Exam 1: The Role and Method of Economics

What does the term "ceteris paribus" mean when used by an economist?

A theory asserts that consumers will purchase less of a good at higher prices than they will at lower prices.However,when the average price of cars increased throughout the 1990s,more cars were purchased.Which of the following explanations of the apparent conflict between theory and data is most accurate?

"The president of the world's biggest polluter (the United States)needs to do more than propose well-intentioned but insufficient measures that amount to using a squirt gun to quell a raging fire." Is this a positive or a normative economic statement? Explain your answer.

Pollution damages the environment we live in.When would an economist advise that we reduce air pollution?

Normative analysis focuses on statements that can be tested against real-world data.

Which of the following best illustrates the fallacy of composition?

Which of the following is a statement of positive economics?

What is the basic difference between macroeconomics and microeconomics?

If rain dancing is correlated with rain,does that necessarily mean rain dancing causes rain?

Thelma,with no money in her bank account,estimates that there is a 25 percent chance that she will get caught stealing a Porsche.According to an economist,under what circumstances might it be rational for Thelma to steal the Porsche?

How would an economist respond to the following statement: "Wanting more goods makes us greedy"?

Many people have heard that the US stock market rises when a team from the National Football Conference (NFC)wins the Super Bowl,and falls when a team from the American Football Conference (AFC)is victorious.If you conclude that there is a causal relationship between the outcome of the Super Bowl and stock prices,you probably are making what mistake?

Why do people specialize?

One topic that microeconomics explores is how prices are determined in individual markets,while macroeconomics is concerned with issues such as the economy's overall rate of inflation,economic growth and unemployment.

Which of the following is the opportunity cost of attending university NOT likely to include?

What is the fallacy of composition?

The opportunity cost of attending college is likely higher for a high school graduate who leaves a job grilling hamburgers than it is for a high school dropout who leaves a job working as a computer network administrator.

"The government should levy higher taxes on the rich and use the additional revenues to provide better housing for the poor." What is this statement an illustration of?

Which of the following statements best describes the study of scarcity?

Which of the following statements best describes scarcity?