Question 1

Raising the price of a good by one dollar

Accepted Answer

A) increases profits. 
B) decreases profits. 
C) leaves profits unchanged. 
D) leads to an indeterminant change in profits. 
A) increases profits. 
B) decreases profits. 
C) leaves profits unchanged. 
D) leads to an indeterminant change in profits. D

Question 2

If a model's predictions are correct, then

Accepted Answer

A) its assumptions must have been correct. 
B) it is proven to be correct. 
C) Both A and B above. 
D) None of the above. 
A) its assumptions must have been correct. 
B) it is proven to be correct. 
C) Both A and B above. 
D) None of the above. D

Question 3

Behavioral economics

Accepted Answer

A) studies why people choose not to optimize. 
B) studies why people optimize. 
C) studies why people sometimes don't optimize. 
D) studies why people behave badly when buying and selling. 
A) studies why people choose not to optimize. 
B) studies why people optimize. 
C) studies why people sometimes don't optimize. 
D) studies why people behave badly when buying and selling. C

Question 4

Economists tend to judge a model based upon

Accepted Answer

A) the reality of its assumptions. 
B) the accuracy of its predictions. 
C) its simplicity. 
D) its complexity. 
A) the reality of its assumptions. 
B) the accuracy of its predictions. 
C) its simplicity. 
D) its complexity.

Question 5

If a theory's predictions are incorrect

Accepted Answer

A) then economists always reject it. 
B) then the data used was clearly faulty. 
C) then economists will likely reduce their confidence in the theory. 
D) then the model must be too simple. 
A) then economists always reject it. 
B) then the data used was clearly faulty. 
C) then economists will likely reduce their confidence in the theory. 
D) then the model must be too simple.

Question 6

Einstein was quoted saying "Everything should be made as simple as possible, but not simpler." When it comes to economic models this means that

Accepted Answer

A) models shouldn't be too complex. 
B) models shouldn't be too simple. 
C) models should have a level of abstraction appropriate to the topic investigated. 
D) All of the above. 
A) models shouldn't be too complex. 
B) models shouldn't be too simple. 
C) models should have a level of abstraction appropriate to the topic investigated. 
D) All of the above.

Question 7

Which of the following is an example of a normative statement?

Accepted Answer

A) A higher price for a good causes people to want to buy less of that good. 
B) A lower price for a good causes people to want to buy more of that good. 
C) To make the good available to more people, a lower price should be set. 
D) If you consume this good, you will be better off. 
A) A higher price for a good causes people to want to buy less of that good. 
B) A lower price for a good causes people to want to buy more of that good. 
C) To make the good available to more people, a lower price should be set. 
D) If you consume this good, you will be better off.

Question 8

What is the purpose of having a strategy?

Accepted Answer

A strategy defines f

Question 9

If a model fits reality but doesn't generate testable predictions, it is of little value to economists.

Accepted Answer

A) True 
 B)False

Question 10

Economic models are most useful in

Accepted Answer

A) explaining outcomes resulting from management decisions. 
B) predicting the direction of the stock market. 
C) explaining the future with the past. 
D) generating untestable hypotheses. 
A) explaining outcomes resulting from management decisions. 
B) predicting the direction of the stock market. 
C) explaining the future with the past. 
D) generating untestable hypotheses.

Question 11

Society faces trade-offs because of

Accepted Answer

A) government regulations. 
B) profit motive. 
C) price setting by firms. 
D) scarcity. 
A) government regulations. 
B) profit motive. 
C) price setting by firms. 
D) scarcity.

Question 12

A firm's managers are constrained by

Accepted Answer

A) consumers. 
B) workers. 
C) government. 
D) All of the above. 
A) consumers. 
B) workers. 
C) government. 
D) All of the above.

Question 13

Which of the following would NOT be considered part of a firm's strategy?

Accepted Answer

A) production levels 
B) which inputs to use 
C) sales strategy 
D) None of the above-all are part of a firm's strategy. 
A) production levels 
B) which inputs to use 
C) sales strategy 
D) None of the above-all are part of a firm's strategy.

Question 14

Normative analysis offers decision makers the most valuable information when choosing among alternatives.

Accepted Answer

A) True 
 B)False

Question 15

Most private firms seek to

Accepted Answer

A) maximize revenue. 
B) maximize profit. 
C) minimize headcount. 
D) maximize employee salaries. 
A) maximize revenue. 
B) maximize profit. 
C) minimize headcount. 
D) maximize employee salaries.

Question 16

Why might raising the price of a good by a dollar lead to higher profits?

Accepted Answer

If the extra profit margin mad

Question 17

Which of the following is an example of a positive statement?

Accepted Answer

A) Since this food is bad for you, you should not consume it. 
B) If this food is bad for you, you should not consume it. 
C) If you consume this food, you will get sick. 
D) None of the above. 
A) Since this food is bad for you, you should not consume it. 
B) If this food is bad for you, you should not consume it. 
C) If you consume this food, you will get sick. 
D) None of the above.

Question 18

CEOs should focus on

Accepted Answer

A) beating their competitors. 
B) maximizing firm profits. 
C) getting the best pay package for the senior management team. 
D) minimizing costs. 
A) beating their competitors. 
B) maximizing firm profits. 
C) getting the best pay package for the senior management team. 
D) minimizing costs.

Question 19

Economic models are only useful in analyzing government policy.

Accepted Answer

A) True, individuals are irrational and therefore economic models are useless. 
B) False, economic models can be used to predict individual and firm behavior. 
C) True, economists only model those questions for which they are hired. 
D) False, economic models are not even useful in analyzing government policy. 
A) True, individuals are irrational and therefore economic models are useless. 
B) False, economic models can be used to predict individual and firm behavior. 
C) True, economists only model those questions for which they are hired. 
D) False, economic models are not even useful in analyzing government policy.

Question 20

Why might raising the price of a good by a dollar lead to lower profits?

Accepted Answer

If the extra profit margin mad

Raising the price of a good by one dollar

If a model's predictions are correct, then

Behavioral economics

Economists tend to judge a model based upon

If a theory's predictions are incorrect

Einstein was quoted saying "Everything should be made as simple as possible, but not simpler." When it comes to economic models this means that

Which of the following is an example of a normative statement?

What is the purpose of having a strategy?

If a model fits reality but doesn't generate testable predictions, it is of little value to economists.

Economic models are most useful in

Society faces trade-offs because of

A firm's managers are constrained by

Which of the following would NOT be considered part of a firm's strategy?

Normative analysis offers decision makers the most valuable information when choosing among alternatives.

Most private firms seek to

Why might raising the price of a good by a dollar lead to higher profits?

Which of the following is an example of a positive statement?

CEOs should focus on

Economic models are only useful in analyzing government policy.

Why might raising the price of a good by a dollar lead to lower profits?

Supply and Demand

Empirical Methods for Demand Analysis

Consumer Choice

Production

Costs

Firm Organization and Market Structure

Competitive Firms and Markets

Monopoly

Pricing With Market Power

Oligopoly and Monopolistic Competition

Game Theory and Business Strategy

Strategies Over Time

Managerial Decision-Making Under Uncertainty

Asymmetric Information

Government and Business

Global Business

Filters

Exam 1: Introduction

Raising the price of a good by one dollar

If a model's predictions are correct, then

Behavioral economics

Economists tend to judge a model based upon

If a theory's predictions are incorrect

Einstein was quoted saying "Everything should be made as simple as possible, but not simpler." When it comes to economic models this means that

Which of the following is an example of a normative statement?

What is the purpose of having a strategy?

If a model fits reality but doesn't generate testable predictions, it is of little value to economists.

Economic models are most useful in

Society faces trade-offs because of

A firm's managers are constrained by

Which of the following would NOT be considered part of a firm's strategy?

Normative analysis offers decision makers the most valuable information when choosing among alternatives.

Most private firms seek to

Why might raising the price of a good by a dollar lead to higher profits?

Which of the following is an example of a positive statement?

CEOs should focus on

Economic models are only useful in analyzing government policy.

Why might raising the price of a good by a dollar lead to lower profits?

Supply and Demand

Empirical Methods for Demand Analysis

Consumer Choice

Production

Costs

Firm Organization and Market Structure

Competitive Firms and Markets

Monopoly

Pricing With Market Power

Oligopoly and Monopolistic Competition

Game Theory and Business Strategy

Strategies Over Time

Managerial Decision-Making Under Uncertainty

Asymmetric Information

Government and Business

Global Business

Filters