Question 1

The cost of building a new interstate highway system is reported to be high at $25 billion.Does it necessarily follow that the interstate highway is not worth building?

Accepted Answer

A) Yes,because it is better to spend $25 billion on ending poverty than on building another interstate highway system. 
B) No,because building a new interstate highway system promotes economic growth,which helps everyone. 
C) No,because the benefits of building a new interstate highway system may be greater than $25 billion. 
D) Yes,because the benefits of building a new interstate highway system may be greater than $25 billion. 
A) Yes,because it is better to spend $25 billion on ending poverty than on building another interstate highway system. 
B) No,because building a new interstate highway system promotes economic growth,which helps everyone. 
C) No,because the benefits of building a new interstate highway system may be greater than $25 billion. 
D) Yes,because the benefits of building a new interstate highway system may be greater than $25 billion.

Question 2

What does it mean if a person makes a "decision at the margin"?

Accepted Answer

A) The person compares additional benefits and additional costs when deciding what to do. 
B) The person weighs the good against the bad and then decides what to do. 
C) The person is more likely to say yes than to say no. 
D) The person compares marginal benefits and total costs and then decides what to do. 
E) The person makes a decision based on a condition. 
A) The person compares additional benefits and additional costs when deciding what to do. 
B) The person weighs the good against the bad and then decides what to do. 
C) The person is more likely to say yes than to say no. 
D) The person compares marginal benefits and total costs and then decides what to do. 
E) The person makes a decision based on a condition.

Question 3

If people want more cars than there are cars available,then it is necessarily true that

Accepted Answer

A) cars are scarce. 
B) there is a surplus of cars. 
C) there is a decreased supply of cars. 
D) none of the above 
A) cars are scarce. 
B) there is a surplus of cars. 
C) there is a decreased supply of cars. 
D) none of the above

Question 4

Which of the following is a microeconomics topic?

Accepted Answer

A) the study of how prices are determined in the computer industry 
B) the study of unemployment in the economy 
C) the study of how changes in the nation's money supply affect the nation's output 
D) a and c 
E) b and c 
A) the study of how prices are determined in the computer industry 
B) the study of unemployment in the economy 
C) the study of how changes in the nation's money supply affect the nation's output 
D) a and c 
E) b and c

Question 5

Economists use the ceteris paribus assumption primarily in order to

Accepted Answer

A) make their analyses easier for them to conduct. 
B) designate what they believe is the correct relationship between two variables. 
C) explain why people sometimes consume more of a good when its price rises. 
D) explain why those things that come first do not necessarily cause those things that come later. 
E) designate the difference between normative and positive economics. 
A) make their analyses easier for them to conduct. 
B) designate what they believe is the correct relationship between two variables. 
C) explain why people sometimes consume more of a good when its price rises. 
D) explain why those things that come first do not necessarily cause those things that come later. 
E) designate the difference between normative and positive economics.

Question 6

The higher the opportunity cost of doing something,the more likely it will be done.

Accepted Answer

A) True 
 B)False

Question 7

Scarcity occurs in both wealthy societies and poor societies.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following statements uses the term ceteris paribus correctly?

Accepted Answer

A) In economics,there are numerous theories,ceteris paribus. 
B) New York City is a major American city,ceteris paribus. 
C) The price of pineapples is low in Hawaii,ceteris paribus. 
D) The more ice cream you eat,the more weight you will gain,ceteris paribus. 
E) none of the above 
A) In economics,there are numerous theories,ceteris paribus. 
B) New York City is a major American city,ceteris paribus. 
C) The price of pineapples is low in Hawaii,ceteris paribus. 
D) The more ice cream you eat,the more weight you will gain,ceteris paribus. 
E) none of the above

Question 9

Economists sometimes refer to the resource category land as natural resources.

Accepted Answer

A) True 
 B)False

Question 10

Explain how scarcity can exist in a relatively rich country such as the United States.Give examples to help support your answer.

Accepted Answer

Even in a wealthy country,the people liv

Question 11

Exhibit 1-1  
-Refer to Exhibit 1-1.If the student whose study habits are illustrated here is currently studying for the 2nd hour she should

Accepted Answer

A) cut back on the number of hours she is studying because the marginal benefit of studying for the 2nd hour is less than the marginal cost of doing so. 
B) cut back on the number of hours she is studying because the marginal benefit of studying for the 2nd hour is greater than the marginal cost of doing so. 
C) increase the number of hours she is studying because the marginal benefit of studying for the 2nd hour is less than the marginal cost of doing so. 
D) increase the number of hours she is studying because the marginal benefit of studying for the 2ndhour is greater than the marginal cost of doing so. 
A) cut back on the number of hours she is studying because the marginal benefit of studying for the 2nd hour is less than the marginal cost of doing so. 
B) cut back on the number of hours she is studying because the marginal benefit of studying for the 2nd hour is greater than the marginal cost of doing so. 
C) increase the number of hours she is studying because the marginal benefit of studying for the 2nd hour is less than the marginal cost of doing so. 
D) increase the number of hours she is studying because the marginal benefit of studying for the 2ndhour is greater than the marginal cost of doing so.

Question 12

Amy's opportunity cost of going to the movies is

Accepted Answer

A) the price of the ticket. 
B) zero,if she has a free pass to the movie. 
C) the price of the ticket plus the value to Amy of what she would have chosen to do with her time had she not chosen to go to the movies. 
D) both b and c 
A) the price of the ticket. 
B) zero,if she has a free pass to the movie. 
C) the price of the ticket plus the value to Amy of what she would have chosen to do with her time had she not chosen to go to the movies. 
D) both b and c

Question 13

Normative economics is concerned with

Accepted Answer

A) value judgments. 
B) opinions. 
C) cause-effect relationships. 
D) observations that can be proved. 
E) both a and b 
A) value judgments. 
B) opinions. 
C) cause-effect relationships. 
D) observations that can be proved. 
E) both a and b

Question 14

Describe the difference between positive and normative economics.Cite an example of each.

Accepted Answer

Positive economics deals with "what is."

Question 15

In general,there is a ______________ relationship between the number of hours spent studying for a test and the grade earned on the test.

Accepted Answer

A) independent 
B) direct 
C) inverse 
D) smooth 
A) independent 
B) direct 
C) inverse 
D) smooth

Question 16

Microeconomics is the branch of economics that deals with

Accepted Answer

A) highly aggregated markets or the entire economy. 
B) the production side of the economy,exclusively. 
C) the buying side of the economy,exclusively. 
D) human behavior and choices as they relate to relatively small units --- an individual,a firm,an industry. 
A) highly aggregated markets or the entire economy. 
B) the production side of the economy,exclusively. 
C) the buying side of the economy,exclusively. 
D) human behavior and choices as they relate to relatively small units --- an individual,a firm,an industry.

Question 17

A rationing device is a method used to resolve who gets what of available goods and resources.

Accepted Answer

A) True 
 B)False

Question 18

Define the term scarcity and discuss two of its consequences.

Accepted Answer

Scarcity is the condition in which our w

Question 19

Which of the following is a positive macroeconomics statement?

Accepted Answer

A) The central bank should increase the nation's money supply. 
B) The increase in the nation's money supply helped push the nation's unemployment rate down in the short run. 
C) Ford Motor Company's new advertising campaign ended up hurting General Motors' sales. 
D) The local government ought to spend more on recreational facilities. 
A) The central bank should increase the nation's money supply. 
B) The increase in the nation's money supply helped push the nation's unemployment rate down in the short run. 
C) Ford Motor Company's new advertising campaign ended up hurting General Motors' sales. 
D) The local government ought to spend more on recreational facilities.

Question 20

If variable X goes up as result of variable Y going down,then X and Y are

Accepted Answer

A) directly related. 
B) inversely related. 
C) independent. 
D) positively related. 
A) directly related. 
B) inversely related. 
C) independent. 
D) positively related.

Exam 1: What Economics Is About

The cost of building a new interstate highway system is reported to be high at $25 billion.Does it necessarily follow that the interstate highway is not worth building?

What does it mean if a person makes a "decision at the margin"?

If people want more cars than there are cars available,then it is necessarily true that

Which of the following is a microeconomics topic?

Economists use the ceteris paribus assumption primarily in order to

The higher the opportunity cost of doing something,the more likely it will be done.

Scarcity occurs in both wealthy societies and poor societies.

Which of the following statements uses the term ceteris paribus correctly?

Economists sometimes refer to the resource category land as natural resources.

Explain how scarcity can exist in a relatively rich country such as the United States.Give examples to help support your answer.

Exhibit 1-1 -Refer to Exhibit 1-1.If the student whose study habits are illustrated here is currently studying for the 2nd hour she should

Amy's opportunity cost of going to the movies is

Normative economics is concerned with

Describe the difference between positive and normative economics.Cite an example of each.

In general,there is a ______________ relationship between the number of hours spent studying for a test and the grade earned on the test.

Microeconomics is the branch of economics that deals with

A rationing device is a method used to resolve who gets what of available goods and resources.

Define the term scarcity and discuss two of its consequences.

Which of the following is a positive macroeconomics statement?

If variable X goes up as result of variable Y going down,then X and Y are

Production Possibilities Frontier Framework

Supply and Demand: Theory

Prices: Free, controlled, and Relative

Supply,demand,and Price: Applications

Macroeconomic Measurements, part I: Prices and Unemployment

Macroeconomic Measurements, part II: GDP and Real GDP

Aggregate Demand and Aggregate Supply

Classical Macroeconomics and the Self-Regulating Economy

Keynesian Macroeconomics and Economic Instability: a Critique of the Self-Regulating Economy

Fiscal Policy and the Federal Budget

Money,banking,and the Financial System

The Federal Reserve System

Money and the Economy

Monetary Policy

Expectations Theory and the Economy

Economic Growth: Resources, technology, ideas, and Institutions

The Financial Crisis of 2007-2009

Debates in Macroeconomics Over the Role and Effects of Government

Public Choice and Special-Interest-Group Politics

Building Theories to Explain Everyday Life: From Observations to Questions to Theories to Predictions

International Trade

International Finance

Globalization and International Impacts on the Economy

The Economic Case for and Against Government: Five Topics Considered

Stocks, bonds, futures, and Options

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