Question 1

In a circular-flow model,firms demand all of the following except

Accepted Answer

A) labor 
B) goods and services 
C) capital 
D) entrepreneurial ability 
E) natural resources 
A) labor 
B) goods and services 
C) capital 
D) entrepreneurial ability 
E) natural resources

Question 2

As a scientist,an economist's main professional objective is to

Accepted Answer

A) become wealthy 
B) control the government's decision-making processes 
C) understand how the economy works 
D) discover which stock prices will decrease 
E) understand the psychology of participants in markets 
A) become wealthy 
B) control the government's decision-making processes 
C) understand how the economy works 
D) discover which stock prices will decrease 
E) understand the psychology of participants in markets

Question 3

Which of the following is not a part of the scientific method in economics?

Accepted Answer

A) normative statements 
B) comparing predictions to evidence 
C) formulating a hypothesis 
D) a hypothesis 
E) behavioral assumptions 
A) normative statements 
B) comparing predictions to evidence 
C) formulating a hypothesis 
D) a hypothesis 
E) behavioral assumptions

Question 4

Which of the following is true about entrepreneurs?

Accepted Answer

A) They have the talent required to dream up a new product or find a better way to produce an existing one. 
B) They are rewarded by profits. 
C) They sometimes suffer losses. 
D) They benefit from what's left over after paying other resource suppliers. 
E) All of the answers are correct. 
A) They have the talent required to dream up a new product or find a better way to produce an existing one. 
B) They are rewarded by profits. 
C) They sometimes suffer losses. 
D) They benefit from what's left over after paying other resource suppliers. 
E) All of the answers are correct.

Question 5

Which of the following would be an example of a resource market?

Accepted Answer

A) the market for tires 
B) the market for baseball games 
C) the market for compact discs 
D) the market for economists 
E) the market for downloadable music 
A) the market for tires 
B) the market for baseball games 
C) the market for compact discs 
D) the market for economists 
E) the market for downloadable music

Question 6

The assumption that individuals act rationally implies that

Accepted Answer

A) people think only of themselves and disregard the well-being of others 
B) people undertake all those activities that yield benefits to themselves 
C) people only consider the costs of an activity to decide whether it is worthwhile 
D) the greater the cost of a charitable deed to a benefactor,the more likely he or she is to perform that deed 
E) people implicitly calculate the costs and benefits of an activity to decide if it is worthwhile 
A) people think only of themselves and disregard the well-being of others 
B) people undertake all those activities that yield benefits to themselves 
C) people only consider the costs of an activity to decide whether it is worthwhile 
D) the greater the cost of a charitable deed to a benefactor,the more likely he or she is to perform that deed 
E) people implicitly calculate the costs and benefits of an activity to decide if it is worthwhile

Question 7

According to a 2011 Payscale.com survey the highest paying college major is:

Accepted Answer

A) Economics 
B) Management 
C) Finance 
D) Computer Engineering 
E) Political Science 
A) Economics 
B) Management 
C) Finance 
D) Computer Engineering 
E) Political Science

Question 8

Which of the following statements about economic methodology is correct?

Accepted Answer

A) An economic law is a cause-and-effect relationship that has been verified by a controlled experiment. 
B) The test of a theory's validity is its usefulness in explaining reality. 
C) An economic law is a statement about group behavior that is based on the observed behavior of a single individual. 
D) An economic law,because it is based on probabilities,can only be expected to be true about half the time. 
E) Assumptions are ignored in the development of hypotheses. 
A) An economic law is a cause-and-effect relationship that has been verified by a controlled experiment. 
B) The test of a theory's validity is its usefulness in explaining reality. 
C) An economic law is a statement about group behavior that is based on the observed behavior of a single individual. 
D) An economic law,because it is based on probabilities,can only be expected to be true about half the time. 
E) Assumptions are ignored in the development of hypotheses.

Question 9

An entrepreneur is a(n)

Accepted Answer

A) individual who has much education 
B) organizer who seeks profitable opportunities and is willing to accept risks 
C) business organization that uses inputs to produce output 
D) administrator who runs an enterprise without accepting any risk of financial loss 
E) depot or storehouse for commercial products 
A) individual who has much education 
B) organizer who seeks profitable opportunities and is willing to accept risks 
C) business organization that uses inputs to produce output 
D) administrator who runs an enterprise without accepting any risk of financial loss 
E) depot or storehouse for commercial products

Question 10

Economics is the study of

Accepted Answer

A) how to get rich by playing the stock market 
B) the best ways to reduce people's wants,given the scarcity of resources 
C) how rational government officials determine what goods should be produced 
D) money and why it is good 
E) how people use limited resources to try to satisfy unlimited wants 
A) how to get rich by playing the stock market 
B) the best ways to reduce people's wants,given the scarcity of resources 
C) how rational government officials determine what goods should be produced 
D) money and why it is good 
E) how people use limited resources to try to satisfy unlimited wants

Question 11

Economists believe that people respond in a predictable way to changes in costs and benefits.The term that best describes this phenomenon is

Accepted Answer

A) opportunity cost 
B) scarcity 
C) innovation 
D) marginal analysis 
E) other things equal (or ceteris paribus) 
A) opportunity cost 
B) scarcity 
C) innovation 
D) marginal analysis 
E) other things equal (or ceteris paribus)

Question 12

Profit is the payment made for land resources.

Accepted Answer

A) True 
 B)False

Question 13

Economics is best described as the

Accepted Answer

A) study of choice when scarcity exists 
B) study of the production of goods and services 
C) theory of consumer behavior 
D) science of money 
E) art of spending money wisely 
A) study of choice when scarcity exists 
B) study of the production of goods and services 
C) theory of consumer behavior 
D) science of money 
E) art of spending money wisely

Question 14

In economics,marginal means

Accepted Answer

A) incremental or decremental 
B) unimportant 
C) level or size 
D) a border-line situation 
E) a bad alternative 
A) incremental or decremental 
B) unimportant 
C) level or size 
D) a border-line situation 
E) a bad alternative

Question 15

Economics is best defined as the study of how

Accepted Answer

A) individuals decide to use scarce resources in an attempt to satisfy their unlimited wants 
B) to make money 
C) the government should deal with unemployment and inflation 
D) to eliminate the problem of scarce resources 
E) to run a business 
A) individuals decide to use scarce resources in an attempt to satisfy their unlimited wants 
B) to make money 
C) the government should deal with unemployment and inflation 
D) to eliminate the problem of scarce resources 
E) to run a business

Question 16

The other-things-constant assumption

Accepted Answer

A) allows the economist to make useful predictions 
B) is a prediction 
C) applies only to consumers' decisions,not to those of firms 
D) forces the economist to ignore reality,where things are constantly changing 
E) implies rational self-interest on the part of all economic actors 
A) allows the economist to make useful predictions 
B) is a prediction 
C) applies only to consumers' decisions,not to those of firms 
D) forces the economist to ignore reality,where things are constantly changing 
E) implies rational self-interest on the part of all economic actors

Question 17

A model that sometimes makes incorrect predictions may be used by economic decision makers

Accepted Answer

A) under no circumstances 
B) only if its assumptions are detailed and realistic 
C) if it is mathematical and computerized 
D) if it is simple enough for a child to understand 
E) until a better model is developed 
A) under no circumstances 
B) only if its assumptions are detailed and realistic 
C) if it is mathematical and computerized 
D) if it is simple enough for a child to understand 
E) until a better model is developed

Question 18

Economic theory

Accepted Answer

A) expresses normative values 
B) invents imaginative and interesting stories 
C) predicts the behavior of a specific economic decision maker after an economic change 
D) predicts the average behavior of a group of similar economic decision makers after an economic change 
E) uses only perfect and complete information 
A) expresses normative values 
B) invents imaginative and interesting stories 
C) predicts the behavior of a specific economic decision maker after an economic change 
D) predicts the average behavior of a group of similar economic decision makers after an economic change 
E) uses only perfect and complete information

Question 19

Economists generally believe that

Accepted Answer

A) buyers and sellers have all the information they can use 
B) additional information is costly to acquire 
C) decision makers have complete knowledge of all the alternatives available 
D) economic decisions result from random behavior 
E) decision makers never make mistakes 
A) buyers and sellers have all the information they can use 
B) additional information is costly to acquire 
C) decision makers have complete knowledge of all the alternatives available 
D) economic decisions result from random behavior 
E) decision makers never make mistakes

Question 20

Resources are divided into the following broad categories:

Accepted Answer

A) people,money,and machines 
B) saving,spending,investment,and capital 
C) human,technological,and government 
D) natural resources,labor,capital,and entrepreneurial ability 
E) free,scarce,abundant,and unlimited 
A) people,money,and machines 
B) saving,spending,investment,and capital 
C) human,technological,and government 
D) natural resources,labor,capital,and entrepreneurial ability 
E) free,scarce,abundant,and unlimited

Exam 1: The Art and Science of Economic Analysis

In a circular-flow model,firms demand all of the following except

As a scientist,an economist's main professional objective is to

Which of the following is not a part of the scientific method in economics?

Which of the following is true about entrepreneurs?

Which of the following would be an example of a resource market?

The assumption that individuals act rationally implies that

According to a 2011 Payscale.com survey the highest paying college major is:

Which of the following statements about economic methodology is correct?

An entrepreneur is a(n)

Economics is the study of

Economists believe that people respond in a predictable way to changes in costs and benefits.The term that best describes this phenomenon is

Profit is the payment made for land resources.

Economics is best described as the

In economics,marginal means

Economics is best defined as the study of how

The other-things-constant assumption

A model that sometimes makes incorrect predictions may be used by economic decision makers

Economic theory

Economists generally believe that

Resources are divided into the following broad categories:

Economic Tools and Economics Systems

Economic Decision Makers

Demand, supply, and Markets

Introduction to Macroeconomics

Tracking the Useconomy

Unemployment and Inflation

Productivity and Growth

Aaggregate Expenditure and Aggregate Demand

Baggregate Expenditure and Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy

Macro Policy Debate: Active or Passive

International Trade

Externalities and the Environment

International Finance

Economic Development

understanding Graphs

National Income Accounts

The Algebra of Demand-Side Equilibrium

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