Question 1

What is an economic variable? Give an example of an economic variable.

Accepted Answer

An economic variable is someth

Question 2

Scarcity refers to the situation in which

Accepted Answer

A) unlimited wants exceed limited resources. 
B) unlimited resources exceed limited wants. 
C) a country's population is larger than its resource base. 
D) a nation's poverty level increases faster than its population. 
A) unlimited wants exceed limited resources. 
B) unlimited resources exceed limited wants. 
C) a country's population is larger than its resource base. 
D) a nation's poverty level increases faster than its population.

Question 3

Which of the following is a normative economic statement?

Accepted Answer

A) Tobacco products should be banned in all public spaces. 
B) The increase in tobacco taxes has caused an increase in the price of cigarettes. 
C) Better awareness of health risks has decreased tobacco use. 
D) A reduction in tobacco subsidies has caused the price of tobacco to increase. 
A) Tobacco products should be banned in all public spaces. 
B) The increase in tobacco taxes has caused an increase in the price of cigarettes. 
C) Better awareness of health risks has decreased tobacco use. 
D) A reduction in tobacco subsidies has caused the price of tobacco to increase.

Question 4

Which of the following is a normative economic statement?

Accepted Answer

A) Rising global demand for diesel and heating oil has led to increases in the price of crude oil. 
B) With falling home prices and rising mortgage interest rates,the amount of foreclosures has increased. 
C) The federal government is considering raising the gasoline tax to promote the use of public transportation. 
D) Fashion designers should be allowed to copyright designs to promote innovation. 
A) Rising global demand for diesel and heating oil has led to increases in the price of crude oil. 
B) With falling home prices and rising mortgage interest rates,the amount of foreclosures has increased. 
C) The federal government is considering raising the gasoline tax to promote the use of public transportation. 
D) Fashion designers should be allowed to copyright designs to promote innovation.

Question 5

The term "market" refers only to trading arrangements that have been approved by the government.

Accepted Answer

A) True 
 B)False

Question 6

Policies based on normative economic ideas tend to increase economic efficiency and improve equity.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is part of an economic model?

Accepted Answer

A) assumptions 
B) norms 
C) opinions 
D) preferences of economic agents 
A) assumptions 
B) norms 
C) opinions 
D) preferences of economic agents

Question 8

Which of the following is an example of a "how much" decision?

Accepted Answer

A) The Pleasantville movie theatre is open only in the evenings.The theatre's manager is debating whether to add daily matinee shows. 
B) The Zhous have demolished their old home and are debating whether to build a ranch-style house or a Craftsman home. 
C) You're planning to hold a graduation party and must decide between having your party catered or having a pot-luck. 
D) Chelsea has withdrawn from the swim team to take a full-time job. 
A) The Pleasantville movie theatre is open only in the evenings.The theatre's manager is debating whether to add daily matinee shows. 
B) The Zhous have demolished their old home and are debating whether to build a ranch-style house or a Craftsman home. 
C) You're planning to hold a graduation party and must decide between having your party catered or having a pot-luck. 
D) Chelsea has withdrawn from the swim team to take a full-time job.

Question 9

________ involves undertaking an activity until its marginal benefits equal marginal costs.

Accepted Answer

A) Scarcity reduction 
B) Central planning 
C) Marginal analysis 
D) Market intervention 
A) Scarcity reduction 
B) Central planning 
C) Marginal analysis 
D) Market intervention

Question 10

Which of the following can use economic principles to improve how they make important decisions?

Accepted Answer

A) individuals 
B) managers in businesses 
C) government policymakers 
D) all of the above 
A) individuals 
B) managers in businesses 
C) government policymakers 
D) all of the above

Question 11

Holding all other personal characteristics-such as age,gender,and income-constant,economists would expect that

Accepted Answer

A) people without health insurance will be less likely to be overweight than people with health insurance. 
B) people without health insurance will be more likely to be overweight than people with health insurance. 
C) people without health insurance will be equally likely to be overweight as people with health insurance. 
D) there is no correlation between not having health insurance and being overweight. 
A) people without health insurance will be less likely to be overweight than people with health insurance. 
B) people without health insurance will be more likely to be overweight than people with health insurance. 
C) people without health insurance will be equally likely to be overweight as people with health insurance. 
D) there is no correlation between not having health insurance and being overweight.

Question 12

Zane's Vanes is a service that restores old weather vanes.Zane has just spent $125 purchasing a 1920s-era weather vane which he expects to restore and sell for $500 once the work is completed.After having spent $125,Zane realizes that he will need to spend an additional $200 on materials to complete the restoration.Alternatively,he can sell the weather vane without restoring it for $200.What is his marginal benefit if he sells the weather vane without restoring it?

Accepted Answer

A) $75 
B) $125 
C) $200 
D) $300 
A) $75 
B) $125 
C) $200 
D) $300

Question 13

Which of the following is not an example of an efficiency-equity trade-off faced by economic agents?

Accepted Answer

A) According to an article by in the American Journal of Public Health by Edward Kaplan and Michael Merson of Yale University School of Medicine,the federal government's current method of allocating HIV-prevention resources is not cost-effective.Instead of allocating resources to states in proportion to reported AIDS cases,resources should flow first to those activities that prevent more infections per dollar and then to less and less effective combinations of programs and populations until funds are exhausted,even if it means that some populations would be left without any prevention services. 
B) Concerned about the falling birth rate,the French government has pledged more money for families with three children,in an effort to encourage working women to have more babies. 
C) The growing demand for corn by ethanol producers has led to a surge in the price of tortillas,a staple in the Mexican diet.To quell public outcry over rising tortilla prices,the Mexican government released government corn stocks at prices well below the market,and pressured states to impose price ceilings on tortillas. 
D) Some U.S.colleges cut back on merit scholarships since these programs siphon money from need-based programs,thus harming lower-income students with greater financial need. 
A) According to an article by in the American Journal of Public Health by Edward Kaplan and Michael Merson of Yale University School of Medicine,the federal government's current method of allocating HIV-prevention resources is not cost-effective.Instead of allocating resources to states in proportion to reported AIDS cases,resources should flow first to those activities that prevent more infections per dollar and then to less and less effective combinations of programs and populations until funds are exhausted,even if it means that some populations would be left without any prevention services. 
B) Concerned about the falling birth rate,the French government has pledged more money for families with three children,in an effort to encourage working women to have more babies. 
C) The growing demand for corn by ethanol producers has led to a surge in the price of tortillas,a staple in the Mexican diet.To quell public outcry over rising tortilla prices,the Mexican government released government corn stocks at prices well below the market,and pressured states to impose price ceilings on tortillas. 
D) Some U.S.colleges cut back on merit scholarships since these programs siphon money from need-based programs,thus harming lower-income students with greater financial need.

Question 14

Which of the following statements is correct?

Accepted Answer

A) Mrs.Lovejoy decides to invest in companies which she believes are producing their goods based on the preferences of consumers.Mrs.Lovejoy is therefore investing in companies that are productively efficient. 
B) Mrs.Lovejoy decides to invest in companies which she believes are producing their goods based on the preferences of consumers.Mrs.Lovejoy is therefore investing in companies that are both allocatively and productively efficient. 
C) Mrs.Lovejoy decides to invest in companies which she believes can produce their goods at the lowest possible cost.Mrs.Lovejoy is therefore investing in companies that are productively efficient. 
D) Mrs.Lovejoy decides to invest in companies which she believes can produce their goods at the lowest possible cost.Mrs.Lovejoy is therefore investing in companies that are allocatively efficient. 
A) Mrs.Lovejoy decides to invest in companies which she believes are producing their goods based on the preferences of consumers.Mrs.Lovejoy is therefore investing in companies that are productively efficient. 
B) Mrs.Lovejoy decides to invest in companies which she believes are producing their goods based on the preferences of consumers.Mrs.Lovejoy is therefore investing in companies that are both allocatively and productively efficient. 
C) Mrs.Lovejoy decides to invest in companies which she believes can produce their goods at the lowest possible cost.Mrs.Lovejoy is therefore investing in companies that are productively efficient. 
D) Mrs.Lovejoy decides to invest in companies which she believes can produce their goods at the lowest possible cost.Mrs.Lovejoy is therefore investing in companies that are allocatively efficient.

Question 15

What is scarcity,and why is it a fundamental concept in economics?

Accepted Answer

Scarcity refers to a situation in which

Question 16

Of the following examples,which would most likely be performed by an economist working for American Airlines?

Accepted Answer

A) using economic models to analyze unemployment and inflation rates in Australia 
B) assessing whether automobile injuries are directly related to speed limits 
C) analyzing data related to passenger air traffic in China 
D) forecasting the demand for U.S.-produced organic produce over the next 15 years 
A) using economic models to analyze unemployment and inflation rates in Australia 
B) assessing whether automobile injuries are directly related to speed limits 
C) analyzing data related to passenger air traffic in China 
D) forecasting the demand for U.S.-produced organic produce over the next 15 years

Question 17

Optimal decisions are made at the point where marginal benefit is maximized.

Accepted Answer

A) True 
 B)False

Question 18

If a graph has a line that shows the quantity of flat-screen televisions sold in the last five years,it is known as

Accepted Answer

A) a pie chart. 
B) a time-series graph. 
C) a demand curve for outsourcing. 
D) a supply curve of outsourcing. 
A) a pie chart. 
B) a time-series graph. 
C) a demand curve for outsourcing. 
D) a supply curve of outsourcing.

Question 19

What is an economic model?

Accepted Answer

A) It is a description of an economic issue that includes all possible related information. 
B) It is a description of an economic issue based on official government information. 
C) It is a detailed version of some aspect of economic life used to analyze an economic issue. 
D) It is a simplified version of some aspect of economic life used to analyze an economic issue. 
A) It is a description of an economic issue that includes all possible related information. 
B) It is a description of an economic issue based on official government information. 
C) It is a detailed version of some aspect of economic life used to analyze an economic issue. 
D) It is a simplified version of some aspect of economic life used to analyze an economic issue.

Question 20

Every society faces trade-offs.Explain the concept of trade-offs.

Accepted Answer

Trade-offs refer to the idea t

What is an economic variable? Give an example of an economic variable.

Scarcity refers to the situation in which

Which of the following is a normative economic statement?

Which of the following is a normative economic statement?

The term "market" refers only to trading arrangements that have been approved by the government.

Policies based on normative economic ideas tend to increase economic efficiency and improve equity.

Which of the following is part of an economic model?

Which of the following is an example of a "how much" decision?

________ involves undertaking an activity until its marginal benefits equal marginal costs.

Which of the following can use economic principles to improve how they make important decisions?

Holding all other personal characteristics-such as age,gender,and income-constant,economists would expect that

Which of the following is not an example of an efficiency-equity trade-off faced by economic agents?

Which of the following statements is correct?

What is scarcity,and why is it a fundamental concept in economics?

Of the following examples,which would most likely be performed by an economist working for American Airlines?

Optimal decisions are made at the point where marginal benefit is maximized.

If a graph has a line that shows the quantity of flat-screen televisions sold in the last five years,it is known as

What is an economic model?

Every society faces trade-offs.Explain the concept of trade-offs.

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money,Banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

Exam 1: Economics: Foundations and Models

What is an economic variable? Give an example of an economic variable.

Scarcity refers to the situation in which

Which of the following is a normative economic statement?

Which of the following is a normative economic statement?

The term "market" refers only to trading arrangements that have been approved by the government.

Policies based on normative economic ideas tend to increase economic efficiency and improve equity.

Which of the following is part of an economic model?

Which of the following is an example of a "how much" decision?

________ involves undertaking an activity until its marginal benefits equal marginal costs.

Which of the following can use economic principles to improve how they make important decisions?

Holding all other personal characteristics-such as age,gender,and income-constant,economists would expect that

Which of the following is not an example of an efficiency-equity trade-off faced by economic agents?

Which of the following statements is correct?

What is scarcity,and why is it a fundamental concept in economics?

Of the following examples,which would most likely be performed by an economist working for American Airlines?

Optimal decisions are made at the point where marginal benefit is maximized.

If a graph has a line that shows the quantity of flat-screen televisions sold in the last five years,it is known as

What is an economic model?

Every society faces trade-offs.Explain the concept of trade-offs.

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money,Banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters