Question 1

A market

Accepted Answer

A)  always involves the personal exchange of goods for money. 
B)  allows interactions between consumers and firms. 
C)  always takes place at a physical location. 
D)  has no influence on prices. 
A)  always involves the personal exchange of goods for money. 
B)  allows interactions between consumers and firms. 
C)  always takes place at a physical location. 
D)  has no influence on prices. B

Question 2

Microeconomics can be used by governments to predict the impacts of a policy and suggest solutions to problems.

Accepted Answer

A) True 
 B)False  True

Question 3

Most microeconomic models assume that decision makers wish to

Accepted Answer

A)  make themselves as well off as possible. 
B)  act selfishly. 
C)  make others as well off as possible. 
D)  None of the above. 
A)  make themselves as well off as possible. 
B)  act selfishly. 
C)  make others as well off as possible. 
D)  None of the above. A

Question 4

Economic modeling requires

Accepted Answer

A)  mathematics. 
B)  logic. 
C)  calculus. 
D)  trigonometry. 
A)  mathematics. 
B)  logic. 
C)  calculus. 
D)  trigonometry.

Question 5

Legislators argue that a minimum wage law is instituted to help poor people.Economists can attack the minimum wage law on two fronts.First,some argue that government should not help the poor.Second,some argue that minimum wage laws actually hurt the poor because it creates unemployment.Which argument is normative and which is positive?

Accepted Answer

An opinion about the role of g

Question 6

Governments use microeconomic models to

Accepted Answer

A)  predict the impact of a policy before adopting it. 
B)  consider the tradeoff between clean air and a high level of GDP. 
C)  determine the tradeoff between equity and efficiency. 
D)  All of the above. 
A)  predict the impact of a policy before adopting it. 
B)  consider the tradeoff between clean air and a high level of GDP. 
C)  determine the tradeoff between equity and efficiency. 
D)  All of the above.

Question 7

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 8

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 9

Individuals use microeconomic models to determine

Accepted Answer

A)  their optimal consumption of beer given an increase in inflation. 
B)  their optimal amount of leisure. 
C)  whether or not to go to college given current student loan interest rates. 
D)  All of the above. 
A)  their optimal consumption of beer given an increase in inflation. 
B)  their optimal amount of leisure. 
C)  whether or not to go to college given current student loan interest rates. 
D)  All of the above.

Question 10

Every economic model should include money as a variable.This statement is

Accepted Answer

A)  true, because every transaction in the economy uses money. 
B)  true, because the federal reserve is very important. 
C)  false, because some transactions in the economy are accomplished without money. 
D)  false, because a model can get unnecessarily complex if it includes money. 
A)  true, because every transaction in the economy uses money. 
B)  true, because the federal reserve is very important. 
C)  false, because some transactions in the economy are accomplished without money. 
D)  false, because a model can get unnecessarily complex if it includes money.

Question 11

Economists will use a model such as the law of demand

Accepted Answer

A)  forever, ignoring all criticism. 
B)  until it is refuted by someone. 
C)  until the model produces the same results with added complexity. 
D)  until every microeconomic courses uses the model. 
A)  forever, ignoring all criticism. 
B)  until it is refuted by someone. 
C)  until the model produces the same results with added complexity. 
D)  until every microeconomic courses uses the model.

Question 12

What links the decisions of consumers and firms in a market?

Accepted Answer

A)  the government 
B)  prices 
C)  coordination officials 
D)  microeconomics 
A)  the government 
B)  prices 
C)  coordination officials 
D)  microeconomics

Question 13

Scarlett developed an economic model to describe the behavior of consumers according to the good price,and their income and tastes.All else equal,her model predicts that an increase in the price of the good may increase or decrease the number of units purchased.What can be said about Scarlett's model?

Accepted Answer

A)  The model's prediction is ambiguous. 
B)  The model's prediction is not ambiguous. 
C)  The model has no assumptions. 
D)  B and C 
A)  The model's prediction is ambiguous. 
B)  The model's prediction is not ambiguous. 
C)  The model has no assumptions. 
D)  B and C

Question 14

If an important assumption is omitted from an economic model,

Accepted Answer

A)  the model's predictions will be accurate 50% of the time. 
B)  the model's predictions will be inaccurate. 
C)  the model will not predict anything. 
D)  the model will be rejected by other economists. 
A)  the model's predictions will be accurate 50% of the time. 
B)  the model's predictions will be inaccurate. 
C)  the model will not predict anything. 
D)  the model will be rejected by other economists.

Question 15

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

Accepted Answer

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

Question 16

Economic models are only applicable to free-market countries.

Accepted Answer

A)  False. Economic models are applicable wherever there is scarcity. 
B)  True. Economic models are applicable only when private citizens are free to make their own decisions. 
C)  False. Economic models are applicable in all countries with more than one million people, regardless of political structure. 
D)  True. Economic models are only applicable when government is small relative to the rest of the economy. 
A)  False. Economic models are applicable wherever there is scarcity. 
B)  True. Economic models are applicable only when private citizens are free to make their own decisions. 
C)  False. Economic models are applicable in all countries with more than one million people, regardless of political structure. 
D)  True. Economic models are only applicable when government is small relative to the rest of the economy.

Question 17

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

Accepted Answer

A)  Prices determine what goods and services are produced in a market economy. 
B)  The government of the Soviet Union determined the three fundamental questions of microeconomics (i.e., what is produced, how it is produced, who receives the product). 
C)  The production of goods and services should be determined by market prices. 
D)  A and B 
A)  Prices determine what goods and services are produced in a market economy. 
B)  The government of the Soviet Union determined the three fundamental questions of microeconomics (i.e., what is produced, how it is produced, who receives the product). 
C)  The production of goods and services should be determined by market prices. 
D)  A and B

Question 18

Who or what is responsible for bringing together scarce resources to produce most of the goods and services in the U.S.?

Accepted Answer

A)  the U.S. government 
B)  the United Nations 
C)  the Federal Reserve Bank 
D)  markets and prices 
A)  the U.S. government 
B)  the United Nations 
C)  the Federal Reserve Bank 
D)  markets and prices

Question 19

Normative statements are easily debated whereas positive statements are simply rhetorical.

Accepted Answer

A) True 
 B)False

Question 20

Under most circumstances,the application of taxes on goods will only affect who gets the goods.

Accepted Answer

A) True 
 B)False

A market

Microeconomics can be used by governments to predict the impacts of a policy and suggest solutions to problems.

Most microeconomic models assume that decision makers wish to

Economic modeling requires

Governments use microeconomic models to

Economic models are only useful in analyzing government policy.

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

Individuals use microeconomic models to determine

Every economic model should include money as a variable.This statement is

Economists will use a model such as the law of demand

What links the decisions of consumers and firms in a market?

If an important assumption is omitted from an economic model,

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

Economic models are only applicable to free-market countries.

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

Who or what is responsible for bringing together scarce resources to produce most of the goods and services in the U.S.?

Normative statements are easily debated whereas positive statements are simply rhetorical.

Under most circumstances,the application of taxes on goods will only affect who gets the goods.

Supply and Demand

Applying the Supply-And-Demand Model

Consumer Choice

Applying Consumer Theory

Firms and Production

Costs

Competitive Firms and Markets

Applying the Competitive Model

General Equilibrium and Economic Welfare

Monopoly

Pricing and Advertising

Oligopoly and Monopolistic Competition

Game Theory

Factor Markets

Interest Rates, Investments, and Capital Markets

Uncertainty

Externalities, Open-Access, and Public Goods

Asymmetric Information

Contracts and Moral Hazards

Filters

Exam 1: Introduction

A market

Microeconomics can be used by governments to predict the impacts of a policy and suggest solutions to problems.

Most microeconomic models assume that decision makers wish to

Economic modeling requires

Governments use microeconomic models to

Economic models are only useful in analyzing government policy.

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

Individuals use microeconomic models to determine

Every economic model should include money as a variable.This statement is

Economists will use a model such as the law of demand

What links the decisions of consumers and firms in a market?

If an important assumption is omitted from an economic model,

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

Economic models are only applicable to free-market countries.

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

Who or what is responsible for bringing together scarce resources to produce most of the goods and services in the U.S.?

Normative statements are easily debated whereas positive statements are simply rhetorical.

Under most circumstances,the application of taxes on goods will only affect who gets the goods.

Supply and Demand

Applying the Supply-And-Demand Model

Consumer Choice

Applying Consumer Theory

Firms and Production

Costs

Competitive Firms and Markets

Applying the Competitive Model

General Equilibrium and Economic Welfare

Monopoly

Pricing and Advertising

Oligopoly and Monopolistic Competition

Game Theory

Factor Markets

Interest Rates, Investments, and Capital Markets

Uncertainty

Externalities, Open-Access, and Public Goods

Asymmetric Information

Contracts and Moral Hazards

Filters