Question 1

The concept of economic efficiency refers to the size of the "economic pie" whereas the concept of equality refers to how the "pie" is distributed.

Accepted Answer

A) True 
 B)False

Question 2

Opportunity cost is the highest possible price you can receive when you sell an object.

Accepted Answer

A) True 
 B)False

Question 3

An economic model is a realistic depiction of the operation of the economy.

Accepted Answer

A) True 
 B)False

Question 4

A student was heard to remark, "Even though I am certain to fail this course, I cannot withdraw from it since it is too late to get back my tuition." Use one or more "Ideas for Beyond the Final Exam" to analyze this reasoning.

Accepted Answer

The student is failing to use marginal a

Question 5

Economic theory is a necessity, not a luxury.This statement is true because theory

Accepted Answer

A) always leads to practical and useful policy. 
B) can prevent depressions in the economy. 
C) substitutes for vast amounts of data. 
D) provides a structure for organizing and analyzing data. 
E) always leads to accurate predictions. 
A) always leads to practical and useful policy. 
B) can prevent depressions in the economy. 
C) substitutes for vast amounts of data. 
D) provides a structure for organizing and analyzing data. 
E) always leads to accurate predictions.

Question 6

​Abstract economic theory can be used by academicians, but not by politicians or business people.

Accepted Answer

A) True 
 B)False

Question 7

Models are simplifications that are used to observe the workings of a system.

Accepted Answer

A) True 
 B)False

Question 8

Marginal analysis involves looking at the extra costs involved in a decision.

Accepted Answer

A) True 
 B)False

Question 9

Economic theory

Accepted Answer

A) is a deliberate simplification of factual relationships. 
B) seeks to disprove a hypothesis. 
C) is based mainly on assumptions. 
D) seeks to prove political ideals. 
A) is a deliberate simplification of factual relationships. 
B) seeks to disprove a hypothesis. 
C) is based mainly on assumptions. 
D) seeks to prove political ideals.

Question 10

Abstraction can be thought of as

Accepted Answer

A) ignoring reality in order to build theory. 
B) omitting unimportant details in order to understand complex phenomena. 
C) creating absurdity in order to explain simplicity. 
D) assuming complexity when simplicity will do. 
E) stylizing reality rather than analyzing cause and effect. 
A) ignoring reality in order to build theory. 
B) omitting unimportant details in order to understand complex phenomena. 
C) creating absurdity in order to explain simplicity. 
D) assuming complexity when simplicity will do. 
E) stylizing reality rather than analyzing cause and effect.

Question 11

Although economic science can contribute theoretical and factual knowledge on a particular issue, the final decision on policy questions often depends on:

Accepted Answer

A) information that is not currently available 
B) social values 
C) ethical considerations 
D) all of these 
A) information that is not currently available 
B) social values 
C) ethical considerations 
D) all of these

Question 12

A vertical line has a slope of

Accepted Answer

A) infinity. 
B) zero. 
C) undefined. 
D) 1,000. 
A) infinity. 
B) zero. 
C) undefined. 
D) 1,000.

Question 13

Economists are often perceived as disagreeing with each other.Is this the way things really are?

Accepted Answer

A) No, economists agree on much more than is commonly supposed. 
B) No, the problem is that some economists are smarter than others. 
C) No, economists "stage" disagreements for public amusement. 
D) Yes, economists rarely agree on much of anything. 
E) Yes, economists are unable to analyze problems dispassionately. 
A) No, economists agree on much more than is commonly supposed. 
B) No, the problem is that some economists are smarter than others. 
C) No, economists "stage" disagreements for public amusement. 
D) Yes, economists rarely agree on much of anything. 
E) Yes, economists are unable to analyze problems dispassionately.

Question 14

If a voluntary trade takes place,

Accepted Answer

A) both parties will benefit from the transaction. 
B) only one party will benefit from the transaction. 
C) neither party will benefit from the transaction. 
D) both parties will benefit only if the government regulates the transaction. 
A) both parties will benefit from the transaction. 
B) only one party will benefit from the transaction. 
C) neither party will benefit from the transaction. 
D) both parties will benefit only if the government regulates the transaction.

Question 15

Carefully define the following terms and explain their importance.
a.variable
b.ray
c.slope
d.contour map

Accepted Answer

a.A variable is an object, such as price

Question 16

The dramatic increase in the standard of living since the Industrial Revolution

Accepted Answer

A) means that societies and individuals face no constraints. 
B) has not meant unlimited abundance for societies or persons. 
C) means that "opportunity cost" is a meaningless concept. 
D) has reduced the choices open to persons. 
E) has made economics less useful to persons. 
A) means that societies and individuals face no constraints. 
B) has not meant unlimited abundance for societies or persons. 
C) means that "opportunity cost" is a meaningless concept. 
D) has reduced the choices open to persons. 
E) has made economics less useful to persons.

Question 17

Policy-oriented economists seek to develop theories to

Accepted Answer

A) explain how things work so policies can be formulated. 
B) describe what happened in a particular time period in history. 
C) describe current economic events. 
D) find correlations between events. 
E) change people's values and ethics. 
A) explain how things work so policies can be formulated. 
B) describe what happened in a particular time period in history. 
C) describe current economic events. 
D) find correlations between events. 
E) change people's values and ethics.

Question 18

Eliminating important details in economic analysis is necessary to understand the complexity of the economy.

Accepted Answer

A) True 
 B)False

Question 19

Why might well-educated economists disagree on appropriate public policy in some situations?

Accepted Answer

Economists might disagree beca

Question 20

A graph with a positive slope indicates that the variables depicted on the axes move in the same directions.

Accepted Answer

A) True 
 B)False

Exam 1: What Is Economics

The concept of economic efficiency refers to the size of the "economic pie" whereas the concept of equality refers to how the "pie" is distributed.

Opportunity cost is the highest possible price you can receive when you sell an object.

An economic model is a realistic depiction of the operation of the economy.

A student was heard to remark, "Even though I am certain to fail this course, I cannot withdraw from it since it is too late to get back my tuition." Use one or more "Ideas for Beyond the Final Exam" to analyze this reasoning.

Economic theory is a necessity, not a luxury.This statement is true because theory

​Abstract economic theory can be used by academicians, but not by politicians or business people.

Models are simplifications that are used to observe the workings of a system.

Marginal analysis involves looking at the extra costs involved in a decision.

Economic theory

Abstraction can be thought of as

Although economic science can contribute theoretical and factual knowledge on a particular issue, the final decision on policy questions often depends on:

A vertical line has a slope of

Economists are often perceived as disagreeing with each other.Is this the way things really are?

If a voluntary trade takes place,

Carefully define the following terms and explain their importance. a.variable b.ray c.slope d.contour map

The dramatic increase in the standard of living since the Industrial Revolution

Policy-oriented economists seek to develop theories to

Eliminating important details in economic analysis is necessary to understand the complexity of the economy.

Why might well-educated economists disagree on appropriate public policy in some situations?

A graph with a positive slope indicates that the variables depicted on the axes move in the same directions.

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: an Initial Look

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: the Importance of Marginal Analysis

Securities: Business Finance and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

Monopoly

Between Competition and Monopoly

Limiting Market Power: Regulation and Antitrust

The Case for Free Markets: the Price System

The Shortcomings of Free Markets

Externalities, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

Is Useconomic Leadership Threatened

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation

Bringing in the Supply Side: Unemployment and Inflation

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

He Financial Crisis and the Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade-Off Between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder

Exchange Rates and the Macroeconomy

Filters

Abstract economic theory can be used by academicians, but not by politicians or business people.