Exam 1: Introduction

A "twinkie tax" on fatty foods would aim to

Explain how a market helps determine which goods and services will be produced,how to produce them,and who gets them.

The objective of creating a permit trading system for SO₂ (sulfur dioxide)is to

Which of the statements below is/are normative?

Governments do not respond to prices.

Economic models are most useful in

The purpose of making assumptions in an economic model is to

Most modern financial centers use computers to match buyers and sellers.This absence of personal contact contradicts the definition of a market.

In Faraway country,every citizen receives a birthday cake voucher as a gift for their birthday.What function of microeconomic analysis does this public policy address?

Billy developed an economic model to describe the behavior of a stock market index.His model predicts that the index increases on Mondays and declines on the other days of the week.What can be said about Billy's model?

Which choice below illustrates the tradeoff faced by surfboard manufacturers after Clark foam shut down in 2005,eliminating 80% of the worlds foam blanks used to shape surfboards? The firms decide to

Economists tend to judge a model based upon

One million automobiles have a defect that could cause the car to explode; however,only one of those cars will actually explode.Nobody knows which one car it is.When the car does explode,the victim's family will sue the automaker for $1 million and win.The defect costs $2 per car to repair.What does economics predict about the automaker's decision to repair the defect?

A microeconomic model CANNOT be used to

Governments may use microeconomic models to study the effects of a new tax on

Economic policy of the government is often based on

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

Microeconomics is often called

In most microeconomic models,a decision maker

Society faces trade-offs because of