Question 1

In economics, the benefit (or satisfaction) that an individual gets from an activity is called

Accepted Answer

A) scarcity. 
B) utility. 
C) opportunity cost. 
D) ceteris paribus. 
A) scarcity. 
B) utility. 
C) opportunity cost. 
D) ceteris paribus.

Question 2

Which of the following is most consistent with economizing behavior?

Accepted Answer

A) If you get the same satisfaction from a hamburger and a fish sandwich, you should purchase the one that costs the most. 
B) Even if you know how to paint, hiring someone to do the job is consistent with economizing behavior, if your opportunity cost is high enough. 
C) If the government provides a good free to citizens, the opportunity cost of the good is zero. 
D) If you get the same satisfaction from going to the opera and going to an art museum, it makes no difference which you choose. 
A) If you get the same satisfaction from a hamburger and a fish sandwich, you should purchase the one that costs the most. 
B) Even if you know how to paint, hiring someone to do the job is consistent with economizing behavior, if your opportunity cost is high enough. 
C) If the government provides a good free to citizens, the opportunity cost of the good is zero. 
D) If you get the same satisfaction from going to the opera and going to an art museum, it makes no difference which you choose.

Question 3

Criteria for rationing goods and resources must be established because of

Accepted Answer

A) scarcity. 
B) the use of capitalism as the method of economic organization. 
C) the inability of politicians to develop efficient forms of economic organization. 
D) shortages resulting from government inefficiency. 
A) scarcity. 
B) the use of capitalism as the method of economic organization. 
C) the inability of politicians to develop efficient forms of economic organization. 
D) shortages resulting from government inefficiency.

Question 4

"If Tom had twice as much money, he could consume twice as much. If everyone had twice as much money, they could consume twice as much." This quote illustrates

Accepted Answer

A) the difference between positive and normative economics. 
B) the fallacy of composition. 
C) that association is not causation. 
D) the law of unintended consequences. 
A) the difference between positive and normative economics. 
B) the fallacy of composition. 
C) that association is not causation. 
D) the law of unintended consequences.

Question 5

If scarcity were eliminated,

Accepted Answer

A) all goods would be free. 
B) no one would have to make any choices. 
C) everyone could have all they want at no cost. 
D) all of the above are true. 
A) all goods would be free. 
B) no one would have to make any choices. 
C) everyone could have all they want at no cost. 
D) all of the above are true.

Question 6

Which one of the following statements is correct?

Accepted Answer

A) Policymakers have good intentions and therefore their proposals will create good outcomes. 
B) Potential secondary effects do not need to be considered when deciding whether to implement a new government program. 
C) A good outcome is guaranteed from a government program if it is created with good intentions. 
D) Government programs can be implemented with good intentions but can lead to undesirable outcomes because of unintended consequences. 
A) Policymakers have good intentions and therefore their proposals will create good outcomes. 
B) Potential secondary effects do not need to be considered when deciding whether to implement a new government program. 
C) A good outcome is guaranteed from a government program if it is created with good intentions. 
D) Government programs can be implemented with good intentions but can lead to undesirable outcomes because of unintended consequences.

Question 7

Modern economics as a field of study is usually thought to have begun with

Accepted Answer

A) Adam Smith and the writing of The Wealth of Nations. 
B) David Ricardo and the writing of The Principles of Political Economy and Taxation. 
C) Aristotle and the writing of Politics and Ethics. 
D) Moses and the Ten Commandments. 
A) Adam Smith and the writing of The Wealth of Nations. 
B) David Ricardo and the writing of The Principles of Political Economy and Taxation. 
C) Aristotle and the writing of Politics and Ethics. 
D) Moses and the Ten Commandments.

Question 8

The fallacy of composition is the incorrect view that

Accepted Answer

A) decisions are always made at the margin. 
B) incentives matter only to those who behave selfishly. 
C) if something is true for an individual, then it must also be true for the group. 
D) the value of a good can be objectively measured by its cost of production. 
A) decisions are always made at the margin. 
B) incentives matter only to those who behave selfishly. 
C) if something is true for an individual, then it must also be true for the group. 
D) the value of a good can be objectively measured by its cost of production.

Question 9

Which of the following is consistent with the implications of the economic guidepost that information is costly to acquire?

Accepted Answer

A) Most people do not know the names of their legislators in the U.S. Congress, but those same individuals are likely to know the names of all the cast members on a popular TV show. 
B) In considering purchases, people are more likely to purchase a consumer ratings magazine that reviews new automobiles before buying a car, but are unlikely to purchase a consumer ratings magazine that reviews pens and pencils before buying a pen or pencil. 
C) When shopping for something like a new calculator, people will generally not spend the time to do price comparisons at all of the stores in town that sell calculators. 
D) All of the above are consistent with the economic way of thinking. 
A) Most people do not know the names of their legislators in the U.S. Congress, but those same individuals are likely to know the names of all the cast members on a popular TV show. 
B) In considering purchases, people are more likely to purchase a consumer ratings magazine that reviews new automobiles before buying a car, but are unlikely to purchase a consumer ratings magazine that reviews pens and pencils before buying a pen or pencil. 
C) When shopping for something like a new calculator, people will generally not spend the time to do price comparisons at all of the stores in town that sell calculators. 
D) All of the above are consistent with the economic way of thinking.

Question 10

The fact that some people love tomatoes while others dislike them illustrates that

Accepted Answer

A) the value of a good is subjective. 
B) the value created by a good does not depend on who consumes it. 
C) the value of a tomato cannot be determined by the person consuming it. 
D) tomatoes have a value that is determined by their cost of production rather than by the value to the consumer of the tomatoes. 
A) the value of a good is subjective. 
B) the value created by a good does not depend on who consumes it. 
C) the value of a tomato cannot be determined by the person consuming it. 
D) tomatoes have a value that is determined by their cost of production rather than by the value to the consumer of the tomatoes.

Exam 1: The Economic Approach

In economics, the benefit (or satisfaction) that an individual gets from an activity is called

Which of the following is most consistent with economizing behavior?

Criteria for rationing goods and resources must be established because of

"If Tom had twice as much money, he could consume twice as much. If everyone had twice as much money, they could consume twice as much." This quote illustrates

If scarcity were eliminated,

Which one of the following statements is correct?

Modern economics as a field of study is usually thought to have begun with

The fallacy of composition is the incorrect view that

Which of the following is consistent with the implications of the economic guidepost that information is costly to acquire?

The fact that some people love tomatoes while others dislike them illustrates that

A: Some Tools of the Economist

B: Some Tools of the Economist

A: Supply, Demand, and the Market Process

B: Supply, Demand, and the Market Process

A: Supply and Demand: Applications and Extensions

B: Supply and Demand: Applications and Extensions

Difficult Cases for the Market and the Role of Government

The Economics of Collective Decision-Making

Consumer Choice and Elasticity

A: Costs and the Supply of Goods

B: Costs and the Supply of Goods

A: Price Takers and the Competitive Process

B: Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

A: Price-Searcher Markets With High Entry Barriers

B: Price-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Appendix: Government Spending and Taxation

Appendix: the Economics of Social Security

Appendix: the Stock Market: Its Function, Performance, and Potential As an Investment Opportunity

Appendix: Great Debates in Economics: Keynes Versus Hayek

Appendix: the Crisis of 2008: Causes and Lessons for the Future

Appendix: Lessons From the Great Depression

Appendix: the Economics of Healthcare

Appendix:education: Problems and Performance

Appendix: Earnings Differences Between Men and Women

Appendix: the Question of Resource Exhaustion

Appendix: Do Labor Unions Increase the Wages of Workers

Appendix: Difficult Environmental Cases and the Role of Government

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