Question 1

The opportunity cost of an action is

Accepted Answer

A) the monetary payment the action required. 
B) the total time spent by all parties in carrying out the action. 
C) the value of the best opportunity that must be sacrificed in order to take the action. 
D) the cost of all alternative actions that could have been taken, added together. 
A) the monetary payment the action required. 
B) the total time spent by all parties in carrying out the action. 
C) the value of the best opportunity that must be sacrificed in order to take the action. 
D) the cost of all alternative actions that could have been taken, added together.

Question 2

Who is more likely to drive carelessly, Sue in her 1980 Ford with bad brakes or Sally, who has a 2005 BMW with all the most recent safety options?

Accepted Answer

On the surface, we might conclude that S

Question 3

In economics, man-made resources such as tools, equipment, and structures that are used to produce other goods and services are referred to as

Accepted Answer

A) consumer goods. 
B) capital. 
C) marginal goods. 
D) infrastructures. 
A) consumer goods. 
B) capital. 
C) marginal goods. 
D) infrastructures.

Question 4

If a college enforces a new policy where anyone caught cheating is immediately expelled, the basic postulate of economics suggests that

Accepted Answer

A) cheating will be completely eliminated. 
B) fewer students will attempt to cheat. 
C) the amount of cheating will be unaffected. 
D) any of the above is possible because student behavior is unpredictable. 
A) cheating will be completely eliminated. 
B) fewer students will attempt to cheat. 
C) the amount of cheating will be unaffected. 
D) any of the above is possible because student behavior is unpredictable.

Question 5

The economic way of thinking stresses that

Accepted Answer

A) changes in personal costs and benefits will exert a predictable influence on the choices of human decision makers. 
B) only direct monetary costs matter in making decisions. 
C) if a good is provided free to an individual, its production will not consume valuable scarce resources. 
D) secondary effects are not important to consider when making decisions. 
A) changes in personal costs and benefits will exert a predictable influence on the choices of human decision makers. 
B) only direct monetary costs matter in making decisions. 
C) if a good is provided free to an individual, its production will not consume valuable scarce resources. 
D) secondary effects are not important to consider when making decisions.

Question 6

In economics, the term "scarcity" refers to the fact that

Accepted Answer

A) everything really worthwhile costs money. 
B) even in wealthy countries like the United States, some people are poor. 
C) no society can produce enough to satisfy fully the desires of people for goods and services. 
D) sometimes shortages of a good arise when its price is set below the market equilibrium. 
A) everything really worthwhile costs money. 
B) even in wealthy countries like the United States, some people are poor. 
C) no society can produce enough to satisfy fully the desires of people for goods and services. 
D) sometimes shortages of a good arise when its price is set below the market equilibrium.

Question 7

The benefit (or satisfaction) that an individual expects to derive from an activity is called

Accepted Answer

A) opportunity cost. 
B) utility. 
C) marginal cost. 
D) scarcity. 
A) opportunity cost. 
B) utility. 
C) marginal cost. 
D) scarcity.

Question 8

Which of the following is a positive economic statement?

Accepted Answer

A) The federal minimum wage should be raised to $6.50 per hour. 
B) The United States spends too much on anti-terrorism efforts. 
C) An increase in investment will lead to a higher rate of economic growth. 
D) Economics is twice as interesting to study as philosophy. 
A) The federal minimum wage should be raised to $6.50 per hour. 
B) The United States spends too much on anti-terrorism efforts. 
C) An increase in investment will lead to a higher rate of economic growth. 
D) Economics is twice as interesting to study as philosophy.

Question 9

The expression "There's no such thing as a free lunch" means

Accepted Answer

A) in an exchange, if one person gains, someone else must lose. 
B) each person must pay for exactly what he or she receives. 
C) the use of resources to meet one need means that those resources can no longer be used to meet another need. 
D) in an exchange, if one person gains, someone else must lose and equal amount. 
A) in an exchange, if one person gains, someone else must lose. 
B) each person must pay for exactly what he or she receives. 
C) the use of resources to meet one need means that those resources can no longer be used to meet another need. 
D) in an exchange, if one person gains, someone else must lose and equal amount.

Question 10

The economizing problem is essentially one of deciding how to make the best use of

Accepted Answer

A) limited resources to satisfy limited wants. 
B) unlimited resources to satisfy limited wants. 
C) limited resources to satisfy virtually unlimited wants. 
D) unlimited resources to satisfy unlimited wants. 
A) limited resources to satisfy limited wants. 
B) unlimited resources to satisfy limited wants. 
C) limited resources to satisfy virtually unlimited wants. 
D) unlimited resources to satisfy unlimited wants.

Question 11

Which of the following is true?

Accepted Answer

A) Human choice is generally not influenced by changes in incentives. 
B) What is true for the individual must be true for the group as a whole. 
C) Using scarce resources to meet one need reduces our ability to meet needs in other areas. 
D) The economic way of thinking stresses that good intentions usually lead to sound economic policy. 
A) Human choice is generally not influenced by changes in incentives. 
B) What is true for the individual must be true for the group as a whole. 
C) Using scarce resources to meet one need reduces our ability to meet needs in other areas. 
D) The economic way of thinking stresses that good intentions usually lead to sound economic policy.

Question 12

Positive economics

Accepted Answer

A) postulates relationships among economic variables that are potentially refutable by real-world events. 
B) is strictly quantitative and is, therefore, of little value to policy makers. 
C) will usually indicate which economic policy is best. 
D) is the same as normative economics. 
A) postulates relationships among economic variables that are potentially refutable by real-world events. 
B) is strictly quantitative and is, therefore, of little value to policy makers. 
C) will usually indicate which economic policy is best. 
D) is the same as normative economics.

Question 13

Which of the following is a positive economic statement?

Accepted Answer

A) Government control of rent is a fair way to help poor people afford housing. 
B) Government control of rent keeps landlords from charging too much rent. 
C) Government control of rent decreases the number of new apartments constructed. 
D) Government control of rent is an injustice. 
A) Government control of rent is a fair way to help poor people afford housing. 
B) Government control of rent keeps landlords from charging too much rent. 
C) Government control of rent decreases the number of new apartments constructed. 
D) Government control of rent is an injustice.

Question 14

When economists use the term ceteris paribus, they are indicating that

Accepted Answer

A) the relationship between two economic variables cannot be determined. 
B) the analysis is true for the individual but not for the economy as a whole. 
C) all other variables except the ones specified are assumed to be constant. 
D) their conclusions are based on normative economics rather than positive economic analysis. 
A) the relationship between two economic variables cannot be determined. 
B) the analysis is true for the individual but not for the economy as a whole. 
C) all other variables except the ones specified are assumed to be constant. 
D) their conclusions are based on normative economics rather than positive economic analysis.

Question 15

The term ceteris paribus means that

Accepted Answer

A) everything is changing. 
B) all variables except those specified are constant. 
C) no one knows which variables will change and which will remain constant. 
D) the basic postulate of economics does not apply for the case being considered. 
A) everything is changing. 
B) all variables except those specified are constant. 
C) no one knows which variables will change and which will remain constant. 
D) the basic postulate of economics does not apply for the case being considered.

Question 16

"The standard of living is too low for many individuals in the United States. The government should implement policies designed to achieve a more equal distribution of income." The preceding statements are

Accepted Answer

A) positive economic statements based on cause and effect. 
B) normative economic statements based on value judgments. 
C) based on the fallacy of composition argument. 
D) an empirically validated economic principle. 
A) positive economic statements based on cause and effect. 
B) normative economic statements based on value judgments. 
C) based on the fallacy of composition argument. 
D) an empirically validated economic principle.

Question 17

"Mediocre economists often consider only the immediate apparent effects of a change, whereas a good economist will also consider effects that may only become observable over time." This statement most clearly emphasizes

Accepted Answer

A) the fallacy of composition. 
B) economizing behavior. 
C) the importance of secondary effects. 
D) the fact that association is not causation. 
A) the fallacy of composition. 
B) economizing behavior. 
C) the importance of secondary effects. 
D) the fact that association is not causation.

Question 18

In economics, secondary effects refer to the

Accepted Answer

A) best alternative that must be forgone as the result of a choice. 
B) unintended consequences of a change that are not immediately identifiable but are felt only with time. 
C) immediate and visible intended consequences of a change. 
D) impact of the scarcity of resources on the scarcity of the goods that are produced with those resources. 
A) best alternative that must be forgone as the result of a choice. 
B) unintended consequences of a change that are not immediately identifiable but are felt only with time. 
C) immediate and visible intended consequences of a change. 
D) impact of the scarcity of resources on the scarcity of the goods that are produced with those resources.

Question 19

When an individual weighs her options and makes a choice that maximizes her benefit at the minimum cost, economists refer to this as a process of

Accepted Answer

A) rational decision making. 
B) objective decision making because the value of goods is determined objectively. 
C) marginal management analysis. 
D) random decision making. 
A) rational decision making. 
B) objective decision making because the value of goods is determined objectively. 
C) marginal management analysis. 
D) random decision making.

Question 20

Which of the following is an example of a rational decision?

Accepted Answer

A) Jim enjoys the feeling of wind in his hair enough to ride his motorcycle without a helmet, even though he fully realizes the potential for injury it creates by not wearing one in the unlikely event he is in an accident. 
B) Doris, a burglar who breaks into houses, decides to break into the house at 265 Elm Street, rather than the house next door because the house next door has a sign in the yard that says "home protected by a security system." 
C) Brandon, a drug user, chooses to buy his cocaine from Pablo, because Pablo's cocaine is as good as the cocaine from other dealers, but Pablo has lower prices. 
D) All of the above are examples of rational choices. 
A) Jim enjoys the feeling of wind in his hair enough to ride his motorcycle without a helmet, even though he fully realizes the potential for injury it creates by not wearing one in the unlikely event he is in an accident. 
B) Doris, a burglar who breaks into houses, decides to break into the house at 265 Elm Street, rather than the house next door because the house next door has a sign in the yard that says "home protected by a security system." 
C) Brandon, a drug user, chooses to buy his cocaine from Pablo, because Pablo's cocaine is as good as the cocaine from other dealers, but Pablo has lower prices. 
D) All of the above are examples of rational choices.

Exam 1: The Economic Approach

The opportunity cost of an action is

Who is more likely to drive carelessly, Sue in her 1980 Ford with bad brakes or Sally, who has a 2005 BMW with all the most recent safety options?

In economics, man-made resources such as tools, equipment, and structures that are used to produce other goods and services are referred to as

If a college enforces a new policy where anyone caught cheating is immediately expelled, the basic postulate of economics suggests that

The economic way of thinking stresses that

In economics, the term "scarcity" refers to the fact that

The benefit (or satisfaction) that an individual expects to derive from an activity is called

Which of the following is a positive economic statement?

The expression "There's no such thing as a free lunch" means

The economizing problem is essentially one of deciding how to make the best use of

Which of the following is true?

Positive economics

Which of the following is a positive economic statement?

When economists use the term ceteris paribus, they are indicating that

The term ceteris paribus means that

"The standard of living is too low for many individuals in the United States. The government should implement policies designed to achieve a more equal distribution of income." The preceding statements are

"Mediocre economists often consider only the immediate apparent effects of a change, whereas a good economist will also consider effects that may only become observable over time." This statement most clearly emphasizes

In economics, secondary effects refer to the

When an individual weighs her options and makes a choice that maximizes her benefit at the minimum cost, economists refer to this as a process of

Which of the following is an example of a rational decision?

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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