
D) equity.

The branch of economics which studies how households and firms interact in markets is called:

Which of the following statements is true about competition in a market?

Scarcity is a problem that will eventually disappear as technology advances.

Explain why economics is considered a social science. _ _

The basic economic problem of ________ has always existed and will continue to exist.

Which of the following is not an example of an economic trade-off that a firm has to make?

In a centrally planned economy, the households and firms decide how economic resources will be allocated.

Figure 1.1 -Refer to Figure 1.1. Using the information in the figure above, calculate the percentage change in sales of alcoholic beverages between 2012 and 2015.

Mr Beasley chooses to invest in companies that produce goods and services at the lowest possible cost. Mr Beasley is investing in companies that are:

An 'economic model' is a simplified version of reality used to analyse real-world economic situations.

What do economists assume about individuals?

Which of the following is a 'microeconomics' question?

Assume that a doctor can earn an additional $20 000 of revenue each year from keeping his office open for one additional hour per week. What must the additional cost of keeping the office open this additional hour per week be to make staying open for the extra hour economically rational? _ _

One desirable outcome of a market economy is that it leads to a more equitable distribution of income.

Examining the conditions that could lead to a recession in an economy is an example of a macroeconomics topic.

Which of the following statements about the economic decisions consumers, firms and the government have to make is false?

The idea that because of scarcity, producing more of one good or service means producing less of another good or service refers to the economic concept of:

Choices and Trade Offs in the Market

Where Prices Come From: the Interaction of Demand and Supply

Gdp: Measuring Total Production, Income and Economic Growth

Economic Growth, the Financial System and Business Cycles

Long-Run Economic Growth: Sources and Policies

Unemployment

Inflation

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money, Banks and the Reserve Bank of Australia

Monetary Policy

Fiscal Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

Exam 1: Economics: Foundations and Models

The branch of economics which studies how households and firms interact in markets is called:

Which of the following statements is true about competition in a market?

Scarcity is a problem that will eventually disappear as technology advances.

Explain why economics is considered a social science. _____________________________________________________________________________________________ _____________________________________________________________________________________________

The basic economic problem of ________ has always existed and will continue to exist.

Which of the following is not an example of an economic trade-off that a firm has to make?

In a centrally planned economy, the households and firms decide how economic resources will be allocated.

Figure 1.1 -Refer to Figure 1.1. Using the information in the figure above, calculate the percentage change in sales of alcoholic beverages between 2012 and 2015.

Mr Beasley chooses to invest in companies that produce goods and services at the lowest possible cost. Mr Beasley is investing in companies that are:

An 'economic model' is a simplified version of reality used to analyse real-world economic situations.

What do economists assume about individuals?

Which of the following is a 'microeconomics' question?

One desirable outcome of a market economy is that it leads to a more equitable distribution of income.

Examining the conditions that could lead to a recession in an economy is an example of a macroeconomics topic.

Which of the following statements about the economic decisions consumers, firms and the government have to make is false?

The idea that because of scarcity, producing more of one good or service means producing less of another good or service refers to the economic concept of:

Choices and Trade Offs in the Market

Where Prices Come From: the Interaction of Demand and Supply

Gdp: Measuring Total Production, Income and Economic Growth

Economic Growth, the Financial System and Business Cycles

Long-Run Economic Growth: Sources and Policies

Unemployment

Inflation

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money, Banks and the Reserve Bank of Australia

Monetary Policy

Fiscal Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

Explain why economics is considered a social science. _ _