Question 1

An "opportunity cost" may be described as: ​

Accepted Answer

A) ​the value of what must be gtiven up 
B) ​the opporrtunity foregone 
C) ​the value of the next best alternative 
D) ​the correct measure of cost 
E) ​all of these are correct 
A) ​the value of what must be gtiven up 
B) ​the opporrtunity foregone 
C) ​the value of the next best alternative 
D) ​the correct measure of cost 
E) ​all of these are correct

Question 2

The word "theory" means the same to the scientist as it does to the man on the street.

Accepted Answer

A) True 
 B)False

Question 3

Abstraction is used in economics to omit unnecessary details and focus on the essence of the problem being studied.

Accepted Answer

A) True 
 B)False

Question 4

One problem with the European Union's choice regarding equality versus efficiency is that it may inadvertently shrink the size of its "economic pie".

Accepted Answer

A) True 
 B)False

Question 5

If a decision maker uses marginal analysis, then the relevant costs are the

Accepted Answer

A) full costs of a particular activity or product. 
B) fixed costs which do not vary with the extra activity or output. 
C) profits obtained on the activity or product. 
D) average costs for a particular activity or product. 
E) additional costs of a particular activity or product. 
A) full costs of a particular activity or product. 
B) fixed costs which do not vary with the extra activity or output. 
C) profits obtained on the activity or product. 
D) average costs for a particular activity or product. 
E) additional costs of a particular activity or product.

Question 6

There are frequently market solutions that the government can use to deal with externalities.

Accepted Answer

A) True 
 B)False

Question 7

Two variables that systematically change together are correlated.

Accepted Answer

A) True 
 B)False

Question 8

The slope of a downward-sloping straight line can be calculated as the distance from the

Accepted Answer

A) horizontal intercept of the line to the origin divided by the distance from the origin to the vertical intercept of the line. 
B) origin to the horizontal intercept of the line minus the distance from the origin to the vertical intercept of the line. 
C) vertical intercept of the line to the origin divided by the distance from the origin to the horizontal intercept of the line. 
D) vertical intercept of the line to the origin minus the distance from the origin to the horizontal intercept of the line. 
A) horizontal intercept of the line to the origin divided by the distance from the origin to the vertical intercept of the line. 
B) origin to the horizontal intercept of the line minus the distance from the origin to the vertical intercept of the line. 
C) vertical intercept of the line to the origin divided by the distance from the origin to the horizontal intercept of the line. 
D) vertical intercept of the line to the origin minus the distance from the origin to the horizontal intercept of the line.

Question 9

Is it possible to express an economic model in words without diagrams?

Accepted Answer

A) No, models can only be stated in diagrams. 
B) No, the very definition of model requires mathematical form. 
C) Yes, some of the simplest models are verbal statements. 
D) Yes, although the best models always use diagrams. 
E) Uncertain, economic theory has not answered this question yet. 
A) No, models can only be stated in diagrams. 
B) No, the very definition of model requires mathematical form. 
C) Yes, some of the simplest models are verbal statements. 
D) Yes, although the best models always use diagrams. 
E) Uncertain, economic theory has not answered this question yet.

Question 10

The slope of a curved line differs from that of a straight line in that

Accepted Answer

A) the numerical value of the slope of a straight line is different at every point, but is the same at every point for a curved line. 
B) the numerical value of the slope of a straight line is always higher than the numerical value of the slope of a curved line. 
C) the numerical value of the slope of a curved line is different at every point, but is the same at every point for a straight line. 
D) the numerical value of the slope of a curved line is an irrational number, but the numerical value of the slope of a straight line is always a rational number. 
E) straight lines are more realistic, but curved lines are not descriptively accurate for the real world. 
A) the numerical value of the slope of a straight line is different at every point, but is the same at every point for a curved line. 
B) the numerical value of the slope of a straight line is always higher than the numerical value of the slope of a curved line. 
C) the numerical value of the slope of a curved line is different at every point, but is the same at every point for a straight line. 
D) the numerical value of the slope of a curved line is an irrational number, but the numerical value of the slope of a straight line is always a rational number. 
E) straight lines are more realistic, but curved lines are not descriptively accurate for the real world.

Question 11

When interdiction efforts manage to stem the flow of illegal drugs into the United States, assuming no change in demand, the price of these substances rises.This price increase leads to more crime as addicts attempt to maintain their now more-expensive habits.Economists call this side-effect of the drug business

Accepted Answer

A) the illusion of rationality. 
B) an externality. 
C) the cost disease of personal services. 
D) inflation. 
E) unemployment. 
A) the illusion of rationality. 
B) an externality. 
C) the cost disease of personal services. 
D) inflation. 
E) unemployment.

Question 12

When a teacher in a private school points out to her high school principal that since there are empty seats in all classrooms, the cost of additional students is really zero, she is using the

Accepted Answer

A) law of comparative advantage. 
B) principle of marginal analysis. 
C) theory of externalities. 
D) notion of the cost decreases of the service sector. 
E) concept of opportunity cost. 
A) law of comparative advantage. 
B) principle of marginal analysis. 
C) theory of externalities. 
D) notion of the cost decreases of the service sector. 
E) concept of opportunity cost.

Question 13

Comparative advantage explains how two nations can benefit from trade.

Accepted Answer

A) True 
 B)False

Question 14

The United States has chosen to balance the competing claims of efficiency versus equality by emphasizing greater efficiency over greater equality.

Accepted Answer

A) True 
 B)False

Question 15

The process of focusing on only the most important factors to explain a phenomenon is called

Accepted Answer

A) abstraction. 
B) marginal analysis. 
C) rational choice. 
D) controlled experimentation. 
E) the trade-off between efficiency and equality. 
A) abstraction. 
B) marginal analysis. 
C) rational choice. 
D) controlled experimentation. 
E) the trade-off between efficiency and equality.

Question 16

The slope of a line with rise of five and run of two is positive.

Accepted Answer

A) True 
 B)False

Question 17

All economic transactions involve only buyers and sellers; no third parties are involved.

Accepted Answer

A) True 
 B)False

Question 18

Economists may disagree about how to solve an economic problem because they

Accepted Answer

A) use different models to analyze the problem and its solutions. 
B) have different political and moral beliefs. 
C) disagree about the facts of the situation. 
D) All of the above are correct. 
A) use different models to analyze the problem and its solutions. 
B) have different political and moral beliefs. 
C) disagree about the facts of the situation. 
D) All of the above are correct.

Question 19

The relatively low rate of inflation coupled with a low unemployment rate that occurred in the 1990s represented a "normal" economic situation.

Accepted Answer

A) True 
 B)False

Question 20

In both the 1970s and the 1990s, extreme economic events caused unemployment to move in the same direction as inflation.

Accepted Answer

A) True 
 B)False

Exam 1: What Is Economics

An "opportunity cost" may be described as: ​

The word "theory" means the same to the scientist as it does to the man on the street.

Abstraction is used in economics to omit unnecessary details and focus on the essence of the problem being studied.

One problem with the European Union's choice regarding equality versus efficiency is that it may inadvertently shrink the size of its "economic pie".

If a decision maker uses marginal analysis, then the relevant costs are the

There are frequently market solutions that the government can use to deal with externalities.

Two variables that systematically change together are correlated.

The slope of a downward-sloping straight line can be calculated as the distance from the

Is it possible to express an economic model in words without diagrams?

The slope of a curved line differs from that of a straight line in that

When a teacher in a private school points out to her high school principal that since there are empty seats in all classrooms, the cost of additional students is really zero, she is using the

Comparative advantage explains how two nations can benefit from trade.

The United States has chosen to balance the competing claims of efficiency versus equality by emphasizing greater efficiency over greater equality.

The process of focusing on only the most important factors to explain a phenomenon is called

The slope of a line with rise of five and run of two is positive.

All economic transactions involve only buyers and sellers; no third parties are involved.

Economists may disagree about how to solve an economic problem because they

The relatively low rate of inflation coupled with a low unemployment rate that occurred in the 1990s represented a "normal" economic situation.

In both the 1970s and the 1990s, extreme economic events caused unemployment to move in the same direction as inflation.

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

An "opportunity cost" may be described as: