Question 1

How do markets respond to price ceilings and price floors?
 Do attempts to repeal the laws of supply and demand meet their objectives?

Accepted Answer

Attempts to repeal the laws of supply an

Question 2

Jack buys a computer from Sam, knowing fully well that the technology used in it is obsolete.In this case, the trade is

Accepted Answer

A) beneficial to both parties. 
B) beneficial only to Sam. 
C) beneficial only to Jack. 
D) not beneficial to either of them. 
A) beneficial to both parties. 
B) beneficial only to Sam. 
C) beneficial only to Jack. 
D) not beneficial to either of them.

Question 3

The high unemployment of 2008-2010 caused a substantial decrease in inflation which created fears of deflation.

Accepted Answer

A) True 
 B)False

Question 4

How does the United States differ from the European Union in how it balances the competing claims of equality and efficiency?

Accepted Answer

The United States has chosen greater eff

Question 5

You have just bought a used car, and drive away satisfied that you've made a good deal on the purchase.What would an economist say about your "gain" on the deal?

Accepted Answer

A) Your gain has clearly meant that the seller lost on the deal. 
B) The seller has clearly gained, and you have actually lost on the deal. 
C) Both you and the seller have gained something. 
D) If your gain is too large, then the deal should be re-negotiated. 
E) If the seller's loss is too large, then the deal should be re-negotiated. 
A) Your gain has clearly meant that the seller lost on the deal. 
B) The seller has clearly gained, and you have actually lost on the deal. 
C) Both you and the seller have gained something. 
D) If your gain is too large, then the deal should be re-negotiated. 
E) If the seller's loss is too large, then the deal should be re-negotiated.

Question 6

If an airline company has several empty seats on a flight and the full price of an air ticket is $500 and the marginal cost per passenger is $100, then it will be profitable for the airline to

Accepted Answer

A) charge a stand-by passenger no less than the full fare of $500. 
B) charge a stand-by passenger less than $100. 
C) charge a stand-by passenger more than $500. 
D) charge a stand-by passenger more than $100. 
E) fill the seats at the last minute for any price. 
A) charge a stand-by passenger no less than the full fare of $500. 
B) charge a stand-by passenger less than $100. 
C) charge a stand-by passenger more than $500. 
D) charge a stand-by passenger more than $100. 
E) fill the seats at the last minute for any price.

Question 7

Economic models are often expressed in

Accepted Answer

A) equations. 
B) words. 
C) graphs. 
D) physical objects.. 
A) equations. 
B) words. 
C) graphs. 
D) physical objects..

Question 8

Economics is a social science rather than a "hard" science like physics because

Accepted Answer

A) economists abstract from reality when creating their theories. 
B) economics is easier to study than physics. 
C) economists must explain their theories to policy makers who lack formal mathematical training. 
D) economists study human behavior, which is affected by an unpredictable and vast range of influences. 
A) economists abstract from reality when creating their theories. 
B) economics is easier to study than physics. 
C) economists must explain their theories to policy makers who lack formal mathematical training. 
D) economists study human behavior, which is affected by an unpredictable and vast range of influences.

Question 9

If Japan is twice as good at producing cameras and three times as good at producing TV sets as the United States, Japan is said to have a comparative advantage in TV sets and the United States has a comparative advantage in cameras.

Accepted Answer

A) True 
 B)False

Question 10

A graph conveys information about a cause-and-effect relationship.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following mathematical expressions represents the equation of a straight line with a slope of zero at all points on a graph with Y on the vertical axis and X on the horizontal axis?

Accepted Answer

A) Y = a + X 
B) X = bY 
C) X = a 
D) Y = a 
A) Y = a + X 
B) X = bY 
C) X = a 
D) Y = a

Question 12

Slope is measured as rise/run.

Accepted Answer

A) True 
 B)False

Question 13

Carefully distinguish between an economic theory and economic model.

Accepted Answer

An economic theory is a deliberate simpl

Question 14

Which person has the highest opportunity cost of obtaining a college degree (assuming that attending college requires giving up his or her current position)?

Accepted Answer

A) Bill, who is unemployed. 
B) Jane, who is an unwed mother and earns $15,000 a year. 
C) Larry, who is a technician in the Navy earning $18,000 a year with free food and housing. 
D) Mary, who has a job earning $60,000 a year as a computer programmer. 
E) Unable to determine from the data given. 
A) Bill, who is unemployed. 
B) Jane, who is an unwed mother and earns $15,000 a year. 
C) Larry, who is a technician in the Navy earning $18,000 a year with free food and housing. 
D) Mary, who has a job earning $60,000 a year as a computer programmer. 
E) Unable to determine from the data given.

Question 15

The growth rate of productivity is the most important determinant of material well-being in the short run.

Accepted Answer

A) True 
 B)False

Question 16

A diagram is a good example of a(n)

Accepted Answer

A) hypothesis. 
B) abstraction. 
C) theory. 
D) concept. 
E) instrumentation. 
A) hypothesis. 
B) abstraction. 
C) theory. 
D) concept. 
E) instrumentation.

Question 17

An economic model can be defined as

Accepted Answer

A) a testable claim which can be evaluated with proper data. 
B) a representation of a theory or a part of a theory. 
C) another word for theory. 
D) a method to distinguish correlation from causation. 
E) All of the above are correct. 
A) a testable claim which can be evaluated with proper data. 
B) a representation of a theory or a part of a theory. 
C) another word for theory. 
D) a method to distinguish correlation from causation. 
E) All of the above are correct.

Question 18

The 1981 tax reform act reduced taxes on high-income individuals.Many economists believed that high tax rates would deter high-income individuals from working and investing, thus slowing the growth of income.This illustrates the issue of

Accepted Answer

A) the equality-efficiency trade-off. 
B) usury. 
C) the effects of budget deficits on future generations. 
D) the cost disease of the public sector. 
E) the importance of externalities. 
A) the equality-efficiency trade-off. 
B) usury. 
C) the effects of budget deficits on future generations. 
D) the cost disease of the public sector. 
E) the importance of externalities.

Question 19

Dryden Press can produce 10,000 textbooks using 10 machines and 100 workers or using five machines and 300 workers.It can produce 20,000 textbooks using 10 machines and 300 workers or five machines and 600 workers.Construct a two-dimensional contour-type graph to show the relationship between the output of textbooks and the labor and machinery inputs.

Accepted Answer

Figure 1-4
 @#IMG-DLM& 
The labor and capital inpu

Question 20

Economic theory is necessary and extremely important because of its relationship to economic policy.

Accepted Answer

A) True 
 B)False

Exam 1: What Is Economics

How do markets respond to price ceilings and price floors? Do attempts to repeal the laws of supply and demand meet their objectives?

Jack buys a computer from Sam, knowing fully well that the technology used in it is obsolete.In this case, the trade is

The high unemployment of 2008-2010 caused a substantial decrease in inflation which created fears of deflation.

How does the United States differ from the European Union in how it balances the competing claims of equality and efficiency?

You have just bought a used car, and drive away satisfied that you've made a good deal on the purchase.What would an economist say about your "gain" on the deal?

If an airline company has several empty seats on a flight and the full price of an air ticket is $500 and the marginal cost per passenger is $100, then it will be profitable for the airline to

Economic models are often expressed in

Economics is a social science rather than a "hard" science like physics because

If Japan is twice as good at producing cameras and three times as good at producing TV sets as the United States, Japan is said to have a comparative advantage in TV sets and the United States has a comparative advantage in cameras.

A graph conveys information about a cause-and-effect relationship.

Which of the following mathematical expressions represents the equation of a straight line with a slope of zero at all points on a graph with Y on the vertical axis and X on the horizontal axis?

Slope is measured as rise/run.

Carefully distinguish between an economic theory and economic model.

Which person has the highest opportunity cost of obtaining a college degree (assuming that attending college requires giving up his or her current position)?

The growth rate of productivity is the most important determinant of material well-being in the short run.

A diagram is a good example of a(n)

An economic model can be defined as

The 1981 tax reform act reduced taxes on high-income individuals.Many economists believed that high tax rates would deter high-income individuals from working and investing, thus slowing the growth of income.This illustrates the issue of

Economic theory is necessary and extremely important because of its relationship to economic policy.

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

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