Question 1

The fundamental economic problem is:

Accepted Answer

A)  poverty. 
B)  unemployment. 
C)  scarcity. 
D)  inflation. 
A)  poverty. 
B)  unemployment. 
C)  scarcity. 
D)  inflation.

Question 2

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

Accepted Answer

A)  Higher unemployment rates are common among young people. 
B)  Young people should learn how to prepare their own taxes. 
C)  Auto insurance rates are generally lower for younger drivers. 
D)  Persons under the age of 30 watch more movies than those over the age of 30. 
A)  Higher unemployment rates are common among young people. 
B)  Young people should learn how to prepare their own taxes. 
C)  Auto insurance rates are generally lower for younger drivers. 
D)  Persons under the age of 30 watch more movies than those over the age of 30.

Question 3

Which of the following is correct?

Accepted Answer

A)  "Theory" and "hypothesis" are interchangeable terms meaning the same thing. 
B)  A hypothesis may result from a tested and confirmed theory. 
C)  A theory may result from a tested and confirmed hypothesis. 
D)  A hypothesis is a theory whose formulation relies on mathematics. 
A)  "Theory" and "hypothesis" are interchangeable terms meaning the same thing. 
B)  A hypothesis may result from a tested and confirmed theory. 
C)  A theory may result from a tested and confirmed hypothesis. 
D)  A hypothesis is a theory whose formulation relies on mathematics.

Question 4

What would not be held constant in testing a theory that if a student studies harder,he will get a better grade?

Accepted Answer

A)  The course being taken. 
B)  The ability and effort of the other students in the class. 
C)  The grading scale in the course. 
D)  The number of hours the student spends studying. 
A)  The course being taken. 
B)  The ability and effort of the other students in the class. 
C)  The grading scale in the course. 
D)  The number of hours the student spends studying.

Question 5

Economics:

Accepted Answer

A)  is a narrowly focused discipline. 
B)  is a broad-ranging, problem-solving discipline. 
C)  concerns itself only with monetary decisions. 
D)  says very little about "everyday life." 
A)  is a narrowly focused discipline. 
B)  is a broad-ranging, problem-solving discipline. 
C)  concerns itself only with monetary decisions. 
D)  says very little about "everyday life."

Question 6

The branch of economics that focuses on the conduct of affairs within narrowly defined units,such as households or business firms,is called:

Accepted Answer

A)  macroeconomics. 
B)  microeconomics. 
C)  socioeconomics. 
D)  applied economics. 
A)  macroeconomics. 
B)  microeconomics. 
C)  socioeconomics. 
D)  applied economics.

Question 7

Most people consider economics a(n):

Accepted Answer

A)  social science. 
B)  physical science. 
C)  accounting science. 
D)  earth science. 
A)  social science. 
B)  physical science. 
C)  accounting science. 
D)  earth science.

Question 8

The table demonstrates that:

Accepted Answer

A)  more apples are purchased at each and every price. 
B)  more apples are purchased as the price declines. 
C)  fewer apples are purchased as the price declines. 
D)  fewer apples are purchased at each and every price. 
A)  more apples are purchased at each and every price. 
B)  more apples are purchased as the price declines. 
C)  fewer apples are purchased as the price declines. 
D)  fewer apples are purchased at each and every price.

Question 9

Economists believe that only a small part of human behavior can be explained and predicted by assuming that most people act as if they are motivated by their own self-interest in an effort to increase their expected personal satisfaction.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

Which of the following forces us to choose among alternatives?

Accepted Answer

A)  Value 
B)  Scarcity 
C)  Rarity 
D)  Market mechanism 
A)  Value 
B)  Scarcity 
C)  Rarity 
D)  Market mechanism

Question 12

Which of the following is a statement of positive economics?

Accepted Answer

A)  New tax laws are needed to help the poor. 
B)  Teenage unemployment should be reduced. 
C)  We should increase Social Security payments to the elderly. 
D)  An increase in tax rates will reduce unemployment. 
A)  New tax laws are needed to help the poor. 
B)  Teenage unemployment should be reduced. 
C)  We should increase Social Security payments to the elderly. 
D)  An increase in tax rates will reduce unemployment.

Question 13

Which of the following contains only normative statements?

Accepted Answer

A)  The birth rate is reduced as economies urbanize, but that also leads to a decreased average age of developing countries' populations. 
B)  An increase in the price of corn will decrease the amount of corn purchased. However, it will increase the amount of wheat purchased. 
C)  A decrease in the price of butter will increase the amount of butter purchased, but that would be bad because it would increase Americans' cholesterol levels. 
D)  none of the above contain only normative statements. 
A)  The birth rate is reduced as economies urbanize, but that also leads to a decreased average age of developing countries' populations. 
B)  An increase in the price of corn will decrease the amount of corn purchased. However, it will increase the amount of wheat purchased. 
C)  A decrease in the price of butter will increase the amount of butter purchased, but that would be bad because it would increase Americans' cholesterol levels. 
D)  none of the above contain only normative statements.

Question 14

Which of the following best illustrates the fallacy of composition?

Accepted Answer

A)  I hate driving to work when the traffic is so heavy, so I decide to leave 30 minutes earlier than in the past. If everyone were to leave 30 minutes earlier for work, we'd all get to work faster. 
B)  A great many people have been immunized against polio because it can be such a devastating disease. As a result, I probably do not personally need to be immunized against polio. 
C)  Whenever I attend a baseball game at the local stadium, the home team wins. Therefore, if I attend all of the team's local games, they will achieve a perfect winning record at home. 
D)  The parking at Ohio State University is in short supply on the main campus. It would be better for more people to ride the bus to school. 
A)  I hate driving to work when the traffic is so heavy, so I decide to leave 30 minutes earlier than in the past. If everyone were to leave 30 minutes earlier for work, we'd all get to work faster. 
B)  A great many people have been immunized against polio because it can be such a devastating disease. As a result, I probably do not personally need to be immunized against polio. 
C)  Whenever I attend a baseball game at the local stadium, the home team wins. Therefore, if I attend all of the team's local games, they will achieve a perfect winning record at home. 
D)  The parking at Ohio State University is in short supply on the main campus. It would be better for more people to ride the bus to school.

Question 15

Wealthy consumers do not have to make decisions on what to buy or how much to save.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following goods would be considered scarce?

Accepted Answer

A)  iPods 
B)  crude oil 
C)  tax preparation services 
D)  all of the above 
A)  iPods 
B)  crude oil 
C)  tax preparation services 
D)  all of the above

Question 17

When economists say goods are scarce,they mean that:

Accepted Answer

A)  consumers do not have enough money to purchase the goods. 
B)  the desire for goods and services exceeds our ability to produce them with limited resources. 
C)  at the current price, consumers are willing to buy more of a good than suppliers are willing to produce. 
D)  government programs are needed to lift families out of poverty. 
A)  consumers do not have enough money to purchase the goods. 
B)  the desire for goods and services exceeds our ability to produce them with limited resources. 
C)  at the current price, consumers are willing to buy more of a good than suppliers are willing to produce. 
D)  government programs are needed to lift families out of poverty.

Question 18

The problem of scarcity:

Accepted Answer

A)  exists because resources are limited relative to wants. 
B)  exists because resources are unlimited relative to wants. 
C)  can be eliminated through appropriate government intervention into markets. 
D)  does not exist in communist societies. 
A)  exists because resources are limited relative to wants. 
B)  exists because resources are unlimited relative to wants. 
C)  can be eliminated through appropriate government intervention into markets. 
D)  does not exist in communist societies.

Question 19

"The government should levy higher taxes on the rich and use the additional revenues to provide better housing for the poor." This statement illustrates:

Accepted Answer

A)  the fallacy of composition. 
B)  the basic principle of economics. 
C)  a normative economic statement. 
D)  a positive economic statement. 
A)  the fallacy of composition. 
B)  the basic principle of economics. 
C)  a normative economic statement. 
D)  a positive economic statement.

Question 20

It is possible to completely eliminate scarcity.

Accepted Answer

A) True 
 B)False

Exam 1: The Role and Method of Economics

The fundamental economic problem is:

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

Which of the following is correct?

What would not be held constant in testing a theory that if a student studies harder,he will get a better grade?

Economics:

The branch of economics that focuses on the conduct of affairs within narrowly defined units,such as households or business firms,is called:

Most people consider economics a(n):

The table demonstrates that:

Economists believe that only a small part of human behavior can be explained and predicted by assuming that most people act as if they are motivated by their own self-interest in an effort to increase their expected personal satisfaction.

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

Which of the following forces us to choose among alternatives?

Which of the following is a statement of positive economics?

Which of the following contains only normative statements?

Which of the following best illustrates the fallacy of composition?

Wealthy consumers do not have to make decisions on what to buy or how much to save.

Which of the following goods would be considered scarce?

When economists say goods are scarce,they mean that:

The problem of scarcity:

"The government should levy higher taxes on the rich and use the additional revenues to provide better housing for the poor." This statement illustrates:

It is possible to completely eliminate scarcity.

Economics: Eight Powerful Ideas

Scarcity, Trade-Offs, and Production Possibilities

Demand, Supply, and Market Equilibrium

Markets in Motion and Price Controls

Elasticities

Market Efficiency and Welfare

Market Failure

Public Finance and Public Choice

Consumer Choice Theory

The Firm: Production and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Product Differentiation

Oligopoly and Strategic Behavior

The Markets for Labor, Capital, and Land

Income, Poverty, and Health Care

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Measuring Economic Performance

Economic Growth in the Global Economy

Financial Markets, Saving, and Investment

Aggregate Demand and Aggregate Supply

The Aggregate Expenditure Model

Monetary Institutions

The Federal Reserve System and Monetary Policy

Issues in Macroeconomic Theory and Policy

International Trade

International Finance

Filters